BCC Merchant Solutions, Inc. v. Jet Pay, LLC (129 F. Supp. 3d 440, 2015)

United States District Court for the Northern District of Texas 2015-09-08

Citations

Full opinion text

MEMORANDUM OPINION AND ORDER

JANE J. BOYLE, District Judge.

Before the Court are two separate motions for summary judgment. The first, Defendant Merrick Bank Corporation’s (“Merrick”) Motion for Summary Judgment (doc. 183) (“Merrick’s MSJ”), asserts, inter ália¡ that Plaintiff BCC Merchant Solutions, Inc. (“BCC”) lacks constitutional and prudential standing to pursue its remaining breach of contract claim against Merrick, who entered into the contract at issue, with BCC’s wholly-owned subsidiary. Agreeing with Merrick that BCC may not maintain its breach of contract action or substitute its subsidiary as' the real party in interest at this late juncture, the Court, as follows, GRANTS Merrick’s MSJ.

The second motion, Defendants JetPay, LLC’s (“JetPay”) and Trent R. Voigt’s (“Voigt”) Motion for Summary Judgment (doc. 180) (“JetPay’s and Voigt’s MSJ”), presents numerous grounds for entering judgment in their favor on all or part of BCC’s state law tort and contract claims, including, among other grounds, the economic loss doctrine, a contractual bar on consequential damages, and BCC’s purported failure to establish its claims ahd damages arising therefrom. Finding summary judgment warranted for all" but BCC’s breach of contract claim against JetPay, the Court, for the reasons that follow, GRANTS IN PART and DENIES IN PART JetPay’s and Voigt’s MSJ.

I.

BACKGROUND

The events in this case took place in the industry responsible for processing credit card transactions between cardholders and merchants. Defendant Merrick, an industrial bank based in Utah, serves as an intermediary in this industry between merchants and credit card issuers; its role, on the front-end of this process, is to acquire credit card transactions from merchants and transmit the issuer’s approval or denial; on the back-end, it settles the payments that issuers owe merchants.

Some of the services Merrick provides in this role are outsourced to Independent Sales Organizations (“ISO”). One such ISO is Plaintiff. BCC, a small company registered and based in Missouri. BCC alleges that it contracted with Merrick to market Merrick’s services to merchants, and enter into agreements with such merchants whom Merrick approved. BCC’s alleged agreement with Merrick also required it to contract with approved third party service providers tasked with lending Merrick processing and merchant account reporting services. One of the third party service providers that BCC eventually contracted-with is Defendant JetPay, a limited liability company based in Texas. Defendant Voigt, a resident of Texas and the last named defendant in this case, is JetPay’s President.

BCC filed this action against Defendants after allegedly suffering significant-financial losses due to JetPay’s purported failure to adequately perform its contractual obligations. In addition to asserting that JetPay is at fault for its contractual breach, BCC claims that Merrick is contractually responsible for at least part'of these losses, and that JetPay and Voigt are liable for their misrepresentations that set the losses in motion. After more than two years litigating these claims, Defendants now move for summary judgment. The Court will address, in turn, Merrick’s MSJ then JetPay’s and Voigt’s MSJ. But first, the Court begins with a review of the applicable legal standard."

II.

SUMMARY JUDGMENT LEGAL STANDARD

The standard of review governing motions for summary judgment is well- established. Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is appropriate if “there is no genuine dispute as to any material fact.” Fed. R. Civ. P. 56(a). A “material” fact is one that “ ‘might affect the outcome of the suit under the governing law,’ ” and a dispute is “genuine” when “ ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ ” Tagore v. United States, 735 F.3d 324 (5th Cir.2013) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In analyzing whether a dispute is “genuine,” courts “consider all facts and evidence in the light most favorable to the nonmoving party [,] ... draw all reasonable inferences in favor of the nonmoving party [,] ... [and] disregard all evidence favorable to the moving party that the jury is not required to believe.” Haverda v. Hays County, 728 F.3d 586, 591 (5th Cir.2013) (quotation marks and internal citations omitted).

Procedurally, the movant “bears the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of’ the record thát “it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where, as here, the non-movant bears the burden of proving such material facts at trial, movants may satisfy their burden by either affirmatively showing the non-movant’s inability to establish such material facts or “merely demonstrating] an absence of evidentiary support in the record for the nonmovant’s case.” Wesley v. Gen. Drivers, Warehousemen & Helpers Local, 745, 660 F.3d 211, 213 (5th Cir.2011) (quoting Bayle v. Allstate Ins. Co., 615 F.3d 350, 355 (5th Cir.2010)). Once movants fulfill their initial responsibilities, “the burden shifts to the non-movant to produce evidence of the existence” of a genuine dispute regarding the material facts at issue. Bayle, 615 F.3d at 355.

III.

MERRICK’S MSJ

The Court first addresses Merrick’s MSJ. BCC’s claims against Merrick have been significantly pared down by the Court’s July 28, 2014 Memorandum Opinion and Order (doc. 79) (“July 28 Order”) granting- in part and denying in part Merrick’s Rule- 12(b)(6) Motion to Dismiss. What remains in the dispute between these two parties are portions of a breach of contract claim in which BCC alleges that Merrick breached its obligations under a “Merchant ISO Agreement” (the “ISO Agreement”) dated November 10, 2008. See Merrick’s App. 7-63, Ex. A-l (hereinafter cited as “ISO Agreement”). At the center of this dispute is whether BCC is entitled to enforce the ISO Agreement, even though the contract plainly states that this ISO Agreement “is made by and between Merrick Bank Corporation ... and BankCard Central, Inc., a Missouri corporation with principal offices located [in Kansas City, Missouri].” See ISO Agreement.

Some brief background here: BankCard Central, Inc.' (“BankCard”) has been a wholly-owned subsidiary of- BCC at all relevant times in this case. Richard Nobel registered both BankCard and BCC under Missouri law in the early 2000s, and in January 2007 all of BankCard’s shares were transferred to BCG. See Pl.’s App. Opp’n Merrick’s MSJ 2, 63. Thereafter, Nobel says that BCC used “Bankcard Central” as a registered trade name, that BankCard and BCC shared employees, accounts, and records, and that the names BCC and BankCard began to be used interchangeably in course of business. Id. at 2-3, 64-66. Nonetheless, BCC does not dispute that BankCard remained a separate entity after becoming BCC’s wholly-owned subsidiary in January 2007. See id. at 3. Nor does it dispute that the ISO Agreement with Merrick dated November 10, 2008 named “BankCard Central, Inc.” alone, without reference to BCC or the trade name “Bankcard Central.” See ISO Agreement.

Based on the foregoing, Merrick now moves for summary judgment on the ground that BCC lácks standing to sue for Merrick’s alleged breach of the ISO Agreement. See Merrick’s MSJ 11-18. Merrick first says that, because BCC was undisputedly not a party to the ISO Agreement, there is no genuine dispute that BCC lacks standing under Article III of the U.S. Constitution to bring this breach of contract claim in its own name. See id. Alternatively, Merrick asserts that summary judgment is similarly appropriate under “Rule 17 of the Federal Rules of Civil Procedure, which embodies prudential standing limitations” on claims belonging to third parties. Id. at 20.

“Standing,” in general, refers to “[a] party’s right to make a legal claim or seek judicial, enforcement of a duty or right.” Black’s Law Dictionary (10th ed.2014). As used in federal courts, “ ‘standing’ subsumes a blend of constitutional requirements and prudential considerations.” Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982) (citing Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed,2d 343 (1975)). Constitutional standing derives from “the ‘case’ or ‘controversy' requirement, of Article III,” and encompasses “‘the irreducible constitutional minimum? ” parties must satisfy before invoking the jurisdiction of a federal court. Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). Prudential standing, in contrast, is a judicially-created, “doctrine not derived from Article III and not exhaustively defined but encompassing” certain principles that closely resemble either Article Ill’s requirements or the substantive law question of “whether a person in the litigant’s position will have a right of action on the claim.” Lexmark Int’l, Inc. v. Static Control Components, Inc., — U.S. -, 134 S.Ct. 1377, 1386, 1387 n. 3, 188 L.Ed.2d 392 (2014) (quotation marks and citations omitted).

While courts are “not always ... clear” as to which form of “standing” they are addressing, the distinction is crucial, as Article III provides immutable “limitation[s] on judicial power,” not mere “factor[s] to be balanced in the weighing of so-called ‘prudential’ considerations.” Valley Forge, 454 U.S. at 471, 475, 102 S.Ct. 752. This is especially true here, given the discretionary issues raised by BCC — including waiver and estoppel — that could overcome prudential standing limitations, but not Article Ill’s immutable requirements. See Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982) (“[NJo action of the-parties can confer subject-matter jurisdiction upon a federal court. Thus, the consent of the parties is irrelevant, principles of estoppel' do not apply, and a party does not waive the requirement by failing to challenge jurisdiction early-in the proceedings.”) (internal citations omitted). Accordingly, the Court must assure itself of BCC’s standing under Article III before proceeding any further in the adjudication of'this dispute.

A. Article III Standing

Standing under Article III requires plaintiffs to “demonstrate a ‘‘personal stake’ in the suit.” Camreta v. Greene, 563 U.S. 692, 131 S.Ct. 2020, 2028, 179 L.Ed.2d 1118 (2011) (quoting Summers v. Earth Island Institute, 555 U.S. 488, 129 S.Ct. 1142, 1148-1149, 173 L.Ed.2d 1 (2009)). To establish such a personal stake for purposes of Article. Ill standing, “a plaintiff must show (1) an ‘injury in fact,’ (2) a sufficient ‘causal connection between the injury and the conduct complained of,’ and (3) a ‘likelfihood]’ that the injury “will be redressed by a favorable decision.’” Susan B. Anthony List v. Driehaus, - U.S. -, 134 S.Ct. 2334, 2341, 189 L.Ed.2d 246 (2014) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)) (brackets in original). In reviewing a plaintiffs showing on these requirements “at the summary judgment stage, any ‘specific facts ... set forth by affidavit or other evidence ... will be taken to be true.’” McCardell v. U.S. Dep’t of Hous. & Urban Dev., 794 F.3d 510, 518 (5th Cir.2015) (quoting Lujan, 504 U.S. at 561, 112 S.Ct. 2130) (ellipses in original).

In this case, Merrick challenges BCC’s ability to establish the first Article III standing requirement. See Merrick’s MSJ 19 (arguing that BCC “has not suffered an injury in fact”). Specifically, Merrick asserts that BCC has not suffered an injury in fact, because it has no right to sue under applicable state law for Merrick’s alleged breach of the. ISO Agreement, which BCC’s wholly-owned subsidiary, BankCard, entered into alone. See id. at 14-16. The Court, however, finds this contention inconsistent with the law governing Article III standing.

As an initial matter, Merrick’s reliance' on state law in support of its Article III standing assertions is unavailing. As the' Supreme Court has made clear, “[standing to sue in any Article III court is, of course, a federal question which does not depend on the party’s [ ] standing in state court.” Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 804, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985) (citations omitted); see also Hollingsworth v. Perry, — U.S. -, 133 S.Ct. 2652, 2667, 186 L.Ed.2d 768 (2013) (“[Standing in federal court is a question of federal law, not state law.”). Similarly, “although federal standing ‘often turns on the nature and source of the claim asserted,’ it ‘in no way depends on the merits of the [claim].’ ” ASARCO, Inc. v. Kadish, 490 U.S. 605, 625, 109 S.Ct. 2037, 104 L.Ed.2d 696 (1989) (quoting Warth, 422 U.S. at 500, 95 S.Ct. 2197) (brackets in original). Thus, the issues of whether BCC has the right to sue for breach of contract under Utah state law, and whether BCC may bring its subsidiary's claim under Missouri state law, do not control the Article III standing inquiry. Rather, the relevant question here is whether, under existing federal precedent;, BCC has “suffered an injury in fact, thus giving [it] a sufficiently concrete interest, in the outcome of the issue in dispute.” Hollingsworth, 133 S.Ct. at 2664 (quotation marks and citation omitted) (brackets added).

Applying these governing federal standards, “[t]he Supreme Court has held .... that a parent company does have Article III standing on the basis of injury to a subsidiary.” In re Neurontin Mktg. & Sales Practices Litig., 810 F.Supp.2d 366, 369 (D,Mass.2011) (discussing Franchise Tax Bd. of Calif. v. Alcan Aluminium Ltd., 493 U.S. 331, 335-36, 110 S.Ct. 661, 107 L.Ed.2d 696 (1990)). As for the real standing concern that Merrick'’ raises here — “the so-called shareholder standing rule ... that generally prohibits shareholders from initiating actions to enforce the rights of the corporation” — the Supreme Court found this rule to be a prudential or “equitable restriction” that did not implicate the minimal requirements of Article III standing. Franchise Tax Bd. of Calif., 493 U.S. at 336, 110 S.Ct. 661. And while a number of Fifth Circuit decisions appear, at first glance, to hold otherwise, a closer examination shows' that none explicitly find standing lacking under Article III, and each decision at least references prudential or substantive law- standing grounds as support for its conclusion. Indeed, the one Fifth Circuit decision to explicitly discuss Article III standing in this context held that the principle “that a shareholder may not sue for the corporation’s injury does not attack [the] injury in-fact” requirement for Article III standing. Ensley v. Cody Res., Inc., 171 F.3d 315, 319-20 (5th Cir.1999). The Fifth Circuit, in Ensley, then went on to conclude that the “significant diminution .in the value of [plaintiffs’] shares” constituted a sufficient injury in fact to establish Article III, standing. Id. at 320. .

Likewise, here, it is undisputed that BankCard was a party to the ISO Agreement that Merrick allegedly breached, and that BCC was the parent company and sole shareholder of BankCard from the Agreement’s' inception. Moreover, BCC submits declarations and other evidence indicating that BankCard suffered significant losses on the ISO Agreement, and that BCC was indirectly damaged as a result. See, e.g., Pl.’s App. Opp’n Merrick’s MSJ 9-16, 163-194, 241-59, 34851. Under governing federal precédent, such losses on the part of BCC are sufficient to show an injury in fact fairly traceable to the breach of contract alleged, and redressable pursuant to a ruling in BCC’s favor. Therefore, the Court concludes that BCC has standing under Article III to pursue its breach of contract claim against Merrick.

B. Prudential Standing/Real Party in Interest Under Rule 17(a)

“ ‘Prudential standing requirements exist in addition to the immutable requirements of Article III as an integral part of judicial self-government.’ ” Superior MRI Servs., 778 F.3d at 504 (quoting St. Paul Fire & Marine Ins. Co. v. Labuzan, 579 F.3d 533, 539 (5th Cir.2009)). One such prudential standing requirement is the “ ‘fundamental restriction on [federal judicial] authority that ... ‘a litigant must assert his or her own legal rights and interests, and cannot rest a claim to relief on the legal rights or. interests of third parties.’ ” Hollingsworth, 133 S.Ct. at 2663 (quoting Powers v. Ohio, 499 U.S. 400, 410, 111 S.Ct. 1364, 113 L.Ed.2d 411 (1991)). The Fifth Circuit has held, in a similar context, that this prudential standing requirement is encompassed in Rule 17(a) of the Federal Rules of Civil Procedure. See Ensley, 171 F.3d at 320; see also Pyramid Transp., Inc. v. Greatwide Dallas Mavis, LLC, No. 3:12-cv-0149-D, 2013 WL 3834626, at *2 (N.D.Tex. July 25, 2013) (“[The Rule 17(a) ] requirement is in essence a codification of the prudential standing requirement that a litigant cannot sue in federal court to enforce the rights of third parties.”).

Rule 17(a), much like the limitation on third party standing, provides that “[a]n action must be prosecuted in the name of the real party, in interest.” Fed. R. Civ. 17(a)(1). Moreover, just as “prudential standing arguments may be waived,” Bd. of Mississippi Levee Comm’rs v. U.S. E.P.A., 674 F.3d 409, 417 (5th Cir.2012) (citation omitted), Rule 17(a) objections may be dismissed as untimely. See Ensley, 171 F.3d at 320 (finding that, since the defendant “did not object until after [the plaintiffs] case-in-chief[,] ... the object is waived”) (citations' omitted). Rule 17(a) additionally requires that a “court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action.” Fed. R. Civ. P. 17(a)(3).

In this case, Merrick raises mostly the same arguments for dismissing BCC’s claim pursuant to Rule 17(a) that it raised in advocating for dismissal under Article III for lack of standing. See Merrick’s MSJ 20-23. In response, BCC offers three counter-points. See Pl.’s Resp. Opp’n Merrick’s MSJ 24-27. Fust, it contends that Merrick has waived its prudential standing and Rule 17(a) arguments by failing to timely object. See id. at 24-26. Second, assuming Merrick’s objection is found to be timely, BCC maintains that dismissal is inappropriate, because it is the real party in interest under Rule 17(a) and applicable state law. See id. at 26-27. Third, in the event “the' Court finds that this case has not been prosecuted in the name of the real party in interest,” BCC requests in the alternative “that the Court grant a reasonable time to join Bankcard before dismissing this case.” Id. at 27 n. 15. The Court addresses each of these points, in turn, below.

1. Did Merrick Waive its Rule 17(a) Objection?

As a preliminary matter, the parties dispute whether Merrick waived its real-party-in-interest objection by waiting too long to assert it. As mentioned, “[r]eal-party-in-interest issues ... impose only a ‘prudential limitation’ on [federal courts] and may be waived by a party’s failure to [timely] raise them.” Sch. Bd. of Avoyelles Parish v. U.S. Dep’t of Interior, 647 F.3d 570, 577 (5th Cir.2011) (citing Ensley, 171 F.3d at 320; In re Signal Int’l, LLC, 579 F.3d 478, 487-90 (5th Cir.2009)).

BCC argues that Merrick waived its real party in interest objection by delaying in raising the issue until after the Court denied in part Merrick’s Motion to Dismiss. PL’s Resp. Opp’n Merrick’s MSJ 24. More specifically, BCC claims that Merrick “laid behind the log of its Motion to Dismiss for nearly a year before asserting” the objection in its original answer on September 10, 2014. Id. Even then, BCC says that Merrick’s original answer did not raise the Rule 17(a) issue directly, but merely asserted vague “standing and privity defenses.” Id. at 26. Thereafter, BCC notes that Merrick “provided evasive, incomplete answers to BCC’s discovery requests concerning its defensive legal theories,” and failed to “disclos[e] Bankcard as a person with knowledge until after BCC called it to Merrick’s attention in its response to Merrick’s original Motion for Summary Judgment.” Id. at 24. BCC maintains that these delay tactics on the part of Merrick have caused “the parties, and BCC, in the meantime to incur substantial costs and attorney’s fees,” and therefore, the Court should find Merrick’s objection to be waived as untimely. Id. at 24-26.

Merrick counters by explaining that its Motion to Dismiss was filed a little over a month after receiving notice of this lawsuit, at which time it “was commencing its investigation into a myriad of issues including the relationship between [BCC and BankCard].” Merrick’s Reply 13. Merrick maintains that its failure to raise the defense at that point was, therefore, reasonable, especially given BCC’s failure to clearly articulate “its own entity relationships-even at this juncture in the case.” Id. Merrick says that when its subsequent “investigation revealed that [BCC and BankCard] are wholly separate entities,” it alerted. BCC of its real-party-in-interest defense the first chance it had—in its original answer. Id. And if this somehow wasn’t enough, Merrick points out that it additionally raised' the issue in response to BCC’s Third Amended Complaint and Synopsis on September 10, 2014, in its initial Motion for Summary Judgment filed November 11, 2014, and now here again in Merrick’s MSJ that is currently pending. Merrick’s MSJ 21-22. Merrick argues in conclusion that these filings are more than enough to show that its real-party-in-interest objection was timely. See id. As follows, the. Court agrees.

To avoid waiver , of a real-party-in-interest defense under Rule 17(a), an “objection must be raised when joinder is practical and convenient.” Rogers v. Samedan Oil Corp., 308 F.3d 477, 484 (5th Cir.2002) (citing Gogolin & Stelter v. Karn’s Auto Imports, Inc., 886 F.2d 100, 102 (5th Cir.1989)). The Fifth Circuit has explained that “[t]here is no magic formula for determining practicality and convenience.” and ultimately,, the determination will depend “on the facts of each case and is within the discretion of the district court.” In re Signal, 579 F.3d at 488 (citing 6A Charles Alan Wright et al„ Federal Practice and Procedure § 1554). Some factors to consider in making -this determination include when the defendant was put on notice of a potential real party-in interest dispute, and whether, the timing of the defendant’s objection was such that the plaintiff had a “meaningful opportunity to prove its status” or join the real party in interest. Id. An objection may be “inconvenient,” for instance, “when it hinders the ‘goal of judicial efficiency’ or manifests the defendant’s intention to ‘lay behind the log’ in ambush.” Id. (citing Rogers, 308 F.3d at 484; Gogolin & Stelter, 886 F.2d at 102).

Here, the Court finds, in its discretion, that Merrick’s objection to BCC’s status as the real party in interest was not waived on timeliness grounds. Despite BCC’s suggestions that Merrick “laid behind the log of its Motion to Dismiss,” Merrick shows that it quite reasonably was investigating the real , party in interest issue at the time its-Motion to Dismiss was filed, at which point Merrick had' only been aware of the lawsuit itself for a little over 'a month: - This minor delay seems even more reasonable given BCC’s ongoing inability to clearly articulate its relationship with the purported real party in interest, BankCard. See, e.g., Pl.’s Resp. Opp’n Merrick’s MSJ 22 (arguing, first, that BankCard is BCC’s subsidiary as shown by the transfer of “all of its stock to [BCC] in 2007,” and second, that BankCard “thereafter” became a mere “trade name” of BCC). Once it had all the facts it needed to raise its real-party-in-interest objection, Merrick did so in its first pleading filed in this case. While Merrick arguably could have put forth this objection sooner, the Court finds no support for the contention that Merrick thereby waived its objection by waiting to see how its first motion to dismiss played out, or by not later filing a second motion to dismiss. Indeed, existing authorities suggest that the real party in interest objection is appropriately raised in the defendant’s answer. See Gogolin & Stelter, 886 F.2d at 102 (citing Wright et al., supra, § 1554 for the proposition that a Rule 17(a) objection should “be raised in responsive pleadings”).

Moreover, the Court rejects BCC’s argqment that Merrick’s assertions in its original answer were not sufficient to constitute a Rule 17(a) objection. While Rule 17(a) is not entirely clear as to what qualifies as an objection, the Fifth Circuit has explained that , the rule contemplates one that allows “the real party in interest .,.. to step forward and assume the plaintiffs role.” Id. And here, Merrick’s allegations in its original answer gave sufficient notice of its position that BankCard must step forward as the real party in interest and assume BCC’s role for the breach of contract claim to succeed. In particular, Merrick alleged that' BCC’s breach of contract claim was “barred and precluded by the lack of privity between Merrick and [BCC],” and “by [BCC’s] lack of standing, as the Merchant ISO Agreement is between Merrick and BankCard Central, Inc.” Doc. 98, Def. Merrick’s Answer at 16, ¶¶ 3, 4. These allegations quite clearly convey Merrick’s objection. And since they were asserted in a timely fashion, the Court finds that Merrick did not waive its Rule 17(a) objection.

Last, and for good measure, the Court finds in the alternative that Merrick’s Rule 17(a) objection in its first motion for summary judgment brief, on November 17, 2014, was timely as well. Assuming arguendo that Merrick’s allegations in its original answer do not constitute an objection, its assertions in its first motion for summary judgment clearly do. See Doc. 126, Merrick’s First Mot. Summ. J. 12 (citing Rule 17(a) in support of its contention that BCC “is not a real party in interest with standing to sue for breach of the Merchant ISO Agreement”), Furthermore, the Court already found Merrick’s allegations in its original answer to. be timely under Rule 17(a), and there is no evidence that Merrick’s two month delay in re-asserting its objection was a dilatory tactic. Additionally, after scheduling issues prompted the Court to dismiss Merrick’s first motion for summary judgment without prejudice, BankCard still had nearly five months to ratify, join, or be substituted into this action before Merrick re-asserted the issue in its now pending MSJ. Under similar circumstances, another court in this District found a Rule 17(a) objection to be timely. See Pyramid Transp., Inc. v. Greatwide Dallas Mavis, LLC, No. 3:12-CV-0149-D, 2013 WL 3834626, at *4 (N.D.Tex. July 25, 2013) (Fitzwater, C.J.) (finding no waiver of Rule 17(a) objection first asserted at summary judgment, since the defendant raised it “soon after learning” of the plaintiffs contested status and át a time in which the real party in interest could, “if he so desire[d], ratify, join, or be substituted into [the] action”). Moreover, these circumstances make this case much different than the Fifth Circuit opinions that BCC relies on, where the Rule 17(a) objection was first raised during or on the eve of trial. For these reasons, the Court rejects BCC’s contention that Merrick waived its Rule 17(a) objection, and instead concludes that Merrick timely objected.

2. Is BCC the Real Party in Interest?

Having determined that it may consider Merrick’s objection, the Court turns now to BCC’s next responsive contention, which is that BCC is indeed the real party-in interest “entitled to enforce the ISO Agreement.” Pl.’s Resp. Opp’n-Merrick’s MSJ 26. As mentioned, Rule 17(a) requires that claims “be prosecuted in the name of the real party in interest.” Fed. R.Civ.P. 17(a). “The real party in interest is the person with the right to sue under substantive law, and the determination whether one is the real party in interest with respect to a particular claim is based on the controlling state or federal substantive laws.” - BAC Home Loans Servicing, LP v. Texas Realty Holdings, LLC, 901 F.Supp.2d 884, 907 (S.D.Tex.2012) (citing In re Davis, 194 F.3d 570, 578 (5th Cir.1999); Farrell Constr. Co. v. Jefferson Parish, La., 896 F.2d 136, 140 (5th Cir.1990)). As the parties agree, Utah law governs the question of whether BCC has a right to sue for Merrick’s alleged breach of the ISO Agreement. See July 28, 2014 Order at 6 (noting the parties’ agreement that disputes arising from the ISO Agreement are governed by Utah state law). Also undisputed is the fact that Missouri law, under which BCC and BankCard are incorporated, controls the question of whether BCC may bring a claim on behalf of its wholly-owned subsidiary, BankCard. See Fed.R.Civ.P. 17(b)(2) (“Capacity to sue or be sued is determined ... for a corporation, by the law under which it is organized.”).

Merrick argues that BCC is not the real party in interest entitled to sue for breach of the ISO Agreement, because the Agreement plainly shows that BankCard — the wholly-owned subsidiary of BCC — entered into the Agreement aloné, Merrick’s MSJ 21. Relying on Utah state law, Merrick explains first that BCC has no right of its own to sue for the alleged breach under these circumstances, since it is “neither a party nor a third-party beneficiary to the ISO Agreement, and no assignment of the relevant claims is pled or possible.” Id.; see also id. at 14-16. Next, under Missouri law, Merrick additionally shows that BCC cannot bring a claim on behalf of its subsidiary in these circumstances, and thereby “pierce its own corporate veil and disregard its separate corporate existence.” Id. at 16. “As a consequence,” Merrick contends, “[BCC] is not the real party in interest with respect. to [the breach of contract] clai[m] asserted against Merrick.” Id. at 21.

In response, BCC does not directly contest any of the above assertions made by Merrick. Instead, BCC offers two novel theories as to why the Court should find there to be a genuine dispute regarding its right to enforce the ISO Agreement. See Pl.’s Resp. Opp’n Merrick’s MSJ 17-24, 26-27. The first is that “Merrick is esT topped to deny the existence of a contract with BCC” under a theory of contract by estoppel recognized in Utah. Id. at 27. Alternatively, BCC claims that it is “entitled to' enforce the ISO Agreement in its own name under Utah law as the undisclosed principal of [BankCard].” Id. at 26. The Court considers each of these theories below. ’

i. BCC’s equitable estoppel theory

The Utah Supreme Court recognizes equitable estoppel as a viable defense in the context of breach of contract claims. See Youngblood v. Auto-Owners Ins. Co., 158 P.3d 1088, 1092 (Utah 2007) (“Our caselaw recognizes equitable estoppel ... as [a] distinct legal principle] [and] a defense ... in most instances.”). Utah courts generally apply the doctrine of equitable estoppel to remedy “circumstances where it is not fair for a party to represent facts to be one way to get the other to agree, and then change positions later to the other’s detriment.” Id. For example, the doctrine has been asserted “to enlarge the scope of an insurance policy’s coverage where the company’s agent materially misstates the scope of coverage prior to the purchase of the policy.” Id. at 1090. Similarly, the doctrine has been used to estop the holder of a promissory note from seeking payment from the note’s makers, who in reliance on the holder’s representations, mistakenly directed payments to the note’s “soon-to-be-bankrupt” originator. See Glew v. Ohio Sav. Bank, 181 P.3d 791, 792 (Utah 2007).

Under Utah law, the party seeking to prevail on “a claim of equitable estoppel ... must establish three elements.” Salt Lake City Corp. v. Big Ditch Irrigation Co., 258 P.3d 539, 548 (Utah 2011). These elements include:

(1) a statement, admission, act, or failure to act by one party inconsistent with a claim later asserted, (2) reasonable action or inaction by the other party taken or not taken on the basis of the first party’s statement, admission, act or failure to act, and (3) an injury to the second party that would result' from allowing the first party to contradict or repudiate such statement, admission, act, or failure to act. Meadow Valley Contractors, Inc. v. State Dep’t of Transp., 266 P.3d 671, 683 (Utah 2011) (citing Youngblood, 158 P.3d at 1092; Nunley v. Westates Casing Servs., Inc., 989 P.2d 1077, 1088 (Utah 1999)) (quotation marks omitted).

BCC claims that a genuine dispute exists with respect to each of these elements of estoppel as applied to the facts of this case. See Pl.’s Resp. Opp’n Merrick’s MSJ 17. Regarding the first element, BCC contends that “Merrick has recognized its contractual relationship with BCC multiple times” during the course of the ISO Agreement's performance. Id. at 18-19. In support, BCC points to a “Merchant Portfolio Assignment and Assumption Agreement” signed by Merrick that indicates the ISO Agreement is between BCC and Merrick, Richard Nobel’s affidavit claiming that he informed Merrick’s Vice President Fred Horn of BCC’s and BankCard’s corporate restructuring and Mr. Horn assured him there was no “need to adopt formal changes to their contractual arrangement,” billing statements Merrick sent to BCC that reflect “the services JetPay provided for BCC’s merchants under the [MSÁ],” and an email from Merrick’s general counsel in January 2013 notifying BCC of Merrick’s intentions to invoke its contractual rights “ ‘pursuant to section 1.3 of our Merchant ISO Agreemént with BCC.’ ” Id. at 18-19. Second, BCC maintains that the second estoppel element is also satisfied, because BCC reasonably relied óh Merrick’s statements in failing to request and execute “an addendum reflecting BCC’s corporate structure change,” and failing to execute or amend merchant and other third party agreements to reflect BCC’s role. Id. at 19-20. Third, BCC lastly contends that' the third element is met here as well, arguing that BCC will' be unable to collect on its breach of contract allegations “if the Court permits Merrick to deny the existence of a contractual relationship with BCC.” Id. at 20.

Merrick argues in reply that BCC “has not established the necessary elements of estoppel” for a number of reasons. Merrick’s Reply 5. Merrick first claims that all of the Utah authorities that BCC relies on apply equitable estoppel where “the extrinsic representations made to the plaintiff, upon which he relied, were made to the plaintiff before he entered the contract.” Id. But in this, case, Merrick contends, BCC “has not alleged a single representation by Merrick prior to execution of the ISO Agreement,” and therefore, the equitable estoppel defense must .fail at both the first and second elements. Id. at 6 & 3. In addition, Merrick posits that-BCC’s equitable estoppel claim fails at the third element, because BCC “has simply not been damages by action of Merrick.” Id. at 6. In essence, Merrick says that BCC’s dam,ages contentions amount to nothing more than a complaint that “Richard Nobel will be forced to restart his litigation against Merrick.” Id. Therefore, Merrick argues that the Court should conclude that summary judgment is proper with respect to BCC’s equitable estoppel claim. Id. at 7. For the reasons that follow, the Court concludes that Merrick’s position is more consistent with the governing law here.

-First, BCC’s equitable estoppel claim fails initially at the first element, because there, is no evidence that Merrick’s prior statements, actions, and- inactions warrant the equitable doctrine’s application;- The Utah Supreme Court has explained that the whole point of “estoppel is ‘to rescue from loss a party who has, without fault, been deluded into a course of action by the wrong or neglect of another.’ ” Big Ditch Irrigation, 258 P.3d at 548 (quoting Morgan v. Bd. of State Lands, 549 P.2d 695, 697 (Utah 1976)). To that end, “application of estoppel is [generally] reserved for instances of wrongdoing by the estopped party ..., and only when necessary to avoid injustice.” Id. (citations omitted). In accordance with these principles, Utah courts hold that equitable estoppel’s first element requires both proof of an inconsistency and evidence that “the party sought to be estopped has intentionally or through culpable negligence induced the other party to change its position by relying on the inconsistent act.” Id. (collecting cases) (emphasis added). -

In .this case, even assuming Merrick’s alleged representations or actions are inconsistent with, its present position, BCC has not shown Merrick’s conduct in this regard was intentional or the product of culpable negligence. At worst, the purported' inconsistencies are attributable to Merrick’s failure to fully comprehend the confusing manner in which Richard Nobel chose to run his business — through two separate entities while interchangeably using the two entity names — and his decision to subsequently sue on behalf of BCC without ever joining BankCard to this suit. These circumstances simply do not show that Merrick was culpably negligent in bringing about BCC’s actions and inactions. Nor do they present the sort of “injustice” for which estoppel is reserved. For these reasons alone, BCC’s estoppel claim fails. See Big Ditch Irrigation, 258 P.3d at 548; Almon, Inc. v. Utah Liquor Control Comm’n, 696 P.2d 1210, 1214-15 (Utah 1985) (declining to apply equitable estoppel where the party opposing estoppel merely failed “to forsee” and “correct a misconception” arising from its statements and conduct).

