Selby v. Schroeder
| Decision Date | 18 October 2021 |
| Docket Number | 2:20-cv-00016 |
| Citation | 567 F.Supp.3d 841 |
| Parties | Becky A. SELBY, Plaintiff, v. Holly T. SCHROEDER, Defendant. |
| Court | U.S. District Court — Middle District of Tennessee |
Stephen S. Werner, Werner Law Group, Hummelstown, PA, Benjamin M. Rose, RoseFirm, PLLC, Brentwood, TN, William B. Pierce, Brewer, Krause, Brooks & Chastain, PLLC, Nashville, TN, for Plaintiff.
Cynthia A. Sherwood, Davis Fordham Griffin, Sherwood Boutique Litigation, PLC, Vincent H. Peppe, Attorney at Law, Nashville, TN, Michael D. Reed, Veronica L. Morrison, Mette Evans & Woodside, Harrisburg, PA, for Defendant.
Pending before the Court is Plaintiff Becky A. Selby's fully briefed Motion to Dismiss Defendant Holly T. Schroeder's Counter-Complaint (Doc. Nos. 106, 107, 115). For the following reasons, the Motion will be denied.
Schroeder, a professional horse breeder, owned Niko, a horse from an esteemed breeding lineage. (Doc. No. 26 ¶¶ 9(a), 20). Because Niko was blind, Schroeder found the prospect of caring for her and her disability to be prohibitively expensive. (Id. ). Schroeder's veterinarian lamented that the only reasonable option was to "put [Niko] down" because of her blindness. (Id. ). However, Schroeder wanted Niko to be well-cared for, and so she instead offered the horse for sale on social media. (Id. ¶¶ 15, 20).
Schroeder and Selby entered into an oral contract for the transfer of Niko in October 2017. (Id. ¶ 11). Since Selby could not pay the $1,000 asking price for Niko, the parties agreed that Selby would obtain ownership subject to certain conditions. (Id. ¶ 18). As consideration, Selby agreed to care for Niko for the rest of her life and provide the horse's first-born healthy foal to Schroeder. (Id. ¶ 17). Schroeder would then transfer Niko's official registration under Selby's name. (Id. ¶¶ 19, 21). The parties negotiated remotely, as Schroeder lived in Tennessee and Selby resided in Pennsylvania. (Id. ¶¶ 8–9, 15). On a pre-arranged date, Selby drove from Pennsylvania to Kentucky, where Schroeder's veterinarian housed Niko. (Id. at ¶ 24). Selby picked up Niko and promptly returned to Pennsylvania to care for her pursuant to the parties’ agreement. (Id. ).
As Niko neared the end of gestation for her first-born foal, Schroeder allegedly reneged and requested conditions that differed from those in the parties’ original agreement. (Id. ¶ 25). According to Selby, Schroeder now wanted: (1) all of Niko's offspring, not just the first-born foal; and 2) Selby to continue to care for Niko without any transfer of ownership rights or official registration. (Id. ¶¶ 24–25). Thus, despite the parties’ original agreement, Schroeder refused to authorize the Tennessee Walking Horse Breeders and Exhibitors Association ("TWHBEA") to transfer Niko's registration to Selby. (Id. ¶¶ 13, 38, 43(a)). Instead, Schroeder filed a police report with the Warren County, Kentucky Sheriff's Office claiming that Selby stole Niko. (Id. ¶¶ 39–40). On January 9, 2019, a sheriff's deputy called Selby to inform her of the police report; however, the case was not pursued further. (Id. ¶ 39).
Based on the foregoing, Selby brought four counts against Schroeder: (1) breach of contract, (2) fraud, (3) malicious prosecution, and (4) defamation. (Id. ¶ 44).2 On December 9, 2019, Schroeder moved to dismiss each claim. (Doc. No. 30). On March 1, 2021, the Court denied Schroeder's motion for all but the malicious prosecution claim. (Doc. No. 90).
There are subtle but important differences in the way Schroeder characterizes the dispute. Schroeder agrees that she and Selby entered into a verbal agreement for Niko. (See Doc. No. 97 ¶ 47). Pursuant to that agreement, Selby would care for Niko while Schroeder would retain: (1) exclusive breeding rights; and (2) ownership of Niko's first foal. (Id. ). Schroeder and Selby would also split proceeds for sales of any remaining foal. (Id. ). Schroeder agrees that, to close the deal, the parties verbally arranged to meet at Schroeder's veterinarian's office in Bowling Green, Kentucky. (Id. ¶ 50). But Schroeder alleges she drafted a contract memorializing the verbally agreed-to terms for the parties to sign. (Id. ). Schroeder also alleges that Selby and her husband arrived in Bowling Green far earlier than the pre-arranged time and allegedly "persuaded the veterinarian to release Niko" before Schroeder could arrive. (Id. ). Selby then returned with Niko to Pennsylvania over Schroeder's protests that she had not yet signed the contract. (Id. ).
