Staffing Advantage LLC v. Definitive Staffing Sols., Inc.

STAFFING ADVANTAGE LLC, Plaintiff, v. DEFINITIVE STAFFING SOLUTIONS, INC., Defendant.

Case No. 7:20-cv-00150-M

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION

June 11, 2021

OPINION AND ORDER

This matter comes before the court on Plaintiff Staffing Advantage LLC's motion to dismiss Defendant Definitive Staffing Solutions, Inc.'s countercomplaint,¹ filed on December 14, 2020. [DE-14] For the reasons that follow, Plaintiff's motion is GRANTED.

I. Background

Defendant's countercomplaint alleges as follows: the parties entered into an Affiliation Agreement (the "Agreement") in November 2015 in which Plaintiff agreed to provide certain services (including the provision of worker's-compensation-insurance coverage) to Defendant in exchange for fees. [DE-11 at 16; DE-11-2²] The Agreement also set forth that Defendant was obligated to provide Plaintiff with certaininformation to properly facilitate Plaintiff's provision of worker' s-compensation-insurance coverage [DE-11-2 ¶ VI.D] and that Plaintiff was obligated to provide Defendant with certificates demonstrating worker's-compensation-insurance coverage which Defendant could forward to its customers [DE-11 at 17; DE-11-2 ¶ III.D.5]. The parties started working together pursuant to the Agreement in late 2015 and continued doing so until Defendant terminated the Agreement in January 2017. [DE-11 at 17-18]

In October and November 2016, Plaintiff sent Defendant insurance certificates that, unlike previous certificates, did not list Defendant as covered by Plaintiff's policy. [DE-11 at 17-18] Defendant's President James Pinedo contacted Plaintiff's member-manager Randal Gore in December 2016 and asked why Defendant was not listed as covered on the certificates, and Gore allegedly "evaded Mr. Pinedo's inquiries . . . and told Mr. Pinedo not to worry about it and that he would take care of it." [DE-11 at 18] Defendant terminated the Agreement one month later in January 2017 because of Plaintiff's purported "failure to address the Certificates" and other issues. [DE-11 at 18] Defendant alleges that it was not listed as covered on the certificates because Plaintiff stopped covering Defendant under its policy by October 2016. [DE-11 at 18]

The parties thereafter began litigating over the Agreement. Defendant brought a number of claims against Plaintiff (and others) in this court in October 2018, including claims for breach of contract, declaratory judgment, and unfair and deceptive trade practices within the meaning of N.C. Gen. Stat. § 75-1.1. See Definitive Staffing Sols., Inc. v. Staffing Advantage, L.L.C., No. 7:18-CV-187-FL (E.D.N.C.) (the "First Litigation") at [DE-1 (first complaint filed October 15, 2018); DE-17 (amended complaint filedJanuary 8, 2019)]. The First Litigation settled pursuant to a settlement agreement, see id. at [DE-41 (January 23, 2020 stipulation of voluntary dismissal with prejudice in consideration of negotiated settlement agreement)], which Plaintiff attached to its motion to dismiss in this case [DE-15-1].³

Plaintiff filed the complaint in this case on August 17, 2020. [DE-1] Within the complaint, Plaintiff brings a number of claims against Defendant generally alleging that Defendant failed to provide Plaintiff with accurate information necessary to properly facilitate Plaintiff's provision of worker's-compensation insurance. [DE-1] On November 11, 2020, Defendant answered the complaint and brought counterclaims against Plaintiff for: (1) breach of contract; (2) declaratory judgment; (3) unfair and deceptive trade practices within the meaning of N.C. Gen. Stat. § 75-1.1; and (4) unjust enrichment/quantum meruit. [DE-11] Plaintiff moved to dismiss Defendant's counterclaims pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) (hereinafter, e.g., "Rule 12(b)(1)") on December 14, 2020. [DE-14] Plaintiff's motion to dismiss has been fully briefed by the parties [see DE-15; DE-18; DE-23] and is ripe for adjudication.

II. Legal standards

a. Rule 12(b)(1)

The Supreme Court has said:

Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, which is not to be expanded by judicialdecree. It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.

Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). A defendant against whom a claim has been brought can move the court to dismiss the claim by arguing that the complaint fails to properly invoke the court's subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1).

