BW Tech, LLC v. Bartell Machinery Systems, LLC

Filing 23

MEMORANDUM AND ORDER denying 19 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM (Signed by Magistrate Judge Stephen Wm Smith) Parties notified.(jmarchand, 4)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BW Tech, LLC,
Plaintiff,
v.
Bartell Machinery Systems, LLC,
Defendant/ ThirdParty Plaintiff,
v.
Bin Chen, individually,
Third-Party
Defendant.

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October 27, 2017
David J. Bradley, Clerk

CIVIL ACTION NO. 4:17-CV-01082

MEMORANDUM AND ORDER
Before the Court is plaintiff BW Tech, LLC (“BWT”) and third-party defendant
Bin Chen’s motion to dismiss. Dkt. 19. All parties consent to magistrate judge
jurisdiction. Dkt. 21. After considering the motion, responses, and law, the motion to
dismiss is denied.
Background
BWT and Bartell entered into a Sales Representative Agreement (“SRA”) whereby
BWT agreed to represent Bartell in the negotiation and sales of Bartell products. Dkt. 6 at
6. BWT filed suit against Bartell alleging Bartell breached the SRA by failing to pay
commissions contracted for under the SRA. Dkt. 1-2. Bartell filed counterclaims alleging
breach of fiduciary duty and breach of contract against BWT. Bartell contends BWT
breached the SRA by (1) failing to disclose its relationship with HAT, a party to a sales
transaction; (2) disclosing Bartell’s confidential pricing structure to HAT; (3) and failing

to assist Bartell in negotiations with HAT. Bartell also filed a third-party claim against
Bin Chen, agent of BWT, alleging he breached his fiduciary duty to Bartell in his
individual capacity. BWT and Bin Chen now bring this Rule 12(b)(6) motion to dismiss
all counterclaims against them.
Standard of Review
In reviewing a pleading under Rule 12(b)(6), the Court must accept as true “all
well-pleaded facts contained in the plaintiff’s complaint and view them in the light most
favorable to the plaintiff.” Gonzalez v. Kay, 577 f.3d 600, 603 (5th Cir. 2009). However,
only facts are entitled to an assumption of truth; legal conclusions unsupported by factual
allegations do not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). To survive a
Rule 12(b)(6) motion to dismiss, the plaintiff must plead “enough facts that state a claim
to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007). “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.” Iqbal, 556 U.S. at 678.
Analysis
BWT contends that Bartell’s allegations are insufficient because they do not allege
facts demonstrating breach of contract, specifically performance and damages, or breach
of fiduciary duty. Dkt. 19 at 3. Yet, BWT contradictorily admits that it may have
committed a “technical breach” of contract; a breach of contract that requires
performance and damages. Id. at 4.

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Bartell sufficiently plead enough facts that could lead the court to believe that
BWT is liable for the misconduct alleged. The plausibility standard “does not impose a
probability requirement at the pleading stage; it simply calls for enough fact[s] to raise a
reasonable expectation that discovery will reveal evidence [to support the cause of
action].” Bell Atlantic Corp., 550 U.S. at 556. A breach of contract claim requires (1) a
valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of
contract by the defendant; and (4) damages sustained by the plaintiff as a result of that
breach. Petras v. Criswell, 248 S.W.3d 471, 477 (Tex. App. 2008). It is clear that there
was a valid SRA between BWT and Bartell. BWT’s argument that Bartell did not allege
facts demonstrating its performance under the SRA fails because Bartell tendered
performance once it started to pay BWT’s commission. Dkt. 22 at 4. Whether BWT
breached the SRA, thus leading to Bartell’s alleged damages, will be determined at a later
date in this matter. However, Bartell has pleaded substantial facts for the breaches to be
plausible. Therefore, Bartell’s counterclaims can proceed.
Further, the pleadings sufficiently allege that both BWT and Bin Chen had a
fiduciary relationship with Bartell. Whether this relationship was breached will also be
determined at a later date.
Conclusion
For the aforementioned reasons, BWT and Bin Chen’s motion to dismiss is denied.
Signed at Houston, Texas, on October 27, 2017.

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