Oldfield Club v. TI Oldfield Development LLC et al

Filing 57

ORDER denying 17 Motion to Dismiss for Failure to State a Claim Signed by Honorable David C Norton on November 17, 2017.(cban, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
OLDFIELD CLUB, for itself and on
behalf of its members,

)
)
)
Plaintiff,
)
)
vs.
)
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TI OLDFIELD DEVELOPMENT, LLC,
)
and TI OLDFIELD OPERATIONS, LLC, )
by and through their respective board of
)
directors, John Doe 1–10, individually and )
as directors between the time period
)
2010–2015 (pre-turnover); OLDFIELD
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HOLDINGS GA, LLC; PHILLIP
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GALBREATH; JAMIE D. SELBY,
)
Individually and as managing member of
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Elliot Group Holdings, LLC; and
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ELLIOT GROUP HOLDINGS, LLC,
)
)
Defendants.
)
)

No. 9:17-cv-0452-DCN
ORDER

This matter is before the court on defendant Jamie D. Selby (“Selby”) and
Elliot Group Holdings, LLC’s (“EGH,” together with Selby, the “Selby Defendants”)
motion to dismiss. ECF No. 17. For the reasons set forth below, the court denies the
motion.
I. BACKGROUND
This action is one of a series of actions arising out of the management and
turnover of the Oldfield Community, a development located in Bluffton, South
Carolina (“Oldfield”). Am. Compl. ¶ 10. Oldfield Club operates the recreational and
social facilities at Oldfield. Id. ¶ 11. TI Oldfield Development, LLC and TI Oldfield
Operations, LLC (the “TI Defendants”) are successors to the original holder of

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declarant rights to Oldfield. Id. ¶¶ 2, 12. Oldfield Club and TI Defendants entered
into a “Transfer Agreement,” which required the TI Defendants to turn over “a firstclass golf and country club” to Oldfield Club. Id. ¶ 16, 17. This turnover occurred in
December of 2015, but Oldfield Club contends that the turnover was deficient in a
number of ways. Id. ¶ 17, 21. Specifically, Oldfield Club argues that the transferred
facilities were in need of immediate repair or replacement. Id. ¶ 21. It also takes issue
with a number of pre-turnover operational decisions that purportedly delayed the
turnover, depleted Oldfield Club’s funds, and failed to develop a strong membership
base for the club, resulting in significantly lower revenues than contemplated by the
Transfer Agreement. Id. Most significantly, Oldfield Club alleges that the turnover
should have included the transfer of a parcel known as the Greeters Store. Id. ¶ 21.B.
Oldfield Club further alleges that Selby, while serving as Oldfield Club’s general
manager, secretly conspired with the TI Defendants and a member of Oldfield Club’s
board of directors, Phillip Galbreath (“Galbreath”), to purchase the Greeters Store
through EGH. Id. ¶ 21.G. Oldfield Club terminated Selby in October, 2017. ECF
No. 8-1, OCA Action Compl. ¶ 43.
On November 16, 2017, Selby filed an action against Oldfield Club in the
Court of Common Pleas for Beaufort County, South Carolina (the “Selby Action”),
bringing claims for breach of contract and defamation. ECF No. 8-2, Selby Action
Compl. ¶ 4–25. Oldfield Club’s answer in the Selby Action included counterclaims
against the Selby Defendants for (1) breach of fiduciary duty, (2) civil conspiracy, (3)
fraud, (4) interference with contractual relations, (5) breach of contract,

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(6) negligence, and (7) unjust enrichment. ECF No. 8-3, Selby Action Answer ¶¶ 94–
138.
On January 23, 2017, Oldfield Club filed the instant action in the Court of
Common Pleas for Beaufort County, South Carolina against the TI Defendants,
Galbreath, Oldfield Holdings, GA, LLC, and ten John Doe defendants (the “Original
Defendants”).1 The action was removed to this court on February 15, 2017. ECF No.
1. On March 2, 2017, Oldfield Club filed an amended complaint, adding the Selby
Defendants as parties. ECF No. 6. The amended complaint brings the following
claims against the Selby Defendants: (1) negligence and negligent misrepresentation,
(2) civil conspiracy and request for declaratory relief, (3) quantum meruit, and (4)
declaratory judgment. Am. Compl. ¶¶ 31–34, 47–61.
On March 24, 2017, the Selby Defendants filed a motion to dismiss, ECF No.
17, and Oldfield Club filed a response on April 6, 2017, ECF No. 24. The court held
a hearing on this motion on June 6, 2017. ECF No. 53. For the reasons set forth
below, the court denies the Selby Defendants’ motion to dismiss.
II. STANDARD
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss
for “failure to state a claim upon which relief can be granted.” When considering a
Rule 12(b)(6) motion to dismiss, the court must accept the plaintiff’s factual

