United States District Court, E.D. Kentucky, Central Division
MEMORANDUM OPINION AND ORDER
C REEVES, CHIEF JUDGE UNITED STATES DISTRICT COURT.
Global USA, Inc. has filed a motion to dismiss Count 3 of
Jenco Industrial Sales & Service, LLC
(“Jenco”) and Edward J. Sieja's
(“Sieja”) Counterclaim which alleges slander,
libel, and defamation. [Record No. 13] The motion to dismiss
will be granted because the alleged defamatory statements
were made during the course of this proceeding and are
is in the business of extracting and distilling legal,
non-intoxicating cannabidiol (“CBD”) from
industrial hemp. [Record No. 1, ¶ 9] Jenco deals in
industrial equipment, including the kinds necessary to
extract and distill CBD from hemp. Id. at ¶ 10.
Sieja is Jenco's sole member. Id. at ¶ 11.
According to GenCanna, the defendants agreed to provide it
with three chillers and six “molecular three-stages
distillation units.” Id. at ¶ 12. The
parties executed a series of purchase orders and, between
September 2018 and May 2019, GenCanna made payments to the
defendants totaling over $2, 290, 166.00. Id. at
alleges that the defendants eventually delivered one chiller
and one molecular distillation unit; however, neither was
functional. Id. at 16. GenCanna further contends
that, as a result of the defendants' failure to deliver
the promised equipment, it has lost millions of dollars in
CBD sales this harvest season. Id. at 19. In
addition to claims for breach of contract, promissory
estoppel, and unjust enrichment, GenCanna brings a claim of
fraud. With respect to the fraud claim, GenCanna alleges that
Jenco and Sieja falsely represented that they would deliver
the specified equipment, knew that their representation was
false, and intended to induce GenCanna to act in reliance on
the false representation. Id. at ¶¶ 25-31.
defendants generally dispute GenCanna's allegations and
assert that GenCanna breached the parties' agreement.
Specifically, they allege that GenCanna failed to pay for all
of the equipment and services it purchased under the
contract. [Record No. 11, ¶ 1] The defendants further
contend that any problems with the defendants' equipment
were caused by GenCanna's own conduct.
defendants have filed a counterclaim which includes claims
for failure to pay for goods/breach of contract (count 1);
liquidation of equipment (count 2); and slander, libel, and
defamation (count 3). Count 3 provides, in part:
The Plaintiff has deliberately and with malice attacked,
impugned, and maligned the character of both defendants, by
asserting allegations of fraud against the defendants within
its Complaint, with intent to injure the Defendants and gain
an impermissible advantage in civil litigation. The
allegations of fraud have been republished nationwide and are
readily available in an on-line search and in articles
regarding the filing of the Complaint, including trade
publications and associations that are directed at potential
customers of similar equipment from the Defendant Jenco.
[Record No. 11, ¶¶ 36-37] GenCanna has filed a
motion to dismiss count 3 of the Counterclaim.
Court examines the sufficiency of the defendants'
counterclaim under Rule 12(b)(6) of the Federal Rules of
Civil Procedure. Generally, in determining whether a motion
to dismiss should be granted, the Court must construe the
counterclaim in the nonmoving party's favor, accept all
factual allegations as true, and determine whether the
pleading contains “enough facts to state a claim to
relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft
v. Iqbal, 556 U.S. 662 (2009). Although the pleading
need not contain detailed factual allegations, it must
contain factual allegations that “raise a right to
relief above the speculative level.” Twombly,
550 U.S. at 555.
merits of a claim are not considered in the Rule 12(b)(6)
context. However, to the extent that the validity of an
affirmative defense such as immunity, statute of limitations,
or privilege is clear from the face of the pleading,
dismissal may be appropriate based on the existence of such a
defense. See, e.g., Gibson v. American Bankers Ins.
Co., 289 F.3d 943, 946 (6th Cir. 2002).
facie case for defamation, whether as an action for libel or
slander, requires proof of defamatory language about the
plaintiff; an unprivileged publication to a third party; and
fault amounting to at least negligence by the publisher.
Toler v. Süd-Chemie, Inc., 458 S.W.3d 276,
281-82 (Ky. 2014); Stringer v. Wal-Mart Stores,
Inc., 151 S.W.3d 781, 793 (Ky. 2004). “Kentucky
courts have long recognized that statements in judicial
proceedings, if relevant to the issues involved, are
absolutely privileged, even though it may be claimed that
they are false and alleged with malice.” Gen. Elec.
Co. v. Sargent & Lundy, 916 F.2d 1119, 1126 (6th
Cir. 1990). Clearly, allegations made in a complaint, such at
those at issue here, constitute “statements in ...