Hostingxtreme Ventures, LLC v. Bespoke Grp., LLC

• Decision Date: 23 August 2017
• Docket Number: Civil Action No. 3:14-CV-1471-M
• Parties: HOSTINGXTREME VENTURES, LLC and DOES 1 through 10 inclusive, Plaintiffs, v. BESPOKE GROUP, LLC, DIVYESH PATEL, and HINA PATEL, and DOES 1 through 10 inclusive, Defendants.
• Court: U.S. District Court — Northern District of Texas

HOSTINGXTREME VENTURES, LLC and DOES 1 through 10 inclusive, Plaintiffs, v. BESPOKE GROUP, LLC, DIVYESH PATEL, and HINA PATEL,and DOES 1 through 10 inclusive, Defendants.

Civil Action No. 3:14-CV-1471-M

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

August 23, 2017

Referred to U.S. Magistrate Judge

FINDINGS, CONCLUSIONS, AND RECOMMENDATION

Pursuant to the order dated November 3, 2015, this case has been referred for full case management, including the determination of non-dispositive motions and issuance of findings of fact and recommendations on dispositive motions. Before the Court for recommendation are Defendants Bespoke Group, LLC's and Divyesh Patel's Joint Motion for Summary Judgment, filed February 24, 2017 (doc. 332), and Plaintiff's Motion for Partial Summary Judgment,¹ filed April 6, 2017 (doc. 359). Based on the relevant filings, evidence, and applicable law, the defendants' motion should be GRANTED IN PART and DENIED IN PART, and the plaintiff's motion should be DENIED.

I. BACKGROUND

This suit arises out of a contract between Bespoke Group, LLC (Bespoke) and Prosper Trade Company (Prosper) for the purchase and delivery of 180 metric tons of bulk "US origin dry green peas" at the price of $552.00 per ton to be delivered by Bespoke from the United States to Prosper in Nhava Sheva, India. (doc. 36 at 4-5.)²

Before the contract was executed, Divyesh Patel (Divyesh), the sole owner and manager of Bespoke, met with Hitesh Sayta (Hitesh), an individual who "held a mandate on behalf [of Prosper]" to buy dried green peas. (Id. at 4.) According to Hitesh, Divyesh represented that he had an "adequate inventory" of dried green peas that "he could ship subsequent to entering into the purported contract." (Id. at 4-5.) They negotiated the details of the contract and "agreed that a formal written contract would be drawn up by [Divyesh] and sent out via email to Hitesh." (Id. at 5.) Though not identified in the written contract, Prosper intended to sell these peas directly to Ask Re Ltd. (Ask Re) in Hong Kong upon receipt. (Id. at 11.) Divyesh later notified Hitesh via e-mail that Bespoke was experiencing difficulties in shipping the peas due to a lack of rail car transportation caused by bad weather. (Id. at 5.) Defendants failed to deliver the peas as required by the contract, and Prosper "had to cover its onward contractual obligations [to Ask Re] . . . [by] purchas[ing] goods from another seller" at an increased price. (Id. at 9.)

Prosper subsequently assigned its rights under the contract to HostingXtreme Ventures, LLC (Plaintiff), which then sued Bespoke, Divyesh, and his wife, Hina Patel (Hina) (collectively Defendants). (See id. at 2, 4.) It later voluntarily dismissed Hina. (docs. 342, 378.) In its second amended complaint, Plaintiff brings claims for breach of contract, breach of the implied covenant of good faith and fair dealing, promissory estoppel, common law fraud, intentional interference with contractual rights, and negligent misrepresentation. (See doc. 36 at 8-15.)³

Defendants and Plaintiff filed competing summary judgment motions on February 24, 2017, and April 6, 2017, respectively. (docs. 333, 360.) With timely filed responses (docs. 363, 373) and replies (docs. 370, 375), these motions are ripe for recommendation.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when the pleadings and evidence on file show that no genuine issue exists as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). "[T]he substantive law will identify which facts are material." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue of material fact exists "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Id. The movant makes a showing that there is no genuine issue of material fact by informing the court of the basis of its motion and by identifying the portions of the record that reveal there are no genuine material fact issues. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party can also meet its summary judgment burden by "pointing out to the district court that there is an absence of evidence to support the nonmoving party's case." Id. at 325 (internal quotation omitted).

