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Bauer-Pileco, Inc. v. Scheffler Northwest, Inc.

United States District Court, S.D. Texas, Houston Division

April 4, 2017

BAUER-PILECO, INC., Plaintiff,
v.
SCHEFFLER NORTHWEST, INC, et al., Defendants.

          MEMORANDUM AND OPINION

          Lee H Rosenthal Chief United States District Judge

         Bauer-Pileco, Inc., a Conroe, Texas construction-equipment leasing company, sued two of its clients, Scheffler Northwest and DJ Scheffler, alleging that they owe money for equipment rentals and related services. (Docket Entry No. 15). DJ Scheffler moved to dismiss for lack of personal jurisdiction here in Texas. (Docket Entry No. 25). Bauer-Pileco responded, and DJ Scheffler replied. (Docket Entries No. 34, 35). Based on the briefs, the complaint allegations, the record evidence properly considered, and the applicable law, DJ Scheffler's motion to dismiss is granted. The reasons are explained in detail below.

         I. Background

         This dispute concerns alleged nonpayment for and damage to several pieces of rented construction equipment. Deciding this motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), the court does not require a full account of the plaintiffs' allegations, but the motion does require the court to analyze the parties' factual contentions relevant to personal jurisdiction.

         Between September 2011 and July 2013, Scheffler Northwest rented various pieces of construction equipment from Bauer-Pileco, each time entering into a rental contract. Scheffler Northwest also purchased “various parts and repair services” for the equipment. Bauer-Pileco alleges that Scheffler Northwest failed to pay as required under the rental and purchase contracts, and that Scheffler Northwest owes more than $800, 000 in late payments. As a result of this account delinquency, Bauer-Pileco refused to sell parts to both Scheffler Northwest and DJ Scheffler, which also had an active rental account with Bauer-Pileco.

         The issue before the court arises from the two defendants' efforts to have their accounts reopened. On August 4, 2015, DJ Scheffler wrote to Bauer-Pileco, stating in relevant part as follows:

[DJ Scheffler] and [Scheffler Northwest] has been restricted on parts purchases for over a year now and we must be able to purchase parts and have th eability to rent as needed in order to continue profitable operations. This is crucial to not only pay the Bauer invoices but the other vendors as well. We have had a rig that has not been used because of this and it has significantly impacted our business. With the goal of reestablishing our ability to make purchases and getting our account balance paid we feel that making [a $33, 190.73 payment to settle a disputed item on the DJ Scheffler] account as referenced above and paying $50, 000 towards the [Scheffler NW] account shows our willingness and desire to move forward with Bauer Pileco. There are some major discrepancies on the [Scheffler NW] account that need to be discussed and negotiated; therefore, we are requesting a meeting with you next week to get this resolved and establish a repayment plan that we can stay committed to.
We have great plans for both [DJ Scheffler] and [Scheffler NW] and have restructured our operations and personnel. We would like for you and your team at Bauer Pileco to play a key role in that future success. If you agree with this letter, the prompt payment proposed of $88, 190.71 and are willing to open our account for parts purchases we will issue payment and discuss a time where we can meet and resolve the [Scheffler NW] account balance.

(Docket Entry No. 11-3). The letter was signed by “DJ Scheffler, Inc.”

         The complaint pleads several breach-of-contract and quasi-contract claims against Scheffler Northwest, which consented to the jurisdiction of a Texas court in a forum-selection clause in the rental contracts. The complaint also pleads several claims against DJ Scheffler, but DJ Scheffler did not consent to Texas jurisdiction.

         The complaint first asserts an alter-ego theory, alleging that the August 2015 letter demonstrates that DJ Scheffler and Scheffler Northwest share each others' debts. The complaint also alleges that:

• Dale Scheffler, the current president of DJ Scheffler, was at one point the president of Scheffler Northwest;
• Cindy Scheffler is the secretary and treasurer of both companies;
• Dale Scheffler regularly comunicated on behalf of both ...

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