Omni USA Inc v. Parker-Hannifin Corporation

Filing 15

OPINION AND ORDER granting in part and mooting in part 2 Motion to Dismiss. Deft's 2 Motion for more definite statement is granted and amended complaint to be filed within 20 days. Deft's 2 Motion to Dismiss is MOOT(Signed by Judge Melinda Harmon) Parties notified.(htippen, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
OMNI USA, INC.,
Plaintiff,
VS.
PARKER-HANNIFIN CORPORATION,
Defendant.

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CIVIL ACTION H-10-4728

OPINION AND ORDER
The above referenced action alleges that Defendant ParkerHannifin Corporation (“Parker”) improperly designed, manufactured,
marketed, and serviced defective industrial oil seals sold to
Plaintiff Omni USA, Inc. (“Omni”) specifically for use in its
gearboxes as part of agricultural irrigation systems sold to a
third party.

The Original Petition (#1, Ex. B) asserts claims for

breach of express warranties, breach of implied warranties, breach
of contract, violations of the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”), Tex. Bus. & Com. Code Ann. §§
17.41-17.63

(allowing

misrepresentation),

recovery

for

fraudulent

breach

of

inducement,

warranty

and

negligent

misrepresentation, fraud, and attorney’s fees.
Pending before the Court is Parker’s motion to dismiss under
Federal Rules of Civil Procedure 12(b)(6), 8, and 9(b) and,

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alternatively, motion for more definite statement under Rule 12(e)
(instrument #2).
Standards of Review
Federal Rule of Civil Procedure 8(a)(2) provides, “A pleading
that states a claim for relief must contain . . . a short and plain
statement of the claim showing that the pleader is entitled to
relief.”

All well pleaded facts must be viewed as true, “in the

light most favorable to the plaintiff.

Lindquist v. City of

Pasadena, Texas, 525 F.3d 383, 386 (5th Cir. 2008).

The plaintiff

must allege “enough facts to state a claim to relief that is
plausible on its face.”
570 (2007).

Bell Atl. Corp. v. Twombly, 550 U.S. 544,

“Factual allegations must be enough to raise a right

to relief above the speculative level, on the assumption that all
allegations in the complaint are true (even if doubtful in fact).”
Id. at 555.

“[A] plaintiff’s obligation to provide the ‘grounds’

of his ‘entitle[ment] to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause
of action will not do.”

Id.

“Without some factual allegation in

the complaint, it is hard to see how a claimant could satisfy the
requirement of providing not only ‘fair notice’ of the nature of
the claim, but also the ‘grounds’ on which the claim rests.”

Id.

at 555, n.3. A claim has facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.
-2-

Ashcroft v. Iqbal,

U.S.

, 129 S. Ct. 1937, 1949 (2009),

citing Twombly, 550 U.S. at 556.
Fraud

claims

must

also

satisfy

the

heightened

pleading

standard set out in Federal Rule of Civil Procedure 9(b): “In
allegations

alleging

fraud

.

.

.,

a

party

must

state

with

particularity the circumstances constituting fraud or mistake.
Malice, intent, knowledge, and other conditions of a person’s mind
may be alleged generally.”

The Fifth Circuit strictly construes

the Rule and requires the plaintiff pleading fraud in federal court
“‘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.’”

Flaherty & Crumrine

Preferred Income Fund, Inc,. v. TXU Corp., 565 F.3d 200. 206-07 (5th
Cir. 2009)(quoting Williams v. WMX Techs., Inc., 112 F.3d 175, 177
(5th Cir. 1997), cert. denied, 130 S. Ct. 199 (2009)).1

A dismissal

for failure to plead with particularity as required by this rule is
treated the same as a Rule 12(b)(6) dismissal for failure to state
a claim.

Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017

(5th Cir. 1996).

1

In contrast Texas only requires the plaintiff to plead that
the defendant made “a material misrepresentation, which was false
and which was either known to be false when made or was asserted
without knowledge of the truth, which was intended to be acted
upon, which was relied upon, and which caused injury.” Dorsey v.
Portfolio Equities, Inc., 540 F.3d 333, 341 (5th Cir. 2008), quoting
Johnson & Johnson Med., Inc. v. Sanchez, 924 S.W. 2d 925, 929-30
(Tex. 1996).
-3-

Because “Rule 9(b) applies by its plain language to all
averments of fraud, whether they are part of a claim of fraud or
not,” it applies to statutory claims based on allegations of fraud.
Lone Star Ladies Inv. Club v. Schlotzky’s, Inc., 238 F.3d 363, 368
(5th Cir. 2001); Melder v. Morris, 27 F.3d 1097, 1100 n.6 (5th Cir.
1994). “Claims alleging violations of the Texas Insurance Code and
the Deceptive Trade Practices Act . . . are subject to the
requirements of Rule 9(b).”

Frith v. Guardian Life Ins. Co. of

America, 9 F. Supp. 2d 734, 742-43 (S.D. Tex. 1998).

See also,

e.g., Berry v. Indianapolis Life Ins. Co., 608 F. Supp. 2d 785, 800
(N.D. Tex. 2009); Patel v. Holiday Hospitality Franchising, Inc.,
172 F. Supp. 2d 821, 824-25 (N.D. Tex. 2001)(and cases cited
therein)(“[C]laims alleging violations of the DTPA are subject to
the requirements of Rule 9(b).”); Flowserve Corp. V. Hallmark Pump
Co., 2010 WL 2232285, *6 (S.D. Tex. Feb. 3, 2010)(same).
“[t]he

factual

identical,”

background

causes

of

of

action

.

.

.

arising

claims
under

is

Where

substantively

DTPA,

the

Texas

Insurance Code, or common law fraud must satisfy Rule 9(b), which
reaches “all cases where the gravamen of the claim is fraud even
though the theory supporting the claim is not technically termed
fraud.”

Frith, 9 F. Supp. 2d at 742, citing Berry, 608 F. Supp. 2d

at 789, 800; Hernandez v. Ciba-Geigy Corp., USA, 200 F.R.D. 285,
290-91 (S.D. Tex. 2001).

The same is true of claims for negligent

misrepresentation where the factual allegations underlying it and
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a fraud claim are the same.

Benchmark Elecs. v. J.M. Huber Corp.,

343 F.3d 719, 723 (5th Cir. 2003)(“Although Rule 9(b) by its terms
does not apply to negligent misrepresentation claims, this court
has applied the heightened pleading requirements when the parties
have not urged a separate focus on the negligent misrepresentation
claims. . . . That is the case here, as Benchmark’s fraud and
negligent misrepresentation claims are based on the same set of
alleged facts.”), citing Williams v. WMX Techs., Inc., 112 F.3d
175, 177 (5th Cir. 1997); Berry v. Indianapolis Life Ins. Co.
(“Berry II”), No. 3:08-CV-0248-B, 2010 WL 3422873, *16 (N.D. Tex.
aug. 26, 2010), citing Benchmark and Biliouris v. Sundance Res.,
Inc.,

559

F.

Supp.

2d

733,

737

(N.D.

Tex.

2008)(dismissing

negligent misrepresentation claim based on the same operative facts
as an insufficient fraud claim).
Federal Rule of Civil Procedure 15(a)(2) states, “The court
should freely give leave [to amend the pleadings] when justice so
requires.”

The decision whether to permit amendment “is entrusted

to the sound discretion of the district court.”
Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993).

Wimm v. Jack

Nevertheless, the

Fifth Circuit has commented that the term “discretion” “‘may be
misleading because Fed. R. Civ. P. 15(a) evinces a bias in favor of
granting leave to amend.’”

Mayeaux v. Louisiana Health Serv. &

Indemn. Co., 376 F.3d 420, 425 (5th Cir. 2004)(citation omitted).
“[A]bsent a ‘substantial reason’ such as undue delay, bad faith,
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dilatory motive, repeated failures to cure deficiencies, or undue
prejudice to the opposing party, ‘the discretion of the district
court is not broad enough to permit denial.’”

