Miller et al v. McEachern

Filing 41

FINDINGS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE re 28 MOTION to Dismiss MOTION to Strike 25 Amended Complaint filed by Brad Miller. The court recommends Defendant's Rule 12(b)(6) motion to dismiss [Doc. #28] should be denied. (see order) (Ordered by Magistrate Judge Jeff Kaplan on 01/14/09) (lmp)

IN THE LTNITED STATESDISTRICTCOURT NORTHERN DISTRICTOF TEXAS D A L L A S DIVISION
BRAD MILLER, Individually and d / b / a FILM-TECH

Plaintiff, VS. K Y L E McEACHERN
Defendant.

N O . 3-07-CY-t997-M

FINDINGS AND RECOMMENDATION OF THE U N I T E D STATES MAGISTRATE JUDGE D e f e n d a n tKyle McEachernhas filed a Rule l2(bX6) motion to dismiss this civil action claims for breachof b r o u g h t by Plaintiff Brad Miller, Individually and d/bia Film-Tech, asserting an oral partnership agreement,conversion, and breach of fiduciary duty under Texas law. As that anyclaimsarisingunderthe allegedoral partnership contends g r o u n d sfor his motion, defendant agreementare barred by the statuteof frauds.r The issueshave beenfully briefed by the parties and t h e motion is ripe for determination. A Rule l2(bX6) motion "is viewed with disfavor and is rarely granted." Lowrey v. Texas a A & M (IniversitySystem,l17 F.3d 242,247 (5th Cir. 1997). In most cases, motion to dismissis by d e t e r m i n e d whetherthe factsallegedin the complaint,iftrue, give rise to a causeof action. ,See Mortgage Corp. of Texas,20F.3d 1362, 1366(5th Cir' K a n s a Reinsuronce Co. v. Congressional

I Defendant also moved to dismiss this caseon the grounds that plaintiffs allegations of breach are "trivial, u n t r u e , a n d i m m a t e r i a l .(SeeDef.Mot.at2). OnNovemberT,200s,thedistrictjudgedeniedthataspectofthemotion, " leaving only the issue of whether plaintiffs claims are barred by the statuteof frauds,

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1994). However,"when a successful appears the face of the pleadings, on affirmativedefense Co., Id., d i s m i s s aunderRule l2(b)(6)maybe appropriate." quotingClark v. AmocoProduction l
7 9 4 F .2d 967,970 (5th Cir. 1986). In his amendedcomplaint, plaintiff allegesthat he and defendantformed a partnershipfor the purpose of developing and marketing a software program, called ShoWizard Pro, that could be used by movie theatersto staggershow times so that physical operationsat the theaterswould not b e overwhelmedby numerousmovies startingand endingat once. (SeePlf. Am. Compl. at 3,']f 8). The alleged partnership agreement,which plaintiff admits was never reducedto writing, was first negotiatedin April 2005, and later revised in March 2007. (Id. at3, tl 8 & 4, tT10). Under the terms of the agreement,plaintiff would advance cash for any business-relatedexpensesand provide consultingservices.(ld. at4, fl 9). Defendantwould write the computercodeand industry-specific develop the technical aspectsof the program. (Id.). lf revenueswere generatedfrom the sale or he licenseof the softwareprogram, plaintiff would be repaid the expenses advancedand, thereafter, the parties would sharethe profits equally. (ld.). After he advancedconsiderablesums of money to defendantand paid for the partiesto attenda trade show in October 2007,plaintiff maintains that to with him, anddeniedhim access the to lost interestin the project,refused communicate defendant 10, program. (Seeid. at 5-8,'lJfl 11, 13, 15 & 19). software Defendantnow seeksdismissalof this suit on the groundsthat the "verbal partnershipdating back to April 2005" is barred by the statute of frauds. (See Def . Mot. at 8). Under Texas law, a partnership may be formed without a written agreement. Tpx. RPv. Cry. Srer. AwN. art. 6132bwritten or oral, of any L 0 1 ( 1 2 ) (Vernon Supp. 2005) ("'Partnershipagreement'means agreement, see a concerning partnership."); alsoLong v. Lopez,I 15 S.W.3d221,225(Tex.App.-t h e partners

