Kelley et al v. Enviva, LP et al

Filing 37

ORDER GRANTING 17 Defendants' Motion to Dismiss, and 32 Defendant Norb Hintz's Motion to Dismiss: Plaintiff's claims against Hintz are dismissed without prejudice and plaintiff's claims against the remaining defendants are dismissed with prejudice. Signed by US District Judge Terrence W. Boyle on 2/2/2015. Copy mailed to pro se plaintiff, via US Mail, to PO Box 624, Swansboro, NC, 28584. (Fisher, M.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
NO. 7:14-CV-126-BO

JAMES KELLEY d/b/a KELLEY
ENGINEERING,

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Plaintiff,
v.
ENVIVA, LP, et al.,
Defendants.

ORDER

This matter is before the Court on defendant Norb Hintz's motion to dismiss pursuant to
Federal Rules of Civil Procedure 4(m), 12(b)(2), (4), and (5) [DE 32], and all defendants' motion
to dismiss pursuant to Rule 12(b)(6) [DE 17]. The motions are ripe for adjudication. For the
reasons stated herein, both motions are GRANTED.
BACKGROUND
Prose plaintiff, James Kelley, filed suit against several corporations and two individual
employees arising following his termination by Enviva, LP. Plaintiff had a written independent
contractor agreement (ICA) for engineering consulting services with Enviva, LP that expired on
June 30, 2012, though plaintiff alleges that the parties had always agreed that plaintiff would
perform work for Enviva, LP through December 2013. After the written contract's expiration,
the parties were unable to negotiate another written employment contract. Both parties agreed,
however that plaintiff would continue working for the company. On January 26, 2013, Enviva,
LP terminated plaintiffs employment. Plaintiff was paid for work performed through that date.
Plaintiff subsequently invoiced En viva, LP $211, 210.15, a sum comprised of plaintiffs future

pay for the period from February 3, 2013, through November 24, 2013, anticipated future
expenses, and a breach of contract fee. No defendant paid the invoice.
Plaintiff filed his first complaint in Onslow County Superior Court on August 12, 2013.
[Kelley v. Enviva, LP, No. 7:13-CV-197-BO (E.D.N.C.)]. Defendants removed the case to this

Court and filed a motion to dismiss due to, inter alia, insufficiency of process and service of
process. After giving plaintiff time to perfect service, the Court dismissed plaintiffs first
complaint without prejudice on April1, 2014. Plaintiff then filed the instant lawsuit in Onslow
County Superior Court on May 13, 2014. Defendants again removed the case to this Court and
again filed a motion to dismiss based on improper service, as well as a motion to dismiss for
failure to state a claim under which relief can be granted pursuant to Federal Rule of Civil
Procedure 12(b)(6). Without ruling on the Rule 12(b)(6) motion, the Court found that plaintiffs
attempts at service were deficient, but stayed the action so that plaintiff could perfect service by
October 10,2014. On October 3, 2014, plaintiff obtained new summonses for all defendants.
Defendant Hintz was served on October 11, 2014. 1
DISCUSSION
Before the Court are Defendant Hintz's motion to dismiss based on lack of personal
jurisdiction, insufficiency of process, and insufficiency of service of process [DE 32], and a
motion to dismiss by all defendants arguing that plaintiffs complaint fails to state a claim upon
which relief can be granted. [DE 17].
I.

DEFENDANT HINTZ'S MOTION TO DISMISS FOR IMPROPER SERVICE.

Pursuant to Federal Rule of Civil Procedure 4(m), plaintiffhad 120 days from the date of
removal to obtain effective service on each defendant. Rule 4(m) states, in pertinent part, that
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It appears that service was timely made on the other defendants based on plaintiffs proof of
service filed with the Court. [DE 31].
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"[i]f a defendant is not served within 120 days after the complaint is filed, the court ... must
dismiss the action without prejudice against that defendant or order that service be made within a
specified time .... "Defendants removed the case from state court to federal court on June 12,
2014. [DE 1]. Accordingly, plaintiffhad until October 10, 2014, to obtain effective service on
each defendant. Mr. Hintz was not served until October 11,2014. [DE 31]. Accordingly, the
summons had already expired at the time it was served, and dismissal is required. Fed. R. Civ. P.
4(m).
The Court's September 2014 order directing plaintiff to serve defendants prior to the 120-day
deadline was clear. Plaintiff waited a week-until October 3-to get new summonses, and did
not retain a process server to mail the summons and complaints until October 7. Moreover,
plaintiff has had multiple prior opportunities to properly serve defendant. The Court is mindful
that plaintiff is prose, but "[p]ro se status ... is insufficient to establish good cause, even where
the prose plaintiff mistakenly believes that service was made properly." Hansan v. Fairfax Cnty.
Sch. Bd, 405 F. App'x 793,794 (4th Cir. 2010). Given that this is plaintiff's third attempt to

make proper service, the Court in its discretion declines to extend the time to make service and
finds that dismissal of this action against defendant Hintz without prejudice is appropriate.
II.

