United States District Court, E.D. North Carolina, Southern Division
W. FLANAGAN United States District Judge
matter is before the court on defendant's motion to
dismiss or, in the alternative, to transfer. (DE 12).
Plaintiff responded in opposition and defendant replied. In
this posture, the issues raised are ripe for ruling. For the
following reasons, defendant's motion is denied.
OF THE CASE
commenced this action on May 12, 2017, in Dublin County
Superior Court seeking a declaration under the North Carolina
Declaratory Judgment Act (“NCDJA”) of
plaintiff's rights under a commercial warehouse lease
(the “lease”) with defendant. In particular,
plaintiff seeks declarations that 1) plaintiff has neither
breached the lease, nor is it in default of the lease, as
defendant contends; 2) that defendant is not entitled to
terminate the lease; 3) that defendant is neither entitled to
take possession of the leased premises nor terminate
plaintiff's right of possession of the premises; and 4)
that defendant is not entitled to monetary damages. Plaintiff
also asserts four breach of contract claims on grounds that
defendant improperly declared plaintiff in default; demanded
cures for approved or allowed modifications or alterations;
and unreasonably withheld approval of modifications. In
addition to declaratory relief, plaintiff seeks damages in
excess of $25, 000, costs, fees, and jury trial.
removed the action to this court on May 23, 2017, and filed
the instant motion to dismiss on May 31, 2017. In its motion
to dismiss, defendant asserts that plaintiff impermissibly
used “procedural fencing” to file this action
before defendant filed an action on May 16, 2017, against
plaintiff in the United States District Court for the Eastern
District of Tennessee captioned Summit Investments
Southeast v. The Pork Company, Inc., No. 3:17-CV-213
(the “Tennessee case”), asserting claims of
breach of contract and tort claims arising out of
plaintiff's asserted defaults under the lease. Defendant
seeks dismissal of the instant action pursuant to Federal
Rule of Civil Procedure 12(b)(6), the NCDJA, and the
court's inherent authority. Defendant seeks, in the
alternative, to transfer the instant matter to the Eastern
District of Tennessee pursuant to 28 U.S.C. § 1404(a).
In support of the motion, defendant attaches a copy of the
complaint in the Tennessee case, as well as a copy of
judicial caseload statistics produced by the Administrative
Office of the United States Courts.
filed response to the instant motion on June 21, 2017,
including as an attachment an affidavit of Salvatore Villari,
Vice-President of plaintiff. Defendant replied on July 5,
OF THE FACTS
facts alleged in the complaint, as well as the procedural
history of this case and the Tennessee case, may be
summarized as follows. Plaintiff is a Delaware corporation
with its principal place of business in Dublin County, North
Carolina. Defendant is a Tennessee general partnership that
owns a 21.78 acre property in Duplin County, North Carolina,
on which a commercial warehouse (the “warehouse”)
is located. On April 1, 2011, plaintiff executed the lease
with defendant, which allowed plaintiff to take a 69, 558
square foot portion of the warehouse at 1012 U.S. Highway 117
South, Warsaw, NC 28398, for a term of 15 years. The lease
provides that “[n]o modifications or alterations to the
buildings . . . are allowed without prior written consent of
the Lessor which consent will not be unreasonably
withheld.” (DE 12-2 at 14). The lease states that the
“Premises shall be only used for Food Processing,
Manufacturing, Cold Storage and Warehouse purposes.”
(Id. at 16). In addition, it states “[t]his
Lease shall be governed by and construed in accordance with
the laws of the State of North Carolina, without regards to
principles of conflicts of laws.” (Id. at 17).
parties executed five addenda to the lease, two in 2011, two
in 2014, and one in 2015. (DE 12-2 at 18-21, 26-27; 12-3 at
1-2, 4-8). “Addendum No. 3” allowed plaintiff to
expand its business operations in up to approximately 35, 743
square feet of the warehouse space adjacent to the portion of
the warehouse space it was already leasing (hereinafter, the
“leased property” or the “premises”)
(DE 12-3 at 1). Between 2011 and 2015 plaintiff presented
construction plans and other information to defendant
describing alterations and modifications it wanted to make,
and defendant approved and/or did not object to these plans.
Plaintiff has never used the premises other than for allowed
uses under the lease.
February 17, 2017, defendant sent plaintiff a “Property
Report” drawing attention to certain “maintenance
issues before they become costly problems, ” and
asserting that certain alterations were not approved or
needed to be approved or removed, based upon an inspection of
the property by a representative of defendant. (DE 1-1 at
21-44). On March 10, 2017, defendant sent a notice of default
to plaintiff informing plaintiff of “deficiencies that
need to be addressed according to the lease, ”
referencing “unapproved alterations” set forth in
the Property Report. (DE 1-1 at 18). Defendant stated
“until such time as a resolution has been reached, you
must cease all work on the modifications.”
(Id. at 19) (emphasis in original). Defendant noted
that plaintiff's lenders “need notice as to how
long they have to respond to the removal of any equipment
should termination be a possibility.” (Id.).
