United States District Court, S.D. Texas, Houston Division
OPINION AND ORDER
MELINDA HARMON, UNITED STATES DISTRICT JUDGE
before the Court in the above-referenced matter are
Third-Party Defendants Michael B. Skalka
(“Skalka”) and Charles M. Craig's
(“Craig”) Motion for Summary Judgment Doc. 70;
Plaintiff Stewart Title Guaranty Company's
(“STGC”) Motion for Partial Summary Judgment on
its Affirmative Claims, Doc. 71; and STGC and Third-Party
Defendant Stewart Title Company's (“STC”)
Motion for Summary Judgment on Stewart Title Latin
America's (“STLA”) Counterclaims, Doc. 74. The
Court has considered the parties' filings, the record,
and the law. For the reasons that follow, the Court grants
all of the pending motions.
the facts of this case are recited extensively in this
Court's prior orders, Docs. 34, 56, the Court need not
repeat them here. For the purposes of the motions now before
this Court, however, it is worth restating that the crux of
the parties' dispute is the proper scope of STLA's
use of STGC's “Stewart Title” trademarks.
STLA argues that it was granted an unrestricted, perpetual
right to use the trademarks and STC and STGC have wrongfully
tried to revoke that right. STC and STGC respond that the
express terms of a series of contracts between the parties
make it clear that STLA's use of the trademarks was
restricted and STGC was free to revoke STLA's license to
the trademarks when STLA violated a number of contractual
these terms, in September 2012 STGC sent termination notices
to STLA. Docs. 74-29, 74-30, 74-31, 74-32. These notices
ordered STLA to cease issuing title policies and discontinue
use of the STGC trademarks. Docs. 74-29, 74-30, 74-31, 74-32.
The notices also cited each provision of the agreements that
STGC alleged STLA had violated. Doc. 74-29. Nevertheless,
STLA continued to use the trademarks. Doc. 74 at 15.
effort to regain control of its trademarks, STGC filed its
Original Petition in the 215th Judicial District
Court of Harris County on October 10, 2012, asserting four
causes of action: (1) Declaratory Judgment: License
Agreement; (2) Declaratory Judgment: Underwriting
Agreements; (3) Breach of Contract: Underwriting Agreements;
and (4) Application for Injunctive Relief. Doc. 1-2 at 1,
18-22. STLA removed the action to this Court on November 5,
2012. Doc. 1. On November 13, 2012, STLA filed its Answer,
Counterclaim, and Third-Party Complaint. Doc. 3. STLA
asserted six counterclaims against STGC and STC: (1) Breach
of Contract: Joint Venture Agreement; (2) Breach of Contract:
Underwriting Agreements; (3) Promissory Estoppel; (4)
Business Disparagement; (5) Breach of Fiduciary Duty as to
Skalka and Craig; and (6) Conspiracy to Breach Fiduciary
Duty. Doc. 3 at 18-21.
September 30, 2013, this Court granted STGC's Motion to
Dismiss STLA's breach-of-contract claim with regard to
the perpetual license of the Joint Venture
Agreement. Doc. 34 at 15. The Court also ordered STLA
to more definitively state a counterclaim for business
disparagement. Id. When it failed to do so, STGC and
STC moved the Court to strike or dismiss the claim. Doc. 59.
On July 31, 2015, STLA filed its Second Amended Counterclaim
and Third Party Complaint in which it dropped its
business-disparagement claim. Doc. 61.
April 29, 2016, Skalka, Craig, STGC, and STC filed their
pending motions for summary judgment. Docs. 70, 71, 74.
Although the motions reference and incorporate one another,
each takes aim at different claims. Skalka and Craig's
motion only attacks STLA's breach-of-fiduciary-duty
counterclaim against them, STGC's motion targets most of
its affirmative claims, and STGC and STC's joint motion
assails all of STLA's counterclaims. STLA filed its
Omnibus Response to Plaintiff's and Third-Party
Defendants' Collective Motions for Summary Judgment
(“Omnibus Response”) on May 20, 2016. Doc. 76.
Skalka, Craig, STGC, and STC filed replies on June 13, 2016.
