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Babbs v. Equity Group Kentucky Division LLC

United States District Court, W.D. Kentucky, Bowling Green Division

October 15, 2019

DENNIS BABBS PLAINTIFF
v.
EQUITY GROUP KENTUCKY DIVISION LLC d/b/a KEYSTONE FOODS DEFENDANT

          MEMORANDUM OPINION AND ORDER

          GREG N. STIVERS, CHIEF JUDGE

         This matter is before the Court on Defendant's Partial Motion to Dismiss (DN 6). This matter is now ripe for adjudication. For the reasons that follow, the motion is DENIED.

         I. BACKGROUND

         A. Statement of Facts

         Many of the relevant facts are not disputed by the parties. In 2003, Plaintiff Dennis Babbs ("Babbs") entered into a contract with Equity Group Kentucky Division d/b/a Keystone Foods ("Keystone") whereby Babbs would accept and raise broiler chickens for later re-delivery back to Keystone. (Compl. ¶ 6, DN 1-3). Similarly, in 2010 the parties entered into and executed a contract for the raising of broilers. (Compl. ¶¶ 10-12). In 2016, the parties entered into the present Broiler Production Agreement ("Agreement"), again for the raising of broiler chickens. (Compl. ¶ 13). The Agreement states, in relevant part, that "[Keystone] will provide [Babbs] with chicks from the hatchery." (Def's Partial Mot. Dismiss Ex. A, at 2, DN 13-1). Babbs contends that he purchased a chicken farm and related equipment in reliance on the Agreement. (Compl. ¶¶ 15-16).

         Beginning in January 2017, the relationship between Babbs and Keystone began to break down. Brandon Gibson ("Gibson"), Broiler Manager of Keystone, inspected Babbs' property on a No. of occasions, each time providing Babbs with a list of alterations and improvements he needed to make to his property if he wished to receive more broilers from Keystone. (Compl. ¶¶ 17-24). Babbs contends that he repeatedly complied with the recommendations made by Gibson and that Gibson became increasingly more difficult to contact. (Compl. ¶ 24).[1] Keystone has not placed any broilers with Babbs since approximately December 2016, and the Agreement does not terminate until October 2019. (Compl. ¶¶ 28-29).

         B. Procedural History

         On March 20, 2019, Babbs filed this lawsuit in Warren Circuit Court alleging breach of contract and breach of implied covenant of good faith and fair dealing. (Compl. ¶¶ 31-37). On May 22, 2019, Keystone filed a notice of removal in the United States District Court for the Western District of Kentucky. (Notice Removal, DN 1). On May 29, 2019, Keystone filed its answer raising a variety of defenses and moved under Fed.R.Civ.P. 12(b)(6) to dismiss Babbs' claim for breach of implied covenant of good faith and fair dealing. (Answer, DN 4; Def's Partial Mot. Dismiss, DN 6). Babbs responded (DN 12), and Keystone replied. (DN 14).

         II. JURISDICTION

         The Court has subject matter jurisdiction over this action via diversity under 28 U.S.C. § 1332. There is complete diversity between the parties because Babbs is a resident of Kentucky and Keystone is incorporated in Delaware with its principal place of business in Pennsylvania. The amount in controversy as pleaded exceeds $75, 000.00. (See Notice Removal 3-4; Compl. ¶¶ 2-3).

         III. STANDARD OF REVIEW

         In order to survive dismissal for failure to state a claim under F. R. Civ. P. 12(b)(6), "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] 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& GPolymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009) (citing Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009)). Even so, the Court need not accept a party's "bare assertion of legal conclusions." Columbia Nat. Res., Inc. v. Tatum, 58 F.3d 1101, 1109 (6th Cir. 1995) (citation omitted). Ultimately, this inquiry is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.

         IV. DISCUSSION

         Keystone argues that a claim for breach of the implied covenant of good faith and fair dealing is not actionable under Kentucky law as a tort claim except for in insurance contracts. (Def's Partial Mot. Dismiss 1). Moreover, Keystone contends that if the implied covenant claim is construed as a contract claim, that it cannot exist apart from Babbs' claim for breach of contract. (Def's Partial Mot. Dismiss 2). In response, Babbs construes his implied covenant claim as a contract claim, and he argues that this claim is properly pleaded as a separate cause of action. (Pl's Resp. Def's Partial Mot. Dismiss 1, DN ...


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