Tour Strategy LLC v. Star-Telegram, Inc. et al
Filing
46
Memorandum Opinion and Order that the 37 Motion to Dismiss filed by Star-Telegram, Inc. be, and is hereby, granted in part and plaintiff's claims against Star-Telegram, Inc. asserted in Count Two for fraud in the inducement, Count Three for fraud by nondisclosure, Count Five for breach of fiduciaryduty, Count Eight for violation of the Sherman Act, and Count Nine for violation of the TFEAA be, and are hereby, dismissed. The court further ORDERS that the 34 Motion to Dismiss filed by Valassis Sales and Marketing Services, Inc. be, and is hereby, granted in its entirety and plaintiff's claims against Valassis be, and are hereby, dismissed. (Ordered by Judge John McBryde on 7/3/2018) (bcr)
IN THE UNITED STATES DISTRICT C URT
NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
TOUR STRATEGY LLC,
D/B/A REDAN BILINGUAL MEDIA,
CLERK, U.S. DISTRlCT COURT
By _ _~---Deputy
§
§
§
Plaintiff,
JUL - 3 2018
§
§
vs.
§
§
STAR-TELEGRAM, INC., ET AL.,
§
§
Defendants.
NO. 4:18-CV-074-A
§
MEMORANDUM OPINION AND ORDER
Came on for consideration the motions of defendants, StarTelegram, Inc.
("STI"), and Valassis Sales and Marketing
Services, Inc.
("Valassis") , to dismiss. The court, having
considered the motions, the responses of plaintiff, Tour Strategy
LLC d/b/a Redan Bilingual Media, the replies, the record, and
applicable authorities, finds that STI's motion should be granted
in part as set forth herein and that Valassis's motion should be
granted in its entirety.
I.
Plaintiff's Claims
This action was brought before the court by notice of
removal filed February 2, 2018, by McClatchy U.S.A., Inc.
("McClatchy") , which is no longer a party to the action. Doc. 1 1;
Docs. 28 & 29. The record reflects that plaintiff filed its
1
The "Doc.
"reference is to the number of the item on the docket in this action.
original petition in the District Court of Dallas County, Texas,
116th Judicial District, on May 23, 2016. Doc. 1, Ex. E-15. By
order signed October 27, 2016, the action was transferred to
Tarrant County, where is was assigned to the 153rd Judicial
District. Id., Ex. E-16. On December 5, 2016, plaintiff filed its
first amended petition.
Id., Ex. E-20. On December 18, 2017,
plaintiff filed its second amended petition, adding McClatchy and
Valassis as defendants.
Id., Ex. E-24.
Following removal, the denial of plaintiff's motion to
remand, Doc. 27, and the dismissal of plaintiff's claims against
McClatchy, Docs. 28 & 29, the court ordered the parties to
replead in keeping with the requirements of the Federal Rules of
Civil Procedure, the Local Civil Rules of this court, and the
requirements of the undersigned. Doc. 30.
On May 4, 2018, plaintiff filed its amended complaint, Doc.
32. Plaintiff alleges: It entered into a contract with STI,
reflected by Exhibits 1 and 2 to the amended complaint. STI
breached the contract in numerous ways and acted in such a manner
as to cause plaintiff to go out of business. Plaintiff asserts
nine causes of action,
six of them against STI alone. The causes
of action against STI are for fraud·in the inducement
Two),
(Count
fraud by nondisclosure (Count Three), money had and
received (Count Four), breach of fiduciary duty (Count Five),
2
tortious interference with existing contracts (Count six) , and
tortious interference with prospective relations (Count Seven) .
In addition, plaintiff asserts breach of contract (Count One),
violations of Section 1 of the Sherman Act, 15 U.S.C. § 1 (Count
Eight), and violation of the Texas Free Enterprise and Antitrust
Act of 1983, Tex. Bus.
&
Com. Code§§ 15.01-.52
("TFEAA"),
against both defendants.
II.
Grounds of the Motions
Each defendant asserts that plaintiff has failed to state
any plausible claims against it.
III.
Applicable Pleading Standards
Rule 8 (a) (2) of the Federal Rules of Civil Procedure
provides,
in a general way, the applicable standard of pleading.
