Tucker Materials, Inc. v. Safesound Acoustics, Inc.

Citation971 F.Supp.2d 537
Decision Date06 September 2013
Docket NumberNo. 1:12–CV–247–MR–DLH.,1:12–CV–247–MR–DLH.
CourtU.S. District Court — Western District of North Carolina


James R. McGibbon, Joshua A. Mayes, William Richard Wildman, Sutherland, Asbill & Bennan, LLP, Atlanta, GA, E. Thomison Holman, Adams, Hendon, Carson, Crow, & Saenger, PA, Asheville, NC, for Plaintiff.

Edward Louis Bleynat, Jr., H. Gregory Johnson, Ferikes & Bleynat, PLLC, Asheville, NC, for Defendant.



THIS MATTER is before the Court for resolution of the Defendant's Motion to Dismiss [Doc. 10] and the Plaintiff's Objections [Doc. 20] to the Magistrate Judge's Memorandum and Recommendation [Doc. 19] regarding said motion. For the reasons that follow, this Court will reject the Plaintiff's Objections, and affirm Magistrate Judge Howell's decision recommending dismissal of this action.


The parties to this action currently are embroiled in two North Carolina state court lawsuits, one of which was filed before this federal action and the other coming shortly after it. Plaintiff, Tucker Materials, Inc. (Tucker), is a Georgia corporation that supplies building materials, including acoustical ceiling products. [Doc. 1, ¶ 5]. Defendant, SafeSound Acoustics, Inc. (SafeSound), is a North Carolina corporation engaged in providing and installing acoustical ceiling products for commercial and residential projects. [Doc. 1, ¶ 6]. In July 2005, the parties entered into a written agreement whereby Tucker would supply SafeSound with acoustical ceiling products and materials on credit and SafeSound would later pay Tucker for its goods delivered pursuant to the agreement. [Doc. 1, ¶ 7].

According to Tucker, SafeSound purchased acoustical ceiling products from Tucker in the fall of 2009 and failed to pay for them. [Doc. 1, ¶ 9]. Tucker sued SafeSound on the alleged debt in Buncombe County, North Carolina, District Court on September 15, 2010. [Doc. 1, ¶ 11]. Tucker also named SafeSound's president as a party defendant, suing her in her individual capacity as a personal guarantor of SafeSound's debt. [ Id.]. On the parties' cross motions for summary judgment, the state district court granted Tucker's motions against both SafeSound and its president and denied the defendants' motions. [Doc. 1, ¶ 13]. The defendants appealed to the North Carolina Court of Appeals. Tucker Materials, Inc. v. SafeSound Acoustics, Inc., 725 S.E.2d 673, 2012 WL 1687689 (N.C.Ct.App.2012) (unpublished).

The North Carolina Court of Appeals reversed the state district court's decisions on May 15, 2012. [ Id.]. First, the appellate court found genuine issues of material fact existed as to whether SafeSound, as opposed to some unauthorized third party, ordered materials from Tucker on SafeSound's account, and therefore, what amount of money, if any, SafeSound owed Tucker. These issues were remanded for trial. [Id. at *3]. The appellate court also reversed the summary judgment in favor of Tucker on its claim pertaining to SafeSound's president, holding that she signed as president of SafeSound on the guarantee agreement, not in her individual capacity. [Id. at *4–5]. Accordingly, the appellate court vacated the district court's judgment in this regard and directed the court grant summary judgment in her favor on remand. [Id.].

On July 24, 2012, counsel for SafeSound wrote a letter to counsel for Tucker asserting that Tucker had “engaged in conduct that violates Chapter 75 of the North Carolina General Statutes in ways which have harmed SafeSound.” [Doc. 1–1]. In short, SafeSound alleged that Tucker employed unfair and deceptive trade practices in its business dealings with SafeSound that drove SafeSound out of business. [ Id.] SafeSound suggested in its letter that Tucker settle all claims with SafeSound by paying SafeSound a lump-sum amount of $300,000. [Id.] On August 14, 2012, Tucker instituted this Declaratory Judgment action. [Doc. 1]. On that same date, counsel for Tucker wrote to counsel for SafeSound, enclosing a copy of Tucker's federal complaint, and said, Tucker is unwilling to pay anything at all to settle claims that are wholly lacking in merit. Rather than let threatened litigation be held over Tucker's head, we have filed suit in the federal district court for the Western District of North Carolina asking for a declaration with respect to your client's purported claims.

