Goosehead Ins. Agency, LLC v. Williams Ins. & Consulting, Inc.
| Decision Date | 03 September 2020 |
| Docket Number | Civil Action No. 4:19-cv-01040-O |
| Citation | 533 F.Supp.3d 367 |
| Parties | GOOSEHEAD INSURANCE AGENCY, LLC, Plaintiff, v. WILLIAMS INSURANCE AND CONSULTING, INC. et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Marc F. Kirkland, Kristin Lee Marker, Quilling, Selander, Lownds, Winslett & Moser, P.C., Plano, TX, Daniel M. Janssen, Pro Hac Vice, Lauren N. Zenk, Pro Hac Vice, Zachary T. Eastburn, Quarles & Brady, Milwaukee, WI, for Plaintiff.
Daniel D. McGuire, Polsinelli PC, Dallas, TX, David L. Steinberg, Pro Hac Vice, Mark L. Kowalsky, Pro Hac Vice, Katherine A. Stefanou, Pro Hac Vice, Jaffe Raitt Heuer & Weiss PC, Southfield, MI, for Defendants.
Before the Court is Plaintiff's Motion to Dismiss Count I, III, IV, and V of Defendants' Counterclaims and to Apply Texas Law to Counts II and VI. Motion, ECF No. 41. After considering this motion, the Court finds that the Motion to Dismiss is GRANTED. Accordingly, Texas law governs this dispute, and Counts I, III, IV, and V of Defendant's counterclaims are dismissed.
On May 25, 2018, Joseph and Trisha Williams ("Defendants") executed a franchise agreement with Plaintiff Goosehead ("Plaintiff") to offer and sell property and casualty insurance products from an office located in Michigan. Defs.' Countercl., ECF No. 40 at ¶ 13. At the time the Franchise Agreement was executed, the sole shareholders of Williams Insurance were Joseph Williams ("J. Williams") and Trisha Williams ("T. Williams"). Id. at ¶ 14. In August 2018, approximately three months after Williams Insurance entered into the Franchise Agreement with Goosehead, J. Williams informed Goosehead that he would be transferring sole ownership in Williams Insurance to T. Williams. Id. at ¶ 24. In January 2019, with the approval and cooperation of Goosehead, J. Williams ceased working as a producer for Williams Insurance. Id. at ¶¶ 24–25. T. Williams steadily grew and increased the Williams Insurance sales revenue, and by summer 2019, Goosehead ranked Williams Insurance fourth of approximately twenty franchises operating in Michigan. Id. at ¶¶ 27, 29. J. Williams began working for a competitor, allegedly in violation of the Franchise Agreement non-compete covenant, so Goosehead terminated Williams Insurance's access to the Goosehead computer system. Id. at ¶ 36. Williams Insurance alleges that this termination violated Michigan law, which requires providing an opportunity to cure a purported breach of the Franchise Agreement. Goosehead argues its termination was proper.
Goosehead sued Williams Insurance on December 17, 2019, for (1) Trademark Infringement under the Lanham Act, (2) Common-law Trademark Infringement, (3) Declaratory Judgment, (4) Breach of Contract, (5) Breach of the Duty of Good Faith and Fair Dealing, (6) Civil Conspiracy, and (7) Fraudulent Inducement. Compl., ECF No. 1. Williams Insurance answered and counterclaimed for (1) Unlawful Termination under Michigan Law, (2) Breach of Contract, (3) Unjust Enrichment, (4) Declaratory Relief, and (5) Tortious Interference with Business Expectations. Answer, ECF No. 36. As a threshold matter, the parties disagree over whether Texas law or Michigan law applies to this dispute. Goosehead argues that Texas law should apply under the Franchise Agreement's choice-of-law provision. Williams Insurance argues that Michigan law should apply. The Court will resolve the choice-of-law issue before addressing the merits of the motion to dismiss.
12Federal Rule of Civil Procedure 8(a) requires a claim for relief to 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 8 does not require detailed factual allegations, but "it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). If a plaintiff fails to satisfy Rule 8(a), the defendant may file a motion to dismiss the plaintiff's claims under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief may be granted."
