MSW Capital LLC v. Aaron's Inc
3:16-cv-03076
N.D. Tex.Aug 18, 2017Background
- MSW Capital, LLC sued Aaron’s, Inc. and Turtle Creek Assets, Ltd.; Aaron’s moved to dismiss MSW’s tortious-interference claim against Aaron’s.
- MSW framed its claim as interference with a business relationship but alleged interference with an existing contract between MSW and Turtle Creek; the court treats the claim as tortious interference with contract.
- MSW alleged Aaron’s refused to produce account documents, which MSW says caused Turtle Creek to breach the Turtle Creek–MSW Agreement.
- Magistrate judge recommended dismissal because MSW failed to plead willful and intentional interference (and related proximate-cause/inducement), and because the MSW–Turtle Creek contract expressly stated failure to provide certain documentation would not constitute a breach.
- MSW objected on intent pleading standards, on the contention that Turtle Creek’s failure to produce documents was a breach, and sought leave to amend if necessary.
- District court agreed the magistrate used an imprecise phrasing of intent but affirmed dismissal on multiple independent grounds, found the contract unambiguous (failure to produce such documents is not a breach), and dismissed MSW’s tortious-interference claim with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MSW sufficiently pleaded the "willful and intentional" intent element of tortious interference | MSW: Texas law does not require explicit allegation of inducement; intent can be shown by facts showing desire or substantial certainty of the consequence | Aaron’s: MSW failed to allege willful/intentional interference; awareness of effects on collection efforts is insufficient | Court: Magistrate misstated intent standard but result stands—MSW’s allegations do not establish required intent/proximate causation |
| Whether Aaron’s conduct induced Turtle Creek to breach the MSW–Turtle Creek Agreement | MSW: Aaron’s refusal to produce documents caused/induced Turtle Creek’s breach | Aaron’s: Even if it breached its own agreement, Aaron’s could not be a tortfeasor inducing breach; disclaimers and contract terms preclude third-party reliance | Court: No plausible allegation that Aaron’s induced a breach; MSW cannot allege inducement required to state the tort claim |
| Whether Turtle Creek’s failure to produce the Lease Agreement or affidavit constituted a breach of the MSW–Turtle Creek Agreement | MSW: Contract ambiguous; failure to obtain documents (from Aaron’s) was a breach | Aaron’s: Agreement expressly provides failure to provide certain documentation will not constitute a breach; seller only must provide available documents | Court: Contract unambiguous; clause excludes failure to provide such documentation from constituting a breach; MSW’s breach theory fails |
| Whether dismissal should be with prejudice or without prejudice to amendment | MSW: If pleading standard required "induce" MSW sought leave to amend | Aaron’s: Dismissal appropriate; MSW cannot cure defects | Court: Amendment would be futile; MSW did not meaningfully propose cure; dismissal with prejudice warranted |
Key Cases Cited
- Amigo Broad., LP v. Spanish Broad. Sys., Inc., 521 F.3d 472 (5th Cir.) (discusses intent element for tortious interference under Texas law)
- Lincoln Gen. Ins. Co. v. U.S. Auto Ins. Servs., Inc., 787 F.3d 716 (5th Cir.) (proximate-cause/inducement element discussion in tortious interference context)
- Matter of Dallas Roadster, Ltd., 846 F.3d 112 (5th Cir.) (a defendant cannot tortiously interfere with its own contract)
- Morgan Stanley & Co. v. Texas Oil Co., 958 S.W.2d 178 (Tex.) (party must be a stranger to the contract to assert tortious interference)
- ACS Inv’rs, Inc. v. McLaughlin, 942 S.W.2d 426 (Tex.) (courts construe unambiguous contract terms as a matter of law)
- C.E. Servs., Inc. v. Control Data Corp., 759 F.2d 1241 (5th Cir.) (inducing an obligor to do what it has a right to do is ordinarily not actionable interference)
- Sw. Bell Tel. Co. v. John Carlo Tex., Inc., 843 S.W.2d 470 (Tex.) (statement on intent standards cited in Texas tort interference jurisprudence)
- Davis v. HydPro, Inc., 839 S.W.2d 137 (Tex. App.) (proximate cause / inducement authority cited by Fifth Circuit and courts)