BancPass, Inc. v. Highway Toll Administration, LLC

Filing 143

ORDER GRANTING IN PART AND DENYING IN PART 84 Motion for Traditional Summary Judgment; GRANTING IN PART AND DENYING IN PART 86 Motion for Partial Summary Judgment and Rule 12(c) Motion to Dismiss. Signed by Judge Sam Sparks. (td)

FILED
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXA
AUSTIN DIVISION

25 Ml

CY .........

BANCPASS, INC.,

yV

9:

13

..-----

Plaintiff,
Case No. A-14-CA-1062-SS
HIGHWAY TOLL ADMINISTRATION, LLC,
Defendant.

ORDER
BE IT REMEMBERED on the 29th day of July 2016 the Court held a hearing in the

above-styled cause, and the parties appeared by and through counsel. Before the Court are

Plaintiff BancPass, Inc.'s Motion for Partial Summary Judgment and Rule 12(c) Motion to
Dismiss Defendant's Requests for Declaratory Relief Counts I, II, and III [#86], Defendant

Highway Toll Administration, LLC's Response [#91] thereto, and Plaintiff's Reply [#98] in
support; and Defendant's Motion for Traditional Summary Judgment on Plaintiff's Claims and

Partial Summary Judgment on Defendant's Counterclaim [#84], Plaintiffs Response [#92]
thereto, and Defendant's Reply [#99] in support.

Having considered the documents, the

governing law, the arguments of the parties at hearing, and the case file as a whole, the Court

now enters the following opinion and orders.

Background
This is a defamation and declaratory judgment action involving competing providers of

electronic highway toll payment technologies. Plaintiff BancPass, Inc. is the creator of PTo11, a

-1-

V

toll-payment smartphone application; Defendant Highway Toll Administration, LLC (HTA), a
private New York limited liability company, is the largest provider of toll processing services to

the rental car industry. According to BancPass, on the eve of PToll' s debut, HTA successfully

thwarted the PTo11 rollout by disseminating defamatory letters about BancPass and PTo11. HTA
denies BancPass's defamation allegations and claims the PToll app tortiously interferes with its
contractual rights.
I.

Facts
Traditionally, state tolling authorities collected tolls from drivers via cash collection

booths stationed along toll roads. Today, however, many tolling authorities, including the Texas
Department of Transportation (TxDOT), collect tolls either partially or entirely through the use

of electronic tolling lanes. When a driver drives through an electronic tolling lane, the state
tolling authority generally collects the toll from the driver in one of two ways: via a "toll tag," a

windshield-mounted transponder device pre-purchased by the driver that automatically deducts
the toll from the driver's pre-paid account, or, by photographing the vehicle's license plate, using
that photograph to identif' the vehicle's registered owner, and then mailing the registered owner
a bill for the toll.
This system creates an obvious administrative problem when the driver using the toll

road is driving a rented vehicle, lacks a state-specific toll tag, and cannot pay cash, either
because the toll road is not equipped to receive cash payments or for personal reasons.
Electronic toll processing companies like BancPass and HTA solve this problem by registering
the license plate numbers of particular rental vehicles to their "fleets," paying the tolling

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authority directly for tolls incurred by those vehicles, and then billing the rental car customers for
the cost of their accrued tolls plus a fee for their services.
HTA processes tolls in this manner for approximately 3.7 million rental cars across the

nation, the license plates of which are registered to HTA's fleet. Its two primary customers are
Avis Budget Group, Inc. (Avis) and Enterprise Holdings, Inc. (Enterprise), which operate the
rental car brands Avis Car Rental, Budget Car Rental, Payless Car Rental, Enterprise Rent-ACar, National Car Rental, and Alamo Rent a Car. Both Avis and Enterprise executed service

agreements with HTA in which they agreed HTA would be their exclusive provider of electronic
toll processing services.

See

DeL's Mot. Summ. J. [#84-1] Ex. A (Avis Service Agmt.) at ¶ 6

("During the term, [Avis] shall not obtain from any other party, nor shall it provide on its own

behalf or account, any electronic tolling collection services[.]");

Id. [#84-2] Ex. B

(Enterprise

Service Agmt.) at ¶ 12 ("The parties hereby acknowledge and agree that HTA shall be the
exclusive provider to Enterprise and its affiliates

.

. .

of all ETC [Electronic Toll Collection]

services[.]").
Avis and Enterprise, of course, require their customers to sign a rental agreement before

turning over the keys to a rental car. Avis rental agreements contain the following provisions
concerning electronic toll processing services:
c-Toll. If you do not pay cash for tolls or the roadway does not accept cash
payment you automatically opt into our e-Toll service, pursuant to which you
agree to pay us or our toll program administrator. . . for all tolls incurred during
your rental and all related fees, charges and penalties. . . . You can avoid the. .
fee[s] and any other charges by paying the toll in cash, using your electronic toll
device, or avoiding any cashless toll road or passage.

Def.'s Mot. Summ. J. [#84-3] Ex. C (Avis Rental Agmts.) at

3

¶ 16,

5

¶ 16,

7

¶ 16. Enterprise

rental agreements also contain provisions related to electronic toll processing services:

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Optional Charges. The optional Tollpass Service accepted by Renter provides for
the daily rental of a toll collection transponder or, in some states, the use of videomonitored toll collection services. In addition to the daily charge for the Tollpass
Service, [Enterprise], its affiliate or a third party may separately charge . . . for
each toll (or other charge) incurred using the transponder or video monitored

service.
Renter shall pay [Enterprise], its affiliates or agents . . . [a] Tolipass Convenience
Charge (TCC) . . . for each day Vehicle is operated on a TCC Covered Road and
Vehicle operator does not pay an applicable toll.
Id. [#84-4] Ex. D (Enterprise Rental Agmts.) at 4 ¶ 3(b)(5), (c)(4); 8 ¶ 3(b)(5), (c)(4);

