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First Bank v. Gibraltar Private, Bank & Trust Co.

United States District Court, M.D. North Carolina

March 31, 2014

FIRST BANK, Plaintiff,
v.
GIBRALTAR PRIVATE, BANK & TRUST COMPANY Defendant.

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

JOE L. WEBSTER, Magistrate Judge.

The matter is before the Court on Gibraltar Private Bank & Trust Company's ("Defendant") Motion to Dismiss or alternative Motion to Transfer Venue. (Docket Entry 10.) First Bank ("Plaintiff") opposes the Motion. (Docket Entries 16, 20.) For the following reasons, it is recommended that Defendant's motion to dismiss be granted.

I. Background

On November 22, 2006, Beaverdam Land Conservancy, LLC executed a Promissory Note in favor of the Bank of Asheville for $9, 872, 000.00 as part of a loan transaction. (Complaint ¶ 3, Docket Entry 6.) To secure the loan, a Deed of Trust was recorded and encumbered multiple properties in North Carolina. ( Id. at ¶ 4.) Additionally, the Bank of Asheville sold a $5, 000, 000.00 participation in the loan to Defendant, consummated by a Participation Agreement. ( Id. at ¶ 5.) Paragraph 5 of this agreement is the crux of the dispute. It reads as follows:

The Bank reserves the sole right to enforce the obligations of the Borrower, but so long as the Participant's share on the loan, together with any shares the Participant may have in any other loans made by the Bank to the same Borrower, is more than 50% thereof in the aggregate, then the Bank will take such action as may be requested by the Participant to enforce the terms of, or to exercise the rights given in, any loan agreement or note or other instrument relating to or evidencing the loan or the security thereof, provided the Participant first indemnifies the Bank to the Bank's satisfaction against the Participant's pro rata share of any expense or liability which the Bank may incur in so doing.

(Participation Agreement ¶ 5, Compl., Ex. 3, Docket Entry 6-3.)

On January 11, 2011, Plaintiff bought the assets of the Bank of Asheville, whose rights and obligations were then assigned to Plaintiff. (Compl. ¶ 4, Docket Entry 6.) In February 2011, Beaverdam defaulted on the note, causing Plaintiff, with consent of Defendant, to request that the trustee institute foreclosure proceedings on the Deed of Trust. ( Id. at ¶ 8.) On January 23, 2012, the Substitute Trustee held an authorized public sale of the encumbered properties, and Plaintiff; as the only bidder, bought the property with a credit bid of $4, 680, 000.00. ( Id. at ¶ 10.) Defendant consented to the sale. ( Id. at ¶ 11.)

As of July 21, 2012, Plaintiff claims that it has incurred $310, 982.44 in expenses for "services related to the enforcement of the obligations" under the promissory note and deed of trust. ( Id. at ¶ 14.) Under the participation agreement, Defendant has a pro rata percentage of 44.02%. ( Id. at ¶ 16.) Plaintiff asserts that under the Participation Agreement, Defendant must reimburse Plaintiff for the "pro rata share of expenses incurred in enforcing obligations of Beaverdam pursuant to the Note and Deed of Trust and protecting the real property." ( Id. at ¶ 17.) Plaintiff has sent many invoices to Defendant requesting its reimbursement. ( Id. at ¶ 18.) Defendant has not reimbursed Plaintiff, a failure that Plaintiff claims breaches the Participation Agreement. ( Id. at ¶ 19.) Plaintiff claims it is entitled to at least $136, 906.61 (44.02% of $310, 982.44) plus interest and attorney's fees in both its breach of contract claim and quantum meruit claim. ( Id. at ¶ 20 and 25.) Defendant contests the argument that it breached the participation agreement, claiming it has no duty to reimburse Plaintiff under Paragraph 5 of the participation agreement. (Def.'s Mem. Supp. Mot. to Dismiss 1, Docket Entry 10.) Because of this alleged absence of duty, Defendant has moved to dismiss and in the alternative to transfer venue to Florida. ( Id. )

II. Standard of Review

A. Motion to Dismiss

Under Federal Rule of Civil Procedure 12(b)(6), a defendant may seek dismissal of a complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A motion to dismiss for failure to state a claim should be granted if the complaint does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In other words, the factual allegations must "be enough to raise a right to relief above the speculative level." Id. at 555. "Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is probable, ' the complaint must advance the plaintiffs claim across the line from conceivable to plausible.'" Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (quoting Twombly, 550 U.S. at 570). As explained by the United States Supreme Court:

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. The plausibility standard is not akin to probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted)

A 12(b)(6) motion tests the sufficiency of a complaint and "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992). Accordingly, a court should "assume the truth of all facts alleged in the complaint and the existence of any fact that can be proved, consistent with the complaint's allegations." E. Shore Mkts. Inc. v. J.D. Assocs. Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000). Although the truth of the facts alleged is assumed, courts are not bound by the "legal conclusions drawn from the facts" and "need not accept as true unwarranted inferences, unreasonable ...


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