De Benedictis v. Grieve et al

Filing 17

ORDER granting in part and denying in part 5 Motion to Dismiss. (Signed by Magistrate Judge Stephen Wm Smith) Parties notified. (jmarchand)

U N IT E D STATES DISTRICT COURT S O U T H E R N DISTRICT OF TEXAS H O U S T O N DIVISION A NTHONY DE BENEDICTIS, P l a i n t i ff , vs. R OBERT GRIEVE AND JILLIAN GRIEVE, D e fen d a n ts. § § § § § § § ORDER T h is dispute is before the court on defendants' motion to dismiss under Federal Rules o f Civil Procedure 12(b)(2) (lack of subject matter jurisdiction) and 12(b)(6) (failure to state a claim) (Dkt. 5). While the 12(b)(2) motion is denied, the 12(b)(6) motion is granted and th is case is dismissed.1 A. R u le 12(b)(2) Motion 1. L e g a l Standards

C IVIL ACTION H-09-1683

The Texas long-arm statute "authorizes the exercise of jurisdiction over nonresidents `d o in g business' in Texas," and "the Texas Supreme Court has interpreted the `doing b u s in e ss ' requirement broadly, allowing the long-arm statute to reach as far as the federal C o n s titu tio n permits." Gundle Lining Constr. Corp. v. Adams County Asphalt, Inc., 85 F.3d 2 0 1 , 204 (5th Cir. 1996); Schlobophm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990); Alpine V ie w Co. v. Atlas Copco AB, 205 F.3d 208, 214 (5th Cir. 2000). Thus, the jurisdictional

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The parties have consented to the jurisdiction of this magistrate judge for all purposes, including final judgment (Dkt. 15).

in q u iry under the Texas long-arm statute collapses into a single due-process inquiry. See R u s to n Gas Turbines v. Donaldson Co., 9 F.3d 415, 418 (5th Cir. 1993). T h e two-part test for assertion of personal jurisdiction under the due process clause is (1) whether a defendant "purposefully availed itself of the benefits and protections of the fo ru m state by establishing `minimum contacts' within the forum sate," and (2) whether the a ss e rtio n of personal jurisdiction would comport with "traditional notions of fair play and s u b s ta n tia l justice." Alpine View, 205 F.3d at 215; see also Burger King Corp. v. Rudzewica, 4 7 1 U.S. 462, 476-77 (1985). Both prongs of the due process test must be met in order for th is Court to exercise personal jurisdiction over the defendant. 2. A n a ly sis

In this case, defendants do not contest the "minimum contacts" prong, but contend that th e exercise of jurisdiction in this case would offend "traditional notions of fair play and s u b s ta n tia l justice." 2 D e f e n d a n ts cite no authority for their position that it is unconstitutional to allow a case to proceed where one defendant is unable to attend trial due to the effects of a criminal c o n v ictio n . The court recognizes that defendants did not flee the country to avoid

a d ju d ic a tio n of the wrongs alleged in this lawsuit. Yet, "only in rare cases . . . will the e x e rc is e of jurisdiction not comport with fair play and substantial justice when the n o n re s id e n t defendant has purposefully established minimum contacts with the forum state."

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See Plaintiff's response, Exhibit A (Dkt. 14-2). 2

E n v ir o Petroleum, Inc. v. Kondur Petroleum, S.A., 79 F. Supp. 2d 770, 726 (S.D. Tex. 1999). T h e court is not persuaded Robert Grieve's circumstances constitute such a rare case. T h e re fo re , defendants' 12(b)(2) motion is denied. B. R u le 12(b)(6) Motion. 1. L e g a l Standards

T h e "court accepts `all well-pleaded facts as true, viewing them in the light most fa v o ra b le to the plaintiff.' " Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F .3 d 464, 467 (5th Cir.2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir.1999)). H o w e v e r, only facts are entitled to an assumption of truth; legal conclusions unsupported by fa c tu a l allegations do not suffice. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009). To s u rv iv e a Rule 12(b)(6) motion to dismiss, the plaintiff must plead "enough facts to state a c la im to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2 0 0 7 ). "A claim has facial plausibility when the plaintiff pleads factual content that allows th e court to draw the reasonable inference that the defendant is liable for the misconduct a lle g e d ." Iqbal, 129 S. Ct. at 1949; Gonzalez v. Kay, 577 F.3d 600, 603 (2009). 2. A n a ly sis

T h e complaint alleges that from 2002-2006 De Benedictis was employed by Robert G rie v e , a private investigator then based in Houston. Grieve allegedly told De Benedictis th a t what he (Grieve) was doing was legal. De Benedictis was named as a co-conspirator in a federal indictment months after he stopped working for Grieve. Grieve pled guilty to one c h a r g e of criminal conspiracy to commit wire fraud and subsequently left the United States. 3