10I 3(b)(5), (c)(5).'
BancPass is a direct competitor of HTA in the electronic toll processing space. A user of
the PToll app can pay tolls incurred while driving any vehicle simply by downloading the app,

using it to take a photograph of the vehicle's license plate, entering the dates he or she will be
driving the vehicle, and providing a credit card number. Using the license-plate photo, BancPass

registers the vehicle to its fleet, pays the tolling authority for the user's tolls, and then charges the

user's credit card.
BancPass released PTo11 in April 2014 and subsequently announced it would officially

launch the app by offering it for free to all attendees of the September 2014 International Bridge,
Tunnel and Turnpike Association (IBTTA) national conference, the most influential annual

conference in the tolling

industry.2

In July 2014, however, HTA learned BancPass customers

could use PTo11 to pay tolls incurred in vehicles rented from Avis and Enterprise brands. Upon

The language of the Alamo-brand rental agreement is slightly, immaterially different: "The optional
Tolipass service accepted by Renter provides for the daily rental of a toll collection transponder . . . or, in some
states, the use of video-monitored toll collection services . . . Renter shall pay [Enterprise], its affiliates or agents
[a] Tollpass convenience charge (TCC) . . for each day Vehicle is operated on a Tollpass Automatic Service
covered road and Vehicle operator does not pay an applicable toll." Enterprise Rental Agmts. at 10 ¶ 3(b)(5), (c)(5).
.

.

2

"The [IBTTA] is the worldwide association representing toll facility owners and operators and the
businesses that serve them." About Us, IBTTA, http://www.ibtta.org/about-us.

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learning this information, HTA took several steps which together kept BancPass from
successfully launching PToll at the IBTTA conference.
First, on August 13, 2014, HTA wrote a letter to TxDOT "express[ing] [its] concern with
the actions recently undertaken by

. . .

BancPass," and particularly with BancPass's "concerted

effort recently to register with TxDot [sic] the license plates of vehicles owned by other parties,

namely the rental agencies." Def.'s Resp. [#84-7] Ex. G (TxDOT Letter) at 3. The letter further
informed TxDOT that HTA would be "work[ing] with the rental agencies and

.

.

.

outside

counsel to take any and all legal actions necessary to protect [its] rights[.]" Id. After receiving
the letter, TxDOT withdrew its necessary support for

properly in time for the conference.
Email) at

1

See

Pl.'s

PTo11,3

rendering PTo11 unable to function

Mot. Summ. J. [#86-12] Ex. J (Sept. 2, 2014

(forwarded message from TxDOT Toll Operations Division employee confirming

"[t]he 'PTo11' app will not be available for IBTTA attendees during the September 2014
conference").
Second, HTA wrote letters to both Apple and

Googlethe two platforms via which

smartphone users can search for and purchase smartphone apps, including PTollrequesting
they remove PTo11 from the App Store and Google Play, respectively.
-10] Exs. I, J (Apple/Google Letters).

See

DeL's Resp. [#84-9,

The letters, which were sent by HTA's then-counsel

Kronenberger Rosenfeld, LLP and are substantially identical, state in pertinent part:
Re:

Illegal PToll App by BancPass [...]

{T]he express purpose

of [PToll] is to permit users to circumvent the highway toll

transponders installed in rental cars, and the associated fees. In order to do so,
While not entirely clear from the pleadings, it appears the proper functioning of PToll depended upon
TxDOT's willingness, at least at that time, to prioritize BancPass's fleet account differently, such that tolls incurred
by vehicles with license plates registered both to BancPass and another entity would be charged to BancPass. See
Pl.'s Mot. Summ. J. [#86-10] Ex. H (Deitiker Rep.) at 5. It is not clear if a change in the prioritization order has
since occurred or remains necessary for PTo11 to properly function.

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users are required to assist in the violation of state vehicle registration
laws.... Many users of [PToII] probably do not realize that they are engaging in
illegal conduct simply by using the App. [...]
PTo11

[Using PToll] is in violation of the laws of most (if not all) states prohibiting false
statements to the State Authorities in conjunction with the registration of a vehicle
By misrepresenting, or assisting BancPass in
or license plate. . . .
misrepresenting, that a particular rental car and its license plate are part of
BancPass's fleet when, in fact, they are not, PTo11 App users are unwittingly
committing a felony.

The sale of [PTo11] in [the App Store/Google Play] gives it an air of legitimacy.
Accordingly, such sale is intentionally deceptive and unfairly induces users of
[PT011] to participate in BancPass's unlawful schemes in violation of Section
17200 of the California Business and Professions Code. [...]
BancPass is intentionally interfering with the contract between the Rental
Agencies and drivers to pay for all tolls using the technology installed in the
vehicle. . . . By offering [PToll] in [the App Store/Google Play], [Apple/Google]
is facilitating this tortious conduct.
Through [PTo11], BancPass is illegally amassing a fleet list of cars it does not
own. . . . BancPass' s amassing of such a list. . . raises other privacy and ethical
concerns. The bottom line, however, is that BancPass is requiring users of the
PToI1 app to help it break the law. Accordingly, the PToI1 app should be removed
from [the App Store/Google Play].
Id. After receiving this letter, Google temporarily removed PToll from the Google Play store on

October 6, 2014.

See

Pl.'s

Mot. Summ. J. [#86-13] Ex. K (Oct. 7, 2014 Email) at 2. Apple did

not respond to HTA's letter.

II.

Procedural History
BancPass initiated this action on October 29, 2014, by filing its Original Petition in the

98th Judicial District Court of Travis County, Texas.

See

Notice Removal [#1-4] Ex. A-i (Orig.

Pet.). In the Original Petition, BancPass raised claims for: (1) tortious interference with contract

and prospective business relations; (2) a declaratory judgment PTo11 does not tortiously interfere

with HTA' s contracts; and (3) a declaratory judgment any agreement not to market PToll to
rental car users would violate the Sherman Act. See Id. ¶J 24-42.

HTA removed the case to this Court on November 24, 2014, invoking the Court's
diversity and federal question jurisdiction, see id. [#1]

¶J

5-9, and subsequently filed a motion to

dismiss BancPass's original petition, which the Court denied on December 17, 2014, see Order

of Dec. 17, 2014 [#9]. HTA counterclaimed on April 22, 2015, seeking declaratory relief
negating BancPass's claims. See generally Countercl. [#12]. BancPass filed its First Amended

Complaint on September 3, 2015, adding a cause of action for defamation.

