Perdue Properties, LLC et al v. Diamond P Enterprises, Inc. et al

Filing 40

ORDER granting 37 Motion to Strike ; denying 9 Motion to Dismiss Signed by Honorable David C. Bramlette, III on 10/23/2015 (ECW)

IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
PERDUE PROPERTIES, LLC, ET AL.
VS.

PLAINTIFFS

CIVIL ACTION NO. 5:15-cv-47(DCB)(MTP)

UNITED STATES OF AMERICA, ET AL.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This cause is before the Court on defendants Scott Lindsey
(“Lindsey”)’s and John Andrew Griffin (“Griffin”)’s motion to
dismiss (docket entry 9), to which joinder has been filed by
defendant Gibson Real Estate, Inc., d/b/a Gibson Realty & Land
Company (“Gibson”) (docket entry 11); and on the plaintiffs’ motion
(docket entry 37) to strike exhibit “B” to defendants’ rebuttal
(docket entry 35).

Having carefully considered the motions and

responses, the memoranda of the parties and the applicable law, and
being fully advised in the premises, the Court finds as follows:
As Lindsey, Griffin and Gibson have moved for relief under
Rule 12(b)(6), the “court accepts ‘all well-pleaded facts as true,
viewing them in the light most favorable to the plaintiff.’”
Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d
464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322,
324 (5th Cir. 1999)). However, “the tenet that a court must accept
as

true

all

of

the

allegations

inapplicable to legal conclusions.

contained

in

a

complaint

is

Threadbare recitals of the

elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007)).

To overcome a Rule 12(b)(6) motion, the plaintiffs must

plead “enough facts to state a claim to relief that is plausible on
its face.”

Twombly, 550 U.S. at 570. “Factual allegations must be

enough to raise a right to relief above the speculative level, on
the assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Id. at 555 (citations and footnote
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.”
Iqbal, 556 U.S. at 678.
The Supreme Court’s examination of the issue in Iqbal provides
a framework for examining the sufficiency of a complaint.

First,

the district court may “begin by identifying pleadings that,
because they are no more than conclusions, are not entitled to the
assumption of truth.”

Id.

Second, “[w]hen there are well-pleaded

factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to
relief.”

Id.

According to the plaintiffs’ Complaint, defendants Lindsey and
Griffin formed 17, LLC, which marketed for sale, through defendant
Gibson,

certain

real

property.

Complaint,

¶¶

9,

17.

plaintiffs agreed to purchase the property for $320,000.

2

The
Id., ¶

21.

The transaction was closed on or about June 21, 2012.

Id.

On

September 4, 2012, the National Park Service put the plaintiffs on
notice that it was investigating whether the United States was the
actual owner of the property.

Id. at ¶ 28.

Sometime around the

same time period, Lindsey and Griffin allowed 17, LLC to become
administratively dissolved, and directly and indirectly distributed
all the money held by 17, LLC to themselves, rendering 17, LLC
insolvent.
being

Id. at ¶¶ 9, 42.

sued

individually,

The plaintiffs contend that after
Lindsey

and

Griffin

filed

for

reinstatement of 17, LLC, and now seek to stand behind its personal
liability shield to protect the economic benefits they received by
rendering it insolvent. Plaintiffs’ Response to Motion to Dismiss,
p. 2 (citing Lindsey and Griffin’s Memorandum in Support of their
Motion to Dismiss, p. 3, n.2).
The plaintiffs have filed a quiet title action against the
United States, and the United States has filed a counter-claim
seeking to be named fee simple owner of the property.

Complaint,

¶¶ 25-31; United States’ Counterclaim (docket entry 6, p. 7).

The

plaintiffs also plead that on or about June 21, 2012, they paid the
sum of $320,000 to 17, LLC., and received in return warranty deeds
from 17, LLC.

Id., ¶¶ 17, 21.

Under Mississippi law, 17, LLC’s

conveyance included the covenants of “seizing, power to sell,
freedom from encumbrances, quiet enjoyment and warranty of title.”
Miss. Code Ann. § 89-1-33.

3

The plaintiffs have sued 17, LLC, Lindsey and Griffin to
defend their title, and have sued Lindsey and Griffin on grounds of
unjust enrichment.

Complaint, ¶ 32.

