United States District Court, M.D. North Carolina.

WILLIAM FULP WRECKER SERVICE, INC., Plaintiff,

v.

MILLER TRANSFER AND RIGGING, CO., Defendant.

1:23CV368

|

Signed February 2, 2024

Attorneys and Law Firms

ANDREW G. BROWN, FINGER, ROEMER, BROWN & MARIANI, L.L.P., JONESVILLE, NC, ROBERT BENJAMIN LAWS, BOWDEN GARDNER & HILL, P.C., WINSTON-SALEM, NC, for Plaintiff.

ANDREW BREHM, SCOPELITIS, GARVIN, LIGHT, HANSON & FEARY, P.C., MILWAUKEE, WI, CHRISTOPHER M. KELLY, GALLIVAN, WHITE & BOYD PA, CHARLOTTE, NC, for Defendant.

MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Joi Elizabeth Peake, United States Magistrate Judge

*1 This case is before the Court on Defendant Miller Transfer and Rigging, Co.’s Motion for Judgment on the Pleadings. Plaintiff William Fulp Wrecker Service, Inc. brings this claim for unjust enrichment based on Defendant’s failure to pay an invoice for work that Plaintiff did cleaning up the site of a single-vehicle accident involving one of Defendant’s trucks. In the Answer and present Motion for Judgment on the Pleadings, Defendant argues that it paid an invoice for clearing wreckage from the site, and that the settlement of that invoice also applies to bar suit related to a separate invoice for environmental remediation at the site. For the reasons stated below, the Court concludes that the settlement and release on the first invoice is ambiguous with respect to whether it included the second invoice for environmental remediation. Therefore, the Court recommends that Defendant’s motion be denied, without prejudice to further consideration after discovery on dispositive motions or at trial.

I. FACTUAL ALLEGATIONS AND PROCEDURAL POSTURE

On April 7, 2020, a tractor trailer operated by Defendant Miller Transfer and Rigging Co. overturned on the side of a highway in Forsyth County, North Carolina. (Compl. [Doc. #3] ¶¶ 10-11.) The overturned truck spilled approximately twenty-five gallons of hydraulic fluids and over fifty gallons of motor oil and diesel fuel in the roadway and surrounding area. (Compl. ¶ 12.) Plaintiff alleges that as a result of this spill of hazardous material, the Winston-Salem/Forsyth County Office of Emergency Management contacted Plaintiff’s company and directed it to “contain, clean-up, and remediate the impacted areas.” (Compl. ¶ 14.) Plaintiff alleges that its hazmat crew arrived and worked on April 7, 2020, “to contain and minimize contamination of the impacted area and clear[ ] the roadway,” and then returned again on April 10, 2020 “to complete the clean-up and remediation.” (Compl. ¶¶ 15-16.) This work related to “hazardous material cleanup and remediation” and ground contamination. (Compl. ¶¶ 17-19, 22.) Plaintiff invoiced Defendant “for the hazardous material cleanup and remediation services” under Invoice 2111, dated April 22, 2020. (Compl. ¶¶ 19-20; Compl. Ex. A [Doc. #3-1] (Invoice 2111).) Invoice 2111 details emergency response and remediation work done by Plaintiff on April 7 and April 10, 2020, as well as subsequent testing and assessment by a geologist. The total cost of the work and fees billed in Invoice 2111 was $77,852.78. Defendant did not pay the invoice, despite Plaintiff’s performing the remediation work on its behalf. (Compl. ¶¶ 20, 24-28, 33.)

Based on these allegations, Plaintiff brought this action in state court claiming that Defendant had been unjustly enriched by the environmental remediation work Plaintiff performed following the accident and for which Defendant had not paid. (Compl. ¶¶ 28-33.) Specifically, Plaintiff alleges that Defendant received the benefit of Plaintiff’s “hazardous material clean up and remediation services” without paying for the services. The matter was removed to federal court in this District on the basis of diversity jurisdiction on May 5, 2023 [Doc. #1]. Discovery is underway and closes on April 30, 2024.

*2 In its Answer, Defendant states that the Parties reached a negotiated settlement related to Plaintiff’s work “associated with the April 7, 2020 accident.” (Answer [Doc. #5] at 5.) Defendant attached, as part of its Answer, a Release and Settlement Agreement and the invoice to which that Release referred, Invoice 2108 [Doc. #5-1]. The Release is dated April 23, 2020, and signed by Defendant on April 24, 2020, and the factual recitals in the Release state:

A. An incident occurred where Fulp’s was called in to provide towing, storage and related charges for a roll over (the “Incident”) [.]

B. As part of its services related to the Incident, Fulp’s issued Invoice 2108 attached hereto as Exhibit A.

C. The invoice claims a total due of $185,377.50, related to removal of the tractor, trailer and oversized cargo from the Incident site, transportation of the same to Fulp’s yard, and storage at Fulp’s yard thereafter.

D. Miller Transfer disputes that the sum charged is fair and reasonable for the services performed.

E. After consultation and negotiations, Fulp’s and Miller Transfer have concluded that it would be in their best interests to fully settle and compromise the controversies among them on the terms and in the manner provided for in this Agreement.