See First Am.

Compi. [#27] ¶J 25-29.

Following additional motions practice, on December 2, 2015, HTA filed its First
Amended Counterclaim, the presently operative counter-pleading. See First Am. Countercl.
[#47]. In its First Amended Counterclaim, HTA seeks: (1) a declaratory judgment it did not

tortiously interfere with BancPass' s contracts with Google or Apple; (2) a declaratory judgment
its contracts with car rental agencies do not tortiously interfere with BancPass' s contracts with its

customers; (3) a declaratory judgment it has not violated the federal or Texas antitrust laws; and
(4) a declaratory judgment that the PTo11 app tortiously interferes with HTA' s current and

prospective contracts. See id.

¶J

16-43.

On January 6, 2016, BancPass filed its Second Amended Complaint, the currently

operative pleading. See Second Am. Compl. [#50]. The Second Amended Complaint brings
only two claims: first, a claim for defamation, and second, a claim seeking declaratory relief

concerning tortious interference with HTA' s contracts. See

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Id. ¶J

26-39.

Following an extension of the dispositive motions deadline from May 2, 2016 to June 16,
2016, see Order of Apr. 18, 2015 [#58], and litigation of several discovery and pre-trial motions,

see Order of June
dismiss.

1,

2016 [#80], the parties filed their motions for summary judgment and to

Shortly thereafter, the parties filed additional discovery motions, which the Court

referred to the United States Magistrate Judge for decision. See Order of July 26, 2016 [#108].
While the additional discovery motions were pending, the parties briefed their motions for
summary judgment and to dismiss, which are now ripe for decision.

Analysis
I.

Legal Standard

A.

Motion to DismissRule 12(c)
Federal Rule of Civil Procedure 12(c) provides: "After the pleadings are

early enough not to delay triala party may move for judgment on the pleadings."
P. 12(c). Motions for judgment on the pleadings are "designed to dispose

closedbut
FED.

R.

Civ.

of cases where the

material facts are not in dispute and a judgment on the merits can be rendered by looking to the
substance of the pleadings and any judicially noticed facts." Great Plains Trust Co.

v.

Morgan

Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002) (internal quotation marks

omitted). "A motion for judgment on the pleadings under Rule 12(c) is subject to the same

standard as a motion to dismiss under Rule 12(b)(6)." Doe v. MySpace, Inc., 528 F.3d 413, 418
(5th Cir. 2008).
A motion under Federal Rule of Civil Procedure 12(b)(6) asks a court to dismiss a

complaint for "failure to state a claim upon which relief can be granted."

FED.

R.

CIV. P.

12(b)(6). In deciding a motion to dismiss under 12(b)(6), a court generally accepts as true all

factual allegations contained within the complaint.

Leatherman

v.

Tarrant Cnty. Narcotics

Intelligence & Coordination Unit, 507 U.S. 163, 164 (1993). However, a court is not bound to
accept legal conclusions couched as factual allegations. Papasan

v.

A/lain, 478 U.S. 265, 286

(1986). Although all reasonable inferences will be resolved in favor of the plaintiff, the plaintiff

must plead "specific facts, not mere conclusory allegations." Tuchman v. DSC Commc 'ns Corp.,
14 F.3d 1061, 1067 (5th Cir. 1994). The

plaintiff must plead sufficient facts to state a claim for

relief that is facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell At!. 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. Although a plaintiffs factual allegations
need not establish the defendant is probably liable, they must establish more than a "sheer

possibility" that a defendant has acted unlawfully. Id. Determining plausibility is a "contextspecific task," that must be performed in light of a court's "judicial experience and common
sense." Id. at 679. In deciding a motion to dismiss, courts may consider the complaint, as well
as other sources courts ordinarily examine when ruling on Rule

1

2(b)(6) motions to dismiss,

such as documents incorporated into the complaint by reference, and matters of which a court

may take judicial notice. Tel/abs. Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007).
B.

Motion for Summary Judgment
Summary judgment shall be rendered when the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter of law.
Celotex Corp.

v.

Catrett, 477 U.S. 317, 323-25 (1986); Washburn

v.

FED. R.

Civ. P. 56(a);

Harvey, 504 F.3d 505, 508

(5th Cir. 2007). A dispute regarding a material fact is "genuine" if the evidence is such that a

reasonable jury could return a verdict in favor of the nonmoving party. Anderson

v.

Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the

court is required to view all inferences drawn from the factual record in the light most favorable
to the nonmoving party. Matsushita Elec. Indus. Co.

v.

Zenith Radio, 475 U.S. 574, 587 (1986);

Washburn, 504 F.3d at 508. Further, a court "may not make credibility determinations or weigh

the evidence" in ruling on a motion for summary judgment. Reeves

v.

Sanderson Plumbing

Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support

the nonmoving party's case, the party opposing the motion must come forward with competent

summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at
586. Mere conclusory allegations are not competent summary judgment evidence, and thus are

insufficient to defeat a motion for summary judgment. Turner
476 F.3d 337, 343 (5th Cir. 2007).

v.

Baylor Richardson Med. Ctr.,

Unsubstantiated assertions, improbable inferences, and

unsupported speculation are not competent summary judgment evidence.

The party

Id.

opposing summary judgment is required to identify specific evidence in the record and to
articulate the precise maimer in which that evidence supports his claim. Adams

v.

Travelers

Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006). Rule 56 does not impose a duty on the

court to "sift through the record in search of evidence" to support the nonmovant's opposition to
the motion for summary judgment. Id.

"Only disputes over facts that might affect the outcome of the suit under the governing
laws will properly preclude the entry of summary judgment."

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Anderson, 477 U.S. at 248.

Disputed fact issues that are "irrelevant and unnecessary" will not be considered by a court in
ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing
sufficient to establish the existence of an element essential to its case and on which it will bear
the burden of proof at trial, summary judgment must be granted.

II.

