Speedway Loans, Inc. v. Hassan

District Court, E.D. Texas·Decided December 2, 2022·No. 4:21-cv-00575·Unknown

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

SPEEDWAY LOANS, INC. § § v. § CIVIL NO. 4:21-CV-575-SDJ § MOATAZ IBRAHAM HASSAN, ET § A L. §

MEMORANDUM OPINION AND ORDER Before the Court are Plaintiff Speedway Loans, Inc.’s Second Motion for Default Judgment, (Dkt. #34), First-Amended Second Motion for Default Judgment, (Dkt. #36), and Supplement to First-Amended Second Motion for Default Judgment as to Attorney’s Fees and Costs, (Dkt. #38). Defendants Moataz Ibraham Hassan, Tyler Grant Horn, Timothy Ray Horn, Jacob Andrew Hernandez, and Manal El- Ghorab have failed to respond, and the deadline for doing so has passed. Having considered the motions, the record, and the applicable law, the Court concludes that the amended second motion for default judgment and the supplemental motion should be GRANTED in part and DENIED in part. The Court further concludes that the second motion for default judgment should be DENIED as moot. I. BACKGROUND The factual background of this case is set forth in the Court’s prior memorandum opinion and order. See Speedway Loans, Inc. v. Hassan, No. 4:21-CV- 575, 2022 WL 3567180 (E.D. Tex. Aug. 18, 2022). In that order, the Court (1) granted Speedway’s motion for default judgment against Tyler Horn and Hernandez as to their liability for breach of contract and fraud; and (2) granted default judgment against Hassan as to his liability for conversion and tortious interference with existing contracts. Id. at *8. The Court denied Speedway’s motion for default judgment on its civil RICO and account stated claims and on its claims against

Timothy Horn. Id. Because the Court could not determine how Speedway calculated the damages it requested in its motion for default judgment, the Court ordered Speedway to file a supplemental motion on damages, prejudgment interest, costs, and attorney’s fees and scheduled an evidentiary hearing on damages. Speedway submitted additional information relating to its requested damages, and the Court held an evidentiary hearing.

II. DISCUSSION A. One-Satisfaction Rule “A party is not entitled to double recovery[.]” Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184 (Tex. 1998) (per curiam). Thus, when a party prevails on multiple causes of action but only suffered one injury, “federal courts apply Texas’s one satisfaction rule, which requires the prevailing party to elect between the alternative claims for purposes of recovery.” Malvino v. Delluniversita,

840 F.3d 223, 233 (5th Cir. 2016). In that circumstance, “the party has a right to a judgment on the theory entitling him to the greatest or most favorable relief.” Boyce Iron Works, Inc. v. Sw. Bell Tel. Co., 747 S.W.2d 785, 787 (Tex. 1988). Here, the Court ruled in Speedway’s favor on four claims against three Defendants, but Speedway suffered only three injuries—the respective losses of the loan payment amounts owed by Tyler Horn, Hernandez, and Amanda Burdine, a non- party to this lawsuit. As such, the Court must consider how the one-satisfaction rule impacts Speedway’s recovery in this case. i. Claims against Tyler Horn and Hernandez On its breach of contract claims against Tyler Horn and Hernandez, Speedway

requests actual damages of $74,120.65 and attorney’s fees of $16,272.50. On its fraud claims against Tyler Horn and Hernandez, Speedway requests actual damages of $74,120.65 and exemplary damages of $148,241.30. Speedway also seeks attorney’s fees for its fraud claim. But “[attorney’s] fees are not allowed for torts like fraud,” even if the fraud claim arose from a breach of contract. MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 667 (Tex. 2009); see also Pollitt v. Comput. Comforts,

Inc., No. 01-17-067-CV, 2018 WL 4780800, at *2 (Tex. App.—Houston [1st Dist.] Oct. 4, 2018, no pet.) (“[A] party who has suffered a single injury cannot recover exemplary damages under a fraud theory and also recover attorney’s fees for breach of contract.”). Speedway concedes that the one-satisfaction rule is implicated and asks to recover on its fraud claim if the Court awards exemplary damages. See (Dkt. #36 ¶ 77). For the reasons stated below, the Court finds that Speedway is entitled to

exemplary damages. Therefore, the Court will enter judgment for Speedway on its fraud claim and not its breach of contract claim. ii. Claims against Hassan Speedway seeks to recover $128,910 in actual damages in connection with its conversion claim against Hassan. Speedway calculated this amount by adding together the market value of the vehicles pledged as collateral by Tyler Horn, Hernandez, and Burdine. Although the measure of damages for conversion generally is the fair market value of the property at the time and place of the conversion, “damages are limited to the amount necessary to compensate the plaintiff for the

actual losses or injuries sustained as a natural and proximate result of the defendant’s conversion.” United Mobile Networks, L.P. v. Deaton, 939 S.W.2d 146, 148 (Tex. 1997) (per curiam). Pursuant to the loan agreements, if a borrower defaults, Speedway can repossess the vehicles, sell them, and use the proceeds to pay down the loan. See, e.g., (Dkt. #35-1 at 11). After any expenses associated with recovering and selling the vehicles are offset, Speedway “remits the surplusage back to the borrower.” (Dkt. #36 ¶ 18). As a result, Speedway’s actual loss does not exceed the

amount of the loan.1 Additionally, Speedway is already being compensated for Tyler Horn’s and Hernandez’s loans through its fraud claim, so the one-satisfaction rule is implicated. Speedway suggests that it can separately recover these damages because the claim is asserted against Hassan rather than Tyler Horn and Hernandez. But the rule applies “when defendants commit technically differing acts which result in a single

injury.” Sky View at Las Palmas, LLC v. Mendez, 555 S.W.3d 101, 107 (Tex. 2018). “Here, although [Speedway] asserted various causes of action against the [three] defendants, all of [Speedway’s] allegations were based on the same injury— nonpayment of the [loan payment amounts].” Id. at 110.

1 Speedway may also be entitled to recover the amounts expended in connection with attempting to recover the vehicles, but it has not indicated how much money it spent doing so or provided any evidence of such costs. However, Speedway has not yet recovered for losses incurred in connection with Burdine’s loan. Pursuant to Burdine’s loan agreement, her total payment amount is $38,528.15. (Dkt. #35-3 at 2). As such, Speedway is entitled to recover

$38,528.15 in actual damages for its conversion claim against Hassan. Speedway also requests twice the amount of economic damages in exemplary damages, making Speedway’s total potential recovery on its conversion claim $115,584.45. For its tortious interference claim against Hassan, Speedway requests $112,643.80 in actual damages. That sum allegedly reflects the sum of Tyler Horn’s, Hernandez’s, and Burdine’s loan payment amounts, but Speedway miscalculated that total. The actual sum of the three-loan payment amount is $101,649.80. The one-

satisfaction rule is implicated in multiple ways.

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