SARAH S. VANCE, District Judge.
Before the Court are Plaintiff Wright's Well Control Services, LLC's motions to dismiss Defendants Oceaneering International, Inc.'s and Christopher Mancini's counterclaims for attorney's fees.
The facts and allegations that follow are limited to what is relevant to the two motions before the Court.
On February 27, 2017, WWCS filed its fourth amended complaint, which is the operative complaint, against both Oceaneering and Oceaneering employee Christopher Mancini.
Mancini filed an answer and a counterclaim for attorney's fees on March 13, 2017.
The Court applies the same test to a motion to dismiss a counterclaim as it does to a motion to dismiss a complaint. To survive a Rule 12(b)(6) motion to dismiss, plaintiffs must plead enough facts to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547 (2007)). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678. A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239, 244 (5th Cir. 2009). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678.
A legally sufficient complaint must establish more than a "sheer possibility" that plaintiffs' claim is true. Id. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Twombly, 550 U.S. at 555. In other words, the face of the complaint must contain enough factual matter to raise a reasonable expectation that discovery will reveal evidence of each element of the plaintiffs' claim. Lormand, 565 F.3d at 257. If there are insufficient factual allegations to raise a right to relief above the speculative level, Twombly, 550 U.S. at 555, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (2007); Carbe v. Lappin, 492 F.3d 325, 328 n.9 (5th Cir. 2007), the claim must be dismissed.
WWCS first argues that Oceaneering's counterclaim for attorney's fees under Texas Civil Practice and Remedies Code Section 38.001 must be dismissed because that provision does not authorize attorney's fees against limited liability companies.
Section 38.001 authorizes "attorney's fees from an individual or corporation" on breach of contract claims. The Texas Supreme Court has not addressed the scope of this provision. But in Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438 (Tex. Ct. App. 2016), a Texas court of appeal held that this provision does not allow attorney's fees against limited liability companies. The court observed that, "as used in Texas statutes, the legal entities identified by the terms `corporation' and `limited liability company' are distinct entities with some but not all of the same features." Id. at 453. Further, the court noted that an earlier version of Section 38.001 "provided that `any person, corporation, partnership, or other legal entity having a valid claim against a person or corporation' could recover attorney's fees against the `persons or corporation.'" Id. at 454 (quoting Tex. Rev. Civ. Stat. art. 2226 (repealed 1985)). This language suggested that the term corporation "was not intended to encompass" partnerships or other legal entities, "because to read the term otherwise would render use of these other terms meaningless." Id. The codification of Article 2226 into Section 38.001 "was intended to be nonsubstantive in nature"; thus, the court found, the term corporation in Section 38.001 does not cover "`other legal entities' such as LLCs." Id. at 455.
A number of courts, both federal and state, have also held that Section 38.001 does not authorize attorney's fees against limited liability companies. See, e.g., BHL Boresight, Inc. v. Geo-Steering Sols., Inc., No. 15-627, 2017 WL 2730739, at *19 (S.D. Tex. June 26, 2017); Hoffman v. L & M Arts, No. 10-953, 2015 WL 1000838, at *10 (N.D. Tex. Mar. 6, 2015); CBIF Ltd. P'ship v. TGI Friday's Inc., No. 15-157, 2017 WL 1455407, at *25 (Tex. App. Apr. 21, 2017) ("Under the plain language of section 38.001, a trial court cannot order limited liability partnerships, limited liability companies, or limited partnerships to pay attorney's fees."); see also Choice! Power, L.P. v. Feeley, 501 S.W.3d 199, 214 (Tex. App. 2016) (interpreting corporation narrowly "to exclude other legal entities"). Additionally, the Fifth Circuit has noted (in dictum) that one Texas case supported the district court's Erie guess that a limited liability company is not a corporation under Section 38.001. Hoffman v. L & M Arts, 838 F.3d 568, 583 n.14 (5th Cir. 2016).
The Court finds the foregoing authority persuasive. Based on both plain meaning and statutory history, the Texas Supreme Court would likely hold that Section 38.001 does not authorize attorney's fees against limited liability companies. Thus, Oceaneering has failed to state a claim against WWCS for attorney's fees under Section 38.001.
WWCS next argues that defendants' counterclaims for attorney's fees under Texas and Louisiana trade secrets statutes should be dismissed for lack of sufficient factual allegations.
Oceaneering's counterclaim fails to state a claim for attorney's fees under the trade secrets statutes because it does not allege sufficient factual allegations to support a finding of bad faith. Oceaneering argues that WWCS alleged trade secrets misappropriation in bad faith because WWCS failed to protect its trade secrets.
Mancini's counterclaim also fails to allege sufficient factual allegations to support a finding of bad faith. Mancini asserts that WWCS had no basis to bring trade secrets claims against Mancini in his individual capacity, rather than as an Oceaneering employee. According to Mancini, WWCS co-founder David Wright testified in a deposition that he did not believe Mancini misappropriated WWCS's trade secrets in his individual capacity.
For the foregoing reasons, plaintiff's motions to dismiss defendants' counterclaims for attorney's fees are GRANTED. Defendants' counterclaims for attorney's fees are DISMISSED.