It requires that a complaint contain "a short and plain statement
of the claim showing that the pleader is entitled to relief,"
Fed. R. Civ. P. S(a) (2), "in order to give the defendant fair
notice of what the claim is and the grounds upon which it rests,"
Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007)
quotation marks and ellipsis omitted) .
(internal
Although a complaint need
not contain detailed factual allegations, the "showing"
contemplated by Rule 8 requires the plaintiff to do more than
3
simply allege legal conclusions or recite the elements of a cause
of action.
Twombly, 550 U.S. at 555 & n.3.
Thus, while a court
must accept all of the factual allegations in the complaint as
true, it need not credit bare legal conclusions that are
unsupported by any factual underpinnings.
556 U.S. 662, 679 (2009)
See Ashcroft v. Iqbal,
("While legal conclusions can provide
the framework of a complaint, they must be supported by factual
allegations.•)
Moreover, to survive a motion to dismiss for failure to
state a claim, the facts pleaded must allow the court to infer
that the plaintiff's right to relief is plausible.
U.S. at 678.
Iqbal, 556
To allege a plausible right to relief, the facts
pleaded must suggest liability; allegations that are merely
consistent with unlawful conduct are insufficient. Id. In other
words, where the facts pleaded do no more than permit the court
to infer the possibility of misconduct, the complaint has not
shown that the pleader is entitled to relief. Id. at 679.
"Determining whether a complaint states a plausible claim for
[is] a context-specific task that requires the
relief .
reviewing court to draw on its judicial experience and common
sense.
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Id.
As the Fifth Circuit has explained: "Where the complaint is
devoid of facts that would put the defendant on notice as to what
4
conduct supports the claims, the complaint fails to satisfy the
requirement of notice pleading." Anderson v. U.S. Dep't of
Housing & Urban Dev., 554 F.3d 525, 528 (5th Cir. 2008). In sum,
"a complaint must do more than name laws that may have been
violated by the defendant; it must also allege facts regarding
what conduct violated those laws. In other words, a complaint
must put the defendant on notice as to what conduct is being
called for defense in a court of law." Id. at 528-29. Further,
the complaint must specify the acts of the defendants
individually, not collectively, to meet the pleading standards of
Rule 8(a). See Griggs v. State Farm Lloyds, 181 F.3d 694, 699
(5th Cir. 1999); see also Searcy v. Knight (In re Am. Int'l
Refinery), 402 B.R. 728, 738
(Bankr. W.D. La. 2008).
Rule 9(b) sets forth the heightened pleading standard
imposed for fraud claims: "In alleging fraud or mistake, a party
must state with particularity the circumstances constituting
fraud or mistake." The Fifth Circuit requires a party asserting
fraud to "specify the statements contended to be fraudulent,
identify the speaker, state when and where the statements were
made, and explain why the statements were fraudulent." Hermann
Holdings, Ltd. v. Lucent Techs., Inc., 302 F.3d 552, 564-65 (5th
Cir. 2002) (internal quotations and citations omitted), Succinctly
stated, Rule 9(b) requires a party to identify in its pleading
5
"the who, what, when, where, and how" of the events constituting
the purported fraud. Dorsey v. Portfolio Equities, Inc., 540 F.3d
333, 339 (5th Cir. 2008). Rule 9(b) applies to all cases where
the gravamen of the claim is fraud even though the theory
supporting the claim is not technically termed fraud. Frith v.
Guardian Life Ins. Co. of Am., 9 F. Supp. 2d 734, 742
(S.D. Tex.
1998). Claims alleging violations of the Texas Insurance Code and
the Texas DTPA as well as those for fraud, fraudulent inducement,
fraudulent concealment, and negligent misrepresentation are
subject to the requirements of Rule 9(b). Berry v. Indianapolis
Life Ins. Co.,
608 F. Supp. 2d 785, 800
(N.D. Tex. 2009); Frith,
9 F. Supp. 2d at 742.
In considering a motion to dismiss for failure to state a
claim, the court may consider documents attached to the motion if
they are referred to in the plaintiff's complaint and are central
to the plaintiff's claims. Scanlan v. Tex. A&M Univ., 343 F.3d
533, 536 (5th Cir. 2003). The court may also refer to matters of
public record. Davis v. Bayless, 70 F.3d 367, 372 n.3
1995); Cinel v. Connick, 15 F.3d 1338, 1343 n.6
(5th Cir.
