UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Thomas Moulton
v. Civil No. 14-cv-265-JD Opinion No. 2014 DNH 245 David Bane and Prime Choice Enterprises, LLC
v.
Thomas Moulton, Eric Emery, and King’s Highway Realty Trust, LTD Partnership
O R D E R
The claims in this case arise from the failure of The Meat
House, a specialty butcher business that had locations in New
Hampshire and elsewhere. Thomas Moulton brought suit against
David Bane and his company, Prime Choice Enterprises, LLC
(“PCE”), which acquired assets of The Meat House after its
financial collapse. Moulton alleges that Bane made fraudulent
misrepresentations to induce him to assist PCE in acquiring
assets of The Meat House and breached their agreement.
Bane and PCE brought a counterclaim against Moulton and a
third-party complaint against Eric Emery and King’s Highway
Realty Trust, LTD Partnership. King’s Highway moves to dismiss
Count III of the third-party complaint. Bane and PCE object to
the motion to dismiss. Standard of Review
Federal Rule of Civil Procedure 12(b)(6) allows a defendant
to move to dismiss on the ground that the plaintiff’s complaint
fails to state a claim on which relief can be granted. In
assessing a complaint for purposes of a motion to dismiss, the
court “separate[s] the factual allegations from the conclusory
statements in order to analyze whether the former, if taken as
true, set forth a plausible, not merely conceivable, case for
relief.” Juarez v. Select Portfolio Servicing, Inc., 708 F.3d
269, 276 (1st Cir. 2013) (internal quotation marks omitted). “If
the facts alleged in [the complaint] allow the court to draw the
reasonable inference that the defendants are liable for the
misconduct alleged, the claim has facial plausibility.” Id.
(internal quotation marks omitted).
Background
The background facts are taken from the amended third-party
complaint (document no. 14), and the factual allegations are
summarized under the Rule 12(b)(6) standard for purposes of the
pending motion only.
PCE purchased “substantially all” of the assets of The Meat
House butcher shops, “including all of the assets owned by
Stratham/Exeter Meat House, LLC,” from Centrix Bank & Trust in a
2 private sale on April 15, 2014.1 Some of the Meat House assets
purchased by PCE were subject to a lien held by Moulton. After
the purchase, PCE hired Emery to open new retail stores at The
Meat House locations, where that was possible, and to sell the
assets at other locations. King’s Highway was the landlord for
the premises where The Meat House store had been operated in
Stratham. Emery negotiated with King’s Highway to lease The Meat
House location in Stratham where PCE planned to open a retail
store.
A representative from Team Funding Solutions, a finance
company in Austin, Texas, contacted PCE and claimed that Team
Funding had leased assets to The Meat House and had a lien on
those assets. Although PCE disputed Team Funding’s lien on The
Meat House assets, it negotiated a deal with Team Funding in
which PCE would pay $30,000 to Team Funding to satisfy the lien.
That transaction was scheduled to close on May 19, 2014.2
At the same time, Bane and Moulton were discussing Moulton’s
investment in PCE and were working to reach an agreement. When
Bane refused to meet Moulton’s terms, they parted ways. Bane and
PCE allege that Moulton then began “a campaign of attack against
PCE.”
1 The allegations that PCE is a bona fide purchaser for value of The Meat House assets and that it is a good faith transferee without notice of any defects in the sale are legal conclusions which are not considered for purposes of a motion to dismiss. 2 It is not clear whether the closing occurred.
3 Moulton arranged for Team Funding to sell its assets in The
Meat House to Moulton.3 Moulton entered into a lease with King’s
Highway for the Stratham property and took possession of The Meat
House assets at that location. Moulton gave PCE a trailer full
of assets from The Meat House in Stratham, but Bane and PCE
contend that the trailer contained largely worthless junk.
Neither King’s Highway nor Moulton will turn over The Meat House
assets at the Stratham location to Bane and PCE.
