Farm Credit Leasing Servs. Corp. v. Smith
| Decision Date | 30 March 2021 |
| Docket Number | Case No. 4:19-cv-OO28O-KGB |
| Parties | FARM CREDIT LEASING SERVICES CORPORATION PLAINTIFF v. TODD WELDON SMITH DEFENDANT |
| Court | U.S. District Court — Eastern District of Arkansas |
Before the Court is plaintiff Farm Credit Leasing Services Corporation's ("Farm Credit") motion to dismiss defendant Todd Weldon Smith's counterclaim (Dkt. No. 25). Also pending before the Court is a motion for declaratory judgment filed by Mr. Smith (Dkt. No. 39). Based upon the parties' filings, the Court directed the parties to file status reports regarding this action (Dkt No. 42). The parties have now done so (Dkt. Nos. 43, 44). For the following reasons, the Court denies Mr. Smith's motion for declaratory judgment (Dkt. No. 39) and grants Farm Credit's motion to dismiss and dismisses without prejudice Mr. Smith's counterclaim (Dkt. No. 25). The Court has under advisement Farm Credit's motion to enforce settlement (Dkt. No. 45).
This is a breach-of-contract case. Farm Credit commenced this action on April 19, 2019, seeking amounts allegedly owed under two commercial equipment leases with Mr. Smith (Dkt. No. 1). Thereafter, Farm Credit sought leave to file an amended complaint (Dkt. No. 18), which Mr. Smith did not oppose, and the Court granted on February 5, 2020 (Dkt. No. 19). Farm Credit filed its amended complaint on February 7, 2020, which narrowed the scope of the case by removing the allegations and claims related to one of the two commercial equipment leases (Dkt. No. 20).
In the amended complaint, Farm Credit alleges that, on August 1, 2017, Mr. Smith entered into an equipment lease agreement with Northland Capital Financial Services, LLC ("the Lease"), for the purpose of leasing a 2015 Deutz Fahr Agrotron Tractor, Serial Number WSXV910200ID10724 ("the Tractor") (Id., ¶ 6). The Lease was subsequently assigned to Farm Credit (Id., ¶ 7). Farm Credit alleges that, under the terms and conditions of the Lease, Mr. Smith agreed to make one payment of $50,000.00 in August 2017, followed by five consecutive annual payments of $46,481.68, beginning in July 2018 (Id., ¶ 12). According to Farm Credit, Mr. Smith failed to adhere to his payment obligations under the Lease and is in default (Id., ¶ 14). Based on these allegations, Farm Credit asserts claims for breach of contract, unjust enrichment, and replevin and seeks damages in the amount of $238,888.62, as well as possession of the Tractor (Id., ¶¶ 17-34).
On February 10, 2020, Mr. Smith filed an answer to amended complaint and counterclaim (Dkt. No. 22). In his counterclaim, Mr. Smith asserts that "Charles Schindler was the agent for Plaintiff and subsequently was convicted of fraud." (Id., ¶ 24). Mr. Smith attached to his answer to amended complaint and counterclaim what he represents to be a copy of the indictment charging Mr. Schindler with "defraud[ing] financial institutions, farm equipment manufacturers, vendors, and farmers in the Northern District of Mississippi and elsewhere by taking money from financial institutions intended to pay for leased farm equipment and not delivering the farm equipment to the farmers." (Id., at 18). Mr. Smith also attached to his answer to amended complaint and counterclaim what he represents to be a copy of the judgment in Mr. Schindler's criminal case, which indicates that he pled guilty to wire fraud and was sentenced to 72 months of imprisonment and 3 years of supervised release, and was ordered to pay $4,397,615.23 in restitution (Id., at 8-15).
Mr. Smith explains that, on April 27, 2016, he leased a tractor from BNP Paribas Leasing Solutions ("BNP") and that Mr. Schindler was the agent for BNP (Id., ¶ 25). Mr. Smith attached to his answer to amended complaint and counterclaim what he represents to be a copy of the Acceptance Certificate for this tractor (Id., at 24). Mr. Smith believes that "the lease was changed many times by Charles Schindler." (Id., ¶ 26). Mr. Smith maintains that neither "Charles Schindler nor the Plaintiff had a lease agreement with Defendant involving the 2015 tractors," and that he "never received these tractors." (Id., ¶ 27). Mr. Smith claims that "Plaintiff was aware of the criminal conduct of Charles Schindler," and that, "[d]espite being aware of Charles Schindler's criminal conduct, Plaintiff filed suit against Defendant." (Id., ¶¶ 28, 29). Mr. Smith represents that "[t]he service of the Plaintiff's complaint against Defendant caused him to become so ill and stressed that he was admitted into the hospital for over four days," and that he "has incurred medical bills, mental anguish, and pain and suffering." (Id. ¶ 30). Finally, Mr. Smith claims that "Plaintiff has been aware throughout this litigation that the filing of the lawsuit was improper and meritless." (Id., ¶ 31).
