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Pelletier v. Victoria Air Conditioning, Ltd.

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

March 28, 2018




         This commercial lawsuit[1] is one of several (filed in both state and federal court) involving the construction of the TexInn, a hotel in Cuero, DeWitt County, Texas. Plaintiff Gaetan Pelletier claims hotel ownership and seeks various damages allegedly caused by faulty plumbing installed by Defendants Victoria Air Conditioning, Ltd. ("VAC") and its employees.

         Plaintiff alleges liability for (1) breach of contract; (2) negligence; (3) negligence per se; (4) gross negligence; (5) common law fraud and fraudulent inducement; (6) fraud by nondisclosure; and (7) conspiracy. For each of these causes of action, Plaintiff seeks damages in excess of $75, 000 for: (1) lost revenues from the delay in opening the TexInn hotel and (2) the costs of repair to the building and replacement of the allegedly faulty plumbing.

         Plaintiff is a citizen and resident of California. Defendants VAC, Lloyd Boedeker, Warren Heilker, Gay Heilker, Benjamin F. Heilker, Donald H. Anderson, and Mario Ledesma are all citizens and residents of Texas. The individual Defendants are current and former employees or officers of VAC. This Court has diversity jurisdiction. 28 U.S.C. § 1332(a).

         In a Rule 12(b)(1) motion, Defendants have challenged Plaintiffs standing to bring these claims. Fed.R.Civ.P. 12(b)(1). The issue is his ownership of the hotel. If he is not the owner, he is not the proper party to bring this lawsuit. See Schwartzott v. Etheridge Prop. Mgmt., 403 S.W.3d 488, 499 (Tex. App. 2013) (holding that plaintiffs lacked standing to sue for damaged property they did not own); Develo-cepts, Inc. v. City of Galveston, 668 S.W.2d 790, 794 (Tex. App. 1984) ("Without an interest in the property, appellant had no legal right to be breached, and therefore, had no standing to challenge zoning decisions concerning that property."). "If a plaintiff lacks standing to bring a claim, the Court lacks subject matter jurisdiction over the claim and dismissal under Federal Rule of Civil Procedure 12(b)(1) is appropriate." In re Enron Corp. Sec., Derivative & ERISA Litig., 279 F.R.D. 395, 403 (S.D. Tex. 2011) (citations omitted). "[A] plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties." Superior MRI Servs., Inc. v. All. Healthcare Servs., Inc., 778 F.3d 502, 504 (5th Cir. 2015) (quoting United States v. Johnson, 632 F.3d 912, 919-20 (5th Cir. 2011)). When a defendant factually challenges ownership of legal rights by submitting evidence, the plaintiff must prove to the Court his own interest in the legal claims of his suit and must do so by a preponderance of the evidence. Superior MRI Servs., Inc., 778 F.3d at 504. If he fails to do so, he has no standing and his suit must be dismissed. Id.

         Based on Plaintiffs pleadings and the evidence in the record, Defendants contend that Plaintiff lacks standing to bring his claims against them because any claims would belong to Plaintiffs limited liability companies, not Plaintiff as an individual. The limited liability companies of Plaintiff s Cuero project are:

(1) Pelletier Management & Consulting, LLC ("PMC"), which Plaintiff describes in this suit as "a Colorado Limited Liability Company and...the land owner on which the improvements of the project are situated."
(2) TexInn, LLC, a limited liability company formed under Texas law which Plaintiff alleges in this suit "manages the TexInn project in part and [which] is designated to own and operate the [hotel] business."
(3) Q.I. Wholesale, Lumber LLC, a limited liability company formed under Texas law which Plaintiff claims in this suit is "one of the building material purchasing agents for the TexInn Project." Plaintiff is a member of Q.I. Wholesale Lumber, LLC and TexInn, LLC, and the chief executive manager of Pelletier Management & Consulting, LLC. It is apparent to the Court that Plaintiff is the primary actor of each of the limited liability companies. On May 25, 2017, the Court (Hanks, J., presiding) ordered the parties to engage in discovery related to Plaintiffs standing. The parties have submitted substantial documentary evidence bearing on the ownership of the TexInn hotel. The Court also held a motion hearing on January 30, 2018 during which Plaintiff testified under oath and Defendants submitted further documentary evidence.

         The public record for the TexInn hotel shows no ownership in Plaintiff. In the first instance, general warranty deed #85582, dated February 10, 2012, conveys title of the land where the TexInn is built from grantors David and Nancy Calhoon to grantee PMC. See Vol. 407, Pages 206-211, Deed Records, DeWitt County, Texas. (D.E. 37-1, Pages 38-43). Likewise, DeWitt County Appraisal District records through 2017 name PMC as the owner of the land, valued at $146, 180, and owner of the improvements, valued at $1, 255, 010. (D.E. 37-1, Pages 56-59).

         In deeds of trust to secure loans for the hotel's construction, Pelletier as chief executive manager signed three deeds of trusts each on separate occasions declaring that PMC was the owner of the property "including any improvements": (1) in deed of trust #108081, dated February 25, 2015, PMC pledged that it owned the land "including any improvements" to secure a loan of $2, 000, 000 (D.E. 37-1, Pages 60-65); (2) in deed of trust #113287, dated April 12, 2016, PMC again made such representation of ownership in PMC to secure a loan of $500, 000 (D.E. 37-1, Pages 66-70); (3) in deed of trust #116974, dated March 31, 2017, PMC again made the same statement of ownership in PMC to secure a loan of $1, 000, 000 (D.E. 37-1, Pages 71-77). This last deed of trust was signed by Pelletier after he filed this suit claiming he was the owner of the hotel. These mortgages contradict Pelletier's personal claims to owning the improvements.

         Equally troubling are claims in a state of Texas lawsuit. On September 23, 2016, Q.I. Wholesale Lumber, LLC and TexInn, LLC brought suit against VAC and Boedeker in the 267th District Court in DeWitt County, Texas claiming the same damages arising from the same events as this lawsuit. Plaintiffs limited liability companies alleged that they were "the owners of the TexInn hotel." (D.E. 37-1, Page 3). Plaintiff made the decision to bring the DeWitt County lawsuit and retain counsel. When counsel withdrew, the state district judge ordered the plaintiffs to enlist counsel and admonished that limited liability companies could not proceed pro se. Plaintiff testified that he decided to abandon the state suit. After Plaintiffs limited liability companies failed to hire counsel or further prosecute the case, the district judge dismissed Q.I. Wholesale Lumber, LLC and TexInn, LLC's claims, but entered default judgment on VAC's counterclaim against the state plaintiffs.

         Now in this federal suit, and appearing pro se, Plaintiff claims hotel ownership for himself-not his limited liability companies. Plaintiff clarifies that he owns the "hotel" itself, which the Court takes to mean the building (its physical manifestation of steel, concrete, and lumber) as opposed to the "hotel business" of TexInn, LLC. Plaintiff further explained that it is his practice to use the limited liability companies, as the organizational structures here and at other properties, to develop his hotel projects. Income tax advantages are the motivation for using limited liability companies.

         To meet his burden of proving to the Court that he is the owner of the hotel, Plaintiff offers one document, entitled "Land Lease Agreement." The lessor is PMC, signed by Plaintiffs wife, Nancy Pelletier, on behalf of lessor; ...

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