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Lahman v. Cape Fox Corp.

United States District Court, E.D. Texas, Sherman Division

August 15, 2019

EARLINE LAHMAN, ET AL.
v.
CAPE FOX CORPORATION, ET AL.

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendant William Walker's (“Walker”) Rule 12(c) Motion for Judgment on the Pleadings (Dkt. #115). After reviewing the relevant pleadings, the Court finds that Walker's motion should be granted.

         BACKGROUND

         The Small Business Association (“SBA”) provides a mentorship service that connects small businesses to larger ones (Dkt. #95 at p. 10). The SBA connected Michael Brown (“Brown”), Cape Fox Corporation's (“Cape Fox”) CEO, to Earline Lahman (“Lahman”), who owns National Provider Solutions (“NPS”) with her husband. In late 2012, Brown proposed purchasing NPS and immediately asked Walker, as Cape Fox's outside counsel, to draft a letter to Lahman outlining the initial terms of the offer (Dkt. #95 at p. 11). Lahman then met with Brown and Walker for several days of in-person meetings at Cape Fox's headquarters in Virginia (Dkt. #95 at pp. 11-12).

         Before the sale would go into effect, the SBA would need to approve the transaction. The SBA asked Lahman to write a letter that explained why she wanted the sale to go forward. (Dkt. #95 at pp. 16-17). But when she did so, Walker revised the letter, without explaining his edits, before it was sent to the SBA. (Dkt. #95 at pp. 16-17). The SBA then initiated a conference call with Lahman, Brown, and Walker because Cape Fox had failed to submit certain documents (Dkt. #95 at pp. 18-19). Walker drafted one of these documents for Lahman, but the SBA informed her that its form was unacceptable (Dkt. #95 at p. 19). Lahman then drafted it herself, and it was accepted (Dkt. #95 at p. 19).

         Still having not acquired NPS, in July 2013, Walker and a lobbyist, C.J. Zane, discussed ways to expedite the transaction (Dkt. #95 at p. 21). Cape Fox, through Walker and Brown, then changed the terms of their agreement to limit the maximum amount of payment that the Lahmans could receive through NPS' profits (Dkt. #95 at p. 23). Lahman initially refused to sign the change of terms, but Brown and Walker threatened to sue (Dkt. #95 at p. 23).

         The SBA would ultimately approve the transaction-though only based on allegedly false information Defendants provided them-such as a promise that NPS would remain in Texas. At this point, Walker asked Cape Fox's CEO when he would prefer the transfer of NPS to occur (Dkt. #95 at p. 25). Walker then sent an email that outlined specific actions that Cape Fox should take to change NPS' ownership documents to reflect Cape Fox ownership, to set up an NPS ethics compliance program, and to draft minutes “to close out the paper trail” (Dkt. #95 at p. 25). Defendants subsequently announced their plans to move NPS from Texas to Virginia.

         In short, Plaintiffs allege that Defendants did not or should not have acquired NPS but attempted to take control over some or all of the company's operations anyway.

         Plaintiffs sued Cape Fox, Walker, and others on this basis. Walker now moves for judgment on the pleadings. He notes that Plaintiffs' allegations against him are based on conduct he took as Cape Fox's outside counsel-such as drafting contracts, revising letters, and arranging meetings- and that he is protected under attorney immunity as a result (Dkt. #115). Plaintiffs have not disputed these assertions, and the deadline to do so has long passed.

         LEGAL STANDARD

         Federal Rule of Civil Procedure 12(c) provides that “[a]fter the pleadings are closed-but early enough not the delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). “A motion brought pursuant to Fed. R. Civ. P 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts.” Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (citation omitted); Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312-13 (5th Cir. 2002). “The central issue is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief.” Hughes v. Tobacco Inst., Inc., 278 F.3d 417, 420 (5th Cir. 2001) (citing St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 440 n.8 (5th Cir. 2000)).

         “Pleadings should be construed liberally, and judgment on the pleadings is appropriate only if there are no disputed issues of fact and only questions of law remain.” Great Plains Tr., 313 F.3d at 312 (quoting Hughes, 278 F.3d at 420). The standard applied under Rule 12(c) is the same as that applied under Rule 12(b)(6). Ackerson v. Bean Dredging, LLC, 589 F.3d 196, 209 (5th Cir. 2009); Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007).

         A Rule 12(b)(6) motion allows a party to move for dismissal of an action when the complaint fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). When considering a motion to dismiss under Rule 12(b)(6), the Court must accept as true all well-pleaded facts in the plaintiff's complaint and view those facts in the light most favorable to the plaintiff. Bowlby v. City of Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court may consider “the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010). The Court must then determine whether the complaint states a claim for relief that is plausible on its face. “‘A claim has facial plausibility when the plaintiff pleads factual content that allows the [C]ourt to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “But where the well-pleaded facts do not permit the [C]ourt to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

         In Iqbal, the Supreme Court established a two-step approach for assessing the sufficiency of a complaint in the context of a Rule 12(b)(6) motion. First, the Court should identify and disregard conclusory allegations, for they are “not entitled to the assumption of truth.” Iqbal, 556 U.S. at 664. Second, the Court “consider[s] the factual allegations in [the complaint] to determine if they plausibly suggest an entitlement to relief.” Id. “This standard ‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary claims or elements.'” Morgan v. Hubert, 335 Fed.Appx. 466, 470 (5th Cir. 2009) ...


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