Alternatively, in the event

the United States is named owner of the property, the plaintiffs
have sued Lindsey and Griffin for unjust enrichment, and for 17,
LLC’s breach of warranty deed covenants and breach of contract.
Id., ¶¶ 41-43.

The plaintiffs have also sued Lindsey and Gibson

for

misrepresentation,

negligent

fiduciary duty.

and

Lindsey

for

breach

of

Id., ¶¶ 44-45.

The plaintiffs have pled that Lindsey and Griffin drained the
assets of 17, LLC, leaving the plaintiffs without recourse against
17, LLC.

On this basis, the plaintiffs seek to hold Lindsey and

Griffin liable for 17, LLC’s breaches, under the theory that
Lindsey

and

Griffin

personally

took

the

consideration

plaintiffs paid 17, LLC for the promises made by 17, LLC.
the plaintiffs claim that limited liability does not apply.

the
Thus,
The

plaintiffs also bring claims against Lindsey and Griffin under the
Mississippi Limited Liability Company Act, Miss. Code Ann. §§ 7929-101, et seq.
The plaintiffs sue defendants Lindsey and Gibson for negligent
misrepresentation, which consists of (1) a misrepresentation of a
fact; (2) that the representation is material; (3) that the person
charged with negligence failed to exercise that degree of diligence
and expertise the public is entitled to expect of such persons; (4)

4

that plaintiffs reasonably relied upon the misrepresentation; and
(5) that plaintiffs suffered damages as a direct and proximate
result of such reliance.
1360 (Miss. 1990).

Bank of Shaw v. Posey, 573 So.2d 1355,

Lindsey and Gibson claim that the plaintiffs’

allegations fail because the alleged representations are related to
future conduct.

However, the plaintiffs allege that they were

promised “good title,” i.e., that Lindsey represented to the
plaintiffs that 17, LLC owned fee simple title to the property.
Lindsey and Gibson also argue that the plaintiffs have not alleged
that Lindsey knew or had reason to know that his statements were
false. The relevant element of negligent misrepresentation is “(3)
that the person charged with negligence failed to exercise that
degree of diligence and expertise the public is entitled to expect
of such persons.”

Id.

The plaintiffs allege that Lindsey, as a

real estate agent, had a duty to his clients to recognize and
investigate

potential

ownership

issues,

especially

property abuts a river or other changing waterway.

when

the

Plaintiffs’

Response, p. 8.
Finally, the plaintiffs state a claim for breach of fiduciary
duty against Lindsey.

The Complaint alleges that Lindsey was

manager of 17, LLC and served as real estate agent for both 17, LLC
and the plaintiffs.

The plaintiffs also plead that they are now

defending their title to the property they purchased from Lindsey
and 17, LLC, against claims of the United States, and asserting a

5

breach of fiduciary duty against Lindsey.
The

Court

finds

that

the

plaintiffs’

Complaint

contains

well-pleaded factual allegations, which the Court assumes are true
for purposes of Lindsey, Griffin and Gibson’s motion to dismiss;
and the Court further finds that the allegations plausibly give
rise to an entitlement to relief in the event the United States is
declared fee simple owner of the property.

The defendants have

failed to meet their burden under Fed.R.Civ.P. 12(b)(6), and their
motion shall therefore be denied.
The plaintiffs have also filed a motion to strike exhibit “B”
to defendants’ rebuttal, which is a survey of Section 16, T4N, R1E,
Amite County, Mississippi.

The survey is not properly part of the

Rule 12(b)(6) record, and the Court chooses not to convert the
defendants’ motion to one for summary judgment.

The plaintiffs’

motion to strike shall therefore be granted, and the defendants
will be allowed to present the exhibit at the summary judgment
stage of this case.
Accordingly,
IT IS HEREBY ORDERED that the motion to dismiss (docket entry
9) by defendants Scott Lindsey and John Andrew Griffin, joined in
by Gibson Real Estate, Inc., is DENIED;
FURTHER ORDERED that the plaintiffs’ motion (docket entry 37)
to strike exhibit “B” to defendants’ rebuttal is GRANTED, inasmuch
as the survey is not properly part of the Rule 12(b)(6) record, and
6

the defendants will be allowed to present the exhibit at the
summary judgment stage of this case.
SO ORDERED, this the 23rd day of October, 2015.

/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

7