Id. (citation

omitted).
When a plaintiff’s complaint fails to state a claim, the court
should generally give the plaintiff at least one chance to amend
the complaint under Rule 15(a) before dismissing the action with
prejudice.

Great Plains Trust Co v. Morgan Stanley Dean Witter &

Co., 313 F.3d 305, 329 (5th Cir. 2002)(“District courts often afford
plaintiffs at least one opportunity to cure pleading deficiencies
before dismissing a case, unless it is clear that the defects are
incurable

or

the

plaintiffs

unwilling

or

unable

to

advise

amend

in

the
a

court

manner

that

that

they

will

are

avoid

dismissal.”); United States ex rel. Adrian v. Regents of the Univ.
of Cal., 363 F.3d 398, 403 (5th Cir. 2004)(“Leave to amend should
be freely given, and outright refusal to grant leave to amend
without a justification . . . is considered an abuse of discretion.
[citations omitted]”).
Federal Rule of Civil Procedure 15(a) provides in relevant
part,
A party may amend the party’s pleading once as a matter
of course at any time before a responsive pleading is
served or, if the pleading is one to which no responsive
pleading is permitted and the action has not been placed
upon the trial calendar, the party may so amend it at any
time within 20 days after it is served.
Otherwise a
party may amend the party’s pleading only by leave of

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court or by written consent of the adverse party; and
leave shall be freely given when justice so requires.
A court has discretion in deciding whether to grant leave to amend.
Foman v. Davis, 371 U.S. 178, 181 (1962).

Since the language of

the rule “‘evinces a bias in favor of granting leave to amend,” the
court must find a “substantial reason” to deny such a request.
Ambulatory Infusion Therapy Specialists, Inc. v. Aetna Life Ins.
Co., Civ. A. No. H-05-4389, 2006 WL 2521411, *3 (S.D. Tex. Aug. 29,
2006), quoting Smith v. EMC Corp., 393 F.3d 590, 595 (5th Cir.
2004), and Mayeaux v. La. Health Serv. & Indem. Co., 376 F.3d 420,
425

(5th

Cir.

2004).

Factors

for

the

court

to

consider

in

determining whether a substantial reason to deny a motion for leave
to amend include “undue delay, bad faith or dilatory motive on the
part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing
party, and futility of amendment.”

Wimm v. Jack Eckerd Corp., 3

F.3d 137, 139 (5th Cir. 1993). The court should deny leave to amend
if it determines that “the proposed change clearly is frivolous or
advances a claim or defense that is legally insufficient on its
face . . . .”

6 Charles A. Wright, Arthur R. Miller & Mary Kay

Kane, Federal Practice and Proc. § 1487 (2d ed. 1990).

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Factual Allegations of the Original Petition2
The petition asserts that in 2004 Omni met with Parker’s sales
representative Ronnie Lovett in Omni’s Houston office.

Lovett

verbally represented to Omni that Parker would be fully capable of
designing and manufacturing high quality seals for Plaintiff’s gear
boxes, which it would then sell to T-L Irrigation Company (“T&L”)
for use in its agricultural irrigation systems.
representation,

Plaintiff

manufacture the seals.

agreed

to

have

Based on this

Parker

design

and

The parties agreed that Defendant would

have final design control over the design and over manufacture of
the seals.
design

and

Lovett also represented that Parker would be able to
manufacture

a

high

quality

cartridge

seal

for

Plaintiff’s gear box that would meet or exceed the seal quality of
Omni’s competitors.
From 2005-07 Parker began supplying Plaintiff with the seals,
which Omni installed in its gear boxes and forwarded to T&L, which
then sold them to end-users. Omni made several payments to Parker,
and Parker sent several invoices to Plaintiff. On the back side of
some of these invoices was an express warranty, including the
statement “Seller warrants that the items sold hereunder shall be
free from defects in material or workmanship at the time of the

2

This action was removed from the 152nd Judicial District
Court of Harris County, Texas based on diversity jurisdiction. The
removal is not contested.
-8-

delivery,” along with purported disclaimers.

Ex. A (entitled

“Standard Terms of Sale”) to #2.
At some point after 2007, T&L notified Omni that at least some
of the gear boxes were leaking oil in the field because of a
problem in the design and/or manufacturing process of the seals.
Omni promptly notified Parker and suspended payment to Parker until
the defective design could be resolved.
Parker has disclaimed responsibility for the seal design
and/or

manufacturing

Plaintiff.

and

blamed

faulty

design

failures

on

Omni, upon information and belief, asserts that Parker

changed its materials supplier during the production of the seals
and that Parker chose and used inferior materials that directly
caused the leakage. Parker also allegedly changed the seal’s “rib”
design during the process of production, evidencing Parker’s own
testing and attempt to correct the design problems.
The petition highlights Parker’s website claims that Parker is
the “world’s leading diversified manufacturer of motion and control
technologies and systems, providing precision-engineered solutions
for a wide variety of mobile, industrial and aerospace markets” and
that “Parker seals can handle the most challenging applications
known to man.”

Ex. B.

Omni states that Parker represented

directly to it and through its website that “Parker EPS Division is
more than a seal manufacturer-–we work with you to solve problems-allowing you to get your products to market quickly and safely.”

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Omni and T&L continued to report incidents of leakage to
Parker, which later indicated that it found certain defects in the
design and proposed to correct the deficiencies, but in return it
required Plaintiff to agree to make future seal purchases from
Parker at a much higher price.
Omni’s cause of action for breach of express warranties is
based on those made by Parker’s representative(s), the invoices,
employee(s), officer(s) and/or website.
Omni also claims that Parker, a merchant as to its seals,
breached the implied warranties of merchantability and fitness for
a particular purpose in T&L’s irrigation systems.
Omni alleges that Parker materially breached their performance
contract by providing Omni with defective seals and failing to
provide adequate replacements.
Moreover Omni insists that Parker’s representations regarding
the quality of its seals and regarding its intention to provide an
adequate and fair replacement were false, misleading and deceptive
and constituted knowing violations of the DTPA, warranting up to
treble damages, in particular of the following subsections of Texas
Business & Commerce Code § 17.46(a):
misunderstanding

as

to

the

source,

(3) causing confusion or
sponsorship,

approval,

or

certification of goods or services; (5) representing that goods or
services have sponsorship, approval, characteristics, ingredients,
uses, benefits, or quantities which they do not have or that a

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person

has

a

sponsorship,

approval,

status,

affiliation,

or

connection which he does not have; (7) representing that goods or
services are of a particular style or model, if they are of
another; (9) advertising goods or services with the intent not to
sell them as advertised; and (24) failing to disclose information
concerning goods or services which was known at the time of the
transaction if such failure to disclose such information was
intended to induce the consumer into a transaction into which the
consumer would not have entered had the information been disclosed.

Omni

also

argues

that

these

false

representations

fraudulently induced it to enter into the contract.
Omni further claims that these statements were negligent
misrepresentations that were an integral part of the performance
contract between Omni and Parker, which also promised that Parker
would create and register a patent for its seal design.
Finally

Omni

alleges

fraud

in

Parker’s

false

misrepresentations, which were made with the intent that Omni would
rely on them, and Omni did rely on them to its detriment.
Parker’s Motion to Dismiss, or,
Alternatively, Motion for More Definite Statement (#2)
Parker moves for dismissal on three grounds: (1) the

alleged

misrepresentation (that Parker would be able to design a seal for
Omni’s gearbox that would exceed the seal quality of Plaintiff’s
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competitors), on which Omni’s causes of action for violations of
the Texas DTPA, fraudulent inducement, negligent misrepresentation,
and fraud are based, is not a misrepresentation of material fact
and is not actionable as a matter of law; (2) the “Standard Terms
of Sale,”3 on which Omni bases its warranty claim, limits or
prohibits many of Omni’s claims for relief, including any claim
except for the express warranty provided in the “Standard Terms of
Sale” and any remedy except for repair, replacement or refund of
the purchase price; and (3) the “Standard Terms of Sale” provides
that Ohio law governs, so the Texas DTPA claim must be dismissed
along with Omni’s claims for exemplary or treble damages under the
Texas DTPA and attorney’s fees under the Texas Civil Practice and
Remedies Code Chapter 38.
Regarding the first ground, Parker notes that the common law
fraud, DTPA, fraudulent inducement, fraudulent concealment, and
negligent misrepresentation claims are all premised on fraud,
indeed on the same allegations, and thus are subject to the
heightened pleading requirements of Rule 9(b)(who, what, when,
where

and

how

fraudulent).

