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Hough v. AG South Farm Credit, ACA

United States District Court, D. South Carolina, Anderson/Greenwood Division

March 22, 2018

James N. Hough, Gena G. Hough, Whitfield Farms, LLC, Plaintiffs,
v.
Ag South Farm Credit ACA, Defendant.

          OPINION AND ORDER

          Donald C. Coggins, Jr. United States District Judge.

         This matter is before the Court on Defendant's Motions to Exclude Untimely Disclosures of Plaintiff's Experts and to Dismiss. ECF Nos. 45, 46. Plaintiffs filed Responses in Opposition to both Motions, and Defendant has filed Replies. ECF Nos. 48, 50, 52, 53. Accordingly, the Motions are ripe for review.

         BACKGROUND

         This action was originally filed in the United States District Court for the Middle District of Florida on October 31, 2016. ECF No. 1. On November 21, 2016, Defendant filed a Motion to Dismiss, or in the Alternative, to Transfer Venue to the District Court of South Carolina. ECF No. 7. Plaintiffs filed a Response in Opposition, and on December 9, 2016, this case was transferred to this District pursuant to an Order by the Honorable James S. Moody, Jr., United States District Judge for the Middle District of Florida. ECF Nos. 12, 13.

         This matter is before this Court on the basis of diversity jurisdiction. ECF No. 1. The Complaint raises state law claims, including causes of action for forgery, bank fraud, fraudulent misrepresentation, mail and wire fraud, wrongful foreclosure, and intentional infliction of emotional distress. Id. The facts of this case stem from the execution of a fixed rate note and the subsequent foreclosure action that was decided in the Court of Common Pleas in Edgefield County, South Carolina (“the State foreclosure action”). See id.; see also AgSouth Farm Credit, ACA v. Whitfield Farms, LLC, Fifth Third Bank, NA, and Signature Bank, n/k/a Hancock Bank, No. 2015-CP-19-361 (S.C. Ct. Com. Pleas 2015).

         Plaintiffs contend that James and Gena Hough (“the Individual Plaintiffs”) were managing partners and owners of Whitfield Farms, LLC, (“Whitfield Farms”). On June 6, 2003, the individual Plaintiffs took out a Fixed Rate Note (“the Note”) with Defendant, a lending cooperative and/or credit union specializing in agricultural land. ECF No. 1 at 3. On March 20, 2010, the Note was satisfied. James Hough received notice on January 5, 2014, from Defendant requiring the Individual Plaintiffs to apply to refinance the remainder of their loan for $400, 000 dated February 24, 2012, (“the 2012 Note”) or face foreclosure. Id. Plaintiffs contend that they did not authorize and have never seen the 2012 Note and have never been to Bamberg, South Carolina where the 2012 Note was executed.

         Defendant filed a complaint for foreclosure of the 2012 Note in the Court of Common Pleas in Edgefield County, South Carolina against only Whitfield Farms. Whitfield Farms filed an answer alleging multiple deficiencies in the 2012 Note. The answer and counterclaims were struck because Whitfield Farms, as a corporation, was prohibited from proceeding pro se in that action. On September 28, 2009, a supplemental order of judgment for foreclosure and sale was issued. Whitfield Farms did not appeal this order.

         APPLICABLE LAW

         Motion to Dismiss

         Rule 12(b)(6) of the Federal Rules of Civil Procedure permits the dismissal of an action if the complaint fails “to state a claim upon which relief can be granted.” Such a motion tests the legal sufficiency of the complaint and “does not resolve contests surrounding the facts, the merits of the claim, or the applicability of defenses . . . . Our inquiry then is limited to whether the allegations constitute a short and plain statement of the claim showing that the pleader is entitled to relief.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (internal quotation marks and citation omitted). In a Rule 12(b)(6) motion, the court is obligated to “assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations.” E. Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). However, while the Court must accept the facts in a light most favorable to the nonmoving party, it “need not accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Id.

         To survive a motion to dismiss, the complaint must state “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570(2007). Although the requirement of plausibility does not impose a probability requirement at this stage, the complaint must show more than a “sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A complaint has “facial plausibility” where the pleading “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         DISCUSSION

         Defendant argues that this action should be dismissed because the claims raised in this action were compulsory counterclaims in the prior state action. ECF No. 46-1 at 2. Defendant contends that Plaintiffs are barred from challenging the 2012 Note's validity under the doctrines of res judicata and collateral estoppel. Id. Defendant further argues that the Individual Plaintiffs lack standing to bring any individual claims. Id. Plaintiffs do not appear to contest that any claim by Whitfield Farms is barred. ECF No. 50. However, the Individual Plaintiffs assert that they have standing in the present action and that their interests were not represented in the prior state action. Id. at 4.

         Res ...


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