| John M. Floyd & Assoc., Inc. v. First Bank
2003 U.S. Dist. LEXIS 12868 (W.D. Va.)
CASE NO. 5:02CV00101
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF VIRGINIA, HARRISONBURG DIVISION
2003 U.S. Dist. LEXIS 13747
May 28, 2003, Decided
May 28, 2003, Entered, Filed
SUBSEQUENT HISTORY: Accepted by, Motion denied by, Summary judgment denied by John M. Floyd & Assoc. v. First Bank, 2003 U.S. Dist. LEXIS 12868 (W.D. Va., July 24, 2003)
DISPOSITION: [*1] Magistrate recommended that defendant's motion to dismiss or for summary judgment be denied.
CASE SUMMARY:
PROCEDURAL POSTURE: Plaintiff corporation's first amended complaint alleged defendant bank accepted and then breached the terms of the corporation's letter proposal for it to install an overdraft protection program at the bank. The trial court referred the bank's Fed. R. Civ. P. 12(b)(1), (6), motions to dismiss, or, in the alternative, motion for summary judgment, to the magistrate for his findings, conclusions, and recommended disposition.
OVERVIEW: The corporation alleged that the bank accepted the proposal, approved the recommendation the corporation made concerning the installation of an overdraft privilege program, formed a binding contract for the corporation's services, took steps toward honoring the contract, caused the corporation to take action in furtherance of performing the contract, later cancelled installation of the corporation's program, and entered into an agreement with one of the corporation's competitors to perform the services covered by the contract with the corporation. The bank's defense was that it was not obligated under the proposal. The bank submitted nothing to indicate the trial court did not have jurisdiction. The magistrate concluded that (1) the trial court did have jurisdiction for denial of the Fed. R. Civ. P. 12(b)(1) motion to dismiss; and (2) the complaint, viewed in the light most favorable to the corporation, alleged all the essential contract elements, namely, offer, acceptance, consideration, and non-performance for denial of the Fed. R. Civ. P. 12(b)(6) motion to dismiss. It was impermissibly premature to consider summary judgment before the discovery process was completed.
OUTCOME: The magistrate recommended (1) that the motions to dismiss be denied, and (2) that the motions to dismiss not be converted to summary judgment, without prejudice to the bank to renew the motion for summary judgment once discovery was completed.
COUNSEL: For John M Floyd & Assoc, John M Floyd & Associates, Inc, PLAINTIFF: John Lyons Marshall, Jr, McSWEENEY, CRUMP, CHILDRESS & TEMPLE,
PC, Richmond, VA USA.
For First Bank, DEFENDANT: David Gant Shuford, Leclair Ryan, Richmond, VA USA.
JUDGES: By: B. WAUGH CRIGLER, U.S. MAGISTRATE JUDGE.
OPINIONBY: B. WAUGH CRIGLER
OPINION:
REPORT AND RECOMMENDATION
By: B. WAUGH CRIGLER
U.S. MAGISTRATE JUDGE
This diversity action asserting breach of contract is before the undersigned under authority of 28 U.S.C. § 636(b)(1)(B) to render to the presiding District Judge a report setting forth findings, conclusions, and recommendations for the disposition of the defendant's January 29, 2003, motion to dismiss or for summary judgment and plaintiff's February 25, 2003, opposition thereto. For the reasons that follow, the undersigned RECOMMENDS that the presiding District Judge DENY the defendant's motion for summary judgment.
BACKGROUND
I. Procedural Background
Plaintiff instituted this [*2] action on October 15, 2002, and on November 5, 2002, defendant moved to dismiss under FED. R. CIV. P. 12(b)(1) and 12(b)(6). On December 12, 2002, the court held a pretrial conference at which the plaintiff orally moved for leave to file an amended complaint. The defendant did not object and the court granted leave to file an amended complaint with the understanding that defendant's Rule 12 motion would be denied without prejudice to renew once the amended complaint was filed. On January 13, 2003, plaintiff filed its First Amended Complaint, and on January 29, 2003, defendant again moved under Rules 12(b)(1) and 12(b)(6) to dismiss. In support of its motion, the defendant submitted a memorandum in which it essentially challenged the veracity of the factual allegations set forth in the complaint, relying in substantial part on evidence outside the four corners of the complaint, such as plaintiff's answers to interrogatories, and pleadings and other papers filed in another action involving the plaintiff in Harris County Texas. While the pleadings and other papers submitted by the defendant addressed its renewed contentions under Rule 12(b)(6), defendant has submitted nothing to the court [*3] supporting its contention under Rule 12(b)(1) that the court lacks subject matter jurisdiction to entertain this cause. Of course, [HN1] to the extent defendant has submitted evidence outside the four corners of the complaint, Rule 12(b) requires the court to treat the motion as one seeking summary judgment under FED. R. CIV. P. 56.
