Opinion
EP-00-CA-38-DB.
September, 2000.
MEMORANDUM OPINION AND ORDER
On this day, the Court considered Defendant Helen of Troy Texas Corporation's "Rule 12(b) Motion to Dismiss," filed in the above-captioned cause on July 26, 2000. Plaintiff David Siqueiros filed a Response on August 8, 2000.
After due consideration, the Court is of the opinion that Defendant's Motion to Dismiss should be denied for the reasons that follow.
BACKGROUND
Plaintiff David Siqueiros filed an Amended Complaint on June 4, 2000, setting forth three claims for relief under Texas common law: (1) breach of contract; (2) conversion; and (3) negligence.
Plaintiff alleges that he entered into an agreement with Defendant on September 13, 1988, to create certain images for Defendant's use in its products and product advertisements and/or packaging. Plaintiff attaches as an exhibit to his Amended Complaint a September 27, 1988 invoice setting forth certain costs associated with the "Shoot Date: 09/19/88 and 09/20/88" and recites a "Usage: Complete Print Media buyout U.S. markets only," and another similar invoice. Plaintiff claims that these invoices constitute the "First Agreement."
Actually, Plaintiff contracted with Helen of Troy Corporation, Defendant Helen of Troy Texas Corporation's predecessor in interest. For convenience, the Court will refer generally to one "Defendant."
Later, Plaintiff alleges, he entered into a "Mutual Settlement and Release Agreement" with Defendant on January 19, 1993. That agreement, which also is attached to Plaintiff's Amended Complaint (the "Second Agreement") (together with the First Agreement, "the agreements") purports to settle a dispute between Plaintiff and Defendant about whether Defendant could use the images outside the United States. The Second Agreement contains the following language:
6. As further consideration for the payment recited herein, SIQUEIROS grants to HOT [(Helen of Troy)] the right to use the Images on its product packaging to be distributed in the United States, Mexico and Canada through the year 1998. This right to use is a complete print media buyout of the Images in the United States, Mexico and Canada. If HOT wishes to use these Images past 1998, it agrees to negotiate and enter into an agreement with SIQUEIROS for the use of these Images. HOT further agrees not to use the Images past the 1998 deadline unless an agreement to do so has been entered into with SIQUEIROS.
In a December 6, 1994, letter to Plaintiff (attached as an exhibit to the Amended Complaint), Defendant informed Plaintiff that although Defendant "has no plans to repeat usage of the photographic images, . . . it reserves the right to do so in the future" based on the terms of the Second Agreement. Defendant further informed Plaintiff that "[i]n the event that [Defendant] chooses not to renegotiate this agreement past 1998, you may pick up the images in January 1999." Plaintiff further alleges that he demanded return of the photographs at some time after the end of the usage period, after 1998, but Defendant never returned the photographs, eventually claiming they were lost.
Based on those facts, Plaintiff alleges that the agreements required Defendant to return the images on January 1, 1999. He further avers that because Defendant has failed and refused to return the images as allegedly required under the agreements, Defendant has breached the terms of the agreements. Alternatively, Plaintiff alleges that Defendant has exercised unlawful, unauthorized dominion and control over the images to the exclusion of or inconsistent with Plaintiff's rights in the property, and that, as such, Defendant converted that property. Finally, Plaintiff alternatively alleges that Defendant had a duty to account for, safeguard and return the images to Plaintiff at the completion of the usage period and a duty to use a reasonable degree of care, and that Defendant's breach of those duties constitutes negligence.
The instant Motion to Dismiss followed.
DISCUSSION
Federal Rule of Civil Procedure 12(b)(6) allows a party to move to dismiss an action for "failure to state a claim upon which relief can be granted." Under that rule, the Court must decide whether the facts alleged, if true, would entitle the plaintiff to some legal remedy. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). Dismissal for failure to state a claim is highly disfavored and is not granted routinely because of the liberal "notice pleading" requirements of the Federal Rules. See Shipp v. McMahon, 199 F.3d 256, 260 (5th Cir. 2000); FED. R. CIV. P. 8(a). In short, the Court should not dismiss a claim pursuant to Rule 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46, 78 S.Ct. at 102.
