DANTZLER INC v. HUBERT MOORE LUMBER COMPANY INC et al
ORDER granting in part and denying in part 38 Motion to Dismiss for Failure to State a Claim. Ordered by Judge Hugh Lawson on 9/25/2013. (nbp)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
Civil Action No. 7:13-CV-56 (HL)
HUBERT MOORE LUMBER COMPANY,
INC., WILBUR STANLEY MOORE,
individually and as guarantor, NORMA
MOORE GASKINS, individually and as
guarantor, JOAN MOORE DRAWDY,
individually and as guarantor, and
DUPONT PINE PRODUCTS, LLC,
This case is before the Court on Counter-Defendant Dantzler, Inc.’s Motion
Counterclaims (Doc. 38). For the reasons discussed below, the motion is granted
in part and denied in part.
MOTION TO DISMISS STANDARD
To avoid dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), “a
complaint must contain specific factual matter, accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129
S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is plausible
where the plaintiff alleges factual content that “allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Id.
The plausibility standard “calls for enough fact to raise a reasonable expectation
that discovery will reveal evidence” of the defendant’s liability. Twombly, 550 U.S.
at 556; 127 S.Ct. at 1965.
On a motion to dismiss, “all-well pleaded facts are accepted as true, and
the reasonable inferences therefrom are construed in the light most favorable to
the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n. 1 (11th Cir.
1999). However, the same does not apply to legal conclusions contained in the
complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009)
(citation omitted). “Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678;
129 S.Ct. at 1949. In addition, the court does not “accept as true a legal
conclusion couched as a factual allegation.” Twombly, 550 U.S. at 555; 127 S.Ct.
Wilbur Stanley Moore, Norma Moore Gaskins, and Joan Moore Drawdy
(the “Shareholders”) and Hubert Moore Lumber Company, Inc. (“HMLC”) have
alleged four counterclaims against Dantzler. They are: (1) a request for a
declaratory judgment; (2) breach of contract; (3) fraud; and (4) costs and
attorney’s fees under Georgia law for bad faith and vexatious, wanton, and
oppressive litigation. Dantzler moves for the dismissal of all four counterclaims.
Count One - Declaratory Judgment
In Count One of their counterclaims, the Shareholders and HMLC seek a
declaration from the Court that (1) the October 23, 2012 Security Agreement was
lawfully terminated or cancelled prior to this case being filed; (2) any right of first
refusal did not survive the termination or cancellation; and (3) any right to notice
of shareholder meetings did not survive the termination.
The Declaratory Judgment Act, 28 U.S.C. § 2201, states in pertinent part:
In a case of actual controversy within its jurisdiction, . . .
, any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other
legal relations of any interested party seeking such
declaration, whether or not further relief is or could be
sought. Any such declaration shall have the force and
effect of a final judgment or decree and shall be
reviewable as such.
28 U.S.C. § 2201(a).
The Supreme Court has held that “[t]he Declaratory Judgment Act was an
authorization, not a command. It gave the federal courts competence to make a
declaration of rights; it did not impose a duty to do so.” Pub. Affairs Assocs., Inc.
v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 582, 7 L.Ed.2d 604 (1962). In
claims arising under the Declaratory Judgment Act, “a court maintains broad
discretion over whether or not to exercise jurisdiction over claims.” Knights
Armament Co. v. Optical Sys. Tech., 568 F.Supp.2d 1369, 1374 (M.D. Fla. 2008)
(citing MedImmune, Inc. v. Genetech, Inc., 549 U.S. 118, 127 S.Ct. 764, 166
L.Ed.2d 604 (2007)). “The Declaratory Judgment Act provides that a court may
declare the rights and other legal relations of any interested party, not that it must
do so.” MedImmune, Inc., 549 U.S. at 136, 127 S.Ct. at 776 (emphasis in
“The declaratory judgment is an all-purpose remedy designed to permit an
adjudication whenever the court has jurisdiction, there is an actual case or
controversy, and an adjudication would serve a useful purpose.” Allstate Ins. Co.
v. Employers Liability Assur. Corp., 445 F.2d 1278, 1280 (5th Cir. 1971). “To
determine whether the declaratory judgment serves a useful purpose, courts
should consider ‘whether resolution of plaintiff’s claim, along with the affirmative
defenses asserted by defendants, would resolve all questions raised by the
counterclaim.” Medmarc Casualty Ins. Co. v. Pineiro & Byrd PLLC, 783
F.Supp.2d 1214, 1217 (S.D. Fla. 2011) (quoting Gratke v. Andersen Windows,
Inc., No. 10-CV-963, 2010 WL 5439763, at *3 (D.Minn. Dec. 8, 2010)).