….

3. Mutual Release Related to Invoice 2108. Each party to this Agreement shall and does immediately RELEASE and DISCHARGE the other, including all officers, directors, members, agents, employees together with customers, business partners, representatives, insurers, affiliated or parent companies, successors and assigns, from all rights, claims, actions, causes of action, suits, debts, accounts, contracts and demands whatsoever and however arising, whether known or unknown, foreseen or unforeseen, patent or latent, which they may now have or may have after the signing of this Agreement related in any way to Invoice 2108 attached hereto as Exhibit A.

(Release and Settlement Agreement [Doc. #5-1] at 1-2.)

Invoice 2108 lists various charges, primarily based on a “[p]rice per pound” for a “super load recovery” of a rollover tractor trailer off the roadway. It also includes a charge for “hauling” and for “light towers.” It does not detail what date the work reflected in it was performed, but the invoice itself is dated April 9, 2020, prior to the additional environmental remediation work performed on April 10, 2020.

Defendant now moves for judgment on the pleadings [Doc. #13], on the basis that the release as to Invoice 2108 [Doc. #5-1], unambiguously applies to bar Plaintiff’s claim as relates to Invoice 2111 [Doc. #3-1].

II. LEGAL STANDARD

The standard for granting judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is the same as for granting a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Burbach Broad. Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 405-06 (4th Cir. 2002). A plaintiff fails to state a claim upon which relief may be granted under Rule 12(b)(6) when the complaint does not “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)).

In deciding a defendant’s Rule 12(c) motion, the court assumes the facts alleged in the complaint are true and draws all reasonable inferences in the plaintiff’s favor. Priority Auto Grp., Inc. v. Ford Motor Co., 757 F.3d 137, 139 (4th Cir. 2014); accord Benitez v. Charlotte-Mecklenburg Hosp. Auth., 992 F.3d 229, 235 n.5 (4th Cir. 2021). In addition, the court may consider the answer to the extent it does not conflict with the complaint, and may consider documents attached to the complaint or to the answer if the documents are integral to the plaintiff’s claims and their authenticity is not challenged. See Massey v. Ojaniit, 759 F.3d 343, 347 (4th Cir. 2014); Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th Cir. 2013).

*3 A Rule 12(c) motion should be granted only if, when taking all of the non-moving party’s factual allegations as true, no genuine issues of material fact remain and the case can be determined as a matter of law. Mendenhall v. Hanesbrands, Inc., 856 F. Supp. 2d 717, 724 (M.D.N.C. 2012).

Notably, because the burden of establishing an affirmative defense, such as a release agreement, rests on the defendant asserting it, a motion under Rule 12(c) is generally not the appropriate vehicle to mount such a challenge. It is only in the rare circumstances where all facts necessary to deciding the issue clearly appear on the face of the pleadings that the Court will reach an affirmative defense through a motion under Rule 12(c).

When asked to enter judgment on the pleadings on the basis of a plaintiff having signed a release agreement, the Court conducts a two-step analysis to determine (1) whether the release agreement is valid; and (2) if it is, whether the agreement’s plain language bars the plaintiff’s claims. Under North Carolina law, when the language of the contract is clear and unambiguous, construction of the agreement is a matter of law for the Court, and the Court cannot look beyond the terms of the contract to determine the intentions of the parties.

Justad v. Bank of Am. Corp., No. 1:17CV219, 2017 WL 3432293, at *2 (M.D.N.C. Aug. 9, 2017) (internal brackets, ellipses, and quotations omitted), report and recommendation adopted, No. 1:17-CV-219, 2017 WL 11019067 (M.D.N.C. Sept. 11, 2017); accord Harris v. Ann’s House of Nuts, No. 4:13-CV-0039-BO, 2013 WL 5592936, at *2 (E.D.N.C. Oct. 10, 2013).

III. DISCUSSION

Defendant argues that the April 23, 2020, Release and Settlement Agreement [Doc. #5-1] unambiguously applies to any claim related to the underlying incident which gave rise to Invoice 2108. In response, Plaintiff argues that the release unambiguously applies only to claims related to Invoice 2108 for removal of the rollover, but not to Invoice 2111 related to the separate environmental response and remediation. Because the Parties do not dispute the validity of the release, the Court will instead focus on whether the agreement contains plain, unambiguous language on its face that bars Plaintiff’s claim related to Invoice 2111.

Under North Carolina law,

Written contracts are to be construed and enforced according to their terms. They must receive a reasonable interpretation, according to the intention of the parties at the time of executing them, gathered from the language employed by them. When the language of a contract is clear and unambiguous, effect must be given to its terms, and its terms may not be contradicted by parol or extrinsic evidence.

Further, a contract’s meaning and effect is a question of law for the court—not the jury—when the language of the contract is clear and unambiguous. And the terms of an unambiguous contract are to be taken and understood in their plain, ordinary and popular sense, and harmoniously construed to give every word and every provision effect.

