First Am. Bankcard, Inc. v. Smart Bus. Tech., Inc.
| Decision Date | 12 April 2016 |
| Docket Number | CIVIL ACTION NO. 15-638 |
| Citation | 178 F.Supp.3d 390 |
| Parties | First American Bankcard, Inc. v. Smart Business Technology, Inc., et al |
| Court | U.S. District Court — Eastern District of Louisiana |
Lawrence G. Pugh, III, William W. Sentell, III, Pugh, Accardo, Haas, Radecker & Carey, New Orleans, LA, for First American Bankcard, Inc.
Mary Ellen Roy, Dan Brian Zimmerman, Phelps Dunbar, LLP, New Orleans, LA, for Smart Business Technology, Inc., et al.
SECTION “N”(2)Flag Section “C”
KURT D. ENGELHARDT
Before the Court is Smart Business Technology, Inc. (“SBT”), Serafin Fuente (“Fuente”) and Carlos Romero's (“Romero”) (SBT, Fuente and Romero are collectively referred to as “Defendants”) Motion to Dismiss, brought pursuant to Federal Rule of Civil Procedure 12(b)(6)
. Rec. Doc. 41. Plaintiff First American Bankcard, Inc. (“Plaintiff” or “FABI”) opposes the motion. Rec. Doc. 48. The Court granted Defendants' leave to reply to Plaintiff's opposition. Rec. Doc. 60. Upon review of the record, the arguments of the parties, and applicable law, the Court GRANTS IN PART and DENIES IN PART, with an order for Plaintiff to file an amended and superseding complaint as set forth below.
This case centers on a failed business relationship between Plaintiff FABI and Defendant SBT. Rec. Doc. 31 (First-Amended Complaint). Defendants Fuente and Romero are officers of SBT. Id. FABI provides cash access services to casinos across the country. Id. at 3. FABI alleges that, beginning in 2009, FABI and SBT executed a number of agreements to expand and upgrade FABI's cash access services, such as automatic teller machines (ATMs), and its two flagship products known as FABICash and FABITrack. Id. at 3-4. FABICash allows casinos to process cash advance and check cashing transactions and electronically captures signatures allowing casino operators to document and verify credit and debit transactions. Id. at 3. FABITrack is designed to allow casino operators to fulfill their reporting obligations to the Internal Revenue Service under The Bank Secrecy Act, 31 U.S.C. § 310
. Id.
According to FABI's amended complaint, SBT's President, Fuente, traveled to Louisiana in 2009 in order to meet with FABI's president and discuss the services SBT could offer FABI. Id. at 4. Starting in June 2009, several agreements outlining projects to be completed by SBT in exchange for professional service fees from FABI were entered into by the two companies. Id.
The business relationship grew through 2012, culminating in a formal agreement meant to “confirm, clarify and expand upon” FABI and SBT's past agreements. Id. However, FABI alleges SBT never provided the products and services contemplated, or those that were provided were of “inferior quality and reliability.” Id. at 5. Further, FABI contends there were significant delays in the development of the products FABI had hoped to expand and upgrade due to “SBT's lack of care, effort, and skill and lack of knowledge about the gaming industry.” Id. Specifically, FABI argues several system failures, which occurred over the years from 2010-2014, led to its customers threatening to terminate their contracts with FABI. Id. at 6. These failures, FABI contends, were caused by a lack of system-wide redundancy, which FABI accuses Defendants Fuente and Romero of intentionally concealing from FABI. Id. FABI alleges that due to the persistence of SBT's deficient performance, FABI elected to terminate its relationship with SBT. Id.
FABI contends that on or around March 2014, SBT was acquired by Powa Technologies, Inc. (“Powa”). Id. FABI alleges that Powa began directing the affairs of SBT and became a “direct participant in the acts and omissions” giving rise to FABI's lawsuit. Particularly, FABI cites to various communications that were conducted with FABI by Powa's former Vice President of Legal, Valerie Chianuri, on behalf of Powa and SBT. Id.
On March 2, 2015, FABI filed a diversity jurisdiction action against SBT, Fuente and Romero (two of SBT's officers), and POWA Technologies Limited, alleging a variety of Louisiana state law claims sounding in breach of contract, tortious interference, fraud, and conversion. See Rec. Doc. 1. On August 31, 2015, the Court granted plaintiff's motion to amend the complaint—filed in response to a motion to dismiss by POWA Technologies Limited—which substituted in Powa, the actual purchaser and owner of SBT. See Rec. Doc. 31.
On October 5, 2015, SBT and its officers filed the instant motion to dismiss for failure to state a claim under Fed. R. Civ. Pro. 12(b)(6)
. Rec. Doc. 41. Plaintiff has responded in opposition. Rec. Doc. 48. Defendants were granted leave to file a reply to Plaintiff's response. Rec. Doc. 60. On October 14, 2015, Powa filed its own motion to dismiss alleging lack of personal jurisdiction, which was granted on March 31, 2016. Rec. Doc. 66.
In their motion, SBT and its officers seek to have five claims dismissed, in whole or part, under Fed. R. Civ. Pro. 12(b)(6)
, specifically: (1) the Louisiana Uniform Trade Secrets Act (“LUTSA”) claim against SBT, Fuente and Romero; (2) the fraudulent concealment claim against SBT, Fuente and Romero; (3) the redhibition claim against SBT; (4) the Louisiana Unfair Trade Practices Act (“LUTPA”) against SBT; and (5) the conversion claim against Fuente and Romero. Rec. Doc. 41.