Discussion
King’s Highway moves to dismiss the conversion claim against
it on the grounds that the complaint lacks specificity as to what
property King’s Highway converted, that Bane and PCE failed to
allege facts showing their right to immediate possession of the
property at the Stratham location, and that they failed to allege
sufficient facts to show that they made a demand to King’s
Highway for the property. In response, Bane and PCE assert that
the complaint includes sufficient facts to show what property
they claim has been converted and their right to the property.
They also contend that while a demand is not an element of
conversion, their allegations show that King’s Highway knew of
PCE’s interest in the property.
3 Bane and PCE allege that the assets sold by Team Funding to Moulton were owned by PCE.
4 A. Conversion
To succeed on a claim of conversion under New Hampshire law,
a plaintiff must show that the defendant intentionally exercised
dominion or control over the plaintiff’s property and that the
defendant’s actions seriously interfered with the plaintiff’s
right to the property. Muzzy v. Rockingham Cty. Tr. Co., 113
N.H. 520, 523 (1973); accord Askenaizer v. Moate, 406 B.R. 444,
454 (D.N.H. 2009). “Among the factors that a court must consider
are the extent and duration of the exercise of control over the
goods, the intent to assert a right inconsistent with the other
party’s right of control, and good faith.” Kingston 1686 House,
Inc. v. B.S.P. Transp., Inc., 121 N.H. 93, 95 (1981). “[N]ot
every failure to deliver upon demand will constitute a
conversion. On the contrary a qualified refusal for a reasonable
purpose and for a reasonable length of time is not a conversion.”
LFC Leasing & Fin. Corp. v. Ashuelot Nat. Bank, 120 N.H. 638, 640
(1980); Peirce v. Finerty, 76 N.H. 38, 79 A. 23, 24 (1911) (“A
retention of the chattel while reasonable investigation is being
made is not wrongful.”).
B. Property Converted by King’s Highway
King’s Highway contends that the complaint does not
sufficiently allege what property belonging to PCE has been
converted by King’s Highway. In support, King’s Highway points
out that Bane and PCE allege that Moulton took possession of the
assets at the The Meat House location in Stratham and do not
5 allege that King’s Highway possesses any of the disputed
property. Bane and PCE respond by noting the detail they
provided about the assets at the Stratham location and assert
that they do not know whether Moulton or King’s Highway
“presently has title or just bare possession of the converted
assets.”
In the third-party complaint, Bane and PCE allege that
Moulton entered into a lease with King’s Highway for the Stratham location. They further allege that “Moulton has taken possession
of virtually all of the Stratham Assets . . . and continues to
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Thomas Moulton
v. Civil No. 14-cv-265-JD Opinion No. 2014 DNH 245 David Bane and Prime Choice Enterprises, LLC
v.
Thomas Moulton, Eric Emery, and King’s Highway Realty Trust, LTD Partnership
O R D E R
The claims in this case arise from the failure of The Meat
House, a specialty butcher business that had locations in New
Hampshire and elsewhere. Thomas Moulton brought suit against
David Bane and his company, Prime Choice Enterprises, LLC
(“PCE”), which acquired assets of The Meat House after its
financial collapse. Moulton alleges that Bane made fraudulent
misrepresentations to induce him to assist PCE in acquiring
assets of The Meat House and breached their agreement.
Bane and PCE brought a counterclaim against Moulton and a
third-party complaint against Eric Emery and King’s Highway
Realty Trust, LTD Partnership. King’s Highway moves to dismiss
Count III of the third-party complaint. Bane and PCE object to
the motion to dismiss. Standard of Review
Federal Rule of Civil Procedure 12(b)(6) allows a defendant
to move to dismiss on the ground that the plaintiff’s complaint
fails to state a claim on which relief can be granted. In
assessing a complaint for purposes of a motion to dismiss, the
court “separate[s] the factual allegations from the conclusory
statements in order to analyze whether the former, if taken as
true, set forth a plausible, not merely conceivable, case for
relief.” Juarez v. Select Portfolio Servicing, Inc., 708 F.3d
269, 276 (1st Cir. 2013) (internal quotation marks omitted). “If
the facts alleged in [the complaint] allow the court to draw the
reasonable inference that the defendants are liable for the
misconduct alleged, the claim has facial plausibility.” Id.
