Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Mid-South Tax Credit Partners I v. Junkin

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

September 10, 2019




         This case is before the court on Defendant Clatus Junkin's[1] (“Defendant”) Motion to Dismiss under Federal Rules of Civil Procedure 12(b)(1), (6), and (7). (Doc. # 4). The Motion is fully briefed (Docs. # 7-8) and is ripe for decision. After careful review, and for the reasons explained below, Defendant's Motion (Doc. # 4) is due to be denied.

         I. Background

         Plaintiff Mid-South Tax Credit Partners I (“Mid-South”) is a limited partnership organized in Delaware with a principal place of business in St. Louis, Missouri. (Doc. # 1 at ¶ 11). Plaintiff AJY Management Group, Inc. (“AJY”) is a corporation organized in Missouri with a principal place of business in St. Louis, Missouri. (Id. at ¶ 10). Mid-South and AJY (collectively, “Plaintiffs”) allege that they are limited partners in Fayette Properties, Ltd. (“the Partnership”). (Id. at ¶ 1). The Partnership is a limited partnership organized under Alabama state law. (Id. at ¶ 24). Defendant, an Alabama resident, served alongside William H. Oswalt as a general partner until September 1, 2017 when Junkin and Oswalt withdrew and disassociated from the Partnership. (Id. at ¶¶ 26-27).[2]

         Plaintiffs allege that in 2016, the General Partners made a claim for benefits arising from several causes of action owned by the Partnership in association with Franconia Associates et al. v. United States, 536 U.S. 129 (2002). (Id. at ¶ 30). As part of the Franconia settlement, the Partnership received $184, 912.20. (Id. at ¶ 31). According to Plaintiffs, Defendant and Oswalt wrongfully diverted and misappropriated their share of the settlement funds. (Id. at ¶ 3). In support of this contention, Plaintiffs point to language in the Partnership Agreement, which provides that “[a]ll profits, losses and credits . . . and all Net Cash Flow available for distribution shall be distributed in accordance with the following: 30% to the General Partners, 10% to the Special Limited Partner, and 60% to the Investment Partnership.” (Doc. # 1-1 at 50). Plaintiffs claim that pursuant to the terms of the Partnership, 70% of the settlement funds should have been distributed to Plaintiffs (the limited partner and special limited partner of the Partnership). (Doc. # 1 at ¶¶ 33-34). Instead, Plaintiffs contend that Defendant and Oswalt retained the entire amount-beyond the 30% designated to the General Partners--in violation of the terms of the Partnership Agreement. (Id. at ¶ 35). Defendant and Oswalt then withdrew and disassociated from the Partnership on September 1, 2017. (Id. at ¶ 36).

         Plaintiffs assert that in late 2018 they discovered the existence of the settlement and the alleged misappropriation of the settlement funds and therefore promptly demanded that Defendant and Oswalt return Plaintiffs' share of the funds. (Id. at ¶¶ 37-38). Plaintiffs settled their dispute with Oswalt, but they maintain that Defendant continues to possess and/or control $76, 938.54 of their outstanding share.[3] (Id. at ¶¶ 6, 39). As a result, Plaintiffs initiated this action on March 27, 2019. (Doc. # 1). In their Complaint, Plaintiffs assert three claims against Defendant: breach of contract (id. at ¶¶ 50-57), conversion (id. at ¶¶ 58-63), and breach of fiduciary duty (id. at ¶¶ 64-67).

         II. Standard of Review

         A. The Rule 12(b)(1) Standard

         Under Rule 12(b)(1), an attack on subject matter jurisdiction is either facial or factual. Lawrence v. Dunbar, 919 F.2d 1525, 1528-29 (11th Cir. 1990). Facial attacks “require[ ] the court merely to look and see if [the] plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion.” Id. at 1259; Ex Parte Safeway Ins. Co. of Ala., Inc., 990 So.2d 344, 349 (Ala. 2008) (“If a defendant mounts a ‘facial' challenge to the legal sufficiency of the plaintiff's jurisdictional allegations, the court must accept as true the allegations in the complaint and consider the factual allegations of the complaint in the light most favorable to the non-moving party.” (citation omitted)).

         Factual attacks, on the other hand, challenge “the existence of subject matter jurisdiction in fact, irrespective of the pleadings.” Id. at 1529. When the challenge is a factual attack, “no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.” Id. (quoting Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir. 1981)); Ex Parte Safeway, 990 So.2d at 350 (“[A] court deciding a Rule 12(b)(1) motion asserting a factual challenge ‘must go beyond the pleadings and resolve any disputed issues of fact the resolution of which is necessary to a ruling upon the motion to dismiss.'” (quotation omitted)).

         Here, although Defendant has not been specific, the court determines that Defendant's attack is factual because it attacks the nature of Plaintiff's lawsuit without going to the specific claims in the pleadings. Indeed, Defendant's contention is that Plaintiff's claim is derivative. If that is so, the court would not have subject-matter jurisdiction because the Partnership, which is currently an unnamed party, would have to be joined and its presence in this litigation would destroy complete diversity. (Doc. # 4 at 4). However, if Plaintiff's claim is direct, the court would not need to evaluate subject-matter jurisdiction any further because joinder of the Partnership is not required, thus leaving complete diversity intact. As discussed below, the court finds that the Plaintiff's claim, properly characterized, is a direct claim; therefore, the court has subject-matter jurisdiction because the Partnership need not be joined.

         B. The Rule 12(b)(6) Standard

         The Federal Rules of Civil Procedure require that a complaint provide “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). However, the complaint must include enough facts “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Pleadings that contain nothing more than “a formulaic recitation of the elements of a cause of action” do not meet Rule 8 standards, nor do pleadings suffice that are based merely upon “labels and conclusions” or “naked assertion[s]” without supporting factual allegations. Id. at 555, 557. In deciding a Rule 12(b)(6) motion to dismiss, courts view the allegations in the complaint in the light most favorable to the non-moving party. Watts v. Fla. Int'l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007).

         To survive a motion to dismiss, a complaint must “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although “[t]he plausibility standard is not akin to a ‘probability requirement, '” the complaint must demonstrate “more than a sheer possibility that a defendant has acted unlawfully.” Id. A plausible ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.