Based on these allegations, Mr. Smith asserts counterclaims for abuse of process, outrage, deceit, and violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692-1692p (Id., ¶¶ 32-35). Mr. Smith seeks compensatory and punitive damages for alleged damage to his reputation, as well as mental anguish, pain, and suffering (Id., ¶¶ 36-37).
On March 2, 2020, Farm Credit filed a motion to dismiss Mr. Smith's counterclaim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure (Dkt. No. 25). Mr. Smith filed a response in opposition to the motion on March 16, 2020 (Dkt. No. 29).
On June 17, 2020, Mr. Smith filed a motion for declaratory judgment (Dkt. No. 39). Farm Credit filed a response (Dkt. No. 40), and Mr. Smith replied (Dkt. No. 41). By Order of the Court, the parties also filed status reports recently (Dkt. Nos. 42, 43, 44).
On February 19, 2021, Farm Credit filed a motion to enforce settlement and request for attorney's fees, which Mr. Smith opposed on March 8, 2021 (Dkt. Nos. 45, 46). Farm Credit replied on March 19, 2021 (Dkt. No. 47).
Mr. Smith filed a motion for declaratory judgment, essentially requesting that this Court declare the rights and responsibilities of entities with respect to language in a settlement agreement being negotiated between Farm Credit and Mr. Smith (Dkt. No. 39). For the following reasons, the Court denies the motion (Dkt. No. 39).
In his motion, Mr. Smith puts before the Court the status of the parties' settlement discussions in this case. The Court observes that no party has moved to dismiss, or informed the Court that this action should be dismissed, on the basis of settlement. Further, the Court has not yet dismissed this action on the basis of settlement. As a result, it is unclear to the Court on what basis Mr. Smith asserts this Court has authority to grant a declaratory judgment such as he seeks.
In Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994), the Supreme Court held that district courts do not have inherent power, that is, automatic ancillary jurisdiction, to enforce an agreement settling federal litigation. Miener By & Through Miener v. Missouri Dep't of Mental Health, 62 F.3d 1126, 1127 (8th Cir. 1995) (citing Lucille v. City of Chicago, 31 F.3d 546, 548 (7th Cir.1994), cert. denied, 513 U.S. 1154 (1995); Sheng v. Starkey Labs., Inc., 53 F.3d 192, 195 (8th Cir.1995)). Ancillary jurisdiction to enforce a settlement agreement exists only "if the parties' obligation to comply with the terms of the settlementagreement [is] made part of the order of dismissal—either by. . . a provision 'retaining jurisdiction' over the settlement agreement [ ] or by incorporat[ion of] the terms of the settlement agreement in the order." Kokkonen, 511 U.S. at 380-81. Ancillary jurisdiction to enforce the agreement exists in these situations because breach of the agreement violates the district court's judgment. Id. Absent action making the settlement agreement part of a dismissal order, "enforcement of the settlement agreement is for state courts, unless there is some independent basis for federal jurisdiction." Id.
The Court acknowledges that Farm Credit recently filed a motion to enforcement settlement (Dkt. No. 45). The Court has that motion under advisement.
Because the parties have not informed the Court of final settlement of the claims and counterclaims in this matter, the Court turns to examine the pending motion to dismiss Mr. Smith's counterclaim (Dkt. No. 25).
A Rule 12(b)(6) motion tests the legal sufficiency of the claim or claims asserted in a pleading. See Peck v. Hoff, 660 F.2d 371, 374 (8th Cir. 1981). "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.'" Ashcroft v. Iqbal, 556 U.S. 662 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "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." Id. (citing Twombly, 550 U.S. at 556). Although a complaint "does not need detailed factual allegations" to survive a Rule 12(b)(6) motion to dismiss, the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550U.S. at 555. Stated differently, the allegations pleaded must show "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678.
A court considering a motion to dismiss must accept as true all well-pleaded facts in the pleading and draw all reasonable inferences from those facts in favor of the non-moving party, here, Mr. Smith. See Farm Credit Servs. of Am., FLCA v. Haun, 734 F.3d 800, 804 (8th Cir. 2013); Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005); Abels v. Farmers Commodities Corp., 259 F.3d 910, 914 (8th Cir. 2001). However, a court need not credit conclusory allegations or "naked assertion[s] devoid of further factual enhancement." Retro Television...
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