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The Oldfield Community Association (“OCA”), another organization
created by Oldfield’s organizational documents, brought a separate action (the “OCA
Action”) against the TI Defendants, Galbreath, the John Doe defendants, the Selby
Defendants, and others in the Beaufort County Court of Common Pleas on February
21, 2017. The OCA Action was removed to this court on March 24, 2017. See Case
No. 9:17-cv-0794-DCN, ECF No. 1.
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allegations as true and draw all reasonable inferences in the plaintiff’s favor. See E.I.
du Pont de Nemours & Co. v. Kolon Indus., 637 F.3d 435, 440 (4th Cir. 2011). But
“the tenet that a court must accept as true all of the allegations contained in a
complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). On a motion to dismiss, the court’s task is limited to determining whether the
complaint states a “plausible claim for relief.” Id. at 679. Although Rule 8(a)(2)
requires only a “short and plain statement of the claim showing that the pleader is
entitled to relief,” “a formulaic recitation of the elements of a cause of action will not
do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The “complaint must
contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).
“Facts pled that are ‘merely consistent with’ liability are not sufficient.” A Soc’y
Without a Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011) (quoting Iqbal, 556
U.S. at 678).
III. DISCUSSION
The Selby Defendants argue that the claims against them should be dismissed
under the abstention doctrine articulated in Colorado River Water Conservation Dist.
v. United States, 424 U.S. 800, 817 (1976). Selby Def.’s Mot. Oldfield Club agrees
that the court should abstain from adjudicating the claims against the Selby
Defendants. Oldf. Club’s Resp. 2. More specifically, however, Oldfield Club asks
the court to abstain from exercising its jurisdiction over all of its claims against all of

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the defendants. 2 Id. Despite its interest in having the case heard in state court,
Oldfield Club objects to the motion to dismiss only the claims against the Selby
Defendants, arguing that it would be improper for the court to abstain from hearing
only part of this action while retaining jurisdiction over the claims against the
remaining defendants. Id. at 2, 8–9. The Original Defendants did not file a response
to the Selby Defendants’ motion.3
In Colorado River, the Supreme Court recognized that “[g]enerally, as
between state and federal courts, the rule is that ‘the pendency of an action in the state
court is no bar to proceedings concerning the same matter in the Federal court having
jurisdiction . . . .’” 424 U.S. at 817 (quoting McClellan v. Carland, 217 U.S. 268, 282
(1910)). Nevertheless, the Court recognized that:
[T]here are principles unrelated to considerations of proper
constitutional adjudication and regard for federal-state relations which
govern in situations involving the contemporaneous exercise of
concurrent jurisdictions, either by federal courts or by state and federal
courts. These principles rest on considerations of “(w)ise judicial
administration, giving regard to conservation of judicial resources and
comprehensive disposition of litigation.”
Id. (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 182
(1952)). Because federal courts owe a “virtually unflagging obligation [] to exercise
the jurisdiction given them,” Colorado River abstention applies only in “exceptional
circumstances.” Id. at 813, 817–18.

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Oldfield Club previously filed a motion to remand the case to state court.
ECF No. 8. This court denied Oldfield Club’s motion to remand on June 6, 2017.
ECF No. 54.
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The original defendants appear to be the only parties interested in having the
case in federal court, as they had previously removed the action from state court to
this district.
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“The threshold question in deciding whether Colorado River abstention is
appropriate is whether there are parallel federal and state suits.” Great Am. Ins. Co.
v. Gross, 468 F.3d 199, 207 (4th Cir. 2006). If the suits are determined to be parallel,
the court must then “carefully balance several factors ‘with the balance heavily
weighted in favor of the exercise of jurisdiction.’” Id. (quoting Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 16 (U.S. 1983)). The six factors
that guide the abstention analysis are:
(1) whether the subject matter of the litigation involves property where
the first court may assume in rem jurisdiction to the exclusion of others;
(2) whether the federal forum is an inconvenient one; (3) the desirability
of avoiding piecemeal litigation; (4) the relevant order in which the
courts obtained jurisdiction and the progress achieved in each action;
(5) whether state law or federal law provides the rule of decision on the
merits; and (6) the adequacy of the state proceeding to protect the
parties’ rights.
Id. at 207–08.
A. Threshold Question of Parallel Suits
Before addressing these six factors, the court must analyze the threshold
question of whether it may abstain because the concurrent federal and states suits are
sufficiently parallel. “Suits are parallel if substantially the same parties litigate
substantially the same issues in different forums.” Id. at 208 (quoting Chase Brexton
Health Servs., Inc. v. Maryland, 411 F.3d 457, 463 (4th Cir. 2005)). The parties to
each action need not be completely identical, but they must be “almost identical.”
Chase Brexton Health, 411 F.3d at 464. The court notes that this threshold question
asks whether the “suits” are parallel, not the individual claims. Thus, Oldfield Club is
correct in asserting that the Colorado River abstention doctrine is an all-or-nothing

