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Prince Payne Enterprises Inc. v. Tigua Enterprises Inc.

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

October 22, 2019

PRINCE PAYNE ENTERPRISES, INC., United States for the Use and Benefit of Prince Payne Enterprises, Inc., Plaintiff,
v.
TIGUA ENTERPRISES, INC. and RESTORATION SPECIALISTS LLC, Defendants.

          ORDER

          DAVID C. NORTON, UNITED STATES DISTRICT JUDGE

         The following matter is before the court on defendant Tigua Enterprises, Inc.'s (“Tigua”) motion to dismiss, ECF No. 27. For the reasons set forth below, the court grants the motion but permits plaintiff Prince Payne Enterprises (“Prince Payne”) to file an amended complaint in accordance with this order within 14 days of this order.

         I. BACKGROUND

         This case arises out of a payment dispute. Tigua entered into a contract with the United States Department of State to perform certain operations and maintenance services. Tigua subcontracted with defendant Restoration Specialists LLC (“Restoration Specialists”) (collectively with Tigua, “defendants”) to perform work at a Department of State site in North Charleston. Restoration Specialists in turn subcontracted portions of work to Prince Payne. Prince Payne alleges that it performed the work until Restoration Specialists stopped paying Prince Payne's invoices in August 2017, and defendants now owe Prince Payne $50, 233.75.

         Prince Payne filed a complaint on September 17, 2018 bringing causes of action for a violation of the Miller Act, breach of contract, unjust enrichment, and a violation of the South Carolina Unfair Trade Practices Act (“SCUTPA”). After neither defendant entered an appearance in the case, Prince Payne filed a motion for default judgment as to both defendants on January 17, 2019. ECF No. 5. On January 31, 2019, Tigua responded to the motion, ECF No. 9, and also filed a motion to set aside default, ECF No. 8. Restoration Specialists did not enter an appearance or respond to Prince Payne's motion. The court denied the motion for default judgment as to Tigua, granted Tigua's motion to set aside default, and denied the motion for default judgment as to Restoration Specialists without prejudice so that the clerk could first enter default for Restoration Specialists. The clerk then entered default as to Restoration Specialists, and the court granted default judgment in the amount of $50, 632.75 on April 24, 2019. ECF No. 23.

         On July 16, 2019, Tigua filed its motion to dismiss. ECF No. 27. On July 17, 2019, Prince Payne filed a request for entry of default as to Tigua, ECF No. 30, which the clerk denied due to the pending responsive pleading, ECF No. 31. Prince Payne then filed a response to the motion to dismiss on July 30, 2019. ECF No. 32. Tigua replied on August 6, 2019. ECF No. 34. The court held a hearing on the motion on October 15, 2019. The motion is ripe for review.

         II. 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 that would support his claim and would entitle him 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 all well-pleaded allegations as true and should view the complaint in a light most favorable to the plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir.1999); Mylan Labs., Inc., 7 F.3d at 1134. “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.

         III. DISCUSSION

         Before diving into the substance of Tigua's motion to dismiss, the court must first address a procedural argument made by Prince Payne. In response to the motion to dismiss, Prince Payne argues that Tigua's motion is untimely, and as such, default judgment against Tigua is warranted. Pursuant to Rule 12 of the Federal Rules of Civil Procedure, a defendant must file an answer or responsive pleading within 21 days of service of the complaint, and if a defendant files a 12(b)(6) motion, he must do so prior to filing a responsive pleading. The complaint was delivered via certified mail to the mail room located at Tigua's physical address on November 9, 2018, where the mail was accepted by an employee of the mailroom who is not affiliated with Tigua. Due to some address and mail delivery issues, Tigua did not learn of the complaint and summons until January 2019 and did not enter an appearance in this case until January 31, 2019. At that point, Tigua did not file an answer or motion to dismiss but instead filed a motion to set aside default judgment and a response to Prince Payne's pending motion for default judgment.

         The court issued its order denying default judgment as to Tigua on March 6, 2019. The order did not specify a date by when Tigua needed to file an answer or a responsive pleading. The court then entered a scheduling order on April 1, 2019. Tigua did not file its motion to dismiss until three months later on July 16, 2019. Prince Payne argues that Tigua clearly had notice of the complaint on January 31, when counsel filed a notice of appearance in this case, and Prince Payne did not file an answer or a motion to dismiss within 21 days. Prince Payne also contends that, to the extent Tigua argues that Tigua's deadline was tolled by the court's consideration of default judgment, Tigua still did not file an answer or motion to dismiss within 21 days of the court's order. Prince Payne argues that it is prejudiced by Tigua's late filing because, per the scheduling order, the deadline for motions to amend the pleadings was June 3, 2019, and because Tigua did not file its motion to dismiss until July 16, Prince Payne lost the right to amend its complaint as a matter of course. As such, Prince Payne argues that Tigua should be held in default for filing its motion “grossly out of time.” At the hearing on the motion, Tigua's counsel explained that he waited to file Tigua's motion to dismiss because at the February 27, 2019 default judgment hearing in this case, counsel for Prince Payne informed counsel for Tigua that she planned to file an amended complaint. Tigua did not want to waste the court's resources by filing a motion to dismiss a complaint that was going to be amended, so Tigua planned to wait to file its motion to dismiss until Prince Payne filed its amended complaint. However, the deadline for motions to amend pleadings passed without Prince Payne seeking leave to amend its complaint, and Tigua subsequently filed its motion to dismiss.

         At the hearing, Prince Payne's counsel agreed that she told Tigua's counsel that she planned to amend the complaint; however, she explained that she was waiting for Tigua to first file a motion to dismiss so that she could fix the deficiencies that Tigua raised in its motion. She continued to stress the procedural order that a plaintiff files a complaint, a defendant files a motion to dismiss, and then the plaintiff amends the complaint as a matter of course based on the arguments in the motion to dismiss. Whether it is a wise use of the parties' and the court's time and resources to rely on a motion to dismiss to alert a plaintiff's counsel to legal deficiencies with the complaint, as opposed to ensuring that the complaint is legally sufficient when it is originally filed, is questionable. Nevertheless, Prince Payne's counsel's reliance on this procedure here is unconvincing because in the briefing on Tigua's motion to set aside default, Tigua provided its arguments about the complaint's deficiencies when arguing that Tigua had meritorious defenses that warranted the court setting aside the default. Indeed, the arguments in Tigua's motion to dismiss appears to be nearly, if not completely, identical to the arguments in Tigua's motion to set aside default.

         In light of this information, the court declines to deny Tigua's motion to dismiss as untimely and grant default judgment. The court finds that it was reasonable for Tigua's counsel to rely on Prince Payne's counsel's representation that she planned to amend the complaint, especially in light of the fact that Prince Payne was privy to a preview of Tigua's motion to dismiss during the briefing on the motion to set aside default judgment. Therefore, the court now considers the merits of Tigua's motion to dismiss.

         Tigua argues in its motion that Prince Payne's claims in its original complaint are legally insufficient. Prince Payne responds by explaining that it has cured the deficiencies discussed in Tigua's motion in its proposed amended complaint, which is attached to Prince Payne's response and for which Prince Payne seeks leave from the court to file. In reply, Tigua argues that Prince Payne's proposed amended complaint is still deficient, making amendment futile. The court finds that Prince Payne's claim for a violation of the Miller Act must be dismissed but grants leave for Prince Payne to amend its complaint on that claim. As for Prince Payne's breach of contract, unjust enrichment, and SCUTPA claims, the court finds that dismissal is warranted and denies leave to amend the complaint because doing so would be ...


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