Commodity Inv. Res. Co. v. JPMorgan Chase Bank, N.A.
| Decision Date | 21 June 2019 |
| Docket Number | CIVIL ACTION FILE NO. 1:19-CV-1296-TWT |
| Parties | COMMODITY INVESTMENT RESOURCES CO. II, INC., Plaintiff, v. JPMORGAN CHASE BANK, N.A., Defendant. |
| Court | U.S. District Court — Northern District of Georgia |
This is a breach of contract action. It is before the Court on Defendant JPMorgan Chase Bank, N.A.'s Motion to Dismiss [Doc. 3]. For the reasons set forth below, the Defendant's Motion to Dismiss [Doc. 3] is GRANTED.
The Plaintiff Commodity Investment Resources Co. II, Inc. was, at the time of the wrongful acts alleged, a Delaware corporation with its main office in Gwinnett County, Georgia.1 The Defendant JPMorgan Chase Bank, N.A. is an Ohio corporation.2 On September 23, 2014, the Plaintiff opened a newcommercial account with the Defendant.3 The Plaintiff used the account as its sole operating account.4 On or about December 16, 2017, the Defendant froze the account after receiving a summons in a Gwinnett County State Court garnishment proceeding.5 The debtor in that action was a now-defunct Georgia corporation registered under the name "Commodity Investment Resource Company LLC."6 Similar names notwithstanding, the debtor was not related to the Plaintiff.7 The Plaintiff attempted to notify the Defendant of its mistake on multiple occasions to no avail, up to and including the date that the funds were transferred to the Gwinnett County State Court.8 The Plaintiff alleges that in early December of 2017 one of the Defendant's branch managers notified the Defendant's Orders and Levies Department that the Plaintiff was not the corporate entity named in the garnishment proceeding.9 The Plaintifffurther alleges that on December 28, 2017, it faxed copies of account signature cards to the Defendant proving that the Plaintiff's assets were not properly subject to garnishment.10 The Defendant nevertheless transferred the Plaintiff's funds to the registry of the Gwinnett County State Court.11 The Plaintiff subsequently filed a traverse in the garnishment proceeding.12 On February 12, 2018, the trial court ordered the Defendant to return the funds to the Plaintiff.13 The months-long freeze on the Plaintiff's account prevented the Plaintiff from operating its business, fulfilling customer orders, and buying and reselling its stock.14
The Plaintiff sued in the Superior Court of Gwinnett County alleging breach of contract, negligence, and fraud.15 The Plaintiff seeks compensatory damages in excess of $250,000, punitive damages, and attorney's fees.16 The Defendant timely removed to this Court pursuant to 28 U.S.C. § 1332 and § 1441(a).17 The Defendant now moves to dismiss all claims against it.
A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a "plausible" claim for relief.18 A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is "improbable" that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely "remote and unlikely."19 In ruling on a motion to dismiss, the court must accept the facts pleaded in the complaint as true and construe them in the light most favorable to the plaintiff.20 Generally, notice pleading is all that is required for a valid complaint.21 Under notice pleading, the plaintiff need only give the defendant fair notice of the plaintiff's claim and the grounds upon which it rests.
The Plaintiff brings claims against the Defendant for breach of contract, negligence, and fraud for its alleged mishandling of the Plaintiff's operating account. The Plaintiff also brings ancillary claims for attorney's fees andpunitive damages. The Defendant argues that (1) the Plaintiff lacks standing to sue because it is a dissolved entity; (2) the Plaintiff's claims are barred by res judicata because they could have been raised in the garnishment proceeding; (3) the Defendant is protected under a safe harbor provision found in Georgia's garnishment code; (4) the Plaintiff's breach of contract claims are barred under the terms of the parties' Account Agreement; (5) the Plaintiff's tort claims are barred due to the contractual relationship between the parties; and (6) each count of the Complaint fails to state a claim on which relief can be granted.22 The Court begins with the Defendant's standing argument, which, for reasons that the Court will explain, the Court treats as a motion to dismiss for lack of subject matter jurisdiction.