Celotex,

477 U.S. at 322-23.

Application
At this stage of the proceedings, there are two primary areas of dispute between the

parties: first, whether HTA defamed BancPass by sending the above-described letters to Apple,
Google, and TxDOT; and second, whether BancPass's PToll app tortiously interferes with the
contracts between (a) HTA and the rental car companies, (b) the rental car companies and their

customers, or (c) HTA and TxDOT. Despite the relative simplicity of this posture, the parties'
motions are complex and at times internally inconsistent, making it difficult to ascertain the

specific contours of their respective requests for relief. The parties do not even agree on what
claims are presently live and ripe for decision.

See

Def.'s Resp. [#91] at 15 n.20; Pl.'s Reply

[#98] at 7 n.6.

For the sake of clarification, the claims raised by the parties' pleadings are as follows. In
its Second Amended Complaint, BancPass raises (1) a defamation claim (Count I) and (2) a

claim seeking a declaration that PTo11 does not tortiously interfere with (a) HTA's contracts with

Avis and Enterprise, (b) the rental agreements between Avis and Enterprise and their customers,
or (c) the agreement between HTA and TxDOT (Count II).

See

Second Am. Compi. [#50] ¶J 34,

37. In its First Amended Counterclaim, HTA brings claims seeking declarations that: (1) HTA

did not tortiously interfere with BancPass's contracts with Google or Apple (Count I); (2) HTA's

contracts with Avis and Enterprise, as well as the rental agreements between Avis, Enterprise,

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and their customers, "do not interfere with BancPass's ability to contract with customers"

through PTo11 (Count II); (3) HTA has not violated federal or state antitrust law (Count III); and
(4) PToll tortiously interferes with HTA' s current or prospective contracts or contracts to which

HTA is a third-party beneficiary (meaning the rental agreements between Avis, Enterprise, and
their customers) (Count IV).
As the Court understands the pending motions for summary judgment, the following

issues are ripe for decision: (1) whether Counts I, II, and III of HTA's counterclaims should be

dismissed; (2) whether HTA is entitled to summary judgment on BancPass's defamation claim;
(3) whether either party is entitled to summary judgment on the question whether PTo11

tortiously interferes with the agreements between Avis, Enterprise, and their customers; and
(4) whether BancPass is entitled to summary judgment on the question whether PToll tortiously

interferes with HTA's contracts with Avis and

Enterprise;4

and (5) whether BancPass is entitled

to summary judgment on the question whether PTo11 tortiously interferes with the agreement

between HTA and TxDOT.5
The Court addresses these matters in turn.
A.

Counts I, II, and III of HTA's Counterclaims
BancPass moves for dismissal of Counts I, II, and III of HTA's counterclaims, arguing

none of the issues raised in these requests for declaratory relief "relate to any present case or

controversy between the parties identified in the parties' pleadings." Pl.'s Mot. Summ. J. [#86]
at 20.

The Court rejects BancPass's argument.

See section II.D,

As HTA points out, it asserted these

infra.

During hearing on the parties' motions, the Court orally ruled from the bench that PTo11 does not
constitute tortious interference with any of the relevant contracts as a matter of law, and thus explains those oral
rulings fully in this opinion.

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counterclaims for declaratory relief based on the claims for declaratory relief BancPass raised in
its original and first amended complaint. BancPass answered the amended counterclaims on

January 21, 2016.

See

Answer Countercls. [#53]. That BancPass subsequently amended its

pleadings to drop its own claims for declaratory relief related to antitrust and HTA' s alleged

tortious interference with BancPass's contracts did not require HTA to drop its properly pleaded
counterclaims. BancPass's motion to dismiss is therefore DENIED.
B.

Defamation
HTA argues it is entitled to summary judgment on BancPass's defamation claim because

its letters to TxDOT, Apple, and Google (1) were absolutely privileged because they were made

preliminarily to a proposed judicial proceeding and (2) express a legal opinion and therefore
cannot be false statements of fact. Additionally, HTA argues BancPass is barred as a matter of
law from seeking exemplary damages because it did not ask HTA to retract the allegedly

defamatory statements with 90 days after making

them.6

As set forth below, the Court finds

BancPass may not seek exemplary damages in connection with the TxDOT letter. In all other

respects, HTA's arguments must be rejected.
i.

Absolute privilege

Texas law recognizes two classes of privilege applicable to defamation suits: absolute
privilege and conditional privilege.
(citing

Huribut

v.

Shell Oil Co.

Gulf Atl. Life Ins. Co., 749

v.

Writt,

464 S.W.3d 650, 654 (Tex. 2015)

S.W.2d 762, 768 (Tex. 1987)). The absolute

HTA further argues BancPass cannot recover mental anguish damages because it is an entity, not an
individual. See Def.'s Mot. Summ. J. [#84] at 14-15. In its response, BancPass clarifies that it is not seeking
mental anguish damages in this litigation. See P1. 's Resp. [#92] at 13.
6

Additionally, BancPass moves for summary judgment on HTA's affirmative defense of truth to the defamation
claims. See P1's Mot. Summ. J. [#86] at 19-20. The Court declines to consider this argument on summary
judgment, as it is more appropriately resolved on a full factual record to be developed at trial.

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privilege "is more properly thought of as an immunity because it is based on the personal
position or status of the actor.

. . .

Such immunity, however, attaches only to a limited and select

number of situations which involve the administration of the functions of the branches of
government, such as statements made during legislative and judicial proceedings." Id. (quoting

Huribut, 749 S.W.2d at 768). A "witness is absolutely privileged to publish defamatory matter
concerning another in communications preliminary to a proposed judicial proceeding.

.

.

,

if it

has some relation to the proceeding." Id. at 654-55 (quoting Hurl but, 749 S.W.2d at 767).

The test for whether a communication is absolutely privileged when it occurs before

judicial proceedings have begun has both subjective and objective components: "the rule

.

applies only when the communication has some relation to a proceeding that is actually

contemplated in good faith and under serious consideration by the witness or a possible party to
the proceeding."

Id. (quoting RESTATEMENT (SECOND) OF TORTS

§

588 cmt. e) (alteration

omitted). "The bare possibility that the proceeding might be instituted is not to be used as a
cloak to provide immunity for defamation when the possibility is not seriously considered." Id.

