United States District Court, M.D. Alabama, Southern Division
WILLIAM C. CARN, III, as Chapter 7 Trustee of SpecAlloy Corp., et al. Plaintiffs,
HEESUNG PMTECH CORP., Defendant.
MEMORANDUM OPINION AND ORDER
A. BAKER UNITED STATES MAGISTRATE JUDGE
C. Cam, III, as the Chapter 7 Trustee ("the
Trustee") of SpecAlloy Corporation doing business as
Panhandle Converter Recycling ("SpecAlloy" or
"the Debtor"), LKQ Corporation ("LKQ"),
Converter Brokers, LLC, ("Converter Brokers"), and
Enterprise Recycling, Ltd., doing business as Wrench-A-Part
and Commodity Recyclers ("Enterprise") filed the
Amended Complaint against Defendant Heesung PMTech
Corporation ("Heesung" or "Defendant").
(Doc. 24). The Trustee asserts claims of avoidable setoff
pursuant to 11 U.S.C. §§ 553 and 550; avoidable
preferences pursuant to 11 U.S.C. §§ 547 and 550;
fraudulent transfers pursuant to 11 U.S.C. §§ 548
& 550; fraudulent transfers pursuant to the Uniform
Fraudulent Transfer Act, Ala. Code §8-9-1,
etseq., and 11 U.S.C. §§ 544 and 550;
re-characterization of the advances; and equitable
subordination. LKQ, Converter Brokers, and Enterprise
(collectively "the Suppliers") assert state law
claims of conversion; breach of contract; quantum meruit;
unjust enrichment; principal liability; and partner/joint
venture liability. (Doc. 24).
October 13, 2017, Heesung filed its Answer to the Amended
Complaint and Counterclaim (Doc. 49), and an Amended Answer
and Counterclaim on October 17, 2017, (Doc. 52). In Count I,
Heesung requested a declaratory judgment "confirming who
has an interest in the Supplier Converters, "
"confirming who was entitled to receive payment on
account of Debtor's sale of Supplier Converters to
Heesung, " "declaring] that LKQ, Brokers, and
Enterprise did not retain or otherwise preserve a bailment
relationship with Debtor, " and "establishing the
relationship between and among Heesung, Debtor, LKQ, Brokers,
and Enterprise." (Doc. 52 at ¶¶ 192-98). In
Count II, Heesung stated a claim for Breach of Contract,
accounts owing, against SpecAlloy Corporation. (Doc. 52 at
¶ 231) In Count III, Heesung requested a declaratory
judgment it made "Advance Payments" to SpecAlloy
Corporation that should be characterized as debts. (Doc. 52
at ¶ 265). In Count IV, Heesung stated a claim for
Breach of Implied Covenant of Good Faith and Fair Dealing
against SpecAlloy Corporation. (Doc. 52 at ¶ 274).
November 3, 2017, the Suppliers filed a Motion to Dismiss
Heesung's Counterclaims, or, in the alternative, to
redesignate the Counterclaims as affirmative defenses (Doc.
59), and the Trustee filed a motion to strike or dismiss the
Counterclaims (Doc. 60). Further, on February 29, 2018, the
parties filed a Joint Motion for Extension of Time to Amend
Pleadings and Add Parties (Doc. 84), and Heesung filed a
Motion to Amend its Answer and to assert additional
affirmative defense (Doc. 85).
court has federal question jurisdiction pursuant to 28 U.S.C.
§1331, diversity jurisdiction pursuant to 28 U.S.C.
§1332, bankruptcy jurisdiction pursuant to 28 U.S.C.
§1334(b), and supplemental jurisdiction pursuant to 28
U.S.C. §1367. The parties do not contest personal
jurisdiction or venue, and there are adequate allegations to
support both. See 28 U.S.C. § 1391. The parties
do not dispute venue or personal jurisdiction, and there are
adequate allegations in Plaintiff's Amended Complaint and
Heesung's First Amended Answer and Counterclaim to
support both. On January 18, 2017, the parties consented to
Magistrate Judge Jurisdiction for all matters pursuant to
Rule 73, Fed. R. Civ. P., and 28 U.S.C. § 636(c). On
December 20, 2017, this matter was reassigned to the
undersigned as the presiding judge in this matter.
STANDARD OF REVIEW
12(b)(6) motion to dismiss tests the sufficiency of the
Complaint against the legal standard set forth in Rule 8:
"a short and plain statement of the claim showing that
the pleader is entitled to relief." Fed.R.Civ.P.
evaluating a motion to dismiss pursuant to Rule 12(b)(6), the
court must take "the factual allegations in the
complaint as true and construe them in the light most
favorable to the plaintiff." Pielage v.
McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008).
However, "the tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable
to legal conclusions." Ashcroft v. Iqbal, 556
U.S. 662, 663 (2009). "[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 the elements of a cause of action
will not do." Twombly, 550 U.S. at 555.
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.'"/gZx2/, 556 U.S. at 678 (quoting Bell Atl
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
"Determining whether a complaint states a plausible
claim for relief [is]... a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense." Id. at 663
(alteration in original) (citation omitted). "[F]acial
plausibility" exists "when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. (citing Twombly, 550
U.S. at 556). The standard also "calls for enough facts
to raise a reasonable expectation that discovery will reveal
evidence" of the claim. Twombly, 550 U.S. at
556. While the complaint need not set out "detailed
factual allegations, " it must provide sufficient
factual amplification "to raise a right to relief above
the speculative level." Id. at 555.
when the allegations in a complaint, however true, could not
raise a claim of entitlement to relief, 'this basic
deficiency should ... be exposed at the point of minimum
expenditure of time and money by the parties and the
court.'" Twombly, 550 U.S. 558 (quoting 5
Wight & Miller § 1216, at 233-34 (quoting in turn
Daves v. Hawaiian Dredging Co., 114 F.Supp. 643, 645
(D. Haw. 1953)) (alteration original). "[O]nly a
complaint that states a plausible claim for relief survives a
motion to dismiss." Iqbal, 556 U.S. at 679
(citing Twombly, 550 U.S. at 556).
"In keeping with these principles a court considering a
motion to dismiss can choose to begin by identifying
pleadings that, because they are no more than conclusions,
are not entitled to the assumption of truth. While legal
conclusions can provide the framework of a complaint, they
must be supported by factual allegations. When there are
well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise
to an entitlement to relief."
Iqbal, 556 U.S. at 679.