Stellar Restoration Services, LLC v. James Christopher Courtney

533 F.Supp.3d 394

STELLAR RESTORATION SERVICES, LLC

v.JAMES CHRISTOPHER COURTNEY a/k/a Chris Courtney d/b/a Chestnut Plaza Condominium, et al.

CIVIL NO. 4:20-CV-382-SDJ

United States District Court, E.D. Texas, Sherman Division.

Signed March 30, 2021

Israel L. Suster, The Suster Law Group, PLLC, Bryan Hillary Burg, Siebman Forrest Burg & Smith LLP, Plano, TX, for Plaintiffs.

Carol Collins Payne, Fishman Jackson Ronquillo PLLC, Jennifer Lynn Henry, Dawn Estes, Estes Thorne & Carr PLLC, Dallas, TX, for Defendants.

MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

SEAN D. JORDAN, UNTTED STATES DISTRICT JUDGE

Came on for consideration the report of the United States Magistrate Judge in this action, this matter having been heretofore referred to the Magistrate Judge pursuant to 28 U.S.C. § 636. On March 11, 2021, the Magistrate Judge entered proposed findings of fact and recommendations (the "Report"), (Dkt. #33), that Defendants James Christopher Courtney's ("Courtney") and JC Enterprises I, LLC's ("JC Enterprises") Motion to Dismiss, (Dkt. #10), be denied. Defendants filed objections to the Report (the "Objections"), (Dkt. #34), and Plaintiff Stellar Restoration Services, LLC ("Stellar Restoration") filed a response (the "Response"), (Dkt. #36).

The Court has conducted a de novo review of the Objections and is of the opinion that the findings and conclusions of the Magistrate Judge are correct and that the Objections are without merit as to the ultimate findings of the Magistrate Judge. The Court hereby adopts the findings and conclusions of the Magistrate Judge as the findings and conclusions of the Court.

Background

This matter boils down to whether Courtney or JC Enterprises can be bound to a forum-selection clause. Courtney is both the President of Chestnut Plaza Condominium Association (the "Association") and the owner of JC Enterprises, a Missouri business selling specialty sportscars. See (Dkt. #8 at 3); (Dkt. #10 at 7); (Dkt. #10-2 at 3). JC Enterprises holds legal title over one of the condominium units in a commercial complex allegedly called Chestnut Plaza Condominiums. See (Dkt. #8 at 3); (Dkt. #10 at 7); (Dkt. #10-2 at 3); (Dkt. #31).

In February 2020, Courtney and Stellar Restoration's sales consultant signed a Restoration Services Agreement (the "Agreement"). See (Dkt. #13-4 at 4). The Agreement contains a forum-selection clause, which provides that "[e]xclusive forum and venue for any action brought pursuant to the terms of this Agreement ... shall be in Collin County, Texas." (Dkt. #13-4 at 4) (emphasis omitted). Courtney signed the document as "President" of the "Customer," who the Agreement defines as "Chestnut Plaza Condo Assoc." (Dkt. #13-4 at 2, 4). The Agreement further defines the "Subject Property" as "Chestnut Plaza Condominium[,] 22Ksf of standing seam, and located at the following address: 1950 E. Chestnut Expwy Springfield MO 65802." (Dkt. #13-4 at 2). The Agreement also provides:

Customer represents and warrants that the Subject Property is insured by an insurance carrier policy ("Policy") owned by Customer for Replacement Cost Value ....

The party signing for Customer represents and warrants his authority to bind Customer hereto and/or to bind the owner of the Subject Property, and Policy, to this Agreement ....

The parties, intending to be legally bound by its terms, have caused this Agreement to be executed individually and/or by their authorized representatives on the dates set forth below ....

(Dkt. #13-4 at 2, 4). Though the Agreement identifies only building 1950 on East Chestnut Expressway, the insurance policy in the record (the "Policy") covers buildings 1950 through 1980 on East Chestnut Expressway. See (Dkt. #13-4 at 2); (Dkt. #13-5 at 4). Further, the Policy's owner is "Chestnut Plaza Condominiums," not "Chestnut Plaza Condominium Association." See (Dkt. #13-5 at 4). The distinction bears significance because the record also contains registration documents for the fictitious business name "Chestnut Plaza Condominiums" (the "Fictitious Name"), which is wholly owned by Courtney. (Dkt. #13-2). The Fictitious Name is registered only as to building 1950 on East Chestnut Expressway, not buildings 1950 through 1980. See (Dkt. #13-2).

The Magistrate Judge's Report found that, due to the Agreement's ambiguous language, Courtney and JC Enterprises are bound to the forum-selection clause at this early stage of litigation. See (Dkt. #33 at 32–34). The Report recommended that (1) Defendants’ Motion be denied with respect to dismissing Defendants, and (2) Defendants’ request to transfer this matter to the Western District of Missouri be denied. See (Dkt. #33 at 32–39).

