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Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 1 of 10

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TEXAS

EL PASO DIVISION

RICARDO MAGALLANES,

Plaintiff,

v.

FORD MOTOR COMPANY,

Defendant.

EP-13-CV-00175-DCG

ORDER DENYING MOTION FOR JUDGMENT ON THE PLEADINGS

Presently before the Court is Defendant Ford Motor Company's ("Defendant" or "Ford")

"Rule 12(c) Motion for Judgment on the Pleadings on Plaintiffs Exemplary Damages Claims"

(ECF No. 9); Plaintiff Ricardo Magallanes' ("Plaintiff or "Magallanes") "Opposition to

Defendant's Rule 12(c) Motion for Judgment on the Pleadings" (ECF No. 10); and Defendant's

"Reply to Plaintiffs Opposition to Defendant's Rule 12(c) Motion for Judgment on the

Pleadings" (ECF No. 11). Also pending before the Court for consideration is Plaintiffs

"Amended Opposition to Defendant's Rule 12(c) Motion for Judgment on the Pleadings"

("Plaintiffs AmendedResponse") (ECF No. 12),and Defendant's "Reply to Amended

Plaintiffs Opposition to Defendant's Rule 12(c) Motion for Judgment on the Pleadings"

("Defendant's Amended Reply") (ECF No. 13).1 After reviewing the motion, memoranda of

counsel, and applicable law, the Court enters the following opinion and orders.

Plaintiffs Amended Response and Defendant's Amended Reply should have been filed as sur-
replies—aparty's formal request to seek the court's permission to file any additional submissions on the
motion. Plaintiffand Defendant are strongly cautioned against improperly filing these type of responses
inthefuture. See W.D. Tex. Civ. R. 7(f)(1) ("Local Court Rules") ("Generally. A party may file a reply
in support of a motion. Absent leave ofcourt, nofurther submissions on the motion are allowed")
(emphasis added); see also, Local Court Rule 7(b) ("Leave to File. When a motion for leave to file a
pleading, motion, or othersubmission is required, an executed copy of the proposed pleading, motion, or
other submission shall be filed as an exhibit to the motion for leave. Unless otherwise ordered, if the

Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 2 of 10

I. Factual and Procedural Background

In the instant case, Plaintiff sues Defendant for common law negligence and exemplary

damages under Section 41.003 of the Texas Civil Practice and Remedies Code. Plaintiff initiated

suit in state court in El Paso County, Texas, on or about April 17,2013. See Notice of Removal

1, ECF No. 1. Thereafter, on May 24, 2013, Defendant removed the above-styled cause to

federal court which Plaintiff did not contest. See id. Subsequent to removal, Plaintiff filed his

First Amended Complaint alleging substantially the same causes of action. Compare Notice of

Removal 10-15 [hereinafter Original Petition], with Am. Compl. 1-8, ECF No. 2. Defendant

now files a judgment on the pleadings for Plaintiffs exemplary damages claim, asserting that

based on Plaintiffs allegations, and pursuant to Section 41.005 of the Texas Civil Practice and

Remedies Code, Plaintiff is barred from recovering such damages.

In support of Plaintiffs causes of action, and without the benefit of discovery, Plaintiff

alleges the following factual narrative. In August 2010, Defendant financed Plaintiffs 2007

Ford Focus, with Vehicle Identification Number (VIN) 1FAFP34N17W133926, under account

number 42278074. See Am. Compl. 2. Evidenced by monthly billing statements at his address

and an online account through Defendant's website (i.e. www.fordcredit.com), Plaintiff alleges

that he maintained an ongoing relationship with Defendant. See id.

Plaintiff further asserts that Defendant maintains an electronic database that documents

specific account activity such as indicating when VIN-specific information is accessed by

authorized users at Defendant's automobile dealerships. Id. Plaintiff alleged that Defendant

maintains and includes in its database VIN-specific key source codes—often used to make car

key duplicates. Id. at 2-3. In accord with said records, Plaintiff contends that on or about

motion for leave is granted, the clerk shall promptly file the pleading, motion, or other submission. After
leave is granted, any applicable time limits triggered by the pleading, motion, or other submission shall
run from the filing of the pleading, motion, or other submission by the clerk or otherwise.").

Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 3 of 10

September 10,2010, Defendant supplied a third-party with VIN-specific information pertaining

to Plaintiffs car and account number. Id. at 3. Plaintiff asserts, however, that he never

requested his car's VIN key source code and never received notice that Defendant authorized

release ofthe above information to a third-party. Id.

