Clark Fire Equip., Inc. v Arkema

CLARK FIRE EQUIP., INC. V. ARKEMA, INC. 176 F. Supp. 3d 646 (S.D. Tex. 2015) Background that Clark Fire send the computer equipment Plaintiff Clark Fire is Texas corporation, to "Robert Walker" in Lombard, Illinois, Doe who has done business with Arkema, a was able to provide Arkema's actual bank Pennsylvania corporation, for the last twenty account information, credit information, ven- years. In September 2013, a person identifying dor account numbers, and trade references, himself as "Joe Cheong" (hereinafter "Doe") which both Clark Fire and an independent contacted Clark Fire seeking approximately third party verified as accurate. According to $40,000 worth of computer parts and accesso- Clark Fire, because it was customary for its ries. Doe represented to Clark Fire that he was clients to request that its products be shipped the Vice President of Arkema, and requested to a third party location, and because it had 168 Chapter 5 a long-standing business relationship with to another, a breach of that duty, and damages Arkema, it did not question the legitimacy of proximately caused by the breach."). "The the transaction nor contact anyone at Arkema existence of a legal duty is a question of law for to verify the identity of "Joe Cheong" and the court to decide." Tri v. J.T.T., 162 S.W.3d "Robert Walker." Instead, Clark Fire shipped 552, 563 (Tex. 2005). Dismissal is appropriate the goods and sent an invoice to Arkema in if the complaint lacks an allegation regarding Pennsylvania. a required element necessary to obtain relief. Approximately sixty days after sending Rios v. City of Del Rio, Tex., 444 F.3d 417, 421 the invoice, Clark Fire contacted Arkema's (5th Cir. 2006). Accounts Payable department seeking pay- Clark Fire seeks to hold Arkema liable ment. Arkema refused to pay for the goods for the actions of John Doe, whom the par- and, for the first time, informed Clark Fire ties agree is unaffiliated third party. However, that: (1) neither "Joe Cheong" nor "Robert "Texas law generally imposes no duty to take Walker" were authorized agents or employees action to prevent harm to others absent cer- of Arkema, (2) Doe's purchase order ("PO") tain special relationships or circumstances." was "clearly fraudulent" because it did not Torrington Co. v. Stutzman, 46 S.W.3d 829, `comport with Arkema's standard PO format- 837 (Tex. 2000). Here, Clark Fire asserts that ting, and (3) the PO had not been approved its "longstanding business relationship and or authorized by any agent or representative course of dealings" with Arkema created a legal of Arkema. Arkema also informed Clark Fire duty that required Arkema, once it received an that it had received several fraudulent invoices invoice seeking payment for goods it never from other vendors over the last several ordered, to timely warn Clark Fire that a third months, and that all of them were tied to the party was using Arkema's identity to fraud- alias of "Joe Cheong." ulently obtain goods. Clark Fire's sole argu- ment is that a twenty-year commercial history Procedural History is sufficient to create a "special relationship" On August 20, 2014, Clark Fire filed an between the parties. The Court disagrees. Original Petition against "John Doe a/k/a Joe Texas courts have established a number Cheong" in the Harris County District Court of "special relationships" that can give rise to a alleging (1) fraud, (2) theft of property under duty of reasonable care. See, e.g., D. Houston, the Texas Theft Liability Act, (3) conversion, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002) and (4) quantum meruit. Clark Fire also sued ("An employer may breach a duty to its inde- Arkema for negligence, claiming that, because pendent contractor by failing to exercise its of their longstanding business relationship, retained control over the contractor with rea Arkema had a duty to timely warn Clark Fire sonable care."); Texas Home Mgmt., Inc. v. of Doe's fraudulent scheme so that the ship- Peavy, 89 S.W.3d 30, 32 (Tex. 2002) (mental ment could be halted. Arkema was served with health facility's "right to control" resident cre- process on September 3, 2014. "John Doe" has ated "special relationship," and facility owed yet to be identified or served. duty of care to person murdered by resident); City of Tyler v. Likes, 962 S. W.2d 489, 496 (Tex. Analysis 1997) (discussing "a very limited number of To bring a cause of action for negligence contracts dealing with intensely emotional under Texas law, Clark Fire must establish noncommercial subjects such as preparing a that Arkema violated a legal duty owed to it. corpse for burial or delivering news of a fam- See Nabors Drilling, U.S.A., Inc. v. Escoto, 288 ily emergency"); Barcelo v. Elliott, 923 S.W.2d S. W.3d 401, 404 (Tex. 2009) (Texas negligence 575, 577 (Tex. 1996) (attorney/client); Krishnan suit requires "a legal duty owed by one person v. Sepulveda, 916 S.W.2d 478, 482 (Tex. 1995) 169 ages (physician/patient relationship); Sw. Bell Tel. v. B.B., 306 S.W.3d 910, 916 (Tex. App.