A ll charges against De Benedictis were later dismissed without any plea agreement or p e n a lt y . De Benedictis has sued Grieve for breach of fiduciary duty, fraud by nondisclosure, a n d conspiracy.3 He seeks to recover for damages, including attorney's fees he incurred as a result of the criminal indictment. B re a c h of Fiduciary Duty. "Texas does not recognize a fiduciary duty or a duty of g o o d faith and fair dealing owed by an employer to an employee. City of Midland v. O 'B r y a n t, 18 S.W.3d 209, 216 (Tex.2000)." Beverick v. Koch Power, Inc., 186 S.W.3d 145, 1 5 3 (Tex. App. ­ Houston [1st Dist.] 2005, pet. denied). De Benedictis argues that Grieve o w e d him a moral "informal fiduciary duty",4 but he has cited no authority recognizing such a duty. The alleged employee - employer relationship between Grieve and De Benedictis is n o t the type of "moral, social, domestic, or purely personal" relationship that Texas law has re c o g n iz e d as giving rise to an informal fiduciary duty. Meadows v. Hartford Life Ins. Co., 4 9 2 F.3d 634, 639-40 (5th Cir. 2007). Therefore, defendants' motion to dismiss the breach o f fiduciary duty claim is granted. F r a u d by Nondisclosure. The elements of fraud are: (1) a material misrepresentation w a s made; (2) the representation was false; (3) when the representation was made, the s p e a k er knew it was false or made the statement recklessly without any knowledge of the
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The complaint (Dkt. 1) alleges no facts that state a cause of action against Jillian Grieve. The motion to dismiss her as a defendant is granted on that basis in addition to the specific reasons set forth below. Plaintiff's response, ¶ 3. 4

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tru th ; (4) the speaker made the representation with the intent that the other party should act o n it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered in ju ry . In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex.2001). The misrepresentation m a y consist of the concealment or non-disclosure of a material fact when there is a duty to d is c lo s e . Custom Leasing, Inc. v. Tex. Bank & Trust Co., 516 S.W.2d 138, 142 (Tex.1974). W h e th e r a duty exists is a question of law. Bradford v. Vento, 48 S.W.3d 749, 755 (Tex. 2 0 0 1 ). A duty to disclose may arise in four situations: (1) where there is a special or fiduciary re la tio n s h ip ; (2) where one voluntarily discloses partial information, but fails to disclose the w h o le truth; (3) where one makes a representation and fails to disclose new information that m a k e s the earlier representation misleading or untrue; and (4) where one makes a partial d is c lo s u re and conveys a false impression. Lesikar v. Rappeport, 33 S.W.3d 282 (Tex. App. ­ Texarkana 2000, pet. denied). As stated above, there was no fiduciary relationship between D e Benedictis and Grieve. De Benedictis contends that Grieve's duty to disclose arises out o f his disclosure of partial information in response to De Benedictis's inquiries about the le g a lity of Grieve's business practices. The only allegation of a misrepresentation by Grieve is contained in paragraph 4.8 of th e complaint: O n c e [sic] specific exchange occurred directly between Plaintiff and D efe n d an t Robert Grieve in January 2005, when a co-worker of the Plaintiff, e d u c ate d and licensed as an attorney and previously employed as a Federal A ss ista n t District Attorney suddenly and unexpectedly resigned his e m p l o y m e n t with the Defendants. At the time of this exchange, Defendant 5

R o b e rt Grieve vehemently denied any wrongdoing when directly asked by P la in tif f if the business was doing anything illegal. This allegation is insufficient to support a claim of fraud by nondisclosure for at least two re a so n s . First, there is nothing "partial" about Grieve's alleged vehement denial of

w r o n g d o in g . Second, the duty to disclose, to the extent one exists, extends to "material fa c ts ." A blanket denial of wrongdoing like that described above is too general and su b jec tiv e to constitute a failure to disclose a material fact. See Transport Ins. Co. v. F a irc lo th , 898 S.W.2d 269, 276 (Tex. 1995) ("Whether a statement is an actionable s ta te m e n t of "fact" or merely one of "opinion" often depends on the circumstances in which a statement is made. Among the relevant circumstances are the statement's specificity, the s p e a k er's knowledge, the comparative levels of the speaker's and the hearer's knowledge, and w h ethe r the statement relates to the present or the future."). D e fe n d a n ts also assert that De Benedicitis has not and cannot show that Grieve's a lle g e d failure to disclose caused De Benedicitis's injuries. De Benedictis alleges that if he h a d known that what Grieve was doing was illegal, he would have quit much earlier, and w o u ld never have been indicted. The only alleged misrepresentation by Grieve took place in January 2005. The in d ic tm e n t states that De Benedictis and other committed offenses "[b]eginning at a time u n k n o w n , but no later than in or about January 2004 . . ." The indictment was issued by a g ran d jury and was the result of an investigation by federal authorities. It is pure conjecture

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to say that if Grieve had been more forthcoming in January 2005, the indictment would never h a v e occurred. The court concludes that the allegations in the complaint do not state a plausible claim fo r fraud by nondisclosure. Defendants' motion to dismiss the fraud claim is granted. C o n s p ir a c y . Having dismissed the breach of fiduciary duty and fraud claims, there is no basis for De Benedictis's civil conspiracy claim. Trammell Crow Co. No. 60 v. H a r k in s o n , 944 S.W.2d 631, 635 (Tex. 1997); Meadows, 492 F.3d at 640. Thus, defendants m o tio n to dismiss the conspiracy claim is granted. C. C o n c lu s io n and Order D e fe n d a n ts' 12(b)(2) motion to dismiss is denied. Defendants' 12(b)(6) motion to d is m is s is granted. De Benedictis's claims in this case are dismissed. The court will issue a separate final judgment. S ig n e d at Houston, Texas on March 29, 2010.

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