Michael et al v. Boutwell et al

Filing 48

ORDER denying as moot 3 Motion to Dismiss for Failure to State a Claim and Motion for Sanctions; denying as moot 14 Motion to Dismiss for Failure to State a Claim. Signed by District Judge Debra M. Brown on 2/19/15. (jtm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
OXFORD DIVISION

SCOTT MICHAEL; and ROOSTER’S
BLUES HOUSE, LLC
V.

PLAINTIFF

NO. 3:14-CV-00116-DMB-SAA

CLINTON L. BOUTWELL; and THE
CHAR GRILLE SEAFOOD & STEAKS
LLC d/b/a OXFORD GRILLEHOUSE

DEFENDANTS

ORDER DENYING MOTIONS TO DISMISS
This contract dispute is before the Court on: (1) the Rule 12(b)(6) motions to dismiss of
Defendants Clinton L. Boutwell and the Char Grille Seafood & Steaks LLC d/b/a Oxford
Grillehouse, Doc. #3; Doc. #14; and (2) Defendants’ motion for sanctions, Doc. #3. Defendants
seek dismissal of the complaint and amended complaint filed by Plaintiffs Scott Michael and
Rooster’s Blues House, LLC.
I
12(b)(6) Standard
As a general matter, “[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). When a complaint falls short of this directive, a defendant may move to dismiss the
claim for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In
considering the interplay between Rule 8 and Rule 12, the United States Supreme Court has
explained that:
To survive a motion to dismiss [for failure to state a claim], a complaint must
contain sufficient factual matter, accepted as true, to state a claim to relief that is
plausible on its face. 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. The plausibility standard is not
akin to a probability requirement, but it asks for more than a sheer possibility that
a defendant has acted unlawfully. Where 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.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and punctuation omitted) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–58 (2007)). Under this standard, a “court must
accept all well-pleaded facts as true and view those facts in the light most favorable to the
plaintiff.” Harold H. Huggins Realty, Inc. v. FNC, Inc., 634 F.3d 787, 803 n.44 (5th Cir. 2011)
(internal quotation marks and punctuation omitted).
In addition to the standard articulated by Iqbal and Twombly, Rule 9(b) of the Federal
Rules of Civil Procedure requires that, “[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake.” This heightened pleading standard
is “supplemental to the Supreme Court’s recent interpretation of Rule 8(a) ….” U.S. ex rel.
Grubbs v. Kanneganti, 565 F.3d 180, 185 (5th Cir. 2009). As a supplement, Rule 9 requires
“simple, concise, and direct allegations of the circumstances constituting fraud, which … must
make relief plausible, not merely conceivable, when taken as true.” Id. at 185–86 (internal
quotation marks omitted).
II
Factual Allegations and Procedural History
A. The Parties and Relevant Property
Plaintiff Scott Michael owns and operates Plaintiff Rooster’s Blues House, LLC
(“Rooster’s”). Doc. #12 at ¶ 6. Together, Plaintiffs lease a three-story building located at 114
Courthouse Square, Oxford, Mississippi (“Building”). Id. The Building has an upstairs (second
floor), a downstairs (first floor), and a basement, with a fully equipped commercial kitchen on
the first floor. Id. at ¶¶ 6, 9.
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Prior to May 2013, Plaintiffs operated Rooster’s Blues House, a restaurant and bar in the
Building. Doc. #12 at ¶ 6. The business primarily served food on the first floor and alcohol on
the second floor. Id. Plaintiffs used the basement for storage of equipment. Id. Pursuant to the
terms of Rooster’s restaurant license, the premises was required to derive at least 25% of its
revenue “from the preparation, cooking and serving of meals ….” Miss. Code Ann. § 67-15(m)(i); see also Doc. #12 at ¶ 7.
Defendant Clint Boutwell operates Defendant The Char Grille Seafood & Steaks LLC
d/b/a Oxford Grillehouse (“Grillehouse”). Doc. #27-1.
B. The Sublease
In December 2012, Michael and Boutwell entered into negotiations regarding a potential
sublease of the first floor of the Building, including use of the commercial kitchen. Doc. #12 at
¶¶ 9, 12. During the course of the negotiations, Boutwell promised Michael that “he would cook
and provide food from a simpler menu to Rooster’s patrons upstairs.” Id at ¶ 12. Following
Boutwell’s promise, the parties agreed that they needed to check with the Mississippi Alcohol
Beverage Control Commission (“ABC”) regarding the proposed arrangement. Id.
Shortly after the decision to contact the ABC, Boutwell informed Michael that “he had
discussed [the] arrangement with the ABC and that they had approved it.” Doc. #12 at ¶ 12.
Boutwell made this statement “on the phone … and throughout a number of face-to-face
meetings held in the [B]uilding from before Christmas of December 201[2], up until about a
week before the lease was actually signed [on May 12, 2013].” Id.
“About a week before” May 12, 2013, the ABC informed the parties that the Grillehouse
would not be permitted to provide food to Rooster’s. Doc. #12 at ¶ 13. In response to the
ABC’s decision, Boutwell told Michael that “that he would install a small kitchen upstairs in