Plaintiff alleges that he suffered harm as a result of Defendant's negligent release of

Plaintiffs VIN-specific information. In support, he alleges that on or about November 15,2010,

while Plaintiffs vehicle was parked in Ciudad Juarez, Chihuahua, Mexico, members of a drug

smuggling organization used a duplicate key to open and place into the car trunk two duffle bags

containing narcotics. Id. The next day, on or about November 16,2010, U.S. Customs and

Border Patrol, at the international bridge in El Paso, Texas, performed a routine inspection and

found the narcotics in Plaintiffs car trunk when he attempted to cross back into the United

States. Id. Resultantly, Plaintiff was arrested, indicted, and imprisoned until his release on May

13,2011. Id. at 4. After the Federal Bureau of Investigation (FBI) obtained evidence of the

conspiracy conjured by members of a Mexican drug smuggling organization and arrested one of

the perpetrators, the United States Government dismissed all indictments against Plaintiff on

June 27,2011. Id.

Defendant now moves for a Rule 12(c) judgment on the pleadings. Defendant asserts

that based upon the facts alleged in the First Amended Complaint, the instant action arises from

harm resulting from a criminal act. See Def.'s Mot. 1. Thus, Defendant contends that it is

entitled to a judgment on the pleadings on Plaintiffs claim for exemplary damages because

Defendant is exempt from exemplary damages in this case pursuant to Section 41.005(a) of the

Texas Civil Practice and Remedies Code.

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Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 4 of 10

II. Legal Standard

Subsequent to the filing of an answer, defendant or plaintiff may file a Rule 12(c) motion

for judgment on the pleadings. Rule 12(c) of the Federal Rule of Civil Procedure reads as

follows: "After thepleadings are closed—butearly enough not to delay trial—a party may move

for judgment on the pleadings." Fed. R. Civ. P. 12(c) (emphasis added). Rule 12(c) motions are

used to determine, "whether the pleadings either (1) establish the plaintiffs claims as a matter of

law or (2) demonstrate their legal insufficiency." See Jebaco, Inc. v. Hurrah's Operating Co.,

Inc., 587 F.3d 314, 318 (5th Cir. 2009).

The standard for deciding a Rule 12(c) motion is the same as a Rule 12(b)(6) motion to

dismiss. Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177,180 (5th Cir. 2007). The court "accepts

all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." In re

Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). The plaintiff must plead

"'enough facts to state a claim to relief that is plausible on its face.'" Jebaco, 587 F.3d at 318

(5th Cir. 2009) (quoting Bell All Corp. v. Twombly, 550 U.S. 544, 570,127 S.Ct. 1955,1974,

167 L.Ed.2d 929 (2007)). As the Fifth Circuit has explained, "[t]he issue is not whether the

plaintiff will ultimately prevail, but whether he is entitled to offer evidence to support his claim."

Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam). The district court should

only grant a Rule 12(c) motion "when it is clear that the plaintiff can prove no set of facts in

support of his claim that would entitle him to relief." Id.

A. Whether Defendant's 12(c) Motion was PrematurelyFiled

III. Discussion

As a threshold matter, the parties argue as to whether Defendant's 12(c) Motion was

prematurely filed in the instant case. Plaintiff contends that because the parties filed a Joint

Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 5 of 10

Status Report and Proposed Scheduling Order (ECF No. 8) proposing that the parties be

permitted to amend or supplement pleadings without leave ofthe Court until November 4, 2013,

the pleadings in this case have not yet "closed." Before delving into the applicable law, the

Court notes that it has not yet entered a scheduling order in this case and no deadlines have been

set by the Court. Irrespectively, deadlines in a scheduling order are not determinative for the

purpose of establishing the timeliness of Rule 12(c) motions. See Beall Legacy Partners, L.P. v.

CityofWaxahachie, Tex., Civ. A. No. 3:05-CV-1942D, 2006 WL 353471, at *1 (N.D. Tex. Feb.

16,2006); Nortel Networks Ltd. v. Kyocera Wireless Corp., Civ. A. No. 3:02-CV-0032-D, 2002

WL 31114077, at *1 n.l (N.D. Tex. Sept. 20,2002) (citing 5A Charles A. Wright & Arthur R.

Miller, Federal Practice and Procedure § 1367, at 5012-13 (1990) (footnotes omitted)).

Here, Plaintiff filed his First Amended Complaint on June 2,2013, and Defendant filed

its answer on June 17,2013. On July 1,2013—the date that Defendant filed the instant

motion—the pleadings were "closed" within the meaning of Rule 12(c). This Court's conclusion

is supported by Rule 7(a) of the Federal Rules of Civil Procedure. Rule 7, entitled "Pleadings

Allowed," defines what filings are considered pleadings and declares which pleadings shall be

filed with the district court. Specifically, Rule 7(a) identifies pleadings as,

(1) a complaint; (2) an answer to a complaint; (3) an answer to a counterclaim
designated as a counterclaim; (4) an answer to a crossclaim; (5) a third-party
complaint; (6) an answer to a third-party complaint; and (7) if the court orders
one, a reply to an answer.

