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Bristol Preservation, LLC v. IGC-Bristol, LLC

United States District Court, E.D. Tennessee

June 26, 2017

BRISTOL PRESERVATION, LLC, Plaintiff,
v.
IGC-BRISTOL, LLC,, Defendants.

          MEMORANDUM OPINION AND ORDER

          THOMAS A. VARLAN CHIEF UNITED STATES DISTRICT JUDGE

         This civil case is before the Court on plaintiff Bristol Preservation, LLC's[1] Motion to Remand [Doc. 13], defendant Knight 39 Holdings, LLC's Motion to Dismiss [Doc. 9], and plaintiff's Motion to Dismiss Counterclaims [Doc. 15]. The parties have filed various responses and replies to the pending motions [Docs. 17, 21, 22, 23, 24, 25, 26]. For the reasons discussed herein, the Court will deny plaintiff's Motion to Remand [Doc. 13], grant in part and deny in part Knight 39's Motion to Dismiss [Doc. 9], and grant plaintiff's Motion to Dismiss Counterclaims [Doc. 15].

         I. Background

         This case involves a dispute over a golf course lease. According to the complaint, plaintiff is the owner of the Country Club of Bristol (“the Country Club”) [Doc. 1-1 p. 5]. On or about July 1, 2015, plaintiff entered into a lease agreement (“the Lease Agreement”) with defendant IGC-Bristol Country Club, LLC (“IGC-Bristol”), in which IGC-Bristol agreed to lease a portion of the Country Club for a ten-year-term [Id.]. Defendant Integrity Golf Company, LLC (“Integrity Golf”) executed a Guaranty of Lease agreement (“Guaranty Agreement”) in which it guaranteed IGC-Bristol's obligations under the Lease Agreement [Id. at 6]. The Lease Agreement contained a forum selection clause, which states:

The venue of any suit or proceeding brought for the enforcement of or otherwise with respect to [the Lease Agreement] shall always be lodged in the State Courts of the Second Judicial Circuit in and for Sullivan County, Tennessee at Bristol; or if the Circuit Court does not have jurisdiction, then before the United States District Court for the Eastern District of Tennessee (Greenville Division); or if neither of such courts shall have jurisdiction, then before any other court sitting in Sullivan County, Tennessee, having subject matter jurisdiction, regardless of whether, under any applicable principal of law, venue may also be properly lodged in the courts of any other federal, state or county jurisdiction [Doc. 10-1 p. 31].

         The Lease Agreement also contained the following terms:

If Tenant is any entity, any change to the structure of such entity or any disposition(s) of any of the interests therein by sale, assignment, operation of law or otherwise, or any change in the power to vote the interests therein, will be a prohibited assignment of this Lease requiring Tenant to obtain Landlord's prior consent [Id. at 19-20].
Default by Landlord: The occurrence of any one of the following events shall constitute a default by Landlord under this Lease:
(a) If Landlord shall fail to fully and completely perform its duties and obligations under this Lease and such failure is not cured within thirty (30) days after receive of notice from Tenant advising Landlord of such default . . . [Id. at 22].

         When the parties executed the Lease Agreement, IGC-Bristol was owned by Integrity Golf, but Integrity Golf later divested or otherwise sold its interest in IGC-Bristol to defendant Knight 39 Holdings, LLC (“Knight 39”) [Doc. 1-1 p. 12].

         Approximately one year after the parties entered into the Lease Agreement, on or about July 1, 2016, IGC-Bristol failed to make a timely rent payment [Id. at 8]. Subsequently thereafter, on July 15, 2016, W. Jack Davis, II, Chairman and President of Knight 39, sent an email to plaintiff stating “we think the best result is for [plaintiff] to own and operate [the Country Club] as [it] wants a number of things done that a tenant simply can't do” [Id.]. Knight 39 is the sole member of IGC-Bristol, and plaintiff alleges that Knight 39 controlled IGC-Bristol at this time [Id. at 20]. IGC-Bristol contends that plaintiff had continuously interfered with its rights of quiet enjoyment up to this time, in part by requiring IGC-Bristol to change the name of the Country Club to “the Olde Tennessean, ” a name change which resulted in trademark infringement litigation [Doc. 11 p. 23].