An ambiguity exists in a contract when either the meaning of words or the effect of provisions is uncertain or capable of several reasonable interpretations. An ambiguity can exist when, even though the words themselves appear clear, the specific facts of the case create more than one reasonable interpretation of the contractual provisions. If a written contract is ambiguous, the contract’s meaning and effect is a factual question for the jury and parol evidence may be introduced not to contradict, but to show and make certain what was the real agreement between the parties.

*4 Galloway as Tr. of Melissa Galloway Snell Living Tr. Dated May 1, 2018 v. Snell, 384 N.C. 285, 287-88, 885 S.E.2d 834, 836 (N.C. 2023) (internal quotations and citations omitted). The Court of Appeals for the Fourth Circuit has further observed that:

Ambiguity arises only when a contract may be understood in more than one way or when it refers to two or more things at the same time. Stated differently, a contract’s term is ambiguous if it is susceptible to more than one reasonable construction. Such ambiguity may be patent or latent. Patent ambiguity exists when the language of the contract itself reveals that it can be interpreted in more than one way. Latent ambiguity, although less common than patent ambiguity, arises where language although appearing perfectly clear at the time the contract is formed, because of subsequently discovered or developed facts, may reasonably be interpreted in either of two ways.

Lion Assocs. v. Swiftships Shipbuilders, LLC, 475 F. App’x 496, 501 (4th Cir. 2012) (internal citation, brackets, and quotations omitted).

Here, in considering the Parties’ briefs, the Court notes first that, unlike the case upon which Defendant primarily relies, the Release in this case did not include broad language releasing Defendant from “any and all past, present or futu[ ]re claims, demands, obligations, actions, causes of action which the Plaintiff now has, or which may hereafter accrue.” (Def. Br. [Doc. #14] at 11-13 (citing Goodwin v. Cashwell, 102 N.C. App. 275, 279, 401 S.E.2d 840, 843 (N.C. App. 1991) (ellipses and parenthetical omitted).) Rather, the language in the Release was much more limited and qualified and, while using sweeping and final language, limited that release language to claims specifically “related in any way to Invoice 2108.” (Release and Settlement Agreement ¶ 3.)

Invoice 2108 in turn did not mention the incident at all and simply includes the fee for the “Roll over off road ways super load recovery,” plus hauling and storage work that all appears to be separate from the environmental remediation and hazardous material disposal work reflected in Invoice 2111. While Invoices 2108 and 2111 are both apparently related to work performed after the April 7, 2020, incident, Invoice 2111 is not thereby necessarily “related” to Invoice 2108. Indeed, Invoice 2108 was issued on April 9, 2020, prior to the additional remediation work on April 10, 2020. Invoice 2111 does not appear to be a change order to Invoice 2108. It does not appear to be an amendment or addenda to Invoice 2108. Thus, Invoice 2111 could reasonably be interpreted as an entirely separate invoice, though involving the same Parties and, presumably, arising from the same incident, though neither the Release and Settlement Agreement nor the invoices make this clear.

The primary basis upon which Defendant relies to argue that Invoice 2108 is related to Invoice 2111 is the fact that both invoices involve the same Parties and that they both “bill $3,500 for one lane closure.” (Def.’s Br. at 7-8.) However, a review of the invoices with all inferences made in Plaintiff’s favor, reveals that this was not one lane closure but two: one that occurred before April 9, 2020, when invoice 2108 was issued [Doc. #5-1], and one that occurred on April 10, 2020, according to Invoice 2111 [Doc. #3-1]. Additionally, simply because the same parties are involved in multiple transactions does not mean that a release as to one is a release to all if the release itself is silent on this point and qualifies itself as to only one transaction.

*5 Relatedly, as to Defendant’s argument that the Release should be read to include claims related to Invoice 2111 because, had the Parties wanted to exclude claims related to Invoice 2111 from that agreement they could have specifically done so (Def.’s Br. at 8, 10-11), the inverse is equally true: had the Parties wanted to include claims related to Invoice 2111 in that agreement they could have specifically done so. They did not. The Release is entirely silent as to Invoice 2111. Despite presumably knowing of Invoice 2111—dated April 22, 2020—at the time of the settlement agreement on April 23, 2020, and therefore knowing that it, from its face, involved work apart from the “removal of the tractor, trailer and oversized cargo from the Incident site, transportation of the same to Fulp’s yard, and storage at Fulp’s yard thereafter,” (Release and Settlement Agreement at 1), the Parties nevertheless specified that the release in this case related only to Invoice 2108, and not the underlying incident itself, and with no reference to Invoice 2111 or environmental restoration and remediation.

Indeed, the Parties specifically identified the April 7, 2020 crash as the “Incident” but nevertheless chose to qualify the release as applying not to claims arising from or related to the “Incident,” but rather to disputes about Invoice 2108 itself, which the agreement recognized reflected only “part of [Plaintiff’s] services related to the Incident.” (Release and Settlement Agreement at 1-2.) Neither did the Parties use universal release language but rather, again, qualified the release as being “Related to Invoice 2108.” And, again, that invoice, rather than being related to all of the work performed as a result of the “Incident,” reflected only a “part of [Plaintiff’s] services related to the Incident” and in fact “related to removal of the tractor, trailer and oversized cargo from the Incident site, transportation of the same to Fulp’s yard, and storage at Fulp’s yard thereafter,” only. Plaintiff’s Complaint does not raise a claim based on Invoice 2108, or apparently, any of the work detailed and billed in that invoice.

