W. Tex. Nat'l Bank v. FEC Holdings, LP
| Decision Date | 17 May 2013 |
| Docket Number | MO-11-CV-086,MO-11-CV-121 |
| Parties | WEST TEXAS NATIONAL BANK, Plaintiff, v. FEC HOLDINGS, LP, FEC MESQUITE, LP, L.R. (ROBIN) FRENCH III, JOHN D. MULLEN, JR., Defendants. FEC HOLDINGS, LP, and FEC MESQUITE, LP, Counter-Plaintiffs, v. WEST TEXAS NATIONAL BANK, CITY BANK TEXAS, KEITH MOORE, and TYLER MOORE, Counter-Defendants. |
| Court | U.S. District Court — Western District of Texas |
(Consolidated with Civil Action
Before the Court are Plaintiffs FEC Holdings, LP and FEC Mesquite, LP's First Amended Complaint (Doc. No. 19, MO-11-CV-121), Motion to Dismiss of Defendants West Texas National Bank and Keith Moore (Doc. No. 12), City Bank of Texas and Tyler Moore's Motion to Dismiss for Failure to State a Claim under Rule 12(b)(6) or Alternatively to Dismiss for Failure to Properly Plead and Brief in Support (Doc. No. 15), Plaintiffs' Response to Defendants' Motions to Dismiss (Doc.No. 20), Defendants' Reply to Plaintiffs' Response to Defendants' Motion to Dismiss (Doc. No. 23), and Defendants, City Bank of Texas and Tyler Moore's Reply to Plaintiffs' Response to Defendants' Motion to Dismiss (Doc. No. 24). The Court held a hearing over the motions on April 29, 2013. At said hearing, the Court orally granted the motions. The Court now issues its memorandum opinion.
Plaintiffs FEC Holdings, LP and FEC Mesquite filed suit against Defendants West Texas National Bank, City Bank of Texas, Keith Moore, and Tyler Moore on August 3, 2011, in the Southern District of Texas, Houston Division styled Cause No. H 11-2873. One day later, Plaintiff West Texas National Bank filed suit against Defendants FEC Holdings, LP, FEC Mesquite, LP, Lloyd R. French III, and John D. Mullen, Jr. on August 4, 2011, in the Western District of Texas, Midland-Odessa Division styled Cause No. MO-11-CV-86. On November 1, 2011, the Houston case—Cause No. H 11-2873— was transferred to the Western District of Texas, Midland-Odessa Division due to the agreed choice of forum clause in the loan agreement at issue entered into by FEC Holdings, LP and Western National Bank. On November 4, 2011, the Houston case was then assigned to this Court and styled Cause No. MO-11-CV-121. Thereafter, on January 25, 2012, the original Houston case—now Cause No. MO-11-CV-121—was consolidated with the original Midland case into Cause No. MO-11-CV-86.
The facts listed here stem from the case that was originally filed in the Southern District of Texas, Houston Division. This case arises out of a series of loans Defendant West Texas National Bank ("WTNB") made to Plaintiffs FEC Holdings, LP and FEC Mesquite (collectively, "FEC") tostart up a pizza and entertainment company in Texas, Oklahoma, and Louisiana. First Am. Original Compl. ¶¶ 1, 11, Doc. 19. In 2006, FEC allege Defendant WTNB contacted FEC and requested a meeting to discuss the prospect of entering into a lending relationship regarding FEC's pizza entertainment company, which is similar to that of Mr. Gatti's Pizza. Id. ¶¶ 11, 12. Thereafter, Defendant WTNB provided financing to FEC and its subsidiaries in connection with opening the pizza restaurants. Id. ¶ 12. WTNB made the following loans to FEC:
After the first four loans were made, FEC alleges in February 2008, Defendant Keith Moore called FEC to discuss the loans. Id. ¶ 14. During their conversation, FEC maintains Keith Moore told FEC he wanted Defendant City Bank to participate in the loans that WTNB had already made to FEC. Id. FEC alleges Keith Moore stated that although WTNB was not at its lending limit, City Bank's participation would be required for the lending relationship to continue. Id. Later in 2008, FEC alleges City Bank would not agree to the terms of the loans—a floating interest rate with no floor—that FEC originally had with WTNB. Id. As a result, FEC claims Keith Moore presented City Bank's participation in the loans and the imposition of an interest rate floor as a mandate. Id. ¶ 15. Fearing that WTNB would refuse to continue the lending relationship, FEC asserts they were forced to agree to the new loan terms, and they executed a modified loan that was allegedly harmfulto them in June 2008. Id. FEC further claims Keith Moore, throughout the new loan negotiation period, failed to disclose that the loan officer at City Bank who would serve as overseer of City Bank's participation in the loans was his son, Defendant Tyler Moore. Id. ¶ 16.