         On July 21, 2016, plaintiff sent IGC-Bristol written notice demanding payment of the unpaid rent [Id.]. Because Integrity Golf was a guarantor of IGC-Bristol's obligations, plaintiff also sent notice to Integrity Golf [Id. at 9]. On or about July 27, 2016, an individual named Paul Fleming, identified in his email as Chief Executive Officer of Knight 39, sent an email to plaintiff stating “[o]ur operation of [the Country Club] will cease at close of business Friday July 29th” [Id.]. Shortly thereafter IGC-Bristol and/or Knight 39, through its attorney, advised plaintiff that it would cease operation of the Country Club at the close of business on July 31, 2016 [Id.]. Plaintiff alleges that IGC-Bristol and Knight 39 then wrongfully abandoned the County Club on the evening of July 31, 2016 [Id. at 10].

         Plaintiff contends that neither IGC-Bristol nor Knight 39 provided notice to the members of the Country Club prior to ceasing operations [Id.]. Additionally, plaintiff alleges upon information and belief that membership fees, deposits, and other monies have been paid and/or will be paid to IGC-Bristol and/or Knight 39 for services that have occurred or will occur after the abandonment of the Country Club [Id.].

         Plaintiff filed this lawsuit in the Law Court for Sullivan County, Tennessee, bringing various claims against IGC-Bristol, Integrity Golf, and Knight 39. Defendants removed the case to this Court, and IGC-Bristol filed several counterclaims against plaintiff. Knight 39 has filed a motion to dismiss all claims asserted against it, and plaintiff has moved both to remand this case back to the Sullivan County Law Court, and also to dismiss IGC- Bristol's counterclaims. The Court will first address the Motion to Remand, and then will turn to the motions to dismiss.

         II. Motion to Remand

         The Court first turns to plaintiff's Motion to Remand [Doc. 13]. In support of this motion, plaintiff argues that remand is warranted because of the Lease Agreement's forum selection clause. Specifically, plaintiff contends that the forum selection clause prohibited defendants' removal of this case from state to federal court.

         As an initial point, the Court notes that the statutory right of removal of a case from state to federal court may be waived, but the waiver must be “clear and unequivocal.” See Cadle Co. v. Reiner, Reiner & Bendett, P.C., 307 F. App'x 884, 886 (6th Cir. 2009). While “general principles of contract interpretation are used to determine whether the right to remove has been waived” by a forum selection clause, district courts within this circuit have indicated that “the Sixth Circuit has established a higher threshold for finding waiver of the right of removal than have other circuits.” See Chrysler Grp., LLC v. Eagle Auto-Mall Corp., No. 14-12964, 2014 WL 5092903, at *1 (E.D. Mich. Oct. 10, 2014) (citation omitted). In particular, “a clause that does not even mention either removal or the party seeking to remove cannot be a clear waiver of removal.” See EBI-Detroit, Inc. v. Detroit, 279 F. App'x 340, 349 (6th Cir. 2008).

         In this case, the forum selection clause in the Lease Agreement states:

The venue of any suit or proceeding brought for the enforcement of or otherwise with respect to [the Lease Agreement] shall always be lodged in the State Courts of the Second Judicial Circuit in and for Sullivan County, Tennessee at Bristol; or if the Circuit Court does not have jurisdiction, then before the United States District Court for the Eastern District of Tennessee (Greenville Division); or if neither of such courts shall have jurisdiction, then before any other court sitting in Sullivan County, Tennessee, having subject matter jurisdiction, regardless of whether, under any applicable principal of law, venue may also be properly lodged in the courts of any other federal, state or county jurisdiction [Doc. 10-1 p. 31].

