Port City Logistics Inc. v. Chasewater Logistics, LLC

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PORT CITY LOGISTICS, INC., Plaintiff, v. CHASEWATER LOGISTICS, LLC, Defendant.

No. 3:23-CV-541-RJC-DCK

United States District Court, W.D. North Carolina, Charlotte Division

July 18, 2024

MEMORANDUM AND RECOMMENDATION

David C. Keesler United States Magistrate Judge.

THIS MATTER IS BEFORE THE COURT on “Plaintiff/Counterclaim Defendant's Motion To Dismiss Defendant/Counterclaim Plaintiff's Counterclaim for Declaratory Judgment.” (Document No. 13). This matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C. §636(b), and is now ripe for disposition. Having carefully considered the arguments, the record, and the applicable authority, the undersigned will respectfully recommend that the motion be granted.

I. BACKGROUND

Plaintiff Port City Logistics Inc. (“Port City” or “Plaintiff/Counterclaim Defendant”) is a third-party logistics company, specializing in drayage services, warehouse storage, and distribution services for shipments to major retailers and distribution centers. (Document No. 1, p. 2). Defendant Chasewater Logistics, LLC (“Chasewater” or “Defendant/Counterclaim Plaintiff”') is a freight shipping broker. Id.

Port City filed its “Complaint” (Document No. 1) on August 28, 2023. The “Complaint” asserts claims for: (1) breach of contract; (2) unjust enrichment/quantum meruit; and (3) account stated. Id. at 3-5.

The Complaint contends that Port City is entitled to recover damages from Chasewater in an amount not less than $125,192.05, plus pre-judgment and post-judgment interest costs, and reasonable attorney's fees, stemming from several incidents which allegedly occurred from in or about May 2022 through in or about September 2022. (Document No. 1 p. 2). The Complaint further contends that Chasewater entered into agreements with Port City to store storage containers on Port City's property and that these agreements were memorialized with purchase orders and invoices. Id. The Complaint continues that “several of these storage containers would remain on [Port City's] property for extended periods of time despite [Port City's] attempts to follow up with Chasewater and thereby accruing significant demurrage (the ‘Storage Costs').” Id.

In addition, the Complaint contends that “[s]eparately, in certain instances, [Chasewater] would request that [Port City] deliver empty shipping containers to [Chasewater] or its third parties (the ‘Delivery Costs'),” and “[i]t was not until [Port City] sought payment for certain of these deliveries that [Chasewater] would advise [Port City] that [Port City] had sent the wrong shipping containers and [Chasewater] would refuse to provide payment.” Id. at 3. Finally, the Complaint contends that Chasewater “never brought this issue to [Port City's] attention and did not provide [Port City] with an opportunity to mitigate any alleged damages.” Id.

In response to the “Complaint,” “Defendant Chasewater Logistics, LLC's Answer And Counterclaims” was filed on November 29, 2023. (Document No. 12). The “. . . Answer And Counterclaims” contends that, contrary to Port City's allegations, “Chasewater already paid Port City for [storage] services, but for de minimis disputed amounts,” “Chasewater has paid Port City for all . . . accrued fees, but for de minimis disputed amounts,” and Chasewater “denies” Port City's allegation that Chasewater failed to advise Port City that the wrong containers had been delivered and did not provide Port City with an opportunity to mitigate any alleged damages. Id. at 3. The “. . . Answer And Counterclaims” further denies breach of contract, unjust enrichment, and account stated on the part of Chasewater and contends that “Chasewater has already paid Port City in excess of $125,192.05” for the services at issue. Id. at 4.

Chasewater also brings two counterclaims: (1) breach of contract on the part of Port City, claiming $159,960 in monetary damages; and (2) a claim for a “declaratory judgment/setoff” in the amount of $159,960. (Document No. 12, p. 7-8). In support of these counterclaims, Chasewater contends that it “incurred per diem charges, excess chassis charges, and delivery costs in circumstances where shipping containers sat on Port City's property or ‘yard' and were not ‘ingated' in a timely manner by Port City.” Id. at 7. Further, Chasewater contends that it “paid these per diem charges, excess chassis charges, and delivery costs in an amount in excess of $159,960,” that “Port City is responsible for the delays resulting in these damages,” and that “Port City breached its obligations under [the] contracts by failing to timely ‘in-gate' shipping containers.” Id. at 7-8.

