United States District Court, N.D. West Virginia
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S
MOTION TO DISMISS COUNTER CLAIMS
FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE
Hard Rock Exploration, Inc., Caraline Energy Company, Blue
Jacket Gathering, LLC, Blue Jacket Partnership, and Brothers
Realty (collectively, “Hard Rock Entities”) are
business entities affiliated with defendant Hard Rock
Exploration, Inc., which engages in oil and gas development.
Defendants James Stephens, Jr., Monica Francisco, Duane Yost,
and Gregory Laughlin (collectively, “principals”)
are shareholders of defendant Hard Rock Exploration, Inc. The
Hard Rock Entities borrowed money from the plaintiff, The
Huntington National Bank, so as to pursue oil and gas
operations. Several years into the lending relationship,
however, the plaintiff claims that the defendants failed to
satisfy their obligations. The plaintiff filed this action
for breach of contract.
plaintiff's complaint alleges that the following amounts
remain outstanding: (1) a $500, 000.00 loan (referred to as
“Obligation 174”); (2) a $17, 887, 867.00 loan
(“Obligation 158”); (3) a $6, 250, 000.00 loan
(“Obligation 42”); (4) a $5, 000, 000.00 loan
(“Obligation 59”); and (5) an unspecified credit
card obligation (“credit card obligation”), which
is allegedly worth $19, 148.10. In addition, the plaintiff
alleges that the parties engaged in a series of swap
transactions and a Forbearance Agreement, which contain the
following obligations: (1) termination charges for the swaps
totaling $839, 606.02; and (2) a $30, 000.00 forbearance fee.
The plaintiff seeks a judgment for the balance due under the
obligations listed above, including legal fees.
defendants filed their answer and counterclaim. ECF No. 37.
The counterclaim asserts claims for fraud and deceit (Count
I), interference with prospective business advantage (Count
II), breach of implied covenant of good faith and fair
dealing (Count III), breach of contract (Count IV), economic
duress (Count V), breach of fiduciary duty (Count VI), demand
for injunctive relief (Count VII), demand for declaratory
judgment (Count VIII), and demand for an accounting (Count
plaintiff then filed a motion to dismiss the defendants'
counterclaims. ECF Nos. 40 and 41. The plaintiff argues that
the defendants' counterclaims are barred by the
Forbearance Agreement, which the plaintiff alleges releases
the plaintiff from all claims arising out of its lending
relationship with the defendants. The plaintiff also argues
that the defendants have failed to sufficiently allege their
causes of action for each count of the counterclaim.
defendants filed a response to the plaintiff's motion to
dismiss the defendants' counterclaims. ECF No. 46. The
defendants allege that the Forbearance Agreement is
unenforceable and does not preclude the claims in the
defendants' counterclaim. The defendants further assert
that the counterclaim contains allegations that, taken as
true and construed in the light most favorable to them,
adequately support the claims stated therein.
plaintiff did not file a reply to the defendants'
response to the plaintiff's motion to dismiss the
assessing a motion to dismiss for failure to state a claim
under Rule 12(b)(6), a court must accept all well-pled facts
contained in the complaint as true. Nemet Chevrolet, Ltd
v. Consumeraffairs.com, Inc, 591 F.3d 250, 255 (4th Cir.
2009). However, “legal conclusions, elements of a cause
of action, and bare assertions devoid of further factual
enhancement fail to constitute well-pled facts for Rule
12(b)(6) purposes.” Id. (citing Ashcroft
v. Iqbal, 129 S.Ct. 1937, 1949 (2009)). This Court also
declines to consider “unwarranted inferences,
unreasonable conclusions, or arguments.” Wahi v.
Charleston Area Med. Ctr., Inc., 562 F.3d 599, 615 n.26
(4th Cir. 2009).
often been said that the purpose of a motion under Rule
12(b)(6) is to test the formal sufficiency of the statement
of the claim for relief; it is not a procedure for resolving
a contest about the facts or the merits of the case. 5B
Charles Alan Wright & Arthur R. Miller, Federal
Practice and Procedure § 1356 (3d ed. 1998). The
Rule 12(b)(6) motion also must be distinguished from a motion
for summary judgment under Federal Rule of Civil Procedure
56, which goes to the merits of the claim and is designed to
test whether there is a genuine issue of material fact.
Id. For purposes of the motion to dismiss, the
complaint is construed in the light most favorable to the
party making the claim and essentially the court's
inquiry is directed to whether the allegations constitute a
statement of a claim under Federal Rule of Civil Procedure
8(a). Id. § 1357.
complaint should be dismissed “if it does not allege
‘enough facts to state a claim to relief that is
plausible on is face.'” Giarratano v.
Johnson, 521 F.3d 298, 302 (4th Cir. 2008) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “Facial plausibility is established once the
factual content of a complaint ‘allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Nemet
Chevrolet, 591 F.3d at 256 (quoting Iqbal, 129
S.Ct. at 1949). Detailed factual allegations are not
required, but the facts alleged must be sufficient “to
raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555.
Court has construed the counterclaims in the light most
favorable to the defendants for the purposes of this motion
to dismiss. Although the plaintiff argues that the
Forbearance Agreement is enforceable and precludes all of the
defendants' claims, the defendants have made factual
allegations that could result in the Forbearance Agreement
being judged void and unenforceable. West Virginia law states
that “[w]here [a] plaintiff is forced into a
transaction as a result of unlawful threats or wrongful,
oppressive, or unconscionable conduct on the part of the
defendant which leaves the plaintiff with no reasonable
alternative but to acquiesce, the plaintiff may void the
transaction and recover any economic loss.” Berardi
v. Meadowbrook Mall Co., 572 S.E.2d 900, 905 ( W.Va.
2002) (citing Machinery Hauling, Inc. v. Steel of
W.Va., 384 S.E.2d 139, 140 ( W.Va. 1989)). The
counterclaim alleges (1) fraudulent, wrongful, and oppressive
conduct by the ...