Once the movant makes this showing, the non-movant must then direct the court's attention to evidence in the record sufficient to establish that there is a genuine issue of material fact for trial. Id. at 324. To carry this burden, the non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The non-movant must show that the evidence is sufficient to support a resolution of the factual issue in her favor. Anderson, 477 U.S. at 249. The nonmovant's burden cannot be satisfied by conclusory allegations, unsubstantiated assertions, or a mere scintilla of evidence. Douglass v. United Servs. Auto. Ass'n, 65 F.3d 452, 459 (5th Cir. 1995), revised on other grounds, 79 F.3d 1415 (5th Cir. 1995) (en banc). "If the [nonmoving party's] theory is . . . senseless [where] no reasonable jury could find in its favor, [then] summary judgment should be granted." Lottinger v. Shell Oil Co., 143 F. Supp. 2d 743, 751 (S.D. Tex. 2001) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 468-69 (1992)).

"The parties may satisfy their respective burdens by 'citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other materials.'" Rooters v. State Farm Lloyds, 428 F. App'x 441, 445 (5th Cir. 2011) (citing Fed. R. Civ. P. 56(c)(1)). While all of the evidence must be viewed in a light most favorable to the motion's opponent, Anderson, 477 U.S. at 255 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59 (1970)), neither conclusory allegations nor unsubstantiated assertions satisfy the non-movant's summary judgment burden, Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc); Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992). There is also "no genuine issue as to any material fact [if] a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex, 477 U.S. at 323. Summary judgment in favor of the movant is proper if, after adequate time for discovery, the motion's opponent fails to establish the existence of an element essential to her case and as to which she will bear the burden of proof at trial. Id. at 322-23.⁴

III. BREACH OF CONTRACT

Both parties seek summary judgment on Plaintiff's breach of contract claim. (docs. 333 at 17-28, 360 at 8-22.) Plaintiff argues that it properly pleaded a claim for oral contract and provided evidence of the fair market value of the dried green peas through its expert, Mr. Darren Hudson (Hudson), and it should be granted summary judgment under an oral contract theory. (docs. 363 at 3, 360 at 8.) Defendants contend that they are entitled to summary judgment because Plaintiff"failed to provide competent and admissible evidence of its damages" under the written contract. (doc. 333 at 17-28.)

The elements of a cause of action for breach of contract 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 as a result of the breach. See Narvaez v. Wilshire Credit Corp., 757 F. Supp. 2d 621, 628 (N.D. Tex. 2010) (citing Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.-Houston [14th Dist.] 2005, no pet.)).

A. Oral Contract

Plaintiff moves for summary judgment on its breach of contract claim, which it contends is premised upon an oral contract between Divyesh and Prosper. (See doc. 360 at 8-10.) Defendants contend that this theory is not supported by Plaintiff's pleadings and fails as a matter of law. (doc. 373 at 18-21.)

In its second amended complaint, Plaintiff asserts that its claim of "Breach of Written Contract" against Divyesh is "based upon the doctrine of lifting of the corporate veil" where Divyesh "personally represented to [Hitesh] that he had an inventory of the goods." (doc. 36 at 8-9.) On summary judgment, Plaintiff instead argues that it "need not resort to the piercing of the veil of [Bespoke] to establish liability of [Divyesh]" because privity of contract exists directly from Divyesh to Prosper when an oral contract "was entered into prior to the written document being circulated." (doc. 360 at 17.) It now contends that the signed written contract attached as an exhibit to its second amended complaint is simply a "written memorandum" of the oral contract previously entered into between Divyesh and Hitesh as Prosper's representative. (Id. at 10, 25.) It argues that its oral contract theory was formally pleaded, "given that the facts leading up to the contract have been pleaded," namely that Hitesh and Divyesh met and negotiated the details of the contract beforethe written contract was signed, and because "it [was] implicit in [its second amended complaint] that all the aforesaid items were agreed verbally." (doc. 375 at 5-6.)

The second amended complaint expressly entitles the contract claim as "Breach of Written Contract;" that section explains the communications between the parties about the written contract. (doc. 36 at 8.) Plaintiff's allegations asserting a breach of contract claim based upon an oral contract between Divyesh and Prosper were neither "abundantly clear" nor "implicit" in its second amended complaint, as now alleged. (doc. 375 at 6.) While Plaintiff correctly points out that the first element of a breach of contract action does not differentiate between the existence of written and oral contracts,...