Port City filed the pending “Motion To Dismiss . . .Counterclaim for Declaratory Judgment” (Document No. 13) and an accompanying “Memorandum Of Law . . .” on December 18, 2023. (Document No. 13-1). Port City's Memorandum contends that pursuant to Local Rule 7.1 and Rule 12(b)(6), Chasewater's counterclaim for a declaratory judgment fails to state a claim as a matter of law because (1) the claim is untimely; and (2) the claim is duplicative of Chasewater's breach of contract counterclaim. Id. at 4-6.

Chasewater's “Response In Opposition . . .” was filed on January 9, 2024. (Document No. 18); Port City's “Reply Brief In Support Of Its Motion To Dismiss . . .” was filed on January 16, 2024. (Document No. 19).

The pending motion is now ripe for review and a recommendation to the Honorable Robert J Conrad, Jr.

II. STANDARD OF REVIEW

A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the “legal sufficiency of the complaint” but “does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992); Eastern Shore Markets, Inc. v. J.D. Assoc. Ltd. Partnership, 213 F.3d 175, 180 (4th Cir. 2000). A complaint attacked by a Rule 12(b)(6) motion to dismiss will survive if it contains “enough facts to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1960 (2009), quoting Twombly, 550 U.S. at 570; see also, Robinson v. American Honda Motor Co., Inc., 551 F.3d 218, 222 (4th Cir. 2009). “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.” Iqbal, 129 S.Ct. at 1949. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

The Supreme Court has also opined that

Federal Rule of Civil Procedure 8(a)(2) requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” Specific facts are not necessary; the statement need only “‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” In addition, when ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint.

Erickson v. Pardus, 551 U.S. 89, 93-94 (2007) (citations omitted).

“Although for the purposes of this motion to dismiss we must take all the factual allegations in the complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). The court “should view the complaint in the light most favorable to the plaintiff.” Mylan Labs, Inc. v. Matkar, 7 F.3d 1130, 1134 (4th Cir. 1993).

III. DISCUSSION

The Federal Declaratory Judgment Act provides that “[i]n a case of actual controversy within its jurisdiction,” a federal district court “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.”

28 U.S.C. § 2201(a). For a federal court to exercise jurisdiction in a declaratory judgment proceeding, three elements must be met:

(1) the complaint alleges an actual controversy between the parties of sufficient immediacy and reality to warrant issuance of a declaratory judgment; (2) the court possesses an independent basis for jurisdiction over the parties (e.g., federal question or diversity jurisdiction); and (3) the court does not abuse its discretion in the exercise of jurisdiction.

Volvo Const. Equipment N.A., Inc. v. CLM Equipment Co., 386 F.3d 581, 592 (4th Cir. 2004) (internal quotation marks omitted). “[D]istrict courts possess discretion in determining whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites.” Wilton v. Seven Falls Co., 515 U.S. 277, 282(1995) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495 (1942)).

The questions before the Court are whether Chasewater's counterclaim for declaratory judgment is timely and not subject to dismissal as duplicative of its breach of contract claim.

“The Fourth Circuit has explained that a declaratory judgment action is appropriate ‘when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and . . . when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.'” Centennial Life Ins. Co. v. Poston, 88 F.3d 225, 256 (4th Cir. 1996) (citing Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 325 (4th Cir. 1937)). The Fourth Circuit has explained that the Declaratory Judgment Act “does not impose a mandatory obligation upon the federal courts to make such declarations of rights. Rather, a district court's decision to entertain a claim for declaratory relief is discretionary.” Aetna Cas. & Sur. Co. v. IndCom Elec. Co., 139 F.3d 419, 421 (4th Cir. 1998).

A. Timeliness of...