United States District Court, S.D. West Virginia, Huntington Division
MEMORANDUM OPINION AND ORDER
C. CHAMBERS UNITED STATES DISTRICT JUDGE
before the Court are Defendants' Motion to Amend the
Counterclaim, ECF No. 31, and Plaintiff's Partial Motion
to Dismiss Counterclaims, ECF No. 20. For the foregoing
reasons, the Court GRANTS Defendants'
Motion to Amend the Counterclaim (ECF No. 31) and
DENIES AS MOOT Plaintiff's Partial
Motion to Dismiss Counterclaims (ECF No. 20).
March 23, 2018, Plaintiff filed a Complaint in this Court
seeking collection of an alleged debt owed by Defendants
Meridian Holding Company, LLC; Gregory L. Howard, Jr.; Roger
J. Harris, Jr.; and Michael C. Dragovich, under the terms of
a Promissory Note dated April 1, 2008. Compl., ECF
No. 1. On May 29, 2017, Defendants each filed an Answer to
the Complaint and asserted Counterclaims against Plaintiff
for Breach of Contract (Count I), Breach of Duty of Good
Faith and Fair Dealing (Count II), Common Law Fraud and
Misrepresentation (Count III), Special Duty and Negligence
(Count IV), and Promissory Estoppel (Count V). ECF Nos.
11-14. In response, Plaintiff filed a Partial Motion to
Dismiss Count IV, alleging Defendants failed to state a claim
upon which relief may be granted because no special duty was
created simply by virtue of the parties' commercial
relationship. Part. Mot. Dismiss, p. 2, ECF No. 20.
Defendants subsequently sought leave of this Court to cure
any alleged deficiencies by including more factual support
for Count IV. Mot. Amend Counterclaim, p. 2, ECF No.
the Federal Rule of Civil Procedure, leave to amend a
complaint “shall be freely given when justice so
requires.” Fed.R.Civ.P. 15(a). “[L]eave to amend
a complaint should be denied only when the amendment would be
prejudicial to the opposing party, there has been bad faith
on the part of the moving party, or the amendment would be
futile.” Edell & Associates, P.C. v. law
Offices of Peter G. Angelos, 264 F.3d 424, 446 (4th Cir.
2001) (internal citations omitted). “An amendment would
be futile if the complaint, as amended, would not withstand a
motion to dismiss.” Elrod v. Busch Entm't
Corp., 479 Fed.Appx. 550, 551 (4th Cir. 2012)
(citing Katyle v. Penn Nat'l Gaming, Inc., 637
F.3d 462, 471 (4th Cir.2011)).
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007),
the United States Supreme Court requires courts to look for
“plausibility” in the complaint. 550 U.S. at 563.
This standard requires a plaintiff to set forth the
“grounds” for an “entitle[ment] to
relief” that is more than mere “labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id. at 555
(internal quotation marks and citations omitted). Accepting
the factual allegations in the complaint as true (even when
doubtful), the allegations “must be enough to raise a
right to relief above the speculative level . . . .”
Id. (citations omitted).
Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme
Court reiterated that Rule 8 does not demand “detailed
factual allegations[.]” 556 U.S. at 678 (internal
quotation marks and citations omitted). However, a mere
accusation” is insufficient. Id. “To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Id. (quoting Twombly, 550 U.S. at 570).
Facial plausibility exists when a claim contains
“factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citation omitted).
The Supreme Court continued by explaining that,
“[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice.” Id. (citation omitted). Whether a
plausible claim is stated in a complaint requires a court to
conduct a context-specific analysis, drawing upon the
court's own judicial experience and common sense.
Id. at 679. The Supreme Court further articulated
that “a court considering a motion to dismiss can
choose to begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the
assumption of truth. While legal conclusions can provide the
framework of a complaint, they must be supported by factual
only opposes the amended counterclaim on the basis that it
would be futile, as it could not survive a motion to dismiss.
Resp. Mot. Amend Counterclaim, p. 3, ECF No. 33.
Plaintiff further states the Partial Motion to Dismiss Count
IV of the Counterclaim should be granted for substantively
similar reasons. Id. The dispositive issue for both
motions is whether the counterclaim for Count IV, as amended,
would survive a motion to dismiss.
Virginia, a breach of contract cannot serve as the basis for
an action in tort, as “[t]ort liability of the parties
to a contract arises from the breach of some positive legal
duty imposed by law because of the relationship of the
parties, rather than from a mere omission to perform a
contract obligation.” Lockhart v. Airco Heating
& Cooling, 567 S.E.2d 619, 624 ( W.Va. 2002). There
must exist a “special relationship” between the
parties, beyond the terms of the contract. See Aikens v.
Debow, 541 S.E.2d 576, 589 ( W.Va. 2000). “In the
lender-borrower context, courts consider whether the lender
has created such a ‘special relationship' by
performing services not normally provided by a lender to a
borrower.” Warden v. PHH Mortgage Corp., No.
3:10-cv-00075, 2010 WL 3720128, at *9 (N.D. W.Va. Sept. 16,
2010) (citing Glascock v. City Nat'l Bank of
W.Va., 576 S.E.2d 540, 545-56 ( W.Va. 2002)). A special
relationship can develop when a lender moves from the role of
lender to that of a financial advisor. See LaPosta v.
Lyle, No. 5:11-cv-177, 2012 WL 1752550, at *7 (N.D.
W.Va. May 16, 2012) (holding a special relationship is
sufficiently alleged so as to withstand a motion to dismiss
when stating the defendant “acted as an advisor and
rendered advice with regard to the plaintiffs' loan
options.” (internal quotations omitted)).
the amendments specifically alter paragraphs 13-15 of the
Counterclaims to clarify that the Plaintiff's loan
officers advised Defendants to alter their loans by entering
into a new transaction. Mot. Amend Counterclaim, at
3. Plaintiff opposes this, claiming that Defendants
have improperly amended paragraphs in a separate cause of
action and that these changes only involve insufficient
conclusory labels. Resp. Mot. Amend Counterclaim, at
the attack by Plaintiff that Defendants altered the incorrect
cause of action is without merit. Though the amendments to
the Counterclaims alter the language in Count III, the first
paragraph in Count IV incorporates this language into their
negligence claim. Mot. Amend Counterclaim, at 3; See
LaPosta, at *7 (addressing the same issue).
while there must be more than mere legal conclusions to
survive a motion to dismiss, Plaintiff improperly applies
this to Defendants' allegations. The legal conclusion
here is a cause of action under a negligence theory, with a
special relationship being a necessary element. Defendants
have supported this element by stating such a relationship
was formed when Plaintiff took on an advisory capacity beyond
that of a normal loan provider by offering Defendants
substantive financial advice. Rule 8 does not demand
“detailed factual ...