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Windecker v. Wei

United States District Court, W.D. Texas, Austin Division

August 26, 2019

THEODORE R. WINDECKER
v.
HANG WEI, et al.

          THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE.

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          ANDREW W. AUSTIN UNITED STATES MAGISTRATE JUDGE.

         Before the Court are Defendants' Motion to Dismiss (Dkt. No. 6), Plaintiff's Response (Dkt. No. 12), Defendants' Reply (Dkt. No. 17), and Plaintiff's Sur-Reply (Dkt. No. 38). The District Court referred the above motion to the undersigned for a report and recommendation pursuant to 28 U.S.C. § 636(b) and Rule 1(c) of Appendix C of the Local Court Rules.

         I. BACKGROUND

         Plaintiff Theodore Windecker brings several causes of action against Defendants Hang Wei, China Vast International, LTD (“Windecker China”), and Windecker Aircraft, Inc. (“Windecker USA”). Plaintiff's claims arise from the sale of his ownership interest in a company owning certain assets and intellectual property to Windecker China pursuant to a Unit Purchase Agreement (“UPA”) and Plaintiff's subsequent employment with Windecker USA as its Chief Technology Officer under the terms of an Employment Agreement. Plaintiff alleges, in part, that Windecker China refused to make payments due upon the achievement of milestones related to developing the aircraft assets purchased, and to transfer ownership interests owed pursuant to the UPA; that all Defendants acted to prevent Plaintiff from achieving the milestone payments; and that all Defendants forced Plaintiff to modify the UPA and the Employment Agreement under economic duress. Plaintiff brings claims for declaratory judgment, separate breach of contract claims for the UPA and the Employment Agreement, and a negligent misrepresentation claim. Windecker China and Windecker USA now move to dismiss the declaratory judgment and negligent misrepresentation claims under Rule 12(b)(6), and Windecker USA additionally moves to dismiss the suit against it as a whole for lack of personal jurisdiction, pursuant to Rule 12(b)(2).

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b)(6) allows a party to move to dismiss an action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim, “[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the [nonmovant].” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (internal quotation marks omitted), cert. denied, 552 U.S. 1182 (2008). While a complaint attacked by a Rule 12(b)(6) motion does not need detailed factual allegations in order to avoid dismissal, the plaintiff's factual allegations “must be enough to raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The Supreme Court has explained that a court need not accept as true conclusory allegations or allegations stating a legal conclusion. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint must contain sufficient factual matter “to state a claim to relief that is plausible on its face.” Id. (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the [nonmovant] pleads factual content that allows the court to draw the reasonable inference that the [movant] is liable for the misconduct alleged.” Id.

         Additionally, a non-resident defendant may move to dismiss for lack of personal jurisdiction under Rule 12(b)(2). “If . . . the court rules on personal jurisdiction without conducting an evidentiary hearing, the plaintiff bears the burden of establishing only a prima facie case of personal jurisdiction.” Sangha v. Navig8 Ship Management Private Ltd., 882 F.3d 96, 101 (5th Cir. 2018). “The district court is not obligated to consult only the assertions in the plaintiff's complaint in determining whether a prima facie case for jurisdiction has been made. Rather, the district court may consider the contents of the record at the time of the motion. . . .” Id. (internal quotations and citations omitted). “Although jurisdictional allegations must be accepted as true, such acceptance does not automatically mean that a prima facie case for [personal] jurisdiction has been presented.” Id. The plaintiff must prove that the court has jurisdiction over the defendant with regard to each claim. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 275 (5th Cir. 2006).

         A federal court sitting in diversity may exercise personal jurisdiction over a non-resident defendant if (1) the state's long-arm statute permits an exercise of jurisdiction over that defendant, and (2) an exercise of jurisdiction would comport with the requirements of the Due Process Clause of the Fourteenth Amendment. Sangha, 882 F.3d at 101; McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009), cert. denied, 131 S.Ct. 68 (2010). Because the requirements of Texas's long-arm statute are coextensive with the requirements of the Due Process Clause, the sole inquiry is whether this Court's exercise of personal jurisdiction over the Defendants would be consistent with due process. Id. The Supreme Court has articulated a two-part test to determine whether a federal court sitting in diversity may properly exercise personal jurisdiction over a nonresident defendant: (1) the nonresident must have sufficient “minimum contacts” with the forum state, and (2) subjecting the nonresident to jurisdiction in the forum state must not offend traditional notions of “fair play and substantial justice.” McFadin, 587 F.3d at 759 (citing Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)). A defendant's “minimum contacts” may give rise to either specific or general personal jurisdiction, depending on the nature of the suit and defendant's relationship to the forum state. Jackson v. Tanfoglio Giuseppe, S.R.L., 615 F.3d 579, 584 (5th Cir. 2010).

         In this Circuit, specific personal jurisdiction is a claim-specific inquiry; a plaintiff bringing multiple claims that arise out of different forum contacts must establish specific jurisdiction for each claim. McFadin, 587 F.3d at 759. Specific jurisdiction applies when a nonresident defendant “has purposefully directed its activities at the forum state and the litigation results from alleged injuries that arise out of or relate to those activities.” Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 243 (5th Cir. 2008). The touchstone of specific-jurisdiction analysis is “whether the defendant's contact shows that it reasonably anticipates being haled into court.” McFadin, 587 F.3d at 759. Even a single contact can support specific jurisdiction if it creates a “substantial connection” with the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 n.18 (1985). Specific jurisdiction “focuses on the relationship among the defendant, the forum, and the litigation.” Sangha, 882 F.3d at 103 (quoting Monkton Ins. Servs. v. Ritter, 768 F.3d 429, 432-33 (5th Cir. 2014). Due process requires that specific jurisdiction be based on more than the “random, fortuitous, or attenuated” contacts a defendant makes by interacting with people affiliated with the forum state. Walden v. Fiore, 571 U.S. 277, 286 (2014). The plaintiff thus “cannot be the only link between the defendant and the forum. Rather, it is the defendant's conduct that must form the necessary connection with the forum State that is the basis for its jurisdiction over him.” Id. at 285.

         III. ANALYSIS

         A. Rule 12(b)(6) motion

         In their 12(b)(6) motion, Windecker China and Windecker USA argue that the negligent misrepresentation claim should be dismissed for several reasons, including the fact that it is barred by Texas' economic loss rule. They also ask that the Court dismiss the Plaintiff's economic duress claim as time barred.

         1. Negligent ...


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