Parker

argues

that

Lovett’s

representation that Parker could design and manufacture seals that
met

or

exceeded

the

quality

of

3

its

competitors

is

not

a

A copy of the Standard Terms of Sale is attached as Exhibit
A to the Original Petition, copies of which are found at #1,
Exhibit B, and #2-1 (Exhibit A). It purportedly was printed on the
reverse sides of some of Parker’s invoices.
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representation of material fact, but an opinion, or mere puffing,
and is not actionable as a matter of law under both Ohio and Texas
law.

Trenholm v. Ratcliff, 646 S.W. 2d 927, 930 (Tex. 1983)(With

limited exceptions the representation must concern a material fact;
a pure expression of opinion or puffery will not support an action
for fraud.).
9(b).

It should be dismissed for failure to satisfy Rule

Under Texas law, see, e.g., Shandong Yinguang Chem. Indus.

Joint Stock Co. v. Potter, 607 F.3d 1029 (5th Cir. 2010)(dismissing
claim of fraudulent misrepresentation for failure to meet standards
of Rule 9(b)); Heard v. Monsanto Co., No. 07-06-0402, 2008 WL
1777989 (Tex. App.-–Amarillo, Apr. 18, 2008, no pet.)(statements
not actionable because they only compared defendant’s product with
other products and claimed superiority); Autohaus, Inc. v. Aguilar,
794

S.W.

2d

459,

464

(Tex.

App.-–Dallas

1990,

writ

denied)(“Generally statements that compare one product to another
and claim superiority are not actionable misrepresentations.”);
Chandler v. Gene Messer Ford, Inc., 81 S.W. 3d 493, 499-501 (Tex.
App.--Eastland 2002, pet. denied)(salesperson’s representations
that a certain automobile was safer than a different type of
automobile were not misrepresentations of material fact or false or
misleading under the DTPA, but mere “sales talk” or “puffing”);
Cleveland Mack Sales, Inc. v. Foshee, No. 13-00-00059-CV, 2001 WL
1013393, *4-6 (Tex. App.--Houston [14th Dist.] Sept. 6, 2001, pet.
denied)(statement that plaintiff would receive a new tractor,

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typical of defendant’s tractor business, delivered to plaintiff’s
specifications, amounted to mere puffing and not actionable under
the DTPA).4

Under Ohio law, see, e.g., Cliff v. Loudenslager, No.

CA2006-01-002, 2006 WL 3186541, *3-4 (Ohio Ct. App. Nov. 6,
2006)(real estate agent’s statement that buyers were “getting a
wonderful house” was not a fraudulent misrepresentation); Akers v.
Classic Props., Inc., No. CA2003-03-035, 2003 WL 22326605, *5 (Ohio
Ct. App. Oct. 13, 2003)(subdivision brochures promoting four-foot
wide

sidewalks

to

be

“bike

and

walking

trails”

was

not

a

misrepresentation of material fact or a warranty, but mere puffing
along with other brochure representations); Dent v. Fort Motor Co.,
614 N.E.2d 1074, 1077 (Ohio Ct. App. 1992)(holding there was no
evidence of fraudulent representations or express warranties in
Ford’s

advertising

slogans,

“Built

Fun

Tough”

or

“best

in

America.”). Parker claims that Omni fails to provide any specifics
showing how the representations of Parker were misrepresentations
of material fact, e.g., how the specifications of Parker’s seals
are different from those of its competitors and/or that the sales
4

The court in Cleveland Mack, 2001 WL 1013393, *4, also noted
that in determining whether a statement is one of fact or one of
opinion involves consideration (1) of “the specificity of the
alleged misrepresentation, (2) the comparative knowledge between
the buyer and seller, and (3) whether the representation concerns
past
or
present
conditions,
or
future
considerations.
Misrepresentations concerning future conditions or performance of
a good are actionable under the DTPA.
Imprecise or vague
statements are generally considered puffing and are not actionable
under the DTPA, while statements of material fact are
actionable.”).
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representative knew the representations were false at the time he
made

them.

fraudulent

Thus

Omni’s

inducement,

claims

negligent

of

violations

of

the

DTPA,

misrepresentations

and

fraud

should be dismissed.
Moreover, sections 4 and 5 of the “Standard Terms of Sale,”
taken from back of some Parker invoices (Exhibit A to the Notice of
Removal, #1, and #2-1), in small print although capitalized in
large part, provides in relevant part:
4.
Warranty:
Seller warrants that the items sold
hereunder shall be free from defects in material or
workmanship at the time of delivery.
THIS WARRANTY
COMPRISES THE SOLE AND ENTIRE WARRANTY PERTAINING TO
ITEMS PROVIDED HEREUNDER.
SELLER MAKES NO OTHER
WARRANTY, GUARANTEE, OR REPRESENTATION OF ANY KIND
WHATSOEVER.
ALL OTHER WARRANTIES, INCLUDING BUT NOT
LIMITED TO, MERCHANTIBILITY [sic] AND FITNESS FOR A
PARTICULAR PURPOSE, WHETHER EXPRESS, IMPLIED, OR ARISING
BY OPERATION OF LAW, TRADE USAGE, OR COURSE OF DEALING
ARE HEREBY DISCLAIMED.
NOTWITHSTANDING THE FOREGOING, THERE ARE NO WARRANTIES
WHATSOEVER ON ITEMS BUILT OR ACQUIRED WHOLLY OR
PARTIALLY, TO BUYER’S DESIGNS OR SPECIFICATIONS.
5. Limitation of Remedy: SELLER’S LIABILITY ARISING
FROM OR IN ANY WAY CONNECTED WITH THE ITEMS SOLD OR THIS
CONTRACT SHALL BE LIMITED EXCLUSIVELY TO REPAIR OR
REPLACEMENT OF THE ITEMS SOLD OR REFUND OF THE PURCHASE
PRICE PAID BY BUYER, AT SELLER’S SOLE OPTION.
IN NO
EVENT SHALL SELLER BE LIABLE FOR ANY INCIDENTAL,
CONSEQUENTIAL OR SPECIFIC DAMAGES OF ANY KIND OR NATURE
WHATSOEVER, INCLUDING BUT NOT LIMITED TO LOST PROFITS
ARISING FROM OR IN ANY WAY CONNECTED WITH THIS AGREEMENT
OR ITEMS SOLD HEREUNDER, WHETHER ALLEGED TO ARISE FROM
BREACH OF CONTRACT, EXPRESS OR IMPLIED WARRANTY, OR IN
TORT, INCLUDING WITHOUT LIMITATION, NEGLIGENCE, FAILURE
TO WARN OR STRICT LIABILITY.

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Parker contends that such limitations of liability are valid
and enforceable under both Ohio and Texas law. Chemtrol Adhesives,
Inc. v. American Mfrs. Mut. Ins., 537 N.E. 2d 624, 638-40 (Ohio
1989); Collins v. Click Camera & Video, Inc., 621 N.E. 2d 1294,
1298-99 (Ohio Ct. App. 1993); Bergholtz v. Southwester Bell Yellow
pages, Inc.,

S.W. 3d

, 2010 WL 1896413, *3-4 (Tex. App.--El

Paso 2010, no pet.); Fox Elec. Co., Inc. v. ToneGuard Sec., Inc.,
861 S.W. 2d 79, 82-83 (Tex. App.--Fort Worth 1993, no pet.).

