Rollins Ranches, LLC v. Watson

• Decision Date: 17 November 2021
• Docket Number: 18-cv-03278-SAL
• Court: U.S. District Court — District of South Carolina
• Parties: Rollins Ranches, LLC, and British Gundogs, LLC, Plaintiffs, v. Rachael Watson, aka Rachael Corbett, Defendant.

Rollins Ranches, LLC, and British Gundogs, LLC, Plaintiffs, v. Rachael Watson, aka Rachael Corbett, Defendant.

No. 18-cv-03278-SAL

United States District Court, D. South Carolina, Rock Hill Division

November 17, 2021

OPINION AND ORDER

SHERRI A. LYDON UNITED STATES DISTRICT JUDGE

This matter is before the court for review of the February 24 2021 Report and Recommendation (“Report”) of United States Magistrate Judge Shiva V. Hodges, made in accordance with 28 U.S.C. § 636(b) and Local Civil Rule 73.02 (D.S.C.). [ECF No. 66.] In the Report, the Magistrate Judge recommends Plaintiffs' motion for default judgment ECF No. 64, be denied and Plaintiffs' complaint, ECF No 1, be dismissed without prejudice for failure to state a claim. Plaintiffs' timely filed objections to the Report. [ECF No. 69.] Defendant did not reply. The matter is ripe for ruling. For the reasons outlined herein, the court adopts the Report as outlined herein.

BACKGROUND

In the Report, the Magistrate Judge set forth the background of this action thoroughly. The court adopts this background in full without a recitation.^[1]

REVIEW OF A MAGISTRATE JUDGE'S REPORT

The court is charged with making a de novo determination of those portions of the Report to which specific objections are made, and the court may accept, reject, or modify, in whole or in part, the recommendation of the Magistrate Judge or recommit the matter to the Magistrate Judge with instructions. See 28 U.S.C. § 636(b)(1). A district court, however, is only required to conduct a de novo review of the specific portions of the Magistrate Judge's Report to which an objection is made. See 28 U.S.C. § 636(b); Fed.R.Civ.P. 72(b); Carniewski v. W. Virginia Bd. of Prob. & Parole, 974 F.2d 1330 (4th Cir. 1992). In the absence of specific objections to portions of the Report, this court is not required to provide an explanation for adopting the recommendation. See Camby v. Davis, 718 F.2d 198, 199 (4th Cir. 1983).

“An objection is specific if it ‘enables the district judge to focus attention on those issues- factual and legal-that are at the heart of the parties' dispute.'” Dunlap v. TM Trucking of the Carolinas, LLC, 288 F.Supp.3d 654, 2017 WL 6345402, at *5 n.6 (D.S.C. 2017) (citing One Parcel of Real Prop. Known as 2121 E. 30th St., 73 F.3d 1057, 1059 (10th Cir. 1996)). A specific objection to the Magistrate Judge's Report thus requires more than a reassertion of arguments from the complaint or a mere citation to legal authorities. See Workman v. Perry, No. 6:17-cv-00765-RBH, 2017 U.S. Dist. LEXIS 175597, 2017 WL 4791150, at *1 (D.S.C. Oct. 23, 2017). A specific objection must “direct the court to a specific error in the magistrate's proposed findings and recommendations.” Orpiano v. Johnson, 687 F.2d 44, 47 (4th Cir. 1982).

“Generally stated, nonspecific objections have the same effect as would a failure to object.” Staley v. Norton, No. 9:07-0288-PMD, 2007 U.S. Dist. LEXIS 15489, 2007 WL 821181, at *1 (D.S.C. Mar. 2, 2007) (citing Howard v. Sec'y of Health and Human Servs., 932 F.2d 505, 509 (6th Cir. 1991)). The court reviews portions “not objected to-including those portions to which only ‘general and conclusory' objections have been made-for clear error.” Id. (emphasis added) (citing Diamond, 416 F.3d at 315; Camby, 718 F.2d at 200; Orpiano, 687 F.2d at 47).

DISCUSSION

Plaintiffs' specific objections to the Report are as follows:

1. The Report's review of Plaintiffs' complaint under a 12(b)(6) standard is improper and resolves all inferences in Defendant's favor;

2. The Report improperly sua sponte raises First Amendment issues with regard to the defamation claims and incorrectly construes Defendant's Facebook statements as hyperbole;

3. In finding Plaintiffs failed to state a claim for tortious interference and civil conspiracy the Report unfairly penalizes Plaintiffs' compliance with the court's order to produce an estimate of damages, ECF No. 61 “not to anticipate and rebut unraised arguments on defaulted claims while rewarding Defendant's repeated discovery abuses”;

4. The Report improperly criticizes Plaintiffs' request for damages, attorneys' fees, and costs as the request is supported by admitted allegations in the complaint and Plaintiffs' damages estimate, and in doing so, the Report unfairly rewards Defendant's repeated discovery abuses.

[ECF No. 69 at 22-23]. The court will review these portions of the Report de novo.