[Doc. 11–2]. In its federal complaint, Tucker is seeking an order from this Court declaring that (1) Tucker did not violate any section of Chapter 75 of the North Carolina General Statutes in its dealing with SafeSound, and (2) Tucker has not violated the federal antitrust laws in its dealings with SafeSound. [Doc. 1]. SafeSound's demand letter, however, made no explicit assertions regarding federal antitrust laws.

On September 20, 2012, SafeSound filed suit in the Buncombe County Superior Court against Tucker, its parent corporation, and one of Tucker's principals. [Doc. 11–3]. SafeSound's suit against Tucker and the other defendants alleges unfair and deceptive trade practices, breach of contract, tortious interference with contracts, and civil conspiracy. SafeSound alleges it is entitled to compensatory, punitive, and treble damages. [Doc. 11–3]. On October 15, 2012, SafeSound filed a motion to dismiss this federal action. [Doc. 10]. The parties briefed the issues raised by SafeSound's dismissal motion [Docs. 11, 14, 18] and the matter was referred to Magistrate Judge Howell. On January 18, 2013, the parties entered into a consent order [Doc. 23–1] staying the North Carolina Superior Court action pending the resolution of SafeSound's motion to dismiss in this matter. Judge Howell issued his Memorandum and Recommendation decision on April 17, 2013, [Doc. 19] recommending that SafeSound's motion to dismiss be granted. Tucker filed objections to Judge Howell's Memorandum and Recommendation [Doc. 20], and SafeSound responded thereto. [Doc. 23]. This matter is now ripe for resolution by the Court.


The Federal Magistrate Act requires a district court to “make a de novo determination of those portions of the report or specific proposed findings or recommendations to which objection is made.” 28 U.S.C. § 636(b)(1). In order “to preserve for appeal an issue in a magistrate judge's report, a party must object to the finding or recommendation on that issue with sufficient specificity so as reasonably to alert the district court of the true ground for the objection.” United States v. Midgette, 478 F.3d 616, 622 (4th Cir.2007). The Court is not required to review, under a de novo or any other standard, the factual or legal conclusions of the magistrate judge to which no objections have been raised. Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). Additionally, the Court need not conduct a de novo review where a party makes only “general and conclusory objections that do not 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).


The Federal Declaratory Judgment Act (the “Act”) provides that a federal district court “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The Act, however, does not provide an independent basis for federal jurisdiction. City Nat'l Bank v. Edmisten, 681 F.2d 942, 945 n. 6 (4th Cir.1982). Tucker relies on the Court's diversity jurisdiction conferred under 28 U.S.C. § 1332(a), asserting in its Complaint that there is complete diversity between the parties and the amount in controversy exceeds $75,000. [Doc. 1, ¶¶ 1–3]. SafeSound does not contest this basis for jurisdiction.

Though styled as a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), SafeSound's dismissal motion, in substance, requests that this Court exercise its discretion and abstain from entertaining Tucker's declaratory judgment action.1 Thus, the issue presented by SafeSound's motion is not whether the Court could exercise jurisdiction over this action but rather whether the Court should exercise such jurisdiction in light of the parallel litigation pending in the North Carolina courts.

The decision to entertain a declaratory judgment action pursuant to the Act is left to the sound discretion of the Court. The Supreme Court has “repeatedly characterized the Declaratory Judgment Act as ‘an enabling act, which confers a discretion on the courts rather than an absolute right upon the litigant.’ Wilton v. Seven Falls Co., 515 U.S. 277, 287, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (quoting Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952)). The Fourth Circuit has explained that a “declaratory judgment action is appropriate ‘when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and ... when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding.’ Centennial Life Ins. Co. v. Poston, 88 F.3d 255, 256 (4th Cir.1996) (quoting Aetna Cas. & Sur. Co. v. Quarles, 92 F.2d 321, 324 (4th Cir.1937)). When related state court proceedings are pending, however, “considerations of federalism, efficiency, and comity should inform the district court's decision whether to exercise jurisdiction over a declaratory judgment action.” Penn–America Ins. Co. v. Coffey, 368 F.3d 409, 412 (4th Cir.2004) (internal quotations and citations omitted).

The first question for the Court to address is whether it can consider the pendency of the state court action, since it was filed after the present case. Ordinarily dispositive in this situation is the “first...

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