United States District Court, W.D. Texas, El Paso Division
MEMORANDUM OPINION & ORDER
T. BERTON UNITED STATES MAGISTRATE JUDGE
day, the Court considered “Defendant Stanton
Nelson's Motion to Dismiss Defendant East El Paso
Physicians' Medical Center, LLC's Crossclaim”
(“Motion to Dismiss”) (ECF. No.
After reviewing the parties' moving papers and the
applicable law, the Court orders that Nelson's Motion to
Dismiss is HEREBY GRANTED IN PART AND DENIED IN
PART as set forth herein.
28, 2017, Argent filed suit against Defendants East El Paso
Physicians' Medical Center, LLC d/b/a Foundation Surgical
Hospital of El Paso (“EEPPMC”), Foundation
Surgical Hospital Holdings LLC, Randstad Professionals US,
LLC d/b/a Tatum, Stanton Nelson, and Justin Bynum
(collectively, “Defendants”). (ECF. No. 1).
Thereafter, on August 4, 2017, Argent filed its Amended
Complaint against Defendants. (ECF. No. 15). Argent asserts
various causes of action related to a “Receivables
Purchase and Sales Agreement” for the purchase of
medical debt. (Id.).
EEPPMC filed an amended answer containing crossclaims against
Justin Bynum, Stanton Nelson, and Foundation Surgical
Hospital Holdings and counterclaims against Argent. (ECF. No.
57). Relevant here, EEPPMC asserts claims against Nelson for
fraudulent misrepresentation, fraudulent inducement,
negligent representation, and conversion. (ECF. No. 57, p.
of the Federal Rules of Civil Procedures requires “a
short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).
To survive a Rule 12(b)(6) motion to dismiss, a complaint
must contain “sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (internal quotation marks and citation omitted).
“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.” Id. (citation omitted).
“Factual allegations must be enough to raise a right to
relief above the speculative level, on the assumption that
all the allegations in the complaint are true (even if
doubtful in fact).” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (citations omitted).
Consequently, a complaint requires more than “labels
and conclusions, and a formulaic recitation of the elements,
” and must state more than “an unadorned,
Id.; Iqbal, 556 U.S. at 678.
because Plaintiff alleges fraud, those claims must meet the
heightened Rule 9(b) standard. Williams v. WMX Techs.,
Inc., 112 F.3d 175, 177 (5th Cir. 1997); see also In
re Enron Corp. Sec., 2010 U.S. Dist. LEXIS 145220, at
*75 (S.D. Tex. 2010). Under Rule 9(b) “[i]n alleging
fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.”
Fed.R.Civ.P. 9(b). To satisfy Rule 9(b)'s pleading
requirements, the Plaintiff must “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,
112 F.3d at 177-78 (citation omitted). In essence, Rule 9(b)
requires “that a plaintiff set forth the ‘who,
what, when, where, and how' of the alleged fraud.”
United States ex rel. Steury v. Cardinal Health,
Inc., 625 F.3d 262, 266 (5th Cir. 2010) (citations
argues that: (1) the Economic Loss Rule prevents the
immediate litigation; (2) Nelson, as a corporate officer, is not
personally liable for the alleged acts; (3) EEPPMC fails to
plead the elements of fraud; (4) EEPPMC fails to plead the
elements of negligent representation; and (5) EEPPMC fails to
plead the elements of conversion, specifically that Nelson
had control of the property or personally benefited from its
retention. (ECF. No. 62, p. 4-7). EEPPMC responds that: (1)
the Economic Loss Rule does not preclude the immediate
litigation; (2) corporate officers are personally liable for
their tortious conduct; (3) EEPPMC sufficiently pled its
fraud claims; (4) EEPPMC sufficiently pled its negligent
misrepresentation claim; and (5) EEPPMC sufficiently pled a
conversion cause of action because conversion does not have a
“personal benefit” element. (ECF. No. 65, p.
Economic Loss Rule
Court finds that the Economic Loss Rule is inapplicable to
EEPPMC's crossclaim. Under the Economic Loss Rule,
“[w]hen a party's acts breach a contract and the
only alleged injury is economic loss to the subject of the
contract itself, the action sounds in contract alone.”
Staton Holdings, Inc. v. Tatum, L.L.C., 345 S.W.3d
729, 732 (Tex. App. 2011) (citations omitted). However, the
rule “does not bar all tort claims arising out of a
contractual setting.” Chapman Custom Homes v.
Dallas Plumbing, 445 S.W.3d 716, 718 (Tex. 2014) (per
curiam). Specifically, the rule does not bar fraud and
negligent misrepresentation causes of action. Sharyland
Water Supply Corp. v. City of Alton, 354 S.W.3d 407,
418-419 (Tex. 2011) (listing several tort claims, including
fraud and negligent misrepresentation, which are not barred
by the Economic Loss Rule in a contractual setting). Here,
EEPPMC's crossclaim is based on fraud, negligent
misrepresentation, and conversion. Accordingly, the Court
finds that the Economic Loss Rule serves as no barrier to
these claims. See id.
Personal Liability of Nelson
Court finds that Nelson may be personally liable for fraud,
negligent misrepresentation, and conversion, if these claims
are sufficiently alleged. “The general rule of
corporate law is that officers of a corporation are insulated
from personal liability arising from their activities
performed in the scope of their duties for the
corporation.” Portlock v. Perry, 852 S.W.2d
578, 582 (Tex. App. 1993) (citation omitted). However,
“[i]t is a longstanding rule in Texas that a corporate
agent is personally liable for his own fraudulent or tortious
acts, even when acting within the course and scope of his
employment.” Cimarron Hydrocarbons Corp. v.
Carpenter, 143 S.W.3d 560, 564 (Tex. App. 2004).
Consequently, “[o]nce fraud is shown, the court may . .
. find an officer personally liable.” United
Heritage Corp. v. Black Sea Invs., Ltd., 2005 Tex.App.
LEXIS 1280, at *23 (Tex. App. 2005) (citing Walker v.