CGI LOGISTICS, LLC v. Fast Logistik

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CGI LOGISTICS, LLC, v. FAST LOGISTIK, et al.

Civil Action No. 5:23-CV-43

United States District Court, S.D. Texas, Laredo Division

December 1, 2023

ORDER

Marina Garcia Marmolejo United States District Judge

Pending before the Court are Defendants' Motion to Dismiss for F ailure to Join Required Parties (Dkt. No. 7) and Motion to Dismiss for Forum Non Conveniens (Dkt. No. 9). The Court referred these motions to the United States Magistrate Judge for a Report and Recommendation pursuant to 28 U.S.C § 636(b) (Dkt. No. 26). The Magistrate Judge entered an Amended Report and Recommendation (“Amended Report”) on September 22, 2023, which recommends that both motions be denied without prejudice (Dkt. No. 31). The Parties timely filed objections to the Amended Report (Dkt. Nos. 32-34).

After a close review of the Amended Report and the Parties' objections, the Court ADOPTS IN PART and MODIFIES IN PART the Amended Report (Dkt No. 31). Defendants' Motions to Dismiss for Failure to Join Required Parties (Dkt. No. 7) and for Forum Non Conveniens (Dkt. No. 9) are hereby DENIED WITHOUT PREJUDICE.

I. BACKGROUND

In or around October 2022, Plaintiff Cargo Group International Logistics, LLC (“CGI”) and Defendant Fast Logistik USA, LLC (“Fast Logistik”) contracted for shipping services (Dkt. No. 5 at 2-3). CGI brokers freight shipments to motor carriers like Fast Logistik for transportation (id. at 3).

Pursuant to the CGI-Fast Logistik contract, Fast Logistik would transport several cargo shipments for Plaintiff's customer, Colgate Palmolive (id. at 3). The contract required Fast Logistik to (1) refrain from double brokering, and (2) obtain insurance to cover lost or damaged cargo (id. at 2-3). Defendant Gerardo Martinez, a representative for Fast Logistik, signed the contact and stated that Fast Logistik would transport the cargo and carry the necessary insurance (id. at 2, 4).

Fast Logistik failed to comply with the contract by (1) double brokering shipments to Defendant VGR Logistics LLC (“VGR Logistics”) who allegedly went on to hire a different carrier, Rone Transportes S.A. de C.V. (“Rone Transportes”), to deliver the cargo, and (2) failing to obtain insurance (id. at 3-4). Rone Transportes subsequently lost three cargo shipments, causing approximately $105,989.32 in damages that Fast Logistik and Martinez refused to pay for (id.). Plaintiff compensated Colgate Palmolive for its damages (id. at 4). Plaintiff's affiliate, Cargo Group International Logistics (“CGI Parent”), assigned its rights over the cargo damages to Plaintiff (id.).

Plaintiff brought suit in state court and Defendants removed the case to federal court in April 2023 (Dkt. Nos. 1-4). Plaintiff sued Defendants as follows:

• Defendant Martinez for fraud and negligent misrepresentation, and unlawful brokerage activity under 49 U.S.C. §§ 13901 and 14916 (Dkt. No. 5 at 5-6);

• Defendant Fast Logistik for fraud and negligent misrepresentation, unlawful brokerage activity, violations of Texas Transportation Code §§ 646.003 and 646.004, breach of contract, and common law liability (id. at 5-7); and

• Defendant VGR Logistics for negligence (id. at 8).

On May 11, 2023, Defendants collectively filed the instant Motions to Dismiss for Failure to Join Required Parties, and Forum Non Conveniens, which Plaintiff timely responded to (Dkt. Nos. 7, 9, 18, 19).

The Motions were assigned to the United States Magistrate Judge for a Report and Recommendation (Dkt. No. 26). The Amended Report recommended that both motions be dismissed without prejudice (Dkt. No. 31 at 21). All parties filed timely objections to the Amended Report (Dkt. Nos. 32, 34).

II. LEGAL STANDARDS

A. Review of Magistrate Judge's Report and Recommendation

A party who timely files objections to a magistrate judge's report and recommendation is entitled to a de novo review of those findings or recommendations to which the party specifically objects. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Objections must specifically identify portions of the report objected to and the basis for those objections. Fed.R.Civ.P. 72(b); Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). Moreover, the district court need not consider frivolous, conclusory, or general objections. Nettles v. Wainwright, 677 F.2d 404, 410 n.8 (5th Cir. 1982) (en banc) (overruled on other grounds). Findings or recommendations not challenged by objections will be reviewed only for plain error. U.S. v. Soto, 734 Fed.Appx. 258, 259 (5th Cir. 2018).