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FortWorth200S,nopet.).However,anoralagreementtoformapartnershipissubjecttothestatute of frauds, which bars enforcementof "an agreementwhich is not to be performed within one year from the date of making the agreement,"unlessthe agreementis "in writing [ ] and signed by the person to be chargedwith the . . . agreementor by someonelawfully authorized to sign for him." T p x . Bus. & Covna. CooB Atw. $ 26.01(a)& (b) (Vemon Supp.2007); seealso Gqno v. Jamail, agreement 6 7 8 S.W.2d 152,153-54(Tex.App.--Houston Il4thDist.] 1984,no pet.)(oralpartnership is subjectto requirementsof statuteof frauds). By its terms, the statuteof frauds appliesonly to oral which cannotbe performedwithin oneyear. Gano,678 S.W.2dat 153-54. "A contract agreements within one year t h a t couldpossibly be performedwithin ayear,however improbableperformance m a y be, doesnot fall within the statuteof frauds." Beverickv. Koch Power, Inc.,186 S.W.3d 145, see 1 4 9 (Tex. App.--Houston Ist Dist.] 2005,pet. denied); alsoNiday v. Niday,643 S.W.2d919, 9 2 0 (Tex. 1982);Miller v. Riata Cadillac Co.,517 S.W.2d773,775 (Tex. 1974). H e r e , plaintiff allegesthat the parties formed a partnershipin 2005 for the purpose of d e v e l o p i n gand marketingthe ShoWizardPro softwareprogram. (SeePlf. Am. Compl. at 3-4, fl 8). Although the parties worked together for more than two yearsto accomplish the objectives of the agreement p a r t n e r s h i p , (seeid. at 4-5, flfl 9-10), nowheredoesplaintiff allegethat the partnership and marketing activities. Nor is a e s t a b l i s h e d time limit for the completionof thesedevelopment i t apparentfrom the amendedcomplaint that the acts requiredto accomplishthe purposeof the partnershipwere of sucha naturethat they could not have beencompletedwithin one year. Without suggestinga view of whether dismissal may be appropriatein another procedural context, such as a motion for summaryjudgment,the court is unableto concludeat the pleading stagethat the alleged oral partnership agreementmade the basis of this suit is subject to the statuteof frauds. See,e.g.

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l4-07-00613-CV,2008WL2390486at*4(Tex.App.--Houston[4thDist.] Chackov.Mathew,No. is J u n . 12,2008, no pet.) ("Enforcementof [an] oral agreement not foreclosedunderthe statuteof frauds when--as here--the time of performance is not establishedin the oral agreement and the within ayear is impossible.");Beverick,186 itself does not indicatethat performance agreement completion doesnot fall within the statuteof fraudsmerely because S . W . 3 d at 150 (oral agreement w i t h i n ayear proved to be impossiblein light of later circumstances). RECOMMENDATION Defendant's Rule l2(b)(6) motion to dismiss[Doc, #28] shouldbe denied. A copy of this report and recommendationshall be served on all parties in the manner provided by law. Any party may file written objectionsto the recommendationwithin l0 daysafter b e i n g servedwith a copy. See28 U.S.C. $ 636(bX1); Fso. R. Crv. P. 72(b). The failure to file written objections will bar the aggrieved party from appealing the factual findings and legal conclusions of the magistratejudge that are acceptedor adoptedby the district court, except upon g r o u n d s o f p l a i n e r r o rSee . Douglassv.UnitedServicesAutomobileAss'n,79F.3d1415,1417(5th C i r . 1996). D A T E D : Januarv14. 2009.

S ' I " A T E SMAGISTRATT, JUDGE

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