Hilbill Properties, LLC v. Jacobson Companies
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendant Jacobson's Motion to Dismiss [ECF No. 9 ] is DENIED. IT IS FURTHER ORDERED that Defendant Jacobson's Motion for a More Definite Statement is GRANTED. Hilbill's amended compl aint, to be filed in twenty (20) days, shall state in separate counts the breaches and damages occurring under each individual lease. (Amended/Supplemental Pleadings due by 11/18/2013.) Signed by District Judge E. Richard Webber on October 29, 2013. (BRP)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
HILBILL PROPERTIES, LLC,
JACOBSON COMPANIES d/b/a,
JACOBSON LOGISTICS COMPANY, LC,
Case No. 4:13CV01663 ERW
MEMORANDUM AND ORDER
This matter comes before the Court on “Motion of Jacobson Logistics Company, LC for
Dismissal and Other Relief Pursuant to FRCP 10(b), 12(b)(6), and 12(e)” [ECF No. 9].
On or around July 1, 2000, Hilbill Properties, LLC (“Hilbill”), a Missouri Limited
Liability Company, entered into three lease agreements (collectively, “Leases”) for portions of its
property located at 7140 North Broadway, St. Louis, MO 63147 (“Property”) [ECF No. 2]. The
lessees of the Property were related companies Arthur Wells, Inc.; National Logistics, Inc.; and
Warehouse Specialists, Inc. (collectively, “Original Lessees”). Each of the Original Lessees
individually signed one of the Leases. The Leases had substantially the same terms, with the
exception that rental amounts and the square footage covered under each lease differed [ECF
Nos. 2-1 at 1-4, 2-2 at 1-4, 2-3 at 1-4]. The Leases required Original Lessees to maintain and
repair their respective portions of the Property, and to present the Property to Hilbill in a
condition similar to its condition when the Leases began. The Leases also required the Original
Lessees to pay, in addition to rent, operating expenses, real estate taxes, and utilities for the
Property for each month of the lease.
After the Leases were signed, three amendments were made to the Leases [ECF Nos. 21at 5-8; 2-2 at 5-8; 2-3 at 5-8]. These amendments also contained substantially the same terms
for each of the Leases. The first amendment to the Leases, made on November 12, 2004,
extended the lease term and modified maintenance allocations between Hilbill and the Original
Lessees. The second amendment, made on June 15, 2005, linked the termination date of each
lease to the end of a sublease agreement, between Original Lessee Warehouse Specialists, Inc.
and Prestige Brands, concerning leased warehouse space at the Property. The third amendment,
made on February 22, 2008, required Original Lessees to name Hilbill as a named insured on
their insurance policies.
Subsequently, Jacobson Logistics Company, LC (“Jacobson”), an Iowa Corporation,
allegedly came to own or control each of the Original Lessees. It is unclear when exactly this
took place, but from 2006, Jacobson had taken over at least some portion of the Property [ECF
Nos. 2-6 at 4; 12-1 at 2].
On or about August 31, 2012, Prestige Brands terminated its sublease with Warehouse
Specialists, Inc., and vacated the Property after providing more than thirty days notice,
consequently triggering termination of the Leases. After earlier attempts at communication
apparently failed, Hilbill demanded, but did not receive, payment of the rent, operating expenses,
real estate taxes, and utilities for the month of September, 2012 from Jacobson [ECF No. 2-6].
In its communication to Jacobson, Hilbill stated the Leases would terminate on September 30,
2012, based on the language of the second amendment to Leases , which provided the leases
would end thirty (30) days after “Prestige Brands vacate[d] its space prior to the end of its
contract” [ECF Nos. 2-1 at 6; 2-2 at 6, 2-3 at 6]. Jacobson, in its reply to Hilbill’s demand letter,
stated that it considered the Leases to be terminated as of August 31, 2012, as the Leases were
month-to-month because they had not actually been renewed in several years, and Jacobson had
notified Hilbill thirty days in advance that it would be vacating the Property on August 31, 2012
[ECF Nos. 2-6 at 4; 12-1 at 2].
Hilbill also requested to meet with an authorized Jacobson representative for an
inspection of the property to determine what repairs would be required, and formally demanded a
list of contractors Jacobson had already engaged to make repairs to the Property. Jacobson
replied that it had made a number of repairs to the Property and was in the process of completing
others, that it had been in contact with Hilbill regarding the repairs to be made and that it
considered these actions to fulfil its obligations under the Leases. Although it is unclear exactly
how events unfolded from this point, Jacobson, to date, has not paid Hilbill the rent and other
expenses for the month of September 2012. Hilbill ultimately paid for several repairs to the
Property, totaling approximately $120,000, and has not received compensation for these repairs
On July 31, 2013, Hilbill filed suit for breach of lease against Jacobson, requesting an
award of rent and other expenses for the month of September, 2012, as well as an award for the
cost of repairs which it made to the Property. On August 23, 2013 Jacobson removed the matter
to federal court, based on diversity jurisdiction.
