United States District Court, W.D. Louisiana, Shreveport Division
GLYNN DALE SISTRUNK, ET AL.
GREGORY LAMAR HADDOX, ETAL.
MAGISTRATE JUDGE HORNSBY
ELIZABETH ERNY FOOTE UNITED STATES DISTRICT JUDGE.
before the Court is a Motion to Dismiss for Failure to State
a Claim Upon Which Relief can be Granted filed by Glynn and
Lawana Sistrunk ("Plaintiffs") pursuant to Federal
Rule of Civil Procedure 12(b)(6). [Record Document 45].
Plaintiffs seek to dismiss a counterclaim filed by Defendant
Lincoln Financial Advisors Corporation ("LFA").
[Record Document 41]. The motion is opposed. [Record Document
51]. For the reasons discussed below, the motion to dismiss
is GRANTED IN PART and DENIED IN
filed the original action against their former investment
advisor Gregory Lamar Haddox ("Haddox") and his
firm LFA (together, "Defendants") for allegedly
"churning" their account and other fraudulent
activity. See Record Document 9, ¶
2.Plaintiffs brought a variety of federal and
state law claims against Defendants, including claims that
Defendants' conduct violated Texas's deceptive trade
practice laws. Record Document 9, ¶s 137-38. LFA filed a
counterclaim against Plaintiffs and a crossclaim against
Haddox pursuant to Federal Rule of Civil Procedure 13. Record
counterclaim alleges that Plaintiffs' claims against it
under the Texas Deceptive Trade Practices Act
("DTPA") are groundless in fact or law, brought in
bad faith, or brought for the purpose of harassment. Record
Document 41, ¶ 12. LFA states it is therefore entitled
to recover attorney's fees and court costs from
Plaintiffs pursuant to Texas Business & Commercial Code
§ 17.50(c). Id. LFA also alleges that it is
entitled to recover damages because Plaintiffs' lawsuit
constitutes an unfair method of competition and an unfair or
deceptive act or practice, in violation of Louisiana Revised
Statutes § 51:1405. Id. at ¶ 13.
order to survive a motion to dismiss brought under Rule
12(b)(6), a plaintiff must "state a claim to relief that
is plausible on its face." Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009). "A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged."
Id. "Threadbare recitals of the elements of a
cause of action, supported by mere conclusory statements, do
not suffice." Id. A court must accept as true
all of the factual allegations in the complaint in
determining whether plaintiff has stated a plausible claim.
See Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007); In re Katrina Canal Breaches Litig., 495
F.3d 191, 205 (5th Cir. 2007). However, a court is "not
bound to accept as true a legal conclusion couched as a
factual allegation." Papasan v. Allain, 478
U.S. 265, 286 (1986). If a complaint cannot meet this
standard, it may be dismissed for failure to state a claim
upon which relief can be granted. Iqbal, 556 U.S. at
678-79. A court does not evaluate a plaintiffs likelihood for
success, but instead determines whether a plaintiff has
pleaded a legally cognizable claim. U.S. ex rel. Riley v.
St. Luke's Episcopal Hosp., 355 F.3d 370, 376 (5th
Cir. 2004). A dismissal under 12(b)(6) ends the case "at
the point of minimum expenditure of time and money by the
parties and the court." Twombty, 550 U.S. at
LFA's Claims Under the DTPA
allege that LFA violated Texas's deceptive trade practice
laws by purposefully deceiving them in order to gain an
economic advantage and by engaging in unfair, deceptive, and
illegal acts and omissions designed to gain economic benefit
from the deception. Record Document 9, ¶s 137-38.
Section 17.50(a) of the DTPA allows a consumer to maintain a
civil action for (1) the use of a false, misleading, or
deceptive act or practice, (2) breach of warranty, (3) any
unconscionable action or course of action, or (4) the use or
employment by any person of an act or practice that violates
Chapter 541 of the Insurance Code. Tex. Bus. & Com. Code
Ann. § 17.50(a). LFA's counterclaim asserts that
Plaintiffs' lawsuit against it violates § 17.50(c)
of the DTPA. Record Document 41, ¶ 12. Section 17.50(c)
states that "[o]n a finding by the court that an action
under this section was groundless in fact or law or brought
in bad faith, or brought for the purpose of harassment, the
court shall award to the defendant reasonable and necessary
attorneys' fees and court costs." Tex. Bus. &
Com. Code Ann. § 17.50(c). Under this statute, the party
claiming attorney's fees bears the burden of proving that
the claims were groundless and brought in bad faith.
Phillips Petroleum Co. v. Loucks, 42 F.3d 641, 1994 WL
708633, at* 3 (5th Cir. 1994) (per curiam). The court, not
the fact finder, must determine the existence of
groundlessness, bad faith, and harassment under §
17.50(c). Id. at *4 (quoting Donwerth v. Preston
II Chrysler-Dodge, Inc., 775 S.W.2d 634, 638 (Tex.
the DTPA, an action is considered groundless if it has no
basis in law or fact and is not warranted by a good faith
argument for the extension, modification, or reversal of
existing law. Donwerth, 775 S.W.2d at 637. The
proper standard for determining groundlessness is
"whether the totality of the tendered evidence
demonstrates an arguable basis in fact and law for the
consumer's claim." Splettstosser v. Myer,
779 S.W.2d 806, 808 (Tex. 1989). A suit is brought in bad
faith if it is motivated by a malicious or discriminatory
purpose. Schlager v. Clements, 939 S.W.2d 183, 190
(Tex. App.-Houston [14th Dist] 1996, writ denied). A lawsuit
meets § 17.50(c)'s definition of harassment only if
that lawsuit was brought solely for the purpose of
harassment. Donwerth, 775 S.W.2d at 638.