III. DISCUSSION

A. Motion to Dismiss for Failure to Join Required Parties

Under Federal Rule of Civil Procedure 12(b)(7), a defendant may move for dismissal on the grounds that the plaintiff failed to join a party under Federal Rule of Civil Procedure 19. Fed. Civ. P. 12(b)(7). The movant bears the burden of demonstrating that a missing party is necessary. Id.; Fed.R.Civ.P. 19. If a party cannot be joined, the court considers several factors to determine whether the case should be dismissed in the party's absence: “(1) prejudice to an absent party or others in the lawsuit from a judgment; (2) whether the shaping of relief can lessen prejudice to absent parties; (3) whether adequate relief can be given without participation of the party; and (4) whether the plaintiff has another effective forum if the suit is dismissed.” Fed.R.Civ.P. 12(b)(7). A court deciding a Rule 12(b)(7) motion “must accept all factual allegations in the complaint as true and draw inferences in favor of the non-moving party.” Dozier v. Sygma Network, Inc., No. 3:15-CV-2783-B, 2016 WL 949745, at *2 (N.D. Tex. Mar. 14, 2016) (citation omitted).

Defendants argue that this case should be dismissed because Plaintiff failed to join three required parties: (1) Colgate Palmolive, (2) CGI Parent, and (3) Rone Transportes (Dkt. No. 7 at 1-2). Plaintiff, on the other hand, argues that none of these parties are required to litigate this dispute (Dkt. No. 18 at 4-7). Plaintiff is correct.

1. Colgate Palmolive

Defendants claim that (1) Colgate Palmolive has a legally protected interest in the outcome of the litigation, and (2) proceeding without this absent party would subject defendants to a substantial risk of incurring multiple or inconsistent obligations (Dkt. No. 7 at 1-2). Plaintiff argues that Colgate Palmolive no longer has a protected interest-while it was the original cargo holder, it equitably subrogated its interest to Plaintiff by withholding payment for the lost cargo (Dkt. Nos. 5 at 4, 18 at 5-6). Because Plaintiff is seeking recovery for the same damages, it is Plaintiff, rather than Colgate Palmolive, that has the protected interest in the outcome of the suit (Dkt. No. 18 at 6). Further, Plaintiff correctly notes that Defendants have not established what inconsistent obligations, if any, would arise from Colgate Palmolive's absence in the suit (id. at 20).

In its objections to the Amended Report, Defendant VGR Logistics argues that Plaintiff has failed to provide proof of the subrogation, such as a binding surety agreement (see Dkt. Nos. 32 at 7, 33 at 4). But a surety agreement is not a requirement for subrogation to occur. Paymentech, L.L.C. v. Landry's Inc., 60 F.4th 918, 929-30 (5th Cir. 2023) (stating that equitable subrogation is “the doctrine by which a party, after having paid the losses of another party, obtains that party's rights and remedies against the third party that [wrongfully] caused the loss.”). Thus, the Court's concern is whether the Plaintiff has paid losses attributable to a different party's wrongful conduct.

Here, Plaintiff alleges that the cargo was lost due to Defendants' conduct- illegal brokering, failure to transport shipments or obtain insurance, among other breaches (Dkt. No. 5 at 5-8). Plaintiff has also alleged that Defendants refused to pay Colgate Palmolive for the lost cargo (id. at 4). Thus, Plaintiff has sufficiently alleged wrongdoing on the Defendants' part and connected the wrongdoing to the lost cargo Plaintiff paid for. The Court must accept Plaintiff's well-pleaded allegations. See Dozier, 2016 WL 949745, at *2.

Moreover, the Court may consider whether Colgate Palmolive is interested in joining the suit. See Union Pac. R. R. Co. v. City of Palestine, 517 F.Supp.3d 609, 620 (E.D. Tex. 2021) (“[T]he fact that an absent party does not seek joinder by its own volition indicates that it lacks an interest relating to the subject matter of the action.”) (citation omitted). Here, Colgate Palmolive has not sought joinder, nor is there any other indication that it has an active interest in the dispute.

Accordingly, because Plaintiff has sufficiently alleged equitable subrogation and there is no evidence that Colgate Palmolive is interested in joining the suit, the Court finds that Colgate Palmolive is not a required party. Defendants' objections as to this party are OVERRULED.

2. CGI Parent

Like with Colgate Palmolive, Defendants argue that CGI Parent has a legally protected interest in the outcome of the litigation, and (2) proceeding without this absent party would subject defendants to a substantial risk of incurring multiple or inconsistent obligations (Dkt. No. 7 at 1-2).

However, Plaintiff alleges that it was assigned any rights of its affiliate group, CGI Parent (Dkt. No. 5 at 4). Defendants have not set forth evidence to refute this claim. Moreover, CGI Parent has not sought to join the suit. Thus, the Court finds that CGI Parent is not a required party. Defendants' objections as to this party are OVERRULED.

3. Rone Transportes

Defendants argue that Rones Transportes is a required party because it is the party that “actually took the cargo . . . and allegedly did not deliver the same as supposed to” (Dkt. No. 7 at 2)....