As a

result, all of Omni’s claims except the express warranty that the
items sold were free from defects in material or workmanship at the
time of delivery should be dismissed, including breach of express
warranties and breach of implied warranties. Any claim for damages
other than the purchase price of the seals must be dismissed,
including claims for “the reasonable cost of acquiring replacement
seals,

the

reasonable

cost

of

replacing

affected

parts,

the

reasonable cost of acquiring field repair kits, payments for field
labor paid to dealers, freight payments, and payments on shop labor
to reseal and/or recondition additional field repair costs” (Orig.
Pet. at p. 11).

So, too must Omni’s claims for economic damages

(benefit-of-the-bargain damages or, alternatively, out-of-pocket
damages,

including

Omni’s

additional

management

expenses

and

additional management expenses sought from Omni by T&L, lost
profits, loss of credit, and loss of goodwill (Orig. Pet. at p.
11).

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Next, Omni argues that because according to the “Standard
Terms of Sale,” Ohio law governs, those claims and remedies not
recognized by Ohio law should be dismissed, including Texas DTPA
claims.

Moreover the Ohio Deceptive Trade Practices Act does not

provide for exemplary or treble damages, although Omni seeks them
under the Texas DTPA.
Parker further insists that Omni’s petition does not contain
factual

allegations

speculation.

that

are

plausible

and

rise

above

mere

There is no allegation that the seals were defective

when delivered, but only that after 2007 some gearboxes containing
them began leaking.

While Omni asserts that “it is believed that

Omni admitted to failures in Defendant’s seal design and in the
quality control aspects of Defendant’s manufacturing process,”
Omni’s belief does not state a claim upon which relief may be
granted and its allegations fail to rise above mere speculation.
Nor does Omni adequately plead breach of contract under Ohio’s
law, asserts Parker vaguely.5

It generally asserts a performance

5

The Court is not sure specifically what Parker means. Under
Ohio law, valid contracts may be either written or oral.
Stainbrook v. Fox Broadcasting Co., No. 3:05 CV 7380, 2006 WL
3757643, *5 (N.D. Ohio Dec. 19, 2006), citing Kostelnik v. Helper,
96 Ohio St.3d 1, 3 (2002). The elements of a breach of contract
claim are similar and certainly not at odds with those under Texas
law: (1) the existence of a valid contract, (2) performance by
Plaintiff, (3) breach by Defendant, and (4) damage to Plaintiff.
Id., citing Doner v. Snapp, 98 Ohio App.3d 597, 601 (1994). For a
valid contract, plaintiff “must show ‘an offer, acceptance,
contractual capacity, consideration (the bargained for legal
benefit and/or detriment), a manifestation of mutual assent and
legality of object and of consideration.’” Id., citing Kostelnik,
-17-

contract, but fails to identify it.

Omni does not identify the

elements for a breach of contract under Ohio law or specify how the
contract was breached.

Indeed Omni’s breach of contract claim

appears to be the same as its breach of express warranty claim,
also speculative.

The claim also should be dismissed.

Alternatively, Parker request that the Court order Plaintiff
to re-plead to make a more definite statement, pursuant to Rule
12(e).
Omni’s Response (#6)
Omni recites the elements of each of its claims under Texas
law and insists that it has asserted plausible claims that meet the
requirements of federal pleading standards.
Omni also insists that the terms of the “Standard Terms of
Sale,” recently discovered on the reverse side of one of Parker’s
invoices, are only an additional basis for Omni’s claim of breach

96 Ohio St.3d at 3.
See, e.g., James M. Clifton, Inc. v.
Premillenium, Ltd., 229 S.W. 3d 857, 859 (Tex. App.-–Dallas
2007)(“The elements of a breach of contract claim are (1) the
existence of a valid contract between the plaintiff and defendant,
(2) the plaintiff performed, (3) the defendant breached the
contract, and (4) the plaintiff was damaged as a result of the
breach.”); Prime Products, Inc. v, S.S.I. Plastics, Inc., 97 S.W.3d
631, 636 (Tex. App.--Houston [1st Dist.] 2002, rev. denied)(“The
elements of a valid contract are (1) an offer, (2) an acceptance,
(3) a meeting of the minds, (4) each party’s consent to the terms,
and (5) execution and delivery of the contract with the intent that
it be mutual and binding. . . . In determining the existence of an
oral contract, the court looks to the communications between the
parties and to the acts and circumstances surrounding those
communications.”).
Both states have adopted the UCC.
-18-

of express warranties, which is not dependent on these “standard
terms,” which it dubs “the attempted modification.”

Furthermore,

any attempted modification of a contract for the sale of goods for
the price of $500 or more must satisfy the requirements of the
Statute of Frauds,6 including

that the modification be “signed by

the party against whom enforcement is sought.”

Tex. Bus. & Com.

Code § 2.209(c), § 2.201; see Enserch Corp. v. Rebich, 925 S.W. 2d
75, 83 (Tex. App.--Tyler 1996)(defining modification of a contract
as “some change in an original agreement which introduces a new or
different element into the details of the contract but leaves its
general purpose and effect undisturbed).

Omni maintains that

Parker’s attempted modification should not bind Omni because Omni
did not suggest, draft, incorporate, sign or otherwise agree to any
portion of it.

Moreover Omni notes that while Parker argues that

its liability is “limited exclusively to repair or replacement of
the items sold or refund of the purchase price paid,” Parker
attempted to undo its fault by demanding that Omni purchase
replacement seals at a higher price than the replacement cost or
refunding the purchase price without additional conditions.
There was no formal contract between the parties, but only a
performance contract, responds Omni.

6

Even if Parker’s attempted

The Statute of Frauds provides that an agreement which is
not to be performed within one year from the date of the making of
the agreement must be in writing to be enforceable. Tex. Bus. &
Com. Code Ann. § 26.01(b)(6)(Vernon 2009).
-19-

modification of the performance contract constituted additional
terms under Tex. Bus. & Com. Code § 2.207(b),7 any additional terms
that materially alter a contract drop out and do not become part of
the contract.

Tex. Bus. & Com. Code § 2.207(b)(1-2).8

7

Section 2.207, “Additional
Confirmation,” provides,

Terms

in

This Court

Acceptance

(a) A definite and seasonable expression of acceptance or
a written confirmation which is sent within a reasonable
time operates as an acceptance even though it states
terms additional to or different from those offered or
agreed upon, unless acceptance is expressly made
conditional on assent to the additional or different
terms.
(b) The additional terms are to be construed as proposals
for addition to the contract. Between merchants such
terms become part of the contract unless”
(1) the offer expressly limits acceptance to the terms of
the offer;
(2) they materially alter it; or
(3) notification of objection to them has already been
given or is given within a reasonable time after notice
of them is received.
(c) Conduct by both parties which recognizes the
existence of a contract is sufficient to establish a
contract for sale although the writings of the parties do
not otherwise establish a contract. In such case the
terms of the particular contract consist of those terms
on which the writings of the parties agree, together with
any supplementary terms incorporated under any other
provisions of this title.
8

Section 2.207(b) in relevant part provides,

The additional terms are to be construed as proposals for
addition to the contract. Between merchants such terms
become part of the contract unless:
-20-

or

has held that “delivery ticket[s] or invoice[s] [are] not documents
that [can] propose additional terms in the first place.”

Enpro

Sys. v. Namasco Corp., 382 F. Supp. 2d 874, 882 (S.D. Tex. 2005).
Omni further argues that each transaction agreed to between
the parties involved the sale of goods for the price of $50,000 or
less.

The

Texas

Business

&

Commerce

Code

imposes

added

requirements that “[i]f a contract contains a provision making the
contract or any conflict arising under the contract subject to
another state’s laws, litigation in the courts of another state, or
arbitration in another state, that provision must be set out
conspicuously in print, type, or other form of writing that is
boldfaced, capitalized, underlined, or otherwise set out in such a
manner that a reasonable person against whom the provision may
operate would notice the provision.”
273.001,

et

seq.,

§

273.002.

If

Tex. Bus. & Com. Code §
one

assumes

that

Parker’s

attempted modification of the performance contract could constitute
additional terms that were not material, all of the attempted
modification,

including

the

choice

of

law

clause,

was

not

conspicuous, but was buried in diminutive print on the reverse side
of the invoice.