The Court must limit its inquiry to facts stated in Plaintiff's Complaint and the documents either attached to or incorporated in the Complaint. See Lovelace v. Software Spectrum, Inc., 78 F.3d 1015, 1017 (5th Cir. 1996). Further, the Court must accept as true all material allegations in the complaint, as well as any reasonable inferences to be drawn from them, see Kaiser Aluminum Chem. Sales, Inc., v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982), and must review those facts in a light most favorable to the plaintiff. See Piotrowski v. City of Houston, 51 F.3d 512, 514 (5th Cir. 1995); Garrett v. Commonwealth Mortgage Corp. of Am., 938 F.2d 591, 593 (5th Cir. 1991). The Court also may "consider matters of which [it] may take judicial notice," Lovelace, 78 F.3d at 1017-18, and matters of public record. See 5A CHARLES A. WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357 (2d ed. 1990).
Defendant moves for dismissal of all three of Plaintiff's claims, arguing that neither of the agreements obligates Defendant to return any images to Plaintiff; that Plaintiff's conversion and negligence claims impermissibly seek to convert a breach of contract claim into a tort; and that Defendant never exercised unlawful dominion or control over any of the images. Plaintiff, conversely, turns to Federal Rule of Civil Procedure 8(a), which requires in a pleading only "a short and plain statement of the claim showing that the pleader is entitled to relief." Although Plaintiff's Complaint is not a model of pleading, the Court finds that is survives attack under Rule 12(b)(6).
A. Breach of Contract
With respect to Plaintiff's claim for breach of contract, Plaintiff avers that Defendant agreed to return the disputed images on January 1, 1999. Defendant contends that the agreements "do not reflect any obligation or duty for [Defendant] to redeliver to [Plaintiff] or "any right of [Plaintiff] to retake possession of any of the physical images/photographs." Defendant fails to show, however, that there is no set of facts which Plaintiff can prove to establish a breach of action claim.
Although, indeed, there is no express term in the agreements relating to return of the images, the invoices which Plaintiff alleges reflect the First Agreement certainly does not purport to be a fully integrated contract. Thus, Plaintiff may still be able to demonstrate an implied term relating to return of the images. See generally RESTATEMENT (SECOND) OF CONTRACTS § 204 (1981); 14 TEX. JUR. 3D Contracts § 216 (1997). For example, courts often imply an industry custom to supplement the terms of the agreement. See RESTATEMENT (SECOND) OF CONTRACTS § 221 (1981) ("An agreement is supplemented or qualified by a reasonable usage with respect to agreements of the same type if each party knows or has reason to know of the usage and neither party knows or has reason to know that the other party has an intention inconsistent with the usage."); 14 TEX. JUR. 3D Contracts § 216 (1997) ("It is customary for parties to contract with reference to the general customs of the particular business concerning which their agreement is made."); see also Energen Resources MAQ, Inc. v. Dalbosco, 23 S.W.3d 551, 556-57 (Tex.App. 2000) ("A custom is a practice so general and universal that the parties to a contract are charged with knowledge of its existence to such an extent as to raise a presumption that they dealt with reference to it.") (citing State Nat'l Bank of Houston v. Woodfin, 146 S.W.2d 284, 286 (Tex.Civ.App. 1940, writ ref'd); Barreda v. Milmo Nat'l Bank, 252 S.W. 1038, 1039-40 (Tex. 1923)). Problems of proof are inconsequential at this juncture. See Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999).
Defendant further contends that the agreements recite no separate consideration for an alleged promise to return the images. While consideration generally is required for all contracts, Plaintiff need not plead consideration in detail for that claim to survive a motion to dismiss. Accordingly, the Court is of the opinion that Plaintiff's claim for breach of contract should not be dismissed.
