Alexander Industries, LLC v. Town of Holly Ridge, North Carolina

CourtDistrict Court, E.D. North Carolina
DecidedJanuary 31, 2022
Docket7:20-cv-00136
StatusUnknown

This text of Alexander Industries, LLC v. Town of Holly Ridge, North Carolina (Alexander Industries, LLC v. Town of Holly Ridge, North Carolina) is published on Counsel Stack Legal Research, covering District Court, E.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Alexander Industries, LLC v. Town of Holly Ridge, North Carolina, (E.D.N.C. 2022).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NORTH CAROLINA SOUTHERN DIVISION

NO. 7:20-CV-136-FL

ALEXANDER INDUSTRIES, LLC, ) ) Plaintiff,1 ) ) v. ) ) TOWN OF HOLLY RIDGE, NORTH ) CAROLINA; CAPTAIN EWAN ) ORDER RICHARDS, in his individual and official ) capacity; LORI FAIRCLOTH, in her ) individual and official capacity; and TOWN ) MANANGER HEATHER REYNOLDS, in ) her individual and official capacity, ) ) Defendants. )

This matter is before the court on defendants’ motion to dismiss amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (DE 32). The issues raised have been briefed fully, and in this posture, are ripe for ruling. For the following reasons, defendants’ motion is granted in part and denied in part. STATEMENT OF THE CASE Former plaintiff Nicholas Koumalatsos (“Koumalatsos”), commenced this action on July 17, 2020, asserting claims for violation of federal and state constitutional rights, as well as common law claims, arising in the course of a search of an exercise facility allegedly initiated by defendants, Town of Holly Ridge, North Carolina (“Holly Ridge”), and officials and officers of Holly Ridge.

1 The court constructively has amended the caption of this order to reflect addition of plaintiff Alexander Industries, LLC, and termination of former plaintiff Nicholas Koumalatsos and former defendant Jeff Wenzel. Koumalatsos sought compensatory, statutory, and punitive damages; attorneys’ fees; costs; interest; and jury trial. On May 12, 2021, upon defendants’ motions, this court dismissed without prejudice former plaintiff Koumalatsos’s claims, on the basis that Koumalatsos did not have standing to assert

claims on behalf of the owner of the exercise facility. See Koumalatsos v. Town of Holly Ridge, N. Carolina, No. 7:20-CV-136-FL, 2021 WL 1910030, at *4 (E.D.N.C. May 12, 2021). Shortly thereafter, with the court’s leave, Koumalatsos filed the operative amended complaint substituting plaintiff in the matter for Koumalatsos, adding additional factual allegations, and seeking the same relief, plus an added request for nominal damages. Defendants filed the instant motion to dismiss on August 6, 2021, seeking dismissal of all claims asserted against them pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff responded in opposition, and, shortly after submission of the motions by the clerk, plaintiff filed a stipulation of dismissal of plaintiff’s first, fourth, and fifth causes of action, comprising its conspiracy claims and claims under the North Carolina Constitution. Plaintiff also noticed

voluntary dismissal of all claims against defendant Jeff Wenzel. STATEMENT OF FACTS The facts alleged in plaintiff’s complaint2 may be summarized as follows. On May 31, 2018, plaintiff purchased a health, fitness, and exercise facility known as Snap Fitness 24/7 (the “gym”) located in Holly Ridge. (Compl. ¶¶ 16-17). Koumalatsos is plaintiff’s chief executive officer. (Id. ¶ 28). On March 23, 2020, the Governor of North Carolina issued Executive Order 120, prohibiting gatherings at indoor exercise facilities and subjecting violators to prosecution under

2 Hereinafter, all references to the complaint or “Compl.” in citations are to the amended complaint filed July 23, 2021 (DE 31). North Carolina General Statute § 166A-19.30(d) for a Class 2 misdemeanor. (Id. ¶ 22). As a result, plaintiff closed the gym on March 25, 2020. (Id. ¶ 23). Approximately one month later, plaintiff re-opened the gym, allegedly implementing guidance from the Centers for Disease Control and Prevention. (Id. ¶ 24).

On May 7, 2020, members of the Holly Ridge police department allegedly entered the gym through an open and unlocked door at the entrance of the facility. (Id. ¶ 26). Defendant Ewan Richards (“Richards”), a police department captain, allegedly ordered the patrons of the gym to leave immediately, or face prosecution, and ordered another officer to issue Koumalatsos a citation for violation of Executive Order 120. (Id. ¶¶ 27-29). Later that same day, Keith Whaley (“Whaley”), Holly Ridge chief of police, informed Koumalatsos that the citation would be rescinded, and further citations would not be issued until plaintiff had been given three warnings, in accordance with police department policy. (Id. ¶¶ 31- 32). Relying upon that policy, plaintiff reopened the gym the next day. (Id. ¶ 34). On May 9, 2020, Whaley issued plaintiff its first warning. (Id. ¶ 36).

Plaintiff operated the gym thereafter from May 9, 2020, until May 18, 2020, without receiving additional warnings or other contact from the Holly Ridge police department. (Id. ¶ 37). However, on May 18, 2020, defendant Richards, who then identified himself as the acting chief of police after Whaley was placed on administrative leave on May 14, 2020; defendant Heather Reynolds (“Reynolds”), Holly Ridge town manager; and defendant Lori Faircloth (“Faircloth”), a police department detective, allegedly conspired to meet, and did meet, at the gym to conduct a search in furtherance of an investigation. (Id. ¶¶ 39-40, 47). Defendants Faircloth and Richards allegedly gained access to the gym’s entrance with a keycard that the gym’s prior owner had provided to defendant Holly Ridge. (Id. ¶ 41). Once inside the gym, defendants Richards and Faircloth allegedly threatened patrons with criminal prosecution, and upon exiting defendant Richards took pictures of the patrons’ license plates. (Id. ¶¶ 43, 46). Defendant Reynolds remained in the parking lot during the alleged search but at one point approached the gym’s door to confer with defendant Richards. (Id. ¶ 44).

Plaintiff alleges that neither it nor any member of its staff authorized defendants’ keycard access and indeed plaintiff had no knowledge of its existence. (Id. ¶¶ 45, 53). Plaintiff further alleges that the gym was locked, and a keycard was necessary to enter the premises. (Id. ¶¶ 42, 121). Moreover, defendants allegedly did not seek a search warrant from a neutral magistrate prior to entering the gym. (Id. ¶¶ 45, 54). COURT’S DISCUSSION A. Standard of Review “To survive a motion to dismiss” under 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, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).3 “Factual allegations must be enough to raise a right to relief above the speculative level.”

Twombly, 550 U.S. at 555. In evaluating whether a claim is stated, “[the] court accepts all well- pled facts as true and construes these facts in the light most favorable to the plaintiff,” but does not consider “legal conclusions, elements of a cause of action, . . . bare assertions devoid of further factual enhancement[,] . . . unwarranted inferences, unreasonable conclusions, or arguments.” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009) (citations omitted).

3 Internal citations and quotation marks are omitted from all citations unless otherwise specified. B. Analysis 1. Fourth and Fourteenth Amendment Claim In its second claim, plaintiff asserts that defendant Richards and defendant Faircloth violated plaintiff’s Fourth and Fourteenth Amendment rights by entering the gym without

plaintiff’s knowledge or permission, and without a warrant.

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Alexander Industries, LLC v. Town of Holly Ridge, North Carolina, Counsel Stack Legal Research, https://law.counselstack.com/opinion/alexander-industries-llc-v-town-of-holly-ridge-north-carolina-nced-2022.