“A contract provision that does not comply with §

273.002 is voidable by a party against whom the provision is sought

(1) the offer expressly limits acceptance to the terms of
the offer;
(2) they materially alter it . . . .
-21-

to be enforced.”

Tex. Bus. & Com. Code § 273.003.

Section 273.002

states, “If a contract contains a provision making the contract or
any other conflict arising under the contract subject to another
state’s laws, litigation in the courts of another state , or
arbitration in another state, that provision must be set out
conspicuously in print, type, or other form of writing that is
boldfaced, capitalized, underlined, or otherwise set out in such a
manner that a reasonable person against whom the provision may
operate would notice the provision.”

Therefore Texas law would

still govern the parties’ agreement.
Finally, should the Court determine that Omni has failed to
show a plausible claim to relief, it requests permission to amend
its pleadings.
Parker’s Reply (#9)
After repeating earlier arguments, Parker replies that if
there is no “formal contract,” Omni cannot bring a breach of
contract action and other causes of action under the Texas Business
and Commerce Code because they would be barred by the statute of
frauds.

Section 2.201(a) of the Texas Business and Commerce

Code

provides that “a contract for the sale of goods for the price of
$500 or more is not enforceable by way of action or defense unless
there is some writing sufficient to indicate that a contract for
sale has been made by the parties.”

Furthermore, Omni’s causes of

action under the Texas Business and Commerce Code Article 2 should

-22-

be dismissed if this is not a dispute regarding the sale of goods
because Article 2 only applies to a sale of goods, as opposed to a
“performance contract.”

Tex. Bus. & Com. Code § 2.102.

Parker claims that while Omni contends that the Standard Terms
of Sale are a modification to the contract that must be in writing,
Tex. Bus. & Com. Code § 2.209(c), Omni ignores that the original
contract must have been in writing, consistent with the longstanding rule that a modification to a contract required to be in
writing must also be in writing.

See, e.g., Robertson v. Melton,

115 S.W.2d 624, 626-27 (Tex. 1938); BACM 2001-1 San Felipe Rd. Ltd.
P’ship v. Trafalgar Holdings I, Ltd., 218 S.W. 3d 137, 145 (Tex.
App.--Houston [14th Dist.] 2007, pet. denied).

Yet Omni concedes

there is no written contract.9
While Omni argues that additional terms that materially alter
a contract drop out and do not become part of the contract, it has
not pled that the contract was materially altered (Omni’s Response,
¶ 15).

Section 2.2087, cited by Omni, states that such additional

terms become a party of the contract unless they materially alter
9

The Court observes that the parties need to distinguish
their claims under Texas’ adoption of Article 2 of the UCC,
embodied in the Texas Business and Commerce Code §§ 2.101, et
seq.), which governs the obligations of buyers and sellers of
goods, from claims for breach of contract under common law, as
there are different requirements for each. The UCC supersedes the
common law and to the extent that a question cannot be resolved
under the UCC, courts usually look to the common law.
Id. §
1.303(b); United Galvanizing, Inc. v. Imperial Zinc. Corp., Civ. A.
No. H-08-0551, 2011 WL 11185, *9 (S.D. Tex. Jan. 3, 2011), citing
Davidson v. FDIC, 44 F.3d 246, 253 n.7 (5th Cir. 1995).
-23-

it, but Omni’s Petition does not assert that the Standard Terms of
Sale are “additional” terms.

Moreover Omni did not recently

discover them; paragraph 8 of the petition states that Omni began
receiving them on the reverse side of invoices when it began
purchasing the seals from Parker in 2005.

Omni also bases its

breach of warranty claims on the Standard Terms of Sale according
to paragraphs 8 and 16-21, but it cannot do so if the Standard
Terms of Sale document is not enforceable.
Finally, although Omni argues that Texas Business and Commerce
Code Chapter 273 makes the choice of law provision in the Standard
Terms of Sale inapplicable, Chapter 273 applies to a contract only
if, among other things, “the contract is for the sale, lease,
exchange, or other disposition for value of goods for the price,
rental or other consideration of $50,000 or less.”
Com. Code § 273.99(1).

Tex. Bus. &

Omni has pleaded there is no formal

contract and it has demanded $758,867.24 from Parker.

Thus the

Standard Terms of Sale applies, as does the choice of law provision
in the Standard Terms of Sale.
Omni’s Supplemental Response (#10)
Omni has not only asserted a misrepresentation that Parker
characterizes as puffing, but it has also alleged that Parker, in
person and through its website, made material misrepresentations
about its proficiencies, skills, and capability to produce the
cartridge seals at issue here.

Orig. Petition, ¶ 6,7,11,29,31,32.

-24-

Omni’s claims under the Texas DTPA assert that Omni’s goods and
services did not possess the approval, characteristics, standard,
quality or grade that Parker had represented.
states,

“Defendant’s

misrepresentations

Furthermore, Omni

in

whole

encompass the lesser representations in parts.

necessarily

Omni is not suing

Parker because the seals were not the best, but because Parker
lacked the skills that it advertised.”
Omni also maintains that the original agreement between the
parties

was

a

performance

confirmed through invoices.
2.204, et seq.

between

merchants

that

was

later

Tex. Bus. & Com. Code § 2.201 and §§

Omni’s reference to a “formal contract” simply

recognized that there was no written contract.

Although Parker

claims that a modification to “a contract required to be in writing
must

also

be

in

writing,”

Parker

ignores

the

fact

that

the

agreement was one between merchants and that a written contract is
not required.

Parker fails to provide any authority that just

because a contract was modified in writing, the original agreement
had to be in writing.
Omni also argued in the alternative that the Standard Terms of
Sales’ additional terms about the choice of law were material and
would therefore drop out as a result, in response to Parker’s
contention that the choice of law provision was inconspicuous.

-25-

Moreover Parker should be estopped from arguing that there was
no agreement because it has pled that a “contract for sale was
made.”

Tex. Bus. & Com. Code § 2.201(c)(2).

Omni insists that Parker misstates its correct position that
the inconspicuous terms on the reverse side of received invoices
were additional terms.

Omni maintains that it is well settled

under Texas law that a confirmation may contain terms that were
agreed upon, but it does not confirm the additional terms that were
not agreed upon.

Tubelite v. Risic & Sons, Inc., 819 S.W. 2d 801,

804 (Tex. 1991).

The inconspicuous choice of law clause was an

additional, material term that was not agreed upon by Omni.
In contrast, Omni argues that the express warranty clause may
have been equally inconspicuous, it was an obligation promised by
Parker and not a material term to which Omni would object.

Even if

the inconspicuous express warranties dropped out of the agreement,
Omni has alleged other claims for violations of express warranties.
Orig. Pet., § 18 (express warranty through advertising and website
and Lovett).
Lastly, to Parker’s argument that the original agreement must
have been for the amount of the resulting damages alleged for §
273.002 to apply, Omni insists the Code addresses the value of the
“contract.”
Court’s Ruling

-26-

Omni relies on 4(a) of the Standard Terms of Sale (on the
reverse side of some of Parker’s invoices)10 for part of its breachof-express-warranty

claim,

while

Parker

document severely limits Omni’s remedies.

insists

rest

of

the

As a threshold matter,

because inter alia The Standard Terms of Sale, if part of the
agreement, also determines whether Texas or Ohio law governs this
action,

the

Court

initially

considers

whether

the

pleadings

establish a claim that the “Standard Terms of Sale” is part of, an
attempt to modify, or a modification of the parties’ unwritten
performance agreement and binds both.
To prove the existence of an enforceable contract, a party
must demonstrate (1) an offer, (2) acceptance of the offer, (3)
mutual assent or “meeting of the minds” about the subject matter
and the essential terms of the contract, and (4) consideration or
mutuality of obligations.

International Metal Sales, Inc. v.