The Defendant has submitted records from the Delaware Department of State's website showing that the Plaintiff was dissolved as a corporate entity on March 14, 2018, eleven months before the Plaintiff filed this action.23 The Defendant argues that dissolved foreign corporations cannot sue in state court under Georgia law. A federal court sitting in diversity cannot maintain subject matter jurisdiction over an action that could not have been brought in the courts of the forum state.24 Thus, although the Defendant purports tochallenge the Plaintiff's standing to sue, its argument is best understood as a challenge to the Court's exercise of subject matter jurisdiction in this case.25 The Court will treat the Defendant's challenge as arising under Federal Rule of Civil Procedure 12(b)(1), which is the appropriate vehicle for challenging subject matter jurisdiction in federal court.26
Defendants can challenge subject matter jurisdiction under Rule 12(b)(1) by mounting "facial attacks" or "factual attacks."27 A "facial attack" asks the district court to determine whether a basis for subject matter jurisdiction is sufficiently alleged in the complaint.28 The district court must accept the plaintiff's allegations as true and limit the scope of its inquiry to theface of the complaint.29 A "factual attack," by contrast, challenges "the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits, are considered."30 The district court is free to independently weigh the evidence and decide for itself whether subject matter jurisdiction exists, notwithstanding the existence of disputed material facts.31 If a "factual attack" implicates the merits of the plaintiff's claim, however, the district court must instead proceed under Rule 12(b)(6) or Rule 56.32
The Defendant asks the Court to go beyond the pleadings to determine the Plaintiff's status of incorporation and to dismiss the case without reaching the merits of the Plaintiff's various state law claims. The Court therefore construes the Defendant's motion as a "factual attack" on the Court's subject matter jurisdiction. It follows that the Court can consider the extrinsic evidence put before it and does not need to accept the facts alleged in the Complaint as true for the limited purpose of adjudicating the Defendant's 12(b)(1) challenge. The Court notes, however, that its analysis would not differ substantially under the more restrictive "facial attack" standard. TheDefendant relies solely on public records, namely printouts from the Delaware Department of State's website, that the Court could consider even if Rule 12(b)(6) safeguards applied.33 The Court concludes from the records before it that the fact of the Plaintiff's dissolution is not reasonably in dispute. The Court must now turn to Georgia common and statutory law to determine whether the Plaintiff, as a dissolved corporation formerly incorporated under foreign law, could maintain this action in state court.
"At common law, a dissolved corporation ceased to exist and could not sue or be sued in its corporate name."34 Most, if not all, states have adopted corporate survival statutes that allow dissolved corporations to engage in litigation for some period following dissolution.35 Georgia's corporate survivalstatute permits dissolved corporations to engage in litigation for "any right or claim existing prior to such dissolution if action or other proceeding thereon is pending on the date of such dissolution or is commenced within two years after the date of such dissolution."36 The Defendant argues that the Plaintiff cannot avail itself of Georgia's corporate survival statute because the statute does not by its terms apply to foreign corporations.37 While the Defendant is correct that Georgia's corporate survival statute does not permit the Plaintiff to sue in Georgia state court, that is not the end of the inquiry. Under Georgia law, a foreign corporation's capacity to sue or be sued is determined by the law under which it was incorporated, unless a Georgia statute states otherwise.38 Therefore, the corporate survival statute that governs the Plaintiff's capacity to sue is not Georgia's, but Delaware's.
Delaware's corporate survival statute states in relevant part that:
[a]ll corporations, whether they expire by their own limitation or are otherwise dissolved, shall nevertheless be continued, for the term of [three] years from such expiration or dissolution or forsuch longer period as the Court of Chancery shall in its discretion direct, bodies corporate for the purpose of prosecuting and defending suits, whether civil, criminal or administrative, by or against them, and of enabling them gradually to settle and close their business, to dispose of and convey their property, to discharge their liabilities and to distribute to their stockholders any remaining assets, but not for the purpose of continuing the business for which the corporation was organized.39
The Plaintiff is well within the three-year window established by the statute. The Court is unaware of any case law interpreting this statute that would prevent the Plaintiff from suing for actions sounding in tort or contract that accrued prior to its dissolution. The Defendant cites Delaware case law suggesting that suits brought by a dissolved corporation must be ...
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