Neither additional time or any discovery will mend Plaintiff’s pleading defect discussed infra. 

1

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

 DALLAS DIVISION 

__________________________________

ADVOCARE INTERNATIONAL L.P., *

*

Plaintiff, *

 *

v. *

 *

HORIZON LABORATORIES, INC., *

HERBASIA CORPORATION, et al., * Civil No. 3:04-CV-1988-H

 *

Defendants, *

 *

v. *

 *

ROBERT HACKMAN, et al., *

 *

Third-Party Defendants. *

MEMORANDUM OPINION AND ORDER

Before the Court are Defendant HerbAsia Corporation’s Motion to Dismiss, filed March 23,

2005; Plaintiff’s Combined Motion to Extend Time for Response, Motion for Discovery, and

Response, filed April 11, 2005; and Defendant HerbAsia Corporation’s Reply, filed April 27, 2005.

For the reasons stated below, Defendant HerbAsia Corporation’s Motion is GRANTED; Plaintiff’s

Motion for Extension of Time is DENIED; and Plaintiff’s Motion for Discovery is DENIED.

1

I. Background

Since 1993, Plaintiff has engaged the services of Defendant Richard Scheckenbach

(“Scheckenbach”) as a consultant. (Pl.’s 1st Am. Compl. at 4; Pl.’s App. at 2.) The latest consulting

agreement of August 29, 2000, “is conditioned on [Plainitff] being the exclusive recipient of

Scheckenbach’s services” and prohibits Scheckenbach from receiving fees from Plaintiff’s suppliers

and manufacturers. (Pl.’s 1st Am. Compl. at 6; Pl.’s App. at 2.) Defendant Horizon Laboratories,

 

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 Plaintiff avers in its Response, that on information and belief, Scheckenbach sold HerbAsia to 2

Tai Brown sometime in 2004. (Pl.’s Resp. at 4.)

2

Inc. (“Horizon”), is one of Plaintiff’s manufacturers. (Pl.’s 1st Am. Compl. at 2, 5; Pl.’s App. at 2.)

Horizon received its raw materials from, inter alia, HerbAsia Corporation (“HerbAsia”). (Pl.’s 1st

Am. Compl. at 6, 7, 11; Pl.’s App. at 3.) From 2001 through 2004, Scheckenbach, along with his

wife, were the sole owners and directors of HerbAsia. (Pl.’s 1st Am. Compl. at 7; Pl.’s App. 2A 2

at 9.)

Originally Plaintiff filed a state court action against Horizon, Scheckenbach (individually),

et al. (Def. Horizon’s Notice of Removal at 1.) After Horizon removed on diversity grounds,

Plaintiff filed its First Amended Complaint adding HerbAsia as a defendant. (Pl.’s 1st Am. Compl.,

filed Jan. 11, 2005.) Albeit inartfully pleaded, Plaintiff alleges that between October 2001 and July

2003, Scheckenbach and HerbAsia, conspired to (1) breach Scheckenbach’s fiduciary duties owed

to Plaintiff, and (2) defraud Plaintiff “in connection with his scheme to profit through sales of raw

materials to Horizon.” (Pl.’s 1st Am. Compl. at 3, 10-11.) On March 23, 2005, HerbAsia filed the

instant Motion to Dismiss. (Def.’s Mot. at 1.) HerbAsia grounds its Motion on Federal Rules of

Civil Procedure 12(b)(2) and (6). (Id.) For the purposes of the instant motion only, the Court

assumes without deciding that personal jurisdiction exists. Accordingly, the Court forgoes any

discussion as to the Court’sin personam jurisdiction over HerbAsia, i.e., dismissal on Rule12(b)(2)

grounds.

II. Standard of Review 

Dismissal for failure to state a claim is not favored by the law. Mahone v. Addicks Util. Dist.,

836 F.2d 921, 926 (5th Cir. 1988). A Plaintiff’s complaint “should not be dismissed for failure to

state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of

 

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3

his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (“The issue is not whether a plaintiff will ultimately

prevail but whether the claimant is entitled to offer evidence to support the claims.”); Adolph v.

Federal Emergency Management Agency, 854 F.2d 732, 735 (5th Cir. 1988) (The court may dismiss

a claim under Rule 12(b)(6) only if “it appears to a certainty that no relief can be granted under any

set of facts provable in support of its allegations or if the allegations, accepted as true, do not present

a claim upon which relief can be legally obtained.”). 