(5u Cir. 1994).
This includes taking notice of pending judicial proceedings.
Patterson v. Mobil Oil Corp., 335 F.3d 476, 481 n.1 (5u Cir.
2003). And, it includes taking notice of governmental websites.
6
Kitty Hawk Aircargo, Inc. v. Chao, 418 F.3d 453, 457
2005); Coleman v. Dretke, 409 F.3d 665, 667
(5th Cir.
(5th Cir. 2005).
IV.
Analysis
A.
Count One
To establish breach of contract, plaintiff must show (1)
existence of a valid contract,
performance by plaintiff,
(2) performance or tendered
(3) breach of the contr.act by
defendant, and (4) resulting damages to plaintiff. Lewis v. Bank
of Am., N.A., 343 F.3d 540, 544-45 (5th Cir. 2003); Rice v.
Metro. Life Ins. Co., 324 S.W.3d 660, 666 (Tex. App.--Fort Worth
2010, no pet.).
Plaintiff admits that its breach of contract claims against
STI are based not on prior representations, but on the terms of
the written agreements between them. Doc. 40 at 11. Although not
articulately or logically pleaded, plaintiff's amended complaint
states a claim against STI for breach of contract.
As for Valassis, plaintiff has not pleaded facts to
establish a contract between the two, much less the other
elements of a claim. The insert agreements, Doc. 36, reflect that
Valassis placed the orders as agent for the named advertisers.
And these agreements reflect that they are directed to En Casa, a
publication of STI, at STI's address. Thus, it appears that both
7
plaintiff and Valassis were acting as agents for known
principals. As Valassis notes, an agent does not become party to,
or liable for claims arising out of, its principal's contracts.
Instone Travel Tech Marine & Offshore v. Int'l Shipping Partners,
Inc., 334 F.3d 423, 428
(5th Cir. 2003); Pension Advisory Grp.,
Ltd. v. Country Life Ins. Co.,
771 F. Supp. 2d 680, 705
(S.D.
Tex. 2011).
B.
Count Two
The elements of a claim for fraud in the inducement are:
defendant made a representation;
false;
(1)
(2) the representation was
(3) the representation was material;
( 4) defendant made
the representation knowing it was false or made it recklessly, as
a positive assertion, without knowledge of its truth;
(5)
defendant made the representation with the intent that plaintiff
act on it;
(6) plaintiff relied on the representation; and,
(7)
plaintiff suffered damage as a result. Zorrilla v. Aypco Constr.
II, LLC, 469 S.W.3d 143, 153
(Tex. 2015). With regard to
reliance, plaintiff must show that it actually relied on the
representation and that its reliance was justifiable. JPMorgan
Chase Bank, N.A. v. Orea Assets G.P., L.L.C,, No, 15-0712, 2018
WL 1440625, at *4 (Tex. Mar. 23, 2018). And, as set forth above,
fraud must be pleaded with particularity. Fed. R. Civ. P. 9(b).
8
Despite plaintiff's argument to the contrary, the facts
pleaded by plaintiff do not set forth the "who, what, when,
where, and how" of the fraud in the inducement claim. The only
seemingly specific allegation is that in May 2015 STI's officers,
including Christian Lee, Don Burk, and Steffanie Striker,
informed plaintiff that En Casa's audited .circulation was 121,
488. Doc. 32,
~
16. The same paragraph says that an audit report
on March 31, 2015, reflected circulation of 112,002. Thus,
plaintiff's own pleading raises the issue of whether its reliance
could be justifiable. And, it would appear that a representation
made in May necessarily occurred after the effective date of the
contract. Id., Ex. 1. Further, the complaint makes plain that all
of the alleged misrepresentations together caused plaintiff to
enter into the contract. There is no allegation that the single
representation described in paragraph 16 would have been
sufficient. Plaintiff has not pleaded the time, place, or
contents of the other misrepresentations, the identities of the
persons making them, or what those persons gained thereby. See
Williams v. WMX Techs. Inc., 112 F.3d 175, 177 (5th Cir. 1997).
