United States District Court, N.D. Alabama, Southern Division
ROBERT L. WIGGINS, JR., et al., Plaintiffs,
FDIC, as Receiver of Superior Bank, et al., Defendants.
MEMORANDUM OPINION AND ORDER REGARDING LINDA J.
PEACOCK'S MOTION TO DISMISS
G. CORNELIUS U.S. MAGISTRATE JUDGE.
case is before the court on Linda J. Peacock's motion to
dismiss the fraudulent misrepresentation counterclaim
asserted against her by Frank P. Ellis, IV, and Character
Counts, LLC, in response to her counterclaims for declaratory
judgment. (Doc. 192). The motion is fully briefed and ripe
for review. (Docs. 192, 198 & 203). After careful
consideration of the parties' briefing, and for the
reasons set forth below, the court denies Peacock's
motion to dismiss.
STANDARD OF REVIEW
8(a)(2) of the Federal Rules of Civil Procedure requires a
complaint or counterclaim to contain “a short plain
statement of the claim showing that the pleader is entitled
to relief.” Fed.R.Civ.P. 8(a)(2). A motion to dismiss
under Rule 12(b)(6) tests the sufficiency of the complaint or
counterclaim. See Fed. R. Civ. P. 12(b)(6). Under
Rule 12(b)(6), the defendant or counterclaim defendant bears
the burden of demonstrating that the complaint or
counterclaim fails “to state a claim upon which relief
can be granted.” See Id. To withstand a
12(b)(6) motion, a pleading “must allege ‘enough
facts to state a claim to relief that is plausible on its
face.'” Adinolfe v. United Tech. Corp.,
768 F.3d 1161, 1169 (11th Cir. 2014) (quoting Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). A
pleading “does not need detailed factual allegations,
” but “a formulaic recitation of the elements of
a cause of action will not do.” Twombly, 550
U.S. at 555.
deciding a motion to dismiss a counterclaim under Rule
12(b)(6), a court must assume the truth of the factual
allegations in the counterclaim and view those facts in the
light most favorable to the counterclaim plaintiff. See
Adinolfe, 768 F.3d at 1169 (citations omitted). However,
“the tenet that a court must accept as true all of the
allegations contained in a [counterclaim] is inapplicable to
legal conclusions” couched as factual allegations.
Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).
Additionally, when deciding a motion to dismiss, a court may
not dismiss a counterclaim merely because it appears unlikely
the counterclaim plaintiff will ultimately prevail on the
merits. See Twombly, 550 U.S. at 563 n.8.
FACTUAL AND PROCEDURAL BACKGROUND
Wolf Pup, LLC (“Wolf Pup”), owned a condominium
development in Baldwin County, Alabama (the
“Property”) that was financed through a loan with
Superior Bank. (Doc. 187 at ¶ 3). Plaintiff Robert L.
Wiggins, Jr. (“Wiggins”),  and third-party
defendant/counterclaim plaintiff Linda J. Peacock
(“Peacock”) are indirect owners and members of
Wolf Pup. (Doc. 187 at ¶¶ 2 & 4).
Defendant/counter-plaintiff Character Counts, LLC
(“CCLLC”), purchased the Property from Wolf Pup
by assuming the loan. (Doc. 183-1).
and defendant/counter-plaintiff Frank Ellis, IV
(“Ellis”), allege Wiggins and Peacock directed
Scott Raley, another indirect owner and member of Wolf Pup,
to inform Ellis that the Property “was a legally
created ready-to-sell condominium project” even though
they knew there were problems relating to the creation of the
condominiums units. (Doc. 187 at ¶¶ 5-6, 17, 19,
33, & 50-52). After CCLLC purchased the Property, Ellis
and CCLLC learned the declaration of condominium for the
Property was defective and failed to legally create any
condominium units for resale. (See Id. at ¶
45). Accordingly, the Property was worth less than the $23
million CCLLC and Ellis had anticipated it was worth.
(See Id. at ¶ 53). Ellis later purchased the
loan from Superior Bank, foreclosed on the mortgage securing
the Property, and sold the Property to another entity.
(See Doc. 119-8). This action followed.
initiated this action in 2012 against the FDIC as receiver of
Superior Bank and amended their complaint in 2015 to assert
claims against the FDIC, Ellis, and CCLLC. (Docs. 1 &
22). After Plaintiffs filed a second amended complaint in
2016 (Doc. 94), Ellis and CCLLC asserted amended
counterclaims against Plaintiffs and third-party claims
against Peacock. (Doc. 112). Peacock moved to dismiss the
claims asserted against her pursuant to Rule 12(b)(6), and
this court granted her motion in part and denied it in part.
(Docs. 117, 181). The court granted Peacock's motion with
respect to Ellis and CCLLC's claims for fraudulent
suppression, fraudulent misrepresentation, and unjust
enrichment and denied her motion with respect to Ellis's
breach of guaranty claim. (Id.).
to the current motion to dismiss, Peacock argued in her prior
motion that Ellis and CCLLC's claim for fraudulent
misrepresentation was barred by the statute of limitations.
(Doc. 117 at 8-10). The undersigned agreed and
recommended the fraudulent misrepresentation claim be
dismissed against Peacock based on the statute of
limitations. (Doc. 158 at 27). The undersigned also found
that the fraudulent misrepresentation counterclaim asserted
against Plaintiffs was not subject to a statute of
limitations defense under Alabama law and recommended that
Ellis and CCLLC be given an opportunity to amend their
counterclaim to state their claim with particularity.
(Id. at 27 & 31). The district judge adopted the
Report and Recommendation and entered an order dismissing the
fraudulent misrepresentation claim against Peacock with
prejudice based on the statute of limitations and giving
Ellis and CCLLC an opportunity to reassert the fraudulent
misrepresentation claim against Plaintiffs. (Doc. 181).
the order granting in part and denying in part Peacock's
motion to dismiss, Peacock answered the breach of guaranty
claim and asserted counterclaims against Ellis and CCLLC,
seeking a declaratory judgment releasing her as a guarantor
of the loan, along with an award of attorneys' fees,
expenses, and “all other damages permitted in law or
equity.” (Doc. 183). Ellis and CCLLC answered
Peacock's counterclaims and reasserted their fraudulent
misrepresentation claim against Peacock as a
counterclaim-in-reply to her counterclaims for declaratory
judgment. (Docs. 187 & 188).
argues that Ellis and CCLLC's counterclaim-in-reply must
be dismissed because the court dismissed Ellis and
CCLLC's prior fraudulent misrepresentation claim against
her, the Federal Rules of Civil Procedure do not allow for a
counterclaim-in-reply, the court denied Ellis and CCLLC's
request for leave to amend their fraudulent misrepresentation
claim against Peacock, and she did not have a duty to
disclose any information to Ellis or CCLLC. (Doc. 192). The
court addresses Peacock's arguments in turn.
Peacock Did Not Show the Counterclaim-In-Reply is Barred