William Noble Rare Jewels v. Sky Global LLC et al

Filing 37

Memorandum Opinion and Order Denies 29 Motion to Dismiss filed by Sky Global LLC. (Ordered by Judge David C Godbey on 9/6/2019) (ndt)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
WILLIAM NOBLE RARE JEWELS, LP, §
§
Plaintiff,
§
§
v.
§
§
SKY GLOBAL LLC,
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Defendant.
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Civil Action No. 3:18-CV-1566-N

MEMORANDUM OPINION AND ORDER
This order addresses Defendant’s motion to dismiss for lack of standing, ripeness,
and failure to state a claim. Because Plaintiff pled a cognizable injury ripe for adjudication
and adequately pled its breach of contract claim, the Court denies the motion.
I. ORIGINS OF THE DISPUTE
This case arises from a dispute between Plaintiff William Noble Rare Jewels
(“Noble”) and Defendant Sky Global LLC (“Sky”) regarding the marketing of three gem
stones: the Yellow Rose, the Blue, and the Pink.1 Noble owns one of the stones, the Pink,
and has a contract with the owner of another, the Yellow Rose, to sell it in exchange for a
commission.
Noble and Sky entered an oral agreement that provided Sky would assist in locating
a buyer with sufficiently deep pockets. In exchange, Noble agreed to evenly divide profits
from any sale with Sky. Sky never found a buyer but did identify several prospects. Noble

1

This discussion is based on the allegations in the Amended Complaint [28], which the
Court must accept as true.
ORDER – PAGE 1

maintains Sky did so in bad faith, shopping the stones around excessively to illegitimate
prospects in hopes of devaluing the stones so they would be easier to sell. Noble argues
this constitutes a breach of contract under Texas law. Sky now moves to dismiss this claim.
II. THE COURT HAS JURISDICTION OVER THE BREACH OF CONTRACT CLAIM
Sky moves to dismiss under Rule 12, primarily arguing that Plaintiff Noble fails to
state a claim. As mandated by Fifth Circuit caselaw, however, the Court first addresses
Sky’s contention that the Court lacks subject matter jurisdiction under Rule
12(b)(1). See Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (citing Hitt v.
City of Pasadena, 561 F.2d 606, 608 (5th Cir.1977) (per curiam)).
A. Subject Matter Jurisdiction Standard
Federal court subject matter jurisdiction is circumscribed by Article III and requires
both constitutional and statutory authorization. U.S. Const. art. III, § 2; Stockman v. Fed.
Election Comm’n, 138 F.3d 144, 151 (5th Cir. 1998). A court properly dismisses a case
where it lacks the constitutional power to decide it. Home Builders Ass’n of Miss., Inc. v.
City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998).
A Rule 12(b)(1) movant may challenge subject matter jurisdiction through either a
facial attack, which challenges the sufficiency of the pleadings through a Rule 12(b)(1)
motion, or a factual attack, which provides evidentiary materials in addition to the motion.
Rodriguez v. Tex. Comm’n on the Arts, 992 F. Supp. 876, 878 (N.D. Tex. 1998). The Court
accepts as true all allegations and facts in the complaint where, as here, the motion presents
a facial attack. Ass’n of Am. Physicians & Surgeons, Inc. v. Tex. Med. Bd., 627 F.3d 547,
553 (5th Cir. 2010). Plaintiff bears the burden of proof in the Rule 12(b)(1) context, but a
ORDER – PAGE 2

court should grant the motion “only if it appears certain that the plaintiff cannot prove a set
of facts in support of his claim that would entitle plaintiff to relief.” Ramming, 281 F.3d at
161 (citing Home Builders Ass’n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010
(5th Cir. 1998)).2
B. Standing and Ripeness Standards
“Standing and ripeness are required elements of subject matter jurisdiction.” Roman
Catholic Diocese of Dallas v. Sebelius, 927 F.Supp.2d 406, 415 (N.D. Tex. 2013) (Boyle,
J.). Sky’s motion challenges one of the three requirements for standing, actual injury.
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). To establish a cognizable injury,
“the plaintiff must have suffered an injury in fact — an invasion of a legally protected
interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural
or hypothetical.” Id. at 560 (citations omitted). Sky also contends that Noble’s claim fails
for lack of ripeness, a related temporal requirement. “A claim is not ripe for adjudication
if it rests upon contingent future events that may not occur as anticipated, or indeed may
not occur at all.” Texas v. United States, 523 U.S. 296, 300 (1998) (citation and internal
quotation marks omitted).
C. The Court Has Subject Matter Jurisdiction
The Court finds Noble has established both actual injury and ripeness. Noble
alleges it owns at least one of the stones and has a contract giving it the right to commission

