BCC Merch. Solutions, Inc. v. Jet Pay, LLC

• Decision Date: 08 September 2015
• Docket Number: Civil Action No. 3:12–CV–5185–B.
• Citation: 129 F.Supp.3d 440
• Parties: BCC MERCHANT SOLUTIONS, INC., Plaintiff, v. JET PAY, LLC, Trent R. Voigt, and Merrick Bank Corporation, Defendants.
• Court: U.S. District Court — Northern District of Texas

129 F.Supp.3d 440

BCC MERCHANT SOLUTIONS, INC., Plaintiff,

v.JET PAY, LLC, Trent R. Voigt, and Merrick Bank Corporation, Defendants.

Civil Action No. 3:12–CV–5185–B.

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

Signed Sept. 8, 2015.

William L. Sessions, Sessions & Associates, PLLC, Kyle William Harneck, Sessions & Schaffer, P.C., Dallas, TX, for Plaintiff.

R. Brent Cooper, Lauren Catherine Tow, Timothy M. Dortch, Cooper & Scully PC, Thomas G. Yoxall, Grant Craig Johnson, James H. Bilton, Taylor F. Brinkman, Locke Lord LLP, Dallas, TX, for Defendants.

Maryssa Jane Simpson, Cooper & Scully PC, Dallas, TX.

MEMORANDUM OPINION AND ORDER

JANE J. BOYLE

, District Judge.

Before the Court are two separate motions for summary judgment. The first, Defendant Merrick Bank Corporation's ("Merrick") Motion for Summary Judgment (doc. 183) ("Merrick's MSJ"), asserts, inter alia, that Plaintiff BCC Merchant Solutions, Inc. ("BCC") lacks constitutional and prudential standing to pursue its remaining breach of contract claim against Merrick, who entered into the contract at issue with BCC's wholly-owned subsidiary. Agreeing with Merrick that BCC may not maintain its breach of contract action or substitute its subsidiary as the real party in interest at this late juncture, the Court, as follows, GRANTS Merrick's MSJ.¹

The second motion, Defendants JetPay, LLC's ("JetPay") and Trent R. Voigt's ("Voigt") Motion for Summary Judgment (doc. 180) ("JetPay's and Voigt's MSJ"), presents numerous grounds for entering judgment in their favor on all or part of BCC's state law tort and contract claims, including, among other grounds, the economic loss doctrine, a contractual bar on consequential damages, and BCC's purported failure to establish its claims and damages arising therefrom. Finding summary judgment warranted for all but BCC's breach of contract claim against JetPay, the Court, for the reasons that follow, GRANTS IN PART and DENIES IN PART JetPay's and Voigt's MSJ.²

I.BACKGROUND

The events in this case took place in the industry responsible for processing credit card transactions between cardholders and merchants. Defendant Merrick, an industrial bank based in Utah, serves as an intermediary in this industry between merchants and credit card issuers; its role, on the front-end of this process, is to acquire credit card transactions from merchants and transmit the issuer's approval or denial; on the back-end, it settles the payments that issuers owe merchants.

Some of the services Merrick provides in this role are outsourced to Independent Sales Organizations ("ISO"). One such ISO is Plaintiff BCC, a small company registered and based in Missouri. BCC alleges that it contracted with Merrick to market Merrick's services to merchants, and enter into agreements with such merchants whom Merrick approved. BCC's alleged agreement with Merrick also required it to contract with approved third party service providers tasked with lending Merrick processing and merchant account reporting services. One of the third party service providers that BCC eventually contracted with is Defendant JetPay, a limited liability company based in Texas. Defendant Voigt, a resident of Texas and the last named defendant in this case, is JetPay's President.

BCC filed this action against Defendants after allegedly suffering significant financial losses due to JetPay's purported failure to adequately perform its contractual obligations. In addition to asserting that JetPay is at fault for its contractual breach, BCC claims that Merrick is contractually responsible for at least part of these losses, and that JetPay and Voigt are liable for their misrepresentations that set the losses in motion. After more than two years litigating these claims, Defendants now move for summary judgment. The Court will address, in turn, Merrick's MSJ then JetPay's and Voigt's MSJ. But first, the Court begins with a review of the applicable legal standard.

