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Laura Johnston Family Properties Ltd. v. Allen Engineering Contractor Inc.

United States District Court, N.D. Texas, Dallas Division

December 18, 2017

ALLEN ENGINEERING CONTRACTOR, INC., Defendant/Third-Party Plaintiff,



         Before the Court are the Motion to Dismiss of Plaintiff Laura Johnston Family Properties, Ltd. (“LJFP”) (ECF No. 34); the Motion to Dismiss of Third-Party Defendants Tom Bennett, Jr. and United States Invention Corporation (“Bennett/USIC”) (ECF No. 46); and the Motion to Dismiss of Defendant/Third-Party Plaintiff Allen Engineering Contractor, Inc. (“Allen”) (ECF No. 50). For the reasons stated below, LJFP's Motion to Dismiss is GRANTED; Bennett/USIC's Motion to Dismiss is DENIED; and Allen's Motion to Dismiss is GRANTED.

         I. Factual and Procedural Background

         This case involves a dispute over two property easements. LJFP alleges it is the owner of real property located in Navarro County, Texas. (LJFP First Am. Pet. ¶ 2.1, ECF No. 23). Bennett/USIC[1] also allegedly owns real property in Navarro County. (Id. ¶ 1.3). Allen, a general contractor, claims it was retained to repair a railroad bridge at Chambers Creek in Navarro County. (Id.; see also Allen Countercl. ¶ 4, ECF No. 24). To access the railroad bridge, Allen alleges it entered into a Temporary Construction Easement (“TCE”) with LJFP. (Allen Countercl. ¶ 5). The TCE entitled Allen to enter part of LJFP's land called the “Construction Area.” (LJFP First Am. Pet. Ex. A). The TCE does not include a written description or definition of the “Construction Area, ” but instead refers to an image captured by Google Earth Pro, a copy of which is attached to the TCE. (Id.). LJFP's land and Bennett/USIC's land are designated on that image as is a red line which represents the “Proposed Access.” (Id.). It is unclear from this image what area constitutes the “Construction Area.” According to LJFP, the TCE required Allen to construct an access road, build a workspace on an adjacent landowner's property, and complete all construction activities by October 1, 2016. (Id. ¶ 2.2).

         After signing the TCE, Allen claims it discovered it could not access the railroad bridge through the easement described in the TCE. (Allen Countercl. ¶ 7). As a result, Allen entered into a separate agreement with Bennett/USIC, denominated the Temporary Easement Agreement (“TEA”), [2] which granted Allen “the necessary access to the worksite from another direction and over different land.” (Id. ¶¶ 7-9). By accessing the worksite via the TEA, Allen alleges it completed the work on the railroad bridge. (Id. ¶ 9).

         LJFP filed this case in Texas state court on November 2, 2016. Allen timely removed the case to this Court on December 6, 2016, based on diversity jurisdiction. In its First Amended Petition, LJFP claimed Allen violated the TCE by building an access road that was “materially different from the access road allowed by the [TCE], ” constructing workspace on LJFP's property (rather than on the adjacent landowner's property), cutting timber from LJFP's property, and continuing to use LJFP's property after October 1, 2016. (LJFP First Am. Pet. ¶¶ 2.3-2.6). LJFP asserts trespass and breach of contract claims against Allen, and seeks exemplary damages. (Id. ¶¶ 3.1-3.3).

         Allen asserts five counterclaims against LJFP: (1) breach of contract, (2) breach of warranty, (3) negligent misrepresentation, (4) statutory fraud, and (5) tortious interference with a business contract. (Allen Countercl. ¶¶ 12-21). The crux of Allen's breach of contract and breach of warranty claims is that LJFP breached the TCE because LJFP did not own the land covered by the TCE. In its tortious interference claim, Allen argues that LJFP interfered with the TEA, Allen's agreement with Bennett/USIC. As discussed in further detail below, Allen's negligent misrepresentation and statutory fraud claims are more difficult to articulate. Allen claims LJFP misrepresented “it owned the land necessary to gain access to [the] worksite, ” but it is not clear to which land Allen is referring. (Id. ¶ 5).

         Allen also brings four causes of action against Bennett/USIC as a third-party defendant: (1) breach of contract, (2) promissory estoppel, (3) negligent misrepresentation, and (4) statutory fraud. (Allen Third-Party Compl. ¶¶ 14-21). The basis of Allen's breach of contract and promissory estoppel claims is that Bennett/USIC breached the TEA because Bennett/USIC did not own the land covered by the TEA. For its negligent misrepresentation and statutory fraud claims, Allen argues Bennett/USIC misrepresented that they owned the land covered by the TEA. In response, Bennett/USIC filed a declaratory judgment counterclaim under the Texas Uniform Declaratory Judgments Act (TUDJA), requesting a declaration of “the boundaries and applicability of [the TEA] as it affects Allen's right to assert causes of action against Bennett/USIC.” (Bennett/USIC Countercl. ¶ 9, ECF No. 47).

         There are three motions to dismiss pending: (1) LJFP's Motion to Dismiss Allen's counterclaims for negligent misrepresentation and statutory fraud; (2) Bennett/USIC's Motion to Dismiss Allen's claims for breach of contract, promissory estoppel, negligent misrepresentation, and statutory fraud; and (3) Allen's Motion to Dismiss Bennett/USIC's counterclaim for declaratory judgment. The Court will address each motion in turn.

         II. Legal Standards

         A. Rule 12(b)(6)

         A pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The pleading standard Rule 8 announces does not require “detailed factual allegations, ” but it does demand more than an unadorned accusation devoid of factual support. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter to state a claim for relief that is plausible on its face. Twombly, 550 U.S. at 570. The court must accept all of the plaintiff's factual allegations as true, but it is not bound to accept as true “a legal conclusion couched as a factual allegation.” Id. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). Where the facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has stopped short of showing that the pleader is plausibly entitled to relief. Iqbal, 556 U.S. at 678.

         B. Rule 9(b)

         Parties alleging fraud must meet a heightened pleading standard. Rule 9(b) provides, in pertinent part, that, “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Articulating the elements of fraud with particularity “requires a plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997) (internal citation omitted); U.S. ex rel Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 903 (5th Cir. 1997) (“At a minimum, Rule 9(b) requires that a plaintiff set forth the ‘who, what, when, where, and how' of the alleged fraud.”) (internal citation omitted).

         Further, “Rule 9(b) applies by its plain language to all [allegations] of fraud, whether they are part of a claim of fraud or not.” Lone Star Ladies Inv. Club v. Schlotzsky's Inc., 238 F.3d 363, 368 (5th Cir. 2001); see also Benchmark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003) (“Although Rule 9(b) by its terms does not apply to negligent misrepresentation claims, this court has applied the heightened pleading requirements when . . . fraud and negligent misrepresentation claims are based on the same set of alleged facts.”).

         III. Analysis

         A. LJFP's ...

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