FNB Bank v. Park National Corporation et al
ORDER denying 9 Motion to Dismiss and Motion for More Definite Statement. Signed by Chief Judge William H. Steele on 4/23/2013. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
PARK NATIONAL CORPORATION, )
CIVIL ACTION 13-0064-WS-C
This matter is before the Court on the defendants’ motion to dismiss and
embedded motion for more definite statement. (Doc. 9). The parties have filed
briefs in support of their respective positions, (Docs. 10, 18, 20), and the motions
are ripe for resolution. After careful consideration, the Court concludes that both
motions are due to be denied.
According to the complaint, (Doc. 1), non-party Vision Bank (“Vision”)
made a $5 million loan (“the Loan”) to non-party Marine Park, LLC (“Marine”)
for a real estate development project, secured by certain realty and guarantied by
multiple guarantors. In March 2007, Vision sold a 100% participation interest in
the loan to the plaintiff, with the parties’ obligations memorialized in a written
agreement (“the Agreement”). Later the same month, Vision consummated a
merger agreement with defendant Park National Corporation (“Park”), a bank
holding company, and Vision became Park’s subsidiary. Park thereafter became
closely involved in supervising Vision. Over the next two years, Vision made a
number of misstatements, repeatedly failed to disclose important information, and
engaged in other conduct to which the plaintiff objects. The Loan matured
without payment in January 2009, and litigation with Marine and the guarantors is
In February 2012, Park sold certain “good” assets of Vision to non-party
Centennial Bank. In February 2012, Park merged Vision into defendant SE
Property Holdings, LLC (“SEPH”), a wholly owned subsidiary of Park, and
Vision ceased to exist. Among the “bad” assets retained by Vision and transferred
to SEPH was the Loan.
In January 2013, the plaintiff sent the defendants a letter identifying
multiple defaults under the Agreement and demanding that the defaults be cured or
its participation interest repurchased as provided for in the Agreement. The
defendants neither cured nor repurchased.
The four counts against the defendants assert the following: (1) breach of
contract; (2) negligence; (3) willful misconduct; and (4) specific performance.
The defendants seek dismissal under Rule 12(b)(6). They seek a more
definite statement under Rule 12(e).
I. Motion to Dismiss.
To survive dismissal under Rule 12(b)(6), a complaint must first satisfy the
pleading requirements of Rule 8(a)(2). Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007). “A pleading that states a claim for relief must contain … a short
and plain statement of the claim showing that the pleader is entitled to relief ….”
Fed. R. Civ. P. 8(a)(2). Rule 8 establishes a regime of “notice pleading.”
Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512, 513-14 (2002). It does not,
however, eliminate all pleading requirements.
First, the complaint must address all the elements that must be shown in
order to support recovery under one or more causes of action. “At a minimum,
notice pleading requires that a complaint contain inferential allegations from
which we can identify each of the material elements necessary to sustain a
recovery under some viable legal theory.” Wilchombe v. TeeVee Toons, Inc., 555
F.3d 949, 960 (11th Cir. 2009) (emphasis and internal quotes omitted).
Pleading elements is necessary, but it is not enough to satisfy Rule 8(a)(2).
The rule “requires more than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do” to satisfy that rule. Twombly, 550
U.S. at 555. There must in addition be a pleading of facts. Though they need not
be detailed, “[f]actual allegations must be enough to raise a right to relief above
the speculative level ....” Id. That is, the complaint must allege “enough facts to
state a claim for relief that is plausible on its face.” Id. at 570. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard … asks for
more than a sheer possibility that the defendant has acted unlawfully,” and
“[w]here 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. (internal quotes omitted). A complaint lacking
“sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face” will not “survive a motion to dismiss.” Id. But so long as
the plausibility standard is met, the complaint “may proceed even if it strikes a
savvy judge that actual proof of those facts is improbable, and that a recovery is
very remote and unlikely.” Twombly, 550 U.S. at 556 (internal quotes omitted).
