First State Bank of Nw. Ark. v. Mcclelland Qualified Pers. Residence Trust, CIVIL ACTION NO. 5:14-CV-130 (MTT)

CourtUnited States District Courts. 11th Circuit. Middle District of Georgia
Docket NumberCIVIL ACTION NO. 5:14-CV-130 (MTT)
Decision Date02 December 2014




December 2, 2014


Before the Court is the Defendants' motion to dismiss (Doc. 25) the Plaintiff's amended complaint (Doc. 17) pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6). For the following reasons, the motion to dismiss is DENIED.


In 2005 and 2006, Defendant Joseph P. McClelland, Jr. took out two loans from First Georgia Community Bank ("First Georgia"). (Doc. 17 at ¶ 7). Between March and June 2008, McClelland made six transfers of real property to Defendant The McClelland Family Limited Partnership ("Partnership") and one transfer of real property to Defendant The McClelland Qualified Personal Residence Trust a/k/a The McClelland Qualified Personal Residential Trust ("Trust").1 (Doc. 17 at ¶¶ 8-14). The loans went into default on November 17, 2008. (Doc. 17 at ¶ 15).

On December 8, 2008, First Georgia failed and went into receivership by the Federal Deposit Insurance Corporation ("FDIC"). (Doc. 17 at ¶¶ 18-19). The FDIC

Page 2

sued McClelland to recover amounts due on the loans in the United States District Couri for the Northern District of Georgia2 and obtained a judgment against him on February 22, 2011. (Doc. 17 at ¶ 20). On December 1, 2011, the FDIC assigned its interest in the loans and the related judgment to the Plaintiff.3 (Doc. 17 at ¶ 21). On March 18, 2013, the Plaintiff obtained an amended final judgment in the Northern District of Georgia case in the amount of $73,983.83 after being allowed to intervene as a plaintiff. (Doc. 17 at ¶ 22). The judgment remains unpaid in its entirety. (Doc. 17 at ¶ 26).

The Plaintiff now seeks to set aside the seven transfers of property identified above, which it contends are fraudulent, as well as damages and injunctive relief pursuant to Georgia's Uniform Fraudulent Transfers Act ("GUFTA"), O.C.G.A. § 18-2-70, et seq., to satisfy its judgment. The Plaintiff also seeks to impose a constructive trust on the real properties that were fraudulently transferred. Finally, the Plaintiff requests attorney's fees pursuant to O.C.G.A. § 13-6-11 for stubborn litigiousness in the amount of $3,900.00.

On May 8, 2014, the Defendants moved to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). (Doc. 12). The Court denied the Defendants' motion on May 27, 2014. (Doc. 19). The Defendants then filed an answer to the Plaintiff's amended complaint on June 10, 2014. (Doc. 21). On July 25, 2014, the Defendants filed a second motion to dismiss. (Doc. 25). The Defendants argue (1) the FDIC's claims were not assignable, and (2) the claims are barred by the applicable statute of limitations. (Doc. 25 at 2). The Plaintiff contends the motion is procedurally

Page 3

improper because the Defendants previously filed a motion to dismiss. In response, the Defendants argue this is the first motion filed by the Partnership and the Trust and suggest the Court can convert the motion into a motion for judgment on the pleadings pursuant to Rule 12(c).4

Rule 12(b) provides that "[a] motion asserting any of [the Rule 12] defenses must be made before pleading if a responsive pleading is allowed." Because the Defendants filed an answer before filing this motion to dismiss, the Defendants have ignored the requirements of Rule 12(b).5 See Leonard v. Enter. Rent a Car, 279 F.3d 967, 971 n.6 (11th Cir. 2002) ("Under Rule 12(b), [this] motion[] [was] a nullity; by filing an answer, the defendants had eschewed the option of asserting by motion that the complaint failed to state a claim for relief."). Nevertheless, in the interest of judicial economy, the Court will treat the Defendants' untimely motion to dismiss as a motion for judgment on the pleadings under Rule 12(c). See Fed. R. Civ. P. 12(h); Keller v. Strauss, 480 F. App'x 552, 554 n.2 (11th Cir. 2012); Skrtich v. Thornton, 280 F.3d 1295, 1307 n.13 (11th Cir. 2002).


