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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

__________________________________

JUST ADD WATER, INC., *

 *

Plaintiff, *

 *

v. * Civil No. 3:04-CV-2085-H

 *

EVERYTHING BUT WATER, INC., *

 *

Defendant. *

MEMORANDUM OPINION AND ORDER

Before the Court are Plaintiff’s Rule 12(b)(6) Motion to Dismiss Defendant’s

Counterclaims for Failure to State a Claim, and supporting brief, filed July 6, 2005; Defendant’s

Response and supporting brief, filed July 26, 2005; and Plaintiff’s Reply Brief and Appendix, filed

August 10, 2005. For the reasonsthat follow, Plaintiff’s motion is granted in part and denied in part.

I. Background

This case stems from a dispute between two retail swimwear businesses for alleged

mutual trademark violations, unfair competition, breach of contract, and various other causes of

action related to the parties’ competing in the same markets. By Memorandum Opinion and Order

of May 18, 2005, the Court denied Defendant’s motion to dismiss Plaintiff’s complaint on grounds

of laches, acquiescence and statute of frauds. In the same order, the Court granted Defendant’s

motion to dismiss Counts I-V of Plaintiff’s Complaint (common-law unfair competition, false

designation of origin, injury to business reputation and dilution, and federal and state trademark

 

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infringement claims) for failure to allege the offenses with sufficient specificity. On July 11, 2005,

with the Court’s permission, Plaintiff filed its Second Amended Complaint remedying the pleading

defects and reinstating those claims.

On June 13, 2005, Defendant filed ten counterclaims against Plaintiff. In the motion

presently before the Court, Plaintiff asks for dismissal of Counterclaims III (tortious interference

with prospective business relationship), IV (fraudulent misrepresentation), VIII (federal trademark

infringement), IX (false representation), and X (unfair competition). See Fed. R. Civ. P. 12(b)(6).

II. Standard for Motion to Dismiss

In considering a motion to dismiss a complaint for failure to state a claim, the Court

must accept as true the non-movant’s well-pleaded factual allegations and any reasonable inferences

to be drawn from them. See Tuchman v. DSC Commc’ns Corp., 14 F.3d 1061, 1067 (5th Cir. 1994).

“Federal Rule of Civil Procedure 8(a)(2) . . . provides that a complaint must include only a short and

plain statement of the claim showing that the pleader is entitled to relief. . . . Rule 8(a)’s simplified

pleading standard applies to all civil actions, with limited exceptions [such as Rule 9(b)].”

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002). Generally, the Court may not look beyond

the pleadings. See Mahone v. Addicks Util. Dist., 836 F.2d 921, 936 (5th Cir. 1988).

Dismissal for failure to state a claim is not favored by the law. Id. at 926. 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 his claim which would entitle him to

relief.” Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Adolph v. Federal Emergency Mgmt Agency,

854 F.2d 732, 735 (5th Cir. 1988) (holding that 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

 

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support of its allegations or if the allegations, accepted as true, do not present a claim upon which

relief can be legally obtained.”). There are times, however, “when a courtshould exercise its power

to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure.” Mahone, 836

F.2d at 927 (emphasis in original).

With these standards in mind, the Court turns to the counterclaims at issue.

III. Analysis

A. Counterclaim III: Tortious Interference with Business Relations

Plaintiff moves for dismissal of Counterclaim III, tortious interference with

prospective business relationship, on grounds that as a matter of law, Plaintiff’s conduct was not

tortious. In response, Defendant alleges that Plaintiff wrote a false warning letter to Defendant in

2004 that interfered with a prospective lease agreement with Northpark Mall in Dallas. Defendant

argues that the 2004 letter, in which Plaintiff demanded that Defendant cease committing trademark

violations and breach of contract, caused Defendant to postpone lease negotiations, which ended in

Northpark’s assigning Defendant a less advantageous location in the mall because of the delay.

