A multi-state Gordon Rees Scully Mansukhani team consisting of Peter Siachos, Bryan Healy, Clair Wischusen, Cristina Guerrero, and Dean Drew scored a significant victory on behalf of a world leader in the manufacture of COVID tests, along with its president, securing a complete dismissal of a lawsuit alleging $50,000,000 in direct damages and lost profits. The plaintiff, a Swiss medical supply company, brought claims for fraud, negligent misrepresentation, civil conspiracy, and aiding and abetting in the District Court for Harris County, Texas, all of which were dismissed.
The claims arose from the plaintiff’s contract with two unnamed third parties who agreed to supply COVID test kits manufactured by GRSM’s client in China to the plaintiff during the COVID pandemic. The third parties entered into a written agreement with the plaintiff for the supply of the tests but breached that contract by absconding with the plaintiff’s multi-million dollar down payment and failing to deliver the tests.
In its complaint, the plaintiff alleged that it would not have entered into the third-party supply contract if GRSM’s clients and their employees had not fraudulently or negligently made certain representations regarding their relationship with the third-party suppliers. The lawsuit also alleged that the client’s president conspired to commit fraud against the plaintiff or, in the alternative, aided and abetted the fraud, based primarily on photographs provided to the plaintiff of the president with the third parties in the client’s manufacturing facility in China. According to the plaintiff, the photographs legitimized the third parties’ ability to secure the COVID tests, which were scarce in the throes of the pandemic.
The GRSM team moved to dismiss for failure to state a claim, asserting that (1) a plaintiff cannot maintain a claim for fraudulent inducement where the plaintiff and defendant are not in contractual privity; (2) Texas’ Economic Loss Rule barred the plaintiff from recovering in tort for damages caused by the third-parties' breach of a contractual agreement; (3) an intra-corporate conspiracy between a corporation, its wholly owned subsidiary, and their employees/officers is legally impossible under Texas law; and (4) Texas does not recognize civil liability for aiding and abetting. Following oral argument, the Court immediately granted the motion to dismiss and dismissed all claims with prejudice.
Leveraging the firm’s expansive 50-state platform, the team from Charleston, Alexandria, Houston, and Dallas delivered an exceptional victory for their clients and are thrilled with this result.