Nolt v. Knowles

NATHANAEL NOLT and COREY LEE Plaintiffs, v. ZACHARY KNOWLES, et al. Defendants.

No. 3:20-cv-00962

United States District Court, M.D. Tennessee, Nashville Division

August 18, 2021

NEWBERN, MAGISTRATE JUDGE

ORDER

WILLIAM L. CAMPBELL, JR. UNITED STATES DISTRICT JUDGE

Pending before the Court is a Report and Recommendation from the Magistrate Judge regarding two pending motions to dismiss. (Doc. No. 52). The Magistrate Judge recommended the Court deny Plaintiffs' motion to dismiss a counterclaim filed against Nathanael Nolt in the Christian District Court in Christian County, Kentucky (Doc. No. 5). The Magistrate Judge further recommended that the Court grant the Motion to Dismiss filed by Defendants Hampton Meats, Inc. and Ernest Hampton (the “Hampton Defendants”) (Doc. No. 20). Plaintiffs filed Objections to the Report and Recommendation. (Doc. No. 53). The Hampton Defendants filed a response to Plaintiffs' objections. (Doc. No. 55).

For the reasons discussed below, the Court will OVERRULE Plaintiffs' Objections and ADOPT the Report and Recommendation of the Magistrate Judge.

I. BACKGROUND^[1]

Plaintiffs Nathanael Nolt and Corey Lea, proceeding pro se, initiated this action on November 6, 2020, and filed an amended complaint on November 18, 2020. (Doc. Nos. 1, 4). The claims arise out of a dispute regarding the processing of four head of cattle. Plaintiffs allege that Corey Lea entered into a verbal agreement with Zachary Knowles for Knowles to transport four head of cattle to Hampton Meats in Hopkinsville, Kentucky, for slaughter and processing. About 20 days after Lea brought the cattle to Knowles, he called Zachary and Lyndi Knowles to ask about the cattle. The Knowleses “started engaging in multiple untruths.” Approximately a week later, Lyndi Knowles informed Lea that his meat would be ready on October 1, 2020. She also informed Lea that Zachary Knowles did not process the cows “in the name of [Lea] as agreed upon.”

Lea then went to the Hopkinsville Police Department to file a complaint against Hampton Meats. An officer took Lea to Hampton Meats to meet with the owner, Ernest Hampton. Ernest Hampton told the officer that Zach Knowles had informed him that he settled the dispute with Lea by purchasing the cattle from him. Hampton Meats employee, Paul Yoder, then took the meat to Zachary and Lyndi Knowles and the Knowleses' business ZK Ranches, LLC. Ernest Hampton told Lea that he did not charge for the slaughter and processing of the cattle at issue. Plaintiffs allege ZK Ranches was not licensed to process meat.

Plaintiffs allege “defendants” falsely told Lea that Zachary and Lyndi Knowles, ZK Ranches, and Paul and Elwood Yoder were going to lease a Kentucky processing plant from Hampton Meats when, in fact, they were trying to partner with Elwood Yoder to take over a different facility.

On August 1, 2019, Plaintiff Nathanael Nolt leased a slaughter and processing facility to Elwood Yoder, Paul Yoder, and Riverside Labor Group, a.k.a. Fairview Custom Meats (the “Lessees”) for one year with a one-year option to purchase. The lease agreement called for defendant to pay $5, 000 for the facility and an additional $5, 000 in labor for Nolt and his family. When there were approximately four months left on the lease agreement, the Lessees fell behind on the payments because Elwood Yoder was using proceeds from the business to pay his personal expenses. With a view toward exercising their right to purchase, the lessees asked Nolt to have the business appraised. Nolt responded that he would sell the business for $1, 500, 000. The Lessees thought the business was worth $700, 000. Elwood Yoder told Nolt on more than one occasion that he would not buy the business because of the price.

Plaintiffs allege Defendants “put together a scheme” to get Zachary and Lyndi Knowles, and ZK Ranches to purchase the facility from Nolt. The proposed contract would have given the purchases and their guests “priority processing.”

Plaintiffs filed this lawsuit against Zachary Knowles, Lyndi Knowles, ZK Raches LLC, Paul Yoder, Elwood Yoder, Riverside Labor Group LLC, a.k.a. Fairview Custom Meats, Hampton Meats Inc., and Ernest Hampton alleging claims for unjust enrichment, constructive trust, fraud, violation of the Federal Meat Inspection Act (“FMIA”), and violation of the Racketeer Influenced and Corrupt Organizations Act (“RICO”). Hampton Meats and Ernest Hampton moved to dismiss all claims against them. (Doc. No. 20).