When a defendant challenges subject matter jurisdiction pursuant to Rule 12(b)(1), the district court is to regard the pleadings as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment. The district court should grant the Rule 12(b)(1) motion to dismiss only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law.

Evans v. B. F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999) (internal quotation marks and citations omitted). Where a settlement agreement has previously disposed of a claim, the claim is moot, courts lack subject-matter jurisdiction over the claim, and a Rule 12(b)(1) motion invoking the settlement agreement must be granted. See Hart v. United Debt Holdings, LLC, Civil Action No. 5:15-cv-00052, 2016 U.S. Dist. LEXIS 51485, at *7 (W.D. Va. Apr. 18, 2016) (considering previous settlement agreement on Rule 12(b)(1) motion challenging subject-matter jurisdiction, granting motion, and dismissing case with prejudice).

b. Rule 12(b)(6)

Federal Rule of Civil Procedure 8 ("Rule 8") requires a pleading to contain, inter alia, "a short and plain statement of the claim showing that the pleader is entitled to relief[.]" Fed. R. Civ. P. 8(a)(2). A defendant against whom a claim has been brought can challenge the claim's sufficiency under Rule 8 by moving the court to dismiss the claim for "failure to state a claim upon which relief can be granted[.]" Fed. R. Civ. P. 12(b)(6).

When considering a Rule 12(b)(6) motion to dismiss, the court must accept as true all of the well-pleaded factual allegations contained within the complaint and must draw all reasonable inferences in the plaintiff's favor, Hall v. DIRECTV, LLC, 846 F.3d 757, 765 (4th Cir. 2017), but any legal conclusionsproffered by the plaintiff need not be accepted as true, Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) ("[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.").

To survive a Rule 12(b)(6) motion, a plaintiff's well-pleaded factual allegations, accepted as true, must "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Twombly's plausibility standard requires that a plaintiff's well-pleaded factual allegations "be enough to raise a right to relief above the speculative level," i.e., allege "enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal [conduct]." Id. at 555-56. A speculative claim resting upon conclusory allegations without sufficient factual enhancement cannot survive a Rule 12(b)(6) challenge. Iqbal, 556 U.S. at 678-79 ("where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged--but it has not 'show[n]'--'that the pleader is entitled to relief.'" (quoting Fed. R. Civ. P. 8(a)(2)); Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) ("'naked assertions' of wrongdoing necessitate some 'factual enhancement' within the complaint to cross 'the line between possibility and plausibility of entitlement to relief.'" (quoting Twombly, 550 U.S. at 557)).

The Fourth Circuit has said:

[A] motion to dismiss filed under Federal Rule of [Civil] Procedure 12(b)(6), which tests the sufficiency of the complaint, generally cannot reach the merits of an affirmative defense, such as the defense that the plaintiff's claim is time-barred. But in the relatively rare circumstances where facts sufficient to rule on an affirmative defense are alleged in the complaint, the defense may be reached by a motion to dismiss filed under Rule 12(b)(6). This principle only applies, however, if all facts necessary to the affirmative defense clearly appear on the face of the complaint.

Goodman v. PraxAir, Inc., 494 F.3d 458, 464 (4th Cir. 2007) (internal quotation marks, brackets, emphasis, and citation omitted).

III. Analysis

Plaintiff challenges each of Defendant's counterclaims under Rule 12(b)(6) as untimely under the applicable statutes of limitations. Plaintiff also invokes the First Litigation's settlement agreement in challenging Defendant's counterclaim seeking a declaratory judgment under Rule 12(b)(1). The court addresses each of Defendant's counterclaims in turn.

a. Breach of contract

Defendant's first counterclaim alleges that Plaintiff breached the Agreement. [DE-11 at 19-20] Plaintiff argues that Defendant's breach-of-contract counterclaim must be dismissed under Rule 12(b)(6) as untimely. [DE-15 at 5]

The parties agree that North Carolina law governs the Agreement⁴ and that N.C. Gen. Stat. § 1-52(1) is North Carolina's statute of limitations governing breach-of-contract claims like Defendant's counterclaim. [DE-15 at 5; DE-18 at 5] N.C. Gen. Stat. § 1-52(1) generally requires a litigant to bring a breach-of-contract claim within three years of the time that the claim accrues, which North Carolina courts have said takes place when the claimant has "notice of the breach[.]" Henlajon, Inc. v. Branch Highways, Inc., 149 N.C. App. 329, 335, 560...