(quoting the RESTATEMENT).
In arguing its letters to TxDOT, Apple, and Google are absolutely privileged

communications, HTA points the Court to no case in which the absolute judicial-proceeding

privilege was extended to a situation analogous to this one. First, in Daystar Residential, Inc.

v.

Colimer, the court found an attorney's statements to newspapers made in advance of filing

wrongful death lawsuits against two treatment centers were absolutely privileged. 176 S.W.3d
24, 26 (Tex.

App.Houston [1st Dist.] 2004, pet. denied). The court made clear it was

extending the privilege in so holding and emphasized "it [wa] s clear that a suit was being

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contemplated" given the attorney's explicit statements "he w[ould] file a lawsuit alleging gross

negligence this week" and that the information he publicly disclosed "bolster[ed] a civil lawsuit
he plan[ned] to file in the near future." Id. at 28, 26. Here, the letters contain no such explicit
statements regarding plans to file suit and were made to corporate entities, not the media.
Second, Shell Oil involved statements made to the Department of Justice by an entity that knew

it was the target of an ongoing DOJ investigation, and thus seriously feared it would soon be
criminally prosecuted.

See 464 S.W.3d at 659.

Here, HTA was not the target of any

investigation and was not making statements in an attempt to clear its name. Finally, Russell

v.

Clark involved an out-of-court letter sent by an attorney seeking evidence to be used in an
existing judicial proceeding. See 620 S.W.2d at 866-67. Here, at the time HTA sent the letters
in question, no judicial proceeding existed.

Considering the entirety of the letters in their context, the Court finds they bear no
relation to a proposed judicial proceeding. The absolute privilege has been extended in Texas to

"limited instances in which the benefit of the communication to the general public outweighs the
potential harm to an individual." See Shell Oil, 464 S.W.3d at 655. The Court declines to extend

absolute immunity from suit for defamation to unsolicited letters mailed to third parties, neither
law enforcement nor media, by an aggrieved entity neither the target of any investigation nor an

attorney advocating on behalf of a client. In the opinion of the Court, this is not an instance in
which the benefit of the communication to the public outweighs the potential harm to an
individual.

HTA's motion for summary judgment on this ground is DENIED.

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ii.

Expressions of legal opinion

HTA next argues it is entitled to summary judgment on BancPass's defamation claim
because the statements made in the letters were "legal opinions regarding the implication of
undisputed facts," and "thus like all opinions cannot constitute a false statement of fact."

Def.'s Mot. Summ. J. [#84] at 12. The Court cannot agree with HTA.
"[T]he meaning of a publication, and thus whether it is false and defamatory, depends on
a reasonable person's perception of the entirety of a publication and not merely on individual

statements." Bentley

v.

Bunton, 94 S.W.3d 561, 579 (Tex. 2002) (quoting Turner

v.

KTRK

Television, Inc., 38 S.W.3d 103, 115 (Tex. 2000)). Further, "the imputation of a corrupt or

dishonorable motive in connection with established facts is itself to be classified as a statement

of fact and as such not to be within the defense of fair comment." Id. at 583 (quoting A.S. Abel!
Co. v. Kirby, 176 A.2d 340, 343 (1961)). Here, even assuming the letters accurately set forth the

facts they allege, at minimum, the letters HTA sent to Apple and Google appear to impute a

dishonorable motive to BancPass in connection with those facts. Those letters, for example,
state that "as BancPass has admitted.

. .

,

the express purpose of the PTo11 App is to permit users

to circumvent" HTA's fees, claim the sale of PTo11 "is intentionally deceptive," allege BancPass

is "intentionally frustrating [HTA' s services] for its own gain," and claim BancPass "is requiring

users of the PToll App to help it break the law." See Apple/Google Letters at 1, 3. As these
statements appear to impute a corrupt motive to BancPass, the Court declines to grant summary

judgment to HTA on grounds the Apple and Google letters are merely opinion.
The Court further declines to grant summary judgment concerning the TxDOT letter on
grounds it, as HTA argues, is a protected statement of legal opinion. The TxDOT letter does not

-16-

contain any direct accusations that BancPass or PToll users are breaking the law; rather, the letter
describes HTA's concerns and states HTA will take the appropriate steps to protect its legal
rights.

See

TxDOT Letter at 2. Thus, no "legal opinion" is expressed in the TxDOT letter. The

Court expresses no opinion on whether the TxDOT letter is otherwise factual.

Consequently, HTA's motion for summary judgment on the merits of BancPass's
defamation claim is DENIED in its entirety.
iii.

Ability to seek exemplary damages

Finally, HTA contends BancPass is barred from seeking exemplary damages on its

defamation claim because BancPass did not ask HTA to retract the letters within 90 days of

learning HTA sent the letters. HTA's argument is based upon a recently enacted statute, Section
73.055(c) of the Texas Civil Practice and Remedies Code, which provides a claimant may not
recover exemplary damages if the person "does not request a correction, clarification, or
retraction" of the allegedly defamatory publication "not later than the 90th day after receiving
knowledge of the publication[.]"

TEX. CIV. PRAc.

&

REM. CODE § 73.055(c).

According to

HTA, BancPass first received knowledge of the letters to Apple and Google when it received

HTA's demand letter dated September 30, 2014, and first received knowledge of the letter to
TxDOT when TxDOT sent it to BancPass in response to a records request on October 10, 2014.
BancPass does not respond to HTA's argument concerning the TxDOT letter, and the

Court therefore finds BancPass may not recover exemplary damages in connection with that
letter. As for the Apple and Google letters, however, BancPass argues while it may have known

the letters existed after receiving HTA' s demand letter, BancPass did not know the specific
contents of those letters (and particularly that HTA claimed the use of PToll amounted to a

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felony) until it received those letters in discovery on April 10, 2015.

BancPass explains it

thereafter sent a retraction request, which HTA received 82 days later, and subsequently

amended its pleadings to assert a defamation claim.