A. Legal Standard

Pursuant to Rule 12(c), "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." "Judgment on the

Page 4

pleadings is appropriate when there are no material facts in dispute and the moving party is entitled to judgment as a matter of law." Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269, 1273 (11th Cir. 2008) (citing Cannon v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001)). "A motion for judgment on the pleadings is subject to the same standard as is a Rule 12(b)(6) motion to dismiss." Provident Mut. Life Ins. Co. of Philadelphia v. City of Atlanta, 864 F. Supp. 1274, 1278 (N.D. Ga. 1994).

To avoid dismissal pursuant to Fed. R. Civ. P. 12(b)(6), a complaint must contain sufficient factual matter to "'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff." Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006) (internal quotation marks and citation omitted). However, "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.'" Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). "[C]onclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts will not prevent dismissal." Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002). The complaint must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555 (internal quotation marks and citation omitted). Where there are dispositive issues of law, a court may dismiss a claim regardless of the alleged facts. Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993).

Page 5

B. Analysis

1. Whether the FDIC's Claims Were Assignable

The Defendants argue the Plaintiff does not have standing because the FDIC's claims were not assignable. The Defendants mainly argue that because Georgia law prohibits the assignment of fraudulent conveyance claims, the FDIC could not assign the claims to the Plaintiff. (Doc. 25-1 at 4). The Plaintiff disagrees that Georgia law bars the assignment of fraudulent conveyance claims, but even if it does, the Plaintiff argues Georgia law is preempted by federal law, which does permit the FDIC's assignment. (Doc. 26 at 5-7).

"The common law recognizes assignment of property damage claims but not personal injury claims, and O.C.G.A. § 44-12-24 codifies these principles." Villanueva v. First Am. Title Ins. Co., 292 Ga. 630, 631, 740 S.E.2d 108, 110 (2013). O.C.G.A. § 44-12-24 provides:

Except for those situations governed by Code Sections 11-2-210 and 11-9-406, a right of action is assignable if it involves, directly or indirectly, a right of property. A right of action for personal torts, for legal malpractice, or for injuries arising from fraud to the assignor may not be assigned.

Thus, generally speaking, claims involving a property right are assignable; claims for fraud are not. The Plaintiff argues their claims were assignable because they are based upon an injury to the right to be paid out of Defendant McClelland's assets—that is, the claims are based upon the loss of value to Defendant McClelland's assets resulting from the properties being transferred. (Doc. 26 at 6). The Defendants argue such a claim is not assignable because, by definition, it involves an injury arising from fraud. It involves a "transfer ... by a debtor [that] is fraudulent as to a creditor." (Doc. 25-1 at 5) (citing O.C.G.A. §§ 18-2-74(a), 18-2-74(b), 18-2-75(a)).

Page 6

The Defendants cite two Georgia cases for the proposition that a fraudulent conveyance claim arises out of fraud and thus is not assignable. (Doc. 25-1 at 5-6). In Security Feed & Seed Co. of Thomasville v. NeSmith, the plaintiff, as assignee of accounts receivable, brought an action against a debtor to recover on an open account, and in the same action, sought equitable relief to set aside an alleged fraudulent transfer made by the debtor. 213 Ga. 783, 102 S.E.2d 37 (1958). The Georgia Supreme Court held the trial court properly dismissed the request for equitable relief, citing Marshall v. Means, 12 Ga. 61 (1852) for the proposition that "[a] bare right to file a bill [in equity] or maintain a suit is not assignable." 213 Ga. at 784, 102 S.E.2d at 37-38.

Unlike the plaintiff in Security Feed, the Plaintiff was not assigned a bare right to file suit. The Plaintiff was assigned the FDIC's interest in two loans and the related judgment against the Defendants. (Doc. 17 at ¶ 21). Thus, the Plaintiff's right to sue for a fraud is "merely incidental to a subsisting substantial property which has been assigned, and which is, itself, intrinsically susceptible of legal enforcement." Emmons v. Barton, 109 Cal. 662, 666, 42 P. 303, 303 (1895); see also Ryan v. Miller, 236 Mo. 496, 139 S.W. 128, 133 (1911) ("[T]he assignment of a judgment enables the assignee to maintain a suit in equity against the judgment debtor to set aside a prior conveyance of property in fraud of his creditors."); Nat'l Val. Bank v. Hancock, 100 Va. 101, 40 S.E. 611, 613 (1902). Security Feed does not control whether O.C.G.A. § 44-12-24 prevents the Plaintiff from bringing a fraudulent conveyance claim pursuant to GUFTA.

In Feeney v. Decatur Developing Co., a bank advanced money to a hay seller with the understanding that the seller's customers would pay the bank upon receipt of hay, and if the customers failed to pay, the seller would...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT