Grayson Inc v. Global Payments Direct Inc

Filing 10

MEMORANDUM OPINION-re: Motion to Dismiss 3 . Signed by Judge Karon O Bowdre on 10/18/2013. (AVC)

FILED
2013 Oct-18 AM 09:21
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
GRAYSON INC. d/b/a CENTER POINT
WHOLESALE TRANSMISSIONS,
Plaintiff,
v.
GLOBAL PAYMENTS DIRECT, INC.,
Defendant

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CV-13-CV-1256

MEMORANDUM OPINION
This diversity case, alleging breach of contract and tort claims under Alabama law, comes
before the court on Defendant Global Payments Direct, Inc.’s Motion to Dismiss (doc. 3). The
Plaintiff responded (doc. 8), and the Defendant filed a reply (doc. 8). For the reasons stated in
this Memorandum Opinion, the court FINDS that the motion is due to be GRANTED IN PART
and DENIED IN PART; more specifically, the court will DENY the motion as to the breach of
contract claim but will GRANT the motion as to the negligence and wantonness claims as well as
the claim for mental anguish damages.
I. FACTS
The Complaint includes the following facts.
The Plaintiff, Grayson, Inc., is an Alabama corporation that does business under the name
Center Point Wholesale Transmissions. Grayson had a contract with the Defendant, Global
Payments Direct, Inc., providing that Global would accept and transfer credit card charges for the

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benefit of Grayson, making deposits into Grayson's bank account less an agreed-upon percentage
fee that Global would retain as payment for its services.
For years before the incident made the basis of this suit, Global accepted payment on
behalf of Grayson and made deposits into Grayson's account. Then, in December of 2012, a
change occurred. During that month, Global accepted payments on behalf of Grayson in the
amount of $14,654.96, but did not deposit payments into Grayson's account. Even though Global
did not deposit money into Grayson’s account during December of 2012, it nevertheless
attempted to take out its percentage fee from Grayson’s account, but no money was in the
account. During December, Grayson wrote numerous checks on the account, relying on Global’s
having deposited the funds accepted on Grayson’s behalf as it had done in the past. Because
Global did not deposit the payments, the bank account did not have sufficient funds for the
payment of the checks Grayson wrote, and the bank charged Grayson fees for insufficient funds
and returned the unpaid checks to the company. When Grayson learned that the company bank
account had no money in it, the company’s owner placed personal money into the account. Once
the account had money in it again, Global took out its percentage fee of $657.74 from Grayson’s
account but did not deposit the payments.
After the problem with insufficient funds, Global notified Grayson that it did not have
Grayson’s W-9 on file, and Global took the position that it could release no monies to Grayson’s
account until it received the W-9. However, Global had accepted and deposited payments on
behalf of Grayson for years without requiring a W-9 on file.
On May 16, 2013, Grayson filed the instant suit in the Circuit Court of Jefferson County,
Alabama against Global, alleging negligence, wantonness, and breach of contract, and
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demanding $250,000 in compensatory and punitive damages. (Doc. 1-1). On July 5, 2013,
Global removed the case to this court based on diversity jurisdiction. (Doc. 1). On July 12, 2013,
Global filed the motion to dismiss. (Doc. 3).
II. STANDARD OF LAW
A Rule 12(b)(6) motion to dismiss attacks the legal sufficiency of the complaint.
Generally, the Federal Rules of Civil Procedure require only that the complaint provide “‘a short
and plain statement of the claim’ that will give the defendant fair notice of what the plaintiff’s
claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957)
(quoting Fed. R. Civ. P. 8(a)). A plaintiff must provide the grounds of his entitlement, but Rule
8 generally does not require “detailed factual allegations.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007) (quoting Conley, 355 U.S. at 47). It does, however, “demand[ ] more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal 556 U.S. 662,
678 (2009). Pleadings that contain nothing more than “a formulaic recitation of the elements of
a cause of action” do not meet Rule 8 standards nor do pleadings suffice that are based merely
upon “labels or conclusions” or “naked assertions” without supporting factual allegations.
Twombly, 550 U.S. at 555, 557.
The Supreme Court explained that “[t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Iqbal, 556 U.S. at 678 (quoting and explaining its decision in Twombly, 550 U.S. at 570).
To be plausible on its face, the claim must contain enough facts that “allow[ ] the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678. Although “[t]he plausibility standard is not akin to a ‘probability requirement,’” the
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complaint must demonstrate “more than a sheer possibility that a defendant has acted
unlawfully.” Id. “Where a complaint pleads facts that are merely consistent with a defendant’s
liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’”
Id. (quoting Twombly, 550 U.S. at 557).
The Supreme Court has recently identified “two working principles” for the district court
to use in applying the facial plausibility standard. The first principle is that, in evaluating
motions to dismiss, the court must assume the veracity of well-pleaded factual allegations;
however, the court does not have to accept as true legal conclusions even when “couched as []
factual allegation[s]” or “threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements.” Iqbal, 556 U.S. at 678.

The second principle is that “only a

complaint that states a plausible claim for relief survives a motion to dismiss.” Id. at 679. Thus,
under prong one, the court determines the factual allegations that are well-pleaded and assumes
their veracity, and then proceeds, under prong two, to determine the claim’s plausibility given the
well-pleaded facts. That task is “context-specific” and, to survive the motion, the allegations
must permit the court based on its “judicial experience and common sense. . . to infer more than
the mere possibility of misconduct.” Id. If the court determines that well-pleaded facts, accepted
as true, do not state a claim that is plausible, the claim must be dismissed. Id.
III. ANALYSIS
Grayson’s Complaint purports to bring claims for breach of contract, negligence, and
wantonness. In its motion to dismiss, Global argues that the Complaint fails to state a plausible
claim on any of these theories, and thus, that the court should dismiss the Complaint pursuant to
Rule 12(b)(6) of the Federal Rules of Civil Procedure.
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A. Breach of Contract
Global argues that the court should dismiss this claim because Grayson does not attach a
copy of the contract nor does it identify the specific contract provisions or term upon which it
relies in claiming that Global breached the contract. No federal rule requires a party asserting
breach of contract to attach the contract. Further, Global provides the court with no case law –
and the court is aware of none – to support the argument that when a complaint asserts a breach
of contract claim but fails to attach or quote the contract, the claim must be dismissed as
insufficient. See, e.g., Mancini Enters., Inc. v. Am. Exp. Co., 236 F.R.D. 695, 698 (S.D. Fla.
2006). Rather, Rule 8(a) requires only that the Complaint sets forth “a short and plain statement
of the claim showing that the pleader is entitled to relief,” with a demand for relief and with
“sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010) (quoting Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Under Alabama law, the elements of a breach of contract claim are (1) “‘the existence of
a valid contract binding the parties in the action, (2) [the plaintiff’s] own performance under the
contract, (3) the defendant’s nonperformance, and (4) damages.’” Poole v. Prince, 61 So. 3d 258,
273 (Ala. 2010) (quoting Southern Med. Health Sys., Inc. v. Vaughn, 669 So. 2d 98, 99 (Ala.
1995)).
In the instant case, the Complaint manages to convey specific information. It states,
among other things, that a contract exists between the parties calling for Plaintiff Grayson to run
its business credit card charges “through the Defendant’s business and then the Defendant in turn
would [deposit] the money back in to the Plaintiff’s account less the agreed upon percentage.”
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(Doc. 1-1, at 4). The Complaint also states the specific amount of charges – $14,654.96 –
Global accepted in a specific month – December of 2012 – but alleges that Global breached the
contract when it failed to deposit that amount into the account yet nevertheless extracted its fee
of $657.74 from funds in Grayson’s account. Finally, the Complaint states that Grayson was
damaged when, as a result of Global’s failure to deposit payments, Grayson’s checks bounced,
Grayson paid fees for insufficient funds, and Grayson’s reputation suffered.
The court FINDS that the factual assertions in the Complaint are sufficient to state a
plausible claim for breach of contract. Accordingly, the motion to dismiss is due to be DENIED
as to that claim.
B. Negligence and Wantonness
Grayson also asserts other state law claims of negligence and wantonness arising out of
the same circumstances. The court will address the negligence and wantonness claims together
because the analysis is similar, both of these claims requiring a duty. See, e.g., Lilya v. Greater
Gulf State Fair, Inc., 855 So. 2d 1049, 1056 (Ala. 2003). Wantonness does, however, require
factual allegations that additionally would support its definition of “reckless indifference to the
consequences” of the breach. See Smith v. Davis, 599 So. 2d 586, 588 (Ala. 1992).
The Complaint in the instant case does not specifically identify what “duty” Global
breached, and focuses instead on Global’s failure to perform under the contract. Thus, based on
the allegations of the Complaint, the court must conclude that the “duty” allegedly negligently
and wantonly performed arises out of the contract and is not separate and apart from it, and
further, that the breach of the duty forming the basis of these tort claims is the breach of the
contract itself.
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Alabama law does not recognize tort liability from the mere failure to perform a contract.
See, e.g., Blake v. Bank of Am., 845 F. Supp. 2d 1206, 1210 (M. D. Ala. 2012) (quoting the
following from Vines v. Crescent Transit Co., 85 So. 2d 436, 440 (Ala. 1956): “a negligent
failure to perform a contract ... is but a breach of the contract”); see also Barber v. Bus. Prods.
Ctr., Inc., 677 So. 2d 223, 228 (Ala. 1996) ) (“However, a mere failure to perform a contractual
obligation is not a tort.”), overruled on other grounds by White Sands Grp., LLC v. PRS II, LLC,
32 So. 3d 5 (Ala. 2009).
In the instant case, Grayson’s Complaint does not provide facts supporting the existence
of a legal duty independent of the contract itself. Thus, based on the allegations of the
Complaint, the court FINDS that Grayson has not stated a plausible claim for negligence and
wantonness; the motion is due to be GRANTED as to those claims.
C. Mental Anguish
Global also requests that this court dismiss any damage claim for mental anguish, noting
that Grayson is a business entity. In its response to the motion to dismiss, Grayson did not
address this argument, and Global correctly points out in its reply that Grayson has therefore
abandoned its claim for those damages. See, e.g., Coal. for the Abolition of Marijuana
Prohibition v. City of Atlanta, 219 F.3d 1301, 1326 (11th Cir. 2000) (“failure to brief and argue
this issue during the proceedings before the district court is grounds for finding that the issue has
been abandoned”); see also Costine v. BAC Home Loans, __ F. Supp. 2d ___, 2013 WL
2248098, at *4 (N. D. Ala. 2013) (dismissing the claim for unjust enrichment because “Plaintiffs
failed to offer any response to Defendant’s argument, and therefore have abandoned their unjust
enrichment claim.”). The court FINDS that the motion is due to be GRANTED as to the claim
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for mental anguish damages.
IV. CONCLUSION
For the reasons stated above, the court FINDS that the motion is due to be DENIED as to
the claim for breach of contract, and is due to be GRANTED as to the claims for negligence and
wantonness and the claim for mental anguish damages. The breach of contract claim will
proceed at this stage.
Dated this 18th day of October, 2013.

____________________________________
KARON OWEN BOWDRE
UNITED STATES DISTRICT JUDGE

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