United States District Court, D. South Carolina, Charleston Division
C. NORTON UNITED STATES DISTRICT JUDGE.
matter is before the court on defendant Southstar Financial
LLC's (“Southstar”) partial motion to
dismiss, ECF No. 21. For the reasons set forth below, the
court grants the partial motion to dismiss and dismisses
GSH's second cause of action-a request for
Alabama, LLC (“GSH”) is an Alabama corporation
that contracts with the United States government to build and
deliver mobile homes to the Federal Emergency Management
Agency (“FEMA”) to aid in disaster relief
efforts. On or about April 4, 2016, GSH entered into a
financing agreement (the “Factoring Agreement”)
with SouthStar Financial, LLC (“SouthStar”), a
South Carolina company. Am. Compl. ¶¶ 1- 2. The
agreement, originally intended to last 36 months, allowed GSH
to periodically sell its accounts to SouthStar and gave
SouthStar a security interest in all of GSH's assets.
Id. ¶ 4.
dispute between the parties over the interpretation of the
Factoring Agreement-particularly regarding the amount
SouthStar owed to GSH after the purchased accounts had been
paid-they reached a settlement agreement (the
“Settlement”), with SouthStar agreeing to pay GSH
$673, 605.00, minus its approximate legal fees and costs
totaling about $25, 000.00, in exchange for complete mutual
releases. Am. Compl. ¶ 6. SouthStar's counsel
offered this settlement in a letter dated July 10, 2017,
stating that the offer would remain open until Friday, July
14, 2017. Id. SouthStar reconfirmed this offer by a
letter dated August 23, 2017, stating that the offer would
remain open for the next ten days and that if not accepted,
SouthStar would “refund $30, 638.41 to GSH after
charging all applicable fees . . . and will consider the
relationship terminated.” Id., see
ECF No. 5-3, 12. GSH says that it orally accepted this
settlement offer in a phone call with SouthStar on August 28,
2017, and reconfirmed by email on September 1, 2017.
Id., see Wilkerson Decl., ¶¶ 2-4.
GSH claims that on September 14, 2017, SouthStar advised GSH
that SouthStar did not intend to abide by the settlement, and
tendered a payment less than the agreed-upon consideration.
Id. ¶ 8, see Wilkerson Decl. ¶ 5.
GSH now seeks to have SouthStar's security interest in
its assets terminated.
filed a complaint against SouthStar in this court on October
5, 2017, ECF No. 1, and then filed an amended complaint on
November 16, 2017, ECF No. 19. GSH alleges that SouthStar has
breached the terms of the Settlement by expressing its
intention to breach and by otherwise failing to honor its
terms. Am. Compl. ¶ 12. In the event that the court
concludes that the parties have not entered a binding
settlement agreement, GSH seeks in the alternative a full
accounting from SouthStar regarding their business dealings
under the Factoring Agreement. Id. ¶¶
14-16. GSH claims that it would need further discovery to
investigate SouthStar's failure to pay GSH pursuant to
the terms of the Factoring Agreement if the Settlement is not
enforced by the court. Id. ¶¶ 14-16. On
December 11, 2017, Southstar filed a motion to dismiss
GSH's second cause of action for failure to state a
claim, ECF No. 21. On December 26, 2017, GSH filed a
response. ECF No. 25. On January 2, 2018, Southstar filed a
reply. ECF No. 26. The motion has been fully briefed and is
ripe for the court's review.
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.”
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 as true all well-pleaded allegations and
should view the complaint in a light most favorable to the
plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251
(4th Cir. 1999). “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.”
first cause of action alleges that SouthStar breached the
terms of the Settlement. Its second cause of action asks for
an accounting of the original Factoring Agreement if the
court determines that the Settlement is not valid. “The
equitable remedy of ‘accounting' . . . refers to
‘an adjustment of the accounts of the parties and a
rendering of a judgment for the balance ascertained to be
due.” Historic Charleston Holdings, LLC v.
Mallon, 673 S.E.2d 448, 453 (S.C. 2009). “[A]n
accounting is designed to prevent unjust enrichment by
disclosing and requiring the relinquishment of profits
received as the result of a breach of a confidential or
fiduciary duty.” Rogers v. Salisbury Brick
Corp., 382 S.E.2d 915, 917 (S.C. 1989). An accounting is
appropriate in three situations: (1) “to prevent
unjust enrichment by disclosing and requiring the
relinquishment of profits received as the result of a breach
of a confidential or fiduciary duty”; (2) “in an
action involving long and complicated accounts where it would
not be practicable for a jury to comprehend the issues and
correctly make adjustments”; and (3) when there is a
need for enhanced discovery. Id. at 916-917. The
court addresses each of these scenarios in turn, finding that
GSH does not qualify for an accounting under any of them.
Breach of a Fiduciary Duty
equitable remedy of accounting originally existed to prevent
unjust enrichment by one party that breached its fiduciary
duty to another. Id., Smith v. Union Central
Life Ins. Co., 99 S.E. 830 (S.C. 1919), Consignment
Sales, LLC v. Tucker Oil Co., 705 S.E.2d 73, 77 (S.C.
Ct. App. 2010), ABC Legal Servs., Inc. v. Korn Law Firm,
P.A., 2015 WL 4068808, at *3-4 (D.S.C. July 2, 2015).
Here, the relationship between GSH and SouthStar is one of
creditor-debtor. Because there is no fiduciary relationship
between the parties, GSH cannot obtain an accounting under
this first prong.