3 To defeat a motion to dismiss pursuant to Rule 12(b)(6), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570, 127 S.Ct. 1955. "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." Iqbal, 556 U.S. at 663, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955 ). "Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ " Id. (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955 ).
4 In reviewing a Rule 12(b)(6) motion, the Court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007). The Court is not bound to accept legal conclusions as true, and only a complaint that states a plausible claim for relief survives a motion to dismiss. Iqbal, 556 U.S. at 678-79, 129 S.Ct. 1937. When there are well-pleaded factual allegations, the Court assumes their veracity and then determines whether they plausibly give rise to an entitlement to relief. Id. 56"Generally, a court ruling on a 12(b)(6) motion may rely on the complaint, its proper attachments, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice." Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (citations omitted); see also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007). A court may also consider documents that a defendant attaches to a motion to dismiss if they are referred to in the plaintiff's complaint and are central to the plaintiff's claims. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000).
Texas prefers contractual choice-of-law provisions are enforced so long as the parties agreed to the choice-of-law provision in writing and the transaction bears a reasonable relationship to the chosen jurisdiction. Tex. Bus. & Com. Code § 271.005.1 For the preference to apply, the transaction must be a "qualified transaction" as defined in the Code. Tex. Bus. & Com. Code § 271.001. "[A] ‘qualified transaction’ means a transaction under which a party (1) pays or receives, or is obligated to pay or receive, consideration with an aggregate value of at least $1 million; or (2) lends, advances, borrows, or receives, or is obligated to lend or advance or is entitled to borrow or receive, money or credit with an aggregate value of at least $1 million." Id. If the transaction at the center of the dispute is "qualified," the statutory preference to enforce a contractual choice-of-law provision between two presumably sophisticated parties supersedes the traditional Restatement (Second) of Conflicts of Law analysis. See Tex. Bus. & Com. Code § 271.005.
The parties dispute whether the transaction is a "qualified transaction" and specifically whether the transaction consists of an aggregate value of at least one million dollars. Defs.' Supp., ECF No. 54; Pl.'s Supp., ECF No. 52. Defendants argue that "Goosehead terminated the Franchise Agreement well before its ten-year term and notably, Goosehead has not, and cannot, present any evidence that the amount actually paid before it was terminated was anywhere close to $1 million [sic]." Def.'s Supp. at 3, ECF No. 52. Defendants further argue that, because the "contract does not specifically state that the consideration" over the ten-year term would be an aggregate value of at least one million dollars this transaction is not a qualified transaction. Defs.' Supp., ECF No. 54.
The Fifth Circuit addressed this issue in a case where the terms of the agreement specifically obligated one party to pay the other party a sum of at least one million dollars. See, e.g., Cantu v. Jackson Nat. Life Ins. Co., 579 F.3d 434, 437–38 (5th Cir. 2009) (). However, the statute does not require the aggregate value to be so explicitly stated in the four corners of the document, while a transaction that explicitly states the consideration to be over one million dollars is clearly a qualified transaction, the absence of such a provision does not prohibit the transaction from being a "qualified transaction".
789 Plaintiff argues that if Defendants "generated such average gross revenues, Goosehead would be entitled to received $1,808,742 in royalties over the life of the Agreement." Pl.' Supp. at 3, ECF No. 54. Defendants allege that it was in the top 20% of Goosehead franchises, which under the Agreement would entitle Goosehead to royalties over the ten-year term, but simultaneously argue that the relevant time frame for "aggregate consideration" is at the time of suit. Am. Countercl., ECF No. 40. The parties present an unresolved issue under Texas law–whether the statute refers to the aggregate value of the transaction at the time of contracting or at...
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...Bros. S.S. Co. v. Esteves, 89 F.2d 528, 530 (5th Cir. 1937). [128] See Goosehead Ins. Agency, LLC v. Williams Ins. & Consulting, Inc., 533 F.Supp.3d 367, 385-86 (N.D. Tex. 2020). [129] See id. [130] 28 U.S.C. § 1292(b). [131] A controlling question of law is “one that would require reversal......