Louisa Lodging, LLC v. Falls Creek, Inc.

Filing 29

MEMORANDUM OPINION & ORDER: IT IS HEREBY ORDERED that the Dft Falls Creek, Inc.'s Partial Motion to Dismiss Plf's Amended Complaint DE 22 be SUSTAINED and that Counts II and III of the Amended Complaint be DISMISSED. This is an INTERLOCUTORY and NON-APPEALABLE ORDER. Signed by Judge Henry R. Wilhoit, Jr on 12/28/17.(KSS)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
ASHLAND
CIVIL ACTION NO. 16-151-HRW

PLAINTIFF,

LOUISA LODGING, LLC

MEMORANDUM OPINION AND ORDER

v.

FALLS CREEK, INC.

DEFENDANT.

This matter is before the Court upon Defendant Falls Creek, Inc. 's Partial Motion to
Dismiss Plaintiffs Amended Complaint [Docket No. 22]. The motion has been fully briefed by
the parties [Docket Nos. 22-1, 25 and 26]. For the reasons stated herein, the Court finds that the
Amended Complaint fails to state a claim under 42 U.S.C. § 1981or42 U.S.C. § 1982 upon
which relief can be granted. Therefore, Counts II and ill of the Amended Complaint will be
dismissed.
I.

This case arises from the purchase and sale of the Super 8 Motel in Louisa, Kentucky and
the appurtenant assignment of the property lease to the purchaser, between Louisa Lodgers, LLC
and Falls Creek, Inc. The purchaser, Louisa Lodgers, LLC, brought this civil action against the
seller, Falls Creek, Inc., alleging that Falls Creek, Inc. violated the terms of the Ground Lease
agreement and discriminated against its members on the basis of their national origin of the
members of its LLC, to-wit, South Asian.
Plaintiff filled its original Complaint against Falls Creek, Inc. in the Circuit Court of

Lawrence County, Kentucky. The case was removed to this Court by Defendant pursuant to 28
U.S.C. §§ 1331and1441. [Docket No. l]. Shortly thereafter, Defendant filed a Motion to
Dismiss the portions of the Plaintiffs Complaint which sought relief under Title VII of the
Federal Civil Rights Act of 1964 ("Title VII), the Immigration Reform and Control Act of 1986
("IRCA") and the Kentucky Constitution as such claims were not colorable under applicable
State and Federal law. [Docket No. 15]. In response to the motion, Plaintiff conceded that the
specific causes of action were not tenable and sought leave to amend its Complaint. [Docket Nos.
16 and 17]. This Court granted Plaintiff leave to amend its Complaint and overruled the
Defendant's motion as moot. [Docket No. 18].
Plaintiffs Amended Complaint seeks a declaration as to the parties' rights under the
Ground Lease agreement and alleges violations of 42 U.S.C. §§ 1981and1982. [Docket No 19].
Defendant seeks to dismiss Counts II and III of the Amended Complaint, which purport to
allege violations of 42 U.S.C. §§ 1981and1982. Specifically, in these Counts, Plaintiff alleges
that Defendant discriminated against its members upon the basis of national origin.

II.
Dismissal of a complaint is warranted under Fed.R.Civ.P. 12(b)(6) if it fails to state a
claim upon which relief can be granted. With respect to a motion to dismiss under Fed.R.Civ.P.
12(b)(6), the Sixth Circuit Court of Appeals explained in Estate of Ezra G. Smith v. United

States, 509 Fed.Appx. 436 (6th Cir. 2012) that:

[t]he Supreme Court held in Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007) that to survive a motion to dismiss under Rule 12(b)(6) a
complaint must contain (1) enough facts to state a claim to relief that

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is plausible; (2) more than a formulaic recitation of a cause of actions'
elements; and (3) allegations that suggest a right to relief above a
speculative level. (internal citation omitted) ... 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. (internal citation omitted) ... For a complaint
to survive a motion to dismiss, the non-conclusory factual content and
the reasonable inferences from that content, must be plausibly
suggestive of a claim entitling a plaintiff to relief. (internal citation
omitted) Where the well-pleaded facts do not permit the court to infer
more than the mere possibility of misconduct, the complaint has
alleged--but it has not show[n]--that the pleader is entitled to relief