Neither party points the Court to any case specifically interpreting the meaning of
"receiving knowledge" as used in

§

73.05 5(c). This is unsurprising, as it appears only two Texas

cases, one of which is unreported, even cite to

§

73.005(c), and neither analyze it. See Neely

v.

Wilson, 418 S.W.3d 52, 63 & n.15 (Tex. 2013) (noting recent passage of § 73.005(c) and stating

it does not apply to the case under review); Cummins
CV, 2015 WL 1641144, at 23 n.104 (Tex.

v.

Bat World Sanctuary, No. 02-12-00285-

App.Fort Worth Apr.

30, 2015, pet. denied) (noting

recent passage in a footnote). In the absence of on-point Texas law, the Court will make an Erie
guess as to how the Texas Supreme Court would decide this question. See Keen

v.

Miller Envt '1

Group., Inc., 702 F.3d 239, 243 (5th Cir. 2012) (explaining the Erie guess obligation).

The Court concludes BancPass did not "receiv[e] knowledge" of the defamatory
statements within the meaning of

§

73.055(c) until it received the Apple and Google letters in

discovery on April 10, 2015. A related subsection of the statute,

§

73.055(d)(3), explains that

"[a] request for a correction, clarification, or retraction is sufficient

if it

.

.

.

states with

particularity the statement alleged to be false and defamatory[,]" among other requirements.
TEX. CIV. PRAc.

& REM.

CODE

§

73.055(d)(3). HTA does not argue that BancPass could have

obtained copies of its letters to Apple and Google merely by requesting them from either

company or that BancPass could have otherwise determined, through the exercise of reasonable

diligence, that HTA made allegedly defamatory statements in those letters. As such, it does not
appear BancPass could have complied with the statute by "stat[ing] with particularity" the

allegedly false and defamatory statements prior to April 10, 2015, the date it received the letters.
The Court declines to construe
§

§

73.055(c) in a manner that makes it impossible to comply with

73.055(d)(3). See United States

v.

Marshall, 798 F.3d 296, 308-09 (5th Cir. 2015) ("Where

possible, statutes must be read in harmony with one another so as to give meaning to each

provision." (citation omitted)).
As it is undisputed HTA received BancPass's request for retraction within 90 days after
BancPass sent the request, the Court finds

§

73.055(c) does not prevent BancPass from seeking

exemplary damages with respect to the Apple and Google letters.

HTA's motion for summary judgment on this ground is DENIED.
C.

BancPass's Alleged Tortious Interference with the Agreements Between Avis,
Enterprise, and Their Customers
Both parties seek summary judgment on their requests for declaratory relief concerning

BancPass's alleged tortious interference with the rental agreements between Avis, Enterprise,
and their customers. The key question underlying these claims is whether the rental agreements

in question prohibit customers from using PTo1I, as "a willful and intentional act of interference

with the contract," an essential element of tortious interference with contract, can be established

by proving, as HTA seeks to prove here, that the alleged tortfeasor (here, BancPass) induced a
third party (here, the rental car customer) to breach his or her obligation under the contract.

Prudential Ins. Co. of Am.

Paul Mitchell

v.

Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000); see John

Sys. v. Randalls

Food Mkts., Inc., 17 S.W.3d 721, 730-32 (Tex. App.Austin

2000, pet. denied) (explaining intentional interference can be found where the defendant "took
an active part in persuading a party to a contract to breach it"). As explained below, the Court

finds BancPass does not induce rental car customers to breach their obligations under their rental

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contracts by using PToll, and therefore that BancPass is entitled to summary judgment on Count
II

of its complaint and Count IV of HTA's

counterclaim.7

BancPass argues the rental contracts unambiguously provide that a customer opts in to

HTA's toll processing service only where the customer uses a toll road without otherwise
making arrangements to pay tolls. HTA disagrees, arguing the rental contracts unambiguously

prohibit the use of PToll or, in the alternative, are ambiguous on the question whether use of
PTo11 is permissible,

barring summary judgment. The Court agrees with BancPass.

When interpreting a contract, the primary concern is to ascertain and effectuate the
written expression of the parties' intent. Italian Cowboy Partners, Ltd.

v.

Prudential Ins. Co. of

Am., 341 S.W.3d 323, 333 (Tex. 2011). Intent is governed by what is written, not by what one

side contends it intended but failed to say. Gilbert Tex. Constr., L.P.
London, 327 S.W.3d 118, 127 (Tex. 2010).

v.

Underwriters at Lloyd

Thus, courts must give terms their plain and

ordinary meaning unless the contract indicates the parties intended a different meaning, and
examine the writing as a whole to harmonize and give effect to all of the contract's provisions.
Dynegy Midstream Servs., Ltd. P'ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex. 2009); Coker
v.

Coker, 650 S.W.2d 391, 393 (Tex. 1983). Courts must "also bear in mind the particular

business activity to be served, and when possible and proper to do so,

. . .

that is unreasonable, inequitable, and oppressive." NuStar Energy, L.P.

avoid a construction

v.

Diamond Offshore

HTA makes the preliminary argument that BancPass lacks standing to assert its claim for declaratory
relief on this issue because BancPass is neither a party to nor an intended beneficiary of the rental agreements. See
Def. 's Mot. Summ. J. [#84] at 8-9. The Court rejects this argument. Here, BancPass "has sufficient injury-in-fact
to satisfy the Art. III case-or-controversy requirement," and as a prudential matter, "can reasonably be expected
properly to frame the issues and present them with the necessary adversarial zeal." See Sec. of State of Md. v.
Joseph H. Munson Co., Inc., 467 U.s. 947, 956 (1984) (discussing third-party standing). Additionally, restricting
BancPass's ability to market PTo11 to rental car customers prevents those customers from exercising their right to
freedom of contract. See US. Dep 't ofLabor v. Triplett, 494 U.S. 715, 721(1990). Finally, HTA has itself brought
a claim for reciprocal declaratory relief, so the practical consequences of this question are minimal. Accordingly,
the Court finds BancPass may assert its claim for declaratory relief concerning the rental contracts.

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Co., 402 S.W.3d 461, 466 (Tex.

App.Houston [14th Dist.], no pet.) (citing Frost Nat'l Bank v.