         Notably, the forum selection clause neither specifically mentions a waiver of the right of removal, nor any particular defendant, and thus cannot constitute a “clear waiver of removal.” See EBI-Detroit, 279 F. App'x at 349.

         Furthermore, the Court finds the case Chrysler Group, LLC v. Eagle Auto-Mall Corp. instructive. In that case, the district court found that a forum selection clause which stated only that a claim must be “filed” in state court was insufficient to constitute a waiver of the right to remove. See Chrysler Grp., 2014 WL 5092903, at *4. The district court emphasized that the clause “does not contain any language, as is required in this Circuit, which would clearly indicate that the right to remove is waived.” See Id. While the clause at issue in the instant case states that venue shall always be “lodged” in state court as opposed to “filed, ” Black's Law Dictionary defines lodged as filed. BLACK'S LAW DICTIONARY (10th ed. 2014). Therefore, this case is like Chrysler Group in that the forum selection clause states only that the claim must be filed/lodged in state court, but makes no mention of whether the case may then be removed. The Court agrees with the Chrysler Group court that this language does not rise to the level of a clear and unequivocal waiver of the right to remove. See Cadle Co., 307 F. App'x at 886.

         Plaintiff argues that the fact that the forum selection clause contemplates a federal forum in the event that the state court does not have jurisdiction indicates that “the parties contemplated, considered, and rejected the possibility that any dispute . . . would be litigated . . . in federal court unless and only if an available state court lacked subject matter jurisdiction” [Doc. 24 p. 2]. The forum selection clause, however, speaks only in terms of the suit being in the federal forum in the event that it may not be lodged in the state court forum. As the Court has already noted, lodged means filed, and the clause says nothing about the ability of the defendants to remove the case from where it is initially lodged/filed. Indeed, this case was initially lodged in state court consistent with the forum selection clause. Therefore, this argument is not well-taken.

         In sum, the Court finds that the forum selection clause does not constitute a clear and unequivocal waiver of the right to remove, and as such, the Court will deny plaintiff's motion to remand.

         III. Motions to Dismiss

         The Court next turns to plaintiff's and Knight 39's motions to dismiss. The Court will first discuss the standard of review applicable to the motions, and then will analyze each motion to dismiss.

         Federal Rule of Civil Procedure 8(a) sets out a liberal pleading standard. To survive a motion to dismiss, a complaint need contain only a “short and plain statement of the claim showing that the pleader is entitled to relief, ‘in order to give [the opposing party] fair notice of what the . . . claim is and the grounds upon which it rests.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Detailed factual allegations are not required, but a party's “obligation to provide the ‘grounds' of his entitle[ment] to relief' requires more than labels and conclusions.” Id. “[A] formulaic recitation of the elements of a cause of action will not do, ” nor will “an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Claims based on fraud are subject to the heightened requirements of Rule 9(b), which requires that a plaintiff plead the circumstances constituting fraud “with particularity.” Fed.R.Civ.P. 9(b).

         In deciding a Rule 12(b)(6) motion to dismiss, a court must construe the complaint in the light most favorable to the plaintiff, accept all factual allegations as true, draw all reasonable inferences in favor of the plaintiff, and determine whether the complaint contains “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570; Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citation omitted). “A claim has facial plausibility when the plaintiff pleads the factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Determining whether a complaint states a plausible claim for relief will [ultimately] . . . be a context-specific task that requires th[is Court] to draw on its judicial experience and common sense.” Id. at 679.

         A. Knight 39's Motion to Dismiss

         In the complaint, plaintiff raises the following claims against Knight 39: 1) Unlawful Detainer; 2) Unjust Enrichment; 3) Trespass; 4) Intentional Interference with Business Relationship; 5) Procurement of Breach of Contract; 5) Piercing the Corporate Veil; and 6) Injunctive Relief. Knight 39 moves the Court to dismiss each of these claims.

         1. ...


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