Servicios Comerciales Lamosa, S.A. De C.V. v. De La Rosa

328 F.Supp.3d 598

SERVICIOS COMERCIALES LAMOSA, S.A. DE C.V. and Revestimientos Porcelanite, S.A. de C.V., Plaintiffs,

v.Mauricio DE LA ROSA, Mundo Tile, Ltd., MT Trading LLC, and MT Group Real Estate LLC, Defendants.

Civil Action No. 3:16-CV-54-L

United States District Court, N.D. Texas, Dallas Division.

Signed August 30, 2018

Ashley Scheer, Jackson Walker LLP, Dallas, TX, George Breck Harrison, Jackson Walker LLP, Austin, TX, for Plaintiffs.

Jason Michael Brown, Gray Reed & McGraw LLP, David M O'Dens, Braden Michael Wayne, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

Sam A. Lindsay, United States District Judge

Before the court are Plaintiff Revestimientos Porcelanite, S.A. de C.V.'s Motion for Summary Judgment (Doc. 90), filed April 17, 2018; Plaintiff Servicios Comerciales Lamosa, S.A. de C.V.'s Motion for Summary Judgment (Doc. 93), filed April 17, 2018; Plaintiffs' Motion to Exclude the Opinion Testimony of Defendant Mauricio De la Rosa (Doc. 96), filed April 17, 2018; and Plaintiffs' Motion to Strike Jury Demand (Doc. 98), filed April 17, 2018.¹ Having considered the motions, legal briefing, appendixes, evidence, record, and applicable law, the court denies Plaintiff Revestimientos Porcelanite, S.A. de C.V.'s Motion for Summary Judgment (Doc. 90); denies Plaintiff Servicios Comerciales Lamosa, S.A. de C.V.'s Motion for Summary Judgment (Doc. 93); denies Plaintiffs' Motion to Exclude the Opinion Testimony of Defendant Mauricio De la Rosa (Doc. 96); and denies Plaintiffs' Motion to Strike Jury Demand (Doc. 98).

I. Factual Background and Procedural History

This action arises from a contractual dispute between Mexican manufacturers of ceramic tile products and their Texas-based distributor. On January 8, 2016, Plaintiffs Servicios Comerciales Lamosa, S.A. de C.V. ("Lamosa Commercial Services") and Revestimentos Porcelanite, S.A. de C.V. ("Porcelanite") (sometimes collectively, "Plaintiffs")—manufacturers of flooring products, headquartered in Mexico City, Mexico—brought this action against Mundo Tile, Ltd., MT Trading LLC, MT Group Real Estate LLC, and Mauricio de la Rosa ("Mr. De la Rosa") (sometimes collectively, "Mundo Tile" or "Defendants"). Lamosa Commercial Services and Porcelanite seek recovery of approximately $3 million in damages from Mundo Tile for breach of contract claims arising from promissory notes Mundo Tile executed in their favor but has not paid. They also seek to recover against Mr. De la Rosa individually for breach of contract, alleging he failed to make payments under the terms of a guaranty agreement. In addition to their respective breach of contract claims, Lamosa Commercial Services and Porcelanite seek to foreclose on real property Mundo Tile pledged in satisfaction of its then-existing and future indebtedness. They also seek attorney's fees.

Mundo Tile contests Lamosa Commercial Services's and Porcelanite's entitlement to recover under the promissory notes and Mr. De la Rosa's guaranty agreement, or to foreclose on real property, asserting affirmative defenses of fraud, fraudulent inducement, offset, and waiver. Mundo Tile has also filed counterclaims against Lamosa Commercial Services and Porcelanite for breach of contract, fraud and fraudulent inducement, promissory estoppel, and unjust enrichment.

Lamosa Commercial Services and Porcelanite move for summary judgment on their respective affirmative breach of contract claims and on Mundo Tile's affirmative defenses and counterclaims. Lamosa Commercial Services and Porcelanite also move to exclude Mr. De la Rosa's testimony concerning Mundo Tile's lost profits and, asserting waiver, move to strike Mundo Tile's demand for a jury trial. The court now sets forth the facts in accordance with the standard in Section II(A) of this opinion.²

A. Porcelanite and Mundo Tile Enter into Distributorship Agreement.

Porcelanite manufactures ceramic tile products in Mexico and ships its products throughout the United States via a network of distributors. Mundo Tile owns and operates ceramic tile and flooring stores in Texas. Mr. De la Rosa is the founder and owner of Mundo Tile. Prior to forming Mundo Tile in 2003, Mr. De la Rosa was employed by several subsidiaries of Grupo Carso, including ConduMex Group and Porcelanite, from approximately 1989 through 2003, and was involved in the purchase, logistics, and manufacturing of Porcelanite-brand tile in the United States and Mexico.

