Simmonds Equip., LLC v. GGR Int'l, Inc.

• Decision Date: 27 August 2015
• Docket Number: Civil Action No. H–15–0862.
• Citation: 126 F.Supp.3d 855
• Parties: SIMMONDS EQUIPMENT, LLC, Plaintiff, v. GGR INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

126 F.Supp.3d 855

SIMMONDS EQUIPMENT, LLC, Plaintiff,

v.GGR INTERNATIONAL, INC., Defendant.

Civil Action No. H–15–0862.

United States District Court, S.D. Texas, Houston Division.

Filed Aug. 27, 2015.

Maureen Blackburn Jennings, Maureen Blackburn Jennings, Attorney at Law, Houston, TX, for Plaintiff.

Jason David Kraus, Bouman Kraus, PC, Houston, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

SIM LAKE, District Judge.

Plaintiff, Simmonds Equipment LLC ("Simmonds"), has filed a Complaint (Docket Entry No. 1) against defendant, GGR International, Inc. ("GGR"), for violations of the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 et seq.; the Texas Theft Liability Act ("TTLA"), Texas Civil Practices & Remedies Code § 134.001 et seq.; and for conversion and tortious interference with prospective business relations. Pending before the court is GGR's Motion to Dismiss Under FRCP 12(b)(6) and FRCP 12(b)(1) (Docket Entry No. 6), in which GGR seeks dismissal of Simmonds' claims for conversion and for violation of the CFAA and the TTLA. Simmonds' opposition to GGR's motion to dismiss contains a request for leave to amend should the court decide to grant GGR's motion to dismiss.¹ For the reasons stated below, the pending motion to dismiss will be granted as to Simmonds' conversion claim and denied in all other respects; and Simmonds' request to file an amended complaint will be granted.

I. Factual Allegations

Simmonds alleges that on August 23, 2013, it executed two contracts with GGR: a Website Agreement and a Marketing Agreement.² Simmonds alleges that under the Website Agreement GGR was to design its company website via the following three-stage process: (1) the design process would commence on September 1, 2013; (2) the Website would launch by January 1, 2014; and (3) the Website Agreement would terminate on its own terms no later than February 28, 2014. Simmonds alleges that the website design process progressed quickly and ended early with "the website completed and final payment under the [Website] Agreement tendered on October 10, 2013, thereby terminating the Website Agreement on that date."³ Simmonds alleges that GGR "had and has no ownership rights over the website or its content and was provided only a limited license to utilize Simmonds' names, trademarks, logos, and service marks ... in order to design and develop the site."⁴ Simmonds alleges that the Marketing Agreement provided for GGR to develop and implement a variety of branding, sales, and marketing strategies, and also provided for the agreement to terminate no later than six months from its September 1, 2013, commencement date.⁵ Simmonds alleges that "nothing in the Marketing Agreement gave GGR any rights to or ownership interests in Simmonds' company website;"⁶ but, instead, the Marketing Agreement granted GGR "only a limited right to use Simmonds' marks in connection with its performance under the Marketing Agreement."⁷

Simmonds alleges that it "quickly became dissatisfied with the services provided by GGR under the Website and Marketing Agreements,"⁸ but that it was

excited to implement a website feature heavily touted by GGR which would enable Simmonds to create and make sales presentations directly through the company website, without the need to load pitches and related materials onto external drives and launch them through PowerPoint to similar software installed on laptop computers.⁹

Simmonds alleges that it "paid GGR $40,000 under the Marketing Agreement despite receiving virtually nothing of value."¹⁰ Simmonds alleges that on March 25, 2014, GGR's Chief Operating Officer, Jayson Nesbitt ("Nesbitt"), e-mailed its CEO, Brian Simmonds, to say that GGR was placing Simmonds' account "on hold" due to Simmonds' alleged non-payment of outstanding invoices under the Marketing Agreement. Despite being told that Brian Simmonds was in Colombia to make a sales presentation to a prospective customer and would return only two days later, on March 27, 2014, Nesbitt again e-mailed Simmonds to say that the Simmonds account was "suspended" and that GGR had "temporarily deactivated" the Simmonds' company website and all incorporated functionality due to the alleged non-payment of Marketing invoices. Simmonds alleges that it

subsequently learned that GGR's owner and CEO, Claire Ansell, had contacted a Simmonds employee, and on the false pretense that GGR was authorized and needed to work on the Simmonds website, obtained the password to the company website in order to access the site via a third-party hosting company and convert it for GGR's own purposes.¹¹

