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Village Park Homes LLC v. Hancock Askew & Co. LLP

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

December 21, 2016

VILLAGE PARK HOMES LLC, et al. Plaintiff,



         This matter is before the court on defendant Hancock Askew & Co LLP's (“Hancock”) motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) because plaintiffs Village Park Homes LLC and Hilton Head Custom Homes LLC (collectively, “plaintiffs”) have failed to state a claim for which relief may be granted (“12(b)(6) motion”). For the reasons set forth below, the court denies Hancock's 12(b)(6) motion.

         I. BACKGROUND

         The instant dispute arises from an alleged breach of contract between plaintiffs, both South Carolina Limited Liability Companies with corporate headquarters and principal place of business in the State of South Carolina, and Hancock, a certified public accountant firm with its headquarters and principal place of business in a state other than South Carolina. Compl. ¶¶ 1-2. In early 2015, plaintiffs retained the services of Hancock for the preparation of a Combined Financial Statement and Independent Accountant's Review Report (“the Report”) for the year ending in December 31, 2014. Id. ¶ 5. The engagement letter for the Report stated that Hancock would “properly comply with all applicable regulations, standards and customary procedures” in conducting the review. Id. ¶ 4.

         Plaintiffs allege that the Report was not completed in compliance with the engagement letter because: (1) it did not accurately and properly reflect the current financial condition of the plaintiff as of December 31, 2014; (2) the figures for various accounts, including the cash accounts, were not accurate and did not coincide with the bank records for the corresponding accounts; (3) a substantial number of business operations transactions were not included; (4) it was not prepared in compliance with all applicable regulations, standards, and customary procedures. Id. ¶ 6. Plaintiffs allege that the breach of this engagement letter resulted in a “substantial loss” to the plaintiffs. Id. ¶ 7. Plaintiffs ask for actual damages plus prejudgment interest in an amount “in excess of $10, 000.” Id. ¶ 3.

         Hancock removed the case from the Beaufort County Court of Common Pleas on August 12, 2016. In the notice of removal, Hancock asserts that “the amount in controversy in this action exceeds $75, 000.” ECF No. 1-1. Upon removal, Hancock filed a 12(b)(6) motion on August 12, 2016. ECF No. 5. Plaintiffs filed a response on August 29, 2016, ECF No. 8, to which Hancock replied on September 9, 2016, ECF No. 10. Upon reviewing the complaint and the notice of removal, the court ordered supplemental briefing on the amount in controversy issue sua sponte to determine if the court had federal subject matter jurisdiction over this case under 28 U.S.C. § 1332(a). The parties filed supplemental briefing on the amount in controversy issue by the November 4, 2016 deadline specified by the court. ECF Nos. 15, 16. The 12(b)(6) motion has been fully briefed and is now ripe for the court's review.

         I. STANDARD

         A. Subject Matter Jurisdiction

         Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). A district court may consider the propriety of subject matter jurisdiction and must remand a case to state court if federal jurisdiction is lacking. See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 196 (4th Cir. 2008); see also 28 U.S.C.A. § 1447(c) (“If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.”). The burden of establishing federal jurisdiction rests upon the party asserting jurisdiction. Barbour v. Int'l Union, 640 F.3d 599, 605 (4th Cir. 2011) (en banc), abrogated on other grounds by 28 U.S.C. § 1446(b)(2)(B).

         In determining the amount in controversy for federal diversity jurisdiction, the court must examine the complaint at the time of removal. Thompson v. Victoria Fire & Casualty Co., 32 F.Supp.2d 847, 848 (D.S.C. 1999) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 292 (1938)). Generally, “the sum claimed by a plaintiff in her complaint determines the jurisdictional amount, and a plaintiff may plead less than the jurisdictional amount to avoid federal jurisdiction.” Phillips v. Whirlpool Corp., 351 F.Supp.2d 458, 461 (D.S.C. 2005). However, where a complaint includes a request for nonmonetary relief or a request for a money judgment in a state that permits recovery in excess of the amount demanded, the court can look to the Notice of Removal to determine the amount in controversy. 28 U.S.C. § 1446(c)(2)(A). If the court finds by a preponderance of the evidence that the amount in controversy exceeds the amount specified in section 1332(a), then removal is proper. 28 U.S.C. § 1446(c)(2)(B).

         B. Rule 12(b)(6) Motion

         A Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) . . . does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally sufficient, a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).

         A Rule 12(b)(6) motion should not be granted unless it appears certain that the plaintiff can prove no set of facts that would support his claim and would entitle him to relief. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When considering a Rule 12(b)(6) motion, the court should accept all well-pleaded allegations as true and should view the complaint in a light most favorable to the plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999); Mylan Labs., Inc., 7 F.3d at 1134. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id.

         III. ...

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