Nolt v. Knowles

CourtDistrict Court, M.D. Tennessee
DecidedJune 7, 2021
Docket3:20-cv-00962
StatusUnknown

This text of Nolt v. Knowles (Nolt v. Knowles) is published on Counsel Stack Legal Research, covering District Court, M.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nolt v. Knowles, (M.D. Tenn. 2021).

Opinion

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

NATHANAEL NOLT et al.,

Plaintiffs, Case No. 3:20-cv-00962

v. Judge William L. Campbell, Jr. Magistrate Judge Alistair E. Newbern ZACHARY KNOWLES et al.,

Defendants.

To: The Honorable William L. Campbell, Jr., District Judge

REPORT AND RECOMMENDATION Two motions to dismiss are now before the Court. Pro se Plaintiffs Nathanael Nolt and Corey Lea have moved to dismiss a counterclaim that Defendants Elwood and Paul Yoder filed against Nolt in the Christian District Court in Christian County, Kentucky. (Doc. No. 5.) Defendants Hampton Meats, Inc. and Ernest Hampton (the Hampton Defendants) have moved to dismiss Nolt and Lea’s amended complaint under Federal Rule of Civil Procedure 12(b)(6). (Doc. No. 20.) For the reasons that follow, the Magistrate Judge will recommend that the Court deny Nolt and Lea’s motion to dismiss the Yoders’ state-law counterclaim and grant the Hampton Defendants’ motion to dismiss Nolt and Lea’s amended complaint. I. Background A. Factual Background1 1. Lea’s Interactions with the Defendants On or around August 11, 2020, Lea entered into a verbal agreement with Defendant Zachary Knowles for Zachary to transport four head of cattle—three already in Lea’s possession and one that Lea purchased from Zachary—to Hampton Meats in Hopkinsville,

Kentucky, for slaughter and processing. (Doc. No. 4.) Zachary told Lea that the cattle would be slaughtered that day. (Id.) About twenty days later, Lea called Zachary and Defendant Lyndi Knowles to ask about the meat. In response, the Knowleses “started engaging in multiple untruths.” (Id. at PageID# 39.) About a week later, Lyndi told Lea that the meat would not be ready until October 1, 2020. (Doc. No. 4.) Lea said that he was going to drive to Hampton Meats and find out what was going on. (Id.) Lyndi then told Lea that Zachary had not processed the cows in Lea’s name, as he had agreed to do. (Id.) Lea sent Defendant Ernest Hampton a letter demanding the return of his processed meat, but Hampton did not respond. (Id.) Lea then went to the Hopkinsville Police Department to file a complaint against Hampton Meats, and an officer took Lea to the processing plant to meet with

Hampton. (Id.) Hampton said that Zachary had represented to him that he had settled the dispute with Lea by purchasing the four cattle from him and that the Knowleses and Paul Yoder, a Hampton Meats employee, had taken the slaughtered cattle back to the Knowleses’ business, ZK Ranches, for processing. (Id.) Lea alleges that the Knowleses, ZK Ranches, and Paul Yoder sold all of the meat from the four cattle at retail prices. (Id.) Lea further alleges ZK Ranches is not

1 The facts in this section are drawn from Nolt and Lea’s amended complaint (Doc. No. 4) and presumed true for purposes of resolving the Hampton Defendants’ motion to dismiss. See Courtright v. City of Battle Creek, 839 F.3d 513, 518 (6th Cir. 2016). authorized to process meat and that the meat was falsely labeled as having been inspected by the United States Department of Agriculture (USDA). (Id.) 2. Nolt’s Interactions with the Defendants On August 1, 2019, Nolt agreed to lease his slaughter and processing facility to the Yoders, doing business as Riverside Labor Group or Fairview Custom Meats, for one year with a purchase

option at the end of the lease. (Id.) “The lease agreement called for the [Yoders] to pay $5,000 for the facility and an additional $5,000 in labor for [ ] Nolt and his family.” (Id. at PageID# 41.) By December 2019, the Yoders had fallen behind on the agreed payments because Elwood Yoder was using proceeds from the business for personal expenses. (Doc. No. 4.) The Yoders still wanted to purchase the business and asked Nolt to have the business appraised. (Id.) Nolt stated that he would sell the business for $1.5 million. (Id.) This angered the Yoders, who thought the business was only worth $700,000.00. (Id.) The Yoders then “put together a scheme to get” the Knowleses and ZK Ranches to buy the facility from Nolt instead. (Id. at PageID# 42.) Nolt also alleges that Elwood Yoder fraudulently obtained a USDA stamp to process meat in March 2020. (Id.) B. Procedural History

Nolt and Lea initiated this action on November 6, 2020, and filed an amended complaint on November 18, 2020. (Doc. Nos. 1, 4). The amended complaint alleges federal claims against the defendants for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961–68, and the Federal Meat Inspection Act (FMIA), 21 U.S.C. §§ 601–26, as well as claims under Tennessee law for fraud, unjust enrichment, and constructive trust. (Doc. No. 4.) Nolt and Lea each request $40,000.00 in damages and any other available relief. (Id.) On the same day they filed their amended complaint, Nolt and Lea filed a motion to dismiss the Yoders’ state-court counterclaim against Nolt, attaching a copy of the counterclaim and arguing that the Yoders failed to exhaust their administrative remedies before filing it in Kentucky state court. (Doc. No. 5.) The Yoders have not appeared in this action and have not responded to Nolt and Lea’s motion.2 On March 3, 2021, the Hampton Defendants moved to dismiss Nolt and Lea’s amended complaint under Rule 12(b)(6) (Doc. No. 20), arguing that Nolt has not alleged any claims against

them and that Lea has not adequately alleged claims for violation of the FMIA, RICO, fraud, unjust enrichment, or constructive trust (Doc. No. 21). Specifically, the Hampton Defendants argue that there is no private right of action under the FMIA, that Lea’s fraud claim fails because Lea has not satisfied the pleading requirements of Rule 9(b), and that his constructive trust claim fails because he has not alleged that the Hampton Defendants knew he owned the cows in question. (Doc. No. 21.) The Hampton Defendants further argue that Lea’s unjust enrichment and RICO claims “contain no substantive allegations against the Hampton Defendants” and should therefore be dismissed. (Id. at PageID# 150.) Lea does not challenge the Hampton Defendants’ assertion that there is no private right of action under the FMIA; instead he argues that he has “establishe[d] a parallel claim with common

law fraud” and that his fraud allegations meet Rule 9(b)’s heightened pleading standard. (Doc. No. 32, PageID# 180, ¶ 4.) Lea also argues that the Court should not dismiss his constructive trust claim because an email from a USDA investigator that Lea attached to his response in opposition to the Hampton Defendants’ motion to dismiss states that “Hampton claims after slaughter they asked Lea to pick up the product, but his partner(?) didn’t until almost a month later.” (Doc. No. 32, PageID# 178, ¶ 1a.) Nolt and Lea do not dispute that Nolt has not alleged any claims against the Hampton Defendants or that Lea has not adequately alleged RICO or unjust enrichment claims

2 On May 25, 2021, the Clerk of Court granted Nolt and Lea’s motion for entry of default with respect to E. Yoder and Riverside Labor Group, a/k/a Fairview Custom Meats. (Doc. No. 46.) Nolt and Lea did not move for entry of default with respect to P. Yoder. (Doc. No. 41.) against them. Instead, Nolt and Lea argue that they will show through discovery that the Hampton Defendants “have been involved in several schemes to limit competition, such as plaintiff Nolt’s business[,]” including, for example, switching the tags on customers’ deer, beef, and pork orders.

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