United States District Court, E.D. North Carolina, Western Division
C. FOX, SENIOR UNITED STATES DISTRICT JUDGE
the court is the motion to dismiss the amended complaint
filed by Yelverton Farms, Ltd. ("Defendant").
[DE-22, No. 5I16-CV-31-F]. On February 21, 2017, United States
Magistrate Judge Robert B. Jones, Jr. issued a Memorandum and
Recommendation ("M&R") recommending the court
grant Defendant's motion. [DE-75, No. 5:15-CV-134-F].
Plaintiff objected and Defendant responded thereto [DE-76,
-77]. For the reasons stated below, the court ADOPTS the
M&R and ALLOWS Defendant's motion.
STANDARD OF REVIEW
district court may "designate a magistrate judge ... to
submit... proposed findings of fact and recommendations for
the disposition" of a variety of motions. 28 U.S.C.
§ 636(b)(1)(B). The court then must "make a de novo
determination of those portions of the report or specified
proposed findings or recommendations to which objection is
made." Id. § 636(b)(1). Upon review of the
record, "the court may accept, reject, or modify, in
whole or in part, the findings or recommendations made by the
magistrate judge." Id.
raises six objections, claiming that: (1) the District Court
lacks subject matter jurisdiction Jo act on the merits of
Plaintiffs claims; (2) Plaintiff is an assignee of claims and
stock rights in Yelverton Farms, Ltd.; (3) the court
improperly took judicial notice of rulings from other courts;
(4) a fiduciary relationship exists between Plaintiff and
Yelverton Farms, Ltd.; (5) Plaintiff adequately pleaded all
elements of defamation; and (6) Plaintiff adequately pleaded
all elements of interference with contract.
first argues that operation of the Burford
abstention doctrine in this case precludes the court's
subject matter jurisdiction. Accordingly, Plaintiff contends
"this proceeding must be referred to the North Carolina
Business Court, or other state courts, for resolution on the
merits, without any rulings on the merits by the District
Court." Obj. M&R [DE-76] ¶ 4.
arguments on this point reflect a misapprehension of both the
nature of Burford abstention and the authority of
this court. Under the Burford doctrine, "[a]
federal court may abstain from hearing a case or claim
over which it has jurisdiction to avoid needless
disruption of state efforts to establish coherent policy in
an area of comprehensive state regulation." Friedman
v. Revenue Mgmt. of N.Y., Inc., 38 F.3d 668, 671 (2nd
Cir. 1994) (quoting Burford v. Sun Oil Co., 319 U.S.
315, 332 (1943)). Thus, a court dismissing a claim pursuant
to Burford is not deprived of jurisdiction, but
declines to exercise the jurisdiction it has. Regardless of
the existence or lack of subject matter jurisdiction,
however, federal courts do not possess the authority to
"refer" cases to state courts.
next argues that the magistrate judge's conclusion is
erroneous with regard to Plaintiffs standing as an assignee
of claims and his stock ownership. In its October 12, 2016
Order (the "October 2016 Order"), the court
discussed these topics and concluded that Plaintiff had no
ownership in Yelverton Farms, Ltd. stock. [DE-67]. The same
rationale and conclusion apply here. Because Plaintiff was
not a Yelverton Farms, Ltd. stockholder, he lacks standing
and his claims for judicial receivership, liquidation, and
dissolution of the corporation must be dismissed.
court acknowledges but declines to discuss Plaintiffs third
objection. The court addressed similar arguments in the
October 2016 Order. [DE-67] at 9. The same rationale and
conclusion apply here. The magistrate judge did not
improperly take judicial notice of rulings from other courts.