Docs. 82-85. The pending motions are now ripe for
purpose of summary judgment is to isolate and dispose of
factually unsupported claims or defenses. See Celotex
Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). Summary
judgment under Federal Rule of Civil Procedure 56(c) is
appropriate when, viewed in the light most favorable to the
nonmovant, the court determines that “the pleadings,
depositions, answers to interrogatories and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law.” Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247 (1996). A dispute about a material fact is
genuine “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.”
Id. at 248.
movant initially bears the burden of identifying those
portions of the pleadings and discovery in the record that it
finds demonstrate the absence of a genuine issue of material
fact on which the nonmovant bears the burden of proof at
trial. Lujan v. Nat'l Wildlife Fed., 497 U.S.
871, 885 (1990) (citations omitted). “[A] complete
failure of proof concerning an essential element of the
nonmoving party's case necessarily renders all other
facts immaterial.” Celotex, 477 U.S. at 323.
When the moving party makes 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
dispute of material fact concerning every element of its
cause of action in order to defeat the motion for summary
judgment. Edwards v. Your Credit, Inc., 148 F.3d
427, 431 (5th Cir. 1998); Nat'l Ass'n of
Gov't Emps. v. City Pub. Serv. Bd., 40 F.3d 698, 712
(5th Cir. 1994); Morris v. Covan World Wide Moving,
Inc., 144 F.3d 377, 380 (5th Cir. 1998). There is no
genuine issue for trial if a rational trier could not find
for the nonmoving party based on the evidence presented.
City Pub. Serv. Bd., 40 F.3d at 712-13 (citing
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 584-88 (1986)).
in a plaintiff's complaint are not evidence. Wallace
v. Tex. Tech Univ., 80 F.3d 1042, 1047 (5th Cir. 1996)
(citation and internal quotation marks omitted)
(“[P]leadings are not summary judgment
evidence.”); Johnston v. City of Houston, 14
F.3d 1056, 1060 (5th Cir. 1995) (quoting Solo Serve Corp.
v. Westtown Assoc., 929 F.2d 160, 164 (5th Cir. 1991)
(for the party opposing the motion for summary judgment,
“‘only evidence-not argument, not facts in the
complaint-will satisfy' the burden.”). Likewise,
unsubstantiated assertions, conclusory allegations,
improbable inferences, and unsupported speculation are not
competent summary judgment evidence. Forsyth v.
Barr, 19 F.3d 1527, 1533 (5th Cir. 1994). Instead, the
nonmovant must “go beyond the pleadings and by [his]
own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific
facts showing that there is a genuine issue of material fact
for trial.” Giles v. Gen. Elec. Co., 245 F.3d
474, 493 (5th Cir. 2001) (quoting Celotex, 477 U.S.
at 324) (internal quotation marks omitted).
ruling on a summary judgment motion, the court must consider
all evidence and draw all inferences from the factual record
in the light most favorable to the nonmovant, but the court
may not make credibility determinations or weigh the
evidence. Turner v. Baylor Richardson Med. Ctr., 476
F.3d 337, 343 (5th Cir. 2007) (citing Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)).
Court begins by noting that STLA conflates STGC and STC
throughout its filings. See Docs. 61, 76. Nowhere,
however, does STLA provide legal authority for doing so.
See Id. STGC and STC are separate, independent
corporate entities-related only as parent and subsidiary.
Doc. 74-44 at 3. Consequently, unless one of the equitable
doctrines for disregarding the separate existence of parent
and subsidiary corporations is applicable (i.e.,
“single business enterprise” or “alter
ego”), STGC and STC must be treated as distinct
and separate “persons” as a matter of law.
See N. Cypress Med. Ctr. Operating Co. v. Fedex
Corp., 892 F.Supp.2d 861, 865 (S.D. Tex. 2012) (citation
omitted); Airflow Hous., Inc. v. Theriot, 849 S.W.2d
928, 931 (Tex. App.-Houston [1st Dist.] 1993, no writ)
stated reason for treating the entities as one is that
“knowledge cannot be segregated between STG and
STC.” Doc. 76 at 9. This is an insufficient rationale;
it addresses none of the factors required for application of
the single business enterprise or alter ego doctrines.