Defendants argue that the complaint fails to allege they acquired trade secrets by improper means, and fails to allege that they disclosed and/or used trade secrets. Without these allegations, Defendants contend the claim should be dismissed under Fed. R. Civ. Proc. 12(b)(6)
. See Rec. Doc. 41-3 at 2-6, and Rec. Doc. 60 at 1-2. Plaintiff argues that Defendants improperly withheld the program, software and data (the “work products”) and that in itself is a violation of LUTSA. Further, Plaintiff alleges it is not necessary to allege both improper acquisition and disclosure, and that only one is enough. See Rec. Doc. 48 at 4-6.
Defendants argue that under Louisiana law, there is no cause of action for fraudulent concealment, or in the alternative that Plaintiff failed to allege a fraud claim with particularity regarding any duty to speak or disclose and/or any fiduciary duty owed by Defendants to Plaintiff. See Rec. Doc. 41-3 at 6-9. Plaintiff contends that it has already pled its fraudulent concealment claim with particularity, specifically, the exact info withheld (only one dedicated server was utilized to host the work products), dates of omissions (from 2009 until 2014), duty to speak due to a relationship of trust between Defendants and Plaintiff (Defendants held themselves out as experts and FABI would not have access to the same information the defendants did). See Rec. Doc. 48 at 6-9. In response, Defendants argue Plaintiff has not alleged that SBT, Fuente or Romero ever made a claim that multiple servers would be used for Plaintiff's products, nor how Defendants concealed this information after making such an alleged assertion. See Rec. Doc. 60 at 2-4.
Defendants argue Plaintiff's claim for redhibition should be dismissed for one of three reasons: (1) there is no cause of action for redhibition because the contract at issue was not for the sale of a thing; (2) in the alternative, if there is a valid claim of redhibition, that claim is prescribed; or (3) in the alternative, if there is a valid claim of redhibition, it was waived or is estopped by plaintiff's continued use. See Rec. Doc. 41-3 at 9-19.1 Plaintiff maintains redhibition covers contracts for software development and products, prescription has not accrued since Plaintiff did not have knowledge of the causal relationship between the defect and Defendants' “faulty product” or alternatively, prescription was interrupted by repairs and because Defendants had possession until the relationship ended. See Rec. Doc. 48 at 9-16. In their response, Defendants reiterate their original arguments. See Rec. Doc. 60 at 4-7.
Defendant SBT argues that Plaintiff's LUTPA claim is merely a rehashing of its breach of contract claim and none of the actions complained of rise to the level of “egregious.” Rec. Doc. 41-3 at 19-20. Plaintiff maintains that determinations of what constitutes an “unfair trade practice” are to be made by the courts on a case-by-case basis. See Rec. Doc. 48 at 18. In addition, FABI argues it has made detailed allegations of SBT's actions which were intended to punish or harm Plaintiff. Id. In response, SBT avers that LUTPA's prohibited practices are “extremely narrow,” and unethical actions are not per se a violation of LUTPA. See Rec. Doc. 60 at 8.
Defendants seek to have only the conversion claims against Fuente and Romero dismissed. See Rec. Doc. 41-3 at 21. The basis of Defendants' argument for dismissal is that Fuente and Romero are shielded from liability for corporate debts as officers of the corporation acting within their corporate capacity. Id. FABI maintains that since Fuente and Romero personally participated in the alleged act of conversion, they can be held personally liable for the conversion. See Rec. Doc. 19-20. Defendants' response reiterates their earlier arguments and emphasizes the state policy for shielding corporate officers from corporate debts. See Rec. Doc. 60 at 9-10.
A motion to dismiss under Rule 12(b)(6)
may be granted when a complaint fails to allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “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.” Ashcroft v....
To continue reading
Request your trial
-
Coleman v. Sears Home Improvement Prods., Inc., CIVIL ACTION NO. 16-2537 SECTION: "G"(5)
...lawsuit for redhibition, but merely limits the remedies available to the buyer). 112. See First Am. Bankcard, Inc. v. Smart Bus. Tech., Inc., 178 F. Supp. 3d 390, 403 (E.D. La. 2016) (Engelhardt, J.); Alonzo v. Chifici, 526 So. 2d 237, 241 (La. App. 5 Cir. 1988); see generally S. Litvinoff,......
-
Del. Valley Fish Co. v. 3South LLC
...coercion, that the other party hire the contractor for the demolition work. (Id. ) Similarly, in First Am. Bankcard, Inc. v. Smart Bus. Tech., Inc. et al. , 178 F. Supp. 3d 390 (E.D. La. 2016), the "strategic, egregious nature" of the additional offenses alleged in support of the LUTPA clai......
-
Tammy Cooper, Cross Over Therapy, LLC v. Primary Care Solutions, Inc.
...is not properly characterized as a mere breach of contract claim."); First American Bankcard, Inc. v. Smart Business Technology, Inc., Civil Action No. 15-638, 178 F.Supp.3d 390, 406 (E.D. La. April 12, 2016) (denying motion to dismiss LUTPA claim where "allegations are similar to the breac......
-
Dunn v. Folgers Coffee Co.
...that would entitle him to prevail. Twombly, 550 U.S. at 560-61, 127 S.Ct. 1955; 5 First Am. Bankcard, Inc. v. Smart Bus. Tech., Inc., 178 F.Supp.3d 390, 399 (E.D. La. 2016). However, the Fifth Circuit has stated that motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) are “vie......