Martin v. Schuck
3:24-cv-02892
N.D. Tex.Jun 25, 2025Background
- Plaintiffs (Martin and Palomino) own and operate Crazy King Burrito (CKB), a restaurant business based in Mexico.
- Defendant Schuck, after becoming acquainted with the plaintiffs, formed Crazy King Burrito North America, LLC (CKB-NA) to market CKB franchises in the U.S.
- In November 2020, CKB (Plaintiffs) entered into a "Franchisor Agreement" with CKB-NA (represented by Schuck) to expand the franchise into the U.S.
- Plaintiffs alleged that Schuck breached the Franchise Agreement and committed fraud by making certain representations.
- Plaintiffs sued Schuck for breach of contract and fraud; Schuck moved to dismiss for failure to state a claim against him personally.
- The court accepted all well-pleaded facts as true for this motion but analyzed whether those facts stated viable claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Schuck’s personal liability for breach | Schuck breached contract as a party | Schuck only signed as CKB-NA representative; not personally liable | Contract claim dismissed; Schuck signed as representative |
| Piercing the corporate veil (fraud) | Schuck used CKB-NA to perpetrate fraud for personal gain | Plaintiffs have not pled particularized facts showing fraud | Not enough facts pled to pierce veil; claim dismissed |
| Fraud allegations (pleading standard) | Schuck made material misrepresentations to induce contract | Complaint meets Rule 9(b) standard, or should be allowed to amend | Fraud claim not pled with particularity; dismissed |
| Leave to amend | Request to amend if dismissed | N/A | Plaintiffs granted leave to amend within 30 days |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (complaint must state a plausible claim to relief)
- Ashcroft v. Iqbal, 556 U.S. 662 (facial plausibility standard for pleadings)
- Blackburn v. City of Marshall, 42 F.3d 925 (Rule 12(b)(6) standard for dismissals)
- Gines v. D.R. Horton, Inc., 699 F.3d 812 (well-pleaded fact review standard on motion to dismiss)
- Ferrer v. Chevron Corp., 484 F.3d 776 (court does not accept conclusory allegations as true)
- Tel–Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d 1134 (particularity required for fraud pleadings)