United States District Court, D. South Carolina, Columbia Division
OPINION AND ORDER GRANTING MIDLANDS DEFENDANTS'
MOTION TO DISMISS (ECF NO. 12)
CAMERON MCGOWAN CURRIE SENIOR UNITED STATES DISTRICT JUDGE.
Through
this action, Plaintiff, Palmetto Assisted Living Systems,
Inc. (“Plaintiff”), brings a claim against
Defendants KeyBank National Association
(“KeyBank”); Deutsche Bank Trust Company Americas
(“DBTCA”), as trustee for the registered holders
of the Wells Fargo Commercial Mortgage Securities, Inc.,
Multifamily Mortgage Pass-Through Certificates, Series
2014-K37 (“the K37 Trust”); and U.S. Bank
National Association (“U.S. Bank”), as trustee
for the registered holders of Wells Fargo Commercial Mortgage
Securities, Inc., Multifamily Mortgage Pass-Through
Certificates, Series 2013-KS01 (“the KS01 Trust”)
for breach of contract. Plaintiff also seeks a declaratory
judgment that KeyBank, U.S. Bank, and DBTCA breached the
contract and implied covenant of good faith and fair dealing
in withholding consent to foreclose certain property, and
that Plaintiff is entitled to a judgment allowing
foreclosure. Plaintiff has also named as Defendants FC Real
Estate - Harbison, LLC; FC Real Estate - Rock Hill, LLC; FC
Real Estate - Garden City, LLC; and FC Midlands, LLC
(collectively, “the Midlands Defendants”).
The
matter is before the court on the Midlands Defendants'
motion to dismiss the breach of contract claim under
Fed.R.Civ.P. 12(b)(6), and the declaratory judgment claim for
lack of subject matter jurisdiction under Rule 12(b)(1). ECF
No. 12. Plaintiff filed a response (ECF No. 22) and the
Midlands Defendants replied (ECF No. 24).
On
January 31, 2019, the court entered an Order holding the
motion to dismiss in abeyance, as Plaintiff had requested
leave to file an Amended Complaint in its response to the
Midlands Defendants' Motion to Dismiss. See ECF Nos. 22
at 9 (Plaintiff's response), 36 (Order). Plaintiff filed
a motion for leave to file Amended Complaint, and attached
the Proposed Amended Complaint. ECF No. 38. Both sets of
Defendants opposed. ECF Nos. 39, 40. Because it found
Plaintiff's proposed amendments futile, the court denied
Plaintiff's motion for leave to file an Amended
Complaint. ECF No. 41.
For the
reasons set forth below, the Midlands Defendants' motion
is granted.
STANDARD
Rule
12(b)(6). A motion under Federal Rule of Civil Procedure
12(b)(6) should be granted only if, after accepting all
well-pleaded allegations in the complaint as true, it appears
certain that the plaintiff cannot prove any set of facts in
support of its the claims that entitles it to relief. See
Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th
Cir. 1999). Although the court must take the facts in the
light most favorable to the plaintiff, it “need not
accept the legal conclusions [the plaintiff would draw] from
the facts.” Giarratano v. Johnson, 521 F.3d
298, 302 (4th Cir. 2008) (quoting Eastern Shore Mkts.,
Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180
(4th Cir. 2000)). The court may also disregard any
“unwarranted inferences, unreasonable conclusions, or
arguments.” Id.
The
Rule 12(b)(6) standard has often been expressed as precluding
dismissal unless it is certain that the plaintiff is not
entitled to relief under any legal theory that plausibly
could be suggested by the facts alleged. See Mylan Labs.,
Inc. v. Markari, 7 F.3d 1130, 1134 (4th Cir. 1993).