Global Steel Corporation and Global Steel Corp., No. 03-07-00172CV, 2010 WL 1170218, * 7 (Mar. 24, 2010), citing Baylor Univ. v.
Sonnichsen, 221 S.W. 3d 632, 635 (Tex. 2007).
Article 2 of the Texas UCC, Section 2.204 supplements these
elements by providing that a “contract for sale of goods may be
made in any manner sufficient to show agreement, including conduct
by both parties which recognizes the existence of such a contract.”
Id., citing Tex. Bus. & Commerce Code Ann. § 2.204(a)(West 2009).
10

Exhibit A to the Original Petition, #2.
-27-

Section

2.206(a)(1)

of

the

same

Code

states

that

unless

unambiguously demonstrated otherwise, “an offer to make a contract
shall be construed as inviting acceptance in any manner and by any
medium

reasonable

in

the

circumstances.”

Id.,

also

citing

Restatement (Second) of Contracts § 24 (1981)(“An offer is the
manifestation of willingness to enter into a bargain, so made as to
justify another person in understanding that his assent to that
bargain is invited and will conclude it.”).

Thus here there was a

contract, though no writing memorializing it, once Omni ordered
seals from Parker and Parker delivered them to Omni, i.e., the
delivery constituting an acceptance through a manner or medium
reasonable under the circumstances.

Id.11

The UCC’s statute-of-frauds provision does not require a
writing where goods have been received and accepted. International
Metal Sales, 2010 WL 1170281, at *9, citing Tex. Bus. & Com. Code
Ann.

§

2.201(c)(3)(“A

contract

which

does

not

satisfy

the

requirements of Subsection (a) but which is valid in other respects
is enforceable . . . with respect to goods for which payment has
been made and accepted or which have been received and accepted
(Section 2.606).”).

See Barrington Group Limited, Inc. v. Classic

11

See also § 2.206(a)(2)(“an order or other offer to buy goods
for prompt or current shipment shall be construed as inviting
acceptance either by a prompt promise to ship or by the prompt or
current shipment of conforming or nonconforming goods.”).
The
Petition in this action fails to state how quickly after the first
or any purchase offer from Omni Parker shipped the seals, so this
section may or may not be applicable.
-28-

Cruise Holdings S. De R.L., Civ. A. No. 3:08-CV-1812-B, 2010 WL
184307,*7 (N.D. Tex.)(Section 2.201(c)(3) “provides that a contract
that does not satisfy the statute of frauds is nevertheless
enforceable ‘with respect to goods for which payment has been made
and accepted or which have been received and accepted (Section
2.606).”).
a

binding

Moreover, “an oral modification that would itself form
contract

in

the

absence

of

Statute

of

Frauds

considerations can be binding on the parties to a sale of goods
over $500 insofar has specific goods have been received and
accepted” under Tex. Bus. & Com Code § 2.201(c)(3).

Brookside

Farms v. Mama Rizzo’s, Inc., 873 F. Supp. 1029, 1033 (S.D. Tex.
1995).
Neither party indicates how many invoices were sent to Omni
and how many of those contained the Standard Terms; clearly it was
not a consistent part of a course of dealings between the two.
Moreover, whether Parker can establish that the few invoices
containing it constitute a “confirmation” of the whole agreement
under what is known as the “merchant’s exception” of Tex. Bus. &
Com. Code § 2.207(c)12 remains a question.

12

Section 2.207,
Confirmation,” provides,

“Additional

Terms

Omni’s Petition and

in

Acceptance

(a) A definite and seasonable expression of acceptance or
a written confirmation which is sent within a reasonable
time operates as an acceptance even though it states
terms additional to or different from those offered or
agreed upon, unless acceptance is expressly made
conditional on assent to the additional or different
-29-

or

Parker’s response fail to provide key facts for demonstrating
whether the Standard Terms of Sale became part of the contract or
constituted

a

modification

of

the

terms

of

the

contract

or

comprised a confirmation or terms of the contract.
In Enpro Sys., Ltd. v. Namasco Corp., 382 F. Supp. 2d 874,
876-80 (S.D. Tex. 2005), the plaintiff ordered a steel plate from
the defendant, which was delivered in a timely manner to the
plaintiff.

The defendant also sent a delivery ticket with the

order that, similar to the Standard Terms of Sale, disclaiming all
warranties, and, after the delivery, an invoice confirming the
terms of that delivery ticket. The defendant argued that the terms

terms.
(b) The additional terms are to be construed as proposals
for addition to the contract. Between merchants such
terms become part of the contract unless:
(1) the offer expressly limits acceptance to
the terms of the offer;
(2) they materially alter it; or
(3) after notification of objection to them
has already been given or is given within a
reasonable time after notice of them is
received.
(c) Conduct by both parties which recognizes the
existence of a contract is sufficient to establish a
contract for sale although the writing of the parties do
not otherwise establish a contract. In such case the
terms of the particular contract consists of those terms
on which the writings of the parties agree, together with
any supplementary terms incorporated under any other
provisions of this title.
-30-

in those writings, including limitations of liability, became part
of the contract.

The court disagreed, concluding that “the

contract formation occurred when [the defendant] accepted the offer
by shipping the steel plate, before [the plaintiff] had any
opportunity to review the ticket/invoice terms,” and “probably as
early as the moment the steel left [the defendant] for shipment to
[the plaintiff], and certainly by the time it arrived at [the
plaintiff’s]

receiving

department

.

.

enforceable contract against the other.”

.

each

party

Id. at 880.

had

an

See also

Tubelite v. Risica & Sons, Inc., 819 S.W. 2d 801, 804 (Tex.
1991)(finding that the offer and acceptance occurred before the
forms containing the additional terms (including interest charge in
the event of late payment) were sent, and holding that statements
of

account

sent

“confirmations”

after

within

delivery

the

meaning

of
of

the

goods

were

not

§

2.207);

Am.

Bus.

Information, Inc. v. Classic Uniforms, No. 04-01-00199-CV, 2002 WL
197936, * (Tex. App.--San Antonio Feb. 6, 2002)(after buyer’s faxed
proposal was a “firm offer for 30 days” and was signed by the agent
of the seller, there was a contract, and the trial court in a
breach of contract action properly excluded from evidence terms and
conditions (including limitation of liability) contained on a
reverse

side

Tubelite).

of

invoice

later

mailed

by

the

seller)(citing

Although the facts in Enpro were that the delivery

ticket “accompanied” the steel plates, the court found that the

-31-

acceptance of the shipment occurred before receipt of the ticket
and invoice.

Id. at 879-80.

See also Preston Farm & /ranch

Supply, Inc. v. Zyme Enterprises, 625 S.W. 2d 295, 299, 300 (Tex.
1982)(noting that “[c]ourts and scholars have questioned whether
[Section 2.207] can apply at all to a sale in which the goods have
already been shipped and accepted and a memorandum such as an
invoice . . . altering the terms is sent contemporaneously with or
subsequent to the shipment of goods” and finding that a monthly
statement

sent

after

the

goods

had

been

shipped

was

not

an

acceptance or written confirmation). See also Contractor’s Source,
Inc. v. Hanes Companies, Inc., Civ. A. No. 09-CV-0069, 2009 WL
6443116, *7-8 (S.D. Tex. Dec. 29, 2009)(discussing these cases and
finding that an invoice constituted neither an acceptance nor a
written confirmation within the scope of § 2.207.

Omni’s Petition

here fails to identify which invoices had the Standard Terms of
Sale on the back, and/or whether they arrived contemporaneously
with the seals or afterward, and/or whether despite the fact that
they were not always included, whether they constituted a course of
dealings that made the Standard Terms of Sale part of the alleged
agreement.
In Permian Petroleum Co. v. Pretroleos Mexicanos, 934 F.2d 635
(5th Cir. 1991), a provision for contract interest was included in
the invoices.

There the court determined that under Tex. Bus. &

Com. Code § 2.207, as a “written confirmation,” the provision

-32-

entitling defendant to the interest became part of the parties’
contract, as either part of the offer or part of the acceptance,
because the seller delivered the goods with the invoices, which
were stamped by the defendant upon receipt and the defendant never
objected to the invoice interest provision.
Omni argues that the Standard Terms of Sale on the back of
several invoices is an “attempted modification” that fails to
satisfy the Statute of Frauds.