Second, BCC’s estoppel claim is also deficient at the second element, as BCC has not shown that it reasonably relied on Merrick’s prior statements, actions, or in-actions. As part of the second element of equitable estoppel, Utah courts require that “a party’s [action or] inaction be induced by another party’s statement, act, or failure to act.” Meadow Valley Contractors, 266 P.3d at 684 (citing Youngblood, 158 P.3d at 1092) (emphasis in original). Moreover, to the extent a party is induced to change positions in reliance of the statements; actions, or inactions at issue, its reliance must be “reasonable.” IHC Health Servs., Inc. v. D & K Mgmt., Inc., 73 P.3d 320, 324 (Utah 2003) (holding that landlord’s acquiescence in a single, late payment by the tenant was “insufficient to justify .[tenant’s] alleged reliance on [landlord’s] failure to enforce the forfeiture provision of the lease”).

Here, BCC has not shown that it was induced to change positions or that it did so “reasonably.” BCC claims that it is now in a position where it has to defend against a real party in interest objection because of Merrick’s statements and inactions, but it was BCC’s own CEO, Richard Nobel, who made this an issue to begin with. Merrick took no part in Mr. Nobel’s unilateral decisions to run his business through, two separate corporate entities, to use “BankCard” and “BCC” interchangeably while intermingling employees and accounts, or to enter into the ISO Agreement in BankCard’s name alone. And to the extent BCC relied on any' of Merrick’s conduct, it offers no explanation as to why BCC decided not to seek an amendment to the ISO Agreement, or at the very least, to join BankCard in this suit. Such confounding decisions, supposedly in reliance of Merrick’s statements and actions, fail to satisfy the “reasonableness” standard for equitable estoppel.

Lastly, the Court additionally finds that BCC has failed to demonstrate detrimental reliance for purposes of its equitable estoppel claim. BCC cannot lose anything as a result of this ruling, because it never had any rights under the ISO Agreement to begin with. Under Utah law, equitable estoppel is typically used as a “shield,” not a “sword” capable of creating a cause of action. Youngblood, 158 P.3d at 1093 (citing Humetrix, Inc. v. Gemplus S.C.A., 268 F.3d 910, 918 (9th Cir.2001)). And here, BCC asks the Court to use its equitable powers to carve out a cause of action it would not otherwise be entitled to bring, all because of its own missteps in running its business and pursuing its claims against Merrick. The Court finds such an application of the equitable estoppel doctrine to be inconsistent with Utah law. As such, it concludes that BCC has failed to carry its burden of creating a genuine issue of material fact for its equitable estoppel claim.

ii. BCC’s undisclosed principal theory

As a second theory regarding its status as a real party.in interest, BCC asserts that BankCard signed the ISO Agreement in an agency capacity on BCC’s behalf. PL’s Resp. Opp’n Merrick’s MSJ 26. Though the ISO Agreement does not mention BCC or indicate that BankCard signed the Agreement as an agent, BCC claims that it, nonetheless, qualifies as an undisclosed principal entitled to enforce the Agreement under Utah law. See id.

It is true that BCC would be entitled to sue as an undisclosed principal to the ISO Agreement under Utah law, so long as BCC could establish that BankCard was acting agent when it signed, the ISO Agreement, and that BankCard was acting within the scope of its agency authority at the time. See Garland v. Fleischmann, 831 P.2d 107, 110 (Utah 1992) (“It is well established in the law that a principal is liable for the acts of his agent within the scope of the agent’s authority, irrespective of whether the principal is disclosed or undisclosed.”). But as Merrick correctly points out in its reply, BCC’s newly-raised agency theory need not be considered at this late juncture in the proceedings.

In the Fifth Circuit, district courts have discretion to “‘disregard claims or theories of liability not present in the complaint and raised first in a motion opposing summary judgment.’” Globeranger Corp. v. Software AG, 27 F.Supp.3d 723, 754 (N.D.Tex.2014) (quoting De Franceschi v. BAC Home Loans Servicing, L.P., 477 Fed.Appx. 200, 204 (5th Cir.2012) (unpublished)). This rule is founded on the principle that a defendant is entitled, from the pleadings stage and ónward, to “‘fair notice of what the claim is and the grounds upon which it rests.’ ” DeFranceschi, 477 Fed.Appx. at 204 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 698-99, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). Thus, a theory or “claim which is not raised in the complaint but, rather, is raised only in response to a motion for summary judgment is not properly before the court.” Cutrera v. Bd. of Sup’rs of Louisiana State Univ., 429 F.3d 108, 113 (5th Cir.2005) (citing Fisher v. Metropolitan Life Ins. Co., 895 F.2d 1073, 1078 (5th Cir.1990)).

Here, the Court, in its discretion, rejects BCC’s undisclosed principal theory, which was raised for the first time in opposition to Merrick’s MSJ. BCC’s pleadings are devoid of any allegations suggesting that BCC’s rights under the ISO Agreement arise from its agency relationship with BankCard. . Instead, BCC’s Third Amended Complaint merely states that “BCC and Merrick entered into ... a Merchant ISO Agreement,” without ever mentioning BankCard or its purported role as BCC’s agent. Doc. 90, Third. Am. Compl. ¶ 13... In addition, there is no evidence that BCC.ever notified Merrick of its undisclosed principal theory prior to its response to Merrick’s MSJ. In fact, Merrick shows that in a Rule. 30(b)(6) deposition on BCC’s behalf, Richard Nobel testified that “BankCard Central, Inc. and BCC Merchant Solutions, Inc. are the same thing,” which contradicts BCC’s current .position that the two entities separately act as agent and principal. Merrick’s Reply 10. Merrick, therefore, has been left without fair notice to mount a defense against BCC’s last-minute agency assertions.’ As such, the Court, in its discretion, declines to entertain BCC’s unpled theory. See Orthoflex, Inc. v. ThermoTek, Inc., 983 F.Supp.2d 866, 873 (N.D.Tex.2013) (declining to- consider new theories supporting breach of contract claim raised for the first time in opposition to summary judgment).

To summarize, BCC has not shown itself to be the real party in interest under either an estoppel or agency law theory. Nor has BCC disputed Merrick’s evidence showing that only BankCard is entitled to enforce the ISO Agreement against Merrick, and that BCC cannot pierce the corporate veil of its subsidiary to bring BankCard’s breach of contract claim. Accordingly, the Court concludes’ that BCC has failed to create a genuine issue of material fact with respect to its status as the real party in interest entitled to sue for Merrick’s alleged breach of the ISO Agreement.