These are the pleading requirements of Rule 8(a)(2), and failure to meet
them exposes a complaint to dismissal under Rule 12(b)(6) for failure to state a
claim on which relief can be granted. But the complaint is so exposed only if the
defendant moves for dismissal under that rule, invokes the plausibility standard,
and makes a satisfactory showing that, in certain, specified respects, for certain,
specified reasons, the complaint falls short of that standard.1 Vague, generalized
assertions that a claim is somehow implausible, without a clear, supported
explanation of just what is implausible and why, places no burden on the Court to
supply the deficiency or on the plaintiff to respond.
A. Cognizable Injury.
The defendants initially argued that the complaint should be dismissed in
its entirety for failure to allege a “cognizable injury.” (Doc. 10 at 4-5). In their
reply brief, the defendants “abandon their cognizable injury argument for purposes
of the motion to dismiss.” (Doc. 20 at 12). The Court therefore moves on.
B. Breach of Contract.
The defendants argue that Park should be dismissed as a defendant because
it is not a party to the Agreement. They also argue that portions of the claim
should be dismissed because they depend on the breach of obligations the
Agreement does not impose. (Doc. 24 at 11-14).
1. Park as a defendant.
The defendants argue in their principal brief that Park must be dismissed
because the complaint pleads no facts supporting the allegation that Park “has
undertaken the duty to fulfill Vision’s contractual obligations.” (Doc. 1, ¶ 65;
Doc. 10 at 7). As the plaintiff points out, the complaint also asserts Park’s
contractual liability based on an alter ego theory. (Doc. 1, ¶ 64). In their reply
brief, the defendants attack the alter ego theory, (Doc. 20 at 5-9), but the effort
comes too late. “District courts, including this one, ordinarily do not consider
This necessarily follows from the principle that the movant bears the burden of
showing that dismissal for failure to state a claim is warranted. E.g., Beck v. Deloitte &
Touche, 144 F.3d 732, 735-36 (11th Cir. 1998); Continental Motors, Inc. v. Jewell
Aircraft, Inc., 882 F. Supp. 2d 1296, 1314 n.26 (S.D. Ala. 2012).
arguments raised for the first time on reply.” Gross-Jones v. Mercy Medical, 874
F. Supp. 2d 1319, 1330 n.8 (S.D. Ala. 2012) (citing cases and explaining the
underlying rationale). The defendants offer no reason the Court should depart
from this well-established rule. Considering that the alter ego theory of
contractual liability is explicitly articulated in Count One, the Court can discern no
basis for excusing the defendants’ failure to address it until their reply brief.
2. Absence of contractual obligation.
The complaint identifies eight ways that the defendants breached the
Agreement. (Doc. 1, ¶ 67). The defendants argue that Count One should be
dismissed to the extent it depends on three of these. (Doc. 24 at 8-10).
The complaint alleges breach by: (1) failing to apprise the plaintiff of
additional loans made to the guarantors; (2) terminating Vision Bank’s existence;
and (3) refusing to repurchase the plaintiff’s participation interest. (Doc. 1, ¶ 67.a,
The defendants point out that the Agreement specifically provides that
Vision “will give [FNB] prior notice of any future extensions of credit … to the
Borrower(s) other than under the Loan.” (Doc. 1, Exhibit 1, ¶ 15.f (emphasis
added)). The defendants conclude that the Agreement requires notice only of
extensions of credit to Marine, not the guarantors. (Doc. 10 at 9). The plaintiff
responds that the obligation resides in paragraph 10, which requires Vision to keep
the plaintiff fully informed of any circumstances that “could have a material
adverse effect on the Loan or the value of the Collateral securing the Loan.” (Doc.
1, Exhibit 1, ¶ 10). In a single, conclusory sentence, the defendants reply that
loans to a guarantor do not have such an effect, but they offer no analysis that
could permit the Court to draw the same conclusion as a matter of law. The
defendants concede that loans to guarantors “may affect the bank’s ability to
collect on the Loan in the event of default by the borrower,” (Doc. 20 at 10), yet
they provide no basis for concluding that paragraph 10 does not embrace such
collectability issues in the term, “material adverse effect on the Loan.”
