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Carolina Cargo, Inc. v. Transportation Personnel Services, Inc.

United States District Court, D. South Carolina, Rock Hill Division

August 29, 2016

Carolina Cargo, Inc. of Rock Hill, Plaintiff,
v.
Transportation Personnel Services, Inc., PTO Services, Inc., Defendants.

          ORDER AND OPINION

         This matter is before the court pursuant to Defendants Transportation Personnel Services, Inc., and PTO Services, Inc.'s (“Defendants”) Motion to Dismiss. (ECF No. 20.) Plaintiff Carolina Cargo, Inc. of Rock Hill (“Plaintiff”) opposes Defendants' Motion to Dismiss. (ECF No. 23.) For the reasons set forth below, the court GRANTS in part Defendants' Motion to Dismiss as to Plaintiff's claims of fraud and unethical trade practices. The court DENIES in part Defendants' Motion to Dismiss as to Plaintiff's declaratory judgment claim.

         I. RELEVANT FACTUAL INFORMATION

         On October 5, 2015, Plaintiff filed a Complaint for Declaratory Judgment in the Court of Common Pleas in York County, South Carolina. (ECF No. 1.) On November 11, 2015, Defendants filed a Notice of Removal asserting that the court possessed jurisdiction over the matter because complete diversity of citizenship exists between the parties and the amount in controversy requirement is met. (Id.) On November 24, 2015, Defendants filed a Motion to Dismiss[1]. (ECF No. 5.) Thereafter, on December 11, 2015, Plaintiff filed a Motion to Amend its complaint, (ECF No. 8), which was granted by this court on July 1, 2016. (ECF No. 16.)

         Plaintiff's Amended Complaint alleges that it entered into a service agreement with Defendants in March of 2013, which established a “Co-employment Relationship” between the parties. (ECF No. 18 at 3 ¶ 12.) Plaintiff further alleges that the Service Agreement constitutes a contract for the provision of “professional employer services” and Defendants were operating as a “professional employer organization” as defined by S.C. Code Ann. § 40-68-10 (2016). (Id. at 3 ¶ 16.) Plaintiff alleges that Defendants are not and have never been licensed by the South Carolina Department of Consumer Affairs to “engage in or offer professional employer services” in South Carolina, and as a result have not satisfied any of the statutorily mandated obligations necessary for licensure as a professional employer organization in South Carolina. (Id. at 4-5.) In count one of the Amended Complaint, Plaintiff seeks a declaratory judgment indicating that Defendants' failure to adhere to the licensing requirements means that the service agreement is an illegal contract and should be voided. (Id.)

         In count two of the Amended Complaint, Plaintiff alleges that the Defendants engaged in fraud and misrepresentation. (ECF No. 18 at 5.) Plaintiff asserts that Defendants, by and through their officers, represented and held themselves out to Plaintiff prior to execution of the Service Agreement as being properly organized and licensed, and capable of entering into and performing the obligation of the Service Agreement in South Carolina. (ECF No. 18 at 5 ¶ 27.) Accordingly, Plaintiff requests actual, consequential, and punitive damages in an amount to be determined by the trier of fact. (ECF No. 18 at 6 ¶ 33.)

         In count three of the Amended Complaint, Plaintiff alleges that the Defendants engaged in unfair trade practices. Plaintiff alleges that Defendants' actions in the conduct of their business, which are capable of repetition and intended to be repeated, affect the public interest and are characterized both by unfairness and deception, and therefore constitute willful violations of South Carolina's Unfair Trade Practices Act (“SCUTPA”), S.C. Code Ann. §§ 39-5-10, 39-5-560 (2014). (ECF No. 18 at 6 ¶ 36.) Accordingly, Plaintiff seeks an award of actual, consequential, and special damages, as well as treble damages, attorney's fees and costs. (Id.)

         On July 19, 2016, Defendants filed a Motion to Dismiss in response to Plaintiff's Amended Complaint. (ECF No. 20.) The court considers Defendants' arguments below.

         II. LEGAL STANDARD

         A. Motion to Dismiss Standard

         A Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted tests the legal sufficiency of a complaint. Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991). While the complaint need not be minutely detailed, it must provide enough factual details to put the opposing party on fair notice of the claim and the grounds upon which it rests. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957)). In order to withstand a motion to dismiss, a complaint must contain factual content that allows the court to reasonably infer that the defendant is liable for the alleged misconduct. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The court must accept the allegations in the complaint as true, and all reasonable factual inferences must be drawn in favor of the party opposing the motion. Id. at 679. If the court determined that those factual allegations can “plausibly give rise to an entitlement of relief, ” dismissal is not warranted. Id.

         B. Declaratory Judgment Standard

         Under the Declaratory Judgment Act, a district court, in a case or controversy otherwise within its jurisdiction, “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The United States Supreme Court has “repeatedly characterized the Declaratory Judgment Act as ‘an enabling Act, which confers discretion on the courts rather than an absolute right upon the litigant.'” Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (quoting Pub. Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241 (1952)). Courts have long interpreted the Act's permissive language “to provide discretionary authority to district courts to hear declaratory judgment cases.” United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998). “[A] declaratory judgment action is appropriate ‘when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and ... when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.'” Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 256 (4th Cir.1996) (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir.1937)).

         III. ANALYSIS

         A. ...


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