Thus, while Defendant is right that the language in the release denotes finality and an intention to “fully settle,” it is not clear that this finality extends beyond an agreement that the controversies arising from Invoice 2108 and its discrete charges are fully settled. Either the phrase “related in any way to Invoice 2108” means “related in any way to the incident underlying Invoice 2108”—which is possible but by no means unambiguously clear from the document—or “related in any way to the charges and services detailed in Invoice 2108”—which would not bar the separate charges in Invoice 2111 and is also possible but by no means the only reasonable reading of the document.

Thus, while the Court concludes that the contract language does not unambiguously support Defendant’s purported clear reading of the release, neither does it wholly preclude it. The language of the Release and Settlement Agreement is such that either Party could be correct, thus highlighting the nature of the ambiguity. To the extent that Defendant seeks judgment in its favor on the basis that the Release unambiguously reads in its favor to bar Plaintiff’s claims related to Invoice 2111, Defendant has failed to meet its burden under Rule 12(c).¹ Therefore, the Court will recommend that Defendant’s Motion for Judgment on the Pleadings be denied. The Court notes that the Parties are presently in discovery, and these issues can be considered further after the close of discovery on dispositive motions or at trial.

IV. CONCLUSION

IT IS THEREFORE RECOMMENDED that Defendant’s Motion for Judgment on the Pleadings [Doc. #13] be DENIED.

All Citations

Footnotes

1. Defendant’s argument that no parol evidence is permitted or required to understand the scope of the Release is essentially the same as the one it makes in terms of ambiguity. However, as noted above, the Court has concluded that the Release is ambiguous.  

End of Document

© 2024 Thomson Reuters. No claim to original U.S. Government Works.  

United States District Court, S.D. New York.

Thompson’s Transport, LLC, Plaintiff-Counter Defendant,

v.

Lisi’s Towing Service, Inc., Defendant-Counter Claimant.

7:23-CV-2385 (VR)

|

Filed 02/13/2024

OPINION AND ORDER

VICTORIA REZNIK United States Magistrate Judge

I. INTRODUCTION

*1 This action arises from a motor vehicle mishap that turned an ordinary highway into the scene of a culinary catastrophe. While driving on the I-84 in Stormville, New York, Plaintiff-Counter Defendant Thompson’s Transport, LLC’s freightliner narrowly avoided a collision with other vehicles, by driving off the side of the road and into a wooded area, colliding with trees. The accident resulted in an overturned Freightliner Cascadia T/A Sleeper PX cab and chassis and a cascade of the freightliner’s cargo of 45,000 pounds of frozen crinkle cut French fries. Defendant-Counter Claimant Lisi’s Towing Service, Inc., was called in to clean up the accident scene and tow the freightliner to its facility in Brewster, New York.

On March 21, 2023, Thompson’s commenced this action, claiming that Lisi’s had negligently damaged the trailer and refrigerator unit, failed to salvage French fry cargo, improperly placed a lien on the freightliner and trailer based on exaggerated cleanup and towing fees of around $150,000, and converted the freightliner and trailer by wrongly refusing to surrender their possession. (ECF No. 1). On June 29, 2023, Lisi’s filed its answer and counterclaim, claiming that it maintains a proper lien on the freightliner and trailer under N.Y. Lien Law § 184 and that Thompson’s owes more than $130,000 for the fair and reasonable costs of its services and storage fees. (ECF No. 15). On August 16, 2023, the parties consented to jurisdiction before a magistrate judge for all purposes, pursuant to 28 U.S.C. § 636(c).

Pending before the Court is Thompson’s motion to dismiss Lisi’s counterclaim. (ECF No. 26). For the reasons explained below, Thompson’s motion is GRANTED. Lisi’s counterclaim is dismissed to the extent it claims recourse beyond an in rem lien against the freightliner and trailer. But Lisi’s request to amend its counterclaim is GRANTED to the extent it can assert a claim under contract law.

II. BACKGROUND

A. Thompson’s Complaint

On March 21, 2023, Thompson’s commenced this diversity action against Lisi’s alleging as follows. (ECF No. 1). On August 9, 2022, Thompson’s rented a 2022 Freightliner Cascadia T/A Sleeper PX cab and chassis to deliver a load of Penobscot McCrum, LLC frozen crinkle cut French fries, weighing about 45,000 pounds, from Maine to Alabama. (Id. at 2).¹ While on the I-84 in Stormville, New York, the freightliner narrowly avoided a collision with other vehicles by driving off to the left side of the road and into a wooded area, where it collided with trees and overturned. (Id. at 3). The accident caused damage to the tractor and trailer and the French fry cargo was spilled. (Id.). Lisi’s was engaged to provide recovery and towing services. (Id.). The freightliner tractor and trailer were towed to Lisi’s facility in Brewster, New York. (Id.).

