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Doosan Machine Tools America Corp. v. Machinery Solutions, Inc.

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

March 19, 2018

Doosan Machine Tools America Corporation, Plaintiff,
v.
Machinery Solutions, Inc., Frank Carl Amick, and James B. DuBose, Defendants.

          ORDER AND OPINION

         Plaintiff Doosan Machine Tools America Corporation (“Doosan” or “DMTA”) filed this action against Defendants Machinery Solutions, Inc. (“MSI”), Frank Carl Amick and James B. DuBose (collectively “Defendants”) to recover actual, compensatory, consequential, special and punitive damages for their alleged breach of contract, conversion and unjust enrichment. (ECF No. 1 at 7 ¶ 40-12 ¶ 83.)

         This matter is before the court pursuant to Doosan's Motion for Judgment on the Pleadings under Rule 12(c) of the Federal Rules of Civil Procedure. (ECF No. 25.) Specifically, Doosan requests that the court grant it “judgment on the pleadings dismissing the affirmative defenses of Defendants” and “judgment against MSI and the Guarantors [Amick and DuBose] on its claims for breach of contract.” (Id. at 1.) Defendants oppose Doosan's Motion in its entirety. (ECF No. 30.) For the reasons set forth below, the court DENIES Doosan's Motion for Judgment on the Pleadings.

         I. RELEVANT BACKGROUND TO PENDING MOTION

         Doosan alleges that it “manages the sales, service, and technical support in North and South America for [][South Korean corporation Doosan Machine Tools] of Computer Numerical Control (CNC) machine tools and related parts, attachments, accessories, products, and other inventory (collectively, the “Equipment”).” (ECF No. 1 at 2 ¶ 7.) Doosan alleges that it had a contractual relationship with MSI, “a former distributor for DMTA in South Carolina, North Carolina, and Georgia.” (Id. at 3 ¶ 12.) Specifically, in February 2009, Doosan and MSI agreed to a “Letter of Understanding” or “Distributor Agreement” to outline the sale of new machine tool products in North Carolina, South Carolina, and Georgia. (ECF No. 1-1 at 2-4.) Pursuant to the terms of the Distributor Agreement, either party could terminate the agreement, at any time for any reason whatsoever, by giving the other party prior written notice of at least 30 days. (ECF No. 1-1 at 4 ¶ XIII.) Additionally, on May 11, 2009, Amick and DuBose each signed a Limited Guaranty to allegedly “protect DMTA in the event that MSI fails to promptly pay DMTA in full, and in cash, an amount owed to it regarding the sale or disposal of Equipment to MSI's customers in a timely manner.” (ECF No. 1 at 4 ¶ 21 (referencing ECF Nos. 1-2 & 1-3).)

         On August 21, 2015, MSI received a letter (the “August Letter”) from Doosan's President in which he communicated the intent of Doosan to terminate the Distributor Agreement with MSI in thirty days. (ECF No. 1 at 3 ¶ 18.) After the termination, Doosan alleges that it “honored certain Equipment orders placed by MSI before the Termination [][, ] delivered the Equipment as MSI had requested” and sent Defendants invoices for the orders. (Id. at 5 ¶¶ 27-29.) Doosan further alleges that Defendants were paid for the aforementioned orders but did not remit payments to Doosan due under the terms of the Distributor Agreement. (Id. at 6 ¶¶ 30-31.)

         On June 27, 2016, Doosan alleges that its attorney sent a demand letter (the “June Demand Letter”) to Defendants' attorneys requesting that Defendants pay $657, 678.00 to Doosan by July 5, 2016.[1] (ECF No. 1 at 6 ¶ 33.) On March 27, 2017, Doosan's counsel sent a second demand letter (the “March Demand Letter”) to Defendants' counsel requesting $1, 666, 035.00.[2] (Id. at 7 ¶ 37.) Doosan alleges that Defendants failed to remit payment upon receipt of the June and March Demand Letters. (Id. ¶ 39.)

         On April 3, 2017, Doosan commenced the instant action against Defendants in this court asserting state law claims for breach of contract, conversion, promissory estoppel and unjust enrichment. (ECF No. 1 at 7 ¶ 40-12 ¶ 83.) On July 5, 2017, Doosan filed the instant Motion for Judgment on the Pleadings. (ECF No. 25.) On July 19, 2017, Defendants filed a Memorandum in Response to Doosan's Motion for Judgment on the Pleadings (ECF No. 30), to which Doosan filed a Reply Memorandum in Further Support of Judgment on the Pleadings (ECF No. 31) on July 26, 2017.

         II. JURISDICTION

         The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a)(1) based on Doosan's allegations that there is complete diversity of citizenship between it and Defendants, and the amount in controversy herein exceeds the sum of Seventy-Five Thousand ($75, 000.00) Dollars, exclusive of interest and costs. (See ECF No. 1 at 1 ¶ 1-2 ¶ 5.) MSI is a corporation organized under the laws of South Carolina with its principal place of business in Lexington County, South Carolina. (Id. at 2 ¶ 2.) Amick is a resident of Lexington County, South Carolina (id. ¶ 3) and DuBose is a resident of Orangeburg County, South Carolina. (ECF No. 11 at 2 ¶ 6.) Doosan is incorporated in the State of New York and has its principal place of business in Pine Brook, New Jersey. (ECF No. 1 at 1 ¶ 1.) Moreover, the court is satisfied that the amount in controversy exceeds $75, 000.00 in accordance with Doosan's representation. (Id. at 2 ¶ 5.).