The notice pleading standard of Federal Rule of Civil Procedure 8(a)(2) requires a
plaintiff to give “a short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). In order to meet this standard and to survive a motion to dismiss,
“a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that
is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and
citation omitted). This requirement of facial plausibility means that the factual content of the
plaintiff’s allegations must “allow the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Cole v. Homier Distrib. Co., Inc., 599 F.3d 856, 861 (8th
Cir. 2010) (quoting Iqbal, 556 U.S. at 678). Furthermore, courts must assess the plausibility of a
given claim with reference to the plaintiff’s allegations as a whole, not in terms of the plausibility
of each individual allegation. Zoltek Corp. v. Structural Polymer Grp., 592 F.3d 893, 896 n.4
(8th Cir. 2010) (internal citation omitted). This inquiry is “a context-specific task that requires
the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed
factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’
requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
alterations and citations omitted); see also Iqbal, 556 U.S. at 679 (“[W]here 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.’”) (quoting Fed. R.
Civ. P. 8(a)(2)). Nevertheless, although the “plausibility standard requires a plaintiff to show at
the pleading stage that success on the merits is more than a ‘sheer possibility,’” it is not a
“probability requirement.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
(citing Iqbal, 556 U.S. at 678). As such, “a well-pleaded complaint may proceed even if it
strikes a savvy judge that actual proof of the facts alleged is improbable, and that a recovery is
very remote and unlikely,” id. (quoting Twombly, 550 U.S. at 556) (internal quotations omitted),
provided that the complaint contains sufficient facts to “give the defendant fair notice of what
the . . . claim is and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93
(2007) (quoting Twombly, 550 U.S. at 555) (internal quotations omitted).
In its motion to dismiss, Jacobson argues that Hilbill’s claims must be dismissed because
Hilbill’s Complaint [ECF No. 2] fails to state a valid claim under Federal Rule of Civil
Procedure 12(b)(6) [ECF No. 9]. Jacobson contends the Complaint omits any facts to support its
claim that Jacobson is the successor in interest of the Original Lessees [ECF No. 10]. Jacobson
also argues that Hilbill’s Complaint fails to meet the standard of Federal Rule of Civil Procedure
10(b), which requires claims based on separate transactions to be stated in separate counts when
doing so would promote clarity. Jacobson asserts the Complaint violates Rule 10(b) because it
fails to state in separate counts the claims arising from the individual leases, and Jacobson
requests dismissal on this ground. Alternatively, Jacobson asks that Hilbill be required to submit
a more definite statement of its claim, separating the breaches and damages by the specific
original lease under which they occurred under Federal Rule of Civil Procedure 12(e). In its
memorandum in opposition to Jacobson’s motion to dismiss, Hilbill requests that the motion be
denied as frivolous and that sanctions be imposed on Jacobson [ECF No. 11].
A. Failure to State a Claim upon which Relief can be Granted
Jacobson argues that Hilbill’s Complaint should be dismissed, as it fails to state a claim
for which relief can be granted under Federal Rule of Civil Procedure 12(b)(6). Specifically,
Jacobson argues Hilbill’s Complaint fails to state any facts in support of its conclusory statement
that Jacobson was the successor in interest of the Original Lessees. In evaluating whether
Hilbill’s Complaint contains sufficient facts to survive a motion to dismiss, “materials attached
to the complaint as exhibits may be considered in construing the sufficiency of the complaint.”
Reynolds v. Dormire, 636 F.3d 976, 979 (8th Cir. 2011) (quoting Morton v. Becker, 793 F.2d
185, 187 (8th Circ. 1986)); see also Fed. R. Civ. P. 10(c) (“A copy of a written instrument that is
an exhibit to a pleading is a part of the pleading for all purposes.”).
In Hilbill’s demand letter, which will be treated as part of Hilbill’s Complaint as it was
incorporated therein by reference, Hilbill states that the Original Lessees are each “owned or
otherwise controlled by Jacobson” [ECF No. 2-6 at 1]. This assertion is not contested in
Jacobson’s reply letter [ECF No. 2-6 at 4-5; 12-1 at 2-3], which is also incorporated in the
Complaint by reference, and must be viewed in the light most favorable to Hilbill. See Carton v.
