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Oldfield Club v. TI Oldfield Development LLC

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

November 17, 2017

OLDFIELD CLUB, for itself and on behalf of its members, Plaintiff,
TI OLDFIELD DEVELOPMENT, LLC, and TI OLDFIELD OPERATIONS, LLC, by and through their respective board of directors, John Doe 1-10, individually and as directors between the time period 2010-2015 pre-turnover; OLDFIELD HOLDINGS GA, LLC; PHILLIP GALBREATH; JAMIE D. SELBY, Individually and as managing member of Elliot Group Holdings, LLC; and ELLIOT GROUP HOLDINGS, LLC, Defendants.



         This matter is before the court on defendant Jamie D. Selby (“Selby”) and Elliot Group Holdings, LLC's (“EGH, ” together with Selby, the “Selby Defendants”) motion to dismiss. ECF No. 17. For the reasons set forth below, the court denies the motion.

         I. BACKGROUND

         This action is one of a series of actions arising out of the management and turnover of the Oldfield Community, a development located in Bluffton, South Carolina (“Oldfield”). Am. Compl. ¶ 10. Oldfield Club operates the recreational and social facilities at Oldfield. Id. ¶ 11. TI Oldfield Development, LLC and TI Oldfield Operations, LLC (the “TI Defendants”) are successors to the original holder of declarant rights to Oldfield. Id. ¶¶ 2, 12. Oldfield Club and TI Defendants entered into a “Transfer Agreement, ” which required the TI Defendants to turn over “a first-class golf and country club” to Oldfield Club. Id. ¶ 16, 17. This turnover occurred in December of 2015, but Oldfield Club contends that the turnover was deficient in a number of ways. Id. ¶ 17, 21. Specifically, Oldfield Club argues that the transferred facilities were in need of immediate repair or replacement. Id. ¶ 21. It also takes issue with a number of pre-turnover operational decisions that purportedly delayed the turnover, depleted Oldfield Club's funds, and failed to develop a strong membership base for the club, resulting in significantly lower revenues than contemplated by the Transfer Agreement. Id. Most significantly, Oldfield Club alleges that the turnover should have included the transfer of a parcel known as the Greeters Store. Id. ¶ 21.B. Oldfield Club further alleges that Selby, while serving as Oldfield Club's general manager, secretly conspired with the TI Defendants and a member of Oldfield Club's board of directors, Phillip Galbreath (“Galbreath”), to purchase the Greeters Store through EGH. Id. ¶ 21.G. Oldfield Club terminated Selby in October, 2017. ECF No. 8-1, OCA Action Compl. ¶ 43.

         On November 16, 2017, Selby filed an action against Oldfield Club in the Court of Common Pleas for Beaufort County, South Carolina (the “Selby Action”), bringing claims for breach of contract and defamation. ECF No. 8-2, Selby Action Compl. ¶ 4-25. Oldfield Club's answer in the Selby Action included counterclaims against the Selby Defendants for (1) breach of fiduciary duty, (2) civil conspiracy, (3) fraud, (4) interference with contractual relations, (5) breach of contract, (6) negligence, and (7) unjust enrichment. ECF No. 8-3, Selby Action Answer ¶¶ 94- 138.

         On January 23, 2017, Oldfield Club filed the instant action in the Court of Common Pleas for Beaufort County, South Carolina against the TI Defendants, Galbreath, Oldfield Holdings, GA, LLC, and ten John Doe defendants (the “Original Defendants”).[1] The action was removed to this court on February 15, 2017. ECF No. 1. On March 2, 2017, Oldfield Club filed an amended complaint, adding the Selby Defendants as parties. ECF No. 6. The amended complaint brings the following claims against the Selby Defendants: (1) negligence and negligent misrepresentation, (2) civil conspiracy and request for declaratory relief, (3) quantum meruit, and (4) declaratory judgment. Am. Compl. ¶¶ 31-34, 47-61.

         On March 24, 2017, the Selby Defendants filed a motion to dismiss, ECF No. 17, and Oldfield Club filed a response on April 6, 2017, ECF No. 24. The court held a hearing on this motion on June 6, 2017. ECF No. 53. For the reasons set forth below, the court denies the Selby Defendants' motion to dismiss.

         II. STANDARD

         Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss for “failure to state a claim upon which relief can be granted.” When considering a Rule 12(b)(6) motion to dismiss, the court must accept the plaintiff's factual allegations as true and draw all reasonable inferences in the plaintiff's favor. See E.I. du Pont de Nemours & Co. v. Kolon Indus., 637 F.3d 435, 440 (4th Cir. 2011). But “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). On a motion to dismiss, the court's task is limited to determining whether the complaint states a “plausible claim for relief.” Id. at 679. Although Rule 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief, ” “a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). “Facts pled that are ‘merely consistent with' liability are not sufficient.” A Soc'y Without a Name v. Virginia, 655 F.3d 342, 346 (4th Cir. 2011) (quoting Iqbal, 556 U.S. at 678).


         The Selby Defendants argue that the claims against them should be dismissed under the abstention doctrine articulated in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). Selby Def.'s Mot. Oldfield Club agrees that the court should abstain from adjudicating the claims against the Selby Defendants. Oldf. Club's Resp. 2. More specifically, however, Oldfield Club asks the court to abstain from exercising its jurisdiction over all of its claims against all of the defendants.[2] Id. Despite its interest in having the case heard in state court, Oldfield Club objects to the motion to dismiss only the claims against the Selby Defendants, arguing that it would be improper for the court to abstain from hearing only part of this action while retaining jurisdiction over the claims against the remaining defendants. Id. at 2, 8-9. The Original Defendants did not file a response to the Selby Defendants' motion.[3]

         In Colorado River, the Supreme Court recognized that “[g]enerally, as between state and federal courts, the rule is that ‘the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction . . . .'” 424 U.S. at 817 (quoting McClellan v. Carland, 217 U.S. 268, 282 (1910)). Nevertheless, the Court recognized that:

[T]here are principles unrelated to considerations of proper constitutional adjudication and regard for federal-state relations which govern in situations involving the contemporaneous exercise of concurrent jurisdictions, either by federal courts or by state and federal courts. These principles rest on considerations of “(w)ise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.”

Id. (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 182 (1952)). Because federal courts owe a “virtually unflagging obligation [] to exercise the jurisdiction given them, ” Colorado River abstention applies only in ...

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