Under Texas law, the elements of a claim for tortious interference with prospective

business relationship are (1) a reasonable probability that the parties would have entered into a

contractual relationship; (2) an independently tortious or unlawful act by the defendant that

prevented the relationship from occurring; (3) a conscious desire by the defendant to prevent the

relationship from occurring, or knowledge by the defendant that the interference was certain or

substantially certain to occur as a result of his conduct; and (4) actual harm or damage suffered by

the plaintiff as a result of the defendant's interference. Allied Capital Corp. v. Cravens, 67 S.W.3d

486 (Tex. App. -- Corpus Christi 2002, no writ); see Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d

 

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711, 715-28 (Tex. 2001); Bradford v. Vento, 48 S.W.3d 749, 757 (Tex. 2001). This analysis focuses

on the second requirement. 

In 2001, the Texas Supreme Court held unequivocally that to form the basis of

tortious interference, a party’s conduct must be actionable under a recognized tort independent of

the claim of interference. See Sturges, 52 S.W.3d at 726. Examples given by the court include

fraudulent statements made to third parties, physical assault on prospective customers, and illegal

boycott. See id. In distinguishing tortious interference with a prospective relationship from tortious

interference with an existing contract, the Sturges court noted that when two parties are competing

for a business interest to which neither is contractually entitled, a cause of action cannot arise from

lawful conduct, even if that conduct is regarded as “unfair.” Id. at 726-27 (“[H]arm that results only

from lawful competition is not compensable by the interference tort.”). Inherent in the court’s

reasoning is a stricture against commercial parties abusing the courtsystem to seek relief for events

that fall within the broad realm of ordinary business dealings.

In this case, the requirement of an independently unlawful act is not met. Defendant

cites no case law in which a demand letter sent to a competitor in the normal course of business is

held to be a recognized tort. Even if the allegations in the 2004 letter prove to be overstated or

indeed false, Texas law is clear that “sharp” business conduct in the absence of actual fraud (for

which Defendant makes no showing) is not in and of itself actionable. Id. Because the 2004 letter

is the sole basis for defendant’s claim and is insufficient on its face to support that claim, Defendant

has no cause of action for tortious interference with prospective business relations.

Accordingly, Plaintiff’s motion to dismiss Defendant’s Counterclaim III is

GRANTED. 

 

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B. Counterclaim IV: Fraudulent Misrepresentation

Plaintiff next moves to dismiss Defendant’s counterclaim for fraudulent

misrepresentation on the grounds that it does not meet the required pleading standard. Under the

Federal Rules of Civil Procedure, a complainant must state with particularity circumstances alleging

fraud. Fed. R. Civ. P. 9(b) (“In all averments of fraud or mistake, the circumstances constituting

fraud ormistake shall be stated with particularity”); Tuchman, 14 F.3d at 1067 (requiring under Rule

9(b) that a complainant state the particulars of “time, place, and contents of the false representations,

as well as the identity of the person making the misrepresentation and what [that person] obtained

thereby”) (quoting Tel-Phonic Servs., Inc. v. TBS Int'l, Inc., 975 F.2d 1134, 1139 (5th Cir.1992));

see also Williams v. WMX Tech., Inc., 112 F.3d 175, 177 (5th Cir.1997), cert. denied, 522 U.S. 966.

Fraudulent intent or other requirement for state of mind “may be averred generally.” Fed. R. Civ.

P. 9(b).

In this case, Defendant’s counterclaim for fraudulent misrepresentation arises out of

an expressly designated written correspondence between the parties in 1985. See Def.’s Answer and

Counterclaim ¶¶ 55-64; Def.’s Resp. at p. 5 & nn. 21-27. The letter itself is attached to the

Defendant’s pleading. Although the basis of the fraud counterclaim appears tenuous at best, Plaintiff

is under sufficient notice of that basis to pursue its defense appropriately at this stage of the

proceedings. 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.”);

Tuchman, 14 F.3d at 1067 (noting that reasons behind the heightened pleading standard for Rule 9(b)

include providing defendants with fair notice of a plaintiff’s claims and preventing plaintiffs from

fishing for unknown wrongs).

