United States District Court, W.D. Kentucky, Bowling Green Division
MEMORANDUM OPINION AND ORDER
N. Stivers, United States District Court Judge
matter is before the Court on Defendants' Motion to
Dismiss (DN 16), and Plaintiff's Motions for Partial
Summary Judgment (DN 4, 13). The Court finds that the facts
and legal arguments are adequately presented in the
parties' filings and its decision would not be
significantly aided by oral argument, despite Plaintiffs'
requests. (DN 4, 13, 18, 20, 21). For the reasons outlined
below, Defendant's Motion to Dismiss is
GRANTED, and Plaintiff's motions are
STATEMENT OF FACTS AND CLAIMS
12, 2007, the Small Business Administration
(“SBA”) approved the application of Audubon State
Bank (“ASB”) for a SBA guaranteed
to Royal Professional Solutions, LLC d/b/a Audubon Dairy
Queen (“Royal”). (Am. Compl. Ex. 5, at 4 DN
10-6). The loan amount was $85, 200.00 for the remodel of a
Dairy Queen restaurant in Audubon, Iowa, which Royal operated
under a franchise with American Dairy Queen
(“DQ”). (Am. Compl. Ex. 5, at 4). On August 10,
2007, Royal executed a promissory note in favor of ASB in
exchange for the loan. (Am. Compl. ¶ 7, DN 10; Am.
Compl. Ex. 1, DN 19-1). Plaintiff Guy A. Blume
(“Plaintiff”) signed the note on behalf of Royal
as a member of the limited liability company and also in his
individual capacity, and Pamela K. Blume (collectively,
“the Blumes”) signed as a manager/member and in
her individual capacity. (Am. Compl. Ex. 1, at 6). The Blumes
also executed individual unconditional personal guaranties in
favor of ASB which were secured with a real property
mortgage. (Am. Compl. ¶ 8; Am. Compl. Ex. 2, DN 10-2).
October 10, 2011, DQ issued a Confirmation of Termination
notice to Royal and the Blumes indicating that the store
would be closed on September 1, 2011, for failure to pay fees
and submit required monthly reports. (Def.'s Mot. Dismiss
Ex. A1, DN 16-1). The termination letter stated that the
franchise and license rights would be terminated effective
November 8, 2011. (Def.'s Mot. Dismiss Ex. A1).
Thereafter, ASB determined that Royal and the Blumes had
defaulted on the 2007 loan, as well as another SBA-guaranteed
loan for $150, 000.00. (Am. Compl. Ex. 4-1, DN 10-4).
October 2015, the Department of the Treasury informed
Plaintiff of its intent to initiate administrative wage
garnishment for the sum of $78, 591.58 owed to the SBA as a
result of the default. (Am. Compl. Ex. 4-2, DN 10-5). Plaintiff
requested a hearing on the wage garnishment issue, and the
matter was referred to the SBA for review and determination.
(Am. Compl. Ex. 4-2).
August 21, 2017, the SBA issued a decision finding that the
wage garnishment action could not proceed, as the
“borrower was current in its payments when the lender
called it in default, liquidated the business, sold its
assets, and obtained the SBA guarantee.” (Am. Compl.
Ex. 4-2, at 4). On September 11, 2017, Plaintiff initiated
the present action alleging breach of contract against the
SBA and negligence against the United States. (Compl., DN 1;
Am. Compl. ¶¶ 34-41). The parties have filed
competing dispositive motions. (Pl.'s Mot. Partial Summ.
J., DN 4; Pl.'s Mot. Partial Summ. J., DN 13; Def.'s
Mot. Dismiss, DN 16).
STANDARD OF REVIEW
standards for dismissal under Fed.R.Civ.P. 12(b)(1) and
12(b)(6) differ in the Sixth Circuit. See RMI Titanium
Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th
Cir. 1996). Threshold challenges to subject matter
jurisdiction under Fed.R.Civ.P. 12(b)(1) should generally be
decided before any ruling on the merits under Fed.R.Civ.P.
12(b)(6). See Bell v. Hood, 327 U.S. 678, 682
(1946). In most circumstances, the plaintiff bears the burden
to survive Fed.R.Civ.P. 12(b)(1) motions to dismiss for lack
of subject matter jurisdiction. See id.
to subject matter jurisdiction come in several varieties.
Facial attacks challenge a plaintiff's establishment of
jurisdiction in their complaint and require the court to
examine the jurisdictional basis. See United States v.
Ritchie, 15 F.3d 592, 598 (6th Cir. 1994) (citation
omitted). Factual attacks contest the existence of factual
prerequisites to jurisdiction. See Id. In such
motions, the district court is empowered to resolve the
factual disputes affecting any jurisdictional prerequisites.