Tex. Bus. & Com. Code § 2.209(c).

“Modification of a contract is some change in an original agreement
which introduces a new or different element into the details of the
contract, but leaves its general purpose and effect undisturbed.”
Enserch Corp. v. Rebich, 925 S.W. 2d 75, 83 (Tex. App.--Tyler 1996,
writ dismissed by agreement).

The Texas Supreme Court has opined,

Parties have the power to modify their contracts.
A
modification must satisfy the elements of a contract: a
meeting of the minds supported by consideration. Whether
a contract is modified depends on the parties’ intentions
and is a question of fact.
The burden of proving
modification rests on the party asserting modification.
[citations omitted]
Hathaway v. General Mills, Inc., 711 S.W. 2d 227, 228-29 (Tex.
19896).

To prove modification, a party must show that the other

side (1) had notice of the change and (2) accepted the change.
S.K. Apparel Mfg., Inc. v. City of Houston, No. 14-01-00554-CV,
2002 WL 1822406, *2 (Tex. App.--Houston [14th Dist.] Aug. 8, 2002),
citing Price Pfister, Inc. v. Moore & Kimmey, Inc., 48 S.W. 3d 341,
349-50

(Tex.

App.--Houston

[14th

-33-

Dist.]

2001,

pet.

denied).

Generally

for

a

valid

modification

of

a

contract

(1)

the

modification must be based on new consideration and (2) the same
degree of mutuality of minds must exist as was present for the
original contract, and all parties to the agreement must assent to
the modification.

Hill v. Heritage Resources, Inc., 964 S.W. 2d

89, 113-14 (Tex. App.--El Paso 1997, writ denied); in accord S&D
Group, Inc. v. Talamas, 710 S.W. 2d 680, 683 (Tex. App.-Corpus
Christi

1986)(A

constitutes

a

contract
new

that

is
and

agreement

modified
takes

original)(and cases cited therein).

by

mutual

consent

place

of

the

the

Under the UCC, Tex. Bus. &

Com. Code § 2.209(a), “no showing of consideration for the contract
modification is required as long as it is made in good faith.”
Enserch Corp., 925 S.W. 2d at 83; see also Allied Chemical Corp. v.
DeHaven, 752 S.W. 2d 155, 159 (Tex. App.--Houston [14th Dist.] 1988,
writ denied). The continuing mutual obligations by the parties may
furnish sufficient consideration to support a binding modified
contract.

Id.

As noted earlier, “an oral modification that would

itself form a binding contract in the absence of Statute of Frauds
considerations can be binding on the parties to a sale of goods
over

$500

insofar

as

specific

accepted” under § 2.201(c)(3).

goods

have

been

received

and

Brookside, 873 F. Supp. at 1038.

In addition, With respect to the Standard Terms of Sale, which
includes

limitations on various warranties, the Petition asserts

that it was found on the reverse side of only some invoices sent by

-34-

Parker to Omni, in diminutive (non-conspicuous) print (see Exhibit
Implied warranties13 can be expressly

A to Original Petition).

disclaimed, but the disclaimer must be in writing and conspicuous.
Tex. Bus. & Com. Code §§ 2.314, 2.315.

Whether a disclaimer is

conspicuous is a question of law for the court.
Code § 1.201(b)(10).

Tex. Bus. & Com.

A term is conspicuous if it is written so

that a reasonable person against whom it is to operate should have
noticed it.

Id.; The Hartford v. Lyndon-DFS Warranty Services,

Inc., No. 01-08-00398-CV, 2010 WL 2220443, *11 (Tex. App.--Houston
[1st Dist.] May 28, 2010). For example, language in the body of a
document can be conspicuous if it is set off from the surrounding
text by symbols or marks that draw attention to it or in larger
type than the surrounding text or in contrasting type, font, or
color.

Id.;

merchantability

id.
must

A

disclaimer
be

of

conspicuous

the

implied

and

state

warranty
the

of

word

“merchantability.” The Hartford, 2010 WL 2220443, *11, citing Tex.
13

“To prevail in a claim of breach of implied warranty of
merchantability, a plaintiff must show as follows: (1) that the
merchant sold goods to the plaintiff; (2) that the goods were
unmerchantable, that is, unfit for ordinary purposes; (3) that the
plaintiff notified the defendant of the breach; and (4) that the
plaintiff suffered injury.” The Hartford v. Lyndon-DFS Warranty
Services, Inc., No. 01-08-00398-CV, 2010 WL 2220443, *11 (Tex.
App.--Houston [1st Dist.] May 28, 2010), citing Tex. Bus. & Com.
Code § 2.314, cmt. 3 and various Texas case. To prevail on a claim
for breach of implied warranty for a particular purpose, the
plaintiff must show that “(1) the seller had reason to know any
particular purpose for which the goods were required at the time of
contracting and (2) the buyer was relying on the seller’s skill or
judgment to select or furnish suitable goods.” Id., citing Tex.
Bus. & Com. Code § 2.315.
-35-

Bus. & Com. Code § 2.316(b).

Language excluding an implied

warranty of fitness for a particular purpose must be in writing and
conspicuous.

Fieldtech Avionics & Instruments, Inc. v. Component

Control.Com, Inc., 262 S.W. 3d 813, 828 (Tex. App.–-Fort Worth
2008).

If inconspicuous, the disclaimer is ineffective.

Sections

4

and

5,

addressing

warranties

and

Id. 829.
imposing

limitations on them, are on the back side of an occasional invoice,
with apparently no reference on the front of those invoices, are
mostly in uppercase letters, in contrast to the other eleven
sections, but all sections of the Standard Terms of Sale are quite
small in size, none in bolder print than the others, and difficult
to read.
“If a contract contains a provision making the contract or any
conflict arising under the contracts subject to another state’s
laws, . . . that provision must be set out conspicuously in print,
type, or other form of writing that is boldfaced, capitalized,
underlined, or otherwise set out in such a manner that a reasonable
person against whom the provision may operate would notice the
provision.”

Section 13 of the Standard Terms of Sale, addressing

the choice of Ohio law, is not conspicuous:

it is in small print

of the same intensity as the rest of the document, is the very last
section, and is not set off by anything to suggest it is important.
That the Standard Terms of Sale appeared inconsistently on only
some invoices, Omni’s insistence that it did not assent to those

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terms, and questions relating to conspicuousness raise substantial
questions

there was a valid modification here, but Parker is free

to raise the issue.
Until these issues regarding the relationship of the Standard
Terms of Sale to the parties’ performance contract are adequately
pleaded and ultimately resolved, the applicability of those terms
to the parties’ dispute cannot be determined. Moreover, before the
Court would rule on such matters, it would require more information
as indicated supra and a clearer copy of the Standard Terms of
Sale.
The court otherwise addresses the arguments in the order they
were made by Parker’s motion to dismiss.
First, it agrees with Parker, as indicated supra in its
Standards of Review section, that Omni’s claims for common law
fraud,14 the DTPA,15 fraudulent inducement,16 fraudulent concealment17

14

To plead fraud under Texas law, moreover, a plaintiff must
allege, with supporting facts giving rise to a plausible claim, (1)
a material misrepresentation; (2) the representation was false; (3)
when the representation was made, the speaker knew it was false or
made it recklessly without knowledge of the truth and as a positive
assertion; (4) the speaker made the representation with the intent
that the other party should act upon it; (5) the party acted in
reliance on the representation; and (6) the party thereby suffered
injury. In re FirstMerit Bank, 52 S.W. 3d 749, 758 (Tex. 2000).
15