II.SUMMARY JUDGMENT LEGAL STANDARD

The standard of review governing motions for summary judgment is well established. Under Rule 56(a) of the Federal Rules of Civil Procedure

, summary judgment is appropriate if "there is no genuine dispute as to any material fact." FED. R. CIV. P. 56(a). A "material" fact is one that " ‘might affect the outcome of the suit under the governing law,’ " and a dispute is "genuine" when " ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ " Tagore v. United States, 735 F.3d 324 (5th Cir.2013) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)

). In analyzing whether a dispute is "genuine," courts "consider all facts and evidence in the light most favorable to the nonmoving party [,] ... draw all reasonable inferences in favor of the nonmoving party [,] ... [and] disregard all evidence favorable to the moving party that the jury is not required to believe." Haverda v. Hays County, 723 F.3d 586, 591 (5th Cir.2013) (quotation marks and internal citations omitted).

Procedurally, the movant "bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of" the record that "it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)

. Where, as here, the non-movant bears the burden of proving such material facts at trial, movants may satisfy their burden by either affirmatively showing the non-movant's inability to establish such material facts or "merely demonstrat[ing] an absence of evidentiary support in the record for the non-movant's case." Wesley v. Gen. Drivers, Warehousemen & Helpers Local, 745, 660 F.3d 211, 213 (5th Cir.2011) (quoting Bayle v. Allstate Ins. Co., 615 F.3d 350, 355 (5th Cir.2010) ). Once movants fulfill their initial responsibilities, "the burden shifts to the non-movant to produce evidence of the existence" of a genuine dispute regarding the material facts at issue. Bayle, 615 F.3d at 355.

III.MERRICK'S MSJ

The Court first addresses Merrick's MSJ.³ BCC's claims against Merrick have been significantly pared down by the Court's July 28, 2014 Memorandum Opinion and Order (doc. 79) ("July 28 Order") granting in part and denying in part Merrick's Rule 12(b)(6) Motion to Dismiss.⁴ What remains in the dispute between these two parties are portions of a breach of contract claim in which BCC alleges that Merrick breached its obligations under a "Merchant ISO Agreement" (the "ISO Agreement") dated November 10, 2008. See Merrick's App. 7–63, Ex. A–1 (hereinafter cited as "ISO Agreement"). At the center of this dispute is whether BCC is entitled to enforce the ISO Agreement, even though the contract plainly states that this ISO Agreement "is made by and between Merrick Bank Corporation ... and BankCard Central, Inc., a Missouri corporation with principal offices located [in Kansas City, Missouri]." See ISO Agreement.

Some brief background here: BankCard Central, Inc. ("BankCard") has been a wholly-owned subsidiary of BCC at all relevant times in this case. Richard Nobel registered both BankCard and BCC under Missouri law in the early 2000s, and in January 2007 all of BankCard's shares were transferred to BCC. See Pl.'s App. Opp'n Merrick's MSJ 2, 63.⁵ Thereafter, Nobel says that BCC used "Bankcard Central" as a registered trade name, that BankCard and BCC shared employees, accounts, and records, and that the names BCC and BankCard began to be used interchangeably in course of business. Id. at 2–3, 64–66. Nonetheless, BCC does not dispute that BankCard remained a separate entity after becoming BCC's wholly-owned subsidiary in January 2007. See id. at 3. Nor does it dispute that the ISO Agreement with Merrick dated November 10, 2008 named "BankCard Central, Inc." alone, without reference to BCC or the trade name "Bankcard Central." See ISO Agreement.

Based on the foregoing, Merrick now moves for summary judgment on the ground that BCC lacks standing to sue for Merrick's alleged breach of the ISO Agreement. See Merrick's MSJ 11–18. Merrick first says that, because BCC was undisputedly not a party to the ISO Agreement, there is no genuine dispute that BCC lacks standing under Article III of the U.S. Constitution to bring this breach of contract claim in its own name. See id. Alternatively, Merrick asserts that summary judgment is similarly appropriate under "Rule 17 of the Federal Rules of Civil Procedure

, which embodies prudential standing limitations" on claims belonging to third parties. Id. at 20.

"Standing," in general, refers to "[a] party's right to make a legal claim or seek judicial enforcement of a duty or right." Black's Law Dictionary (10th ed.2014). As used in federal courts, " ‘standing’ subsumes a blend of constitutional requirements and prudential considerations."⁶ Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982)

(citing Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ). Constitutional standing derives from "the ‘case’ or ‘controversy’ requirement of Article III," and encompasses " ‘the irreducible constitutional minimum’ " parties must satisfy before invoking the jurisdiction of a federal court. Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). Prudential standing, in contrast, is a judicially-created "doctrine not derived from Article III and not exhaustively defined but encompassing" certain principles that closely resemble either Article III's requirements or the substantive law question of "whether a person in the litigant's position will have a right of action on the claim." Lexmark Int'l, Inc. v. Static Control Components, Inc., ––– U.S. ––––, 134 S.Ct. 1377, 1386, 1387 n. 3, 188 L.Ed.2d...