LAUREL GARDENS, LLC et al v. MCKENNA et al

Filing 200

MEMORANDUM ORDER granting 60 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AND IMPROPER VENUE. The Court GRANTS MJL's motion to dismiss the Amended Complaint as to all claims against MJL that are before this Court. Signed by District Judge Mark S. Davis and filed on 7/18/18. (tbro)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA

Norfolk Division

LAUREL GARDENS, LLC, et al.,

Plaintiffs,
Civil No. 2:18cv210

V.

MJL ENTERPRISES, LLC,

Defendant.

MEMORANDUM ORDER

This

filed

by

matter

Rule

alleges

that

American

before

defendant

Federal

Eastern

is

of

Civil

the

of

Court

Enterprises,

Procedure

Amended

District
Winter

MJL

the

LLC

Complaint,

LLC,

a

motion

to

dismiss

{^'MJL")

12(b)(6).

Pennsylvania

Services,

on

pursuant

ECF

60.

No.

originally filed

in

to
MJL

the

by

Laurel

Gardens,

LLC,

Laurel

Garden

Holdings,

LLC,

LGSM, GP, and Charles P. Gaudioso (collectively, "Plaintiffs"):

(1)

is

barred

by

a

settlement

agreement

from

a

prior

case

litigated in this Court; and (2) alternatively fails to state a
claim upon which relief can be granted.

Id.

A. Factual and Procedural Background

On March 9, 2015, in a previous civil action filed in this
Court,

MJL

filed

a

complaint

against

Laurel

Gardens,

LLC

("Laurel Gardens"), raising claims related to a contract awarded

to MJL under the New Jersey Department of Transportation's "Good

Neighbor Planting Program."
at 1.

Case No. 2:15cvl00, ECF No. 34-1,

Less than a week later, Laurel Gardens filed suit against

MJL in New Jersey similarly raising claims associated with the

Good Neighbor contract.
MJL

entered

into

a

Id.

global

On May 6, 2016, Laurel Gardens and
settlement

agreement

("Settlement

Agreement") with respect to both the "Virginia litigation" and
the "New Jersey litigation."

Id.

The Agreement, which was

filed on the docket of this Court, states in pertinent part:

The Parties agree to mutually release each other for
all claims and disputes, asserted or un-asserted and
arising out of, any acts, failures to act, omissions,
misrepresentations, facts, events, transactions, or
occurrences

described

in

either

the

Virginia

litigation or the New Jersey litigation, or otherwise
related to the Good Neighbor contract.

Id.

at

2-3.

The

Settlement

Agreement

further

provides

that

Virginia law governed the parties' rights and duties and that
the parties "consent[] to the jurisdiction of [this Court] with
respect

to

any

further

litigation

or

dispute

between

the

Parties, whether related or unrelated to this Agreement, the New

Jersey litigation, the Virginia litigation, or the Good Neighbor
contract."

Id. at 4-5.

On April 21, 2017, the instant civil action was filed in
the

Eastern

District

of

Pennsylvania

by

Laurel

Gardens,

and

several associated plaintiffs, against MJL and more than thirty
other

named

defendants.

ECF

No.

43.

Multiple

motions

to

dismiss were filed by various defendants in that case, with MJL

seeking

dismissal

under

Rule

12(b)(6)

and

alternatively

requesting that the case against it be severed and transferred
to this Court in light of the fact that the Plaintiffs' factual
allegations were associated with the Good Neighbor contract and

were

therefore

covered

Agreement.

EOF

No.

Pennsylvania

denied

by

the

60.
the

motions to dismiss, he

terms

of

Although
various

the

the

prior

district

defendants'

Rule

granted MJL's alternative

Settlement

judge

in

12(b)(6)

request, and

''sever[ed] Plaintiffs' claims against MJL," transferring them to

this Court with the express clarification that such ruling "does
not address the merits of MJL's motion to dismiss for failure to

state a claim."
transfer,

no

ECF No. 146, at 6 n.2.

party

has

filed

a

motion,

Subsequent to such
brief,

or

any

other

document in this Court relating to the merits of MJL's pending

motion to dismiss.

Such motion is therefore ripe for review.
B. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) pemits dismissal

of a complaint, or a claim within a complaint, based on the

plaintiff's "failure to state a claim upon which relief can be
granted."

Fed. R. Civ. P. 12(b)(6).

A Rule 12(b)(6) motion to

dismiss must be

analyzed in conjunction with

Civil Procedure

8(a),

Federal Rule of

thus requiring that a complaint allege

sufficient facts to render a claim "plausible on its face" and
"raise a right

to relief

above

the

speculative

level on the

assumption that all the allegations in the complaint are true
(even if doubtful in fact)."