After the loan modification, the Prime Rate continued to decline significantly. Id. ¶ 17. As a result of the interest rate floor imposed in the modified loan, FEC alleges they were forced to pay higher interest rates than would have been required under their original loan. Id. On March 8,2010, FEC claims it was forced to place FEC Subsidiaries, with the exception of FEC Mesquite, in Chapter 11 bankruptcy proceedings. Id. ¶ 18. FEC states it actively sought investors and secured an interested investor. Id. When FEC presented WTNB with the proposed terms of the investor's participation, FEC alleges WTNB rejected the proposal without consideration and instructed FEC to find purchasers for all of the stores. Id. Thereafter, FEC closed four of its pizza stores. Id. FEC then claims a private equity group, the principals of which allegedly included WTNB's controlling owner and Keith Moore, financed the purchase of those four stores, as well as assets of the Mesquite and Sugarland stores, through the bankruptcy court by a Gatti's franchise operator from Austin, Texas. Id.
FEC filed suit on August 3, 2011, in the Southern District of Texas, Houston Division alleging the following causes of action against Defendants: (1) fraud, fraudulent inducement, and failure to disclose (WTNB and Keith Moore); (2) conspiracy to commit fraud; (3) violation of RICO: 18 U.S.C. § 1962(c); (4) violation of RICO: 18 U.S.C. § 1962(d) (conspiracy); and (5) unjust enrichment. Defendants filed motions to dismiss, pursuant to 12(b)(6), 12(b)(1), and 9(b), on September 6, 2011, and FEC then filed a First Amended Original Complaint on October 3, 2011. Defendants, in their reply to FEC's response and amended complaint, re-urged their motions todismiss. This case was then transferred to the Western District of Texas, Midland-Odessa Division on November 1, 2011. This Court will now address both motions to dismiss.
Federal Rule of Civil Procedure 12(b)(6) allows a defendant to present, via motion, a defense for failure to state a claim upon which relief can be granted. Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts as true and view them in the light most favorable to the non-moving party. Baker v. Putnal, 75 F.3d 190,196 (5th Cir. 1996). However, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. To survive dismissal, a plaintiff must plead specific facts that "state a claim to relief that is plausible on its face," not mere conclusory allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Supreme Court in Iqbal explained that Twombly promulgated a "two-pronged approach" to determine whether a complaint states a plausible claim for relief. Id. at 679. First, the court must identify those pleadings that, "because they are no more than conclusions, are not entitled to the assumption of truth." Id. Legal conclusions "must be supported by factual allegations." Id.
Upon identifying the well-pleaded factual allegations, the court should "assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. "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." Id. at 678. This is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.
Rule 12(b)(1) of the Federal Rules of Civil Procedure authorizes the filing of a motion to dismiss a case for lack of subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Federal courts are "courts of limited jurisdiction, having only the authority endowed by the Constitution and that conferred by Congress." Halmekangas v. State Farm Fire and Cas. Co., 603 F.3d 290, 292 (5th Cir. 2010) (internal quotes and citation omitted). A lawsuit must be dismissed for lack of subject matter jurisdiction "when the court lacks the statutory or constitutional power to adjudicate the case." Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (internal quotation marks and citation omitted). The district court "has the power to dismiss for lack of subject matter jurisdiction on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Stiftung v. Plains Marketing, L.P., 603 F.3d 295, 297 (5th Cir. 2010) (citing Williamson v. Tucker, 645 F.2d 404,413 (5th Cir. 1981)). The party seeking to litigate in federal court bears the burden of establishing subject matter jurisdiction. Ramming v. United States, 281...
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