Objections to Report and Recommendation

Defendants raise two Objections to the Magistrate Judge's Report. Defendants assert that: (1) the Agreement unambiguously binds only the Association, and (2) if the Agreement is ambiguous, such ambiguity requires dismissing Courtney and JC Enterprises. See (Dkt. #34).

A. Whether the Agreement is Ambiguous

1 Defendants first Objection focuses on the phrase "and/or": "[T]he only reasonable interpretation of ‘and/or’ in these provisions is that the party signing is 1) signing both in his individual AND his representative capacity; or 2) [a] signing either in his individual OR [b] representative capacity, but not both ...." (Dkt. #34 at 3). According to Defendants, due to "the surrounding circumstances of the Agreement," Courtney signed the document only in his capacity as President of the Association, and, thus, neither Courtney nor JC Enterprises are bound. See (Dkt. #34 at 3–4). In other words, Defendants argue that "the surrounding circumstances of the Agreement" compel the Court to determine Courtney signed the Agreement in his representative capacity and nothing more. See (Dkt. #34 at 3–4). This argument is unpersuasive.

2 First, if the Court accepts Defendants’ reading of "and/or," the inquiry should end. Accepting Defendants’ understanding of "and/or" concedes that the Agreement is ambiguous. See Kenneth A. Adams & Alan S. Kaye, Revisiting the Ambiguity of "And" and "Or" in Legal Drafting, 80 St. John's L. Rev. 1167, 1180 (2006) ("[A]uthorities on legal drafting have stated or [in "and/or"] is ambiguous, in that it can be ‘inclusive,’ meaning A or B, or both, or it can be ‘exclusive,’ meaning A or B, but not both."); William Strunk , Jr. & E.B. White , The Elements of Style 40 (4th ed. 2000) (stating that "and/or" is "[a] device, or shortcut, that damages a sentence and often leads to confusion or ambiguity."). Indeed, courts have long noted that the term "and/or" can be ambiguous.¹ As the Magistrate Judge noted, "[o]nce a court determines a contractual provision is ambiguous, the meaning of that provision and the parties’ intent are questions of fact." (Dkt. #33 at 33) (citing Cicciarella v. Amica Mut. Ins. Co., 66 F.3d 764, 768 (5th Cir. 1995) ). Here, Defendants urge the Court to accept their interpretation of "and/or," drawn from the "surrounding circumstances," and conclude that Courtney signed the Agreement only in his representative capacity. See (Dkt. #34 at 2–5). But drawing from the "surrounding circumstances" of the Agreement requires the Court to examine extrinsic evidence and answer a question of fact. See Nat'l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (holding that an ambiguous contract permits the court to consider the parties’ interpretation and admit extraneous evidence to determine the instrument's meaning); R & P Enters. v. LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 519 (Tex. 1980) (same). It is simply too early to answer questions of fact at the dismissal stage. Cf. Nevels v. Ford Motor Co., 439 F.2d 251, 256–57 (5th Cir. 1971) ("The ultimate end of all litigation is the ascertainment and rendition of truth.").

Even if the meaning of "and/or" is not ambiguous on its face, its application to Courtney and JC Enterprises is ambiguous in the present context. As the Report notes, what constitutes the "Subject Property" is ambiguous as a matter of law. See (Dkt. #33 at 33). The Agreement partially defines the Subject Property as Chestnut Plaza Condominiums, which implicates buildings 1950 through 1980 on East Chestnut Expressway. See (Dkt. #13-4 at 2); (Dkt. #13-5 at 4). However, only building 1950 is listed as the Subject Property. See (Dkt. #13-4 at 2). Further, it is unclear to what "22Ksf of standing seam" refers. From the record, it appears that "22Ksf of standing seam" may mean "22,000 square feet of standing seam." See (Dkt. #13-5 at 6) (copy of insurance claim, listing 21,139.63 square feet of "R&R Standing seam metal roofing" as an itemized expense). This raises the question: Would replacing 22,000 square feet of "standing seam" affect only building 1950, which is JC Enterprises’ unit, or would it affect all units in the condominium complex?

Just as the Court cannot presently divine what constitutes the Subject Property, the Court also cannot determine who is "the owner" of the Subject Property. Only after answering these preliminary questions can the Court determine how the "and/or" language operates in the Agreement. Resolving these ambiguities requires the Court to answer questions of fact, which are more appropriately addressed after discovery commences. See National Union, 907 S.W.2d at 520 ; R & P Enterprises, 596 S.W.2d at 519. At this juncture, JC Enterprises is bound to the Agreement for jurisdictional purposes.

"The owner" of the Policy presents the same problem. From the insurance claim submitted, it appears that the Policy covers buildings 1950 through 1980 on East Chestnut Expressway. See (Dkt. #13-5 at 4). This suggests that "the owner" of the Policy is the Association. However, the Policy names "Chestnut Plaza Condominiums" as the insured party, not "Chestnut Plaza Condominiums Association." (Dkt. #13-5 at 4). Whether this was merely a clerical error or instead a reference to...