Cahill v. Turnkey Vacation Rentals, Inc.
| Citation | 500 F.Supp.3d 569 |
| Decision Date | 13 November 2020 |
| Docket Number | CIVIL ACTION NO. 1:20-CV-441-LY |
| Parties | Shane CAHILL and Nye Peterson, Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. TURNKEY VACATION RENTALS, INC., Defendant. |
| Court | U.S. District Court — Western District of Texas |
Bryan L. Clobes, Pro Hac Vice, Cafferty Clobes Meriwether & Sprengel LLP, Media, PA, Daniel O. Herrera, Pro Hac Vice, Kaitlin Naughton, Cafferty Clobes Meriwether & Sprengel LLP, Chicago, IL, James Hatchitt, Sean E. Breen, Randy Howry, Howry, Breen & Herman, LLP, Austin, TX, Joseph G. Sauder, Pro Hac Vice, Sauder Schelkopf LLC, Berwyn, PA, for Plaintiffs.
Arthur Gollwitzer, III, Michael Best & Friedrich LLP, Austin, TX, for Defendant.
Before the court are Defendant's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) filed July 30, 2020 (Doc. #18); Plaintiffs’ Response in Opposition to Defendant TurnKey Vacation Rental Inc.’s Motion to Dismiss For Failure to State a Claim filed on August 20, 2020 (Doc. #22); and Reply in Support of TurnKey's Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6) filed on September 9, 2020 (Doc. #24). Having considered the motion, response, and reply, the court is of the opinion that the motion to dismiss should be granted for the reasons to follow.
Plaintiffs Shane Cahill and Nye Peterson, individually and on behalf of all others similarly situated, filed suit against Defendant TurnKey Vacation Rentals, Inc. ("TurnKey"). TurnKey is a full-service vacation-rental property-management company. Plaintiffs rented homes through TurnKey and agreed to be bound by TurnKey's Guest Agreement and Terms of Service (together "Rental Contracts") issued June 15, 2013. When the COVID-19 pandemic hit the United States in March 2020, local and state governments began issuing stay-at-home orders and travel restrictions, preventing Plaintiffs from being able to stay in the homes they had rented through TurnKey. In response to this crisis, TurnKey issued credit for the cost of the stay to guests, which can be used over an 18-month period, instead of a full refund.
Plaintiffs filed this suit asserting breach of contract, unjust enrichment, and conversion. Plaintiffs argue that the Rental Contracts stipulate that guests are entitled to a refund, not a credit, under these circumstances. However, TurnKey argues that the Rental Contracts clearly and unambiguously state that guests, including Plaintiffs, are not entitled to a refund after the cancellation period. Therefore, TurnKey asserts that this case should be dismissed with prejudice.
Rule 12(b)(6) allows for dismissal of an action "for failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). Although a complaint does not need detailed factual allegations, in order to avoid dismissal the factual allegations "must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; see also Cuvillier v. Taylor , 503 F.3d 397, 401 (5th Cir. 2007). A plaintiff's obligation "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly 550 U.S. at 555, 127 S.Ct. 1955. The Supreme Court expounded on the Twombly standard, explaining that a complaint must contain sufficient factual matter to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (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. Courts are to determine if the claim is plausible, "not to evaluate the plaintiff's likelihood of success." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC , 594 F.3d 383, 387 (5th Cir. 2010). In evaluating a motion to dismiss, the court must construe the complaint liberally and accept all of the plaintiff's factual allegations in the complaint as true. See In re Katrina Canal Breaches Litig. , 495 F.3d 191, 205–06 (5th Cir. 2009).
In a Rule 12(b)(6) motion, "courts must limit their inquiry to the facts stated in the complaint and the documents either attached to or incorporated in the complaint," and "may also consider matters of which they may take judicial notice." Lovelace v. Software Spectrum, Inc. , 78 F.3d 1015, 1018–19 (5th Cir. 1996) ; see In re Katrina Canal Breaches Litig. , 495 F.3d at 205. Therefore, courts may consider documents referred to in the complaint that are essential to the plaintiff's claims. Lone Star Fund V , 594 F.3d at 387.