DEFENDANTS' MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM.

All defendants joined in a motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(6). A Rule 12(b)(6) motion challenges the legal sufficiency of a plaintiff's complaint.
Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). When ruling on the motion, the court

"must accept as true all of the factual allegations contained in the complaint." Erickson v.
Pardus, 551 U.S. 89, 93-94 (2007) (citing Bell At!. Corp. v. Twombly, 550 U.S. 544, 555-56

(2007). Specificity is not required; the complaint need only "give the defendant fair notice of

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what the ... claim is and the grounds upon which it rests." Twombly, 550 U.S at 555 (quotation
omitted). To survive a Rule 12(b)(6) motion, a complain must contain facts sufficient "to raise a
right to relief above the speculative level" and to satisfy the court that the claim is "plausible on
its face." !d. at 555, 570; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Complaints filed
by pro se litigants are entitled to liberal construction; however the Court need not accept
plaintiffs conclusions, unwarranted inferences, unreasonable conclusions, or arguments. Laber

v. Harvey, 438 F.3d 404, 413 n.3 (4th Cir. 2006).
A. Proper Parties
In his complaint, plaintiff has not specified which of the defendants should be held liable for
each claim. The only signed contract between any of the parties explicitly states Enviva, LP and
James A. Kelly, III, as the parties. [DE 1-4 at 25]. Plaintiffhas not attached and the complaint
does not reference any contracts with the other named defendants. Plaintiff argues that the
corporate defendants other than Enviva, LP, are proper parties because he visited their properties
and worked at facilities owned by them. Without more, however, plaintiff cannot maintain an
independent cause of action against the owner of each site. This is particularly true when the
complaint and attached documents show that his contract was with Enviva, LP, plaintiff invoiced
Enviva Biomass, LP, and plaintiffs invoices reference a single project. [DE 1-4 at 25, 34-37].
Accordingly, plaintiff has failed to state a claim on which relief can be granted as to Enviva
Pellets Ahoskie, LLC, Enviva Pellets Northampton, LLP, Enviva Pellets Southampton, LLC, or
Enviva Holdings, LP and the claims against those defendants are dismissed.
Moreover, there is no basis alleged in the complaint upon which to hold defendant Keppler
individually liable for the alleged injuries. It is well-established under North Carolina law that
"an officer of a corporation is not liable for the torts of the corporation 'merely by virtue of his

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office."' Wolfe v. Wilmington Shipyard, Inc., 522 S.E.2d 306, 312-13 (1999) (quoting United
Artists Records, Inc. v. E. Tape Corp., 198 S.E.2d 452, 457 (1973)). Plaintiff does not allege that
he had any contract with Mr. Keppler nor does the complaint contain allegations that could form
the basis for a tort claim against him individually. Mr. Keppler is referenced because he is the
"Chairman and CEO for the Defendants," and is referred to only in terms of his day-to-day
actions with plaintiff as they pertained to plaintiffs consulting engagement. [DE 1-4 ~ 26, 29,
45-46]. Plaintiff has not alleged facts sufficient to overcome the presumption against officer
liability, and according his claims must be dismissed against defendant Keppler.
B. Breach of Contract Claim
The ICA, which was for a set term of May 7, 2012, through June 30, 2012, contained a
choice-of-law provision specifying that New York law governed the contract. All of the work
referenced in plaintiffs complaint related to construction located in Virginia. Accordingly, either
New York or Virginia law controls plaintiffs breach of contract claim. A detailed choice of law
analysis is not required, however, because the result is the same under either state's law.
Plaintiff alleges that a new contract (or contracts) with defendant arose following the
expiration of the ICA based on defendants' alleged representation that plaintiff always was to be
employed through December 2013. The parol evidence rule, however bars plaintiffs allegations
that defendants promised him compensation through December 2013. As applied in New York
and Virginia, the parol evidence rule "prohibits the introduction of evidence outside a written
agreement for the purpose of varying or adding to such an agreement," especially where, as here,
the written agreement includes a merger clause. Katz v. Am. Technical Indus., Inc., 96 A.D.2d
932, 932-33 (N.Y. App. Div. 1983) (citation omitted); see also Bell, II v. Superintendent of
Banks, 227 A.D.2d 145, 145 (N.Y. App. Div. 1996); Ott v. L & J Holdings, LLC, 654 S.E.2d