Because Schroeder believed that Selby had taken Niko without signing the contract, she disputes the oral agreement's terms. (See id. ). Schroeder maintains that Selby has failed to rightfully return Niko or her foal. (Id. ¶ 51). According to Schroeder, Selby will only divulge that Niko's foal is "alive." (Id. ). Accordingly, Schroeder brings three counterclaims against Selby: (1) breach of contract; (2) conversion of Niko; and (3) conversion of Niko's foal. (Doc. No. 97 at 7–9). Selby has now moved to dismiss Schroeder's counterclaims. (Doc. No. 106).
The legal standard for motions to dismiss counterclaims follows the same standard as other motions to dismiss under Rule 12(b)(6). See Sony/ATV Music Publ. LLC v. D.J. Miller Music Distribs., No. 3:09-cv-01098, 2011 WL 4729811 at *2-3, 2011 U.S. Dist. LEXIS 116158 at *9 (M.D. Tenn. Oct. 7, 2011). To survive a motion to dismiss under Rule 12(b)(6), "the complaint must include a ‘short and plain statement of the claim showing that the pleader is entitled to relief.’ " Ryan v. Blackwell, 979 F.3d 519, 524 (6th Cir. 2020) (quoting Fed. R. Civ. P. 8(a)(2) ). When determining whether the complaint meets this standard, the Court must accept all of the complaint's factual allegations as true, draw all reasonable inferences in the plaintiff's favor, and "take all of those facts and inferences and determine whether they plausibly give rise to an entitlement to relief." Doe v. Baum, 903 F.3d 575, 581 (6th Cir. 2018) ; see also Ashcroft v. Iqbal, 556 U.S. 662, 678–79, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Moreover, the Court must determine only whether "the claimant is entitled to offer evidence to support the claims," not whether the plaintiff can ultimately prove the facts alleged. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ). But "[w]hile the complaint ‘does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of a cause of action's elements will not do.’ " Blackwell, 979 F.3d at 524 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ).
As the Court discussed at length in its opinion denying Schroeder's Motion to Dismiss Selby's initial claims, because "jurisdiction over this case [is] based solely on diversity of citizenship between the parties, [the Court] must first decide what state's laws to apply to each claim." (Doc. No. 90 at 5). The Court must similarly determine what law applies to Schroeder's counterclaims. See Columbia Cas. Co. v. Century Sur. Co., 203 F. Supp. 3d 863, 868 (M.D. Tenn. 2016). "A federal court exercising its diversity jurisdiction must apply the choice-of-law rules of the state in which it is located." Yang Ming Marine Transport Corp. v. Intermodal Cartage Co., Inc., 685 F. Supp. 2d 771, 779 (W.D. Tenn. 2010). The Court has already determined that Tennessee choice of law rules apply. (Doc. No. 90 at 5–6).
But which state law applies according to Tennessee choice of law rules depends on the context of each of Schroeder's three counterclaims, especially because Selby resides in Pennsylvania, Schroeder resides in Tennessee, and the parties’ claims deal with activity occurring in either Kentucky or Pennsylvania. See Restatement (Second) of Conflict of Laws § 173 cmt. a (Am. L. Inst. 1971) ( a "growing realization that all issues in tort need not be governed by the same law"). The Court will thus examine each counterclaim in turn, first determining what choice of law a Tennessee court would apply and, second, analyzing that claim under the applicable jurisdiction's law.
The Court need not undertake a fulsome choice of law analysis for Schroeder's breach of contract counterclaim because it has already found that Pennsylvania choice of law rules apply to the contract at issue. (See Doc. No. 90 at 7–8). Moreover, both Selby and Schroeder concede that Pennsylvania law applies. (See Doc. No. 106 at 12; see also Doc. No. 115 at 2).
Schroeder argues that Selby breached the parties’ verbal agreement by: (1) withholding Niko's foal; and (2) failing to abide by terms for breeding and ownership of subsequent foals. (Doc. No. 97 ¶¶ 52–57). Under Pennsylvania law, "three elements are necessary to plead a cause of action for breach of contract: (1) the existence of [an oral, written, or implied] contract, including its essential terms, (2) a breach of the contract; and, (3) resultant damages." Meyer, Darragh, Buckler, Bebenek & Eck, P.L.L.C. v. Law Firm of Malone Middleman, P.C., 635 Pa. 427, 137 A.3d 1247, 1258 (2016).
Selby challenges the first two prongs, arguing that Schroeder's breach of contract claim consists entirely of insufficient legal conclusions and that the agreement's breeding terms are unenforceable. (Doc. No. 106 at 12, 15). Specifically, Selby appears to argue that the terms of the bargain that allowed her to take possession of Niko in the first place are too uncertain. (Id. ). But the Court already recognized the existence of this exact bargain in favor of Selby when...
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