In their principal brief, the defendants assert generally that “the plain
language of the Agreement does not identify ‘termination of existence’ in and of
itself as a breach of an obligation.” (Doc. 10 at 9). This is the sum total of the
defendants’ argument, with no identification of what else might be required or
what necessary allegations might be missing. As noted, such superficial
presentation passes no burden to the plaintiff or the Court. In their reply brief, the
defendants finally play their card, arguing that only the commencement of
proceedings to terminate Vision’s existence could breach the Agreement. They
continue that the complaint does not allege such a proceeding and conclude the
claim is thus factually insufficient. (Doc. 20 at 9-10). Again, the defendants have
waited too long to make this argument, especially since it is clear from their “in
and of itself” language that they were aware of the “proceeding” argument but
elected not to assert it initially.2
The defendants next argue that the complaint does not allege the “prerequisite obligations [for repurchase] … imposed by the Agreement.” (Doc. 10 at
9). Again, no explanation of this conclusory position is offered, and it is plainly
erroneous. The Agreement requires repurchase if SEPH “shall fail to cure any
default by Originating Bank under this Agreement within thirty (30) days after
notice from [the plaintiff] specifying the default,” (id., ¶ 13.d), and the complaint
expressly alleges that the plaintiff sent such a demand letter and that the
At any rate, “proceeding” is an undefined term, and the defendants have done
nothing to show that the sale of Vision’s “good” assets to Centennial Bank, followed by
Vision’s merger into SEPH – facts that are expressly alleged in the complaint – could not
constitute proceedings within the contemplation of the Agreement. To the uncertain
extent the defendants suggest the complaint must use the term “proceeding,” they “offer
no support for the remarkable proposition that a pleading must not only state the facts but
explain their import as well.” Renasant Bank v. Park National Corp., 2013 WL 1499580
at *3 (S.D. Ala. 2013).
defendants neither cured the defaults nor honored their repurchase obligation.
(Doc. 1, ¶ 59).
Finally, the defendants insist the plaintiff was required to allege “all of the
elements required to demonstrate its entitlement to [the] remedy” of specific
performance “imposed … under Alabama law.” (Doc. 10 at 9). The defendants
cite generally to Alabama Code § 8-1-40, which provides that “[s]pecific
performance cannot be enforced against a party to a contract in any of the
following cases ….” The plausibility standard of Twombly and Iqbal derives from
Rule 8(a)(2), which governs the pleading of “the claim.” The defendants,
however, insist that specific performance is not a claim but a only a remedy.
(Doc. 10 at 16). If that is so, the pleading of specific performance presumably is
governed by Rule 8(a)(3), which addresses the pleading of the “demand for the
relief sought.” The defendants have not attempted to show that the plausibility
standard extends to Rule 8(a)(3), which does not include the key language on
which the Twombly Court relied.3 Nor do they cite any authority for the
proposition that the non-existence of the circumstances listed by the statute is an
“element” of a specific performance remedy that must be plausibly pleaded. At
any rate, the Agreement explicitly provides that “Participating Bank shall have the
right to maintain an action for specific performance against Originating Bank to
enforce Participating Bank’s rights [to re-purchase of its participation interest]
under this Section 13.” (Doc. 1, Exhibit 1, ¶ 13).4 That provision, agreed to if not
Rule 8(a)(2) requires a “statement of the claim showing that the pleader is
entitled to relief,” and the Twombly Court rested its plausibility standard on this
language. 550 U.S. at 555-57. Rule 8(a)(3) contains no similar language, instead
requiring only that a demand for relief be made.
“A copy of a written instrument that is an exhibit to a pleading is a part of the
pleading for all purposes.” Fed. R. Civ. P. 10(c).
authored by Vision, of its own weight renders it plausible that the circumstances
disfavoring specific performance do not exist.5
C. Tort Claims.
Counts Two and Three allege that the defendants breached “a duty to
exercise reasonable care and diligence in their administration of the Loan, and to
act in a commercially reasonable manner.” (Doc. 1, Exhibit 1, ¶¶70-71, 74-75).
