Peela v. BrownIT, Inc.

Filing 9

MEMORANDUM AND ORDER denying 6 Defendant BrownIT's Motion to Dismiss. Signed by Judge Richard D Bennett on 8/27/2015. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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JYOTHI PEELA,
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Plaintiff,

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v.

Civil Action No. RDB-14-2482

BROWNIT CORPORATION,1

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Defendant.
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MEMORANDUM ORDER

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Plaintiff Jyothi Peela (“Peela” or “Plaintiff”), as successor in interest2 to San Systems,
Inc. (“San Systems”), brings this diversity action against Defendant BrownIT Corporation
(“BrownIT” or “Defendant”), alleging a breach of contract claim under Pennsylvania law.
San Systems, a forefeited Maryland corporation, formerly “engaged in the temporary staffing
services business providing temporary personnel to customers with staffing needs.” Compl.
Ex. A ¶ 1, ECF No. 1-1 (Contract). San Systems entered into a contract under Pennsylvania
law with BrownIT, pursuant to which San Systems agreed to provide BrownIT with
temporary employees for a specified period. Id. ¶ 5. Plaintiff alleges that Defendant breached
the subject contract by failing to pay certain invoices submitted by San Systems to
Defendant. Compl. ¶¶ 8-9, ECF No. 1.
Plaintiff incorrectly names Defendant BrownIT Corporation as “BrownIT, Inc.” in the Complaint (ECF
No. 1). The Clerk of the Court is directed to re-caption this action in accordance with this correction.
2 Defendant contends that Plaintiff cannot show that she is the successor in interest to San Systems, yet this
argument is unpersuasive. Under Maryland law, a director and/or trustee of a corporation may sue in his own
name or in the name of the corporation. Md. Code Ann., Corps. & Ass’ns § 3-515(c). When a corporation
forfeits its corporate charter, the directors of the forfeited corporation “wind up” the business of the
corporation, holding its assets for the benefit of any creditors and trustees. Cloverfield Imp. Ass’n, Inc. v.
Seabreeze Properties, Inc., 362 A.2d 675 (Md. Ct. Spec. App. 1976), aff’d 373 A.2d 935 (Md. 1977). Peela, a
director and trustee of San Systems, see Pl.’s Resp. in Opp., 7, ECF No. 7, may sue on behalf of San Systems.
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Currently pending is Defendant BrownIT’s Motion to Dismiss (ECF No. 6). The
parties’ submissions have been reviewed and no hearing is necessary. See Local Rule 105.6
(D. Md. 2014). Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint
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 12(b)(6) of the Federal Rules of Civil Procedure
authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be
granted. The purpose of Rule 12(b)(6) is “to test the sufficiency of a complaint and not to
resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”
Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006).
The Supreme Court’s recent opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), “require that complaints in civil actions be
alleged with greater specificity than previously was required.” Walters v. McMahen, 684 F.3d
435, 439 (4th Cir. 2012) (citation omitted). In Twombly, the Supreme Court articulated “[t]wo
working principles” that courts must employ when ruling on Rule 12(b)(6) motions to
dismiss. Iqbal, 556 U.S. at 678. First, while a court must accept as true all the factual
allegations contained in the complaint, legal conclusions drawn from those facts are not
afforded such deference. Id. (stating that “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice” to plead a claim. Second, a
complaint must be dismissed if it does not allege “a plausible claim for relief.” Iqbal, 556
U.S. at 679.
In moving to dismiss the subject Complaint, BrownIT does not contend that Peela’s
allegations are not plausible, nor that they are inadequately pleaded. Instead, BrownIT argues
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solely that the general four-year statute of limitations under Pennsylvania law, 42 Pa. Stat.
and Cons. Stat. Ann. § 5525(a)(8) applies, rather than the twenty-year statute of limitations
for a written contract under seal, 42 Pa. Stat. and Cons. Stat. Ann. § 5529(b). Defendant
asserts that, although the contract recites the parties’ intent to sign under seal, a seal was not
affixed to the contract.
A defendant may raise the statute of limitations as a bar to the plaintiff’s claims as an
affirmative defense. Dean v. Pilgrim’s Pride Corp., 395 F.3d 471, 474 (4th Cir. 2005). The
defendant bears the burden of establishing a statute of limitations defense. Goodman v.
Praxair, Inc. 494 F.3d 458, 464 (4th Cir. 2007). As a motion to dismiss pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure “tests the sufficiency of the complaint,” that
motion “generally cannot reach the merits of an affirmative defense, such as the defense that
the plaintiff’s claim is time-barred.” Id. To properly raise a statute of limitations defense in a
motion to dismiss, the complaint must include allegations supporting this time bar. Id. In
other words, a district court will reach a statute of limitations defense if the “time bar is
apparent on the face of the complaint.” Dean, 395 F.3d at 474 (citing Bethel v. Jendoco
Construction Corp., 570 F.2d 1168 (3d Cir. 1978).
In this case, BrownIT has not, at this stage of the proceedings, met its burden of
establishing a statute of limitations defense. Defendant must show that the contract was not
signed under seal, but such allegation is not supported on the face of the Complaint. In fact,
the parties recite that they are signing the contract under seal. Discovery is necessary to
determine which statute of limitations applies. At the very least, this inquiry requires the

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production of the original document. The Complaint does not contain allegations sufficient
to establish that Peela’s claim is time-barred under Pennsylvania law.
Accordingly, it is this 27th day of August, 2015, ORDERED that:
1. Defendant BrownIT’s Motion to Dismiss (ECF No. 6) is DENIED;
2. The Clerk of the Court re-caption this case as “Jyothi Peela v. BrownIT
Corporation;”
3. The Clerk of the Court transmit copies of this order to Counsel.

____/s/_______________________
Richard D. Bennett
United States District Judge

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