III. Analysis

Assuming, arguendo, that Plaintiff could make a prima facie showing of personal

jurisdiction, Plaintiff has failed to state a legally cognizable cause of action against HerbAsia.

Plaintiff’s sole cause of action against HerbAsia is a conspiracy claim. (Pl.’s 1st Am. Compl. at 10-

11.) Plaintiff alleges that Scheckenbach conspired with HerbAsia to defraud Plaintiff and breach

Scheckenbach’s fiduciary duties owed to Plaintiff. (Id. at 11.) Plaintiff concedes that Scheckenbach,

as HerbAsia’s agent, may not have the capacity to conspire with HerbAsia, his principal. (Pl.’s Resp.

at 10.) Indeed the law in this respect is clear; “the actions of a corporate agent on behalf of the

corporation are deemed the corporation’s acts,” Holloway v. Skinner, 898 S.W.2d 793, 795 (Tex.

1995), and therefore “as a matter of law, a corporation cannot conspire with itself.” Atlantic

Richfield Co. v. Misty Prods., Inc., 820 S.W.2d 414, 420 (Tex. App.–Houston [14th Dist.] 1991, writ

denied) (citing Wilhite v. H.E. Butt Co., 812 S.W.2d 1, 5 (Tex. App.–Corpus Christi 1991, no writ));

see Bradford v. Vento, 48 S.W.3d 749, 761 (Tex. 2001) (affirming the court of appeals’ analysis and

judgment that “Bradford, Simon, and Golden Ring could not have conspired because Bradford was

the agent of Simon and Golden Ring”); Staples v. Merck & Co., Inc., 270 F.Supp.2d 833, 845 (N.D.

 

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 An exception to the general rule stated in Atlantic Richfield is that a corporate agent acting in 3

his individual capacity can conspire with his principal (corporation). See Holloway, 898 S.W.2d at 796

(“the alleged act . . . must be performed in furtherance of the defendant’s personal interests so as to

preserve the logically necessary rule that a party cannot” conspire with itself); Texas-Ohio Gas, Inc. v.

Mecom, 28 S.W.3d 129, 138 n.10 (Tex. App.–Texarkana 2000, no pet.) (“We hold that corporate agents

can conspire with one another even if they are purportedly acting as employees of the corporation, if they

are in fact acting primarily for their own personal benefit”). Here, there is no allegation of a personal

benefit accruing to Scheckenbach from the alleged conspiracy. The Court finds that the personal benefit

accruing to Scheckenbach is derivative of HerbAsia’s profits from the alleged conspiracy. Additionally,

Plaintiff has alleged and the record supports that HerbAsia is Scheckenbach’s alter ego. (Pl.’s 1st Am.

Compl. at 7; Pl’s Resp. at 2,3, 7-11; Pl.’s App. 2A.) Plaintiff’s allegations, if true, cannot support a

conspiracy theory because a conspiracy requires two or more persons, i.e., entities. Tri v. J.T.T., —

S.W.3d —, 2005 WL 1124734, *3 (Tex. May 13, 2005); see United States ex rel. Reagan v. East Texas

Medical Center Regional Healthcare System, 274 F.Supp.2d 824, 856 (S.D.Tex. 2003) (citing Elliott v.

Tilton, 89 F.3d 260, 265 (5th Cir. 1996)).

4

Tex. 2003) (“an agent cannot conspire with its principal”). Because Plaintiff has failed to state a 3

claim for which relief can be granted, Defendant’s Motion must be GRANTED.

Recognizing that it cannot assert a conspiracy theory against HerbAsia vis-à-vis

Scheckenbach, Plaintiff proposes alternate theories of liability and requests leave to amend its

complaint. Plaintiff may do so pursuant to the Court’s Revised Scheduling Order, entered March

18, 2005, and the local rules. The Court anticipates that, having been alerted to a possible personal

jurisdiction defect, Plaintiff will, in all probability, re-allege the jurisdictional facts. Accordingly,

the Court regards HerbAsia’s Motion grounded in Rule 12(b)(2) as premature and DENIES

HerbAsia’s Motion to Dismiss for lack of personal jurisdiction.

 

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5

IV. Conclusion

For the foregoing reasons, Defendant HerbAsia’s Motion to Dismiss is GRANTED.

Plaintiff is granted leave to file an amended complaint no later than noon, June 6, 2005. Failure to

do so will result in a dismissal with prejudice of Plaintiff’s claims against HerbAsia. SO

ORDERED. DATED: May 19, 2005. 

 

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