3. Should the Court Grant BCC Leave to Join or Substitute BankCard?

Now that it has been established that BCC is not the real party in interest under the ISO Agreement, the Court must consider whether to grant BCC leave to join or substitute BankCard as the real party in interest under Rule 17(a). As mentioned, Rule 17(a) limits this Court’s discretion to “dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action.” Fed. R. Civ. P. 17(a)(3). Nonetheless, courts have held that this language places the burden on the “plaintiff who is not the real party in interest [to] show ... that he did not have a reasonable time to correct the pleading deficiency.” Wieburg v. GTE Sw., Inc., 71 Fed.Appx. 440, 2003 WL 21417074, at *2 (5th Cir. June 2, 2003) (unpublished) (citing Wieburg v. GTE Sw. Inc., 272 F.3d 302, 308 (5th Cir.2001); Wright et al., supra, § 1555). In addition, the Fifth Circuit, “[i]n accord with advisory committee notes, .-.. has put gloss on Rule 17’s unqualified language,” holding that “a plaintiff must have a reasonable basis for naming the wrong party to be entitled to ratification, joinder, op substitution.” Magallon v. Livingston, 453 F.3d 268, 273 (5th Cir.2006) (citing Wieburg, 272 F.3d at 308). Whether to grant or deny leave pursuant to Rule 17(a) is generally left to the “discretion” of the district court. Wieburg, 272 F.3d at 308 (citations omitted).

Merrick argues that the Court should deny BCC leave under Rule 17(a), because it cannot meet its burden of showing that its failure to join BankCard was based on a reasonable or understandable mistake, or that it did not have a reasonable time to correct this deficiency. See Merrick’s MSJ 22-23. Despite Merrick’s citation and. discussion of Fifth Circuit case law placing the burden on plaintiffs to show they are entitled to leave, BCC responds with a single-sentence footnote that summarily “requests that the Court grant a reasonable time to join-BankCard before dismissing this case.-”- Pl.’s Resp. Opp’n Merrick’s MSJ 27 n. 5. The Court, in its discretion, declines to grant BCC leave on the basis of such a lackluster showing.

Left without an explanation from BCC, the Court has no reason to find that BCC’s failure to join BankCard — its' own subsidiary — constitutes- a “reasonable” or “understandable” mistake. See Delor v. Intercosmos Media Grp., Inc., 232 F.R.D. 562, 567 (E.D.La.2005) (denying leave because “plaintiff simply cannot maintain that he brought this action in his' own name due to an honest and understandable mistake”) (emphasis omitted); In re Enron Corp. Secs., Derivative & ERISA Litig., 279 F.R.D. 395, 412 (S.D.Tex.2011) (denying leave where plaintiffs “did not make ah honest or ‘understandable’ mistake under Rule 17”); Isbell v. DM Records, Inc., No. 4:07-cv-146, 2009 WL 792415, at *1 (E.D.Tex. Mar. 24, 2009) (denying leave, because plaintiffs “mistake ... was not reasonable,” as “it should have been clear whose action this was”); Triple Tee Golf, Inc. v. Nike, Inc., No. 4:04-cv-302-A, 2007 WL 4260489, at *26 (N.D.Tex. Aug. 10, 2007) (finding “plaintiff cannot show that it sued in its own name based on an understandable mistake,” because, “for whatever reason, plaintiff made a calculated decision to pursue this action in its own name ... notwithstanding knowledge that it did not have a legal right to do so”).

Nor does the Court believe that BCC was deprived of a “reasonable” amount of time, following Merrick’s objection, to allow BankCard to join, ratify, or be substituted into this action. Fed. R. Civ. P. 17(a)(3). The Court is at a loss to understand BCC’s - strategy in opposing Merrick’s real party in .interest defense, when it seemingly could have avoided the issue altogether eight months before Merrick re-asserted the objection. Eight months notice is more than reasonable, making BCC’s last-ditch effort-buried in a throwaway footnote in its summary judgment brief-unavailing. See Wieburg, 2003 WL 21417074, at *2 (finding “[s]even months is more than reasonable” for plaintiff to have sought leave pursuant to Rule 17(a)); Triple Tee Golf, 2007 WL 4260489, at *26 (“[Pjlaintiff.had much more, than a reasonable time to correct the deficiency its complaint suffers by reason of plaintiffs lack of standing to bring-this action, [but] it consciously chose not to do so notwithstanding repeated reminders over the years since this action was. instituted that defendants did not accept, , and were questioning, plaintiffs standing to.institute and pursue the action.”); Lexxus Int’l, Inc. v. Loghry, 512 F.Supp.2d 647, 661 (N.D.Tex. 2007) (denying leave, in part, because “interested parties have had more than ample time to obtain joinder, ratification, or substitution of ... the real party in interest”).

Finally, the Court further notes that BCC’s request for leave to join BankCard came well after the expiration • of the Court’s scheduling order deadline to move for leave to join parties. See Doc. 22, Scheduling Or. (setting August 1, 2013 as “Deadline for Motions for Leave to Join Parties or .Amend Pleadings”). In such circumstances, courts have held that plaintiffs must show “good cause” under Rule 16(b)(4), notwithstanding - Rule 17(a)(3). See, e.g., Jasper Wood Products, LLC v. Jordan Scrap Metal, Inc., No. CIV.A. 13-0407-WS-C, 2014 WL 3720530, at *6 (S.D.Ala. July 25, 2014) (“[P]laintiff has made no showing and advanced no legal argument that the provisions of Rule 17(a)(3) would allow it to disregard Scheduling Order deadlines with impunity or override.- the ‘good cause’ requirement of Rule 16(b)(4).”); U.S. Steel Corp. v. Scheuerle Fahrzeugfabrik GmbH, No. 2:07 CV 305, 2010 WL 4318657, at *1 (N.Dind. Oct. 25, 2010) (“Without the ability to show good cause to amend the scheduling order under Rule 16(b)(4),. the court need not reach the [Rule 17(a) motion presented].”). Since BCC made no effort to show “good cause” for asserting its request for leave more, than a year after the scheduling order deadline expired, the Court declines to grant BCC leave to join BankCard under Rule 16(b)(4) as well.

In conclusion, while BCC may have Article III standing, - the Court finds that it lacks prudential standing and is not the real party in interest entitled to enforce the ISO Agreement, Which - BCC’s subsidiary, BankCard, undisputedly entered into alone. And since BCC asked for leave -to join BankCard in a single-sentence footnote more than eight months- after the objection was-raised, the Court, in its discretion, declines to allow BCC to delay these proceedings any further by joining or' substituting BankCard at this late stage. Accordingly, the Court concludes that BCC’s' remaining breach of contract claim- against Merrick should be dismissed,

- IV.

JETPAY’S & VOIGT’S MSJ

The Court turns next to Defendants Jet-Pay’s and Voigt’s MSJ, which seeks to dismiss BCC’s five.Texas state law claims brought .against them. These claims in-elude: three tort actions filed jointly against JetPay and Voigt (jointly referred to hereinafter as “Defendants”) for (1) common law fraud, (2) fraud by nondisclosure, and (3) negligent misrepresentations; a tort-based claim against JetPay individually for (4) Texas Deceptive Tradé Practices Act (“DTPA”)-violations; and another claim against JetPay individually for (5) breach of contract. See Third Am. Compl. ¶¶ 63-89.