The Magistrate Judge recommended granting the Hampton Defendants' motion to dismiss as to all claims. (See Doc. No. 52). She further recommended denying the Plaintiffs' motion to dismiss a counterclaim pending in a separate state court action. (Id.).

II. STANDARD OF REVIEW

Under 28 U.S.C. § 636(b)(1) and Local Rule 72.03(b)(3), a district court reviews de novo any portion of a report and recommendation to which a specific objection is made. United States v. Curtis, 237 F.3d 598, 603 (6th Cir. 2001). General or conclusory objections are insufficient. See Zimmerman v. Cason, 354 Fed.Appx. 228, 230 (6th Cir. 2009). Thus, “only those specific objections to the magistrate's report made to the district court will be preserved for appellate review.” Id. (quoting Smith v. Detroit Fed'n of Teachers, 829 F.2d 1370, 1373 (6th Cir. 1987)). In conducting the review, the court may “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C).

In deciding a motion to dismiss under Rule 12(b)(6), a court must take all the factual allegations in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual allegations, accepted as true, to state a claim for relief that is plausible on its face. Id. A claim has facial plausibility when the plaintiff pleads facts that allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. In reviewing a motion to dismiss, the Court construes the complaint in the light most favorable to the plaintiff, accepts its allegations as true, and draws all reasonable inferences in favor of the plaintiff. Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007).

In considering a Rule 12(b)(6) motion, 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 provided they are referred to in the Complaint and are central to the claims. Bassett v. National Collegiate Athletic Assn., 528 F.3d 426, 430 (6th Cir. 2008).

III. ANALYSIS

As stated above, the Magistrate Judge recommended the Court deny Plaintiffs' motion to dismiss a state court counterclaim and grant the Hampton Defendants' motion to dismiss all claims against them. Plaintiffs object to the recommendation with regard to their motion to dismiss in its entirety. With regard to the recommended disposition of the Hampton Defendants' Motion to Dismiss, Plaintiffs object to dismissal of the claims for fraud, unjust enrichment, and constructive trust; but do not object to the recommended dismissal of their RICO and FMIA claims. In addition, Plaintiffs object to the Magistrate Judge's failure to consider an email included as an exhibit to their response in opposition to the motion to dismiss and that the Magistrate Judge reviewed Defendants' motion to dismiss without considering Plaintiffs' later-filed Motion for Partial Summary Judgment.

A. Dismissal of State Court Counterclaim

The Magistrate Judge recommended denying Plaintiff's motion to dismiss a counterclaim filed against Nathanael Nolt in the Christian District Court in Christian County, Kentucky, on grounds that the counterclaim Plaintiffs seek to dismiss is not part of this action.

Plaintiffs argue the suit was removed from state court and the Magistrate Judge's recommendation to deny Plaintiffs' motion to dismiss the counterclaim was, therefore, in error. (Doc. No. 53 at 11 (citing Doc. No. 5). Plaintiffs argue the Magistrate Judge is “basically overruling the default judgment.” (Id.).

The filing to which Plaintiffs refer is a copy of the state court counterclaim attached as an exhibit to their motion to dismiss. (See Doc. No. 5). Attaching a copy of the state court pleading to a filing in this case does not remove the state case to federal court. The Magistrate Judge correctly stated that the state court counterclaim is not part of this case and that the Court is without authority to dismiss claims pending in other courts. Accordingly, Defendants' objection to denial of the motion to dismiss the state court counterclaim is overruled. Plaintiffs' Motion to Dismiss (Doc. No. 5) will be denied.

B. Matters Outside the Pleadings

As stated above, in considering a Rule 12(b)(6) motion, 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 provided they are referred to in the Complaint and are central to the claims. Bassett v. National Collegiate Athletic Assn., 528 F.3d 426, 430 (6th Cir. 2008). If matters outside the pleadings are presented by the parties and considered by the Court, the motion must be treated as one for Summary Judgment under Federal Rule of Civil Procedure 56. See Fed.R.Civ.P. 12(d). “It is well established that a District Court has ‘complete discretion to determine whether or not to accept any material beyond the pleadings that is offered in conjunction with a Rule 12(b)(6) motion.'” Barrett v Harrington, 130 F.3d 246, 253 (6th Cir. 1997) (citing 5A Wright & Miller, Federal Practice and Procedure, Civil 2d, § 1366 (199...