1. Tort duty owed by SEPH.
Originating Bank agrees to exercise the same degree of care in
administering [the plaintiff’s] Participation Interest in the Loan
that Originating Bank customarily exercises in handling similar
loans for its own account; however, Originating Bank shall be
liable to [the plaintiff] only for losses due to Originating
Bank’s lack of commercially reasonable conduct[,] negligence
or willful misconduct.
(Doc. 1, Exhibit 1, ¶ 16.d).
The defendants argue that the only duties owed by SEPH to the plaintiff are
those imposed by the Agreement and that the only remedy for breach of those
duties sounds in contract, not tort. (Doc. 10 at 10-12). The plaintiff counters that,
“[i]n Alabama, one who contracts with another and expressly promises to use due
care is undoubtedly liable in both tort and contract when his negligence results in
injury to the other party.” Blumberg v. Touch Ross & Co., 514 So. 2d 922, 927
(Ala. 1987). The plaintiff also quotes this Court for the proposition that breach of
a duty implied by or arising out of a contract (but not expressly set forth therein)
Similarly, the defendants argue the demand for specific performance must be
stricken for lack of an allegation that the plaintiff has no adequate remedy at law. (Doc.
10 at 17). But they have not attempted to show that such pleading is necessary when the
parties’ agreement explicitly provides for the remedy of specific performance. At any
rate, that provision plausibly reflects the parties’ realization that no adequate remedy at
law exists. See SunTrust Mortgage, Inc. v. Old Second National Bank, 2012 WL
1656667 at *3 (E.D. Va. 2012) (where parties agreed to re-purchase obligation in
addition to other remedies, claim for specific performance would not be dismissed for
failure to allege lack of adequate remedy at law).
may be actionable in tort. Hardy v. Jim Walter Homes, Inc., 2008 WL 906455 at
*14 (S.D. Ala. 2008) (summarizing Brown-Marx Associates, Ltd. v. Emigrant
Savings Bank, 703 F.2d 1361, 1371 (11th Cir. 1983)). The defendants do not
challenge these legal propositions but simply invite the Court to review the
complaint on its own and figure out which if any portions of the tort claims fall
outside these safe harbors. (Doc. 20 at 11). The Court declines to perform the
defendants’ work on their behalf
2. Tort duty owed by Park.
The defendants assert vaguely that the plaintiff “has not and cannot plead
facts to demonstrate the existence of a duty” owed it by Park. (Doc. 10 at 12).
But the defendants have not addressed what Alabama law requires in order to
impose such a duty and, without doing so, they cannot successfully assert that the
plaintiff has inadequately pleaded its existence.6
The defendants argue that Counts II and III limit the alleged duty to one
involving the Agreement, and they deny that the complaint asserts that Park
“played any role whatsoever in regard to the Agreement.” (Doc. 10 at 12-13).
Assuming without deciding that the first proposition is correct, the second is not.
Without purporting to be exhaustive, the Court notes the complaint’s allegations
Although the defendants’ opaque ipse dixit triggers no judicial obligation to
examine it further, the Court notes that “a duty of due care can arise in the absence of a
contract, based on a number of factors, including public policy, social considerations, and
foreseeability [of harm]. … The ultimate test of the existence of a duty to use due care is
found in the foreseeability that harm may result if care is not exercised.” Southland Bank
v. A&A Drywall Supply Co., 21 So. 3d 1196, 1217 (Ala. 2008) (internal quotes omitted).
The defendants have not attempted to show that the numerous allegations of the
complaint fail to suggest plausibly the foreseeability of harm to the plaintiff from Park’s
It also appears that a defendant can be liable for the torts of its alter ego. See
Brown v. Standard Casket Manufacturing Co., 175 So. 358, 362 (Ala. 1937). As noted in
Part I.B.1, the defendants have not shown that the plaintiff’s assertion of alter ego
liability is illegitimate.
that Park sold Vision’s “good” assets to Centennial Bank, created SEPH, and
merged Vision into SEPH, thereby terminating Vision’s existence in violation of
the Agreement. (Doc. 1, Exhibit 1, ¶¶ 5, 40-42, 44, 67.c).