C.
Count Three
The elements of fraud by nondisclosure are:
concealed or failed to disclose a fact;
to disclose the fact;
(2) defendant had a duty
( 3) the fact was material;
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(1) defendant
(4) defendant
knew that plaintiff was ignorant of the fact and did not have an
equal opportunity to discover the fact;
deliberately silent;
(5) defendant was
(6) plaintiff was induced to take some
action or refrain from acting;
(7) plaintiff relied on the
nondisclosure; and (8) plaintiff suffered damage as a result.
Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 341 (5th Cir.
2008); In re C.M.V., 479 S.W.3d 352, 362 (Tex. App.--El Paso
2015, no pet.).
Although plaintiff itself emphasizes the requirement of a
duty to disclose, Doc. 40 at 15-16, it has not pleaded facts to
establish such a duty. For example, plaintiff alleges that STI
had a special relationship with plaintiff that imposed a duty to
speak, id. at 19, but no facts are alleged to establish such
relationship. See, e.g., Schlumberger Tech. Corp. v. Swanson,
959
S.W.2d 171, 176-77 (Tex. 1997) (to impose a fiduciary relationship
in a business context, the relationship must exist prior to and
apart from the agreement made basis of the action) . The contract
itself belies the allegation of paragraph 10 of the amended
complaint that the agreement was a partnership agreement. Nor
does plaintiff explain what new information STI was required to
disclose. For example, plaintiff refers to the representation
that En Casa would not be converted to a bilingual publication
during the third or fourth quarters of 2015 or the first quarter
10
of 2016, Doc. 40, , 19, but plaintiff does not plead that it was
so converted during that time.
D.
2
Count Four
The elements of a claim for money had and received are that
(1) defendant holds money and (2) the money in equity and good
conscience belongs to plaintiff. Staats v. Miller, 243 S.W.2d
686, 687-88
(Tex. 1951); Norhill Energy LLC v. McDaniel, 517
S.W.3d 910,
917 (Tex. App.--Fort Worth 2017, pet. denied).
Here, plaintiff has pleaded that it sold advertising to
Valassis, but STI instructed Valassis not to pay plaintiff but to
pay STI instead. Plaintiff says that STI has never paid it for
the sale of the advertising. Plaintiff has stated a plausible
claim.
E.
Count Five
The elements of a claim for breach of fiduciary duty are (1)
the existence of a fiduciary duty,
(2) breach of the duty,
(3)
causation, and (4) damages. First United Pentecostal Church v.
Parker, 514 S.W.3d 214, 220 (Tex. 2017). To impose a fiduciary
relationship in a business context, the relationship must exist
prior to, and apart from,
the agreement made the basis of the
suit. Schlumberger Tech. Corp., 959 S.W.2d at 177. A fiduciary
'Plaintiff only says that the conversion occurred in early 2016. Doc. 40, ~ 21.
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duty will not be lightly created. ARA Auto. Grp. v. Cent. Garage,
Inc.,
124 F. 3d 720, 723
(5th Cir. 1997).
Here, despite plaintiff's argument to the contrary, it has
not pleaded facts that would support imposition of a fiduciary
duty. In particular, the contract belies any claim that plaintiff
and STI were partners or joint venturers. Doc.
32, Ex. 1 at
unnumbered fourth and fifth pages, reflecting that the parties
are independent contractors, each operating independent
businesses. Further, plaintiff recites instances of reason for
distrust existing before agreeing to the contract at issue. See,
~.
F.
Doc. 32, ~~ 8-9.
Count Six
The elements of a claim for tortious interference with an
existing contract are:
(1) a contract subject to interference,
(2) a willful and intentional act of interference,
cause, and (4)
(3) proximate
actual damages or loss. Butnaru v. Ford Motor Co.,
84 S.W.3d 198, 207
(Tex. 2002); Prudential Ins. Co. of Am. v.
Fin. Review Servs., Inc., 29 S.W.3d 74,
77
(Tex. 2000).