 

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Plaintiff’s motion to dismiss Counterclaim IV is therefore DENIED.

C. Counterclaim IX: False Representation

Plaintiff moves for dismissal of Defendant’s counterclaim for false representation on

grounds that it is not supported by sufficient factual pleading. Defendant responds that its

counterclaim is reciprocal to Plaintiff’s claim for false representation against Defendant. That is,

Defendant supports its counterclaim only by stating in its pleading that if Defendant is guilty of false

representation in Texas, then Plaintiff is guilty of false representation everywhere else the parties

compete. See Def.’s Counterclaim at ¶ 98.

In a claim for false representation, the claimant must prove that (1) the other party

made false statements of fact about the goods in question; (2) those statements deceived, or had the

potential to deceive, a substantial segment of potential customers; (3) the deception was material,

in that it tended to influence purchasing decisions; (4) the party caused their products to enter

interstate commerce; and (5) the claimant has been or is likely to be injured as a result. 15 U.S.C.

§ 1125(a)(1) (Lanham Act); Taylor Made Golf Co. v. MJT Consulting Group, LLC, 265 F. Supp. 2d

732, 745 (N.D. Tex. 2003). The central inquiry is whether the accused party is confusing customers

by passing off its goods or services as those of the complaining party. See Volkswagenwerk

Aktiengesellschaft v. Rickard, 492 F.2d 474, 478 (5th Cir. 1974).

In this case, Defendant seeks affirmative relief but does not allege any affirmative

conduct supporting the elements of a cause of action for that relief. Even under the “notice pleading”

standard of Rule 8(a), Defendant’s pleadings fall short of the minimum required to allow Plaintiff

to defend the action appropriately. See Thrift v. Estate of Hubbard, 44 F.3d 348, 356 n. 13 (5th Cir.

1995) (noting that even under liberal notice pleading, plaintiffs are required to “identify the grounds

 

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upon which their claims are based”) (quoting Perkins v. Silverstein, 939 F.2d 463, 467 (7th

Cir.1991)).

Accordingly, as to Counterclaim IX Plaintiff’s motion to dismiss is GRANTED.

Defendant may file an amended counterclaim to remedy the deficiency.

D. Counterclaims VIII and X: Federal Trademark Infringement, and Unfair Competition

Plaintiff moves for dismissal of Defendant’s counterclaims for federal trademark

infringement and for unfair competition on the same grounds of insufficiency: that Defendant has

failed to allege conduct supporting the elements of those causes of action. The Court agrees.

Defendant will be held to the same pleading standard of factual specificity for its counterclaims as

Plaintiff was held for those same claims against Defendant. See Just Add Water, Inc. v. Everything

But Water, Inc., Civ. No. 3:04-CV-2085-H, order at 6-7 (N.D. Tex. May 18, 2005) (dismissing

Plaintiff’s claims without prejudice); see also Fed. R. Civ. P. 8(f) (“All pleadings shall be so

construed as to do substantial justice.”). 

As to Counterclaims VIII and X, Plaintiff’s motion is GRANTED. Defendant may

file an amended pleading to remedy the deficiency.

IV. Conclusion

For the foregoing reasons, Plaintiff’s Rule 12(b)(6) motion to dismiss Defendant’s

Counterclaims is GRANTED IN PART and DENIED IN PART.

Defendant’s Counterclaim Count III(tortiousinterference with prospective business

relationship) is DISMISSED WITH PREJUDICE for failure to state a claim for which relief may

be granted. See Fed. R. Civ. P. 12(b)(6).

 

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Defendant’s Counterclaim Counts VIII (federal trademark infringement), IX (false

representation), and X (unfair competition) are DISMISSED WITHOUT PREJUDICE.

Defendant may file an amended pleading by noon, October 3, 2005, remedying the deficiencies.

If such a pleading is not timely filed, the counterclaims will be dismissed with prejudice on that date.

In all other things, Plaintiff’s motion to dismiss is DENIED.

SO ORDERED.

DATED: September 23, 2005

 

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