FinishMaster, Inc. v. Richard's Paint and Body Shop, LLC et al

Filing 139

ORDER DENYING 131 Motion to Dismiss for Failure to State a Claim. Signed by Judge Andrew W. Austin. (jk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
FINISHMASTER, INC.,
Plaintiff, Counter-Defendant,

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v.
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RICHARD’S PAINT AND BODY SHOP, §
LLC D/B/A CUSTOM CAR CRAFTERS
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AND RICHARD W. WOOD,
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INDIVIDUALLY,
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Defendants, Counter-Plaintiffs,
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RICHARD’S PAINT AND BODY SHOP, §
LLC D/B/A CUSTOM CAR CRAFTERS, §
Consolidated Plaintiff,
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v.
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BASF CORPORATION AND
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FINISHMASTER, INC.,
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Consolidated Defendants,
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BASF CORPORATION,
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Consolidated Counter-Plaintiff,
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v.
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RICHARD’S PAINT AND BODY SHOP, §
LLC D/B/A CUSTOM CAR CRAFTERS, §
Consolidated Counter-Defendant.
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NO. A-11-CA-560 AWA

ORDER
Before the Court is the Consolidated Defendants’ Motion to Dismiss Count 2 of Plaintiffs’
Second Amended Complaint and to Dismiss All Claims Alleged by Plaintiff Richard Wood (Clerk’s
Doc. No. 131).

The Defendants move to dismiss the Plaintiffs’ negligence claim (count two) as barred under
two different theories: (1) the statute of limitations, and (2) the economic loss rule. The Court
previously rejected the Defendants’ statute of limitations argument contained in their motion for
summary judgment, Clerk’s Doc. No. 129 at 6–7, and their economic loss rule argument contained
in their opposition to the Plaintiffs’ motion for leave to file a second amended complaint. Clerk’s
Doc. No. 119 at 3–6. Although persistent, they are not persuasive, and the Court again rejects the
Defendants’ arguments.
I.

Statute of Limitations
Richard’s Paint and Body Shop (RPBS) does business as Custom Car Crafters (CCC), and

RPBS has filed an assumed name certificate to that effect.

However, when the lawsuit

commenced—October 20, 2010—CCC’s certificate had expired.1 Under Texas law, a company
“may not maintain in a court of this state an action or proceeding arising out of a contract or act in
which an assumed name was used until an original, new, or renewed certificate has been filed as
required by this chapter.” TEX . BUS. & COM . CODE ANN . § 71.201(a). And in this case, RPBS is
referred to as “Richard’s Paint & Body, LLC, d.b.a. Custom Car Crafters” in the contracts with the
Defendants. E.g. Defendants’ Motion Exh. 2 at 1. RPBS refiled its assumed name certificate for
CCC last month.
According to the Defendants, RPBS could not file suit for claims arising out of its contracts
entered into under CCC’s name until it had a valid assumed name certificate, which was not until
last month. And if that is the case, then RPBS’s claims are barred by the two-year statute of

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The certificate expired on October 5, 2009.
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limitations because its claims arose “before May 28, 2010, by virtue of BASF’s breach.”
Defendants’ Motion at 4.
First, it is unclear whether this rule is procedural or substantive. Under the Erie doctrine, the
Court looks to state law in determining the substantive law governing the claims, but it looks to
federal law in determining the procedural law. Hall v. GE Plastic Pacific PTE Ltd., 327 F.3d 391,
394 (5th Cir. 2003). Additionally, the statute proscribes suits “in a court of this state,” while this is
a court of the United States. Further, assuming the rule is substantive, the Texas Supreme Court has
previously allowed an entity to maintain a lawsuit under the name of its alias, even though the entity
never filed an assumed name certificate. Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 53
(Tex. 2003). The Texas Supreme Court concluded that the evidence supported the entity’s claim that
it used the alias as an assumed name; therefore, the alias’s lawsuit was effective to commence suit
on behalf of the entity. Id. at 53. And the Fifth Circuit has indicated that it “is possible for
partnerships to cure the lack of capacity [created by TEX . BUS. & COM . CODE ANN . § 71.201(a)] by
belatedly filing a certificate.” Advanced Nano Coatings, Inc. v. Hanafin, No. 10-20865, 2012 WL
1957895, at *5 (5th Cir. 2012) (per curiam). In that case, the district court recognized that a
partnership could cure the defect by filing an assumed name certificate just two weeks before trial.
Id.
For all of the reasons set forth above, the Court rejects the Defendants’ argument. Moreover,
at all times during the pendency of this lawsuit, the Defendants knew who the real parties were, and
to allow them to escape at the 11th hour on this ground would be inequitable. Because RPBS refiled
its certificate, § 71.201(a) does not bar its claims.

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II.

Economic Loss Rule
The Defendants claim that they do not “seek to reargue” the Court’s previous determination

that the economic loss rule bars RPBS’s negligence claim but bring the argument to preserve it for
appeal. Motion at 5. As the Defendants do not present new arguments and raise the issue merely
to preserve it on appeal, the Court will not regurgitate its prior analysis and will stand by its order
of June 22, 2012.
III.

Richard Wood’s Standing
Finally, the Defendants contest Richard Wood’s capacity to sue as a party in interest. This

is the first time that the Defendants have raised this argument, despite the fact that trial is only a
month away. Given this tardiness, the Court will deny the Defendants’ motion to dismiss his claims
for lack of standing without prejudice to being raised in a Rule 50 motion at the appropriate time.
III.

Conclusion
The Court HEREBY DENIES the Consolidated Defendants’ Motion to Dismiss Count 2 of

Plaintiffs’ Second Amended Complaint and to Dismiss All Claims Alleged by Plaintiff Richard
Wood (Clerk’s Doc. No. 131).
SIGNED this 18th day of July, 2012.

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ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE

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