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McCarthy Improvement Co. v. Manning & Sons Trucking & Utilities, LLC

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

June 14, 2018

McCarthy Improvement Company, Plaintiff,
v.
Manning & Sons Trucking & Utilities, LLC; Keven Manning; and Southstar Capital, LLC, Defendants.

          ORDER AND OPINION

         This matter is before the court pursuant to Defendant Southstar Capital, LLC's (“Southstar”) Motion to Dismiss for Failure to State a Claim (ECF No. 31). Plaintiff McCarthy Improvement Company (“McCarthy”) filed a response in opposition (ECF No. 40). For the reasons set forth below, the court GRANTS Southstar's Motion to Dismiss (ECF No. 31), thereby DENYING AS MOOT Southstar's Motion to Stay Discovery Pending Resolution of Southstar's Motion to Dismiss (ECF No. 43).

         I. JURISDICTION

         The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332. See 28 U.S.C. § 1332. McCarthy is an Iowa Corporation with its principal place of business in Iowa. (ECF No. 1 at 1.) Manning & Sons Trucking & Utilities, LLC (“Manning Trucking”) is a South Carolina Limited Liability Company with its principal place of business in Dorchester County, South Carolina. (Id.) Keven Manning (“Manning”) is a citizen and resident of Dorchester County, South Carolina. (Id. at 2.) The amount in controversy exceeds $75, 000.00, exclusive of interests and costs. (Id.) When a federal court sits in diversity jurisdiction, it applies federal procedural law and state substantive law. See Gasperini v. Ctr. For Humanities, Inc., 518 U.S. 415, 427 (1996).

         II. RELEVANT FACTUAL BACKGROUND

         On September 23, 2013, McCarthy entered into a prime contract with the South Carolina Department of Transportation (“SCDOT”) (the “Prime Contract”) for the Santee S.C. I-95/US Route 301 improvement project. (ECF No. 1-1 at 175 ¶ 6.) Manning Trucking entered into a subcontract with McCarthy to perform truck hauling services for the I-95/US Route 301 project and later to purchase and deliver fill dirt (the “Subcontract”). (Id. ¶ at 8-9.) Manning Trucking sought financing from Southstar. (Id. at ¶ 13-14.) In exchange for advancing funds to Manning Trucking, Southstar acquired a security interest in Manning Trucking's accounts receivables and other assets pursuant to an executed factoring agreement between the parties (the “Factoring Agreement”). (Id.) Upon execution of the Factoring Agreement and as is the regular business practice of Southstar, Southstar served McCarthy with a Notice of Assignment of payment rights (the “NOA”) in accordance with § 9-406(a) of the Uniform Commercial Code (the “UCC”).[1](Id. at ¶ 14.)

         III. RELEVANT PROCEDURAL BACKGROUND

         On May 30, 2017, McCarthy filed a Petition for Declaratory Relief against Manning Trucking in the Iowa District Court for Scott County. (ECF No. 1-1 at 1-4.) On September 13, 2017, McCarthy filed a First Amended Petition for Declaratory Judgment, adding Southstar and Manning as defendants and asserting claims for declaratory judgment and unjust enrichment and/or mistake. (Id. at 174-179). Southstar removed the matter to the United States District Court for the Southern District of Iowa based upon diversity jurisdiction and moved to dismiss for lack of personal jurisdiction or, in the alternative, to transfer venue to the United States District Court for the District of South Carolina. (ECF No. 1.) The Iowa District Court granted the Motion to Transfer Venue on December 4, 2017. (ECF No. 1-2.)

         Meanwhile, on June 27, 2017, Manning Trucking and Manning filed an action against McCarthy in South Carolina, which is currently pending before the court as Civil Action No. 5:17-01994-JMC (the “Related Action”). In the Related Action, McCarthy moved to amend its answer to add Southstar as a counter-defendant and assert a counterclaim against it for unjust enrichment and/or mistake, similar to the claim in this action. (Related Action, ECF No. 17.) The Motion was granted (Related Action, ECF No. 23), and on February 20, 2018, Southstar moved to dismiss the counterclaim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Related Action, ECF No. 27). Plaintiff filed a response (Related Action, ECF No. 31), and Southstar replied (Related Action, ECF No. 32).

         On March 21, 2018, Southstar filed a Motion to Dismiss the counterclaim in this case pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.[2] (ECF No. 31.) Plaintiff filed a response (ECF No. 40), and Southstar replied (ECF No. 41). The claims are essentially identical in this and the Related Action. On June 6, 2018, the court consolidated the cases for both pretrial and trial purposes.[3]

         IV. LEGAL STANDARD

         A Rule 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.” Fed.R.Civ.P. 8(a)(2).

         A Rule 12(b)(6) motion “should not be granted unless it appears certain that the plaintiff can prove no set of facts which would support its claim and would entitle it 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.” Id. (citing Twombly, 550 U.S. at 556).

         V. ANALYSIS

         At the outset, the court notes that it applies South Carolina law in its analysis. While the Subcontract between McCarthy and Manning Trucking is governed under Iowa law (see ECF No. 1-1 at 11), Southstar is not a party to that agreement. Therefore, the court is inclined to apply South ...


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