Bell Atl. Corp. v. Twombly^

550

U.S. 544, 555, 570 (2007) (internal citations omitted).

In assessing the plausibility of a claim, a district court
may "consider documents attached to the complaint, see Fed. R.
Civ.

P.

10(c),

dismiss,

so

as

long

authentic."

well

as

as

they

those

are

attached

integral

Philips v. Pitt Cty.

180 (4th Cir. 2009).

to

to

the

the

motion

to

complaint

and

Mem'l Hosp., 572 F.3d 176,

Additionally, the court may take judicial

notice of matters of public record relevant to an affirmative
defense

if

such
Id.

complaint.
be

defense

Judicial notice is permissible when a fact can

"accurately

and

clearly

readily

appears

on

determined

from

accuracy cannot reasonably be questioned."
Here,

MJL's

affirmative

defense

the

face

of

sources

the

whose

Fed. R. Evid. 201.

seeks

to

rely

on

the

release that was entered as part of a negotiated settlement of
the prior case in this Court, and such prior case is referenced

in

Plaintiffs'

(identifying

Company,"

to

the

amended
prior

include

lawsuit was filed).

complaint.

See

Virginia lawsuit

a

reference

to

ECF

No.

43

H

219

between MJL and "the

the

date

such

previous

MJL's reliance on the release executed in

that case is procedurally similar to raising a defense of "res

judicata," a defense that the Fourth has addressed as follows:

[The

plaintiff]

also

argues

that

Rule

12(b)(6)

dismissal of his lawsuit on the basis of res judicata

was procedurally inappropriate because the defense of
res judicata was not clearly established by the
affirmative
allegations
of
the
complaint.
We
disagree.
This Court has previously upheld the
assertion of res judicata in a motion to dismiss. See
Thomas v. Consolidation Coal Co., 380 F.2d 69, 75 (4th

Cir. 1967).
Although an affirmative defense such as
res judicata may be raised under Rule 12(b)(6) "only
if it clearly appears on the face of the complaint,"
Richmond, Fredericksburg & Potomac R. Co. v. Forst, 4
F.3d 244, 250 (4th Cir. 1993), when entertaining a
motion to dismiss on the ground of res judicata, a
court may take judicial notice of facts from a prior
judicial proceeding when the res judicata defense
raises no disputed issue of fact, see Day v. Moscow,

955 F.2d 807, 811 (2d Cir. 1992);^ Scott v. Kuhlmann,
746

F.2d

Newberry

1377,

1378

Cir.

1984);

Briggs

v.

Dist., 838 F. Supp. 232, 234
989 F.2d 491 (4th Cir. 1993)
(unpiablished).
Because [the plaintiff] does not
dispute the factual accuracy of the record of his
previous
suit
against
[the
defendant]
in
[his]
(D.S.C.

County

(9th

1992),

Sch.

aff ^d,

official capacity, the district court did not err in
taking judicial notice of this prior case.
Andrews v. Daw, 201 F.3d 521, 524 n.l (4th Cir. 2000).
C. Discussion

The

became

Settlement

a

public

approximately

Agreement

record

nine

between

when

months

filed

before

Laurel

on

this

and

MJL

Court's

docket

filed

their

Plaintiffs

complaint in Pennsylvania district court.
ECF No. 34-1.

Gardens

Case No. 2:15cvl00,

Directly contrary to Plaintiffs' assertion that

"Defendants

.

.

.

have

settlement

agreement

not

under

asked

any

this

Court

evidentiary

to

consider

standard

the

(e.g.

^ In Day, the Second Circuit held that the affirmative defense of res
judicata is properly addressed through a Rule 12(b)(6) motion ''when all
relevant facts are shown by the court's own records, of which the court
takes notice."
Day, 955 F.2d at 811.
Similarly, here, the release at
issue is found within this Court's "own records."

judicial notice)" ECF No. 91, at 42, MJL's Rule 12(b)(6) motion
expressly

asserts

201,

Court

the

that

may

Pursuant

take

to

judicial

Federal

notice

Rule

of

of

the

Evidence

Settlement

Agreement & Mutual Release, a copy of which was filed with the
United

States

District

Court

for

Virginia," ECF No. 60, at 3 n.l.

the

Eastern

District

of

Furthermore, Plaintiffs do not

dispute the factual accuracy of the public docket containing the
release.
or

There being no valid reason to disregard the existence

contents

of

such

public

document,

a

document

executed

by

Laurel Gardens close in time to the filing of the instant suit,

this

Court

takes

judicial

notice

of

such

court

record.