Plaintiff has pleaded that it had contracts with Valassis
and with EPMG and that STI tortiously interfered with those
contracts.
Plaintiff has not pleaded that Valassis tortiously
interfered with any contract between plaintiff and another
person. A party cannot tortiously interfere with its own
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contract. Del Carmen Flores v. Summit Hotel Grp., 492 F. Supp. 2d
640,
644
(W.D. Tex. 2006).
G.
Count Seven
The elements of a claims for tortious interference with
prospective business relations are:
(1) a reasonable probability
that plaintiff would have entered into a business relationship
with a third party;
the relationship;
(2) defendant intentionally interfered with
(3) defendant's conduct was independently
tortious or unlawful;
(4) the interference proximately caused the
plaintiff's injury; and (5) plaintiff suffered actual damages or
loss as a result. D'Onofrio v. Vacation Publications, Inc., 888
F.3d 197, 214
(5th Cir. 2018); Coinmach Corp. v. Aspenwood
Apartment Corp., 417 S.W.3d 909, 923
(Tex. 2013).
Plaintiff has pleaded sufficient facts to state a claim for
tortious interference by STI with plaintiff's prospective
relations with Valassis. 3
H.
Counts Eight and Nine
To establish a violation of Section 1 of the Sherman Act,
plaintiff must show:
(1) an agreement, conspiracy, or combination
of two or more persons or distinct business entities,
(2) which
is intended to harm or unreasonably restrain competition, and (3)
3
Contrary to plaintiffs argument in its response, Doc. 40 at 20, it has not pleaded a claim for
tortious interference with prospective relations with Motivate, Inc. Doc. 32 at 23.
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which actually causes injury to competition, beyond the impact of
the claimant, within a field of commerce in which plaintiff is
engaged. Payne v. Columbia Plaza Med. Cntr., No. 4:01-CV-382-A,
2002 WL 1315801, at *2
McNamara,
(N.D. Tex. June 11, 2002) (citing Austin v.
979 F.2d 728, 738
(9th Cir. 1992)). A claim under the
TFEAA requires the same elements of proof. Alternatives
Unlimited, Inc. v. Grp. Excellence, Ltd., No. 3:10-CV-02283-BF,
2012 WL 715970, at *6-7
(N.D. Tex. Mar. 5, 2012).
STI says that plaintiff lacks standing to bring its
antitrust claims. To have standing, plaintiff must suffer an
antitrust injury, i.e., damages must flow from the
anticompetitive conduct. Digital Recognition Network,
Inc. v.
Accurate Adjustments, Inc., No. 4:14-CV-903-A, 2016 WL 1023316,
at *4
(N.D. Tex. Mar. 8, 2016). Here, plaintiff does not allege
that it was forced to buy anything. Rather, the harm alleged was
to Valassis. More importantly, plaintiff has not pleaded an
agreement, conspiracy, or combination between STI and Valassis
(or anyone else)
intended to harm or unreasonably restrain
competition.' Rather, the injury alleged results solely from the
conduct of STI. And, plaintiff has failed to plead the relevant
product and geographic markets. See Doc. 35 at 13-15.
4
The apparent contention that Valassis would conspire or enter into an agreement to harm itself
and its customers is nonsensical.
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I.
Damages
Finally, the STI's motion addresses the exemplary damages
and attorney's fees sought by plaintiff. Disposition of these
matters would be premature in light of the court's ruling herein.
v.
Order
The court ORDERS that the motion of STI to dismiss be, and
is hereby, granted in part and plaintiff's claims against STI
asserted in Count Two for fraud in the inducement, Count Three
for fraud by nondisclosure, Count Five for breach of fiduciary
duty, Count Eight for violation of the Sherman Act, and Count
Nine for violation of the TFEAA be, and are hereby, dismissed.
The court further ORDERS that the motion of Valassis to
dismiss be, and is hereby, granted in its entirety and
plaintiff's claims against Valassis be, and are hereby,
dismissed.
The court determines that there is no just reason for delay
in, and hereby directs, entry of final judgment as to the
dismissal of plaintiff's claims against Valassis.
SIGNED July 3, 2018.
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