I. The Magistrate Judge properly reviewed the complaint.

Plaintiffs argue that the Magistrate Judge improperly applied a 12(b)(6) standard of review to their complaint. [ECF No. 69 at 4.] Plaintiffs' position is as follows:

The Report correctly acknowledges that because default was entered against Defendant, Defendant is deemed to have admitted the factual allegations of the Verified Complaint against her. Despite this acknowledgement, the Report disregards facially sufficient, admitted facts stated in the Complaint which would immediately preclude dismissal. Instead, the Report sua sponte scrutinizes the Complaint under a heightened version of the Fed.R.Civ.P. 12(b)(6) standard.

Id. (internal citations omitted). Plaintiffs further question whether a 12(b)(6) review is required prior to the entry of default judgment, noting:

The Report draws authority to evaluate Plaintiffs' Complaint “against the standards of Fed.R.Civ.P. 12(b)(6)” from a footnote in a case from the Eastern District of Virginia. Doc. 66 at 14 (quoting Globalsantafe Corp. v. Globalsantafe.com, 250 F.Supp.2d 610, 612 (E.D. Va. 2003)). Yet, the Globalsantafe footnote simply stated that “[u]pon default, facts alleged in the complaint are deemed admitted and the appropriate inquiry is whether the facts as alleged state a claim.” Globalsantafe, 250 F.Supp.2d at 612. Neither Globalsantafe-nor the authorities cited by Globalsantafe-provide further discussion of the Rule 12(b)(6) standard of review. See id. (citing Anderson v. Found. for Advancement, Educ. & Employment of Am. Indians, 187 F.3d 628 (4th Cir. 1999), and Bonilla v. Trebol Motors Corp., 150 F.3d 77 (1st Cir. 1998)).

Id. at 4 n.1.

A. Review of Plaintiffs' complaint under a 12(b)(6) standard was proper

Plaintiffs' motion for default judgment is governed by Fed.R.Civ.P. 55.^[2] “Rule 55(b)(2) allows the court in its discretion to enter a judgment of default ....” United States v. Ragin, 113 F.3d 1233 (4th Cir. 1997). Although a defaulting defendant is held to have “admit[ted] the plaintiff's well-pleaded allegations of fact, ” he is not held to have admitted conclusions of law. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). “In short, despite occasional statements to the contrary, a default is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover.” Id.

As such, “[a] plaintiff's burden in moving for default judgment is not satisfied . . . by simply pleading facts; rather, the plaintiff's complaint must also state a cognizable claim to which his or her well-pleaded facts provide support and show an entitlement to relief.” Silvers v. Iredell Cty. Dep't of Soc. Servs., No. 515CV00083RLVDCK, 2016 WL 427953, at *4 (W.D. N.C. Feb. 3, 2016) (citing Ryan, 253 F.3d at 780), aff'd, 669 Fed.Appx. 182 (4th Cir. 2016); see also Broxton v. Blue Ridge in Fields, No. CV 0:18-2022-JFA-PJG, 2019 WL 3315245, at *2 (D.S.C. July 24, 2019) (“[T]he court must still determine if the unchallenged factual allegations constitute a legitimate cause of action and support the relief sought.”).

Pursuant to Rule 12(b)(6), “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, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The 12(b)(6) standard is consistent with Fourth Circuit precedent requiring the court not to treat a default judgment as a confession of liability and to review the complaint to determine whether the admitted facts support a claim upon which relief can be granted. See id.; Ryan, 253 F.3d at 280. The court therefore finds that it was proper for the Magistrate Judge to “evaluate the plaintiff's complaint against the standards of Fed.R.Civ.P. 12(b)(6) to ensure that the complaint properly states a claim.” [ECF No. 66 at 14.]

B. The Magistrate Judge did not apply a heightened standard of review

The Magistrate Judge correctly recognized that “[b]ecause Defendant is in default, [ECF No. 14], the allegations in Plaintiffs' complaint against Defendant are deemed admitted.” [ECF No. 66 at 15] (citing Fed.R.Civ.P. 8(b)(6)). However, Plaintiffs allege that “the Report fails to draw reasonable inferences in Plaintiffs' favor and construe the facts in the light most favorable to Plaintiffs. Because this heightened level of scrutiny permeates the entire Report, the Report should be rejected in its entirety.” [ECF No. 69 at 7.] Plaintiffs point to the following allegations as examples:

• The Report acknowledges that Defendant's warning to not “send dogs to be fried on an e collar by assholes there” implies that Plaintiffs mistreat dogs via e-collars and presents a “closer question” of fact on the defamation claim, yet the Report ultimately resolves that “closer question” of fact in the light most favorable to Defendant. ECF No. 66 at 19.

• The admitted facts in the Complaint expressly state that Defendant is a “stranger” to all of Plaintiffs' business relationships relevant to Plaintiffs' claims, yet the Report construes the facts to conclude this assertion does not apply to each of the contracts for purposes of the tortious interference

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