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Warren Paving, Inc. v. Heartland Materials, Inc.

United States District Court, W.D. Kentucky, Paducah Division

January 21, 2015

WARREN PAVING, INC., et al., Plaintiffs,
HEARTLAND MATERIALS, INC., et al., Defendants.


THOMAS B. RUSSELL, Senior District Judge.

This matter is before the Court on two pending motions. First, Defendants Heartland Materials, Inc., Southern Aggregate Distributors, Inc., and William R. Frazer LLC have filed a Motion to Dismiss. (Docket No. 7). Plaintiffs Slats Lucas, LLC, and Warren Paving, Inc. have responded, (Docket No. 8), and Defendants have replied, (Docket No. 9). Second, Plaintiffs filed a Motion to Deposit Funds. (Docket No. 10). Defendants have responded, (Docket No. 11), and Plaintiffs have replied, (Docket No. 12). These matters are now ripe for adjudication. For the following reasons, the Court will GRANT Defendants' Motion to Dismiss and DENY Plaintiffs' Motion to Deposit Funds.


Plaintiff Warren Paving, Inc. ("Warren Paving") began investigating opportunities to own and operate a limestone quarry in 2003. Lawrence Warren, on behalf of Warren Paving, engaged a geologist, Walt Gaylord, to investigate the quality and quantity of limestone reserves at a quarry for sale in Illinois. Subsequently, Gaylord, who was a principal in Heartland Materials, Inc. ("Heartland"), represented that he knew of potential locations in Kentucky. Heartland then began assisting Warren Paving in this search, first identifying a potential tract called "Paddy's Bluff" that Warren Paving declined to purchase because it would require underground mining. Heartland held an option to purchase Paddy's Bluff. Later, Heartland identified a tract of land for purchase in Livingston County, Kentucky ("the Property"). After data gathered by Gaylord indicated the Property was a good location for a limestone quarry, Warren Paving told Heartland it would like to purchase an option to buy the Property. Warren Paving gave Heartland a $5, 000 check to purchase the option, however Heartland purchased the option in its own name without informing Warren Paving. When the option was about to expire, Warren Paving gave Heartland another check for $5, 000 to extend the option; Heartland did so, again in its own name.

Warren Paving decided to exercise its option to purchase the property, and Heartland presented it with a "Contract for the Assignment of an Option to Purchase Real Property with Retained Royalties" (the "Contract for Assignment") which showed that the option was in Heartland's name. The Contract for Assignment was dated September 1, 2004. Heartland transferred its option to Warren Paving in exchange for Warren Paving's agreement to advance $300, 000 to Heartland to be recouped by the first 75, 000 tons of limestone produced on the property. Further, another $300, 000 advance was to be paid to Heartland to be recouped over the next 750, 000 tons. After production of the first 1, 500, 000 tons of limestone, Warren Paving was to pay Heartland royalties of $0.40 per ton for all limestone mined and loaded for transport.

Warren Paving states that "[d]espite Heartland's actions, however, because Warren Paving believed a successful limestone quarry could be operated on the Property, even with Heartland's exorbitant demands, Warren Paving executed the Contract for Assignment so it could purchase the Property from Mr. and Mrs. Grabowski." (Docket No. 1). Before production began, Heartland got certain required permits and other approvals for Warren Paving. On June 4, 2007, Warren Paving transferred the Property to Slats Lucas. On July 1, 2007, Warren Paving and Slats Lucas entered into a lease under which, among other things, Warren Paving agreed to make the payments on behalf of Slats Lucas. In July of 2009, Heartland assigned a 1/3 undivided interest in its right to the purported royalties to Gaylord. Subsequently, in July of 2009, Gaylord relinquished his interest in the purported royalty to Slats Lucas. In August of 2010, in consideration for the payment of one dollar, Heartland assigned half of its remaining 2/3 interest in its right to the royalties to WRF and half to Southern Aggregate. Currently, WRF and Southern Aggregate each have a 1/3 interest in the right to the purported royalties.

Further, Warren Paving alleges that "[a]t all times relevant hereto, neither Heartland nor any of its officers were licensed real estate brokers registered with the Kentucky Real Estate Commission." Id. Warren Paving brought this lawsuit seeking a declaratory judgment that Heartland was prohibited from practicing real estate and thus that the Contract for Assignment is void and Defendants are not entitled to any payments. Further, Warren Paving brings claims of Mistake of Fact, Breach of Fiduciary Duties, Fraud and Intentional Misrepresentation, Restitution, and Assumpsit/Unjust Enrichment/Constructive Trust.


The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a "short plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). A defendant may move to dismiss a claim or case because the complaint fails to "state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b). When considering a Rule 12(b)(6) motion to dismiss, the court must presume all of the factual allegations in the complaint are true and draw all reasonable inferences in favor of the nonmoving party. Total Benefits Planning Agency, Inc., 552 F.3d 430, 434 (6th Cir. 2008) (citing Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). "The court need not, however, accept unwarranted factual inferences." Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)).

Even though a "complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). Instead, the plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). A complaint should contain enough facts "to state a claim to relief that is plausible on its face." Id. at 570. A claim becomes plausible "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, 129 S.Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). If, from the well-pleaded facts, the court cannot "infer more than the mere possibility of misconduct, the complaint has alleged-but has not show[n]'-that the pleader is entitled to relief.'" Id. at 1950 (citing Fed.R.Civ.P. 8(a)(2)). "Only a complaint that states a plausible claim for relief survives a motion to dismiss." Id.

Although Rule 12(b) does not specifically address motions to dismiss based on the alleged expiration of the applicable statute of limitations, a complaint that shows on its face that relief is barred by the affirmative defense of the statute of limitations is properly subject to a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. City of Painesville, Ohio v. First Montauk Fin. Corp., 178 F.R.D. 180, 193 (N.D.Ohio 1998). A statute of limitations defense essentially signifies that the face of the complaint contains an insurmountable bar to relief, indicating that the plaintiff has no claim. See Ashiegbu v. Purviance, 76 F.Supp.2d 824, 828 (S.D. Ohio 1998) ( citing Rauch v. Day & Night Mfg., 576 F.2d 697, 702 (6th Cir. 1978)).


Declaratory Judgment (Count I)

Warren Paving argues that because Heartland did not have a real estate license, it was prohibited from practicing real estate. Thus, they argue, the Contract for Assignment is void and Defendants are not entitled to any payments under it. Defendants argue that Heartland was not required under Kentucky law to hold a real estate broker's license, and that even if it had been required to hold a license, the claim is barred by ...

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