New London Tobacco Market, Inc. v. Burley Stabilization Corp.

Filing 13

MEMORANDUM AND OPINION as set forth in following order.Signed by District Judge R Leon Jordan on 5/15/13. (ABF)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE

THE NEW LONDON TOBACCO
MARKET, INC.,

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Plaintiff,
v.
BURLEY STABILIZATION
CORPORATION,
Defendant.

No. 3:13-CV-122

MEMORANDUM OPINION
This civil action was removed from the Chancery Court of Jefferson County,
Tennessee on March 4, 2013, on the basis of diversity jurisdiction. Now before the court is
defendant’s motion for judgment on the pleadings pursuant to Rule 12(c) of the Federal
Rules of Civil Procedure. Plaintiff has responded in opposition to the motion, and defendant
has submitted a reply. For the reasons that follow, defendant’s motion will be granted, and
this case will be dismissed.
I.
Background1
Plaintiff is engaged in the business of lending to farmers. From 2009 through
2011, plaintiff loaned money to the following related persons and entities: Grace M. Manley;

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The court’s factual recitation is taken from plaintiff’s complaint, the contents of which
must be accepted as true at this stage of the proceedings.

James Todd Manley; Stephen K. Manley; Manley Farms; and Manley’s Farm (collectively,
“the Manleys”). The loans were evidenced by promissory notes and security agreements
granting plaintiff a security interest in the Manleys’ crops. Plaintiff in turn gave defendant
notice of those security interests.
Defendant purchased crops from the Manleys in 2009, 2010, and 2011 which
were encumbered by security interests in favor of plaintiff. Despite its awareness of the
liens, defendant did not pay plaintiff the value of its security interests. The Manleys have not
repayed their loans and are now insolvent.
On December 20, 2012, plaintiff filed its “Complaint for Conversion and
Voiding of Security Interest” in the Jefferson County Chancery Court. As is suggested by
the title of that pleading, plaintiff alleges a state law claim for conversion but does not raise
any claims under federal law.
II.
Applicable Legal Standards

Motions for judgment on the pleadings are authorized by Rule 12(c) of the
Federal Rules of Civil Procedure. Courts analyze Rule 12(c) motions by employing the
same standard applied to those filed under Rule 12(b)(6). See Penny/Ohlmann/Nieman, Inc.
v. Miami Valley Pension Corp., 399 F.3d 692, 697 (6th Cir. 2005) (“PONI”) (citing Ziegler
v. IBP Hog Market, Inc., 249 F.3d 509, 511-12 (6th Cir. 2001)). The court “must construe
the complaint in the light most favorable to the plaintiff, accept all of the complaint’s factual

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allegations as true, and determine whether the plaintiff undoubtedly can prove no set of facts
in support of his claim that would entitle him to relief.” Hog Market, 249 F.3d at 512. The
court need not, however, accept legal conclusions presented in the complaint, nor should it
make unwarranted factual inferences. See PONI, 399 F.3d at 697 (quoting Mixon v. Ohio,
193 F.3d 389, 400 (6th Cir. 1999)).
Further, “a pleading must contain a ‘short and plain statement of the claim
showing that the pleader is entitled to relief.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)
(quoting Fed. R. Civ. P. 8(a)). “[A] complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’ . . . 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, 129 S.
Ct. at 1949 (citing and quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 570 (2007)).
“A pleading that offers labels and conclusions . . . will not do.” Id. (quotation and citation
omitted).
III.
Analysis
A. Preemption
As noted, plaintiff’s complaint contains a single count: state law conversion.
By its motion for judgment on the pleadings, defendant argues that this state law claim is
preempted by the Food Security Act of 1985, 7 U.S.C. § 1631 (“FSA”). Defendant is correct.

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With exceptions not relevant to the issue of preemption, the FSA provides that
“notwithstanding any other provision of Federal, State, or local law, a buyer who in the
ordinary course of business buys a farm product from a seller engaged in farming operations
shall take free of a security interest created by the seller, even though the security interest is
perfected; and the buyer knows of the existence of such interest.” 7 U.S.C. § 1631(d)
(emphasis added).2 Congress enacted the FSA “to protect farm products purchasers from
double payment.” Farm Credit Midsouth v. Farm Fresh Catfish, 371 F.3d 450, 452 (8th Cir.
2004).
[T]he exposure of purchasers of farm products to double payment inhibits free
competition in the market for farm products . . . and this exposure constitutes
a burden on and an obstruction to interstate commerce in farm products. The
purpose of [the FSA] is to remove such burden on and obstruction to interstate
commerce in farm products.
7 U.S.C. § 1631(a)(3)-(4), (b). Tennessee law recognizes that “[a] buyer in ordinary course
of business buying farm products from a person engaged in farming operations would take
free of a security interest created by the buyer’s seller as provided in Section 1324 of the
federal Food Security Act of 1985, 7 U.S.C. § 1631.” Tenn. Code § 47-9-320(a).
The complaint in this case alleges that defendant, with knowledge of plaintiff’s
perfected security interests, purchased and sold the Manleys’ crops without paying plaintiff
the value of its liens. That is the precise factual circumstance covered by the FSA,
“notwithstanding any other provision of Federal, State, or local law . . . .” 7 U.S.C. §
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It appears that the crop at issue in this case is tobacco. Tobacco is a “farm product”
covered by the Food Security Act. See 9 C.F.R. § 205.206(a).