3. Economic loss rule.
The defendants propose that the tort claims are barred by Alabama’s
version of the economic loss rule. (Doc. 10 at 13-16). “The economic-loss rule
prevents tort recovery when a product damages itself, causing economic loss, but
does not cause personal injury or damage to any property other than itself.”
Public Building Authority v. St. Paul Fire & Marine Insurance Co., 80 So. 3d 171,
184 (Ala. 2010) (internal quotes omitted). This case does not concern economic
damage caused by a product. The plaintiff pointed this out, and the defendants
offer no reply.
D. Specific Performance.
The defendants argue that specific performance is not a cause of action but
a remedy that the plaintiff must plead in association with a viable cause of action.
(Doc. 10 at 16). Since the plaintiff invokes specific performance as a cause of
action, the defendants demand that Count IV be dismissed. Although a reasonable
position, the defendants have not shown that Alabama refuses to recognize a cause
of action for specific performance, and the Court, in a brief review, found several
dozen appellate cases addressing “claims” and “counts” for specific performance
without a murmur that no such cause of action exists.
In the alternative, the defendants assert the complaint fails adequately to
allege such a cause of action. (Doc. 10 at 16-17). This argument fails for reasons
set forth in Part I.B.2.
II. Motion for More Definite Statement.
Calling the plaintiff’s pleading a “shotgun complaint,” the defendants
request that the plaintiff be required to replead under Rule 12(e). (Doc. 10 at 1718).
“The typical shotgun complaint contains several counts, each one
incorporating by reference the allegations of its predecessors, leading to a situation
where most of the counts (i.e., all but the first) contain irrelevant factual
allegations and legal conclusions.” Strategic Income Fund, L.L.C. v. Spear, Leeds
& Kellogg Corp., 305 F.3d 1293, 1295 (11th Cir. 2002). The instant complaint
employs incorporation by reference and hence meets this technical definition of a
But Rule 12(e) does not authorize repleader simply because its counts
incorporate earlier paragraphs; instead, the pleading must be “so vague or
ambiguous that the party cannot reasonably prepare a response.” Fed. R. Civ. P.
12(e). Certainly that standard may sometimes be met by a shotgun complaint, but
the defendants have not shown it to be satisfied in this case; indeed, they have not
attempted to do so. Instead, they advance the erroneous position that the mere
usage of incorporation of itself requires repleader. (Doc. 10 at 18). This is
incorrect, and the Court’s familiarity with the complaint permits it to comfortably
draw the conclusion that its use of incorporation by reference does not impair the
defendants’ ability to frame a responsive pleading for purposes of Rule 12(e).7
The defendants also object that the complaint “has improperly combined
Vision, SEPH and Park into single subjects and objects,” making it “difficult … to
understand” which defendant allegedly did what. (Doc. 10 at 17-18). The
defendants identify, and the Court can detect, no instances of such
As the defendants’ own authority states, relief under Rule 12(e) is available to
address a shotgun pleading when “it is virtually impossible to know which allegations of
fact are intended to support which claim(s) for relief.” Anderson v. District Board of
Trustees, 77 F.3d 364, 366 (11th Cir. 1996). That standard is not remotely approached by
the complaint in this action.
“combin[ation]”; the complaint appears uniformly to address the three entities
separately. And it can hardly be confusing for the complaint to allege that Park
engaged in certain conduct, that SEPH engaged in certain conduct, and that both
defendants engaged in certain conduct. Nor can it be confusing to allege that
Vision engaged in certain conduct, for which SEPH and Park are responsible
under varying theories. Notably, the defendants identify not a single example of
an allegation so vague or ambiguous that they cannot respond to it.
For the reasons set forth above, the defendants’ motion to dismiss and
motion for more definite statement are denied.
DONE and ORDERED this 23rd day of April, 2013.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
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