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Fire Protection Service, Inc. v. Survitec Survival Products, Inc.

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

August 9, 2019

FIRE PROTECTION SERVICE, INC., Plaintiff,
v.
SURVITEC SURVIVAL PRODUCTS, INC. d/b/a SURVITEC GROUP, Defendant.

          MEMORANDUM AND ORDER

          NANCY F. ATLAS SENIOR UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant Survitec Survival Products, Inc.'s (“Survitec”) Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) (“Motion to Dismiss” or “Motion”) [Doc. # 5]. Plaintiff Fire Protection Service, Inc. (“FPS”) responded, [1] and Survitec replied.[2] The Motion is ripe for decision. Based on the parties' briefing, pertinent matters of record, and relevant legal authority, the Court denies Survitec's Motion to Dismiss.

         I. BACKGROUND

         This factual background is drawn from the allegations in Plaintiff FPS's Complaint.[3] These allegations, for the purposes of the Motion, are taken as true. See, e.g., Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009).

         Survitec, a Delaware corporation headquartered in Jacksonville, Florida, is in the business of manufacturing marine safety and survival equipment, including life rafts.[4] FPS, a Texas corporation headquartered in Houston, was a dealer and servicer of Survitec's life rafts until Survitec terminated their dealer arrangement in December 2017.[5] After FPS's attempts to have Survitec repurchase its life raft inventory failed, FPS initiated this lawsuit in Texas state court on June 14, 2019.[6]

         FPS asserts a single cause of action against Survitec for violation of Texas's Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act (“Deal Protection Act” or the “Act”).[7] See Tex. Bus. & Com. Code § 57.001 et seq. FPS alleges Survitec violated its duty under the Act to repurchase, after termination of the parties' dealer agreement, all the life rafts and parts FPS had purchased from Survitec.[8] Survitec timely removed based on diversity jurisdiction.[9]

         II. MOTION TO DISMISS STANDARD

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (citing Harrington, 563 F.3d at 147). The complaint must be liberally construed in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563 F.3d at 147. The complaint must, however, contain sufficient factual allegations, as opposed to legal conclusions, to state a claim for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d 614, 617 (5th Cir. 2012).

         Federal pleading rules call for “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). When there are well-pleaded factual allegations, a court should presume they are true, even if doubtful, and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. “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. at 678. “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court “accept[s] all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” Edionwe, 860 F.3d at 291 (quoting Gines v. D.R. Horton, Inc., 699 F.3d 812, 816 (5th Cir. 2012)).

         III. DISCUSSION

         Survitec moves to dismiss FPS's Complaint for failure to state a claim under the Deal Protection Act. The Act governs the relationship of suppliers and dealers with respect to certain “equipment, ” as defined by the Act. See Tex. Bus. & Com. Code § 57.002(7). Survitec asserts that the parties' dispute regarding the repurchase of life rafts is not governed by the Dealer Protection Act because life rafts do not qualify as “equipment” within the meaning of Act.

         A. The Dealer Protection Act

         Recognizing that the sale and rental of “agricultural, construction, industrial, mining, outdoor power, forestry, and lawn and garden equipment through” independent dealers “vitally affect [Texas's economy], the public interest, and the public welfare, ” the Texas Legislature in 2011 enacted the Dealer Protection Act to regulate “the business relationship between . . . independent dealers and equipment suppliers.” Fair Practices of Equipment Manufacturers, Distributors, Wholesalers, and Dealers Act, 82nd Leg., R.S., ch. 1039, § 1, 2011 Tex. Sess. Law Serv. (codified at Tex. Bus. & Com. Code § 57.001 et seq.). Under the Act, “[a] supplier who refuses to repurchase any inventory covered [by the Act] after termination or discontinuation of the dealer agreement is liable to the dealer for” 110 percent of the repurchase price, freight charges, accrued interest, and attorney fees and costs. See Tex. Bus. & Com. Code § 57.355(a). A “dealer agreement” is defined as ...


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