See supra note 4. Accordingly, the Court will
analyze each of STLA's claims against STGC and STC
Breach of Contract
Third-Party Complaint, STLA alleges that STGC/STC breached
the Formation Agreement by wrongfully terminating the
Underwriting and License Agreements; wrongfully competing
with STLA in the covered territories; terminating and
revoking the unrestricted and perpetual grant; and otherwise
failing to carry out the terms of the agreements. Doc. 61 at
¶¶ 48- 53. STLA alleges reliance damages of
“millions of dollars in building the Stewart Title
brand across Latin America.” Id. ¶ 53.
response, STGC and STC note that STGC cannot be liable for
breach of the Formation Agreement because it was not a party
to it. Doc. 74 at 16-17. Similarly, STGC and STC argue that
STC cannot be liable for breach of the Formation Agreement on
the basis of breach of the Underwriting or Licensing
Agreements because STC was not a party to those underlying
agreements and, therefore, could not have breached them.
Id. at 18. STGC and STC also point out STLA's
lack of evidence to support its arguments that STGC and STC
breached the Formation Agreement by wrongfully competing
against STLA in the covered territories and failing to make
premium payments. Id. at 18-19.
regard to the wrongful-competition accusations, STGC and STC
urge, “all of Counterclaimants' complaints about
competition relate to activities carried out by employees,
representatives, or agents of STGM,  not STC.” Id.
at 18. Next, STGC and STC draw the Court's attention to
STLA shareholder and general manager Christopher Hill's
testimony in which he admits that he has no knowledge of STC
ever competing directly with STLA. Id. at 19 (citing
Doc. 74-42 at 13-14).
and STC respond to STLA's claim that STC failed to make
premium payments due under the Formation Agreement by
pointing out that the Underwriting and Service Provider
Agreements make it clear that STC never had an agreement to
pay anything to STLA. Id. Rather, STLA agreed in
these agreements to share premiums with STGM. Id.
STGC and STC contend that STLA has no evidence otherwise.
STGC and STC respond to STLA's argument that revocation
of the alleged perpetual right to a license breached the
Formation Agreement by pointing out that because STC does not
own the trademarks-a fact this Court has already
established-it cannot have either granted or revoked a
perpetual license of said trademarks. Id. at 19-20.
STGC and STC point out that this Court has already found that
the Formation Agreement granted no such “perpetual
license” to STLA and instead stated that
“licensing will be governed by agreements between
[STGC] and [STLA].” Id. at 20 (citing Doc. 56
at 4, 9).
and STC point out, Texas law does not provide a cause of
action for breach of contract against a defendant who is not
a party to the underlying contract. Silvas v. Ohio Cas.
Ins. Co., SA-05-CA-0627 XR, 2005 WL 2645015, at *2 (W.D.
Tex. Aug. 24, 2005) (citing Natividad v. Alexsis,
Inc., 875 S.W.2d 695, 698 (Tex. 1994); C & C
Partners v. Sun Exploration & Prod., 783 S.W.2d 707,
721 (Tex. App.-Dallas 1989, writ denied)). Accordingly, as a
non-party, STGC could not have, as a matter of law, breached
the Formation Agreement. Likewise, STC cannot be liable for
breach of the Formation Agreement as a result of alleged
breaches of underlying agreements to which it was not a
there evidence in the record to support STLA's claims
that STC wrongfully competed in the covered territories or
that STC wrongfully withheld premiums. Indeed, STGC, not STC,
was the party that contracted with STLA in the Underwriting
and Service Provider Agreements that outlined territorial
boundaries and premium-payment terms. See Docs. 74-5
at 1-74-18 at 1. Finally, to the extent that STLA relies on
STC's alleged breach of the perpetual license as the
basis of its breach-of-contract claim in the Formation
Agreement (a.k.a. Joint Venture Agreement), the Court agrees
with STGC and STC that such a claim has been foreclosed by
the Court's prior opinion:
Counter-Defendants' motion to dismiss the counter claim
and third party claims for breach of contract under the
perpetual right clause of the First Addendum (Joint Venture
Agreement) is GRANTED. The Counterclaim and Third Party
Claims for breach of contract under the alleged perpetual
right to use of the Stewart name are DISMISSED.
Doc. 56 at 9. As a result, summary judgment is warranted on
STLA's breach-of-contract claims against both STGC and
STC regarding the Formation Agreement.