L & F. Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005); Reilly v. Rangers Mgmt., Inc., 727

S.W.2d 527, 530 (Tex. 1987)).

"Whether a contract is ambiguous is a question of law that must be decided by examining
the contract as a whole in light of the circumstances present when the contract was entered."
Enter. Leasing Co. of Hous.
Gas Transmission Corp.

v.

v.

Barrios, 156 S.W.3d 547, 549 (Tex. 2004) (quoting Columbia

New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996)). "If the

written instrument is so worded that it can be given a certain or definite legal meaning or
interpretation, then it is not ambiguous and the court will construe the contract as a matter of

law." Id. (quoting Coker, 650 S.W.2d at 393). An ambiguity exists only if the contract language
is susceptible to two or more reasonable interpretations. Id. (citing Am. Mfrs. Mut. Ins. Co.

v.

Schaefer, 124 S.W.3d 154, 157 (Tex. 2003)).
Again, the Avis contracts provide:
e-Toll. If you do not pay cash for tolls or the roadway does not accept cash
payment you automatically opt into our e-Toll service, pursuant to which you
agree to pay us or our toll program administrator. . . for all tolls incurred during
your rental and all related fees, charges and penalties. . . . You can avoid the.
fee[s] and any other charges by paying the toll in cash, using your electronic toll
device, or avoiding any cashless toll road or passage.

Avis Rental Agmts. at

3

¶ 16,

5

¶

16, 7

¶ 16. These provisions unambiguously permit renters to

use PTo11 rather than opt in to HTA's services for two reasons.
First, the language expressly provides that renters can "avoid [HTA's] fee[s]" by "using
[thei]r electronic toll device[s]."

While "electronic toll device" is not specifically defined

elsewhere in the contract, the Court agrees with BancPass that the plain and ordinary meaning of
the phrase encompasses a smartphone on which an app specifically designed to manage the

-21-

payment of tolls is installed. The Court disagrees with HTA' s argument that the true meaning of
the phrase is limited to transponders that are issued by tolling authorities and send radio signals,
such as TxTags and ToilTags. Had Avis wished to limit the types of electronic toll devices a

renter is permitted to use in order to avoid HTA's fees, it could have used more specific language
to so indicate, such as "transponder issued by a tolling authority," "transponder issued by a

tolling authority that emits radio signals," or the like. The Court declines to read a limitation into
the Avis agreements that is not there. See Schaefer, 124 S.W.3d at 162 ("[W]e may neither

rewrite the parties' contract nor add to its language.").
Second, the first sentence of the e-Toll provision does not change the analysis. HTA
argues the provision "plainly states [] if a rental customer does not pay cash for tolls, the

customer automatically agrees to pay HTA, as the toll program administrator, for all tolls
incurred." Def.'s Mot. Summ. J. [#84] at 18. The later, more specific provision delineating the

more specific ways in which a renter can avoid HTA's fees, however, controls over the earlier,
conflicting general statement that renters automatically opt in to HTA' s services if they do not

pay cash. See NuStar Energy, 402 S.W.3d at 467 (citing Grynberg

v.

Grey Wolf Drilling Co.,

L.P., 296 S.W.3d 132, 137 (Tex. App.Houston [14th Dist.] 2009, no pet.)).

The analysis of the Enterprise rental agreements is even more straightforward. Those
agreements state in relevant part:
Optional Charges. The optional Toilpass Service accepted by Renter provides for
the daily rental of a toll collection transponder or, in some states, the use of videomonitored toll collection services. In addition to the daily charge for the Tollpass
Service, [Enterprise], its affiliate or a third party may separately charge . . . for
each toll (or other charge) incurred using the transponder or video monitored

service.

. .

-22-

Renter shall pay [Enterprise], its affiliates or agents . . . [a] Tollpass Convenience
Charge (TCC). . . for each day Vehicle is operated on a TCC Covered Road and
Vehicle operator does not pay an applicable toll.
Enterprise Rental Agmts. at 4 ¶ 3(b)(5), (c)(4); 8 ¶ 3(b)(5), (c)(4); 10 ¶ 3(b)(5),

(c)(5).8

Under

the plain language of these contracts, the "Tollpass Convenience Charge," which is the "daily
charge for the Tollpass Service" provided by HTA, must be paid by the renter only where the
vehicle is driven on a toll road and the "Vehicle operator does not pay an applicable toll." This

language is even less restrictive than the language of the Avis contracts; the Enterprise contracts
do not specify the ways a renter may avoid opting in to HTA's services, instead merely stating

that so long as the renter pays his or her applicable tolls, the "daily charge for the Tollpass
Service" is never assessed.
The Court caimot agree with HTA's argument PTo11 is prohibited under the Enterprise
rental agreements because they state HTA "may separately charge

using.

. .

. . .

for each toll .. . incurred

video monitored service[.]" Read in context, it is clear HTA may assess those charges

"{i]n addition to the daily charge for the Tollpass Service," which is itself "optional." If a renter

never accepts the optional Tolipass Service by failing to pay an applicable toll, thus triggering
the daily charge for the service, HTA has no ability to "separately charge" for the tolls incurred.
This reading harmonizes all relevant provisions in the agreements, including the language

describing HTA's fees as "Optional Charges" and stating HTA's services are "optional" and

must be "accepted by Renter[.]"
The Court therefore concludes the use of PTo11 does not constitute a breach of the Avis or
Enterprise rental agreements. As such, the Court finds BancPass does not tortiously interfere

with those agreements as a matter of law. HTA's motion for partial summary judgment on this

8Seesupran.

1.

-23-

issue is therefore DENIED, and BancPass's reciprocal motion for summary judgment is
GRANTED.
D.

BancPass's Alleged Tortious Interference with HTA's Contracts with Avis &
Enterprise
HTA does not address the merits of BancPass's request for summary judgment on its

claim seeking a declaration PTo11 does not tortiously interfere with HTA's contracts with Avis
and Enterprise, instead stating in a footnote that "neither party has asserted a claim relating to

tortious interference of HTA's contracts with rental agencies."

See

Def.'s Resp. [#91] at 15 n.20.

