United States District Court, N.D. Mississippi, Oxford Division
FILL IT UP, LLC; FILLIN' STATION GRILL, LLC; and STEVEN P. BEENE Individually PLAINTIFFS
MS LZ DELTA, LLC d/b/a SOUTHERN THUNDER HARLEY-DAVIDSON DEFENDANT
OPINION AND ORDER
M. BROWN UNITED STATES DISTRICT JUDGE
contract dispute is before the Court on the defendant's
motion to dismiss, Doc. #5; and the plaintiffs' motion to
amend their complaint, Doc. #11.
September 29, 2017, Fill It Up, LLC, Fillin' Station
Grill, LLC, and Steven P. Beene filed a complaint in the
Circuit Court of DeSoto County, Mississippi, against MS LZ
Delta, LLC d/b/a Southern Thunder Harley Davidson, alleging
that MS LZ Delta breached a “Reciprocal Easement
Agreement With Covenants, Conditions and Restrictions”
(“Agreement”). Doc. #7 at 4, 5, 7. On October 4,
2017, the plaintiffs amended their state court complaint.
Doc. #7 at 42. MS LZ Delta removed the case to this Court on
November 13, 2017, invoking jurisdiction pursuant to 28
U.S.C. §§ 1332 and 1334. Doc. #1.
November 17, 2017, MS LZ Delta filed a Rule 12(b)(6) motion
to dismiss for failure to state a claim. Doc. #5. On November
30, 2017, the plaintiffs responded to the motion to dismiss,
Doc. #13, and filed a motion to amend their complaint, Doc.
#11. On December 7, 2017, MS LZ Delta replied in support of
its motion to dismiss. Doc. #17. One week later, MS LZ Delta
responded in opposition to the motion to amend, Doc. #18; and
on December 20, 2017, the plaintiffs replied, Doc. #20.
survive a Rule 12(b)(6) motion to dismiss, the complaint does
not need detailed factual allegations, but it must provide
the plaintiff's grounds for entitlement for
relief-including factual allegations that, when assumed to be
true, raise a right to relief above the speculative
level.” Ruiz v. Brennan, 851 F.3d 464, 468
(5th Cir. 2017). Under this standard, a court must
“accept all well-pleaded facts as true.” New
Orleans City v. Ambac Assur. Corp., 815 F.3d 196,
199-200 (5th Cir. 2016) (quotation marks omitted).
Rule of Civil Procedure 15(a)(2) provides that a “court
should freely give leave [to amend pleadings] when justice so
requires.” “The language of this rule evinces a
bias in favor of granting leave to amend.” SGIC
Strategic Glob. Inv. Capital, Inc. v. Burger King Europe
GmbH, 839 F.3d 422, 428 (5th Cir. 2016) (alterations and
quotation marks omitted). However, a “court need not
grant a futile motion to amend. Futility is determined under
Rule 12(b)(6) standards, meaning an amendment is considered
futile if it would fail to state a claim upon which relief
could be granted.” Legate v. Livingston, 822
F.3d 207, 211 (5th Cir. 2016) (citation omitted).
Beene is the principal officer and member of Fill It Up and
Fillin' Station. Doc. #2 at 1. Fillin' Station
operates a restaurant adjacent to a Harley Davidson retail
location operated by MS LZ Delta. Id. at 2; Doc. #7
7, 2010, Fill It Up and MS LZ Delta entered into the
Agreement regarding three lots in DeSoto County, Mississippi:
Lot 2, Lot 3, and Lot 4. Id. at 2. BL Property I,
LLC, is the owner of Lot 2; BL Property II, LLC, is the owner
of Lot 3; and Fill It Up is the owner of Lot 4. Id.
at 2; see Doc. #7 at 49. Among other things, the
Agreement provides for restrictive covenants to ensure
“compatible and complement[ary]” business
operations. Doc. #2 at 3; see Doc. #7 at 58.
Agreement provides, in part, “The Lot 4 Property Owner
intends to develop or cause Lot 4 Property to be developed as
a restaurant which is compatible with the current use of the
Lot 2 Property as Harley-Davidson motorcycle retail
location.” Doc. #7 at 50. Subsection 3.5 of the
Further, so long as Lot 4 is utilized as a restaurant, no
portion of Lot 2 or Lot 3 (or any lot created therefrom),
shall, without the prior written consent of the Owner of Lot
4, be used as one of the following: a tavern, bar, nightclub,
discotheque or any form of a restaurant without the prior
written permission of the owner of Lot 4.
Id. at 58.
point, MS LZ Delta, in breach of the Agreement, “began
serving food, including bringing in vendors to provide food
… and serving alcohol on the premises of Lot 2”
without Fill It Up's written consent. Doc. #2 at 3. On
June 10, 2016, Fill It Up sent a cease and desist letter to
MS LZ Delta but MS LZ Delta continues to violate the
Agreement. Id. As a result of MS LZ Delta's
breach, the plaintiffs have incurred losses in excess of
$100, 000 per year since MS LZ Delta began violating the
Agreement. Id. at 4.
support of its motion to dismiss, MS LZ Delta argues that
none of the plaintiffs have legal authority to bring the
claims asserted against it in this action. Doc. #6 at 2. The
Court will discuss the issue of the authority of each
plaintiff in turn.
Fillin' Station Grill, LLC
Delta argues that Fillin' Station's claims are barred
by the doctrine of judicial estoppel because Fillin'
Station previously took the position in its bankruptcy
proceedings that it had no claims against MS LZ Delta.
Fillin' Station responds that it sufficiently disclosed
its claims against MS LZ Delta in its schedule of assets
filed with the bankruptcy court; that its claims against MS
LZ Delta were disclosed in a motion to employ counsel in Fill
It Up's bankruptcy proceedings; and that the bankruptcy
court's order granting Fill It Up's motion to employ
counsel disclosed Fillin' Station's claims against MS
LZ Delta such that MS LZ Delta cannot invoke judicial
estoppel here. In reply, MS LZ Delta argues that Fillin'
Station misconstrues the applicable standard and that
Fillin' Station's purported disclosures are
estoppel is a common law doctrine that prevents a party from
assuming inconsistent positions in litigation.” In
re Superior Crewboats, Inc., 374 F.3d 330, 334 (5th Cir.
2004). “The purpose of the doctrine is to protect the
integrity of the judicial process, by preventing parties from
playing fast and loose with the courts to suit the exigencies
of self interest.” In re Coastal Plains, Inc.,
179 F.3d 197, 205 (5th Cir. 1999) (quotation marks and
alterations omitted). “Against the backdrop of the
bankruptcy system judicial estoppel must be applied in such a
way as to deter dishonest debtors, whose failure to fully and
honestly disclose all their assets undermines the integrity
of the bankruptcy system.” United States ex rel.
Long v. GSDMIdea City, L.L.C., 798 F.3d 265, 271 (5th
Cir. 2015) (alterations omitted). Thus, “[j]udicial
estoppel is particularly appropriate where, as here, a party
fails to disclose an asset to a bankruptcy court, but then
pursues a claim in a separate tribunal based on that
undisclosed asset.” Jethroe v. Omnova
Sols., Inc., 412 F.3d 598, 600 (5th Cir. 2005).
estoppel has three elements: (1) The party against whom it is
sought has asserted a legal position that is plainly
inconsistent with a prior position; (2) a court accepted the
prior position; and (3) the party did not act
inadvertently.” In re Flugence, 738 F.3d 126,
129 (5th Cir. 2013). “The burden to prove judicial
estoppel is on the party invoking the doctrine.”