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De Lage Landen Financial Services, Inc. v. Rasa Floors

March 2, 2010

DE LAGE LANDEN FINANCIAL SERVICES, INC., PLAINTIFF/COUNTERCLAIM DEFENDANT
v.
RASA FLOORS, LP, DEFENDANT/COUNTERCLAIM PLAINTIFF, THIRD PARTY PLAINTIFF
v.
3COM CORP., AND CAPITAL 4, INC., THIRD PARTY DEFENDANTS AND DEFENDANTS ON THE COUNTERCLAIM.
DE LAGE LANDEN FINANCIAL SERVICES, INC.,
v.
NORTH CENTRAL COMMUNICATIONS CORPORATION, THIRD PARTY DEFENDANT ON COUNTERCLAIM



The opinion of the court was delivered by: Baylson, J.

MEMORANDUM RE: NORTH CENTRAL COMMUNICATIONS, CORP.'S MOTION TO DISMISS

Pending before the Court is Third-Party Defendant North Central Communications Corporation's ("NCC") Motion to Dismiss Plaintiff De Lage Landen Financial Services, Inc.'s ("DLL") Third-Party Complaint, which brings a claim for contribution and indemnity under the Texas Deceptive Trade Practices and Consumer Protection Act ("DTPA"), Tex. Bus. & Comm. Code § 17.555, and a claim for indemnity under Texas common law against NCC. For the reasons stated below, the Motion will be denied.

I. Factual and Procedural Background

This suit arises out of a contract dispute between DLL and Defendant Rasa Floors, LP ("Rasa"). The Court previously detailed the background of this case in its November 4, 2008 Memorandum denying Rasa's Motion to Dismiss. See De Lage Landen Fin. Servs., Inc. v. Rasa Floors, LP, No. 08-0533, 2008 WL 4822033, at *1-2 (E.D. Pa. Nov. 4, 2008). A brief summary of the relevant background is set forth below.

On February 1, 2008, DLL filed a complaint alleging Rasa Floors, LP ("Rasa") breached the parties' "Rental Agreement" by failing to make payments in exchange for leased telephone equipment provided by the "Power of $Zero" ("POZ") program. (Docket No. 1.) On November 18, 2008, Rasa filed a counterclaim alleging that DLL conspired with other subsequently added third-party Defendants 3Com Corporation ("3Com") and Capital 4, Inc. ("Capital 4," collectively with DLL and 3Com, "Counterclaim Defendants"), the other members of the POZ partnership, to defraud Rasa. (Docket No. 34.) The amended counterclaim generally refers to Counterclaim Defendants' purported misrepresentations, and details how Counterclaim Defendants' website, brochure, and contracts allegedly misrepresent the services that they provided to Rasa. (Docket No. 70.).

Soon after, DLL moved for, and was granted, leave to add as a Third-Party Defendant NCC, which allegedly solicited the business of Rasa, had many meetings with Rasa, passed on CounterClaim Defendants' website, brochure, and contracts to Rasa, procured Rasa's signatures on the Rental Agreement and related contracts, and earned a commission from Counterclaim Defendants as a result. (3d Party Compl. ¶¶ 10, 21-26, 33-42.) DLL's Third-Party Complaint brings an indemnity claim under Texas common law, and a contribution and indemnity claim under Texas Deceptive Trade Practices and Consumer Protection Law ("DTPA"), Tex. Bus. & Comm. Code § 17.555 against NCC, alleging that because NCC directly communicated with Rasa, NCC is liable for all sums DLL is required to pay as a result of Rasa's action. (Docket No. 105.) DLL's common law indemnity claim alleges that "[t]o the extent that DLL is found liable for any fraudulent misrepresentations made to Rasa . . . , such liability would be purely vicarious and based solely upon NCC's actions or omissions in its capacity as a Reseller." (3d Party Compl. ¶ 53.)

On November 24, 2009, NCC moved to dismiss DLL's Third-Party Complaint.

II. The Parties' Contentions

NCC contends that under Texas Law, a party can only be indemnified if it may be held liable for the damaging event of which the consumer complains. (Mot. to Dismiss 4.) NCC continues that because Rasa only alleges that Counterclaim Defendants made written misrepresentations, and because nothing in the record suggests that NCC contributed in any way to these written statements, DLL failed to state with particularity a basis for indemnifying NCC. (Mot. to Dismiss 4, 11.) As for the claim under Texas common law, NCC avers that DLL is only entitled to indemnity if its claim is supported by a cognizable vicarious liability theory; however, because vicarious liability "is liability placed upon one party for the conduct of another," and "[t]he conduct of NCC is not the basis for the responsibility of DLL to Rasa for the fraudulent misrepresentations," NCC argues that DLL cannot make out an indemnity claim under Texas common law. Letter from Counsel for NCC to Judge Michael M. Baylson 1-2, Feb. 5, 2010 (on file with the Court) (hereinafter NCC Supp. Letter).*fn1 NCC thereby urges the Court to dismiss DLL's Third-Party Complaint.

In response, DLL avers that under Texas law, merely passing along another's false misrepresentations can be a basis for indemnity, that it is enough that NCC's representations contributed to DLL's liability, and the indemnity claim need not center on the same acts or practices underlying the fraud claim. (DLL Resp. 3, 8-10, Docket No. 111.) For vicarious liability under Texas common-law, DLL contends that "Rasa's pleading make clear that Rasa is relying on the concept of agency as a way to make DLL liable for the allegedly false information provided to Rasa by NCC," and that "Rasa clearly had the right to pursue its own claims against NCC." Letter from Counsel for DLL to Judge Michael M. Baylson 2-3, Feb. 4, 2010 (on file with the Court) (hereinafter DLL Supp. Letter). According to DLL, "while it is true that a principal has no right to indemnity until after there has been a judicial determination that an agency exists and that an agent is liable to the injured party, those questions are properly resolved by the fact-finder as part of the instant suit." (DLL Supp. Letter 4.) DLL thus urges the Court to deny NCC's Motion to Dismiss.

III. Legal Standards

When deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court may look only to the facts alleged in the complaint and its attachments. Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). The Court must accept as true all well-pleaded allegations in the complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985).

A valid complaint requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). Iqbal clarified that the Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which required a heightened degree of fact pleading in an antitrust case, "expounded the pleading standard for 'all civil actions.'" 129 S.Ct. at 1953.

The Court in Iqbal explained that, although a court must accept as true all of the factual allegations contained in a complaint, that requirement does not apply to legal conclusions; therefore, pleadings must include factual allegations to support the legal claims asserted. Id. at 1949, 1953. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 1949 (citing Twombly, 550 U.S. at 555); see also Phillips v. County of Allegheny, 515 F.3d 224, 232 (3d Cir. 2008) ("We caution that without some factual allegation in the complaint, a claimant cannot satisfy the requirement that he or she provide not only 'fair notice,' but also the 'grounds' on which the claim rests." (citing Twombly, 550 U.S. at 556 n.3)). Accordingly, to survive a motion to dismiss, a ...


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