B. Tort Claims
With respect to Plaintiffs tort claims — conversion and negligence — Defendant contends that Plaintiff's injury, if any, sounds in contract, not tort, and Plaintiff "is attempting to impermissibly convert an alleged breach of contract into alleged tort claims of conversion and negligence," citing Southwestern Bell Telephone Co. v. DeLanney, 809 S.W.2d 493 (Tex. 1991). In general, "if the defendant's conduct . . . would give rise to liability only because it breaches the parties' agreement, the plaintiff's claim ordinarily sounds only in contract." Delanney, 809 S.W.2d at 494. However, Defendant's contention that Plaintiff cannot state both a contract claim and a negligence claim is simply wrong. Rather, DeLanney made clear that the same conduct may sound in both tort and contract depending on the duty imposed, one by agreement (contract) and one by law (tort). See id. at 494-95. "When the injury is only the economic loss to the subject of a contract itself the action sounds in contract alone." Id. at 495 (quoting Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986)). Moreover, "[a] plaintiff is not precluded from asserting a tort cause of action solely because his damages are analogous to the damages sought in a contract claim." Farah v. Mafrige Kormanik, 927 S.W.2d 663, 674 (Tex.App. 1996); see also State of Tex. by and through the Bd. of Regents of the Univ. of Tex. Sys., 142 F.3d 813, 824 (5th Cir. 1998) ("[U]nder Texas law, a claim for breach of contract and the tort of conversion may arise from the same set of facts.")
1. Negligence
Here, with respect to Plaintiff's negligence claim, Defendant contends that Plaintiff's claim for damages, if any, lies in contract because it "relate[s] solely and specifically to personal property which is the subject of" the agreements. Curiously, Defendant already contends, with respect to the breach of contract claim, that the agreements have nothing to do with return of the images. If that is the case, then there is no legal reason Plaintiff's damages cannot sound in tort. Clearly, Plaintiff can plead alternative claims for recovery, even inconsistent claims. See FED. R. CIV. P. 8(e)(2). Plaintiff seeks damages for loss or destruction of his photos, not for the economic expectancy he had in the agreements. Hence, Plaintiff can permissibly assert a tort here. Because Defendant does not attack any of the substantive allegations in Plaintiff's claim for negligence, the Court is of the opinion that claim should not be dismissed.
2. Conversion
With respect to Plaintiff's claim for conversion, for the same reasons set forth above, the Court finds that Plaintiff's conversion claim does not "impermissibly convert an alleged breach of contract into" a tort.
Defendant next contends that it "has not exercised dominion and control over any property of [Plaintiff]." Defendant further contends that Plaintiff does not allege that he is the owner of the controversial images, which Defendant did not have any contractual duty to return and Plaintiff had no contractual right to recover. Frankly, Defendant misses the point. Conversion is the wrongful exercise of dominion and control over another's property in denial of or inconsistent with his rights. See Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 446 (Tex. 1971). There need not be a physical taking; rather, the defendant merely has to act inconsistently with the owner's rights in the property. See In re Moody (Revie v. Smith), 899 F.2d 383, 385 (5th Cir. 1990).
Here, Plaintiff alleges that he owns the images and Defendant failed to return the images when he demanded their return after Defendant's right to use the photos ended at the end of 1998. Defendant's failure to return the photos may constitute "wrongful exercise of dominion and control." Without the photos, Plaintiff's alleged ownership rights, including publication rights, are futile. Accordingly, these facts suffice to state a claim for conversion under Texas law, and this claim, too, survives.
Because Defendant cannot show that plaintiff can prove no set of facts in support of his claim which would entitle him to relief, the Court is of the opinion that Defendant's Motion to Dismiss should be denied.
Accordingly, IT IS HEREBY ORDERED that Defendant Helen of Troy Texas Corporation's "Rule 12(b) Motion to Dismiss" is DENIED.