Hostingxtreme Ventures LLC v. Bespoke Group LLC
3:14-cv-01471
N.D. Tex.Aug 23, 2017Background
- Bespoke Group, LLC (Bespoke) and its owner/manager Divyesh Patel contracted to sell 180 metric tons of U.S. dry green peas to Prosper Trade Company at $552/ton for delivery to India; Prosper assigned its rights to HostingXtreme Ventures (Plaintiff).
- Divyesh allegedly told Prosper’s representative (Hitesh) before the written contract that Bespoke had adequate inventory; Bespoke failed to deliver and cited shipping/railcar issues.
- Prosper purchased replacement peas at a higher price (allegedly $725/ton) to meet onward obligations to Ask Re Ltd., incurring claimed cover and incidental damages.
- Plaintiff pleaded a written-contract claim (and alternatives) and later sought to assert an oral contract and various tort claims (fraud, negligent misrepresentation, promissory estoppel, interference, breach of implied covenant).
- Defendants moved for summary judgment on multiple grounds (lack of admissible damages evidence, duplicative tort claims, failure to show existence of a third-party contract); Plaintiff moved for partial summary judgment.
- Magistrate Judge recommended granting defendants’ motion in part and denying plaintiff’s partial motion; only Plaintiff’s fraud claim based on pre-contract misrepresentations survives to trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiff may proceed on an oral contract theory | Plaintiff: an oral contract existed pre-dating the written memorandum and was fairly pleaded | Defendants: only a written contract was pleaded; oral theory is not properly before the court | Denied — oral-contract theory not fairly pleaded and cannot be raised first on summary judgment |
| Sufficiency of damages for breach of contract (cover vs. market) | Plaintiff: expert shows market price much higher, so damages exist; cover purchases occurred | Defendants: Plaintiff lacks admissible evidence of cover purchases/incidental costs; market damages unavailable if buyer covered | Granted for Defendants — Plaintiff failed to prove cover damages; breach claim dismissed for lack of damages evidence |
| Fraud based on pre-contract inventory representations | Plaintiff: Divyesh represented inventory and induced contract; no dispute as to fraud | Defendants: fraud duplicative of breach of contract | Denied (for Defendants) — pre-contract fraudulent inducement is an independent tort and survives summary judgment, but Plaintiff did not establish entitlement to summary judgment on fraud |
| Fraud based on post-contract shipping-delay statements | Plaintiff: these statements were false and actionable | Defendants: such claims are duplicative of contract breach (no independent duty) | Granted for Defendants — post-contract statements are subsumed by contract claim; fraud claim on shipping delays dismissed |
| Negligent misrepresentation claim | Plaintiff: alleged misstatements caused pecuniary loss | Defendants: claim duplicates contract damages; no independent injury | Granted for Defendants — negligent misrepresentation precluded by economic-loss rule (no independent injury) |
| Intentional interference with contract (Prosper–Ask Re) | Plaintiff: Defendants knew of tri-party arrangement and interfered, causing cover losses | Defendants: Plaintiff produced no evidence of an existing Prosper–Ask Re contract | Granted for Defendants — Plaintiff failed to show existence of an enforceable contract between Prosper and Ask Re |
Key Cases Cited
- Anderson v. Liberty Lobby, 477 U.S. 242 (framework for summary judgment and genuine-issue standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burdens and failure-of-proof basis)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (nonmovant must show more than metaphysical doubt)
- Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41 (fraudulent inducement is independent tort, not barred by economic-loss rule)
- Narvaez v. Wilshire Credit Corp., 757 F. Supp. 2d 621 (elements of breach of contract under Texas law)
- Ibe v. Jones, 836 F.3d 516 (fraudulent inducement and independent duty analysis)
- D.S.A., Inc. v. Hillsboro Indep. Sch. Dist., 973 S.W.2d 662 (narrower scope for negligent misrepresentation; independent-injury requirement)