2

Although the Supreme Court has abrogated this standard in the Rule 12(b)(6) context,
see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007), courts still use this verbiage in the Rule 12(b)(1) context.
ORDER – PAGE 3

from the sale of another. Taken as true, the allegation that Sky diminished the value of
these stones establishes an actual injury.
Sky argues that as “a mere broker of the Jewelry, any injury [Noble] might
suffer…will occur if, and only if, the Jewelry is sold at a diminished price.” Mem. Supp.
Def.’s Mot. Dismiss 9 [30]. While a sale at diminished value would constitute proof of
Noble’s loss, a sale is not necessary to establish that Noble’s property interest — the value
of its right to commission — has decreased. Noble alleges that its contract with the Yellow
Rose owner gives it the right to any sale amount above the diamond’s wholesale value.
Am. Compl. 2 [28]. The alleged decrease to the stone’s “value,” assuming the pleadings
indicate market value, diminishes the value of Noble’s right to commission because the
margin between wholesale and market value decreases. It is possible, as Sky argues, that
the decrease in value is temporary, but this is not subject to determination on a motion to
dismiss.
Noble’s allegations are similarly sufficient to satisfy Article III’s ripeness
requirement. Noble has alleged a concrete injury, and this dispute does not appear
speculative on the face of the complaint.

Accordingly, the Court finds that Noble

established standing and that its claim is ripe for adjudication.
III. THE COURT DENIES THE MOTION TO DISMISS
A. Rule 12(b)(6) Legal Standard
When addressing a Rule 12(b)(6) motion to dismiss, a court must determine whether
the plaintiff has asserted a legally sufficient claim for relief. Blackburn v. City of Marshall,
42 F.3d 925, 931 (5th Cir. 1995). A viable complaint must include “enough facts to state
ORDER – PAGE 4

a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
570 (2007). To meet this standard, a plaintiff must “plead[ ] factual content that allows the
court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court generally accepts wellpleaded facts as true and construes the complaint in the light most favorable to the
plaintiff. Gines v. D.R. Horton, Inc., 699 F.3d 812, 816 (5th Cir. 2012). But a court does
not “accept as true conclusory allegations, unwarranted factual inferences, or legal
conclusions.” Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007) (citation
omitted). “Factual allegations must be enough to raise a right to relief above the speculative
level on the assumption that all the allegations in the complaint are true (even if doubtful
in fact).” Twombly, 550 U.S. at 555.
B. Noble States a Breach of Contract Claim
Texas law requires a plaintiff alleging breach of contract to show: (1) a valid
contract; (2) performance by the plaintiff; (3) breach by the defendant; and (4) damages to
the plaintiff flowing from the breach. Villareal v. Wells Fargo Bank, N.A., 814 F.3d 763,
767 (2016). Sky argues that Noble has failed to plead facts sufficient to establish a valid
contract, breach, and damages. The Court disagrees.
Sky maintains that Noble did not allege a sufficiently definite contract because the
amended complaint left material terms undefined. Mem. Supp. Def.’s Mot. Dismiss 11
[30]. Noble’s amended complaint states that there was an oral contract between Noble and
Sky and identifies a provision requiring Sky to market to only “established purchasers”
with the “means and ability to purchase,” which it alleges is an industry standard. Am.
ORDER – PAGE 5

Compl. 3 [28]. Noble further alleges that Sky understood the terms in this provision due
to its experience in the industry. Pl.’s Resp. Def.’s Mot. Dismiss 4 [34]. These allegations
are enough to plead a valid contract. The Court does not determine on a Rule 12(b)(6)
motion whether there are, in fact, industry standards that define the terms in this provision
or whether the terms were understood by Sky.
Sky also contends that Noble did not allege a plausible breach, arguing that its mere
marketing of the stones cannot constitute breach of an agreement to market and that there
is no plausible way to determine the number or type of permissible marketing contacts.
Mem. Supp. Def.’s Mot. Dismiss 13 [30].

These arguments are not susceptible to

resolution in the context of a Rule 12(b)(6) motion. Noble identified a specific provision
limiting Sky’s marketing. Am. Compl. 3 [28]. Further, Noble pled facts supporting a
reasonable inference that Sky breached this provision, alleging that Sky marketed the
stones to illegitimate buyers and that an industry player warned Noble that Sky was
engaging in overmarketing. Id. at 3–4. This satisfies the Rule 12(b)(6) plausibility
standard.
Lastly, Sky argues that damages were not sufficiently alleged because they are
speculative and there is no “reliable indicia that the market value of the Jewelry has been
reduced by any actions” of the defendant. Mem. Supp. Def.’s Mot. Dismiss 14 [30]. Sky’s
contentions are appropriate for determination in a Rule 56 motion for summary judgment
supported by evidence, not a motion to dismiss. Noble sufficiently pled damages by
alleging Sky’s breach caused a drop in the value of the stones.

ORDER – PAGE 6

CONCLUSION
Accordingly, the Court denies Sky’s motion to dismiss.

Signed September 6, 2019.

___________________________
David C. Godbey
United States District Judge

ORDER – PAGE 7