See

Clark V. BASF Salaried Employees' Pension Plan, 329 F. Supp. 2d

694, 697 (W.D.N.C. 2004) (collecting cases).

Having taken judicial notice, the Court separately finds
that nothing in the record, even unproven facts proffered in

opposition to dismissal, call into question the validity and/or
enforceability of the release contained in the jointly executed
Settlement Agreement.

While

Plaintiffs ostensibly attack the

MJL Settlement Agreement in their omnibus response in opposition
to

fifteen

discrete

motions

to

dismiss

filed

by

various

defendants in Pennsylvania, their attack is ineffective on its
face,

as

it

broadly

contends

that

unspecified

''Defendants"

breached the settlement agreement attached to such defendants'

motions,

yet fails

to offer even a

broad

description of

the

alleged

breach,

does

not

identify

any

breached

contractual

terms, and fails to even outline at a macro level when or how

such agreement was purportedly breached, or even which named

party breached it.
enforceability
Plaintiffs
through

of

instead

discovery,

ECF No. 91, at 42-44.
the

unidentified

advance
they

the

will

In questioning the

settlement

speculative
demonstrate

agreement(s),

assertion
that

that,

unspecified

defendants (presumably including MJL) breached their settlement
agreement(s).

Id.

at

42.

Additionally,

Plaintiffs

vaguely

reference ''correspondence of Charles Brown, esquire" as evidence
documenting a breach of the settlement agreement(s), noting that

such correspondence
brief.

Id.

at 43;

is attached
however,

no

as an exhibit to Plaintiffs'
such

exhibit

is

attached

by

Plaintiffs.^

In response to such vague allegations, MJL's reply brief

reports

a

complete

lack

of

knowledge

regarding

any

alleged

breach of the MJL Settlement Agreement, and expressly questions
whether the Plaintiffs' vague references to "certain Defendants"
seeking to enforce a breached settlement agreement even refers
to MJL, as contrasted with one of the other thirty-plus named

^ Plaintiffs' vague reference to such correspondence does not identify MJL
as the breaching party, nor does it provide any further detail about the
alleged breach.
Out of an abundance of caution, and to ensure that no
documents were misplaced through transfer, this Court reviewed the
electronic docket for the Eastern District of Pennsylvania, but the
referenced

exhibit

was

5:17cv570, ECF No. 91.

also not filed

on

that

court's

docket.

Case

No.

defendants with whom Plaintiffs may have executed a different

settlement

agreement

district court.

prior

to

filing

ECF No. 95, at 2.

suit

in

Pennsylvania

Subsequent to MJL taking

such position, Plaintiffs did not request leave to file a surreply in Pennsylvania, or in this Court subsequent to transfer,
instead

resting

Defendants"

on

breached

unspecified

ways.

their

vague

assertion

unidentified

Accordingly,

on

release
these

that

"certain

agreements

unique

facts

in

where

Plaintiffs have offered such a vague response that it cannot be
determined

whether

it

is

even

directed

at

MJL,

the

current

record fails to reflect a factual dispute as to whether the MJL
Settlement Agreement is enforceable.

Cf. Jared & Donna Murayama

1997 Tr. ex rel. Murayama v. NISC Holdings, LLC, 82 Va. Cir. 38
(2011), aff'd sub nom. Jared & Donna Murayama 1997 Tr. v. NISC

Holdings, LLC, 284 Va. 234, 727 S.E.2d 80 (2012) (granting the
defendant's demurrer after a settlement agreement was advanced

through a motion craving oyer, noting that "[a] valid release

completely bars litigation of the waived claims," and finding
that it was "undisputable" that the settlement before the court
"constitutes

a

valid

release,"

further

finding

that

the

plaintiff "has failed to advance a valid defense to set aside
the Settlement release").

