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Ace Motor Acceptance Corp. v. McCoy Motors, LLC

United States District Court, W.D. North Carolina, Charlotte Division

January 14, 2020



          Kenneth D. Bell, United States District Judge.

         THIS MATTER is before the Court on the defendants Robert McCoy, III's and Flash Autos, LLC's Partial Motion to Dismiss the Third Complaint (Doc. No. 50), Robert McCoy, III's and Flash Auto, LLC's Motion for More Definite Statements (Doc. No. 52), and the McCoy Joint Revocable Trust's Motion to Dismiss (Doc. No. 56).

         The Court has carefully reviewed and considered the Third Amended Complaint (Doc. No. 41), the parties' motions and briefs, and all other relevant portions of the record. For the reasons stated herein, the Court will GRANT IN PART and DENY IN PART Robert McCoy, III's and Flash Auto, LLC's Partial Motion to Dismiss the Third Amended Complaint; DENY Robert McCoy, III's and Flash Auto, LLC's Motion for More Definite Statements; and DENY McCoy Joint Revocable Trust's Motion to Dismiss.

         I. BACKGROUND

         While this action is still in the pleadings stage, there have been extensive prior proceedings which have been detailed in numerous orders by this Court and the Bankruptcy Court. The orders detailing prior proceedings include: (1) Order Concerning Interim Servicing of Accounts of Vehicle Buyers and Order Setting Hearing on Preliminary Injunction (Bankr. Doc. No. 8);[1] (2) Order Granting Motions for Preliminary Injunction and Other Emergency Relief (Bankr. Doc. No. 26); (3) Order Finding Certain Defendants in Civil Contempt and Continuing Pretrial Conference (Bankr. Doc. No. 47); (4) Order of U.S. Bankruptcy Judge Recommending Withdrawal of Reference of Adversary Proceeding for Further Civil, and Potentially Criminal, Contempt Proceedings (Doc. No. 1); (5) Supplemental Order (To November 21, 2018 Order Recommending Withdrawal) (Doc. No. 2); and (6) Order to Show Cause (Doc. No. 60). This Court has twice referred this matter to the United States Attorney for the Western District of North Carolina for criminal prosecution and investigation into Robert McCoy, Jr.'s (“McCoy Jr.”) and Misty McCoy's actions related to this case. (Doc. Nos. 3, 71).

         A brief history of the case shows that this matter arises from a dispute between McCoy Motors, LCC (“McCoy Motors”), a South Carolina used car dealership, its owners McCoy Jr. and Misty McCoy, and Ace Motor Acceptance Corporation (“Ace”), one of McCoy Motors' lenders.[2] In January 2018, Ace entered into a series of written agreements with the Original Defendants. Pursuant to the Agreements, Ace provided initial financing to purchase vehicles for ultimate sale by McCoy Motors and later purchased “receivables from the financing” of these sales.

         Ace is a Chapter 11 Debtor in Possession in the Western District of North Carolina. After a loan payment default by McCoy Motors, Ace attempted to recover its property and repossess its collateral from the Original Defendants. The Original Defendants resisted Ace's recovery by blocking access to the premises, suing the repossession agents, and swearing out criminal warrants against Ace's employees. Ace then filed suit to liquidate its debt and obtain judicial assistance in recovering the collateral.

         Ace filed its original complaint in June 2018 in the United States Bankruptcy Court for the Western District of North Carolina seeking, among other things, injunctive relief prohibiting asset transfers, the recovery of collateral, and damages arising out of breach of contract. Ace filed its first amended complaint on July 10, 2018, asserting another claim for relief against McCoy Jr. The parties bringing the present motions, Robert McCoy III (“McCoy III”), Flash Autos, LLC (“Flash Autos”) and the McCoy Joint Revocable Trust (“Trust”) were not mentioned in Ace's initial or first amended complaint.[3]

         Ace's second amended complaint added Flash Autos and McCoy III as defendants and was filed on December 19, 2018. After filing the seconded amended complaint, Ace became aware of additional factual allegations that arose after it had filed the second amended complaint. Accordingly, Ace was permitted to file a third amended complaint (“TAC”) (Doc. No. 41) in light of these new allegations. The TAC combines the allegations in the prior complaints, deletes several matters which have been ruled on by the Bankruptcy Court, or which are moot, and alleges new facts and counts against McCoy III, Flash Autos, and the Trust. McCoy III and Flash Autos now move to dismiss eight of the eleven claims alleged against them and move for more definite statements on the remaining three claims. The Trust seeks to dismiss the one claim alleged against it.