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Rooster’s and would provide someone to run it, and that Michael would pay him for this
service.” Id. at ¶ 14. Boutwell made these statements to Michael over the telephone and in
Michael’s office between the day ABC provided notice to the parties that the Grillehouse could
not provide food to Rooster’s and the day the lease was signed. Id. Boutwell allegedly made
these statements without “any intention of providing food to Rooster’s [and to put himself] in the
position of taking over the Plaintiffs’ business.” Doc. #12 at ¶ 16.
On May 12, 2013, the parties executed a sublease for part of the Building. Doc. #27-1.1
Under the terms of the sublease, Plaintiffs leased to the Grillehouse “Suite A,” described as “the
first floor, kitchen and basement” of the Building. Id. at ¶ 1. Plaintiffs retained control of the
second floor, identified as “Suite B.”
Of relevance here, the sublease further provided:
[Rooster’s] gives [Grillehouse] the option to serve its menu to customers … on
the second floor and/or balcony. Should [Grillehouse] decide to serve food, it
shall obtain permission from [Rooster’s] owner, Scott Michael, before proceeding
to serve in such a fashion. If [Grillehouse] is allowed to serve food in Suite B, it
shall be without any contingency or fee due to [Rooster’s]. [Grillehouse] shall not
serve alcohol of any type in Suite B and [Rooster’s] shall not serve alcohol in
Suite A. [Rooster’s] will always maintain alcohol sales in Suite B.
Doc. #27-1 at ¶ 25.
The sublease also contained a merger clause, providing:
Entire Agreement: This agreement constitutes the essential terms of the
Agreement between the parties for the purposes stated herein and no other offers,
agreements, understandings, warranties or representations exist between the
parties. Any additional terms of the Agreement shall be in writing, signed by
each owner, and made a part of this Sub-Lease as an addendum thereto.
Id. at ¶ 34.

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Documents “attache[d] to a motion to dismiss are considered to be part of the pleadings, if they are referred to in
the plaintiff’s complaint and are central to her claim.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498–
99 (5th Cir. 2000) (internal quotation marks omitted). The sublease is attached to Defendants’ motion to dismiss, is
referenced in the amended complaint, and is clearly central to Plaintiffs’ claims.

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C. Subsequent Promises and ABC Inspections
Despite numerous post-execution promises to comply with his promise to install a
kitchen, Boutwell repeatedly postponed the installation. Doc. #12 at ¶ 17. Plaintiff alleges that
he “rel[ied] upon Boutwell’s intentionally false statements and efforts to lull him to sleep on the
issue.” Id. at ¶ 18. As a result of this reliance, Rooster’s lost “a great deal of business [and fell]
far behind in establishing [the] necessary food sales for the months and for the year.” Doc. #12
at ¶ 19.
Additionally, in the months following the execution of the sublease, Boutwell would
“come upstairs to have drinks and visit with Michael and others.” Doc. #12 at ¶ 21. Boutwell
used these visits “to scout out anything he could think of that he could report to [the ABC]
whether it was accurate or not, to try and get the Plaintiffs in trouble.” Id.
Sometime between May and July of 2013, Boutwell called an ABC agent and reported
that Rooster’s was not serving food. Doc. #12 at ¶ 22. Later, the agent came into Rooster’s and
stated that he had heard Rooster’s “didn’t even have a loaf of bread behind the counter.” Id.
Approximately two months after the execution of the sublease, Rooster’s began
construction of a small upstairs kitchen. Doc. #12 at ¶¶ 18, 24. After a few weeks of operation,
the fryer in the small kitchen malfunctioned and Rooster’s sent it off for a five or six day repair.
Id. at ¶ 24.
When the fryer was sent for repair, Boutwell informed the ABC of the problem. Doc.
#12 at ¶ 25. While the fryer was still out for repair, ABC agents conducted an inspection of
Rooster’s kitchen and an audit of Rooster’s food sales. Id. During the inspection, an ABC agent
informed Michael that the ABC “acted on reports of problems.” Id. at ¶ 26.