HTA is incorrect. While BancPass's complaint may be inartfully pled, it fairly raises a request
for this declaratory relief

See

Second Am. Compi. [#50] ¶ 34 (alleging HTA has "incorrectly

stated that merely permitting PToll to function constitutes tortious interference against HTA' s
contracts with.

controversy.

. .

. .

the tolling authority"), ¶ 37 ("HTA's threats.

. .

have created an actual, mature

with respect to whether consumers choosing to use.

. .

PTo11

. . .

interferes with

HTA's contracts with rental car companies[.]"). As HTA declined to respond to BancPass's
summary judgment argument, the Court grants BancPass's motion concerning same as
unopposed.
Alternatively, turning to its merits, the Court finds PToll does not tortiously interfere with

HTA' s contracts with Avis and Enterprise as a matter of law. As previously noted, the

Avis

HTA contract states: "During the term, [Avis] shall not obtain from any other party, nor shall it

provide on its own behalf or account, any electronic tolling collection services." Avis Service
Agmt. ¶ 6. Similarly, the EnterpriseHTA contract states: "The parties hereby acknowledge and
agree that HTA shall be the exclusive provider to Enterprise and its affiliates

. . .

of all ETC

[Electronic Toll Collection] services[.]" Enterprise Service Agmt. ¶ 12. The plain language of
-24-

these agreements indicates nothing more than each rental car company's obligation not to obtain
from any other provider, or to provide of its own accord, any electronic tolling collection
services. BancPass and PTo11 do not provide Avis or Enterprise with electronic tolling collection
services, and thus, PToll does not tortiously interfere with the respective agreements between
Avis, Enterprise, and HTA.

BancPass's motion for summary judgment on this ground is GRANTED.
E.

BancPass's Alleged Tortious Interference with HTA's Contract with TxDOT
Finally, BancPass seeks summary judgment on its claim seeking a declaration PTo11 does

not tortiously interfere with HTA's contract with TxDOT.9 While this argument is somewhat
underdeveloped given the parties' focus on other areas, the Court finds, on the present record,
that BancPass is entitled to summary judgment.
Simply stated, the parties disagree about whether the contract between HTA and TxDOT,
entitled "Service to Provide Management of Rental Car Fleet," permits the simultaneous
registration of a single vehicle's license plate to both HTA's and BancPass's fleet accounts.

Pl.'s Mot. Summ. J. [#86-21] Ex.

S

See

(HTATxDOT Agmt.) at HTA000165. BancPass contends

nothing in the HTATxDOT contract prohibits such simultaneous registration or otherwise gives
HTA the exclusive right to pay electronic tolls on the vehicles registered to its fleet. In response,

HTA points to the provisions (1) requiring HTA to "[h]ave established agreements with rental
car agencies to manage the agencies' toll obligations" and (2) stating TxDOT will "[c]ompare

license plate data from images to vendor's [HTA' s] license plate information" and "[d] educt [the
pay-by-mail] rate from vendor's [HTA's] established pre-paid account," contending these
Confusingly, in HTA's response to BancPass on this issue, HTA states that "HTA has not moved for
summary judgment on its claim that PTo11 tortuously [sic] interferes with HTA's TxDOT Rental Fleet Agreement."
Def. 's Resp. [#911 at 17. HTA, however, has brought no such claim. See generally First Am. Countercl. [#47].

-25-

provisions together establish its claimed exclusive rights. See Pl.'s Mot. Summ. J. [#86-21] Ex.
S

(HTATxDOT Agmt.) at HTA000166, 69.
The Court disagrees with HTA's reading of the contract. Nowhere in the provisions

HTA cites is TxDOT prohibited from registering a vehicle license plate to more than one fleet
account. Reading these provisions to give HTA exclusive rights would require reading the word

"exclusively" into the language: the agreement does not guarantee TxDOT will "compare license
plate data from images to HTA's license plate information exclusively." Again, the Court may

not create contractual rights by inserting additional words into agreed-upon contractual language.
See Schaefer, 124 S.W.3d at 162. Rather than establish exclusivity, these provisions merely

describe the general steps TxDOT takes in processing electronic tolls.

In fact, additional

language in the TxDOT contract expressly discredits any claim it awards any one "vendor"
exclusive rights: the contract expressly states that TxDOT "will award to multiple vendors."

HTATxDOT Agmt. at HTA000 171. Thus, the contract itself implicitly acknowledges TxDOT
will be required to compare the license plate data it collects from tolling stations to the license

plate information supplied by multiple vendors.

BancPass's motion for summary judgment on this ground is GRANTED.

Conclusion
In sum, the Court finds: (1) Counts I, II, and III of HTA's counterclaims may proceed to
trial; (2) BancPass's defamation claims may proceed to trial, and BancPass may seek exemplary

damages concerning only the letters to Apple and Google; (3) BancPass is entitled to a
declaration PToII does not tortiously interfere with the agreements between Avis, Enterprise, and

their customers, resolving both its affirmative claim and HTA' s counterclaim to that effect;

-26-

(4) BancPass is entitled to a declaration PToll does not tortiously interfere with the agreements

between HTA, Avis, and Enterprise; and (5) BancPass is entitled to a declaration PToll does not

tortiously interfere with the agreement between HTA and TxDOT.

This case will therefore

proceed to trial on BancPass's defamation claim and Counts I, II, and III of HTA's counterclaim.
Accordingly:
IT IS ORDERED that Plaintiff BancPass, Inc.'s Motion for Partial Summary

Judgment and Rule 12(e) Motion to Dismiss Defendant's Requests for Declaratory Relief
Counts I, II, and III [#86] is GRANTED IN PART and DENIED N PART as described
in this opinion; and
IT IS FINALLY ORDERED that Defendant's Motion for Traditional Summary

Judgment on Plaintiff's Claims and Partial Summary Judgment on Defendant's
Counterclaim [#84] is GRANTED concerning BancPass's inability to seek exemplary
damages concerning the TxDOT letter and DENIED in all other respects.
SIGNED this the

9-tay of August 2016.

UNITED STATES DISTRICT JUDGE

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