Fed. R. Civ. P. 7(a)(l)-(7). Thus, the pleadings are closed for the purposes of Rule 12(c) once a

complaint and answer have been filed, assuming, as is the case here, that no counterclaim or

cross-claim is made. Fed. R. Civ. P. 12(c); see also Doe v. United States, 419 F.3d 1058, 1061

(9th Cir. 2005) (internal citations omitted) ("Rule 7(a) provides that the pleadings are closed

upon the filing of a complaint and an answer."); Flora v. Home Fed. Savs. & Loan Ass 'n, 685

Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 6 of 10

F.2d 209,211 n.4 (7th Cir. 1982) ("Fed. R. Civ. P. 7(a) prescribes when the pleadings are

closed."); Beall Legacy, 2006 WL 353471, at *1; Nortel Networks, 2002 WL 31114077, at *1.

Because the final pleadings closed after Defendant filed its answer to Plaintiffs First

Amended Complaint, and before the present motion was filed, the Court finds that the present

motion was not procedurally premature for the purpose of Rule 12(c). Having determining that

Defendant's motion is not untimely pursuant to Rule 12(c), the Court now turns to whether the

requested relief is warranted.

B. Plaintiffs Exemplary Damages Claim

In his First Amended Complaint, Plaintiff seeks exemplary damages under Section

41.003 of the Texas Civil Practice and Remedies Code. Section 41.003, entitled "Standards for

Recovery of Exemplary Damages," permits such recovery for exemplary damages "only if the

claimant proves by clear and convincing evidence that the harm ... result from (1) fraud; (2)

malice; or (3) gross negligence." Tex. Civ. Prac. & Rem. Code § 41.003 (2003).

Nonetheless, an exemption, which operates to bar recovery of exemplary damages under

Section 41.003, is set forth in Section 41.005(a) of the Texas Civil Practice and Remedies Code.

Section 41.005, entitled "Harm Resulting From Criminal Act," provides that "[i]n an action

arising from harm resulting from an assault, theft, or other criminal act, a court may not award

exemplary damages against a defendant because of the criminal act of another. Tex. Civ. Prac.

& Rem. Code § 41.005(a)(1995).

A plain reading of the statute precludes as award against a defendant where the harm is

caused by the criminal act of another. Relevant case law further holds that recovery is barred

even if the defendant's actions are deemed a concurrent cause of the resultant harm. In Miles v.

Jerry Kidd Oil Co., 363 S.W.3d 823 (Tex. App.—Tyler 2012, no pet.), husband of the store

Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 7 of 10

cashier, who was killed when she was struck by an intoxicated driver performing the duties of

her job, was not entitled to an award of exemplary damages against his wife's employer based on

allegation that employer was partially responsible for cashier's death by requiring her to traverse

a heavily traveled roadway as part of her job duties. In construing Section 41.005, the Miles

Court held that exemplary damages are not recoverablebecause the statute does not "punish[] a

defendant for harm resulting from a criminal act of a third party when that defendant's actions

are a concurrent cause ofthe harm." Miles, 363 S.W.3d at 826 (emphasis added). The court

further noted that "[t]here is no theory of liability under which a defendant is punished for the

criminal acts of unrelated third parties." Id.; see also In re Islamorada Fish Co. Texas, L.L.C.,

319 S.W.3d 908, 913 (Tex. App.—Dallas 2010, no pet.) (maintaining that Texas appellate courts

have previously held that "[S]ection 41.005(a) applies to bar recovery of punitive damages"

when plaintiffs attempt to recover exemplary damages from third-party bar-owner defendants

who serve the injury-inducing drunk driver too many drinks).

Notwithstanding the exemption in subsection (a), subsection (b) of Section 41.005further

provides Texas four exceptions to the exemption set forth in subsection (a). Miles, 363 S.W.3d

at 826; compare Black's Law Dictionary 653 (9th ed. 2009) (defining "exemption" as "freedom

from a duty, liability, or other requirement"), with id. at 644 (defining "statutory exception" to

"[a] provision in a statute exemption certain persons or conduct from that statute's operation").

Subsection (b) of Section 41.005 states the following:

(b) The exemption provided by Subsection (a) does not apply if:

(1) the criminal act was committed by an employee of the defendant;2

2 If Section 41.005(b)(1) is atissue, subsection (c) of said statute states that,

(c) In an action arising out of a criminal act committed by an employee, the employer may be
liable for punitive damages but only if:

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Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 8 of 10

(2) the defendant is criminally responsible as a party to the criminal act under the
Provisions of Chapter 7, Penal Code;

(3) the criminal act occurred at a location where, at the time of the criminal act,
the Defendant was maintaining a common nuisance under the provisions of
Chapter 125, Civil Practice and Remedies Code, and had not made reasonable
attempts to abate the nuisance; or

(4) the criminal act resulted from the defendant's intentional or knowing violation
of a statutory duty under Subchapter D, Chapter 92, Property Code, and the
criminal act occurred after the statutory deadline for compliance with that duty.