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After the second ABC inspection, Rooster’s contracted with a restaurant across the street
to cook food in the upstairs kitchen. Doc. #12 at ¶ 28. Although this arrangement worked “for a
short period,” the kitchen soon experienced another equipment problem. Id. While dealing with
this new problem, the restaurant then responsible for food preparation began bringing food from
its premises to Rooster’s. Id. At the time, Boutwell informed “a number of people that he knew
it was going to happen, and that he was going to make a video of it happening.” Id. at ¶ 29. The
food transportation continued until an ABC agent came to Rooster’s and informed Rooster’s
employees that a video had surfaced of the restaurant carrying food across the street and that “it
was likely that Rooster’s ABC license would not be renewed.” Id. at ¶ 30.
Sometime later, the ABC conducted a second audit of Rooster’s business. Doc. #12 at ¶
34. The audits required Rooster’s “to spend a great deal of money to prepare for [them].” Id.
D. Boutwell’s Public Statements
In the past, Boutwell told “a number of people words to the effect that he owned … the
ABC and that they would do whatever he wanted.” Doc. #12 at ¶ 23. Boutwell also told people,
including Michael, that he “wanted to get Rooster’s shut down so that he could own the bar.” Id.
at ¶ 32. To this end, Boutwell told ABC agents and others “that Rooster’s intentionally serves
minors, that Rooster’s serves liquor after hours, that its managers get drunk at work, that Michael
himself is a drunk, and that Plaintiffs intentionally violate the law in other ways.” Id. at ¶ 31.
Plaintiffs allege that Boutwell made the statements regarding Rooster’s compliance with the law
“know[ing] the falsity of these statements or [without] concern[] whether they are true or not
….” Id.
Similarly, acting with the intent to take over the Building lease, Boutwell made numerous
statements to Plaintiffs’ landlord designed to “poison the relationship” and suggest that Plaintiffs

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would be unable to pay their bills. Doc. #12 at ¶ 37. Finally, Boutwell made statements “to
business owners in the community, to the ABC and its agents, and to various others about the
Plaintiffs’ allegedly criminal activities … inability to pay bills and other problems ….” Id. at
¶ 38. As a result of these statements, Plaintiffs suffered injury. Id.
E. Procedural History
On May 30, 2014, Plaintiffs filed this action. Doc. #1. On July 16, 2014, Defendants
filed a motion to dismiss and for sanctions. Doc. #3. On August 5, 2014, Plaintiffs filed a multicount amended complaint.2 Doc. #12. On August 22, 2014, Defendants filed a second motion to
dismiss. Doc. #14.
III
Motion to Dismiss Original Complaint and for Sanctions
“[A]n amended complaint supersedes [an] original complaint and renders it of no legal
effect unless the amended complaint specifically refers to and adopts or incorporates by
reference the earlier pleading ….” King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994). When a
motion to dismiss has been filed against a superseded complaint, the proper course is to deny the
motion to dismiss as moot. See, e.g., Sartori v. Bonded Collect Servs., 2:11-cv-030, 2011 WL
3293408, at *1 (N.D. Miss. Aug. 1, 2011) (“The defendant’s March 26, 2011 motion to dismiss
for lack of personal jurisdiction should be denied as moot since the plaintiff filed an Amended
Complaint subsequent to the filing of the first motion to dismiss.”); Fit Exp., Inc. v. Circuit-Total
Fitness, No. 1:07-cv-62, 2008 WL 4450290, at *1 (N.D. Miss. Sep. 29, 2008) (“Because
Plaintiff’s Counterclaims were amended, Defendants’ previously filed Motion to Dismiss … is
denied as moot”).

2

Rule 15(a) of the Federal Rules of Civil Procedure authorizes a party to amend its pleading once as a matter of
course within 21 days after service of a motion under Rule 12(b).

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Here, insofar as the amended complaint does not reference or incorporate the original
complaint, the latter has been superseded by the former. Accordingly, the motion to dismiss the
original complaint, Doc. #3, must be denied as moot. For the same reason, insofar as the motion
for sanctions relates to a superseded complaint, such motion will be denied as moot.3
IV
Motion to Dismiss Amended Complaint
The amended complaint does not separate its claims into separate counts. However,
based on the language of the complaint and subsequent filings, it appears Plaintiffs assert the
following claims: (1) fraud; (2) fraud in the inducement; (3) breach of contract; (4) “intentional
interference with contracts and prospective contracts;” (5) defamation; (6) defamation per se; and
(7) violation of due process. Defendant seeks dismissal of all of Plaintiffs’ claims on the
grounds that: (1) the allegations of fraud are not pled with particularity; (2) the amended
complaint does not allege facts to support liability under any of Plaintiffs’ claims. Doc. #15.
As explained above, Rule 9(b) of the Federal Rules of Civil Procedure requires that
allegations of fraud be pled with particularity. “Rule 9(b) serves three purposes: first, the Rule
ensures that defendants receive fair notice of the plaintiffs’ claims; second, it protects the
defendants’ reputations from unfounded allegations of improper conduct, and third, the Rule
helps prevent the institution of strike suits.” Cypress/Spanish Ft. I, L.P. v. Prof. Serv. Indus.,
Inc., 814 F. Supp. 2d 698, 712 (N.D. Tex. 2011) (internal punctuation and quotation marks
omitted omitted).
“[I]t is allegations of fraud, not claims of fraud, to which Rule 9(b) applies.” Pirelli
Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 447 (7th Cir.
2011). Accordingly, “whether the rule applies will depend on the plaintiffs’ factual allegations.”
3

Defendants concede that the motion for sanctions and motion to dismiss the original complaint were mooted by the
filing of the amended complaint. See Doc. #27 at 13.