Thompson’s alleges that, in connection with its work, Lisi’s charged for “excessive cleanup and work fees” by “inflat[ing] invoices and seek[ing] exorbitant fees” from Thompson’s. (Id.). Lisi’s invoice “detail[ed] work completed at the scene involving use of a heavy duty rotator, transportation of an excavator, use of incident recovery trailer equipment, use of a disposal container, completion of disposal trips, and crew work, among other things.” (Id.). Thompson’s attached a copy of the invoice, totaling $132,390.33. (Id. at 12–17).

*2 Thompson’s also alleges that Lisi’s failed to complete its work in an appropriate manner by exacerbating damage to the freightliner tractor, trailer, and refrigerator unit, and by failing to salvage any of the French fry cargo. (Id. at 3–4). The freightliner’s value is $174,890. (Id. at 9). Lisi’s sent Thompson’s a notice, advising that the freightliner and trailer were being housed at its Brewster facility at a combined rate of $260.00 per day as of October 11, 2022. (Id. at 4, 19–20). Lisi’s notice stated that “[i]f storage and towing charges are not paid for, a lien will be placed on your vehicle.” (Id.).

Thompson’s insurer provided $5,000 for debris removal and provided payment for the destroyed French fry cargo. (Id. at 5). But because Lisi’s allegedly failed to recover the cargo, Thompson’s was forced to pay a $1,000 deductible to receive payment for it. (Id.).

Thompson’s asserts five causes of action: (1) three negligence claims for exacerbated damage to the trailer and refrigerator unit and failure to salvage the French fry cargo (id. at 5–7); (2) a claim for declaratory judgment on the amount owed to Lisi’s and the propriety of Lisi’s lien (id. at 7–8); and (3) a conversion claim for Lisi’s failure to surrender possession of the freightliner, trailer, and refrigerator unit. (Id. at 8–9). Thompson’s requests damages totaling $41,000, a declaratory judgment that Lisi’s lien is null and void, and return of its property in an amount no less than $174,890.00 plus interest. (Id. at 9).

B. Lisi’s Counterclaim

On June 29, 2023, Lisi’s filed its answer with counterclaim, alleging as follows. (ECF No. 15). On August 9, 2022, Thompson’s freightliner tractor and trailer was involved in a motor vehicle accident on the I-84 in Stormville, New York. (Id. at 5). Lisi’s “was dispatched to the aforesaid location to remove [Thompson’s] tractor and trailer.” (Id.). Lisi’s “performed services identified on its Invoice #22-144, which totaled $133,014.87 exclusive of storage fees and attorneys’ fees.” (Id.; see ECF No. 15-1 at 2–3). After removing the tractor and trailer from the scene, Lisi’s notified Thompson’s that it “would be responsible for all costs and fees for the work performed by [Lisi’s], including but not limited to the storage of [Thompson’s] tractor and trailer.” (ECF No. 15 at 6). To date, Thompson’s “has failed to pay [Lisi’s] for its services despite [Lisi’s] repeated requests that it do so.” (Id.). Thus, Lisi’s “has sustained damages in the sum of $133,014.87, and continuing, plus storage, costs, interest, taxes and attorneys’ fees.” (Id.). Finally, Lisi’s “maintains a lien pursuant to N.Y.S. Lien Law § 184.” (Id.).

C. Thompson’s Motion to Dismiss

Thompson’s now moves to dismiss Lisi’s counterclaim, arguing that Lisi’s failed to state a counterclaim, because N.Y. Lien Law § 184 provides a right in rem against property but does not provide an avenue for in personam liability. (ECF No. 28 at 4). Thus, to the extent Lisi’s claims that Thompson’s owes Lisi’s a sum of money, N.Y. Lien Law § 184 does not provide for such monetary relief. (Id. at 4–5). Thompson’s also argues that while monetary relief may be available under contract law, Lisi’s has failed to allege sufficient facts to support any such theories of relief, including unjust enrichment or promissory estoppel. (Id. at 5–7). Rather, because the New York State Police had engaged Lisi’s to perform its services, any contractual remedy would be available against the State Police, and not Thompson’s. (Id. at 5).

Lisi’s opposes, arguing that its lien is valid (ECF No. 33 at 4–7), and that N.Y. Lien Law § 184 “was enacted to protect businesses like Lisi’s.” (Id. at 7). Lisi’s also argues that Thompson’s “points to no credible authority” for its assertion that “Lisi’s must go to law enforcement for recovery of its alleged costs and expenses” (Id.). In the alternative, Lisi’s requests leave to amend its counterclaim. (Id.).

III. DISCUSSION

A. Legal Standard

*3 A court evaluates a motion to dismiss a counterclaim under Rule 12(b)(6) of the Federal Rules of Civil Procedure using the same standard as a motion to dismiss a complaint. Phx. Cos. v. Concentrix Ins. Admin. Sols. Corp., 554 F. Supp. 3d 568, 585 (S.D.N.Y. 2021); see also GEOMC Co. v. Calmare Therapeutics Inc., 918 F.3d 92, 99 (2d Cir. 2019) (explaining that a “counterclaim, like all pleadings, must conform to the pleading requirements of Twombly and Iqbal”).² To survive a Rule 12(b)(6) motion, a counterclaim must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A counterclaim is facially plausible when the factual content pleaded allows a court “to draw the reasonable inference that the [counter-]defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Where a [counterclaim] pleads facts that are merely consistent with a [counter-]defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. (quoting Twombly, 550 U.S. at 557).