Gen. Motor Acceptance Corp., 611 F.3d 451, 454 (8th Circ. 2010) (in reviewing a motion to
dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint is viewed in the light most
favorable to the nonmoving party). Furthermore, Jacobson’s reply also indicates that “Jacobson
took over the space in 2006,” and that “Jacobson will comply with its repair obligations as
required by the expired Leases” (emphasis added) [ECF Nos. 2-6 at 4; 12-1 at 2]. The reply also
states that “the Leases do require Jacobson to ‘present the leased facility in a similar manner to
that when it originally began the lease’”(emphasis added) [ECF Nos. 2-6 at 5; 12-1 at 3], a
statement that appears to be a quotation of Article II of the Leases. While these pleaded facts
may not directly show a transfer of assets, or identify an exception that would give rise to
successor liability, they do provide sufficient facts to “raise a reasonable expectation that
discovery will reveal evidence of [the claim]”; in this case, evidence that Jacobson is obligated
by the terms of the Original Leases. Twombly, 550 U.S. at 556; see also Perrin v. Papa John’s
Int’l, Inc., 818 F. Supp. 2d 1146, 1148 (E.D. Mo. 2011) (“Although a complaint need not contain
‘detailed factual allegations,’ it must contain facts with enough specificity to ‘raise a right to
relief above the speculative level.’” (quoting Twombly, 550 U.S. at 555)).
When considering, as a whole, the information in Hilbill’s Complaint, including the
documents incorporated as exhibits, in the light most favorable to Hilbill, the Court finds there
are sufficient facts in the pleadings to make Jacobson’s liability based on the Leases plausible.
Accordingly, the Court will deny Jacobson’s motion for dismissal under Rule 12(b)(6).
B. Failure to State Claims Founded on Separate Transactions in Separate Counts
Jacobson contends that Hilbill’s Complaint does not specify which breaches occurred
under which of the Leases and states only the aggregate damages under the Leases. As such,
Jacobson claims the Complaint violates Federal Rule of Civil Procedure 10(b), which requires
parties to state claims founded on separate transactions in separate counts if doing so would
promote clarity, and Jacobson requests dismissal on this ground. In the alternative, Jacobson
asks for relief under Federal Rule of Civil Procedure 12(e), which allows a party to “move for a
more definite statement of a pleading . . . which is so vague or ambiguous that the party cannot
reasonably prepare a response.” Fed. R. Civ. P. 12(e). Jacobson argues that, without knowing to
which individual leases the particular breaches and damages relate, it cannot effectively respond
to Hilbill’s allegations, should it be determined Jacobson is not the successor to all of the Leases.
Hilbill’s response focuses on the adequacy of the facts contained in its pleading to state a
cause of action, rather than the clarity of its Complaint, which is called into question by
Jacobson’s motion under Rules 10(b) and 12(e).
In its Complaint, Hilbill identifies the Property at issue, the Leases, the Original Lessees,
the alleged relationship between Jacobson and the Original Lessees and the alleged breaches and
damages arising under the Leases collectively. This information would be sufficient for Jacobson
to prepare a response on the issue of successor liability, as it is clear the Complaint alleges
Jacobson to be the successor to each of the Original Lessees. Disputing that allegation would
require no more than a denial of successor liability with regards to any of the Original Lessees.
The Complaint also provides sufficient information to identify the portion of the damages
attributable to rent for the month of September 2012 for each of the Leases. The monthly rent
amount for each lease is indicated in the Leases, which were incorporated into Hilbill’s
Complaint, and could be identified, and contested, by consulting the documents included in the
Complaint. However, this should not be necessary to determine the rent claimed as damages
under each individual lease.
Nevertheless, Hilbill’s failure to state in separate counts the breaches and damages under
each lease makes it impossible to identify the breaches and damages as they relate to the repairs
to the Property, operating expenses, real estate taxes, and utilities specific to the individual
leases. This ambiguity could be removed, and clarity would certainly be promoted, by stating in
separate counts the breaches and damages under each lease. As each lease is a separate
transaction, Hilbill’s Complaint fails to meet the requirement of Rule 10(b) that “If doing so
would promote clarity, each claim founded on a separate transaction . . . must be stated in a
separate count.” Fed. R. Civ. P. 10(b). The issue remaining is the appropriate remedy for this
defect in Hilbill’s Complaint.
In support of its argument for dismissal, Jacobson points to several cases where courts
have dismissed complaints for failure to satisfy the requirements of Rule 10(b). Each of these
cases, however, presents a very different factual situation from the present case.
