Decorative Ctr. of Houston v. Direct Response Pub., Civ.A. H-01-4069.

• Court: United States District Courts. 5th Circuit. United States District Courts. 5th Circuit. Southern District of Texas
• Citation: 264 F.Supp.2d 535
• Docket Number: No. Civ.A. H-01-4069.,Civ.A. H-01-4069.
• Parties: THE DECORATIVE CENTER OF HOUSTON, L.P., Plaintiff, v. DIRECT RESPONSE PUBLICATIONS, INC., Defendant.
• Decision Date: 30 April 2003

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264 F.Supp.2d 535 THE DECORATIVE CENTER OF HOUSTON, L.P., Plaintiff,
v.
DIRECT RESPONSE PUBLICATIONS, INC., Defendant. No. Civ.A. H-01-4069. United States District Court, S.D. Texas, Houston Division. April 30, 2003.

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Robert O'Conor, Jr., Attorney at Law, Houston, TX, Donald A. Harwood, Jay B. Itkowitz, Itkowitz & HArwood, New York City, for Plaintiff.

Donald B. McFall, McFall Sherwood et al., Houston, TX, Darin Lee Brooks, Beirne Maynard, Houston, TX, for Defendant.

MEMORANDUM AND ORDER

ATLAS, District Judge.

Several motions are pending before the Court in this commercial dispute. Plaintiff The Decorative Center of Houston, L.P. ("DCH" or "Plaintiff) has moved for partial summary judgment¹ and to strike the testimony of Dennis Arnie, Defendant's expert.² Defendant Direct Response Publications, Inc. ("Direct" or "Defendant") has moved for final summary judgment³ and to exclude the testimony of Richard Bean, Plaintiffs expert.⁴ The parties have responded and replied to the pending motions.⁵ After reviewing the parties' submissions, the record, and the applicable authorities, the Court determines that there is no issue of material fact on DCH's breach of contract claim. The Court also concludes that there are no issues of material fact on DCH's Lanham Act, tortious interference with prospective business relationship, and unfair competition claims, and those claims must be dismissed.

I. BACKGROUND FACTS

This case arises out of the alleged breach of contract and misleading business practices of Defendant Direct.⁶ Plaintiff DCH is a Texas limited partnership that owns a building known as The Decorative Center (the "Building") in Houston, Texas, in which vendors in the interior decorating

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industry lease showrooms.⁷ Direct is a design center directory publisher that, for two years prior to the events in dispute, printed a directory of the vendors in the Building, pursuant to a contract between Direct and the prior owner of the Building, Decorative Center Houston, Limited ("DCH Ltd.").

Until April 2001, DCH Ltd., a Texas limited partnership, owned the Building. In 1986, Siri Roark ("Roark") joined DCH Ltd. as Special Events Coordinator for the Building. Her title later changed to Marketing Director.

In 1986, Roark began a tenant directory, the Decorative Center Houston Directory. Eventually, the project became too time consuming and too large for Roark to handle on her own. She hired a company that is not a party to this action to publish the directory, and that publisher did so until 1998, when DCH Ltd. and that publisher terminated their agreement.

In 1999, DCH Ltd. entered into a Publishing Agreement with Direct to publish the Decorative Center Houston Directory for the years 2000, 2001, 2002, and 2003. Thereafter, Direct published the Decorative Center Houston 2000 Directory and the Decorative Center Houston 2001 Directory.

In approximately March of 2001, DCH Ltd. asked Direct to terminate the Publishing Agreement. DCH Ltd. did so because the Building was being purchased by DCH, the Plaintiff in this lawsuit and a separate entity from DCH Ltd. DCH insisted that DCH Ltd. cancel the Publishing Agreement and other marketing agreements.

In April 2001, DCH Ltd. and Direct executed a "Termination to Agreement" ("Termination Agreement"). Specifically, the Termination Agreement required DCH Ltd. to pay $85,000 to Direct. In addition, the Termination Agreement provided that:

[Direct] will not publish the Decorative Center Houston 2002 and Decorative Center Houston 2003 directories and/or will not solicit tenants of the Decorative Center of Houston for advertising for the Decorative Center Houston 2002 and Decorative Center Houston 2003 directories.

Termination Agreement, 111.