(internal quotation marks omitted).
Background
The background facts are taken from the amended third-party
complaint (document no. 14), and the factual allegations are
summarized under the Rule 12(b)(6) standard for purposes of the
pending motion only.
PCE purchased “substantially all” of the assets of The Meat
House butcher shops, “including all of the assets owned by
Stratham/Exeter Meat House, LLC,” from Centrix Bank & Trust in a
2 private sale on April 15, 2014.1 Some of the Meat House assets
purchased by PCE were subject to a lien held by Moulton. After
the purchase, PCE hired Emery to open new retail stores at The
Meat House locations, where that was possible, and to sell the
assets at other locations. King’s Highway was the landlord for
the premises where The Meat House store had been operated in
Stratham. Emery negotiated with King’s Highway to lease The Meat
House location in Stratham where PCE planned to open a retail
store.
A representative from Team Funding Solutions, a finance
company in Austin, Texas, contacted PCE and claimed that Team
Funding had leased assets to The Meat House and had a lien on
those assets. Although PCE disputed Team Funding’s lien on The
Meat House assets, it negotiated a deal with Team Funding in
which PCE would pay $30,000 to Team Funding to satisfy the lien.
That transaction was scheduled to close on May 19, 2014.2
At the same time, Bane and Moulton were discussing Moulton’s
investment in PCE and were working to reach an agreement. When
Bane refused to meet Moulton’s terms, they parted ways. Bane and
PCE allege that Moulton then began “a campaign of attack against
PCE.”
1 The allegations that PCE is a bona fide purchaser for value of The Meat House assets and that it is a good faith transferee without notice of any defects in the sale are legal conclusions which are not considered for purposes of a motion to dismiss. 2 It is not clear whether the closing occurred.
3 Moulton arranged for Team Funding to sell its assets in The
Meat House to Moulton.3 Moulton entered into a lease with King’s
Highway for the Stratham property and took possession of The Meat
House assets at that location. Moulton gave PCE a trailer full
of assets from The Meat House in Stratham, but Bane and PCE
contend that the trailer contained largely worthless junk.
Neither King’s Highway nor Moulton will turn over The Meat House
assets at the Stratham location to Bane and PCE.
Discussion
King’s Highway moves to dismiss the conversion claim against
it on the grounds that the complaint lacks specificity as to what
property King’s Highway converted, that Bane and PCE failed to
allege facts showing their right to immediate possession of the
property at the Stratham location, and that they failed to allege
sufficient facts to show that they made a demand to King’s
Highway for the property. In response, Bane and PCE assert that
the complaint includes sufficient facts to show what property
they claim has been converted and their right to the property.
They also contend that while a demand is not an element of
conversion, their allegations show that King’s Highway knew of
PCE’s interest in the property.
3 Bane and PCE allege that the assets sold by Team Funding to Moulton were owned by PCE.
4 A. Conversion
To succeed on a claim of conversion under New Hampshire law,
a plaintiff must show that the defendant intentionally exercised
dominion or control over the plaintiff’s property and that the
defendant’s actions seriously interfered with the plaintiff’s
right to the property. Muzzy v. Rockingham Cty. Tr. Co., 113
N.H. 520, 523 (1973); accord Askenaizer v. Moate, 406 B.R. 444,
454 (D.N.H. 2009). “Among the factors that a court must consider
are the extent and duration of the exercise of control over the
goods, the intent to assert a right inconsistent with the other
party’s right of control, and good faith.” Kingston 1686 House,
Inc. v. B.S.P. Transp., Inc., 121 N.H. 93, 95 (1981). “[N]ot
every failure to deliver upon demand will constitute a
conversion. On the contrary a qualified refusal for a reasonable
purpose and for a reasonable length of time is not a conversion.”