In the first of Jacobson’s cited cases, Ehlers Const., Inc. v. Timbers of Shorewood, L.P.,
Nos . 03-6966, 03-6969, 2004 WL 816748 *3-4 (N.D. Ill. March 11, 2004), the plaintiff’s
complaint claimed in a single count that defendant had breached an undefined “agreement”
between plaintiff and defendant. In dismissing the count under Fed. R. Civ. P. 10(b), the court
noted there were eight subcontracts and twenty-five change orders between the plaintiff and the
defendant that may have constituted the agreement, but no specifics were given by the plaintiff as
to which of the contracts were breached, or what damages were attributable to any individual
contract. Id. In contrast, Hilbill’s claims are all related to the substantially similar Leases, which
all concern the Property and are signed by the Original Lessees who are all allegedly owned or
controlled by Jacobson. Hilbill claims that all of the Leases were breached by Jacobson’s failure
to pay rent and other expenses for September 2012, and failure to make repairs to the Property
required under the Leases. While Hilbill’s Complaint lacks clarity as to the specifics of the
breaches and damages related to each lease, it does not rise to the level seen in Ehlers that would
justify dismissal at this stage.
The second case cited by Jacobson, Marlborough Holdings Grp., Ltd. v. Azimut-Benetti,
Spa, Platinum Yacht Collection No. Two, Inc., 505 Fed. Appx. 899, 907 (11th Cir. 2013),
involved a situation where a single count contained two distinct claims, one for civil conspiracy
and the other for the underlying civil wrong. In Marlborough, the Court determined the plaintiff
violated federal pleading standards, because the plaintiff lumped the two distinct claims into a
single undifferentiated count. Id. The Marlborough Holdings Group situation is unlike that
before this Court, where the only claim being advanced is for the breach of the Leases, making
this case distinct from the situation in Marlborough.
In the third case, Shonk v. Fountain Power Boats, 338 Fed. Appx., 282, 284 (4th Cir.
2009), the plaintiff’s complaint attempted to state claims against multiple defendants, without
utilizing separate counts for each defendant. As all claims here are made against Jacobson,
Shonk also does not directly support Jacobson’s position.
While Hilbill’s Complaint does undoubtedly lack some clarity due to its aggregation of
damages under the Leases, and specifying which breaches and damages occurred under each
lease would promote clarity, its failings do not to rise to the level seen in the cases cited by
Jacobson, such as might warrant dismissal. “[P]leading rules favor decisions on the merits rather
than technicalities . . . and . . . leave to amend pleadings should be freely given[ ]”; accordingly,
the Court determines Hilbill should be granted an opportunity to file an amended complaint that
meets the requirements of Rule 10(b) by stating its claims related to the individual leases in
separate counts. Stanard v. Nygren, 658 F.3d 792, 800-01 (7th Circ. 2011).
Jacobson’s motion for dismissal will be denied. However, its motion for a more definite
statement will be granted, with regards to the separation of breaches and damages occurring
under each lease agreement. In particular, the breaches and damages for rent, repair costs,
operating expenses, real estate taxes, utilities and any other damages occurring under each lease
should be specified in the amended complaint.
C. Hilbill’s Request for Sanctions
Hilbill asks that the Court impose sanctions on Jacobson for its “specious and frivolous”
motion to dismiss [ECF No. 11 at 5-7]. However, as pointed out in Jacobson’s brief, a party
requesting sanctions under Federal Rule of Civil Procedure 11(c) must file a separate motion.
Additionally, Hilbill’s Complaint did suffer several defects in the specificity of pleading breaches
and damages. Consequently, sanctions would not be appropriate.
Hilbill’s Complaint, including the exhibits attached, contains sufficient facts in support of
its statement that Jacobson is the successor in interest of the Original Lessees to make Jacobson’s
liability under the Leases plausible. However, Hilbill’s failure to specify and to state in separate
counts the damages arising under each individual lease violates Fed. R. Civ. P. 10(b)’s
requirement that claims based on separate transactions be stated in separate counts when doing so
would promote clarity.
IT IS HEREBY ORDERED that Defendant Jacobson’s Motion to Dismiss [ECF No. 9]
IT IS FURTHER ORDERED that Defendant Jacobson’s Motion for a More Definite
Statement is GRANTED. Hilbill’s amended complaint, to be filed in twenty (20) days, shall
state in separate counts the breaches and damages occurring under each individual lease.
Dated this 29th day of October, 2013.
E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE
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