Travelex Currency Services, Inc. v. Puente Enterprises, Inc.

Background

Travelex Currency Services, Inc. provided foreign-currency exchange services at Dallas/Fort Worth International Airport and George Bush Intercontinental Airport. It subcontracted with Puente Enterprises, Inc. (PEI), an airport-concessions operator, to provide those services.

The parties’ relationship deteriorated after a dispute over money in a bank account used for their operations. Travelex sued PEI for breach of contract and conversion. PEI denied liability and asserted counterclaims for breach of contract, fraud, and tortious interference. PEI also asserted a defamation claim against Travelex and James C. Hewitt, Jr., Travelex’s chief executive officer.

The court had previously dismissed PEI’s fraud and tortious-interference claims without prejudice and had denied a motion to dismiss PEI’s breach-of-contract and defamation claims. PEI then moved to amend the dismissed counterclaims and add a new counterclaim for fraudulent inducement.

Legal standard

Under Federal Rule of Civil Procedure 15(a)(2), a court generally should allow a party to amend a pleading when justice requires. The court may deny amendment, however, when the proposed amendment would be futile. The court evaluated futility under a standard comparable to deciding a motion to dismiss for failure to state a claim.

Fraud

PEI alleged that, during Travelex’s effort to obtain an airport contract, Travelex promised that PEI would receive a 35 percent concession fee or revenue share. PEI relied on statements about meeting a 35 percent Airport Concession Disadvantaged Business Enterprise goal and on statements in Travelex’s proposal.

The court held that PEI did not adequately allege a material misrepresentation. It did not explain how the 35 percent Airport Concession Disadvantaged Business Enterprise goal—which could be met through several methods—was equivalent to a 35 percent concession fee or share of gross revenue. The proposed pleading used terms such as “concession fee,” “revenue share,” “profit share,” “percentage of earnings,” gross revenue, earnings before interest, taxes, depreciation, and amortization, and net revenue without adequately explaining their relationship.

The court also held that PEI did not adequately allege that Travelex intended to deceive PEI when the alleged promises were made. Later events, including a 2014 email proposing a reduced revenue share, a 2018 proposal involving a 30 percent participation rate, and Travelex’s failure to provide the promised fee, did not show Travelex’s intent in 2013, when the alleged statements were made. The court stated that failing to perform a promise, by itself, does not establish fraudulent intent.

Finally, the court held that PEI did not adequately plead reasonable reliance. Although PEI alleged that it continued its business relationship with Travelex, negotiated contracts, and agreed to participate in Travelex’s proposal, it did not allege facts showing that the statements were a substantial factor in those decisions. Reliance by DFW on statements made to DFW also could not satisfy PEI’s own reliance requirement.

Fraudulent inducement

PEI proposed adding a claim that Travelex misrepresented its intent to provide a 35 percent concession fee to persuade PEI to join the DFW proposal. The court held that this claim failed for the same reasons as the proposed fraud claim: PEI did not adequately allege a material misrepresentation, intent to deceive, or reasonable reliance.

Tortious interference with business relations

PEI alleged that Travelex interfered with its business relationship with DFW by promising to enter an agreement consistent with the airport’s proposal requirements and then failing to do so. PEI also alleged that Travelex interfered with PEI’s relationships with approximately twenty-five former employees by encouraging them to leave PEI and work for Travelex.

The court held that PEI could not base an interference claim on the DFW operations arising from PEI’s agreement with Travelex, because those operations did not establish a business relationship between PEI and DFW. PEI did allege separate business relationships with DFW, but the court found that the proposed pleading did not adequately allege that Travelex directly interfered with those relationships. The alleged defamatory statements to DFW had already been rejected as the basis for an interference claim because that theory duplicated PEI’s defamation claim.

As to the former employees, the court held that PEI did not adequately allege wrongful conduct. Under New York law, tortious interference with business relations generally requires conduct amounting to a crime or independent tort, unless the defendant acted solely to inflict intentional harm. PEI alleged that Travelex hired trained employees for its own economic benefit, not solely to harm PEI, and did not allege a crime or independent tort.

Disposition

Judge Edgardo Ramos denied PEI’s motion to amend its counterclaims. The court directed the parties to appear by telephone for a case-management conference and directed the Clerk of Court to terminate the motion. The opinion does not state that PEI’s separate breach-of-contract or defamation claims were dismissed in this order.