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1631(d). Plaintiff’s state law conversion claim is therefore preempted by the FSA. See
United States of America v. Winter Livestock Comm’n, 924 F.2d 986, 993 n. 8 (10th Cir.
1991) (noting preemptive effect of FSA on conversion claims); Farm Credit Servs. of Mid
Am. v. Rudy, Inc., No. C-3-93-271, 1995 WL 1622801, at *6 (S.D. Ohio, Mar. 8, 1995) (The
FSA “is intended to preempt state law . . . to the extent necessary to achieve the goals of the
legislation.”) (citation omitted); Tallahatchie County Bank v. Marlow (In re Julien Co.), No.
90-20283-B, 1992 WL 65723, at *3 (Bankr. W.D. Tenn. Apr. 3, 1992) (noting the
preemptive effect of the FSA over matters addressed therein); First Nat’l Bank & Trust v.
Miami County Coop. Ass’n, 897 P.2d 144, 151 (Kan. 1995) (The FSA “preempts the Kansas
Uniform Commercial Code provisions and any other federal, state, or local law governing
security interests in agricultural products and production of agricultural products.”); State
Bank of Cherry v. CGB Enters., 964 N.E.2d 604, 608 (Ill. App. Ct. 2012) (“Section 1631(d)
is a clear expression of an intent to preempt state law.”).
Because plaintiff’s single-count state law complaint is preempted by federal
law, the complaint must be dismissed. See, e.g., Allis-Chalmers Corp. v. Lueck, 471 U.S.
202, 220 (1985) (ERISA); Monroe Retail, Inc. v. RBS Citizens, N.A., 589 F.3d 274, 277-78,
281 (6th Cir. 2009) (National Banking Act); Broyde v. Gotham Tower, Inc., 13 F.3d 994 (6th
Cir. 1994) (Federal Communications Act). Defendant’s motion for judgment on the
pleadings will accordingly be granted.

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B. Amendment of Complaint
Plaintiff has not file a motion to amend its complaint. Nonetheless, the court
will address the last full paragraph of plaintiff’s response brief, which reads in material part,
In the event the Court considers the Complaint as currently stated to be
insufficient to survive the motion for judgment on the pleadings, New London
requests leave to amend the Complaint . . . , especially to attach the relevant
notices and further evidence of their receipt by BSC. . . . It is New London’s
position that the Complaint states a cause of action upon which relief can be
granted; however, it would ask for leave to amend the Complaint in the event
the Court considers it insufficient for any reason.
[Doc. 10, p. 11].
Plaintiff has not properly moved to amend its complaint by filing an actual
motion. It is unacceptable for a litigant to bury a motion inside a brief. A motion must be
filed as a separate, freestanding document. For that reason alone, the court will deny leave
to amend.
The court acknowledges that it “should freely give leave [to amend a
complaint] when justice so requires.” Fed. R. Civ. P. 15(a)(2). Despite this lenient standard,
leave to amend should not be granted in instances where the proposed amendment would be
futile. See Foman v. Davis, 371 U.S. 178, 182 (1962). “Amendment of a complaint is futile
when the proposed amendment would not permit the complaint to survive a motion to
dismiss.” Miller v. Calhoun County, 408 F.3d 803, 817 (6th Cir. 2005).
The amendment suggested in plaintiff’s response brief would be futile.
Plaintiff suggests only that it might produce an amended complaint containing more facts and

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exhibits. No mention is made of amending the complaint to add a claim under the
preemptive FSA.3 Plaintiff’s suggested amendment would be futile, as a fleshed-out
conversion claim would still be preempted by the FSA.
C. Remaining Issues Moot
In addition to the issues discussed herein, the parties dispute the necessary
contents of a notice under the FSA’s direct notice exception and whether the FSA requires
strict, or merely substantial, compliance with the requirements of its direct notice exception.
The court’s rulings in the two preceding sections of this opinion render all of the parties’
remaining disputes moot.

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More disturbing is plaintiff’s statement that “it would ask for leave to amend the Complaint
in the event the Court considers it insufficient for any reason.” Plaintiff is openendedly requesting
legal advice, and this court does not give legal advice to its litigants. Plaintiff is not “entitled to an
advisory opinion from the Court pointing out the deficiencies in the complaint and allowing [it] a
free opportunity to cure them.” Azzolini v. Corts Trust II for Provident Fin. Trust I (In re
UnumProvident Corp. Sec. Litig.), 396 F. Supp. 2d 858, 900 (E.D. Tenn. 2005). Moreover, this
court “will not approve of any [motion to amend] whose sole purpose is to avoid or circumvent” a
ruling on a motion to dismiss. Id. at 901 n.19.

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IV.
Conclusion
For the reasons provided herein, defendant’s motion for judgment on the
pleadings will be granted. This civil action will be dismissed. An order consistent with this
opinion will be entered.

ENTER:
s/ Leon Jordan
United States District Judge

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