MEMORANDUM OPINION AND ORDER
This matter is before the Court on Plaintiff's Motion to Dismiss Defendants' Counterclaim [DN 23] and Peabody Development Company's Motion to Dismiss the Counterclaim [DN 46]. Fully briefed, these matters are ripe for decision. For the following reasons, Plaintiff's motion is GRANTED in part and DENIED in part. Peabody Development Company's motion is GRANTED.
On April 21, 1970, Dr. Malcolm L. Barnes and others conveyed certain mineral and mining rights to Peabody Coal Company ("Peabody") by a general warranty deed. (Compl. [DN 1] ¶ 8.) The deed, conveying over one hundred mineral acres in Ohio County, Kentucky, included the rights of "using the surface . . . for the purpose of mining any or all of said coal by the strip mining method." It also included the "usual, customary, and necessary rights . . . for the mining of said coal by the underground method, or any other method of mining said coal." (Deed from Barnes to Peabody, D.B. 188, Pg. 171, Office of Ohio Cnty. Clerk [DN 21-1].) At or around the same time that the deed was executed, Peabody drafted a letter to Dr. Barnes. This letter stated that it was intended to clarify the parties' agreement. (See Letter from Peabody to Barnes Dated Apr. 21, 1970 [DN 21-2].) The letter limited the areas of land where Peabody would conduct its strip mining operations. It also put a time limit on them, stating that Peabody would conclude its strip mining operations within ten years. (Id.)
Thereafter, in 1978, Dr. Barnes passed away. His estate subsequently conveyed his interest in the surface property to Defendants Malcolm S. J. Barnes and Shirley Barnes. (Compl. [DN 1] ¶ 13.) After becoming the owners of the surface, Malcolm S. J. Barnes and Shirley Barnes mortgaged the land on multiple occasions and constructed barns, a residential home, and other structures on it. (Countercl. [DN 24] ¶ 14.) In 2009, they conveyed a portion of the property to Defendants Joseph
H. R. Barnes and Carrie B. Barnes. (Id. ¶ 9.) Joseph H. R. Barnes and Carrie B. Barnes then took out a loan to construct a house on their portion of the property. (Id. ¶ 14.)
Meanwhile, Peabody conveyed its mineral rights in the property to Peabody Development in 1989. (Countercl. [DN 24] ¶ 11.) In 2005, Peabody Development then conveyed the same mineral rights to Central States Coal Reserves. (Id.) Thereafter, in 2006, Central States Coal Reserves and Beaver Dam Coal Company conveyed the same mineral rights to Plaintiff. (Id. ¶ 12.)
On February 12, 2012, Plaintiff filed this action for a declaratory judgment, requesting that the Court declare that Plaintiff was a bona fide purchaser for value without notice, thus having all of the mining rights that were originally conveyed to Peabody in 1970. (Compl. [DN 1] ¶ 22(a).) In this action, Plaintiff also requested a declaration from the Court that the letter from Peabody to Dr. Barnes was void as to Plaintiff, thus having no effect on Plaintiff's mining rights as described in the 1970 deed. (Id. ¶ 22(b).) On September 25, 2012, Defendants filed a counterclaim against Plaintiff alleging fraud. (See Countercl. [DN 24].) This counterclaim is at issue in this motion to dismiss.
Upon a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), a court "must construe the complaint in the light most favorable to plaintiff," League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007) (citation omitted), accepting all plaintiff's allegations as true. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Under this standard, the plaintiff must provide the grounds for its entitlement to relief, which "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action." Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 555 (2007). A plaintiff satisfies this standard only when it "pleads 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. A complaint falls short if it pleads facts that are merely "consistent with a defendant's liability" or if the facts do not "permit the court to infer more than the mere possibility of misconduct." Id. at 678--79. Instead, the allegations must "'show that the pleader is entitled to relief.'" Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
III.DISCUSSION OF PLAINTIFF'S MOTION TO DISMISS [DN23]
Plaintiff has moved to dismiss Defendants' counterclaim pursuant to Fed. R. Civ. P. 12(b)(6). Defendants assert the Court should not dismiss their counterclaim, as they have "specifically alleged fraud, collusion, equitable estoppel, and adverse possession." (See Mem. of Authority in Supp. of Defs./Countercl. Pls.' Resp. to Pl.'s Mot. to Dismiss Countercl. [DN 42-1] 5.) The Court considers each aspect of Defendants' counterclaim in turn.
The basis for Defendants' fraud claim is difficult to discern. Nevertheless, it appears to the Court that Defendants' basic argument is that Plaintiff was aware that Defendants owned and lived on the property's surface; Plaintiff represented to Defendants that they owned the surface without any form of restriction; and Defendants were thereby induced to mortgage their property and construct several improvements on it, all to their detriment. (See Countercl. [DN 24] ...