Synovus Bank v. MPM Investment, LLC et al

Filing 48

MEMORANDUM OF DECSION AND ORDER granting 40 Motion to Dismiss; granting in part and denying in part 42 Motion to Dismiss. (SEE ORDER FOR DETAILS) Signed by District Judge Martin Reidinger on 8/15/12. (nll)

THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:11cv166

SYNOVUS BANK,
Plaintiff,
vs.
MPM INVESTMENT, L.L.C., et al.,
Defendants/
Third-Party Plaintiffs,
vs.
SYNOVUS FINANCIAL CORP. d/b/a
NATIONAL BANK OF SOUTH
CAROLINA, et al.,
Third-Party Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

MEMORANDUM OF
DECISION AND ORDER

THIS MATTER is before the Court on the Third Party Defendant
Synovus Financial Corp.’s Motion to Dismiss Defendants’ Amended Third
Party Claims [Doc. 40] and the Plaintiff Synovus Bank’s Motion to Dismiss the
Defendants’ Amended Counterclaims [Doc. 42].
Synovus Bank argues that the individual Defendants have waived all
counterclaims and defenses in this matter by executing various waivers and
releases in the guaranties made in support of the Promissory Note. [Doc. 43

at 5-6]. The Defendants argue that these waivers violate public policy and are
therefore unenforceable. [Doc. 45 at 24-25].
In Synovus Bank v. Karp, No. 1:10cv172 (W.D.N.C.), the Court
concluded that the Defendants expressly waived all counterclaims and
defenses against the Bank pursuant to contractual language that is identical
to the language at issue here. Thus, for the reasons stated in the Karp
decision, the Court concludes that the individual Defendants’ counterclaims
in this action are subject to dismissal on the basis of these express waivers.
The facts, legal issues and causes of action asserted in the present
matter by the remaining Defendant, MPM Investment, L.L.C.1 (“MPM
Investment”), are virtually identical to those presented in the case of Synovus
Bank v. Coleman, Case No. 1:11cv66 (W.D.N.C.), and the same attorneys
appear in both cases. Even though the cases have not been consolidated,
the decision of this Court in the Order being entered contemporaneously
herewith in Coleman addresses and disposes of nearly all of the issues raised
by the motions currently before the Court in this matter.

The Order in

Coleman, therefore, is incorporated herein, and, with the exception of the
MPM Investment’s counterclaim under the South Carolina Unfair and

1

MPM Investments, LLC did not join in the waiver.
2

Deceptive Trade Practices Act, the current motions will be disposed of in
accord therewith.
In addition to those counterclaims which are addressed by the Coleman
decision, MPM Investment asserts additional counterclaims for negligent
misrepresentation, fraud, and fraud in the inducement. The facts asserted by
MPM Investment in support of these counterclaims are substantially similar
to those asserted by the Defendants in Synovus Bank v. Karp, No. 1:10cv172
(W.D.N.C.). For the reasons stated in the Karp decision, the Court concludes
that MPM Investment’s counterclaim for negligent misrepresentation must be
dismissed. Further, for the reasons stated in Karp, the Bank’s Motion to
Dismiss will be denied as to MPM Investment’s counterclaims for fraud and
fraud in the inducement.
As noted above, MPM Investment also asserts a counterclaim for
violation of the South Carolina Unfair and Deceptive Trade Practices Act, S.C.
Ann. Code § 39-5-10, et seq. (“SCUTPA”). For the reasons stated in the
Coleman decision, supra, the Court concludes that North Carolina law
governs any claim that MPM Investment may have for the Bank’s unfair and
deceptive trade practices.

Accordingly, MPM Investment’s counterclaim

under the SCUTPA must be dismissed.

3

As the Court recognized in Karp, however, “[p]roof of fraud necessarily
constitutes a violation of the prohibition against unfair and deceptive acts.”
Karp, No. 1:10cv172, slip op. at 27 (quoting Winston Realty Co. v. G.H.G.,
Inc., 314 N.C. 90, 97, 331 S.E.2d 677, 681 (1985).

Because the Court

concludes that MPM Investment has stated plausible claims for fraud and
fraud in the inducement with enough particularity to survive the Plaintiff’s
Motion to Dismiss, the Court will provide MPM Investment with an opportunity
to assert a claim under N.C. Gen. Stat. § 75-1.1, et seq. (“Chapter 75”) for the
Bank’s alleged unfair and deceptive trade practices.

ORDER
IT IS, THEREFORE, ORDERED that the Third Party Defendant
Synovus Financial Corp.’s Motion to Dismiss Defendants’ Amended Third
Party Claims [Doc. 40] is GRANTED, and the Defendants’ Amended Third
Party Claims against Synovus Financial Corp. are hereby DISMISSED WITH
PREJUDICE.
IT IS FURTHER ORDERED that the Plaintiff Synovus Bank’s Motion to
Dismiss the Defendants’ Amended Counterclaims [Doc. 42] is GRANTED IN
PART and DENIED IN PART as follows:

4

(1)

The Motion to Dismiss [Doc. 42] is GRANTED with respect to the

counterclaims asserted by Defendants Markus J. Frantzen, Patrik Gaehwiler,
Juerg A. Gege, and Markus Wegmann, and these counterclaims are
DISMISSED WITH PREJUDICE;
(2)

The Motion to Dismiss [Doc. 42] is DENIED with respect to

Defendant MPM Investment, L.L.C.’s counterclaims under the ILSA and
Chapter 75 and for fraud and fraud in the inducement; and
(3)

With respect to all other counterclaims asserted by Defendant

MPM Investment, L.L.C., the Motion to Dismiss [Doc. 42] is GRANTED, and
these counterclaims are DISMISSED WITH PREJUDICE.
IT IS FURTHER ORDERED that the Defendant MPM Investment, L.L.C.
may file an amended Answer and Counterclaim within fourteen (14) days of
the entry of this Order in order to assert an additional counterclaim under
Chapter 75 against the Plaintiff Synovus Bank.
IT IS SO ORDERED.
Signed: August 15, 2012

5