Nonetheless, the plaintiff must allege “enough facts to
state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)
(quoted in Giarratano, 521 F.3d at 302). Thus, in
applying Rule 12(b)(6), the court also applies the relevant
pleading standard. Despite the liberal pleading standard of
Rule 8, a plaintiff in any civil action must include more
than mere conclusory statements in support of a claim. See
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (court
need only accept as true the complaint's factual
allegations, not its legal conclusions); see also
McCleary-Evans v. Maryland Dept. of Trans., 780 F.3d
582, 587 (4th Cir. 2015) (noting “Iqbal and Twombly
articulated a new requirement that a complaint must allege a
plausible claim for relief, thus rejecting a standard that
would allow a complaint to survive a motion to dismiss
whenever the pleadings left open the possibility that a
plaintiff might later establish some set of [undisclosed]
facts to support recovery.” (emphasis and alteration in
original, internal quotation marks omitted)); Walters v.
McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing
Robertson v. Sea Pines Real Estate Companies, Inc.,
679 F.3d 278 (4th Cir. 2012) for proposition Plaintiff need
not forecast evidence sufficient to prove the elements of a
claim, but must allege sufficient facts to establish those
elements).
Rule
12(b)(1). Plaintiff bears the burden of establishing a proper
basis for the assertion of subject matter jurisdiction.
Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982).
A motion challenging the existence of subject matter
jurisdiction may challenge either the adequacy of the
allegations or the facts alleged. Id. Where the
factual basis for the assertion of subject matter
jurisdiction is challenged, no presumption of truthfulness
applies to the facts of the case and the court may resolve
disputed issues of fact. Id. However, where the
facts central to jurisdiction are intertwined with those
central to the merits, it may be necessary to find
jurisdiction and proceed to resolve the claims on their
merits. Id.
FACTS[1]
Plaintiff
entered into three Subordination Agreements (the Harbison
Subordination Agreement, the Rock Hill Subordination
Agreement, and the Garden City Subordination Agreement) for
the Midlands Defendants to purchase properties from
Plaintiff. ECF No. 1-1 at ¶¶ 2, 42. Defendants U.S.
Bank and DBTCA are the trustees for the KS01 and K37 Trusts,
respectively, that hold the Promissory Note and Pledge and
Security Agreement to facilitate this sale of properties,
[2] and
KeyBank acted as the master servicer for both U.S. Bank and
DBTCA in connection with the Subordination Agreements.
Id. at ¶¶ 6, 11, 16. As set forth in the
Subordination Agreements, Plaintiff holds a promissory note
dated August 14, 2015, in which FC Midlands promised to pay
eight million dollars and other certain sums due to Plaintiff
(the “FC Midlands Loan”). Id. at ¶
42. That loan is secured by a Pledge and Security Agreement
between FC Midlands and Plaintiff, which provides terms and
conditions under which Plaintiff may foreclose on and obtain
membership of FC Midlands Properties III, LLC (currently held
by FC Midlands). Id. at ¶ 43. Under the
Subordination Agreements, KeyBank (as master servicer for the
Trusts) must consent to any “Enforcement Action”
Plaintiff may file to protect its interest in the event of a
default under the FC Midlands Loan Agreement. Id. at
¶ 44.
On
August 15, 2018, Plaintiff submitted to KeyBank, as master
servicer for DBTCA and U.S. Bank, formal notice of its
request under each Subordination Agreement for consent to
proceed with an Enforcement Action against FC Midlands to
obtain the membership interest in FC Midlands Properties,
III, LLC, as contemplated in the Pledge and Security
Agreement. Id. at ¶ 48. KeyBank refused
Plaintiff's request for consent. Id. at ¶
49. Although Plaintiff requested KeyBank (and U.S. Bank and
DBTCA) provide a good faith reason for denying consent, they
did not do so. Id. at ¶¶ 51-52.
ARGUMENTS
In
support of their motion to dismiss, the Midlands Defendants
argue the Complaint does not allege any breach of contract by
the Midlands Defendants, and no case or controversy exists
between Plaintiff and the Midlands Defendants, as the
declaratory judgment claim only affects the rights of
KeyBank, U.S. Bank, and DBTCA. ECF No. 12-1. They also argue
the Midlands Defendants are not necessary parties, as the
court can afford complete relief for Plaintiff's claims
without the Midlands Defendants, as their rights are not
affected or at issue. Id. at 8-9. Finally, they
contend “there is no useful purpose in the proposed
declaratory judgments” ...