The Court finds that no useful purpose would be served by allowing the
declaratory judgment counterclaims to proceed. In order to resolve Dantzler’s
breach of contract and declaratory judgment counts contained in its complaint,
the question of whether the Security Agreement was lawfully terminated on
February 15, 2013 will have to be resolved.
Further, courts have typically declined to consider counterclaims for
declaratory relief that are duplicative of affirmative defenses. See e.g., Penn Mut.
Life Ins. Co. v. Berck, No. OKC 09-0578, 2010 WL 3294305, at *3 (D.Md. Aug.
20, 2010) (“This type of double pleading is not the purpose of a declaratory
judgment.”); Penn Mut. Life Ins. Co. v. Greatbanc Trust Co., No. 09 C 6129, 2010
WL 2928054, at *5 (N.D. Ill. July 21, 2010) (“counterclaims that mimic affirmative
defenses are no less duplicative [than] counterclaims that mirror the plaintiff’s
request for declaratory relief”); Zytax, Inc. v. Green Plains Renewable Energy,
Inc., No. H-09-2582, 2010 WL 2219178, at *8 (dismissing declaratory
counterclaim duplicative of affirmative defense). The issue of the termination of
the Security Agreement has already been raised by the Shareholders and HMLC
in their affirmative defenses. (See Answer, First and Seventh Defenses, Doc. 14
at 2, 4). Thus, the Court will have to address the matter in the context of the
affirmative defenses anyway. If it is determined that the Security Agreement was
in fact terminated on February 15, 2013, it would necessarily follow that any
rights contained within the Security Agreement (i.e., the right of first refusal and
the right to notice of shareholder meetings) would be terminated as well.1
Of course, a finding that the Security Agreement was not lawfully terminated means
that the corresponding obligations are still in effect.
Based on the foregoing, the Court declines to exercise its discretion as to
the declaratory judgment counterclaims. Dantzler’s Motion to Dismiss Count One
of the Shareholders’ and HMLC’s counterclaims is granted.
Count Two - Breach of Contract
Prior to delving into the merits of Dantzler’s motion on Count Two, the
Court must resolve Dantzler’s procedural argument that the Shareholders and
HMLC impermissibly combined two claims into one count - one breach of
contract claim with respect to the 2009 agreement and one breach of contract
claim with respect to the 2012 Security Agreement. Federal Rule of Civil
Procedure 10(b) requires parties to limit claims “as far as practicable to a single
set of circumstances,” and to state in a separate count or defense “each claim
founded on a separate transaction or occurrence. . . .” But the separation of
claims is only required “[i]f doing so would promote clarity,” Fed.R.Civ.P. 10(b),
and “when necessary to facilitate a clear presentation.” 5A FED. PRAC. & PROC.
CIV. § 1324 (3d ed.). The Court has no problem differentiating between the two
claims, and Dantzler drafted its motion to dismiss without indicating any
confusion over the Shareholders’ and HMLC’s allegations. In any event, the
proper remedy for a violation of Rule 10(b) is not a Rule 12(b)(6) motion to
dismiss, but instead is a motion for more definite statement under Rule 12(e).
“Where, as here, the plaintiff asserts multiple claims for relief, a more definite
statement, if properly drawn, will present each claim for relief in a separate count,
as required by Rule 10(b), and with such clarity and precision that the defendant
will be able to discern what the plaintiff is claiming and to frame a responsive
pleading.” Anderson v. Dist. Bd. of Trustees of Cent. Fla. Cmty. Coll., 77 F.3d
364, 366 (11th Cir. 1996). The Court will not dismiss Count Two for a purported
Rule 10(b) violation.
Dantzler’s next argument is that the portion of Count Two relating to the
2009 agreement should be dismissed because it is not in writing, and therefore
violates the statute of frauds. To support its position, Dantzler relies on testimony
from Hugh Roberts, HMLC’s former CFO, from the June 4, 2013 Preliminary
Injunction hearing wherein he testified that there was an oral agreement between
the parties but it was never reduced to writing.
Even if the Court was to consider Mr. Roberts’ testimony that the
agreement between the parties was never put in writing, the Court still would not
dismiss the counterclaim relating to the 2009 agreement. The Court certainly
realizes there are potential problems associated with the counterclaim, but at this
stage of the case the Court is not prepared to say that the Shareholders’ and
HMLC’s claim is factually implausible. It is certainly possible that with a more
developed record, the Shareholders and HMLC could present facts that would
support a theory of part performance or equitable estoppel, both of which would
preclude the application of a statute of frauds defense. The Court is not prepared
to completely write off this counterclaim based on one sentence of testimony.