         III. LEGAL STANDARD

         Rule 12(c) provides that “[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). “[A] motion for judgment on the pleadings is decided under the same standard as a motion to dismiss under Rule 12(b)(6).”[3] Deutsche Bank Nat'l Trust Co. v. IRS, 361 F. App'x 527, 529 (4th Cir. 2010) (citing Independence News, Inc. v. City of Charlotte, 568 F.3d 148, 154 (4th Cir. 2009)); see also Massey v. Ojaniit, 759 F.3d 343, 353 (4th Cir. 2014) (citing Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999)). The key difference between a Rule 12(b)(6) motion and a Rule 12(c) motion is that on a 12(c) motion, the court “consider[s] the answer as well as the complaint” and “documents incorporated by reference in the pleadings.” Fitchett v. Cnty. of Horry, S.C., C/A No. 4:10-cv-1648-TLW-TER, 2011 WL 4435756, at *3 (D.S.C. Aug. 10, 2011) (citations omitted).

         A motion for judgment on the pleadings is intended to test the legal sufficiency of the complaint and will operate to dispose of claims “where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noted facts.” Cont'l Cleaning Serv. v. UPS, No. 1:98CV1056, 1999 WL 1939249, at *1 (M.D. N.C. Apr. 13, 1999) (citing Herbert Abstract v. Touchstone Props., Inc., 914 F.2d 74, 76 (5th Cir. 1990)). “An issue of fact is deemed to be material if the outcome of the case might be altered by the resolution of the issue one way rather than another.” Walker v. Liberty Mut. Ins. Co., C/A No. No. 4:16-cv-01388-RBH, 2017 WL 1020884, at *1 (D.S.C. Mar. 16, 2017) (quoting 5C Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure § 1368 (3d ed. 2011)). “Thus, the plaintiff may not secure a judgment on the pleadings when the answer raises issues of fact that, if proved, would defeat recovery.” Id. “Accordingly, ‘[t]he court must accept all well pleaded factual allegations in the non-moving party's pleadings as true and reject all contravening assertions in the moving party's pleadings as false.'” Catlin Specialty Ins. Grp. v. Lowcountry Oysters of Murrells Inlet, LLC, C/A No. No. 2:17-1528-RMG, 2018 WL 369154, at *1 (D.S.C. Jan. 11, 2018) (quoting Lewis v. Excel Mech., LLC, No. 2:13-CV-281-PMD, 2013 WL 4585873, at *1 (D.S.C. Aug. 28, 2013)). “[W]hen the plaintiff moves for judgment on the pleadings, the motion should be granted if, ‘on the undenied facts alleged in the complaint and assuming as true all the material allegations of fact in the answer, the plaintiff is entitled to judgment as a matter of law.'” Walker, 2017 WL 1020884, at *1 (quoting Lowden v. Cty. of Clare, 709 F.Supp.2d 540, 546 (E.D. Mich. 2010)).

         IV. ANALYSIS

         A. The Parties' Arguments

         Doosan argues that it is entitled to Judgment on the Pleadings for breach of contract because the Complaint contains indisputable facts and Defendants lack valid defenses. (ECF No. 25 at 12.) Doosan's specific argument is as follows:

Doosan is entitled to relief because Doosan and MSI entered into a binding contract when they agreed to the 2009 Contract, and Amick and DuBose entered into a binding contract with Doosan when they signed the Guarantees; MSI breached the 2009 Contract when it failed to remit payment for the Outstanding Orders, and in addition Amick and DuBose breached the Guarantees when they refused to personally and promptly pay all sums due and owing by MSI to Doosan when MSI failed to pay Doosan the money collected related to the Outstanding Orders; and Doosan has suffered damages as a direct and proximate result of the breaches by MSI, Amick, and DuBose because it has not been paid the more than $1.66 million due for the machines that it has been actively attempting to collect for more than a year since amounts first came due.

(Id. at 12-13.) Doosan further argues that Defendants' defense for set-off is unavailable to them because (1) the court has already determined that Defendants do not have a viable claim or defense for set-off, (2) res judicata prevents Defendants from asserting set-off and (3) there is a lack of mutuality between the debt obligations in the instant action and the debt obligations in the case captioned Machinery Solutions, Inc. v. Doosan Machine Tools America Corporation and Ellison Technologies, Inc., Civil Action No. 3:15-cv-03447-JMC (hereinafter the “Termination Case”), alleged by Defendants to support their claim of set-off. (Id. at 13-15.) Additionally, Doosan argues that Defendants' other affirmative defenses of unclean hands, waiver and estoppel either have not been properly pleaded under Rule 8 or are inapplicable to this action. (ECF No. 31 at 11-12.)

         Defendants oppose Plaintiff's Motion for Judgment on the Pleadings asserting that it “should be denied because there are factual disputes between the Plaintiff's Complaint and the Defendants' Answer” regarding “the manner of business transacted between Plaintiff and MSI” and the applicability of the Limited Guaranty agreements to the transactions at issue. (ECF No. 30 at 4-9.) Defendants also assert that they have properly pleaded affirmative defenses of set-off, unclean hands, estoppel and waiver that preclude awarding judgment to Doosan due to specific challenges to the veracity of its Complaint. (Id. at 9-16 (referencing ECF No. 11 at 2 ¶ 4, 4 ¶¶ 36-38).) Finally, Defendants ...


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