See Rogers v. Stratton Indus., Inc., 798 F.2d 913,
915 (6th Cir. 1986). A plaintiff bears the burden in both of
these situations. See Bell, 327 U.S. at 682.
immunity may serve as a basis for a Fed.R.Civ.P. 12(b)(1)
motion to dismiss for lack of jurisdiction. See
Muniz-Muniz v. U.S. Border Patrol, 741 F.3d 668, 671
(6th Cir. 2013). “‘[W]hile the Eleventh Amendment
is jurisdictional in the sense that it is a limitation on the
federal court's judicial power, ' the defense
‘is not coextensive with the limitations on judicial
power in Article III.'” Nair v. Oakland Cty.
Cmty. Mental Health Auth., 443 F.3d 469, 474 (6th Cir.
2006) (citing Calderon v. Ashmus, 523 U.S. 740, 745
n.2 (1998)). “[U]nlike subject-matter jurisdiction,
‘the entity asserting Eleventh Amendment immunity has
the burden to show that it is entitled to
immunity.'” Id. (citation omitted).
considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6),
courts must presume all factual allegations in the complaint
to be true and make all reasonable inferences in favor of the
non-moving party. Total Benefits Planning Agency, Inc. v.
Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434
(6th Cir. 2008) (citation omitted). “But the district
court need not accept a bare assertion of legal
conclusions.” Tackett v. M & G Polymers, USA,
LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citation
omitted). “A pleading that offers labels and
conclusions or a formulaic recitation of the elements of a
cause of action will not do. Nor does a complaint suffice if
it tenders naked assertion[s] devoid of further factual
enhancement.” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (internal quotation marks omitted) (citation
omitted). When a plaintiff is proceeding pro se, the
Court is required to liberally construe the complaint and
hold it to a less stringent standard than a similar pleading
drafted by an attorney. Haines v. Kerner, 404 U.S.
519, 520 (1972); Hahn v. Star Bank, 190 F.3d 708,
715 (6th Cir. 1999). Even pro se complaints,
however, must satisfy basic pleading requirements. Wells
v. Brown, 891 F.2d 591, 594 (6th Cir. 1989).
survive a motion to dismiss under Rule 12(b)(6), the
plaintiff must allege “enough facts to state a claim to
relief that is plausible on its face.” Traverse Bay
Area Intermediate Sch. Dist. v. Mich. Dep't of
Educ., 615 F.3d 622, 627 (6th Cir. 2010) (internal
quotation marks omitted) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). 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.”
Iqbal, 556 U.S. at 678 (citing Twombly, 550
U.S. at 556). “A complaint will be dismissed pursuant
to Rule 12(b)(6) if no law supports the claims made, if the
facts alleged are insufficient to state a claim, or if the
face of the complaint presents an insurmountable bar to
relief.” Southfield Educ. Ass'n v. Southfield
Bd. of Educ., 570 Fed.Appx. 485, 487 (6th Cir. 2014)
(citing Twombly, 550 U.S. at 561-64).
Defendant's Motion to Dismiss
United States mounts several arguments on behalf of the
in support of its motion to dismiss Plaintiff's breach of
contract claim. (Def.'s Mot. Dismiss 5-17, DN 16).
Although the Motion to Dismiss was filed by “[t]he
United States, on behalf of the Small Business
Administration, ” it contains arguments that are
relevant to Plaintiff's claims against both the SBA and
United States. (See Def.'s Mot. Dismiss 5-9).
Notably, Section III argues for dismissal of Plaintiff's
negligence claim brought only against the United States, not
the SBA. (Def.'s Mot. Dismiss 6-9). Thus, while Plaintiff
complains that “[t]he United States has not appeared in
the motion to dismiss defending the claims of negligence
against their employees, ” he was clearly on notice
that the Motion to Dismiss extended to his negligence claim.
Further, the Court has the power to sua sponte
dismiss a complaint for lack of subject matter jurisdiction.
See Apple v. Glenn, 183 F.3d 477, 479 (6th Cir.
1999). The Court will therefore consider the arguments raised
in the Motion to Dismiss as to Plaintiff's negligence
claim against the United States, insofar as they address lack
of subject matter jurisdiction.
Plaintiff's Negligence Claim - Sovereign
United States argues that it enjoys sovereign immunity under
the FTCA for Plaintiff's negligence claim. (Def.'s
Mot. Dismiss 6-9). “‘The United States, as
sovereign, is immune from suit save as it consents to be sued
. . . .' This principle extends to agencies of the United
States, as well, which are immune absent a showing of a
waiver of sovereign immunity.” Whittle v. United
States, 7 F.3d 1259, 1262 (6th Cir. 1993) (internal
citation omitted) (citing United States v. Testan,
424 U.S. 392 (1976)). The Federal Tort Claims Act
(“FTCA”) is the exclusive remedy for suits
against the United States or its agencies sounding in tort,
including negligence. 28 U.S.C. § 2679(a). The FTCA
“waives sovereign immunity to the extent ...