The DTPA gives consumers a cause of action for a defendant’s
false, misleading, or deceptive acts or practices. Tex. Bus. &
Com. Code § 17.50(a)91).
To state a claim under the DTPA a
plaintiff must allege that (1) plaintiff is a consumer, (2)
defendant engaged in false, misleading or deceptive acts, and (3)
these acts constitute a producing cause of the consumer’s damages.
Doe v. Boys Club of Greater Dallas, Inc., 907 S.W. 2d 472, 478
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(Tex. 1985). To be a “consumer” under the Act, the plaintiff must
be “an individual . . .
who seeks or acquires by purchase or
lease, any goods or services . . . .” Tex. Bus. & Com. Code §
17.45(4). Whether a party is a consumer is a question of law.
Marketic v. U.S. Bank Nat’l Ass’n, 436 F. supp. 2d 842, 854 (N.D.
Tex. 2006).
To state a claim under the DTPA, “the goods or
services purchased or leased must form the basis of the complaint.”
ShermanSimon Enters., Inc. v. Lorac Serv. Corp., 724 S.W. 2d 13, 15
(Tex. 1987).
16

Fraudulent inducement “is a particular species of fraud that
arises only in the context of a contract, and the elements of fraud
must be established as they relate to the agreement between the
parties.” Haase v. Glazner, 62 S.W. 3d 795, 798-99 (Tex. 2001).
Thus to state a claim for fraudulent inducement a plaintiff must
allege that a false material misrepresentation was made that (1)
was either known to be false when made or was asserted without
knowledge of the truth, (2) was intended to be relied upon, (3) was
relied upon, and (4) caused injury. Formosa Plastics Corp. USA v.
Presidio Eng’rs & Contractors, Inc., 960 S.W. 2d 41, 47 (Tex.
1998). “Failing to disclose information is equivalent to a false
representation only when particular circumstances impose a duty on
a party to speak, and the party deliberately remains silent.” In
re Int’l Profit Assocs., Inc., 274 S.W. 3d 672, 678 (Tex. 2009),
citing Bradford v. Vento, 48 S.W. 3d 749, 755 (Tex. 2001). Whether
a duty to speak exists is a question of law. Bradford, 48 S.W. 3d
at 755.
A contractual promise made with no intention of
performing, indeed with an intent to deceive, may give rise to a
fraudulent inducement claim. Tony Gullo Motors I, LP v. Chapa, 212
S.W. 3d 299, 304 (Tex. 2006); Formosa, 960 S.W. 2d at 48' Spoljaric
v. Percival Tours, Inc., 708 S.W. 2d 432, 434 (Tex. 1986).
17

For a claim of fraud by nondisclosure or fraud by omission,
a plaintiff must show (1) the defendant failed to disclose facts to
the plaintiff when the defendant had a duty to disclose such facts;
(2) the facts were material; (3) the defendant knew of the facts;
(4) the defendant knew that the plaintiff was ignorant of the facts
and did not have an equal opportunity to discover the truth; (5)
the defendant was deliberately silent and failed to disclose the
facts with the intent to induce the plaintiff to take some action;
and (6) the plaintiff suffered injury as a result of acting without
knowledge of the undisclosed facts. Horizon Shipbuilding, Inc. v.
Blyn II Holding, LLC, 324 S.W. 3d 840, 850 (Tex. App.--Houston [14th
Dist.] 2010, no pet.). Plaintiff must also show that he relied on
the omission or concealment. Schlumberger Tech. Corp. v. Swanson,
959 S.W. 2d 171, 181 (Tex. 1997).
As indicated above, on a
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and negligent misrepresentation18 are based on the same allegations
of fraud and are thus subject not only to the plausible claim
standard of Rules 8 and 12(b)(6), requiring sufficient facts to
support the elements of each claim, but to the heightened pleading
requirements of Rule 9(b), specifically identifying who made the
false representation, what was said, when, where, and how it was
fraudulent, as set out in the Standards of Review section of this
Opinion and Order.

Omni has clearly not satisfied the standard

under either Rules 12(b)(6) or 9(b).

fraudulent nondisclosure claim, the plaintiff must show that the
defendant owed a duty to speak or disclose information. Bradford
v. Vento, 48 S.W. 3d at 755; Spoljaric, 708 S.W. 2d at 435 (“When
the particular circumstances impose on a person a duty to speak and
he deliberately remains silent, his silence is equivalent to a
false representation.”).
18

To state a claim for negligent misrepresentation a plaintiff
must assert (1) that the representation was made by a defendant in
the course of his business or in a transaction in which the
defendant has a pecuniary interest; (2) the defendant supplied
“false information” for the guidance of others in their business;
(3) the defendant did not exercise reasonable care or competence in
obtaining or communicating the information; and (4) the plaintiff
suffered a pecuniary loss by justifiably relying on the
F.
representation. Biggers v. BAC Home Loans Servicing, L.P.,
Supp. 2d
, No. 3:10-CV-1182-D, 2011 WL 588059, *7-8 (N.D. Tex.
Feb. 10, 2011), citing Fed. Land Bank Ass’n v. Sloane, 825 S.W. 2d
439, 442 (Tex. 1991)(approving definition in Restatement (Second)
of Torts § 552B (1977)).
Rule 9(b) can apply to a claim for
negligent misrepresentation where the fraud and negligent
misrepresentation claims are sufficiently intertwined, where the
allegations of both are not clearly separate, and where a simple
redaction cannot remove allegations of fraud so that a valid and
intelligible negligent misrepresentation claim remains intact.
Lone Star, 594 F. Supp. 2d at 387 n.3.; Biliouris, 559 F. Supp. 2d
at 737; In re Enron Corp. Securities, Derivative & “ERISA” Litig.,
540 F. Supp. 2d 843, 827 (S.D. Tex. 2007).
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Moreover

the

Court

also

concurs

with

Parker

that

its

representative Lovett’s statement that Parker could design and
manufacture

seals

that

met

or

exceeded

the

quality

of

its

competitors is not a representation of material fact, but an
opinion, or mere puffing, and is not actionable as a matter of law
under both Ohio and Texas law. Autohaus, 794 S.W. 2d at 464
(“Generally, statements that compare one product to another and
claim superiority

[such as the Mercedes automobile is the best

engineered

in

car

misrepresentations.”).

the

world]

are

not

actionable

So, too, are Parker’s website claims that

Parker is the “world’s leading diversified manufacturer of motion
and

control

technologies

and

systems,

providing

precision-

engineered solutions for a wide variety of mobile, industrial and
aerospace

markets,”

that

“Parker

seals

can

handle

the

most

challenging applications known to man,” and that “Parker EPS
Division is more than a seal manufacturer-–we work with you to
solve problems--allowing you to get your products to market quickly
and safely.”

Autohaus, 794 S.W. 2d at 462 (“One consideration in

determining whether a statement is puffing or opinion is the
specificity of the statement.

Imprecise or vague representations

constitute mere opinions.”).
In Holland the court explained what is established law in
Texas,
Whether a statement is an actionable statement of “fact”
or merely one of “opinion” often depends on the
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circumstances in which a statement is made. Among the
relevant circumstances are the statement’s specificity,
the speaker’s knowledge, the comparative levels of the
speaker’s and listener’s knowledge, and whether the
statement relates to the present or the future.
2011 WL 3157148, *7, citing inter alia Trenholm,646 S.W. 2d at 930.
An opinion may even be actionable if (1) it is “intertwined” with
direct representations of present facts”; (2) “the speaker had
knowledge of its falsity”; (3) it is based on past or present
facts”; or (4) the speaker has “special knowledge of facts that
will occur or exist in the future.”
31.

Trenholm, 646 S.W. 2d at 930-

Omni fails to provide any such details about the context of

the fraudulent representations it alleges.
The Court has indicated where Omni’s Petition fails to state
a claim or provides insufficient information to determine whether
it has a viable claim.
Because the Court finds no “undue delay, bad faith or dilatory
motive on the part of [Omni], repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the opposing
party, and futility of amendment” under Federal Rule of Civil
Procedure 15(a) here, the Court
ORDERS that Parker’s motion for more definite statement (#2)
is GRANTED and Omni is GRANTED LEAVE to file an amended complaint
within twenty days of entry of this order.
timely response.

Parker shall file a

Parker’s motion to dismiss (#2) is MOOT.

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SIGNED at Houston, Texas, this

28th

day of

June , 2011.

___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE

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