Defendants cite ten different grounds on which they believe that summary judgment should be granted as to all or part of BCC’s five claims. See JetPay’s & Voigt’s MSJ 4-5. They have also filed objections and - a motion to strike in relation to the summary judgment evidence offered by BCC. See Doc. 222, Defs. JetPay’s & Voigt’s Objections & Mot. Strike Pl.’s Exs. (“Defs. Objections & Mot. Strike”). In wading through all of this, the Court’s discussion, below, will proceed as follows: (a) a brief background discussion to give context to the parties’ contentions, (b) a quick review of two preliminary matters raised by Defendants, (c) an analysis of the economic loss rule as applied to BCC’s four tort-based claims, and (d) an analysis of BCC’s breach of contract claim, including evidence of JetPay’s alleged breach and BCC’s damages.

A Background

Unlike Merrick, JetPay and Voigt have not filed any dispositive motions prior to this stage of the proceedings; thus, the Court has not, until--now, discussed the relevant background facts to BCC’s dispute with. JetPay and Voigt.

BCC’s and JetPay’s dispute ultimately derives'from the Master Service Agreement (the “MSA”) the two entities executed on January 31, 2012. See JetPay’s & Voigt’s App. 1-25, Ex.’ A (herein after, “MSA”). Before, this time, BCC and BankCard had been serving as an ISO for Merrick since November 10, 2008, when the ISO Agreement was first executed. Pursuant to the ISO Agreement, BCC was permitted to hire certain approved third party service providers, who would be responsible for providing Merrick and BCC’s merchant' customers with credit card processing and data capture services. BCC initially selected CardWorks Processing, Inc. (“CardWorks”) and TSYS Acquiring Solutions (“TSYS”) as its third party.services providers. PL’s App. Opp’n JetPay’s & Voigt’s MSJ 5. In late 2011, however, CardWorks and TSYS closed their processing platforms, forcing BCC to find new a provider. Id. at 6-7.

Thus, BCC began considering Merrick’s other approved third party service providers, including JetPay. See id. at 7. In addition to Merrick’s assurances, BCC alleges that it was drawn to JetPay by its advertisements representing that it offered “first class customer support” and “expertise in advising and delivering optimal payment, solutions tailored to the specific and unique needs of each customer.”. Third Am. Compl. ¶¶ 23-25. So, in the fall of 2011, BCC’s CEO Richard Nobel decided to meet with JetPay and its president, Defendant Trent Voigt. Pl.’s App. Opp’n JetPay’s & Voigt’s MSJ 7. At that meeting, Nobel detailed the specific capabilities and services that BCC would need JetPay to provide as BCC’s third party service provider. Id. According to Nobel, Voigt responded by “affirm[ing] that JetPay had the ability to provide all of these services and was currently providing such services in its business.” Id. Nobel says that Voigt further represented to him “that JetPay could easily duplicate the files that Card-Works Processing was supplying for BCC’s daily balancing and reporting,” and that JetPay had and could provide a “ ‘state-of-the-art merchant reporting system,’” an “industry leading transaction processing platform,” an “automated merchant boarding system” and “portal,” a “transaction clearing and settlement system able to process BCC transactions without incident,” and systems capable of providing “daily merchant and transaction data of the same nature, character and completeness as previously provided to BCC by CardWorks [and TSYS].” Id. at 7-8.

Based on the above representations, BCC claims that it entered into the MSA with JetPay on January 31, 2012. Id. at 8. The MSA provided that" JetPay would perform a number of services “on behalf of [BCC],” including transaction authorization and data capture, chargeback processing, data entry, daily transaction reporting, customer service, merchant training and equipment services, and other services at JetPay’s “written election.” See MSA § 2. JetPay further agreed to “exercise commercially reasonable care and diligence” in the performance of its “services contemplated by [the MSA].” Id. § 6.3. In return, BCC agreed to pay JetPay “the fees and other charges set forth in” schedules attached to the MSA. Id. § 4.2. The MSA further provided a process by which BCC could withhold payment “subject to a bona fide dispute,” and resolve any such disputes. Id. § 4.3. It also allowed either party to terminate the MSA under certain conditions and subject to the processes set forth therein. See id. § 5.

Thereafter, BCC says that it experienced a multitude of problems with Jet-Pay’s services. PL’s App. Opp’n JetPay’s & Voigt’s MSJ 9-10. Supported by averments, deposition testimony, and emails, BCC claims that JetPay failed in a variety of ways to process merchant transactions, accurately report transactions, and service BCC’s .merchant customers, along with other issues. See id. at 9-18,183-84, 203-11, 256-85, 302-03, 306-14. These problems caused BCC’s offices to be flooded with calls from unhappy merchants starting as early as February 2012. Id. at 10. BCC began requesting immediate action from JetPay to.remedy the problem, and thereafter communicated the various issues BCC and its merchant .customers were experiencing. See, e.g., id. at 11, 183-84, 206-07, 262-78. When nothing came from- these communications, BCC says that, its staff was enlisted to troubleshoot and resolve the issues that JetPay had caused and failed to correct. See id. at 11-12. BCC’s staff even traveled to JetPay’s offices in Dallas to help resolve these issues and to oversee a remediation project. Id. at 12.

In July 2014, Nobel traveled to JetPay’s offices to meet with Voigt and JetPay’s representatives regarding the issues BCC was - continuing to experience. See id. at 13, 203-05. At that time, Nobel informed Voigt that BCC would not pay JetPay’s invoices-“until the outstanding issues with JetPay’s performance were resolved.” Id. at 13. Voigt agreed to this arrangement, and reaffirmed that JetPay would be able to fix BCC’s issues moving forward. See id. at-13-14. As a result of these, and other assurances from JetPay, BCC alleges that it refrained from terminating the MSA. See Third Am. Compl. ¶¶ 33-34, 74, 79.

BCC claims that it continued to suffer problems due to JetPay’s inadequate services up until JetPay “ceased processing card transactions for BCC’s merchants at or near the end of February 2013.” PL’s App. Opp’n JetPay’s & Voigt’s MSJ 10. Right before JetPay’s services were terminated, in January 2013, JetPay reached out to Merrick and demanded payment of a $100,000 invoice that BCC refused to pay, with the threat that JetPay would discontinue services for merchant accounts if the invoice remained unpaid. Id. at 231-32. After notifying BCC, who strongly objected, Merrick complied with JetPay’s demands and paid the $100,000 disputed fee from funds that would have otherwise been paid to BCC. See id. at 17, 231-32.

As a result of the foregoing, BCC filed this suit against Defendants for their alleged misrepresentations and for JetPay’s alleged breach of the MSA’s terms. In relief, BCC seeks over $2 million in damages, most significantly for its lost profits and business resulting from the departure of dissatisf