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Southern Financial Group, LLC v. Commonwealth

United States District Court, W.D. Kentucky, Louisville

May 13, 2019



          Charles R. Simpson III, Senior Judge

         I. Introduction

         This case is before the Court on two interrelated motions. Defendants have moved for judgment on the pleadings. DN 14. Plaintiff responded and cross-moved for summary judgment. DNs 15, 18. Defendants replied in support of their motion for judgment on the pleadings and responded in opposition to Plaintiff's motion for summary judgment. DNs 16, 19. Plaintiff replied in support of its motion for summary judgment. DN 17. Therefore, this matter is ripe for review. Finding that the Defendants are entitled to the sovereign immunity of the Commonwealth of Kentucky, the Court will grant the Defendants' motion for judgment on the pleadings, deny the Plaintiff's motion for summary judgment, and dismiss the case without prejudice.

         II. Legal Standard

         A. Defendant's Motion for Judgment on the Pleadings

          “After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). To the extent a Rule 12(c) motion challenges the pleading of plaintiff's complaint, the inquiry is equivalent to that used under Rule 12(b)(6). Lindsay v. Yates, 498 F.3d 434, 438 (6th Cir. 2007). Therefore, to survive a Rule 12(c) motion for judgment on the pleadings, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “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.” Id. The complaint need not contain “detailed factual allegations, ” yet must provide “more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. “Conclusory allegations or legal conclusions masquerading as factual allegations will not suffice.” Eidson v. Tenn. Dept. of Child Servs., 510 F.3d 631, 634 (6th Cir. 2007).

         In undertaking this inquiry, “a district court must (1) view the complaint in the light most favorable to the plaintiff and (2) take all well-pleaded factual allegations as true.” Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009). The Court “may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Bassett v. Nat l Collegiate Athletic Ass 'n, 528 F.3d 426, 430 (6th Cir. 2008). “The defendant has the burden of showing that the plaintiff has failed to state a claim for relief[.]” Wesley v. Campbell, 779 F.3d 421, 428 (6th Cir. 2015).

         B. Plaintiff's Cross-Motion for Summary Judgment

         A party moving for summary judgment must show that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A genuine issue for trial exists when “there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id. In undertaking this analysis, the Court must view the evidence in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378 (2007).

         The party moving for summary judgment bears the burden of establishing the nonexistence of any issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). They can meet this burden by “citing to particular parts of materials in the record” or “showing that the materials cited do not establish the . . . presence of a genuine dispute.” Fed.R.Civ.P. 56(c)(1). This burden can also be met by demonstrating that the nonmoving party “fail[ed] to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

         III. Factual and Procedural Background

         In 2003, Bramer-Ferriell-Stoess, LLC (“Bramer”) and Hy-Point Family Limited Partnership began work on a commercial and residential real estate development in Oldham County, Kentucky known as the Claymont Springs Subdivision. DN 1 at 2. To finance the development, Bramer obtained a loan from Branch Banking & Trust Company (“BB&T”) in the principal amount of $2.2 million on December 21, 2006. Id. To evidence and secure the loan, Bramer executed a promissory note and a real estate mortgage. Id. at 2-3. At the same time, Bramer obtained two irrevocable standby letters of credit from BB&T totaling $134, 600 to construct certain improvements and erosion controls required by regulations from the Oldham County Fiscal Court and the Oldham County Planning and Zoning Commission (collectively “Oldham County”). Id. at 3.

         BB&T assigned the promissory note and mortgage executed by Bramer to Southern Financial Group, LLC (“Southern”) in 2010. Id. Afterward, on April 6, 2011, Southern agreed to post cash bonds to replace the irrevocable standby letters of credit from BB&T. Id. See also DN 1-1 (cash bond agreement). The agreement reduced the amounts previously pledged to $94, 000. Id. One provision of the contract, the progenitor of this case, states:

The above amounts will be held by the P&Z until construction of the Project is completed, whereupon all of the cash deposits will be returned to SFG, PROVIDED, the cash deposits shall ...

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