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902, 904 (Va. 2008) (requiring "a court to construe a document according to its plain terms if it
is clear and unambiguous on its face"). The ICA expressly states a termination date of June 30,
2012. Plaintiffs claims that he had an exclusive contract with Enviva, LP, through December
2013, based on oral discussions not incorporated into the ICA, must be disregarded.
The complaint contains no additional allegations of a fixed time period within which any
contract existed other than the dates covered by the ICA. Accordingly, it is well established in
both New York and Virginia that plaintiffs relationship with Enviva, LP, became terminable at
will after the ICA expired. See, e.g, Twitchell v. Town ofPittsford, 106 A.D.2d 903, 904 (N.Y.
App. Div. 1984) (explaining that continued dealings following the expiration of a contract
neither give rise to a new implied contract nor continue the terms of the expired contract
continue); Miller v. SEVAMP, 362 S.E.2d 915, 917-18 (Va. 1987) (affirming dismissal where
promise of employment as long as organization had "adequate federal funding" was insufficient
to rebut presumption of at will employment as a matter of law). Accordingly, no valid contract
existed after the ICA's expiration on June 30, 2012. As there can be no breach of contract claim,
plaintiff has failed to state a claim upon which relief can be granted, and his claim must be
dismissed.
C. Breach of Implied Duty of Good Faith and Fair Dealing Claim
Neither Virginia nor New York law recognizes a stand-alone claim for breach ofthe implied
covenant of good faith and fair dealing. Derthick v. Bassett-Walker, Inc., 904 F. Supp. 510, 521
(W.D. Va. 1995); MBIA Ins. Corp. v. Royal Bank ofCan., 28 Misc.3d 1225(A), 2010 WL
3294302, at *43 (N.Y. Sup. Ct. Aug 19, 2010) (2010 WL 3294302). Accordingly, plaintiffs
claim for breach of the implied duty of good faith and fair dealing is dismissed.

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D. Quantum Meruit Claim
Plaintiffs quantum meruit and tort claims are governed by North Carolina law, as that is
where plaintiff resides and where the alleged injury accord. Hensley v. Nat'! Freight Transp.,

Inc., 668 S.E.2d 349, 351 (N.C. Ct. App. 2008) (explaining that North Carolina follows the lex
loci delicti rule for choice of law in tort claims. In order to state a quantum meruit claim, plaintiff
must allege that (1) services were rendered to defendant; (2) the services were knowingly and
voluntarily accepted; and (3) the services were not given gratuitously. Scheerer v. Fisher, 688
S.E.2d 472,476 (N.C. Ct. App. 2010).
Plaintiffs claimed damages are based on the period after he was terminated and consist of
his anticipated fees for work and expenses plus a "termination" fee. [DE 1-4 at 33, 37]. In his
reply, plaintiff attempts to rewrite his quantum meruit claim to recover allegedly deferred
compensation, but the invoices attached to plaintiffs complaint demonstrate that plaintiff was
paid for the work he performed up to his termination date of January 26, 2013. [DE 1-4 at 34].
Plaintiffs complaint does not allege that he provided any services to defendant or that defendant
accepted any services following his termination. Accordingly, plaintiff has failed to state a claim
under a quantum meruit theory, and his claim must be dismissed.
E. Fraud and Unfair and Deceptive Trade Practices Act (UDTP A) Claims
Plaintiffs fraud claim is based on defendant allegedly providing plaintiff with inaccurate
"financial and corporate information" about Enviva, LP "in order to induce the Plaintiff into long
term contracts commitments exclusively to the Defendants for their benefit to the detriment of
the Plaintiff." [DE 1-4 at~ 96]. Plaintiffs alleged detriment is the termination ofhis
employment and resultant loss of future income.

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A showing that defendant proximately caused plaintiffs damages is an essential element of
a fraud claim. Selfv. Yelton, 688 SE. 2d 34, 38 (N.C. Ct. App. 2010). "[B]efore holding a
defendant liable for an injury to a plaintiff, it must be shown that defendant's actions were
substantial factor of the particular injuries for which plaintiff seeks recovery." !d. (internal
quotation and citation omitted). In the complaint, plaintiff asserts no connection between the
alleged financial misrepresentations and the termination of plaintiffs employment. The
complaint in fact alleges that plaintiff was terminated after a meeting in which "verbal tempers ..
. generally flaired [sic]." [DE 1--4 at~ 52]. Because plaintiffhas made no showing that defendant
proximately caused his damages, plaintiff fails to state a common law fraud claim.
Plaintiffs UDTP A claim likewise fails, as it is premised on his fraud claim, and proximate
cause is a required element of a UDTP A claim. Nucor Corp. v. Prudential Equity Grp., LLC, 659
S.E.2d 483,488 (N.C. Ct. App. 2008). Accordingly, plaintiffs fraud and UDTPA claims must be
dismissed.
CONCLUSION
For the foregoing reasons, defendants' motions to dismiss are hereby GRANTED.
Plaintiffs claims against defendant Hintz are DISMISSED WITHOUT PREJUDICE, while
plaintiffs claims against the remaining defendants are DISMISSED WITH PREJUDICE. The
Clerk is directed to enter judgment accordingly and to close the file.
SO ORDERED, this~ day of February, 2015.

~lc.J./k.~

TERRENCE W. BOYLE
UNITED STATES DISTRICT JUDGE

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