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Borsellino v. Goldman Sachs Group, Inc., 477 F.3d 502, 507 (7th Cir. 2007) (citing In re Daou
Sys., Inc., 411 F.3d 1006, 1027–28 (9th Cir. 2005)); see also Benchmark Elecs., Inc. v. J.M.
Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003) (applying Rule 9(b) to “negligent
misrepresentation claims … based on the same set of alleged facts [as fraud claim]”).
Here, the amended complaint contains 32 separate factual allegations covering the array
of conduct described above.

Following these factual allegations, the amended complaint

includes twelve “legal allegations,” which plead various causes of action. Rather than linking
causes of action to particular factual allegations, Plaintiffs simply allege in conclusory fashion
that, in each instance, Defendants “conduct constitutes” a particular tort or contract claim. See,
e.g., Doc. #12 at ¶ 39 (“The Defendants’ conduct constitutes fraud in the inducement of the
sublease contract.”); ¶ 41 (“The Defendants conduct in harming the Plaintiffs’ sales constitutes
intentional interference with contracts and prospective contracts.”); ¶ 42 (“The Defendants’
conduct constitutes defamation.”); ¶ 43 (“The Defendants’ conduct constitutes defamation per
se.”); ¶ 44 (“The Defendants’ conduct constitutes fraud.”); ¶ 47 (“The Defendants actions
constitute a taking in violation of the Plaintiffs’ procedural due process rights under the 14th
amendment to the United States Constitution”). Put differently, the amended complaint wholly
fails to plead which alleged facts support which causes of action.
District courts have a “supervisory obligation to sua sponte order repleading pursuant to
Federal Rule of Civil Procedure 12(e) when a shotgun complaint fails to link adequately a cause
of action to its factual predicates.” Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 1275
(11th Cir. 2006). As this Court has previously explained:

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Shotgun pleadings, which are prohibited by the Federal Rules, are characterized
as complaints containing 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.
Sahlein v. Red Oak Capital, Inc., No. 3:13-cv-67, 2014 WL 3046477, at *3 (N.D. Miss. July 3,
2014) (internal quotation marks and citations omitted). Shotgun complaints are problematic
because they force a “trial court to sift out the irrelevancies, a task that can be quite onerous.” Id.
(internal punctuation omitted)
Beyond forcing the Court to sift through irrelevant factual pleadings for each cause of
action, Plaintiff’s failure to link his claims to his factual allegations creates a more fundamental
problem. Without sufficient factual allegations for each claim, the Court cannot determine
which claims sound in fraud. Without the ability to determine which claims sound in fraud, the
Court cannot ascertain which claims require application of 9(b)’s heightened pleading standard.
Under these circumstances the Court, pursuant to Rule 12(e), will sua sponte order
Plaintiffs to re-plead their complaint.

Thus, Defendants’ motion to dismiss the amended

complaint will be denied as moot. Plaintiffs will be allowed fourteen days from the entry of this
order to file a second amended complaint.4
V
Conclusion
For the reasons above, Plaintiffs are DIRECTED to file a second amended complaint
within fourteen days from the entry of this order. Furthermore: (1) Defendants’ motion to
dismiss, Doc. #3, is DENIED as MOOT; (2) Defendants’ motion for sanctions, Doc. #3, is

4

The Fifth Circuit has recognized that a private party may be liable as a state actor for filing a complaint if the
actual state actor who harmed the plaintiff: (1) “acted in accordance with a ‘preconceived plan’ to take the action
“merely because [the action] was designated … by the private party[;]” and (2) the state actor did so “without
independent investigation.” Sims v. Jefferson Downs Racing Ass’n, Inc., 778 F.2d 1068, 1078–79 (5th Cir.
1985). Plaintiffs are cautioned that a failure to adequately plead sufficient facts to support such alleged state action
in this case will likely result in the dismissal of this action for lack of jurisdiction.

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DENIED as MOOT; and (3) Defendants’ motion to dismiss the amended complaint, Doc. #14,
is DENIED as MOOT.

SO ORDERED, this 19th day of February, 2015.
/s/ Debra M. Brown
UNITED STATES DISTRICT JUDGE

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