Simmonds alleges that due to "GGR's unlawful conduct, Mr. Simmonds was unable to make the sales presentation for which he had traveled to Colombia, and his company lost a business opportunity of more than $1,000,000 with a major prospective customer."¹²

II. Standards of Review

Asserting that "[t]his is a breach of contract case—nothing more,"¹³ and citing Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), GGR moves "to dismiss Plaintiff's sole federal claim (and thus federal question jurisdiction) and state law claims of Conversion and Theft."¹⁴ GGR also "moves to dismiss this case for lack of subject matter jurisdiction as the contracts themselves limit liability so that the amount in controversy in this case does not rise to the $75,000.00 minimum amount to trigger diversity jurisdiction."¹⁵ Simmonds responds that none of its claims are subject to dismissal, but that should the court decide otherwise, Simmonds requests leave to file an amended complaint.¹⁶

A. Rule 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) governs challenges to the court's subject matter jurisdiction. "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case." Home Builders Association of Mississippi, Inc. v. City of Madison, Mississippi, 143 F.3d 1006, 1010 (5th Cir.1998). "Courts may dismiss for lack of subject matter jurisdiction on any one of three different bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts."

Clark v. Tarrant County, Texas, 798 F.2d 736, 741 (5th Cir.1986). Rule 12(b)(1) challenges to subject matter jurisdiction come in two forms: "facial" attacks and "factual" attacks. See Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir.1981). A facial attack consists of a Rule 12(b)(1) motion unaccompanied by supporting evidence that challenges the court's jurisdiction based solely on the pleadings. Id. A factual attack challenges the existence of subject matter jurisdiction in fact—irrespective of the pleadings—and matters outside the pleadings—such as testimony and affidavits—may be considered. Id. Because GGR has not submitted evidence outside plaintiff's pleadings in support of its Rule 12(b)(1) motion to dismiss, the motion is a facial attack; and the court's review is limited to whether the complaint sufficiently alleges jurisdiction. Simmonds, as the party asserting federal jurisdiction, has the burden of showing that the jurisdictional requirement has been met. Alabama–Coushatta Tribe of Texas v. United States, 757 F.3d 484, 487 (5th Cir.2014). When facing a challenge to subject matter jurisdiction and other challenges on the merits, courts must consider the Rule 12(b)(1) jurisdictional challenge before addressing the merits of the case. Id.

B. Rule 12(b)(6)

Under Rule 8 of the Federal Rules of Civil Procedure, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A Rule 12(b)(6) motion tests the formal sufficiency of the pleadings and is "appropriate when a defendant attacks the complaint because it fails to state a legally cognizable claim." Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001), cert. denied sub nom. Cloud v. United States, 536 U.S. 960, 122 S.Ct. 2665, 153 L.Ed.2d 839 (2002). The court must accept the factual allegations of the complaint as true, view them in a light most favorable to the plaintiff, and draw all reasonable inferences in the plaintiff's favor.Id. 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." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 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. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Twombly, 127 S.Ct. at 1965 ). "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, 127 S.Ct. at 1965 ). "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, 127 S.Ct. at 1966 ). When considering a motion to dismiss, district courts are "limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint." Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir.2010).

III. Analysis

A. The Court Has Subject Matter Jurisdiction

Under the heading "Jurisdiction and Venue," Simmonds alleges:

5. The Court has subject matter jurisdiction over this dispute pursuant to 28 U.S.C. §§ 1331 and 1367 as Plaintiff brings a claim arising under federal law and related claims that form part of the same case or controversy.

6. The Court also has subject matter jurisdiction over this dispute pursuant to 28 U.S.C. § 1332

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