II. FACTUAL BACKGROUND
This dispute arises out of a letter proposal made by the plaintiff to install an overdraft protection program at First Bank. The allegation is that the bank accepted the proposal, approved the recommendation plaintiff made concerning the installation of an overdraft privilege program, formed a binding contract for plaintiff's services, took steps toward honoring the contract, caused plaintiff to take action in furtherance of performing the contract, later cancelled installation of plaintiff's program and entered into an agreement with one of plaintiff's competitors to perform the services covered by the contract with the plaintiff. Key to its claim is an allegation that the accepted proposal contained a provision to the effect that if "any" of the plaintiff's recommendations were "installed, approved or approved as modified, [*4] or initially declined and later approved as recommended or as substantially modified" within 24 months of the initial engagement, plaintiff would be due fees under the proposal. Plaintiff also alleges that defendant shared confidential information which violated confidentiality provisions of the contract and, in the end, otherwise caused plaintiff to suffer loss of income expected under the contract.
The undersigned will not detail here every contention defendant advances in support of its motion. Suffice it to say, defendant goes beyond simply challenging the sufficiency of plaintiff's complaint on its face to re-characterize plaintiff's claim and offer evidence outside the pleadings in an effort to demonstrate that it is entitled to judgment as a matter of law at this stage of the proceedings. At the heart of its defense is the notion that plaintiff's proposal did not obligate defendant to accept anything, but only to pay the plaintiff a fee contingent on installing plaintiff's program and realizing actual increased earnings as a result thereof. Because it declined to install plaintiff's program, defendant does not believe plaintiff is entitled to anything, much less an award of [*5] judgment award of judgment for breach of contract.
II. DISCUSSIONS, FINDINGS, CONCLUSIONS, AND RECOMMENDATION
Clearly the defendant's motion to dismiss under Rule 12(b)(1) should be OVERRULED because the issue has not been pursued and because every basis for subject mater jurisdiction appears on the face of the extant pleadings. It is so RECOMMENDED.
As to the balance of the motion, the undersigned is struck by defendant's effort to have the court interpret plaintiff's amended complaint entirely favorable to it or to re-characterize plaintiff's allegations as something more than or less than they are. Of course, [HN2] plaintiff's complaint must be construed in a light most favorable to it. Mylan Laboratories v. Matkari, 7 F.3d 1130 (4th Cir. 1993); Republican Party of N.C. v. Martin, 980 F.2d 943 (4th Cir. 1992); Benson v. E.I. DuPont De Nemours & Co., 182 F. Supp. 2d 527 (W.D. Va. 2002). When plaintiff's allegations are read in light of the terms of the written proposal plaintiff alleges to have been accepted as the contract, [HN3] all the elements of a breach of contract claim, namely offer, acceptance, consideration, and non-performance, [*6] are present. Whether plaintiff will be able to prove what it has alleged concerning the contextual circumstances in the case is not appropriate for consideration under Rule 12 where, as here, the allegations in the amended complaint, if true, set forth a claim upon which relief can be granted.
Moreover, both the presiding District Judge in this case and the Fourth Circuit Court of Appeals have made clear that [HN4] to the extent entitlement to judgment depends on development of the underlying facts in this case, it would be impermissibly premature for the court to consider summary judgment before the discovery process has been completed. Oksanen v. Page Memorial Hospital, 912 F.2d 73 (4th Cir. 1990); Universal Test Equipment, Inc. v. Heath, 2000 U.S. Dist. LEXIS 15422, 2000 WL 1566971 (W.D. Va. 2000)(UP).
Accordingly, it is RECOMMENDED that an order enter DENYING defendant's motion to dismiss, and DECLINING to convert it to a motion for summary judgment without prejudice to defendant to renew once discovery in this case has been completed.
The Clerk is directed immediately to transmit the record in this case to the Hon. James H. Michael, Jr., Senior United States District Judge. [*7] Both sides are reminded that pursuant to Rule 72(b) they are entitled to note objections, if any they may have, to this Report and Recommendation within (10) days hereof. Any adjudication of fact or conclusion of law rendered herein by the undersigned not specifically objected to within the period prescribed by law may become conclusive upon the parties. Failure to file specific objections pursuant to 28 U.S.C. § 636(b)(1)(C) as to factual recitations or findings as well as to the conclusions reached by the undersigned may be construed by any reviewing court as a waiver of such objection. The Clerk is directed to send a certified copy of this Report and Recommendation to all counsel of record.
ENTERED:
B. Waugh Cringler
U. S. Magistrate Judge
Date 5/28/03 |