         A. Motions to Dismiss

         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.”Fed. R. Civ. P. 8(a)(2). However, “Rule 8(a)(2) still requires a ‘showing,' rather than a blanket assertion, of entitlement to relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007).

         The purpose of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint, not to resolve conflicts of fact or to decide the merits of the action. Edwards v. City of Goldsboro, 178 F.3d 231, 243-44 (4th Cir. 1999). In considering a motion to dismiss, the court assumes 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. Erickson v. Pardus, 551 U.S. 89, 94 (2007). “The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.” Revene v. Charles County Comm'rs, 882 F.2d 870, 872 (4th Cir. 1989) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

         However, the “‘[f]actual allegations must be enough to raise a right to relief above the speculative level' and have ‘enough facts to state a claim to relief that is plausible on its face.'” Wahi v. Charleston Area Med. Ctr., Inc., 562 F.3d 599, 616 n.26 (4th Cir. 2009) (quoting Twombly, 550 U.S. at 555); Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). “[A] plaintiff's obligation to provide the grounds of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do.” Twombly, 550 U.S. at 555 (citations omitted). Moreover, a court “need not accept the legal conclusions drawn from the facts” nor “accept as true unwarranted inferences, unreasonable conclusions, or arguments.” Eastern Shore Mkts., Inc. v. J.D. Assocs. Ltd. P'shp., 213 F.3d 175, 180 (4th Cir. 2000).

         B. Motion for More Definite Statement

         Federal Rule of Civil Procedure 12(e) allows a party to move for a more definite statement when the pleading “is so vague or ambiguous that the party cannot reasonably prepare a response.” F.R.C.P. 12(e). “Unlike a motion to dismiss for failure to state a claim, which attacks the legal sufficiency of a complaint, a motion for a more definite statement focuses on whether a party has enough information to frame an adequate answer.” Fogner v. Am. Home Mortg. Servicing, No. 1:11-CV-1073, 2012 U.S. Dist. LEXIS 194690, at *2 (M.D. N.C. 2012) (citing Re/Max, LLC v. Underwood, No. WDQ-10-2367, 2011 U.S. Dist. LEXIS 55943 (D. Md. May 25, 2011); Frederick v. Koziol, 727 F.Supp. 1019, 1020-21 (E.D. Va. 1990)).


         A. McCoy III's and Flash Autos' Motion to Dismiss

         McCoy III and Flash Autos move for the following claims to be dismissed: Preliminary Injunction (Claim 16); Payment of Legal Fees and Costs Incurred (Claim 13); Conspiracy to Defraud and/or Aiding and Abetting Fraudulent Transfers (Claim 10); Conversion (Claim 9); Unfair and Deceptive Trade Practices (Claims 12 and 17); Violation of Automatic Stay (Claim 11); Constructive Trust (Claim 15); and Successor Liability (Claim 19) as to McCoy III individually.

         1. Preliminary Injunction & Successor Liability as to McCoy III

         McCoy III and Flash Autos contend that Ace's claim for preliminary injunction must be dismissed because it is “a remedy, not an independent cause of action.” (Doc. No. 51, at 7). Ace does not contest the defendants' motion with respect to its claim for preliminary injunction. (Doc. No. 61, at 4). Therefore, the defendants' motion to dismiss Claim 16 is granted to the extent that a claim for a preliminary injunction is not recognized as an independent cause of action, but this ruling does not affect the availability of this relief in the future if it becomes necessary.

         McCoy III argues that he can not be held liable individually as a “successor” of McCoy Motors and that to the extent any such claim exists against McCoy III, it would be covered under Ace's claim for piercing the corporate veil or voidable transfers. (Doc. No. 51, at 15). Ace does not contest McCoy III's motion to dismiss its claim for successor liability as to McCoy III. Therefore, the Court will grant McCoy III's motion to dismiss Claim 19 as to McCoy III only.

         2. Payment of Legal Fees and Costs Incurred

         Ace asserts that it is entitled to legal fees and costs under North Carolina General Statute § 6-21.2, Rule 11, and 28 U.S.C. § 1927. (Doc. No. 51, ¶ 405). McCoy III and Flash Autos argue that Ace's claim for payment of legal ...

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