In the final section of the portion of Plaintiffs' brief
that ostensibly responds to MJL's dismissal motion. Plaintiffs

argue

that

the

Plaintiffs'

until

current

after

noting

terms

the

that

of

the

claims

because

Settlement

Pennsylvania

Settlement Agreement
such

Agreement

law

claims

was

precludes

Agreement's release to unaccrued claims.

do

did

not

not

executed,

application

bar

accrue

further

of

the

Rather than advancing

Plaintiffs' position, such statements appear to further indicate
that

Plaintiffs

must

be

referring

to

a

settlement

agreement

involving a party other than MJL as: first, Pennsylvania law
does

not

appear

applicable

in

light

of

the

express

and

unambiguous Virginia choice of law provisions clearly set forth

in the MJL Settlement Agreement; second, and even more telling.
Plaintiffs'

contention

that

the

claims

advanced

in

the

Pennsylvania lawsuit were ''unaccrued" factually conflicts with
Plaintiffs'

own

timeline

of

events,

as

the

MJL

Settlement

Agreement was executed in May of 2016, and Plaintiffs expressly
assert

that

their

current

claims

"accrued

in

February

2016,

after discovery of the conspiracy through forensic analysis."
ECF

No.

91,

alternative

parties

to

agreement
factual

at

45

(emphasis

assertion

the

for

that

settlement

lack

disconnect,

of
as

added);

"the

agreement"

was

Agreement at issue in this case.^

third.

Defendants"

consideration
MJL

and

a

and

were

cannot

further

signatory

Plaintiffs'

to

"additional

enforce

illustrates
the

such

the

Settlement

Id.

^ A mutual release of affirmative claims advanced in competing lawsuits
9

In

sum,

the

relevant

section

of

Plaintiffs'

brief

opposition to dismissal is so broadly worded, including
reference

to

the

"settlement

agreement

attached

to

in

the

certain

Defendants' motion to dismiss," id. at 42 (emphasis added), that
it

is

unclear

Settlement

whether

Agreement

such

brief

between

Laurel

is

even

referring

Gardens

and

to

MJL.

the
Even

assuming that it is referring to the MJL Settlement Agreement,
Plaintiffs: (1) overlook MJL's express request that this Court
take

judicial

notice

of

such

Agreement;

(2)

offer

a

vague

response in opposition based on "correspondence" that is neither
described

in

Plaintiffs'

brief

or attached

thereto;

(3)

offer

the nebulous assertion that discovery is needed to prove that

the unidentified Settlement Agreement is unenforceable; (4) make
no reference to MJL, Virginia law, or any of the actual terms of
the MJL Settlement Agreement; (5) misstate MJL's status as a

signatory to such Settlement Agreement; and (6) offer a legal
defense

that

fails

on

its

face

because

it

is

disproven

by

Plaintiffs' own timeline as to when the instant claims accrued.

Therefore, for the reasons argued by MJL, the MJL Settlement

plainly constitutes valid consideration.

See, e.g., Freedlander, Inc.,

The Mortg. People v. NCNB Nat. Bank of N. Carolina, 706 F. Supp. 1211,
1215 (E.D. Va. 1988); Knight v. Docu-Fax, Inc., 838 F. Supp. 1579, 1581
n.5 (N.D. Ga. 1993).
10

Agreement is properly before the Court and Plaintiffs' tenuous

arguments against its enforceability fail on their face.'^
"Like the termis of any contract, the scope and meaning of a
release

agreement,"

absent

ambiguity,

"is

governed

by

the

intention of the parties as expressed in the document they have
executed."

Berczek

v. Erie Ins.

S.E.2d 89, 91 (2000).^

Grp., 259 Va.

795,

799, 529

Here, Laurel Gardens and MJL executed a

written settlement that unambiguously releases them both from
"all claims and disputes, asserted or un-asserted and arising
out

of,

any

acts,

failures

to

act,

omissions,

misrepresentations, facts, events, transactions, or occurrences

described in either the Virginia litigation or the New Jersey
litigation, or otherwise related to the Good Neighbor contract."
Case

No.

2:15cvl00,

Plaintiffs'
that

the

amended

newly

ECF

No.

complaint

advanced

34-1,

filed

causes

of

at

in

2-3.

this

action

The

case

against

face

of

establishes
MJL

arise

^ This Court is "mindful that judicial notice must not be used as an
expedient for courts to consider ^matters beyond the pleadings' and
thereby upset the procedural rights of litigants to present evidence on
disputed matters."
Goldfarb v. Mayor & City Council of Baltimore, 791
F.3d 500, 511 (4th Cir. 2015) (internal quotation marks and citation
omitted).
That said, here, MJL has pointed to a duly executed release
recently entered in this Court in a prior case addressing the precise same
claims at issue in this case, and Plaintiffs have offered a facially
inadequate response to MJL's invocation of the express protections
afforded by such release. Were this Court to refuse to enforce the terms
of the release based on vague opposition that firmly suggests that
Plaintiffs are referring to a different release executed by a party other
than MJL, no release entered in federal court would ever insulate a party

from the burdens/expense of future federal litigation.

