Sea Song Farms, LLC v. GeoStar Corporation

Filing 19

MEMORANDUM OPINION & ORDER: (1) GRANTING IN PART & DENYING IN PART pla's 11 MOTION for Partial Summary Judgment; (2) GRANTING pla's 14 MOTION to Seal Document; (3) DENYING pla's 17 MOTION for Hearing re 11 MOTION for Partial Summary Judgment; (4) pla shall SHOW CAUSE within 21 days why its claims for conversion & unjust enrichment should not be dismissed for failure to state a claim. Signed by Judge Joseph M. Hood on 9/30/14.(KJR)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
SEA SONG FARMS, LLC,

)
)
)
)
)
)
)
)
)

Plaintiff,
v.
GEOSTAR CORPORATION,
Defendant.

Civil Case No. 10-cv-23-JMH

MEMORANDUM OPINION & ORDER

***
This matter is before the Court upon the Motion for Partial
Summary Judgment of Plaintiff Sea Song Farms, LLC [DE 11], which
shall be sealed in the absence of any objection to the Motion to
Seal Document [DE 14].
Counts

I

Complaint.

(Breach

of

Plaintiff seeks relief with respect to
Contract)

and

II

(Conversion)

of

its

Defendant GeoStar Corporation has filed a Response

stating its objection to the Motion for Partial Summary Judgment
[DE 15], and Plaintiff has filed a Reply [DE 16] in further
support of its Motion.

No hearing on the motion is necessary,

and the request for same [DE 17] shall be denied.
Sea Song Farms, LLC (“Sea Song”) is a party to a Settlement
Agreement and Release with GeoStar Corporation (“GeoStar”).

In

Count I of the Complaint [DE 1], Plaintiff avers a breach of
their contract.

The parties are in agreement that, in January

2009, they entered into a legally binding, written Settlement
Agreement and Release (“Agreement”) supported by consideration.

As

part

of

that

Plaintiff

Agreement,

1,813,141

Defendant

shares

of

agreed

to

transfer

non-restricted,

to

freely

transferable Gastar Exploration, Ltd. common stock (AMEX: GST)
(hereinafter referred to as the “Gastar Stock”) to Plaintiff on
or

before

December

Plaintiff

5%

31,

interest,

2009.

GeoStar

compounded

also

annually,

agreed

on

the

to

pay

principal

amount of $4,626,282 from June 1, 2008 through December 31,
2009,

for

a

Payment”).

total

It

is

of

$373,049.44

undisputed

that

(hereinafter,
Defendant

has

the

“Cash

failed

to

transfer the shares of Gastar Stock or to make the Cash Payment
to Plaintiff.
Defendant

has

admitted

liability

with

respect

to

Plaintiff’s breach of contract claim and concedes that Plaintiff
is owed money under the settlement agreement at issue this case.
[See Answer, DE 8, par. 6.]
that

it

owes

Plaintiff

Defendant Geostar does not dispute

$2,110,038.52

(the

$373,049.44

cash

payment plus the closing value of 362,628.20 Gastar shares on
December

31,

2009,

$1,736,989.08)).
Accordingly,

(362,628.2

[Id.;

there

being

see
no

shares

also
issue

times

Response,
of

DE

material

judgment is appropriate with respect to Count I.

$4.79
15,
fact,

equals
p.

2.]

summary

See Fed. R.

Civ. P. 56(a) and (c); Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986) (holding that, under Fed. R. Civ. P. 56, moving party
bears initial burden of specifying basis for its motion and
2

identifying that portion of the record that demonstrates the
absence

of

a

genuine

issue

of

material

fact);

Anderson

v.

Liberty Lobby, Inc., 477 U .S. 242, 247–48 (1986) (holding that,
under Rule 56, once the moving party satisfies its burden, nonmoving

party

thereafter

must

produce

specific

facts

demonstrating a genuine issue of fact for trial); Matsushita
Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986) (holding that, although court must review evidence in the
light most favorable to the non-moving party on motion under
Rule 56, the non-moving party must do more than merely show that
there is some “metaphysical doubt as to the material facts).
Next, the Court is not persuaded that summary judgment is
due to Plaintiff upon its claim for conversion.
law,

“[c]onversion

is

an

intentional

tort

that

Under Kentucky
involves

the

wrongful exercise of dominion and control over the property of
another.” Jones v. Marquis Terminal, Inc., No. 2013–CA–000702–
MR, 2014 WL 2155255, *3-4 (Ky. Ct. App. May 23, 2014) (citing
St. Auto. Mutual Ins. Co. v. Chrysler Credit Corp., 792 S.W.2d
626, 627 (Ky. Ct. App. 1990); Oliver v. J.J.B. Hilliard, Nos.
2010–CA–001138–MR,

2010–CA–001236–MR,

2010–CA–001428–MR,

2010–

CA–001479–MR, 2013 WL 762593 (Ky. Ct. App. Mar. 1, 2013)).

