United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE
case is before the Court on the Motion to Dismiss [Doc. # 42]
filed by Defendants Scott D. Nguyen, 2621 Amazing River Oaks,
LLC, 1923 Amazing Sawyer Heights, LLC, 1415 Amazing Voss,
LLC, 9650 Amazing Woodlake, LLC, 10927 Amazing Vintage Park,
LLC, 6501 Amazing Grand Lakes Katy, LLC, and Hawthorne
Heights, LLC (“Hawthorne Heights”), seeking
dismissal of the statutory fraud, common law fraud, negligent
misrepresentation, and civil conspiracy claims asserted by
Plaintiff Amazing Lash Franchise, LLC. Defendants argue that
Plaintiff lacks standing to assert these claims. Plaintiff
filed a Response [Doc. # 43], and Defendants filed a Reply
[Doc. # 45]. Having reviewed the record and the applicable
legal authorities, the Court grants the
Motion to Dismiss and dismisses the
statutory fraud, common law fraud, negligent
misrepresentation, and civil conspiracy claims because
Plaintiff lacks standing to assert them.
Lash” studios provide eyelash extensions and other
beauty care products and services. In 2012, Amazing Lash
Studio Franchise, LLC (“ALSF”) was formed to
offer “Amazing Lash” franchises. In October 2017,
the original “Amazing Lash” studios were sold to
Hawthorne Heights, owned by Nguyen, pursuant to three
separate Sale and Purchase Agreements. In early November
2017, ALSF entered into three separate Transfer Agreements
with Nguyen and Hawthorne Heights. Also in early November
2017, ALSF entered into franchise agreements with Defendants.
2018, Plaintiff was incorporated in the state of Delaware. In
September 2018, Plaintiff acquired the “Amazing
Lash” franchise system indirectly from ALSF, and
assumed all existing franchise agreements.
alleges that Defendants failed to comply with their
obligations under the franchise agreements. As a result,
Plaintiff sent Defendants notices of termination of the
franchise agreements. Plaintiff alleges that Defendants
failed to comply with their post-termination obligations.
See Amended Complaint [Doc. # 28], ¶¶
39-40. Plaintiff sued Defendants, asserting multiple causes
of action, including trademark-related claims. Plaintiff also
asserted claims for statutory fraud, common law fraud,
negligent misrepresentation against Scott Nguyen and
Hawthorne Heights, and a civil conspiracy claim against all
Defendants, alleging a civil conspiracy to commit fraud.
filed a Rule 12(b)(1) Motion to Dismiss, asserting that
Plaintiff lacks standing to assert these fraud-based claims.
The Motion to Dismiss has been fully briefed and is now ripe
STANDARD FOR RULE 12(b)(1) MOTION TO
defendant may file a motion asserting lack of subject matter
jurisdiction. See Fed. R. Civ. P. 12(b)(1). For a
federal court to have subject matter jurisdiction, the
plaintiff must establish constitutional standing to sue.
See Glass v. Paxton, 900 F.3d 233, 238 (5th Cir.
2018). “One requirement of constitutional standing is
that the plaintiff must have suffered (or be imminently
threatened with suffering) the alleged injury.”
Pelletier v. Victoria Air Conditioning, Ltd., __
Fed.Appx. __, 2019 WL 3071870, *3 (5th Cir. July 12, 2019)
(citing Lexmark Int'l, Inc. v. Static Control
Components, Inc., 572 U.S. 118, 125 (2014)). The party
invoking federal jurisdiction bears the burden of
establishing standing. See Lujan v. Defenders of
Wildlife, 504 U.S. 555, 561 (1992).
is a question of law for the court. See Friends of St.
Francis Xavier Cabrini Church v. Fed. Emergency Mgmt.
Agency, 658 F.3d 460, 466 (5th Cir. 2011). The Court can
consider: “(1) the complaint alone; (2) the complaint
supplemented by undisputed facts evidenced in the record; or
(3) the complaint supplemented by undisputed facts plus the
court's resolution of disputed facts.” Tsolmon
v. United States, 841 F.3d 378, 382 (5th Cir. 2016).
to certain exceptions, Texas law grants assignees standing to
assert assigned claims. See Southwestern Bell Tel. Co. v.
Marketing on Hold Inc., 308 S.W.3d 909, 916 (Tex. 2010);
State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d
696, 705-07 (Tex. 1996). One such exception is for
fraud-based claims. “A fraud claim is personal to the
defrauded party.” Baker v. City of Robinson,
305 S.W.3d 783, 788 (Tex. App. - Waco 2009); Vial v. Gas
Sols., Ltd., 187 S.W.3d 220, 227 (Tex. App. - Texarkana
2006, no pet.) (citing Nobles v. Marcus, 533 S.W.2d
923, 927 (Tex. 1976)). Therefore, “only the defrauded
party has standing to assert a fraud claim.” Zaan,
LLC v. Sangani, 2015 WL 2398652, *4 (Tex. App. - Dallas,
May 20, 2015) (citing Nobles, 533 S.W.2d at 927). An
assignee of a contract that was not a party to the fraudulent
transaction does not have standing to sue unless he was
“specifically assigned causes of action for
fraud . . ..” See In re JNS Aviation, LLC, 376
B.R. 500, 533-34 (Bankr. N.D. Tex. 2007), aff'd sub
nom. JNS Aviation, Inc. v. Nick Corp., 418 B.R. 898
(N.D. Tex. 2009), aff'd sub nom. In re JNS Aviation,
L.L.C., 395 Fed.Appx. 127 (5th Cir. 2010).
case, Plaintiff did not come into existence until after the
alleged misrepresentations were made to ALSF. Plaintiff
argues that it has standing to assert the fraud-based causes
of action because ALSF assigned them to Plaintiff. To support
its argument, Plaintiff relies on an Asset Purchase Agreement
in which Wellness and Vitality Exchange, LLC
(“WAVE”) purchased franchise assets from ALSF,
and a Buyer Assignment Agreement in which WAVE assigned the
purchased assets to Plaintiff.
Asset Purchase Agreement, ALSF assigned to WAVE all
“claims or causes of action . . ..” See
Asset Purchase Agreement, Exh. A to Response, ¶ 2.1(h).
In the Buyer Assignment Agreement, WAVE assigned to Plaintiff
its “right, title and interest” under the Asset
Purchase Agreement “to acquire all the Purchased
Assets.” See Buyer Assignment Agreement, Exh.
B to Response, ¶ 2. Neither agreement specifically
assigns ALSF's fraud-based claims to WAVE or to
Plaintiff. Indeed, neither agreement mentions fraud-based
claims at all. ...