A few days after the Termination Agreement was executed in April 2001, DRP solicited 56 of DCH's tenants for advertising. The solicitations asked the tenants to "update your information below" and stated "Our records currently show the following information."⁸ The solicitations were for a "Dallas/Houston Design To The Trade Directory."⁹

Direct, through its President, Richard Joseph Giarratana, concedes that it also provided rate cards to the same 56 DCH tenants, although this rate card apparently was sent separate from the solicitation.¹⁰ The rate card stated:

Dallas/Houston Design To The Trade is the ultimate trade resource to the finest traditional and contemporary furnishings in the five-state region. More than

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350 Dallas/Houston-area showrooms and galleries, including the Decorative Center Dallas, Dallas Design Center, Dallas Market Center, Decorative Center Houston, are listed. To The Trade is undoubtedly the design professional's premier resource for furniture, fabrics, flooring, lighting, wall coverings, art antiques, kitchen and bath products, accessories and more.¹¹

Direct also sent solicitations and rate cards to DCH tenants for a 2003 directory. The 2003 directory solicitations have the same language and Direct also mentions Decorative Center Houston on Direct's web site at . Direct did not inform Plaintiffs tenants in its solicitations or rate cards that its contract to publish the Building-sponsored Decorative Center Houston Directory had been terminated. Siri Roark, DCH's Marketing Director, testifies that some DCH tenants who received the solicitation from Direct were confused that the solicitation was from Roark for the DCH Directory,¹² but identifies no specific tenants. In mid-2001, Roark sent a memo to DCH tenants clarifying that the Direct solicitation was not for the Building's own annual DCH Directory.¹³

Kim Mullen, building manager for DCH, also testifies that the information in the solicitation created confusion among tenants because it requested them to update their information and added that "Our records currently show the following information."

¹⁴ Mullen names four specific tenants and alludes to others that she cannot now remember who described being confused and not understanding that DCH's solicitation of advertising from them was different from Direct's solicitations.¹⁵ She also testifies that it was difficult to sell advertising to the tenants for the Buildingsponsored directory because of the competition from Direct Response.¹⁶

Alton LaDay, who took over from Siri Roark as Marketing Director in October 2001, also testifies that Direct's actions made it difficult for DCH to compete with Direct for advertising sales.¹⁷ Bob Briddick, an employee of David Sutherland, Inc., a tenant in the Building, testifies that had he known that Direct Response was not publishing DCH's Directory for 2002, he would not have returned the completed solicitation form to Direct Response on behalf of his employer.¹⁸

After Direct sent its solicitations to DCH tenants, Direct published a 2002 Dallas/Houston Design To The Trade market source book, which listed DCH Building tenants among many other tenants in other Houston and Dallas decorator buildings. Around the same time, DCH also published its own Decorative Center Houston 2002 Directory.

In 2002 and 2003 respectively, DCH sold only 30 and 32 advertisements for its own directory. This is a decline from 65 advertisements that were sold for the DCH

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Directory in 2001 when Direct was the publisher.

DCH alleges that Direct's solicitations misled the Building's tenants into believing that they were being offered a renewal of their listing in the DCH Directory, and not a new listing in a separate two-city directory published solely by Direct. In other words, DCH's essential contention is that its tenants were misled into believing that Direct's directory was authorized by the Building owners as the Decorative Center Houston Directory had been in the two preceding years. In this lawsuit, DCH alleges causes of action under the Lanham Act for both money damages and injunctive relief, breach of contract, tortious interference with prospective business relationships, and unfair competition. Direct has moved for summary judgment on all causes of action. DCH has moved for summary judgment only on its breach of contract claim.

II. SUMMARY JUDGMENT STANDARDS

Rule 56 of the Federal Rules of Civil Procedure mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a sufficient showing of the existence of an element essential to the party's case, and on which that party will bear the burden at trial. Baton Rouge Oil and Chem. Workers Union v. ExxonMobil Corp., 289 F.3d 373, 375 (5th Cir.2002) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

In deciding a motion for summary judgment, the Court must determine whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Calbillo v. Cavender Oldsmobile, Inc., 288 F.3d 721, 725 (5th Cir.2002). An issue is material if its resolution could affect the outcome of the action. Terrebonne Parish Sch. Bd, v. Columbia Gulf Transmission Co., 290 F.3d 303, 310 (5th Cir.2002) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In deciding whether a fact issue has been created, the facts and the inferences to be drawn from them must be reviewed in the light most favorable to the nonmoving party. Hotard v. State Farm Fire & Cos. Co., 286 F.3d 814, 817 (5th Cir.2002). However, factual controversies are resolved in favor of the nonmovant "only when there is an actual controversy—that is, when both parties have submitted evidence of...