Dantzler’s motion to dismiss Count Two as relates to the 2009 agreement is
Dantzler also moves for dismissal of Count Two with respect to the 2012
Security Agreement and Revolving Credit Note. The Shareholders and HMLC
allege that Dantzler breached the Security Agreement and Revolving Credit Note
by refusing to provide advances for raw logs as provided for those documents. 2
The Court finds that the allegations asserted by the Shareholders and HMLC are
more than sufficient to state a breach of contract claim. Whether Dantzler in fact
“satisfied additional advance requests made after October 23, 2012, and, in fact,
continued to satisfy requests for HMLC operational expenses up through
November 2, 2012, until Dantzler learned that HMLC had removed Tim Moore as
President and would be turning over its operations to DuPont Pine,” as alleged in
Dantzler’s complaint is an issue for a later stage in the litigation that cannot be
determined here. This portion of Dantzler’s motion to dismiss is denied.
Contrary to Dantzler’s motion, the Court does not read the counterclaim to include an
alleged breach based on Dantzler’s failure to include minimum purchasing terms in the
Security Agreement and failure to make said mandatory minimum purchases. The only
breach alleged based on the Security Agreement is that Dantzler did not fund advances
for raw logs. (See Countercl. at ¶¶ 192, 195, 198, 217, 219, 220). Thus, the Court will
only consider Dantzler’s arguments with respect to the fund advance breach.
Count Three - Fraud
Count Three of the Shareholders’ and HMLC’s counterclaims alleges
fraud. In support of its argument that Count Three should be dismissed, Dantzler
relies exclusively on testimony presented at the June 4, 2013 Preliminary
Injunction hearing. Thus, the Court must decide whether it should consider that
testimony when ruling on the motion.
“The district court generally must convert a motion to dismiss into a motion
for summary judgment if it considers materials outside the complaint.” D.L. Day v.
Taylor, 400 F.3d 1272, 1275-76 (11th Cir. 2005); see also Fed.R.Civ.P. 12(d). At
this stage of the proceedings, the Court declines to convert the motion to dismiss
to a motion for summary judgment, and accordingly will not consider the
testimony from the injunction hearing. As Dantzler’s motion as to Count Three is
based solely on testimony that will not be considered, the motion must be denied.
Count Four - Costs and Attorney’s Fees for Bad Faith and
Vexatious, Wanton, and Oppressive Litigation
Count Four of the Shareholders’ and HMLC’s counterclaims is a request
for statutory attorney’s fees and expenses of litigation pursuant to O.C.G.A. § 136-11. In light of the Court’s findings above, Dantzler’s request to dismiss this
counterclaim is denied. O.C.G.A. § 13-6-11 authorizes the recovery of attorney’s
fees on the basis of bad faith or where the opposing party has been “stubbornly
litigious, or has caused the [claimant] unnecessary trouble and expense. . . .”
“When a defendant asserts a claim for relief independent of a claim for litigation
expenses incurred in defending against a plaintiff’s case-in-chief, defendant may
recover litigation expenses incurred in prosecuting such an independent claim in
accordance with O.C.G.A. § 13-6-11.” Gardner v. Kinney, 230 Ga. App. 771, 772,
498 S.E.2d 312, 313 (1998). The Shareholders’ and HMLC’s breach of contract
and fraud counterclaims are independent claims of relief, and in the event they
prevail on either of these counterclaims, the Shareholders and HMLC may be
entitled to fees under § 13-6-11. At this stage of the litigation, the Court cannot
rule as a matter of law that the Shareholders or HMLC are not entitled to
attorney’s fees under this statute.3
Counter-Defendant Dantzler, Inc.’s Motion to Dismiss Counter-Plaintiffs
HMLC’s and the Shareholders’ Amended Counterclaims (Doc. 38) is granted in
part and denied in part. The motion is granted as to Count One but denied as to
Counts Two, Three, and Four of the counterclaims.
SO ORDERED, this the 25th of September, 2013.
s/ Hugh Lawson_______________
HUGH LAWSON, SENIOR JUDGE
The fact the Shareholders and HMLC have pleaded their claims for attorney’s fees in a
separate count is irrelevant. What matters is that they seek litigation expenses related to
causes of action set forth in their other substantive counts.
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