In considering a motion to dismiss a counterclaim for failure to state a claim, a district court must “accept[ ] as true all factual claims in the [counterclaim] and draw[ ] all reasonable inferences in the [non-moving party’s] favor.” Slattery v. Hochul, 61 F.4th 278, 285–86 (2d Cir. 2023). This tenet, however, is “inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Rather, the counterclaim’s “factual allegations must be enough to raise a right to relief above the speculative level,” Twombly, 550 U.S. at 555, “i.e., enough to make the claim plausible.” Arista Recs. LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010). A counterclaim is properly dismissed, where, as a matter of law, “the allegations in [the counterclaim], however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558.

“In considering a motion to dismiss for failure to state a claim, the district court is normally required to look only to the allegations on the face of the [counterclaim],” but “the court may consider documents that are attached to the [counterclaim], incorporated in it by reference, integral to the [counterclaim], or the proper subject of judicial notice.” United States v. Strock, 982 F.3d 51, 63 (2d Cir. 2020).³

B. N.Y. Lien Law § 184 Does Not Provide for In Personam Liability

Lisi’s claims that it “maintains a lien pursuant to N.Y.S. Lien Law § 184” and Thompson’s “owes” Lisi’s “the sum of $133,014.87.” (ECF No. 15 at 6). Although it may be true that Lisi’s can maintain a lien against Thompson’s property unless and until Thompson’s makes payment to satisfy the lien, the Lien Law itself does not provide an independent claim for payment. In other words, N.Y. Lien Law § 184 only provides an in rem right and does not provide a basis for in personam liability. Thus, if Lisi’s relies on N.Y. Lien Law § 184 to assert a claim for in personam liability, Lisi’s has failed to state a claim upon which relief could be granted.

In relevant part, N.Y. Lien Law § 184(1) provides that “[a] person keeping a garage, hangar or place for the storage, maintenance, keeping or repair of motor vehicles” and who “tows and stores any motor vehicle at the request of a law enforcement officer authorized to remove such motor vehicle … has a lien upon such motor vehicle … for the sum due for such towing, storing, maintaining, keeping or repairing of such motor vehicle … and may detain such motor vehicle … at any time it may be lawfully in his possession until such sum is paid.” N.Y. Lien Law § 184(1). N.Y. Lien Law § 184(2) further provides that “[a] person who tows and stores a motor vehicle at the request of a law enforcement officer authorized to remove such motor vehicle shall be entitled to a lien for the reasonable costs of such towing and storage,” provided that the garage-owner follows the notice provisions outlined in the statute. N.Y. Lien Law § 184(2).

*4 “The purpose of the enactment is to accord a form of security for personal credit extended by the vendor of service and supplies enhancing the value of the specified vehicle.” Nat’l Union Fire Ins. Co. v. Eland Motor Car Co., 85 N.Y.2d 725, 730 (1995). N.Y. Lien Law § 184 “was an outgrowth of the artisan’s lien recognized at common law, whereby a worker who by his labor enhanced the value of a chattel, obtained a lien upon it for the reasonable value of the work performed. That lien endowed the artisan with the exclusive right to possession of the repaired article until his charges were satisfied.” Id. The garage keeper’s lien “is a specific one attaching only to the certain motor vehicle that was the subject of the unpaid charges.” Id.

Thus, N.Y. Lien Law § 184, “[l]ike any other lien, … is merely a right in rem against the property itself, and, in effect, subjects the chattel to an incumbrance as security for the principal debt.” In re Estate of Diamond, 162 Misc. 604, 604–05 (Kings Cnty. Sur. Ct. 1937).⁴ This security “as against the rem … may not be metamorphosed into a preferential right in personam against the individual debtor.” Id. at 605. Conceivably, a garage keeper may have, at the same time, both an in rem right under N.Y. Lien Law § 184 and a contractual right, but the lien is only enforceable against the thing itself. Express Freight Sys., Inc. v. Walter, 219 A.D.2d 813, 814 (4th Dep’t 1995) (“The contractual remedy of a garageman, if any, is concurrent with his remedy under the Lien Law and a garageman may recover damages for storage on proof of an agreement to pay storage charges.”); Estate of Diamond, 162 Misc. at 605 (“The garage originally possessed two rights, namely, an ordinary contract right against the decedent, which survives as against his estate, and a right against the chattel itself as security for the contract right. Conceivably both may still be in existence, but the latter is enforc[ea]ble only against the thing itself in the manner particularly specified in article 9 of the Lien Law.”). Thus, in the absence of a contractual right, a garage keeper cannot recover money from the vehicle’s owner and must instead resort to his in rem remedy under New York Lien Law. See Gotham Credit Corp. v. A. & H. Serv. Station, Inc., 120 N.Y.S.2d 749, 750 (App. Term, 1st Dep’t 1953) (per curiam) (“In the absence of a specific agreement, the repairman may not recover charges for storage. He is under a duty to proceed with his remedy under the Lien Law if the owner fails to claim his automobile within a reasonable time after notice that the repairs have been completed.”).⁵