Further defendant stated that it has “been marketing
the facility at a value of $13, 942, 000 for a couple of
years, ” and it “would be willing to help
[plaintiff] with securing a reasonable mortgage wit ha [sic]
credible lender if that is something that you would like us
to do.” (Id.).
March 27, 2017, response to defendant, plaintiff noted that
it had proposed to purchase defendant's entire 21.78 acre
property at an undisclosed price on March 24, 2017.
(See DE 1-1 at 47). “However, ”
plaintiff stated, “if the parties cannot come to an
agreement on a purchase price, then we will have to address
those matters raised in the Notice of Default. While we are
confident we can establish [plaintiff's] actions did not
breach the Lease, it is willing to work with [defendant] to
address any concerns it has regarding the expansion.”
(Id.). Plaintiff then outlined its plans regarding
correction of items noted in the Property Report, concluding
by noting that it has “incurred over $5 million in
costs related to this construction and installation of new
equipment.” (Id.) “Should [defendant]
attempt to terminate the Lease by declaring [plaintiff] in
default, ” plaintiff stated, “[plaintiff] will
exercise all legal rights available to it to prevent that, as
well as seek to recover any monetary damages caused by
April 14, 2017, defendant provided notice to plaintiff of
additional instances of default under the lease, including
that plaintiff had “materially and significantly
changed the nature of the business [plaintiff] was permitted
to conduct at the Premises.” (DE 1-3 at 12-13).
Defendant further states: “Notice is given that unless
[plaintiff] cures the instances of default within thirty (30)
days of receipt of this notice as provided in Section 15 of
the Lease, [defendant] will seek to enforce its remedies as
provided in the Lease and at law.” (Id.).
April 28, 2017, plaintiff responded to the April 14, 2017,
letter, asserting its position that it was not using the
premises in violation of the lease terms and setting forth
items that plaintiff was willing to undertake “to
resolve the difference that exists between the two
parties.” (DE 1-3 at 37).
stated in addition “there is a significant question as
to whether [defendant] has been operating in good faith with
[plaintiff] regarding the Lease and whether such actions give
rise to certain business torts.” (Id.).
Plaintiff stated further:
While the two sides did engage in discussions regarding the
purchase of the Premises, I understand that was unsuccessful.
That leaves us with the path of trying to resolve the alleged
default as outlined in my letter and I hope we can use this
as a foundation to come to an agreement. As [defendant] has
given [plaintiff] a deadline of May 14, 2017 to cure the
conditions in the Itemized Default Report, we ask
[defendant] to respond to this letter and [plaintiff's]
proposals by May 6, 2017.
(Id.) (emphasis in original). According to
defendant, it responded by telephone and then by letter dated
May 10, 2017, stating it “respectfully disagree[s] with
the positions you state in [the April 28, 2017] letter,
” and it “stands by the defaults listed in . . .
prior letter.” (DE 12-4 at 22).
noted above, plaintiff filed this action on May 12, 2017, a
Friday, in Dublin County Superior Court. Defendant commenced
the Tennessee case on May 16, 2017, a Monday. According to
the docket in the Tennessee case, on July 7, 2017, plaintiff
filed in the Tennessee case a motion to dismiss or transfer
the Tennessee case to this court. On July 28, 2017, defendant
filed in the Tennessee case an amended complaint that asserts
claims against three additional entities in addition to
plaintiff, 1) Villari Bros. Foods, LLC, 2) Villari Food
Group, LLC, and 3) Villari Brothers Trucking Inc. Defendant
has added in the Tennessee case 1) claims for civil
conspiracy, unjust enrichment, against these entities and
plaintiff, and 2) claims for inducement to breach of contract
and intentional interference with business relationships, and
punitive damages against these entities. Defendant seeks in
the Tennessee case damages in excess of $14 million, trebled,
plus punitive damages in excess of $28 million, as well as
trial by jury.
in the Tennessee case filed on August 9, 2017, a motion for
extension of time to file answer or otherwise respond and to
establish new deadlines for initial disclosures and Rule
26(f) conference. Defendant filed a response in opposition to
that motion in the Tennessee case on August 10, 2017, and
plaintiff replied on August 11, 2017, in the Tennessee case.
Standard of Review
motion to dismiss for failure to state a claim under Rule
12(b)(6) tests the legal sufficiency of the complaint but
“does not resolve contests surrounding the facts, the
merits of a claim, or the applicability of defenses.”
Republican Party v. Martin, 980 F.2d 943, 952 (4th
Cir. 1992). A complaint states a claim if it contains
“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 Atl. Corp v. Twombly, 550
U.S. 544, 570 (2007)). In evaluating whether a claim is
stated, “[the] court accepts all well-pled facts as
true and construes these facts in the light most favorable to
the plaintiff, ” but does not consider “legal
conclusions, elements of a cause of action, . . . bare
assertions devoid of further factual enhancement[, ] . . .
unwarranted inferences, unreasonable conclusions, or
arguments.” Nemet Chevrolet, Ltd. v.
Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir.
2009) (citations omitted).
the convenience of parties and witnesses, in the interest of
justice, a district court may transfer any civil action to
any other district or division where it might have been
brought or to any district or division to which all ...