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Phalanx Group International v. Critical Solutions International

United States District Court, N.D. Texas, Dallas Division

October 23, 2019




         Before the Court is Defendant Critical Solutions International's motion to dismiss (Doc. 40). For the reasons stated, the Court GRANTS the motion (Doc. 40) and DISMISSES all claims.



         The issue before the Court is whether Defendant Critical Solutions International (CSI) owes Plaintiff Phalanx Group International (Phalanx) commission for Phalanx's facilitation of military equipment sales. Phalanx seeks compensation for CSI's sale of seven “Husky” mine-detection vehicles, as well as for additional, unspecified sales by CSI. See Doc. 37, Second Am. Compl., ¶ 42. This Court thoroughly described the history underlying this breach-of-contract case when it granted CSI's previous motion to dismiss (Doc. 29). See Doc. 36, Mem. Op. & Order, 1-4. Thus, the Court hereby incorporates the “Background” section of its previous order (Doc. 36). Nonetheless, to provide additional context, the Court briefly summarizes its most recent ruling before turning to the present claims.

         A. This Court Previously Dismissed Phalanx's Breach-of-Contract Claims and Granted Phalanx Leave to File a Second Amended Complaint.

         In granting CSI's previous motion to dismiss (Doc. 29), this Court found that Phalanx's first amended complaint failed to sufficiently allege the existence of a contract covering the sale of the seven Huskys. Doc. 36, Mem. Op. & Order, 10. The Court concluded that the December 17 Sales Representation Agreement (December 17 SRA)-the only official agreement between the parties submitted by Phalanx-covered only direct commercial sales (DCS). See Doc. 36, Mem. Op. & Order, 9-10 (summarizing the difference between direct commercial sales and foreign military sales). The sale of the seven Husky vehicles, however, was a foreign military sale (FMS). Id. at 9. Since neither party offered an official contractual amendment to the December 17 SRA specifying a commission rate for the sale of the seven FMS Huskys, the Court found the allegations of a governing contract insufficient. Id. at 11. Further, although Phalanx suggested that subsequent agreements addressed the seven-Husky sale, the Court did not consider this argument, because Phalanx failed to raise it in its first amended complaint. Id. at 11-12.

         Moreover, although Phalanx sufficiently alleged the existence of a contract regarding additional Husky sales, the Court concluded that Phalanx did not adequately allege a breach of this contract. Id. at 12-14. Specifically, the Court reasoned that Phalanx's allegations, based only “upon information and belief, ” were “too sparse” to provide a ripe dispute over the sale of additional Huskys. Id. at 14 (internal quotation marks omitted). Further, the Court expressed its confidence that, if there were additional Husky sales, Phalanx “[would] be able to amend its complaint to more thoroughly reflect that . . . .” Id. Based on Phalanx's bare allegations, the Court dismissed Phalanx's claim for commission on additional sales. Id. Nonetheless, the Court permitted Phalanx to file a second amended complaint, instructing Phalanx to “specifically and separately articulate the basis for its claims . . . .” Id. at 16.

         B. CSI Now Seeks Dismissal of All Claims in Phalanx's Second Amended Complaint.

         On March 19, 2019, Phalanx filed its second amended complaint. See Doc. 37, Second Am. Compl. In its second amended complaint, Phalanx once again asserts breach-of-contract claims. Id. ¶ 1. Specifically, Phalanx seeks commission for its facilitation of the purchase agreement between the Kingdom of Saudi Arabia (KSA) and CSI of seven Husky vehicles. See Id. ¶ 42. Moreover, Phalanx seeks the payment of commission for other, additional Husky sales made by CSI. See Id. ¶ 43. Phalanx acknowledges that the December 17 SRA governs the parties' dispute. Id. ¶¶ 31, 39.

         In response, CSI filed a motion to dismiss (Doc. 40), seeking dismissal of all claims. Doc. 41, Mem. of Law in Supp. of Mot. to Dismiss, 10. In its motion, CSI reiterates this Court's previous finding that the December 17 SRA provides commission only for DCS-not the seven-Husky FMS. See Id. at 5; Doc. 36, Mem. Op. & Order, 10-12. Moreover, CSI points out that an amendment to the December 17 SRA (Amendment 1) “explicitly excludes commissions on the seven Husky FMS sale . . . .” Doc. 41, Mem. of Law in Supp. of Mot. to Dismiss, 5. Accordingly, CSI contends that Phalanx has failed to state a breach-of-contract claim pertaining to the seven-Husky FMS. Id. at 8. And with respect to additional Husky sales, CSI suggests that Phalanx failed to plead new facts in its second amended complaint that would support its breach-of-contract allegations. Id.



         CSI filed its motion as a motion to dismiss or, in the alternative, a motion for summary judgment. Doc. 40, Mot. to Dismiss Second Am. Compl., 1. Accordingly, the Court must determine first which standard to apply.

         Deciding whether Rule 12(b)(6) or Rule 56 is the proper procedural vehicle for resolving an issue is driven by whether a court deems it appropriate to consider materials outside the pleadings and otherwise not appropriate for a 12(b)(6) analysis. See generally, St. Paul Ins. Co. of Bellaire, Tex. v. AFIA Worldwide Ins. Co., 937 F.2d 274, 279 (5th Cir. 1991).

         Given that no discovery evidence has been presented in this case, and that the Court does not consider any evidence outside the pleadings in reaching its decision, the Court finds it inappropriate to proceed under a summary-judgment posture. Thus, the Court analyzes CSI's motion as a motion to dismiss.

         Under Federal Rule of Civil Procedure Rule 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) authorizes the Court to dismiss a complaint for “failure to state a claim upon which relief can be granted.” Id. 12(b)(6). To survive a 12(b)(6) motion, “enough facts to state a claim to relief that is plausible on its face” must be pled. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         “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 this stage, a court “must accept all well-pleaded facts alleged in the complaint as true and must construe the allegations in the light that is most favorable to the plaintiff.” J&J Sports Prods., Inc. v. Live Oak Cnty. Post No. 6119 Veterans of Foreign Wars, 2009 WL 483157, at *3 ...

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