United States District Court, D. South Carolina, Orangeburg Division
Manning & Sons Trucking & Utilities, LLC, and Keven Manning, Individually, Plaintiffs,
McCarthy Improvement Company, Defendant. McCarthy Improvement Company, Counter-Plaintiff,
Manning & Songs Trucking & Utilities, LLC; Keven Manning; and Southstar Capital, LLC, Counter-Defendants.
ORDER AND OPINION
matter is before the court pursuant to Defendant Southstar
Capital, LLC's (“Southstar”) Motion to
Dismiss for Failure to State a Claim (ECF No. 27). Plaintiff
McCarthy Improvement Company (“McCarthy”) filed a
response in opposition (ECF No. 31). For the reasons set
forth below, the court GRANTS
Southstar's Motion to Dismiss (ECF No. 27), thereby
DENYING AS MOOT Southstar's Motion to
Stay Discovery Pending Resolution of Southstar's Motion
to Dismiss (ECF No. 35), and DENYING AS MOOT
Southstar's Motion for a Protective Order and to Quash
the Subpoena Issued by McCarthy (ECF No. 41).
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. (Related Action, 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).
RELEVANT FACTUAL BACKGROUND
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.
(Related Action, 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”). (Id. at ¶ 14.)
RELEVANT PROCEDURAL BACKGROUND
27, 2017, Manning Trucking and Manning filed an action
against McCarthy in South Carolina. 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 May 30, 2017, McCarthy filed a Petition for Declaratory
Relief against Manning Trucking in the Iowa District Court
for Scott County. (Related Action, 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. (Related Action, ECF No. 1.) The Iowa District
Court granted the Motion to Transfer Venue on December 4,
2017. (Related Action, ECF No. 1-2.)
March 21, 2018, Southstar filed a Motion to Dismiss the
counterclaim in the Related Action pursuant to Rule 12(b)(6)
of the Federal Rules of Civil Procedure. (Related Action,
ECF No. 31.) Plaintiff filed a response (Related Action, ECF
No. 40), and Southstar replied (Related Action, 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.
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
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).
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
Related Action, ECF No. 1-1 at 11), Southstar is not a party
to that agreement. Therefore, the court is inclined to apply