Tex. Civ. Prac. & Rem. Code § 41.005(b).

Here, Defendant contends that Section 41.005 is applicable in the instant case because

Plaintiffs claims arise from Ford's failure to properly secure the key codes and failure to notify

that the key codes had been provided to a third party. Def.'s Mot. 2. As such, Plaintiff alleges

that Defendant's negligent actions facilitated the efforts of a criminal conspiracy to transport

narcotics into the United States and resultantly caused Plaintiff to endure wrongful arrest and

imprisonment. See id. In response, Plaintiff alleges that because his imprisonment was not a

criminal act, Section 41.005(a) is not applicable. PL's Am. Resp. 4. Nevertheless, Plaintiff does

not dispute that in part, his harm resulted from criminal conduct—i.e. opening Plaintiffs car

without lawful authority and placing narcotics in his trunk. Contemporaneous with the criminal

conduct, Plaintiff also alleges that Ford is responsible for Plaintiffs harm when it provided VIN-

specific key source codes to an unauthorized third party. As such, it appearsthat Plaintiff

(1) the principal authorized the doing and the manner ofthe act;

(2) the agent was unfit and the principal acted with malice in employing or retaining him;

(3) the agent was employed in a managerial capacity and was acting in the scope of
employment; or

(4) the employer or a manager of the employer ratified or approved the act.

Tex. Civ. Prac. & Rem. Code § 41.005(c).

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Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 9 of 10

concedes that the harm was caused concurrently by Ford and the drug smuggling organization.

Based upon the pleadings and memoranda of counsel, Section 41.005(a) appears to be applicable

in the instant case.

Despite the exemption set forth in subsection (a) of Section 41.005, Plaintiff may still

recover exemplary damages if he can prove that one of the exceptions provided in subsection (b)

applies. Although Defendant asserts that exemplary damages in this case are barred by

subsection (a), Defendant fails to address how and why the exceptions in subsection (b) do not

apply, and, thus, further bar Plaintiffs recovery under Section 41.003.

Instead, Defendant

broadly states that the exceptions in subsection (b) are not applicable in this case. Plaintiff,

however, contends that without discovery, Defendant's blanket dismissal of the potentially

applicable exceptions is not justified. PL's Am. Resp. 4. Moreover, Plaintiff asserts that without

the benefit of discovery it will be deprived of the opportunity to determine whether Ford or an

employee of Ford is involved in the criminal conspiracy. Tex. Civ. Prac. & Rem. Code §

41.005(b)(lH2).

Moreover, Plaintiff and Defendant appear to dispute whether Ford or an employee of

Ford participated in the criminal conduct. See Am. Compl. 6 (alleging that Defendant has a duty

to control another person); id. at 8 (alleging that Defendant should have anticipated the danger

created by its own negligence). Because a motion brought pursuant to Rule 12(c) is designed to

dispose of cases where the material facts are not in dispute, the Court finds that at this stage of

the proceeding it remains possible that Plaintiff might produce evidence in discovery that would

create a genuine issue of material fact with respect to Plaintiffs claim for exemplary damages.

See Hughes v. Tobacco Inst., Inc., 278 F.3d 417,420 (5th Cir. 2001) ("Pleadings should be

construed liberally, and judgment on the pleadings is appropriate only if there are no disputed

Case 3:13-cv-00175-DCG Document 14 Filed 07/19/13 Page 10 of 10

issues of fact."). This possibility of acquiring such evidence remains disputed between the

parties, and, thus, is properly subject to discovery. Plaintiff is entitled to use the discovery

process to find and offer such evidence to support his claim for relief, and hence a judgment on

the pleadings in favor of Defendant is improper.

IV. Conclusion

At this particular pre-discovery juncture of the case, there is insufficient information

before the Court to determine whether a judgment on the pleadings for Plaintiffs exemplary

damages claim in favor of Defendant is proper. For the foregoing reasons,

IT IS HEREBY ORDERED that Defendant Ford Motor Company's "Rule 12(c)

Motion for Judgment on the Pleadings on Plaintiffs Exemplary Damages Claims" (ECF No. 9)

is DENIED.

So ORDERED and SIGNED this 19th day of July, 2013.

DAVID C. GUADERRAMA
UNITED STATES DISTRICT JUDGE

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