^ This Court applies Virginia law based on the express choice-of-law
provision in the Settlement Agreement.
at 4-5.

11

Case No. 2:15cvl00, ECF No. 34-1,

almost exclusively out of events related to the Good Neighbor
contract.

ECF No. 43 HH 205-19.

Moreover, to the extent that

an additional claim against MJL appears to be unrelated to such
contract, the face of the amended complaint reveals that such

claim still falls within the scope of the release as it arises

out of acts/facts/events described in the Virginia litigation.®
Id.

Therefore,

the

affirmative

defense

advanced

by

MJL

is

apparent from the facts alleged on the face of the complaint
(that is. Plaintiffs' own factual assertions plainly demonstrate

that

the

claims

fall

within

the

scope

of

the

release)

thus

based

**salt

barring litigation of such claims in this action.

®

Plaintiffs

contracts"

contend

that

MJL

that

MJL

entered

is

into

Pennsylvania case (Tim McKenna).

liable
with

to

Plaintiffs

another

defendant

on

named

in

the

MJL's filings in support of dismissal

assert that such matters still fall within the scope of the release, ECF
No. 60, at 10, and Plaintiffs do not contest such representation.
That
said, MJL at one point in its briefing labels the salt contract

allegations as "new material allegations" not raised in the prior
lawsuits, id. at 6-7, and notwithstanding Plaintiffs' silence on this

issue, this Court deemed it necessary to review the cited public records
from the prior suit to ensure that there is no plausible claim that the
salt contracts fall outside of the scope of the release.
A review of
Laurel Gardens' "Answer and Counterclaim" in the prior Virginia Litigation
conclusively resolves such issue, as Laurel Gardens expressly alleged in
that case both that MJL was "doing business with Tim McKenna . . . in
connection with the purchase of industrial road salt," and that "Tim
McKenna has stolen and or embezzled hundreds of thousands of dollars-worth

of goods, services and cash from [Laurel Gardens] and/or its affiliated
companies."
Case No. 2:15cvl00, ECF No. 27, at Counterclaim
12-13
(emphasis added).
Accordingly, to the extent that Plaintiffs now assert
that MJL purchased salt from Tim McKenna with knowledge that such salt
actually belonged to Plaintiff American Winter Services (and not Tim
McKenna), ECF No. 43
199, 221-24, such allegations are plainly within
the scope of the release as they constitute previously "un-asserted"
claims "arising out of, any acts . . . facts, events, transactions, or
occurrences described in . . . the Virginia litigation."
Case No.
2:15cvl00, ECF No. 34-1, at 2-3.

12

D. Conclusion

For

the

reasons

set

forth

herein,

the

Court

GRANTS

MJL's

motion to dismiss the Amended Complaint as to all claims against
MJL that are before this Court.^

ECF No. 60.

The Clerk is REQUESTED to send a copy of this Memorandum
Order to all counsel of record.

IT IS SO ORDERED.

/s/
Mark S. Davis
UNITED STATES DISTRICT JUDGE

Norfoll^ Virginia
July

2018

^ It remains unclear to this Court why any claims against MJL were
transferred to this Court based on what appears to be a "permissive"
contractual waiver of the right to challenge this Court's jurisdiction, as
contrasted with a mandatory venue clause. Case No. 2:15cvl00, ECF No. 341,

at 4-5; cf.

IntraComm,

Inc. v. Bajaj, 492

F.3d

285,

290

{4th

Cir.

2007).
That said, none of the Plaintiffs have sought reconsideration of
the transfer order or otherwise advanced a post-transfer challenge to
venue and/or jurisdiction in this Court.
This Court further recognizes
that all of the various Plaintiffs' claims against MJL were transferred to
this Court, yet Laurel Gardens is the only Plaintiff that executed the
release relied on by the Pennsylvania court to effectuate such transfer.

Based on the current record, the legal relationship between the Plaintiffs
is unclear, but the various Plaintiff business entities not only share the

same legal address, they collectively identify themselves in the amended
complaint as: "the Company."
ECF No. 43, at 2-3.
Notwithstanding the
lack of clarity in the record on this issue, because the only legal basis
for

the

transfer

of

all

of

"Plaintiffs'

claims"

against

MJL

from

Pennsylvania to this Court is the jurisdictional waiver contained in the
MJL Settlement Agreement, to the extent any Plaintiff is not legally bound

by the terms of the settlement agreement (a claim Plaintiffs failed to
raise in Pennsylvania or in this Court), such Plaintiff's claims are
alternatively dismissed based on improper venue.
13