LFC Leasing & Fin. Corp. v. Ashuelot Nat. Bank, 120 N.H. 638, 640
(1980); Peirce v. Finerty, 76 N.H. 38, 79 A. 23, 24 (1911) (“A
retention of the chattel while reasonable investigation is being
made is not wrongful.”).
B. Property Converted by King’s Highway
King’s Highway contends that the complaint does not
sufficiently allege what property belonging to PCE has been
converted by King’s Highway. In support, King’s Highway points
out that Bane and PCE allege that Moulton took possession of the
assets at the The Meat House location in Stratham and do not
5 allege that King’s Highway possesses any of the disputed
property. Bane and PCE respond by noting the detail they
provided about the assets at the Stratham location and assert
that they do not know whether Moulton or King’s Highway
“presently has title or just bare possession of the converted
assets.”
In the third-party complaint, Bane and PCE allege that
Moulton entered into a lease with King’s Highway for the Stratham location. They further allege that “Moulton has taken possession
of virtually all of the Stratham Assets . . . and continues to
refuse to turn them over to PCE.” Based on the allegations, the
only assets at the Stratham location that Moulton does not
possess are those that Moulton put into a trailer and gave to
PCE. Taking the allegation as true, King’s Highway does not
possess any of the disputed assets.4
In the absence of facts to show that King’s Highway
intentionally exercised dominion or control over property that
Bane and PCE claim belongs to PCE, Bane and PCE have not stated a
claim of conversion against King’s Highway.5
4 The parties do not address what right or authority, if any, a landlord would have to distribute assets located in leased property to someone other than the tenant. In other words, Bane and PCE do not explain how King’s Highway possesses the assets that they claim are theirs when those assets are located in the Stratham store that is leased to Moulton. 5 Bane and PCE suggest in their objection that King’s Highway may be benefitting from leasing a fully equipped and functioning store. It is not clear how that suggestion would support their conversion claim. Further, to the extent Bane and PCE may intend
6 C. Right to Possession
King’s Highway also moves to dismiss the conversion claim on
the grounds that Bane and PCE have not pleaded facts to show that
they are entitled to immediate possession of the disputed assets.
“An action for conversion is based on the defendant’s exercise of
dominion or control over goods which is inconsistent with the
rights of the person entitled to immediate possession.” Rinden
v. Hicks, 119 N.H. 811, 813 (1979). “[O]ne in possession of a chattel who is in reasonable doubt as to the right of the
claimant to its immediate possession does not become a converter
by making a qualified refusal to surrender the chattel to the
claimant for the purpose of affording a reasonable opportunity to
inquire into such right.” Restatement (Second) of Torts § 240.
Bane and PCE acknowledge that at least some of the assets in
the Stratham location are claimed by Moulton. Although they
apparently have provided lists of all of the assets at the
Stratham location, they are claiming the right to assets that
they admit are claimed by Moulton. Given the disputed ownership,
Bane and PCE have not alleged facts that show they are now
entitled to immediate possession of all of the assets at the
Stratham location. They have not alleged which assets, if any,
are not claimed by Moulton. Under these circumstances, King’s
Highway is not liable for conversion.
to offer a new claim, that should be raised in a motion to amend rather than in their objection to a motion to dismiss.
7 D. Demand
In addition, King’s Highway contends that the conversion
claim fails because Bane and PCE failed to allege that they made
a demand to King’s Highway for the assets at the Stratham
location. Because the conversion claim fails on the elements of
intentionally exercising dominion or control over the disputed
assets and the right to immediate possession, it is not necessary
to decide whether Bane and PCE were required to make a demand for the property.
Conclusion
For the foregoing reasons, the third-party defendant’s
motion to dismiss (document no. 23) is granted. The conversion
claim, Count III in the third-party complaint (document no. 14),
against King’s Highway Realty Trust is dismissed.
SO ORDERED.
____________________________ Joseph A. DiClerico, Jr. United States District Judge
November 24, 2014
cc: Anna B. Hantz, Esq. Michele E Kenney, Esq. Peter N. Tamposi, Esq. Nathan P. Warecki, Esq.