Under Texas Law, "the essential elements of a breach-of-contract claim are: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach." Mullins v. TestAmerica, Inc. , 564 F.3d 386, 418 (5th Cir. 2009) (quoting Aguiar v. Segal , 167 S.W.3d 443, 450 (Tex. App.—Houston [14th Dist.] 2005, pet. denied) ) (quotations omitted). To analyze whether a breach occurred, the court must interpret the contract. Contract interpretation is a matter of state law. DIRECTV, Inc. v. Imburgia , 577 U.S. 47, 54, 136 S.Ct. 463, 193 L.Ed.2d 365 (2015) (citing Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ. , 489 U.S. 468, 474, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) ). Therefore, Texas law applies to the interpretation of the Rental Contracts.
"The Court's task is to ‘ascertain the true intentions of the parties as expressed in the writing itself ’ " Burlington Resources Oil & Gas Co. LP v. Texas Crude Energy, LLC , 573 S.W.3d 198, 202-03 (Tex. 2019) (quoting Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am. , 341 S.W.3d 323, 333 (Tex. 2011) ) (emphasis added); see ConocoPhillips Co. v. Koopmann , 547 S.W.3d 858, 874 (Tex. 2018). Courts "give terms their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used them in a technical or different sense." ConocoPhillips , 547 S.W.3d at 874. Courts "have developed rules of interpretation to determine a contract's meaning and canons of construction to determine its legal effect." McCarty v. Montgomery , 290 S.W.3d 525, 532 (Tex. App.—Eastland 2009, pet. denied). These rules include:
1. Construe the agreement as a whole; 2. Give each word and phrase its plain, grammatical meaning unless it definitely appears that such meaning would defeat the parties’ intent; 3. Construe the agreement, if possible, so as to give each provision meaning and purpose so that no provision is rendered meaningless or moot; 4. Express terms are favored over implied terms or subsequent conduct; and 5. Surrounding circumstances may be considered—but to determine the appropriate meaning to ascribe to the language chosen by the parties.
Id. (quoting Mark K. Glasser & Keith A. Rowley, On Parol: The Construction and Interpretation of Written Agreements and the Role of Extrinsic Evidence in Contract Litigation , 49 BAYLOR L. REV. 657, 664-82 (1997) ).
The most relevant part of the rental agreement is Section 14, Payment and Cancellations, which provides in pertinent part:
All reservations which are made more than 10 days in advance are fully refundable if the guest cancels the reservation within 72 hours after the time of booking. After this cancellation period expires, all guest payments are non-refundable.
(Emphasis added). The terms are clear and unambiguous: "all guest payments are non-refundable" after the cancellation period. The parties agreed that TurnKey would not be required to refund any guest payments after the cancellation period for any reason and did not include language to the contrary.
Additionally, TurnKey argues that it is not required to issue a refund under Section 9, Weather and Other Unforeseen Events. Plaintiffs argue that Section 9 does not apply because it does not cover pandemics and, even if pandemics were covered, the cancellations were caused by government actions, not the COVID-19 pandemic. Section 14 states:
TurnKey does not accept liability for any inconveniences arising from ... natural disasters, acts of God or other reasons beyond its control. No refunds will be given for any delays or cancellations due to such conditions. Travel Insurance is highly recommended
Because Section 14 clearly and unambiguously states that TurnKey is not required to refund Plaintiffs’ payments, the court need not consider Section 9.
Plaintiffs assert that Section 12, Unavailability shows that they are entitled to a refund. Section 12 provides:
In the rare event the Home that [sic] you have reserved is for sale, is sold or is otherwise unavailable for any reason as determined by TurnKey , then TurnKey, in our discretion, may provide Guest with a comparable home at no additional cost to the Guest or cancel and refund Guest's reservation.
(Emphasis added). Plaintiffs argue that this section requires TurnKey to issue a refund when the home is unavailable and TurnKey cannot provide the guest with a comparable home. However, the plain language of Section 12 gives TurnKey the power to decide both when the section applies and whether it will issue a refund or provide a comparable home. The section specifies that TurnKey is the party that determines when the home is unavailable for any reason not listed. Moreover, the agreement states that TurnKey has the discretion to provide a refund or a comparable home if it determines the home is unavailable. There is no language suggesting TurnKey is required to provide a refund when the home is unavailable.
Athough TurnKey is not required to provide a refund or comparable home under Section 12, it did provide a comparable home to Plaintiffs—it issued...
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