Estate of Ezra G. Smith, 509 Fed.Appx. at 439.
"Conclusory assertions, e.g., that...[the] defendants engaged in 'outrageous' and
'unlawful' behavior ... are insufficient to state a claim that is plausible on its face." Ogle v.
Columbia Gas Transmission, LLC, 513 Fed.Appx. 520, 522-523 (foCir. 2013). The "complaint
must contain either direct or inferential allegations respecting all material elements to sustain a
recovery under some viable legal theory." Bishop v. Lucent Technologies, Inc.,520 F.3d 516, 519
(6th Cir. 2008) (internal citation omitted). As the Sixth Circuit stated in Bishop:

[c]onclusory allegations or legal conclusions masquerading as factual
allegations will not suffice. Even under Rule 12(b)(6), a complaint
containing a statement of facts that merely creates a suspicion of a
legally cognizable right of action is insufficient. (internal citations
omitted) The factual allegations must be enough to raise a right to
relief above the speculative level; they must state a claim to relief that
is plausible on its face.

Bishop, 520 F.3d at 519 (internal citations omitted) (emphasis original). "At the very least, trial

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and appellate courts should not have to guess at the nature of the claim asserted." Kafele v.
Lerner, Sampson & Rothfuss, 161 Fed.Appx. 487, 491 (6th Cir. 2005). See also
Scheid v. Fanny Farmer Candy Shops, Inc., 859 F.2d 434 (6th Cir. 1988)(holding that "more than

bare assertions of legal conclusions is ordinarily required to satisfy federal notice pleading
requirements.")

III.
Plaintiff alleges that Defendant discriminated and/or retaliated against its members upon
the basis of their national origin and, by doing so, Defendant ran afoul 42 U.S.C. §§ 1981 and
1982. [Docket No. 19, iii! 26-36].
The relevant paragraphs of the Amended Complaint allege:

That Louisa Lodging engaged in protected activity under 42 U.S.C.
§ 1981 when it complained to Falls Creek that its refusal to
approve an assignment of the Ground Lease from Louisa Lodging
to the prospective purchasers was unlawful discrimination on
the basis of ethnicity and national origin.
That Louisa Lodging engaged in protected activity under 42 U.S.C.
§ 1982 when it complained to Falls Creek that its refusal to
approve an assignment of the Ground Lease from Louisa Lodging
to the prospective purchasers was unlawful discrimination on
the basis of ethnicity and national origin.

Id. at

iii! 27 and 33 (emphasis added).
As defendant points out, Sections 1981 and 1982 apply to discrimination upon the basis

or race, not national origin. Courts, including the United States Supreme Court as well as the
Sixth Circuit have held the same time and time again. See, Jones v. Alfred H. Mayer Co., 392

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U.S. 409, 413 (1968) and Blank v. Cox, 2000 U.S. App. LEXIS 24005, at *3-4 (6th Cir. Sep. 21,
2000). See also, Ana Leon T v. Fed. Res. Bank, 823 F.2d 928, 931 (6th Cir. 1987)(
"discrimination based solely on the place or nation of a plaintiffs origin is not actionable under
§1981."); El-Zabet v. Nissan N Am., Inc., 211 F. App'x 460, 462 (6th Cir. 2006) "it is legally
impossible to state a claim for national-origin discrimination under section 1981 ).
Indeed, in its response to Defendant's motion, Plaintiff appears to concede that national
origin or ethnicity cannot be the basis for the claims alleged in Counts II and III of its Amended
Complaint.
Yet, Plaintiff maintains that it asserted a viable claim of racial discrimination and that the
motion should be overruled. The Court disagrees. Notably absent from the Amended Complaint
are any factual allegations regarding the alleged acts of discrimination.

Plaintiff makes no

reference to any statement or action by Defendant disparaging, or even mentioning, the skin
color, race, or any other alleged ethnic characteristic of its members. Plaintiff fails to
specifically denotes what Defendant said or did that supports the claims of discrimination.
Rather, Plaintiffs claim is a single conclusory allegation that Falls Creek imposed umeasonable
conditions on Plaintiffs lease assignment "on account of the national origin of the prospective
purchasers." Declaring that the Defendant discriminated against its members, without any
details, is not sufficient. The lone allegation of discrimination is a mere conclusory assertion or,
to quote Bishop, a "legal conclusion masquerading as a factual allegation." As set forth supra,

Twombly requires more.

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IV.
The Counts II and III of the Amended Complaint fail to pass Twombly muster.
Accordingly, IT IS HEREBY ORDERED that Defendant Falls Creek, Inc.'s Partial
Motion to Dismiss Plaintiffs Amended Complaint [Docket No. 22] be SUSTAINED and that
Counts II and III of the Amended Complaint be DISMISSED.
This is an INTERLOCUTORY and NON- APPEALABLE ORDER.
This 28 1h day of December, 2017.

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