Price et al v. Shelton et al

Filing 37

ORDER Granting in part 6 MOTION to Dismiss For Failure to Name Necessary Parties, Lack of Subject Matter Jurisdiction and Failure to State A Claim filed by Ronald Edward Shelton, H Ronald Shelton; Granting 19 MOTION to Dismiss COUNT ERCLAIM COUNT II FOR FAILURE TO STATE A CLAIM filed by Christian Price, Cassidy Price, and providing leave to Amend their counterclaim within fourteen (14) days of the date of this order; Granting 30 Third Party MOTION to Strike or dismiss 13 Third Party Complaint filed by Matthew McCraw; and Granting the Sheltons' oral motion to join McCraw as a necessary party plaintiff. Signed by Chief Judge Michael F. Urbanski on 10/15/18. (sas)

IN THE UNITED STATES DISTRICT COURT CLERK'SOFFICEU.S. DIST.COURT
AT ROANOKE, VA
FOR THE WESTERN DISTRICT OF VIRGINIA
FILED
ROANOKE DIVISION

OCT 1 6 2018

CASSIDY PRICE, et al.,
Plaintiffs/ Counterclaim
Defendants,

v.
H. Ronald Shelton, et al.,
Defendants/ Counterclaim
Plaintiffs.

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Civil Action No. 7:18cv275
Michael F. Urbanski
Chief United States District Judge

By:

ORDER
Before the court are defendants/ counterclaim plaintiffs H. Ronald Shelton and
Ronald E dward Shelton's (the "S heltons") motion to dismiss pursuant to Rule 12(b)(1), (6),
and (7) (ECF No. 6), plaintiffs/ counterclaim defendants Cassidy Price and Christian Price's
(the "Prices") motion to dismiss count 2 of the counterclaim pursuant to Federal Rule of
Civil Procedure 12(b)(6) (ECF No. 19), and third-party defendant Matthew McCraw's 1
motion to strike or dismiss the third-party complaint. ECF No. 30. T he parties fully briefed
the motions and the court held a hearing on the motions on October 15, 2018. ECF No. 36.
The Sheltons seek to dismiss plaintiff Price Brothers Jerseys, LLC f/ k/ a M&P D airy,
LLC's (the "LLC") breach of contract claim under count 1, count 2's claim for violation of
Virginia Code § 55-225.19, and count 3's claims for negligence/ gross negligence. At this
early stage of the litigation, more factual development is needed to assess whether the LLC is
a third-party beneficiary of the lease agreement at issue. T he parties need to engage in

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Mr. McCraw is sometimes referred to as Mr. "McGraw" in the briefing supporting the motions.

discovery to determine the merits of Count 1. Count 2 also should advance past the motion
to dismiss stage because although Virginia Code § 55-225.19 addresses residential leases, and
the lease agreement primarily is commercial in nature, the Prices allege that the lease was in
part residential and thus the claim cannot be dismissed as a matter of law at this time. Count
3's claims for negligence / gross negligence must be dismissed because this action is based in
contract. All of the Sheltons' rights and obligations arise out of the parties' contractual
relationship and there is no basis for a separate tort claim under the economic loss rule. The
court will entertain any future motions to amend flied by the Prices and / or the LLC if
discovery reveals facts in support of a negligence claim.
In regards to the third-party complaint, counsel for the Sheltons acknowledged at the
hearing that the complaint flied against McCraw did not squarely fit within Federal Rule of
Civil Procedure 14. Counsel for the Sheltons orally moved for McCraw to be added as a
necessary party under Federal Rule of Civil Procedure 19. The court agrees that Rule 14 does
not support the filing of this third-party complaint. The court further finds that McCraw is a
necessary party under Rule 19(a)(1)(B)(ii) because his absence from this action may "leave an
existing party subject to a substantial risk of incurring double, multiple, or otherwise
inconsistent obligations because of [McCraw's] interest" in the lease agreement. Based on
the allegations in the complaint and counterclaim, the Sheltons appear to allege that McCraw
remains obligated to pay rent and may allege that McCraw caused some of the damages at
issue in this action. These allegations create a substantial risk of inconsistent obligations.
The Prices' motion to dismiss count 2 of the counterclaim also is well-taken as the
count currently does not state a claim for relief. The court is skeptical of the Sheltons'

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interpretation of the lease agreement's indemnification provision and its application to the
Prices' claims. However, paragraph 36 of the currently filed counterclaim is incomplete. The
court will provide the Sheltons with fourteen days to file an amended counterclaim that
clarifies paragraph 36, plead any additional facts in support of their indemnification claim,
and name McCraw as a counterclaim defendant.
Accordingly, and for the reasons stated on the record, the court hereby GRANTS in
p art the Sheltons' motion to dismiss (ECF No. 6), GRANTS the Prices' motion to dismiss
(ECF

o. 19), provides the Sheltons LEAVE TO AMEND their counterclaim within

fourteen (14) days of the date of this order, GRANTS McCraw's motion to strike or
dismiss the third-party complaint (ECF

o. 30), and GRANTS the Sheltons' oral motion to

join McCraw as a necessary party plaintiff to this action.
It is SO ORDERED.

Chief United States District Judge

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