In the late 1990s, Porcelanite-brand tile did not have a strong presence in the United States and was more popular in Central and South America. In the early 2000s, to boost its presence in the United States, Porcelanite began using United States-based distributors to sell its tiles in states with large Hispanic populations, including in California and Arizona, and in El Paso, Texas. In late 2002, Mr. De la Rosa spoke with Porcelanite's Chief Executive Officer, Antonio Gomez, as well as the chairman of Grupo Carso, Alejandro Aboumrad, about plans to return to the United States to open a tile store. They encouraged him and told him to confer with Felix Aguirre ("Mr. Aguirre"), Porcelanite's Exports Director, about his plans to open a Porcelanite-brand tile distributorship in the United States. In or around 2003, Mr. Aguirre gave Mr. De la Rosa permission to open an exclusive Porcelanite distributorship for the cities of Dallas/Fort Worth, San Antonio, Houston/Galveston, Waco, Austin, and Laredo. This agreement was not in writing. Lamosa Commercial Services and Porcelanite dispute the existence of an exclusive distributorship agreement with Mr. De la Rosa, although they concede that Porcelanite and Mundo Tile entered into a distributorship agreement.

In 2003, Mr. De la Rosa quit his job, moved from Mexico City, Mexico, to Dallas, Texas, and opened his first Mundo Tile store in Dallas, Texas, designed as a Porcelanite-brand tile distributor. Other stores followed. During the first years, with the exception of a wall tile from a Spanish manufacturer, Mundo Tile sold only Porcelanite products. When new customers or potential distributors would approach Porcelanite about purchasing Porcelanite-brand tile or opening a distributorship, Porcelanite would reject the request, sending the customers to Mundo Tile and explaining that Porcelanite already had a distributor, and that Mundo Tile was the only place to buy Porcelanite-brand tile in Texas. Porcelanite was now exporting massive amounts of tile to the United States, and a vast majority of its Texas exports was being sold by Mundo Tile. By 2007, Mundo Tile was approaching or exceeding $10 million in annual revenue, expanding its operations in Texas, and had been granted exclusive rights to sell Porcelanite-brand tiles in Oklahoma and Colorado. In exchange for exclusive rights, Mundo Tile underwrote significant advertising on behalf of Porcelanite and passed on the opportunity to diversify its offerings.

B. Grupo Lamosa Acquires Porcelanite in November 2007 .

In or around November 2007, Porcelanite was acquired by a competitor, Grupo Lamosa, S.A.B. de C.V. ("Grupo Lamosa"), a Mexican-based manufacturer of less expensive tiles and floor coverings.³ Grupo Lamosa used two separate subsidiary entities for its multiple brands, Lamosa Commercial Services, formed in December 2007, responsible for selling Lamosa-brand tiles, and Porcelanite, responsible for selling Porcelanite-brand tiles. For some time thereafter, Mundo Tile's account representatives and accounting contacts remained the same as prior to Grupo Lamosa's acquisition of Porcelanite. After the acquisition, however, Mundo Tile began to receive isolated reports of Porcelanite-brand tile being sold by Mundo Tile's competitors. When Mr. De la Rosa confronted his Grupo Lamosa contacts about these sales, he was reassured that the sales were isolated mistakes and that the exclusive distributorship agreement remained intact. In 2009, Mr. Aguirre left his position as United States Exports Director for Grupo Lamosa and was replaced by Hector Welsh ("Mr. Welsh").

C. Other Retailers in Texas Begin Selling Porcelanite-Brand Tile.

In April 2009, Mr. De la Rosa attended an annual industry conference in Chicago, at which Grupo Lamosa was displaying its Porcelanite tile line. Mr. De la Rosa discovered that Grupo Lamosa was displaying Mundo Tile's best-selling Hispanic tiles. He questioned Grupo Lamosa's President of Ceramics, Sergio Narvaez ("Mr. Narvaez"), and Mr. Welsh about the display, reminding them that these products were exclusive to Mundo Tile in Texas. Mr. Narvaez and Mr. Welsh assured Mr. De la Rosa that they would not allow any Texas-based retailers to purchase the tiles.

At about this time, Grupo Lamosa started delaying orders placed by Mundo Tile, questioning its price list. As a result, customers were abandoning Mundo Tile, as it was increasingly unable to satisfy orders or replenish its inventory. Thereafter, reports of Porcelanite products available for sale became more frequent, and other retailers in Texas sold the tiles at a lower price than Mundo Tile. Mundo Tile's network of contractors stopped buying from Mundo Tile, their trust fractured by the availability of Porcelanite-brand tiles at other retailers, and for prices significantly cheaper than at Mundo Tile. Mundo Tile's revenue dropped significantly.

In 2010, one of Mundo Tile's sub-distributors (Materiales El Valle) complained to Mr. De la Rosa that one of its competitors (Rodriguez Home Center) was selling Porcelanite-brand tile. When Mr. De la Rosa confronted Grupo Lamosa, Export Manager Leonor Cardenas ("Ms. Cardenas") apologized, as did Mr. Welsh. Mr. Welsh and Ms. Cardenas agreed to pull the products from Rodriguez Home Center and also offered, as a concession, to eliminate freight charges for Porcelanite orders placed by Mundo Tile on behalf of Materiales El Valle.

In 2011, Mr. Welsh called Mr. De la Rosa after hearing that Mundo Tile was considering suing Grupo Lamosa, seeking his assurance that this was not...