*5 Because N.Y Lien Law § 184 does not provide an avenue for Lisi’s to recover in personam from Thompson’s, the Court must dismiss Lisi’s counterclaim to the extent it asserts an in personam claim for relief under N.Y. Lien Law § 184. In opposition to Thompson’s motion, Lisi’s argues, primarily, that its lien is valid. (ECF No. 33 at 4–7). But Thompson’s does not, at the pleading stage, challenge the lien’s validity. (See ECF No. 34 at 2). Rather, Thompson’s argues that N.Y. Lien Law § 184 only provides an in rem right. (Id.). Thus, the Court need not address whether Lisi’s has sufficiently asserted its lien.

Lisi’s further argues that the notion that it “is not entitled to any compensation for the extensive work done defies common sense” because N.Y. Lien Law § 184 “was enacted to protect businesses like Lisi’s.” (ECF No. 33 at 7). That may be true but N.Y. Lien Law § 184 does so by providing Lisi’s with an in rem right to the vehicle. While Lisi’s is not entitled to monetary relief under N.Y. Lien Law § 184, it does not follow that Lisi’s cannot obtain any compensation for its work. Rather, its compensation is the lien itself and Lisi’s may satisfy its lien by selling the vehicle. See N.Y. Lien Law § 200 (“A lien against personal property … may be satisfied by the sale of such property ….”); Santander Consumer USA, Inc. v. Aledrew Corp. 206 A.D.3d 1191, 1192 (3d Dep’t 2022) (“A garagekeeper may satisfy a lien against such motor vehicle by selling the same ….”). Finally, if Lisi’s has a contractual right against Thompson’s, then N.Y. Lien Law § 184 does not foreclose such a remedy. See N.Y. Lien Law § 205 (“The preceding provisions of this article do not preclude any other remedy by action or otherwise, now existing, for the enforcement of a lien against personal property, or bar the right to recover so much of the debt as shall not be paid by the proceeds of the sale of the property.”); Walter, 219 A.D.2d at 814.

Accordingly, Thompson’s motion to dismiss Lisi’s counterclaim is GRANTED. Lisi’s counterclaim is dismissed to the extent it claims recourse beyond an in rem lien against the freightliner and trailer.

C. Leave to Amend Lisi’s Counterclaim

An amendment to add a counterclaim is governed by Rule 15 of the Federal Rules of Civil Procedure. Fed. R. Civ. P. 13, 2009 Advisory Committee Notes. Under Rule 15(a)(2), after expiration of the time that a party may amend its pleading as a matter of course, the party may amend its pleading “only with the opposing party’s written consent or the court’s leave.” Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so requires.” Id.; see, e.g., Foman v. Davis, 371 U.S. 178, 182 (1962) (“Rule 15(a) declares that leave to amend ‘shall be freely given when justice so requires’; this mandate is to be heeded.”). “This is a liberal and permissive standard, and the only grounds on which denial of leave to amend has long been held proper are upon a showing of undue delay, bad faith, dilatory motive, or futility.” Sacerdote v. N.Y. Univ., 9 F.4th 95, 115 (2d Cir. 2021); Foman, 371 U.S. at 182. “[E]ven where such factors are present, the rule in this Circuit has been to allow a party to amend its pleading in the absence of prejudice or bad faith.” Martin v. Sprint/United Mgmt. Co., No. 15-cv-5237, 2016 WL 2757431, at *2 (S.D.N.Y. May 12, 2016) (quoting Block v. First Blood Assocs., 988 F.2d 344, 350 (2d Cir. 1993)).

“[U]nder the liberal standard of Rule 15(a), leave to amend may be appropriate at any stage of litigation.” Duling v. Gristede’s Operating Corp., 265 F.R.D. 91, 97 (S.D.N.Y. 2010). Delay alone is usually not a sufficient reason for denying a motion to amend. See Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008) (“Mere delay, however, absent a showing of bad faith or undue prejudice, does not provide a basis for the district court to deny the right to amend.”); Rachman Bag Co. v. Liberty Mut. Ins. Co., 46 F.3d 230, 234–35 (2d Cir. 1995) (“Delay alone unaccompanied by such a ‘declared reason’ does not usually warrant denial of leave to amend.”). Even so, “a court has discretion to deny leave to amend where the motion is made ‘after an inordinate delay, no satisfactory explanation is offered for the delay, and the amendment would prejudice other parties, or where the belated motion would unduly delay the course of proceedings by, for example, introducing new issues for discovery.’ ” State Farm Ins. Cos. v. Kop-Coat, Inc., 183 F. App’x 36, 37–38 (2d Cir. 2006) (Summary Order) (quoting Grace v. Rosenstock, 228 F.3d 40, 53–54 (2d Cir. 2000)). “The non-moving party has the burden to show any prejudice from the proposed amendment.” Harleysville Worcester Ins. Co. v. Consigli & Assocs., LLC, No. 21-cv-934, 2023 WL 4684652, at *4 (S.D.N.Y. July 21, 2023); see, e.g., Lamont v. Frank Soup Bowl, Inc., No. 99-cv-12482, 2000 WL 1877043, at *2 (S.D.N.Y. Dec. 27, 2000) (“Plaintiff bears the burden of establishing that an amendment to the answer would be prejudicial.”). In determining what constitutes prejudice, a court considers whether the amendment would “(i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay the resolution of the dispute; or (iii) prevent the plaintiff from bringing a timely action in another jurisdiction.” Block, 988 F.2d at 350.

