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
PLAINTIFFS' MOTION TO DISMISS AMENDED
G. CORNELIUS U.S. MAGISTRATE JUDGE
action is currently before the court on Robert L. Wiggins,
Jr. and Wolf Pup, LLC's ("Wolf Pup")
(collectively, "Plaintiffs") motion to dismiss the
amended counterclaim for fraudulent misrepresentation
asserted against them by defendants/counterclaim plaintiffs
Frank P. Ellis, IV ("Ellis") and Character Counts,
LLC ("CCLLC"). (Doc. 194). The motion is fully
briefed and ripe for review. (Docs. 194, 201 & 206).
After careful consideration of the amended counterclaim and
the parties' briefing, and for the reasons set forth
below, the court denies Plaintiffs' motion.
STANDARD OF REVIEW
8(a)(2) of the Federal Rules of Civil Procedure requires a
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). Under Rule 12(b)(6), a counterclaim
defendant may move to dismiss a counterclaim for
"failure to state a claim upon which relief can be
granted." Fed.R.Civ.P. 12(b)(6). 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.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
Pup owned a condominium development in Baldwin County,
Alabama (the "Property") that was financed through
a loan with Superior Bank. (Doc. 187 at ¶ 3). Wiggins
and third-party defendant/counterclaim plaintiff Linda J.
Peacock ("Peacock") are indirect members of Wolf
Pup. (Doc. 187 at ¶¶ 2 & 4). Ellis is an owner
and member of CCLLC. (See Doc. 187 at ¶ 26;
Doc. 206-2). CCLLC purchased the Property from Wolf Pup by
assuming the loan. (Doc. 183-1).
and Ellis allege that Wiggins and Peacock directed Scott
Raley, an owner/member of Wolf Pup, to inform Ellis that the
Property "was a legally created, ready-to-sell
condominium project" even though they knew of problems
with the creation of the condominiums units. (Doc. 187 at
¶¶ 18-19, 33, & 50-52; see also Doc.
194-3 at 3). CCLLC and Ellis also allege that Wiggins and
Peacock informed them "the condominium units were
properly formed under applicable law" to induce them to
purchase the Property. (Doc. 187 at ¶¶ 52, 62-63).
After CCLLC purchased the Property, Ellis and CCLLC learned
the declaration of condominium for the Property was defective
and failed to 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;
Doc. 187-2). Ellis later purchased the loan from Superior
Bank, foreclosed on the mortgage securing the Property, and
sold the Property to another entity. (See Doc.
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 Peacock (Doc. 112).
Plaintiffs moved to dismiss the counterclaims asserted
against them pursuant to Rule 12(b)(6), and this court
granted their motion in part and denied it in part. (Docs.
118, 180 & 181). Relevant to Plaintiffs' pending
motion, the court granted Plaintiffs' prior motion with
respect to Ellis and CCLLC's claims for fraudulent
suppression and fraudulent misrepresentation. (Doc. 181). The
court dismissed the claim for fraudulent misrepresentation
without prejudice and gave Ellis and CCLLC leave to reassert
the claim. (Id.). Following the court's order,
Ellis and CCLLC filed an amended counterclaim for fraudulent
misrepresentation. (Doc. 187).
allege a claim for fraudulent misrepresentation against
Plaintiffs, Ellis and CCLLC must allege facts showing
"(1) a false representation (2) of a material existing
fact (3) reasonably relied upon by [Ellis and CCLLC] (4) who
suffered damage as a proximate consequence of the
misrepresentation." Exxon Mobil Corp. v. Ala.
Dep't of Conservation and Nat. Res., 986 So.2d 1093,
1114 (Ala. 2007) (quotation and emphasis omitted). Plaintiffs
contend Ellis and CCLLC's amended counterclaim for
fraudulent misrepresentation should be dismissed under Rule
12(b)(6) because they did not allege a plausible claim. (Doc.
194). Plaintiffs present numerous arguments to support their
contention, and the court addresses each argument in
Allegations of Misrepresentations
first assert that Ellis and CCLLC's amended counterclaim
for fraudulent misrepresentation must be dismissed because it
is based on the same suppression-based allegations the Court
previously found insufficient to state a viable claim of
fraudulent suppression. (Doc. 194 at 2-3, 5-9). Plaintiffs
argue the amended counterclaim "is explicit in treating
silence and non-disclosure as 'representations' and
'communications.'" (Id. at 5).
the amended counterclaim contains many allegations that
Plaintiffs suppressed material information, it also contains
allegations that Plaintiffs made, or were responsible for,
false representations regarding the Property. In particular,
Ellis and CCLLC allege: (1) "Ellis had communications
with the members of Wolf Pup regarding a potential purchase
of [the Property];" (2) "Raley, at the direction of
Wiggins , informed Ellis that [the Property] was a legally
created, ready-to-sell condominium
project;" (3) "Wolf Pup [and] Wiggins 
continued to represent to CCLLC, Ellis, and Superior that the
units could be sold as a means of paying off the indebtedness
due to Superior;" (4) Wiggins purported to convey a
condominium unit at the Property to Ellis; (5) "Wiggins
, individually and on behalf of Wolf Pup, . . . represented
to Ellis and CCLLC that [the Property] was a legally created,
ready-to-sell condominium project by executed deeds
purporting to transfer the units and in other documents
acknowledging the purported existence of the units;" (6)
"in communications with Ellis and CCLLC . . . Wiggins
, both in [his] individual capacity[y] and as [a] member
of Wolf Pup, informed Ellis and CCLLC that the condominium
units were properly formed under applicable law, ready for
resale as 62 separate units;" and (7) "in ongoing
communications throughout August, September, October, and
November 2007, Wiggins , individually and on behalf of Wolf
Pup, informed Ellis and CCLLC that [the Property] was a
legally created, ready-to-sell condominium project."
(Doc. 187 at ¶¶ 18-19, 33, 41-42, 52, 56). At this
stage in the litigation, the court must accept the truth of
these allegations and view them in the light most favorable
to Ellis and CCLLC. See Adinolfe, 768 F.3d at 1169
allegations, when viewed in the light most favorable to Ellis
and CCLLC, show Plaintiffs did not just conceal or suppress
material information. Instead, Ellis and CCLLC allege
Plaintiffs made false representations of a material fact
regarding the Property. (Doc. 187 at ¶¶ 18-19, 33,
41-42, 52, 56). Thus, the court is not persuaded by