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Center for Legal Reform v. Rakowsky

United States District Court, D. South Carolina, Columbia Division

November 14, 2014

Center for Legal Reform, a Nevada Non-Profit Corporation as Successor-in-Interest to Resolution Settlement Corporation, a former Nevada Corporation, Plaintiff,
John Rakowsky, Defendant

For Center for Legal Reform, as Successor-in-Interest on behalf of Resolution Settlement Corporation, Plaintiff: Michael G Sribnick, LEAD ATTORNEY, Michael G Sribnick, Charleston, SC; Guinness I Ohazuruike, Guiness Law Firm, Las Vegas, NV.

For John Rakowsky, Defendant: Amanda Kurzen Dudgeon, David W Overstreet, LEAD ATTORNEYS, Carlock Copeland Semler and Stair, Charleston, SC; Joseph P Garin, Stephen G Keim, Lipson Neilson Cole Seltzer & Garin, P.C., Las Vegas, NV.


Joseph F. Anderson, Jr., United States District Judge.

I. Introduction

This matter comes before the Court on defendant, John Rakowsky's (" Defendant"), Motion for Judgment on the Pleadings against Center for Legal Reform (" Plaintiff") pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. (ECF No. 31). Plaintiff filed a Response to the motion (ECF No. 51), and Defendant filed a Reply. (ECF No. 53). The Court granted the Plaintiff's request for leave of court to file a Surreply. (ECF No. 62). After full briefing on this motion, the Court heard oral arguments on November 10, 2014.[1]

For the reasons discussed below, the Court grants Defendant's motion for judgment on the pleadings.

II. Background Facts

This case arises out a contract that was executed on June 5, 2005, between Resolution Settlement Corporation (" RSC"), South Holdings, and James Spencer, wherein RSC agreed to pay $25, 000 to Southern Holdings and James Spencer (collectively " Borrowers") to fund litigation instituted by Borrowers in South Carolina (" Agreement").

Defendant served as counsel for the Borrowers in the South Carolina litigation, [2] for which the funding was sought from RSC. Plaintiff's complaint, as currently written, alleges causes of action for breach of contract, breach of implied covenant of good faith and fair dealing, intentional misrepresentation, and conversion of property as it relates to the contract with and funds provided by RSC.

Defendant has now moved for judgment on the pleadings on three primary grounds: (1) Plaintiff lacks the requisite standing to bring this suit; (2) Plaintiff's complaint is barred by the statute of limitations; and (3) Plaintiff's causes of action are barred because Defendant was not a party to the contract with RSC. Because standing presents a threshold matter, the Court will address it fist.

III. Standing

Standing refers to the determination of whether a litigant is entitled to have the court decide the merits of the dispute. Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). A challenge to a particular party's standing is permissible at any time because " [s]tanding represents a jurisdictional requirement which remains open to review at all stages of the litigation." Lott v. Scottsdale Ins. Co., 811 F.Supp.2d 1224, 1232 (E.D. Va. 2011) (citing Nat'l Org. for Women v. Scheidler, 510 U.S. 249, 255, 114 S.Ct. 798, 127 L.Ed.2d 99 (1994)).

An analysis of standing requires the Court to ascertain whether the plaintiff is the proper party the litigation. State of W.Va. v. Morgan Stanley & Co. Inc., 747 F.Supp. 332, 340 (S.D. W.Va. 1990) (" Questions of standing involve a determination of whether the plaintiff is the proper party to assert a claim under the applicable substantive law."). Rule 17 of the Federal Rules of Civil Procedure dictates, " an action must be prosecuted in the name of the real party in interest." " The purpose of this rule is to enable the defendant to present his defenses against the proper persons, to avoid subsequent suits, and to proceed to finality of judgment. The question is one of procedure and not substantive law. The real test is whether the named plaintiffs have a right under the substantive law to maintain the action." Rackley v. Bd. of Trustees of Orangeburg Reg'l Hosp., 35 F.R.D. 516, 517 (E.D.S.C. 1964).

The fundamental question in the case before this Court is whether Plaintiff is the real party in interest. The contract in the Southern Holdings case was entered into between RSC, South Holdings, and James Spencer. Therefore, any claims seeking to enforce the Agreement or recover damages for the breach of the Agreement's provisions would only be properly brought by one of the parties to the contract or its privy. " South Carolina contract law carries a presumption that an individual who is not a party to a contract lacks privity to enforce it." Trancik v. USAA Ins. Co., 354 S.C. 549, 553-54, 581 S.E.2d 858, 861 (Ct. App. 2003) (citing Touchberry v. City of Florence, 295 S.C. 47, 48-49, 367 S.E.2d 149, 150 (1988)). " Generally, one not in privity of contract with ...

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