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proposition. The court must determine whether the action can be dismissed in its
entirety, not whether the claims against the Selby Defendants can be dismissed.
The court finds that the entire suit should not be dismissed pursuant to the
Colorado River abstention doctrine. First, the Selby Action—the action between
Jamie Selby and Oldfield Club currently pending in state court—is not sufficiently
parallel to the current suit. All of the parties in the Selby Action are parties here, but
this action also includes the TI Defendants, Galbreath, Oldfield Holdings GA, LLC,
and ten John Doe defendants. Similarly, the issues raised by the two actions are not
identical. While the issues involved in the Selby Action are largely subsumed into
the instant action in relation to the transfer of the Greeters Store, the instant action
goes further, seeking to impose liability against the Original Defendants for other
deficiencies in the Oldfield turnover process. Am. Compl. ¶ 21. Ultimately, “a
federal court may abstain under Colorado River only if it ‘concludes that the parallel
state-court litigation will be an adequate vehicle for the complete and prompt
resolution of the issues between the parties.’” vonRosenberg v. Lawrence, 849 F.3d
163, 168 (4th Cir. 2017) (emphasis in original) (quoting Moses H. Cone, 460 U.S. at
28). “If there is any serious doubt that the state action would resolve all of the claims,
‘it would be a serious abuse of discretion’ to abstain.” Id. (emphasis in original)
(quoting Moses H. Cone, 460 U.S. at 28). Here, the scope of the federal action
exceeds the scope of the state action, and thus, all of the claims in the federal action
would not be resolved in state court through the Selby Action. Therefore, the court
finds that the actions are not sufficiently parallel and that the Colorado River
abstention doctrine does not apply.

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B. Colorado River Abstention Doctrine Factors
Even if the state and federal court actions were sufficiently parallel, the six
factors would still weigh against abstention. In regards to the first factor, this action
initially appears to “involve[] property where the first court may assume in rem
jurisdiction to the exclusion of others.” Great American, 468 F.3d at 207. Both
actions undoubtedly involve the Greeters Store, and Oldfield Club has sought
“disgorgement of all improperly obtained property and profits of [the Selby
Defendants]” in the Selby Action. Selby Action Answer ¶ F. Thus, the state court
may need to exercise jurisdiction over the Greeters Store in order to effectuate its
judgment, even though the Selby Action is not in rem in the traditional sense.
However, to the extent that the state court needs to take control of the Greeters Store,
it would not need to do so “to the exclusion” of this court’s access to the store,
because Oldfield Club’s federal claims do not seek the physical return of the Greeters
Store. Instead, Oldfield Club seeks damages based on the unlawful transfer of the
Greeters Store. See Am. Compl. ¶¶ A–L. Thus, the court finds that the movants have
not sufficiently proven that this first factor weighs in favor of abstention.
Second, this forum is not particularly inconvenient to the parties.
Undoubtedly the Selby Defendants would prefer not to drive ninety miles to attend
court, but this does not seem to be the sort of inconvenience which rises to the level
of “exceptional circumstances” under Colorado River. Similarly, the threat of
piecemeal litigation in this case—the third factor—is no greater than in most other
situations involving parallel proceedings. For this factor to weigh in favor of
abstention, the “retention of jurisdiction must create the possibility of inefficiencies

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and inconsistent results beyond those inherent in parallel litigation, or the litigation
must be particularly ill-suited for resolution in duplicate forums.” Gannett Co. v.
Clark Cont. Grp., Inc, 286 F.3d 737, 744 (4th Cir. 2002). Because the overlap in this
case would likely be limited to inconsistent monetary judgments, the court does not
find this case to be particularly different from any other case involving parallel
litigation.
The fourth factor—the “order in which the courts obtained jurisdiction and the
progress achieved in each action”—does weigh in favor of abstention, as the Selby
Action was filed first, and very little progress has been made in the instant action.
However, turning to the final two factors—“whether state law or federal law provides
the rule of decision on the merits” and “the adequacy of the state proceeding to
protect the parties’ rights”—the court finds that they indicate that abstention is
unnecessary. This case involves state law, but the state law at issue appears to be
well-settled. Finally, while Oldfield Club prefers for this case to be dismissed from
federal court in its entirety, the Selby Action in state court will not adequately protect
all of Oldfield Club’s rights because it does not include Oldfield Club’s claims
against the Original Defendants. It certainly is inadequate to protect the rights that
the Original Defendants’ have raised in their counterclaims against Oldfield Club in
the instant action. Based on the above six factors, as well the non-parallel nature of
the federal and state suits, the court declines to dismiss the action under the Colorado
River abstention doctrine.

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IV. CONCLUSION
For the reasons set for above, the court DENIES the Selby Defendants’
motion to dismiss, ECF No. 17.
AND IT IS SO ORDERED.

DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
November 17, 2017
Charleston, South Carolina

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