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Branch Banking and Trust Co. v. Ebr Investments LLC

United States District Court, N.D. Alabama, Southern Division

January 16, 2015

BRANCH BANKING AND TRUST COMPANY, Plaintiff and Counterclaim-Defendant,
v.
EBR INVESTMENTS LLC, et al., Defendants and Counterclaim-Plaintiffs.

MEMORANDUM OPINION

WILLIAM M. ACKER, Jr., District Judge.

Before the court are various motions relating to the answer and counterclaim filed on October 17, 2014 by defendants EBR Investments, LLC ("EBR"), Stewart Dudley ("Dudley"), and SRD Assurance Corporation ("SRD") (Doc. 13). It is undisputed by the parties that EBR executed and delivered to plaintiff Branch Banking and Trust Company ("BB&T") a promissory note with guarantees by Dudley and SRD. (Doc. 1 at 4-6; Doc. 13 at 2-3). Defendants allege in their counterclaim that the loan at issue was obtained for the purchase of eighteen condominiums in a real estate development project by EBR that soured with the deterioration of the real estate market in Fall of 2006. (Doc. 13 at 11). Defendants allege that Colonial Bank, the predecessor to plaintiff, orally agreed that the loan would be extended and renewed until the purchased condominiums were sold. (Doc. 13 at 12). Defendants further allege that the subsequent actions of Colonial Bank and BB&T, actually extending and renewing the loan in the years following, evidences the parties' oral agreement. (Doc. 13 at 12-13).

On November 11, 2014, BB&T moved to dismiss defendants' counterclaim (Doc. 20), moved to strike defendants' jury demand (Doc. 21), and moved to strike certain affirmative defenses interposed by defendants (Doc. 22). On November 14, 2014, defendants moved to strike BB&T's motion to dismiss (Doc. 24).

For the reasons stated below, defendants' motion to strike BB&T's motion to dismiss will be denied, BB&T's motion to dismiss defendants' counterclaim will be granted, BB&T's motion to strike defendants' jury demand will be granted, and BB&T's motion to strike certain of defendants' affirmative defenses will be denied.

I. Defendants' motion to strike plaintiff's motion to dismiss

Defendants move to strike BB&T's motion to dismiss their counterclaim pursuant to Federal Rule of Civil Procedure 12(f), arguing that plaintiff cannot pursue discovery and a motion to dismiss without either the motion to dismiss being deemed withdrawn or the discovery stayed (Doc. 24 at 3).

While judicial economy may at times warrant otherwise, a federal district court is capable of simultaneously considering a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and managing discovery. Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1368 (11th Cir. 1997). Specifically, Rule 12(i) merely requires that a Rule 12(b)(6) motion "must be heard and decided before trial unless the court orders a deferral until trial." Fed. R. Civ. Proc. 12. While the better practice may be to obtain a ruling on a motion to dismiss before discovery begins, there "is no requirement that this be done." United States v. Marion, 562 F.3d 1330, 1342 (11th Cir. 2009). Furthermore, Federal Rule of Civil Procedure 8 "expressly permits the pleading of both alternative and inconsistent claims." United Technologies Corp. v. Mazer, 556 F.3d 1260, 1273 (11th Cir. 2009).

Plaintiff's discovery requests do not constitute a waiver of its motion to dismiss. And defendants have not provided any reason why discovery should be stayed beyond their errant construction of the Federal Rules of Civil Procedure.

II. BB&T's motion to dismiss

BB&T moves to dismiss defendants' counterclaim pursuant to Federal Rule of Civil Procedure 12(b)(6). "A motion to dismiss a counterclaim under Rule 12(b)(6) is treated the same as a motion to dismiss a complaint" Masterbuilt Mfg., Inc. v. Bruce Foods Corp., 2013 WL 5328367, at *1 (N.D. Ala. Sept. 20, 2013) (quoting Fabricant v. Sears Roebuck, 202 F.R.D. 306, 308 (S.D.Fla.2001)). "To survive a motion to dismiss, a complaint must contain 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).

A. Statute of Frauds

This case involves an alleged oral agreement(Doc. 13 at 12-13). The parties agree[1] that subsection (7) of the Alabama statute of frauds is the applicable statute, which extends the general writing and subscription requirements to "[e]very agreement or commitment to lend money, delay or forebear repayment thereof or to modify the provisions of such an agreement or commitment except for consumer loans with a principal amount financed less than $25, 000."[2] Ala. Code § 8-9-2(7). Defendants argue however, that the alleged oral agreement is not void because it falls within a "part performance" exception to the statute of frauds. (Doc. 31 at 2-4).

Although Alabama courts have long recognized a "part performance" exception to the statute of frauds under Ala. Code § 8-9-2(5) for oral agreements to buy or sell land, Darby v. Johnson, 477 So.2d 322, 326 (Ala. 1985), Alabama courts have declined to expand[3] the exception beyond subsection (5). Mantiply v. Mantiply, 951 So.2d 638, 652-53 (Ala. 2006). The alleged contract at issue here squarely falls within the domain of Ala. Code § 8-9-2(7), a subsection with no recognized "part-performance" exception. Even though the agreement incidentally relates to the sale of eighteen condominiums, it is not a land sale contract within the contemplation of Ala. Code § 8-9-2(5), nor does it even satisfy that subsection's two payment or possession requirements necessary for the "part-performance" exception to apply.[4] Further, this case is not the proper one for expanding the ...


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