- The Co. y. DeLanney, 809 S.W.2d 493, 494 n.1 (Tex. Beaumont 2010, pet. denied) ( Generally, a for 1291) ("Some contracts involve special relation- person's duty to warn of a dangerous situation ships that may give rise to duties enforceable as that the person did not create is a moral duty, late torts, such as professional malpractice."); Farley not a legal one."); Carter v. Abbyad, 299 S.W.3d ing v. M M Cattle Co., 529 S.W.2d 751, 754 (Tex. 892, 901 (Tex. App.-Austin 2009, no pet.). 1975), overruled on other grounds by Parker v. ("Texas common law is fundamentally prem- Highland Park, Inc., 565 S.W.2d 512 (Tex. 1978) ised on individuals' responsibility for their own (employer/employee); Freeman v. Harris Cuty., actions," and "the exceptions to that rule-e.g. 183 S.W.3d 885, 890 (Tex. App.-Houston (Ist employer-employee, parent-child-all involve Dist.) 2006, pet. denied) (statutorily-mandated situations where the defendant either had a autopsy created "special relationship," and recognized legal obligation to control the other county had a duty to safeguard the body). person's conduct or the right to do so."). Here, Clark Fire does not cite, and the Any ethical obligation Arkema may have, Court is not aware of, any case that recognizes had to share its knowledge regarding Doe or establishes a "special relationship" under and his schemes does not rise to the level of Texas law based solely upon a long-standing a legal duty simply because the parties have a commercial relationship. Instead, Clark Fire history of doing business together. Clark Fire asserts that, through their long-term business has not alleged the existence of: (1) a control- relationship and course of dealings, Clark Fire ling contractual agreement, (2) a fiduciary relied on Arkema to immediately inform Clark relationship between the parties, (3) some Fire that Arkema had received several fraudu- "right of control" over Doe, or (4) any other lent invoices over the last several months, all of "special relationship" recognized under Texas which were tied to the alias provided by Doe. law. Accordingly, the Court finds that Arkema Clearly, Arkema had superior knowledge of did not owe Clark Fire a duty of care. Because the risk, the fraud perpetrated by Doe under Clark Fire's complaint lacks an element that is the guise and apparently authority of Arkema, necessary for relief, dismissal is appropriate. and therefore Arkema had a duty to warn See Rios, 444 F.3d at 421. Clark Fire of that dangerous condition. Clark Fire cites only one Texas case to Conclusion establish that Arkema had a duty to warn- For these reasons, it is ORDERED that Thapar v. Zezulka, 994 S.W.2d 635, 639-40 Defendant Arkema's Motion to Dismiss (Doc. (Tex. 1999). However, in Thapur, the Texas 2) is hereby GRANTED. Supreme Court held that a mental-health pro- fessional did not owe a common law duty to Questions about the case: directly warn third parties that a patient had made violent threats against them. Id. 1. What is the first element that a plain- Likewise, other Texas courts have declined iff must prove in order to bring a neg- to create a wholesale duty to warn about the ligence action in Texas? criminal acts of third parties, outside of prem- 2. What type of duty is alleged in this case ises liability cases or situations in which the and how does the plaintiff claim that defendant had the ability to control the crimi- the duty was breached? nal actor. See, e.g., San Benito Bank & Trust Co. 3. What other special relationships have v. Landair Travels, 31 S.W.3d 312, 321 (Tex. Texas courts recognized in the past? App.-Corpus Christi 2000, no pet.) (certified 4. What case does Clark Fire provide as public accountant and his lawyer did not owe precedent for its argument that the duty to warn potential victims regarding for- defendant had a duty to warn about mer employee who had embezzled); Newsom Doe's fraudulent actions