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RDS Real Estate, LLC v. Abrams Group Construction, LLC

United States District Court, S.D. Mississippi, Southern Division

January 23, 2017

RDS REAL ESTATE, LLC PLAINTIFF
v.
ABRAMS GROUP CONSTRUCTION, LLC, et al. DEFENDANTS

          ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT

          LOUIS GUIROLA, JR. CHIEF U.S. DISTRICT JUDGE

         BEFORE THE COURT are the [140, 144] Motions for Summary Judgment filed by Defendants George E. Spellmeyer, Norma Spellmeyer, and Michael Spellmeyer (collectively, “the Spellmeyer defendants”) and Defendant Tusitala, Inc. (“Tusitala”) regarding the allegations against them in the [107] Amended Complaint filed by Plaintiff RDS Real Estate, LLC. The Court has extensively outlined the background of this action in its previous [174, 175, 177] Orders, and incorporates those discussions by reference herein. For the reasons discussed below, the Court finds that the Motions should be denied.[1]

         Discussion

         Defendants have raised arguments for dismissal under both Federal Rule of Civil Procedure 12(b)(6) and for summary judgment under Rule 56. Because the Court has already found that any 12(b)(6) argument is untimely, (see Order 3-4, ECF No. 174), it will treat Defendants' dismissal arguments as being made pursuant to Rule 12(c). See Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999).

         Defendants' Rule 12(c) Arguments for Dismissal

         Under Rule 12(c), “[a]fter the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings.” “‘The standard for dismissal under Rule 12(c) is the same as that for dismissal for failure to state a claim under Rule 12(b)(6).'” Bosarge v. Miss. Bureau of Narcotics, 796 F.3d 435, 439 (5th Cir. 2015) (citation and brackets omitted). The Court “‘accept[s] all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” Id. (citation omitted). “[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) (citation and quotation marks omitted). “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 679.

         Defendants make multiple arguments for dismissal of the Amended Complaint related to both RDS's fraudulent transfers claims and its allegations of piercing the corporate veil. The Court will discuss the arguments related to the fraudulent transfer claims, and will next consider the allegations of piercing the corporate veil against each Defendant.

         A. RDS's Fraudulent Transfer Claims

         To the extent Defendants argue that that RDS had to specifically cite the applicable provisions of the Uniform Fraudulent Transfer Act (UFTA) to state a claim thereunder, the Court is not persuaded by such an argument. Under Federal Rule of Civil Procedure 8(a)(2), a complaint “must contain . . . a short and plain statement of the claim showing that the pleader is entitled to relief . . . .” “Rule 8(a)(2) . . . does not treat legal descriptions of a claim the same as factual averments.” Johnson v. Honda, No. 3:15cv223-DPJ-FKB, 2015 WL 5794449, at *3 (S.D.Miss. Oct. 1, 2015). “A complaint need not . . . articulate a perfect ‘statement of the legal theory supporting the claim asserted.'” Smith v. Bank of Am., N.A., 615 F. App'x 830, 833 (5th Cir. 2015) (citing Johnson v. City of Shelby, 135 S.Ct. 346, 347 (2014)) (emphasis in original). All that is required of a plaintiff is to inform the defendant “of the factual basis for their complaint . . . .” See Johnson v. City of Shelby, 135 S.Ct. at 347. Here, the Court finds that, while RDS's Amended Complaint could be clearer, the Amended Complaint satisfies this low threshold.

         Defendants also contend that the Amended Complaint does not comply with Federal Rule of Civil Procedure 9(b), which states in pertinent part that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” The Fifth Circuit has not yet had occasion to address whether Rule 9(b) applies to UFTA claims. See Janvey v. Alguire, 647 F.3d 585, 599 (5th Cir. 2011). This Court need not decide this issue, either, as it is of the opinion that RDS has pled its fraudulent transfer claims with sufficient particularity even to satisfy Rule 9(b)'s more stringent standard. See, e.g., Biliouris v. Sundance Res., Inc., 559 F.Supp.2d 733, 736 (N.D. Tex. 2008); In re Tex. Rangers Baseball Partners, 498 B.R. 679, 712 (Bankr. N.D. Tex. 2013).

         B. RDS's Allegations of Piercing the Corporate Veil Related to the Spellmeyer Defendants

         The Spellmeyer defendants also challenge the legal sufficiency of RDS's attempts to pierce the corporate veil of S&S Construction, LLC, and hold them individually liable for the judgment RDS obtained against S&S. In doing so, they rely on Mississippi law, but the Court has already determined that Alabama law applies to this issue. (See Order 5-6, ECF No. 177). Accordingly, dismissal is not warranted on the ground that RDS has failed to state a claim under Mississippi law. In any event, the Court is of the opinion that the allegations of the [107] Amended Complaint are sufficient under Alabama law. See, e.g., Claybar v. Huffman, 54 F.Supp.3d 1284, 1290 (S.D. Ala. 2014).

         C. RDS's Allegations of Piercing the Corporate Veil Related to Tusitala

         As discussed in the Court's [177] Order, the Mississippi Limited Liability Company Act has been interpreted to mean that the veil-piercing standard of the law of the state under which an LLC exists applies when a party attempts to pierce the LLC's veil. (See Id. at 5-6). “On the other hand, when considering whether the corporate veil [of Tusitala, Inc.] should be pierced, the choice of laws is not as clear because the Mississippi Business Corporation Act contains no provision that specifically addresses this question.” See In re Thorne, No. 09-11763-DWH, 2011 WL 2496217, at *2 (Bankr. N.D. Miss. June 22, 2011). Nonetheless, “[w]hen confronted with an uncertainty such as this, several courts have decided that the law of the state of incorporation . . . should be applied.” See Id. This Court agrees. Since Tusitala is an Alabama corporation, Alabama law applies to RDS's veil piercing allegations related to Tusitala. Because Tusitala has not made any argument for dismissal based on the applicable law, the Court finds that its Motion should be denied.[2]

         Defendants' Summary Judgment Arguments

         A summary judgment motion shall be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). If the movant carries its burden of demonstrating the absence of a genuine issue of material fact, the burden shifts to the non-movant to show ...


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