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Lyons v. BAIC Inc.

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

April 12, 2018

Jason Lyons, Chad Wright, Adrian Russo, Plaintiffs,
v.
BAIC Inc., VFG Inc., SoBell Ridge Corp, Bradling Financial Group, Veterans Benefit Leverage, Andrew Gamber, Mark Corbett, Candy Kern-Fuller, Upstate Law Group, Defendants.

          OPINION AND ORDER

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

         This matter is before the Court on Defendants Candy Kern-Fuller and the Upstate Law Group's (“the Upstate Defendants”) Motion to Dismiss for Failure to State a Claim and Defendants Bradling Financial Group, Mark Corbett, and Veteran's Benefit Leverage's (“the Corbett Defendants”) Motion to Dismiss. ECF Nos. 39, 60. Plaintiffs filed Responses in Opposition, and the Upstate Defendants filed a Reply. ECF Nos. 48, 53, 62. Accordingly, the Motions are ripe for review.

         Plaintiffs bring this action seeking a declaration that Defendants violated 38 U.S.C. § 5301(a) and 37 U.S.C. § 701 and seeking damages for Defendants' alleged violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and civil conspiracy. Plaintiffs allege that Defendants maintained websites designed to attract veterans in need of money. Plaintiffs contend that Defendants promised an up-front lump sum in exchange for the veteran's agreement to sell a portion of their military pension to an investor and to allow Defendants to deduct certain fees. Plaintiffs assert that Corbett operated websites designed to attract prospective veterans and once they signed the agreements, their pensions were redirected to Kern-Fuller's IOLTA account; Kern-Fuller would then distribute the proceeds.

         In their Motion, the Upstate Defendants argue that Plaintiffs have failed to allege sufficient allegations to state a claim against them with respect to Plaintiffs' request for declaratory judgment and their claims under RICO and civil conspiracy. The Upstate Defendants also assert that this action is barred by the applicable statute of limitations. The Corbett Defendants join in the Upstate Defendants' Motion and assert that the arguments raised by the Upstate Defendants apply with equal force to them.[1]

         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.

         Rule 9(b)

         Although “[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally, ” when a party alleges “fraud or mistake, ” he or she “must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Particularity requires that the claimant state “the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999) (quoting 5 Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure: Civil § 1297 at 590 (2d 1990)). A primary purpose of Rule 9(b) is to ensure “that the defendant has sufficient information to formulate a defense by putting it on notice of the conduct complained of.” Harrison, 176 F.3d at 784 (internal citations omitted). Lack of compliance with Rule 9(b)'s pleading requirements is treated as a failure to state a claim under Rule 12(b)(6). See United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir. 1997).

         DISCUSSION

         Declaratory Judgment

         Count I of Plaintiffs' Amended Complaint seeks a declaratory judgment that Defendants' conduct violates the Federal Anti-Assignment Acts. ECF No. 17 ¶ 79. The Upstate Defendants and the Corbett Defendants have moved to dismiss this claim, alleging that they are not parties to the contracts at issue in this case and, thus, that the Court cannot declare their acts unlawful. In response, Plaintiffs contend that the Court has the authority to declare that Defendants' conduct in perpetuating a scheme to violate the Federal Anti-Assignment Acts was unlawful. After a review of the arguments of the parties and the relevant law, the Court concludes that the Upstate Defendants and the Corbett Defendants' Motions to Dismiss Count I of the Amended Complaint should be denied.

         “The Declaratory Judgment Act provides that, ‘[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.'” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126 (2007) (quoting 28 U.S.C. § 2201(a)). The Supreme Court of the United States has “explained that the phrase ‘case of actual controversy' in the Act refers to the type of ‘Cases' and ...


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