*6 Here, the Court grants Lisi’s leave to amend its counterclaim to the extent it can assert liability under contract law. As explained above, a garage keeper may concurrently have an in rem right to the vehicle under N.Y. Lien Law § 184 and a contractual right to monetary damages against the vehicle’s owner. Walter, 219 A.D.2d at 814; Gotham Credit Corp., 120 N.Y.S.2d at 750; Estate of Diamond, 162 Misc. at 605. Lisi’s request is not unduly delayed because it was made in the early stages of discovery and was included in its response to Thompson’s motion to dismiss the counterclaim. Contra State Farm Ins. Cos., 183 F. App’x at 38–39 (affirming denial of leave to amend where party moved to amend four years after action filed, had notice of preemption defense that could justify amended claim, and failed to take various opportunities to amend). There is also no indication that Lisi’s request has been made in bad faith, or that granting the request would prejudice Thompson’s. Indeed, any amended counterclaim would arise under the same facts as the claims in Thompson’s complaint, so that any impact on the scope of discovery should be negligible. Cf., e.g., Martin, 2016 WL 2757431, at *4 (holding that a proposed amendment would not prejudice the opposing party where “any additional discovery costs … would be relatively marginal”). Finally, the Court cannot discern, at this stage, that leave to amend would be futile, as Lisi’s may be able to assert a contract or quasi-contract claim that would survive a motion to dismiss. Although Thompson’s argues otherwise, the complaint itself alleges that there had been an “agreement between Thompson and Lisi for, inter alia, towing and recovery work.” (ECF No. 1 at 6). In fact, the complaint makes at least six references to an “agreement” between Thompson’s and Lisi’s. (See id. at 6–9).

IV. CONCLUSION

For these reasons, Thompson’s motion to dismiss Lisi’s counterclaim is GRANTED. Lisi’s counterclaim is dismissed to the extent it claims recourse beyond an in rem lien against the freightliner and trailer. But Lisi’s request to amend its counterclaim is GRANTED to the extent it can assert a claim under contract law.

The Clerk of Court is respectfully directed to terminate the pending motion at ECF No. 26.

SO ORDERED.

All Citations

Footnotes

1. All page numbers to documents filed on ECF refer to pdf pagination.  
2. Unless otherwise indicated, case quotations omit all internal citations, quotation marks, footnotes, and alterations.  
3. Lisi’s has submitted exhibits in its opposition to Thompson’s motion to dismiss. (See ECF Nos. 32-3, 32-4). In resolving this motion, the Court relies on the invoices at ECF No. 32-4, which were incorporated by reference into Lisi’s Counterclaim. (See ECF No. 15 at 5). The Court does not rely on the remaining exhibits.  
4. See also 13 Elizabeth M. Bosek & Elizbeth Williams, Carmody-Wait 2d New York Practice § 84:23 (2023) (“The lien of a bailee of a motor vehicle, motorboat, or aircraft is merely a right in rem against the property itself and, in effect, subjects the chattel to an encumbrance as security for the principal debt.”); 61A Joseph Bassano et al., Corpus Juris Secundum § 1835 (2023) (“A garage keeper’s statutory lien on a motor vehicle is a right in rem against the property itself.”); 62 Rachel M. Kane & Charles J. Nagy, New York Jurisprudence 2d Garages § 75 (2023) (“The garagekeeper’s lien is merely a right in rem against the property itself and, in effect, subjects the chattel to an encumbrance, as security for the principal debt. The lien entitles the garage keeper only to retain possession of the automobile until the lien is satisfied.”).  
5. See also Elfadil v. Cyclone Auto Body Collision, Inc., 113 N.Y.S.3d 462 (App. Term, 2d Dep’t 2019) (“[N.Y. Lien Law § 184(2)] allows a person who tows a vehicle at the request of a police agency a lien for reasonable costs of the towing and storage so long as the person complies with the notice requirements. It is undisputed that defendant did not comply with the notice requirements. Therefore, defendant did not have a valid lien for storage fees and is unable to recover for storage in the absence of a specific agreement. Here, there was no agreement between the parties for storage fees. Thus, defendant was not entitled to storage fees.”); Walter, 219 A.D.2d at 814 (“[A] garageman may recover damages for storage on proof of an agreement to pay storage charges.”); Phillips v. Catania, 155 A.D.2d 866, 866 (4th Dep’t 1989) (“In the absence of a specific agreement, the repairman may not recover damages for storage.”).  

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