To

succeed on a claim of conversion, Plaintiff must demonstrate
that:

3

(1) the plaintiff had
converted property;

legal

title

to

the

(2) the plaintiff had possession of the
property or the right to possess it at the
time of the conversion;
(3) the defendant exercised dominion over
the property in a manner which denied the
plaintiff's rights to use and enjoy the
property and which was to the defendant's
own use and beneficial enjoyment;
(4) the defendant intended to interfere with
the plaintiff's possession;
(5) the plaintiff made some demand for the
property's
return
which
the
defendant
refused;
(6) the defendant's act was the legal cause
of the plaintiff's loss of the property; and
(7) the plaintiff suffered
loss of the property.
Id.

(citing

McClendon,

Ky.
157

Ass'n
S.W.3d

of

Counties

626,

632

n.

damage

All
12

by

Lines
(Ky.

the

Fund

Trust

v.

2005);

Meade

v.

Richardson Fuel, Inc., 166 S.W.3d 55 (Ky. Ct. App. 2005)).

As a

practical matter, the Court is not persuaded that Plaintiff has
demonstrated that it had legal title to the shares of Gastar or
the cash payment due under Kentucky law since neither item was
transferred

to

Plaintiff,

even

though

contractual right to obtain those shares.
element

of

the

cause

of

action

conversion in Count II.

4

would

Plaintiff

had

a

The failure of this
defeat

its

claim

for

Also,

upon

its

own

motion,

the

Court

considers

whether

Plaintiff may also recover under a theory of unjust enrichment
or quantum meruit, as claimed in Count III of its Complaint, in
light

of

the

fact

that

judgment

as

a

matter

of

law

appropriate with respect to its breach of contract claim.
Court concludes it may not.

is
The

See Coddell Constr. Co. v. Com.,

566 S.W.2d 161, 165 (Ky Ct. App. 1997) (“The doctrine of unjust
enrichment has no application in a situation where there is an
explicit contract which has been performed.”); see also Fed. R.
Civ.

P.

(8)(2)(2)

(permitting

pleading

in

the

alternative);

Boardman Steel Fabricators, Ltd. V. Andritz, Inc., Civil Case
No.

14-2-GFVT,

2014

WL

2159743,

*2

(E.D.

Ky.

May

23,

2014)

(holding that plaintiff may plead quantum meruit as alternative
theory of recovery where breach of contract is also pleaded).
The Court raises the arguments above with respect to the
conversion and unjust enrichment claims for the first time in
this matter and, in order to assure Plaintiff an opportunity to
address
claims

them,
for

will

require

conversion

and

Plaintiff
unjust

to

show

enrichment

cause
should

why
not

its
be

dismissed for failure to state a claim, pursuant to Fed. R. Civ.
P. 12(b)(6), and final judgment entered in this matter.

See

Fed. R. Civ. P. 12(b)(6); Ashcroft v. Iqbal, 129 S.Ct. 1937,
1949

(2009)

(holding

that

court

“must

determine

whether

the

complaint alleges sufficient factual matter, accepted as true,
5

to state a claim to relief that is plausible on its face” and
that plaintiff must plead “factual content that allows the court
to draw the reasonable inference that the defendant is liable
for the misconduct alleged.”) (internal citation and quotation
marks omitted).
Accordingly, IT IS ORDERED:
(1)

That

the

Motion

for

Partial

Summary

Judgment

of

Plaintiff Sea Song Farms, LLC [DE 11] is GRANTED IN PART and
DENIED IN PART;
(2)

That Plaintiff’s Motion to Seal Document [DE 14] is

GRANTED.
(3)

That the request for a hearing on the motion [DE 17]

is DENIED.
(4) That Plaintiff shall

SHOW CAUSE

why its claims for

conversion and unjust enrichment should not be dismissed for
failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(6),
and final judgment entered in this matter within twenty-one (21)
days of entry of this order.
This the 30th day of September, 2014.

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