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Filed 11/04/05 Page 1 of 16 FILED 2005 Nov-04 PM 03:36 U.S Case 2:05-cv-01239-JEO Document 23 Filed 11/04/05 Page 1 of 16 FILED 2005 Nov-04 PM 03:36 U.S. DISTRICT COURT N.D. OF ALABAMA IN THE UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION DONNA R. McKINNEY and ) JANICE POOLE as heir and ) successor-in-interest to ) PEGGY L. WALDOW, ) ) Plaintiffs, ) ) v. ) 2:05-cv-01239-JEO ) GREENETRACK, INC., ) ) Defendant. ) MEMORANDUM OPINION This case is before the court on the defendant’s motion to dismiss the plaintiffs’ complaint. (Doc. 5)12. The plaintiffs, Donna R. McKinney and Janice Poole, have responded (doc. 11) to the defendant’s motion to dismiss and the defendant has replied (doc. 12) to the plaintiffs’ response. Thereafter, the plaintiffs requested a hearing on the motion to dismiss, which the court granted. The day before the hearing, the plaintiffs filed an “Addendum to Response to Defendant’s Motion to Dismiss.” (Doc. 17). After the hearing, the defendant filed a document providing supplemental legal authority (doc. 19) and the plaintiffs filed a supplement to the addendum to their opposition to the defendant’s motion to dismiss (doc. 20) along with affidavits in support thereof (doc. 21). Finally, the defendant filed its supplemental reply to the plaintiffs’ opposition to the motion to dismiss. (Doc. 22). After a hearing on the motion and a review of the parties’ submissions, the court finds 1References to “Doc. ___” are to the documents as numbered by the clerk of court in the court’s record of the case. 2Janice Poole is the heir and successor-in-interest to Peggy L. Waldow. Case 2:05-cv-01239-JEO Document 23 Filed 11/04/05 Page 2 of 16 that the defendant’s motion to dismiss is due to be denied for the reasons set out herein. I. BACKGROUND This case involves a November 3, 1997 contract between the defendant, Greenetrack, Inc. (“Greenetrack”), and ATM Services International (“ATM Services”) for the placement of an ATM machine on Greenetrack’s property. (Ex. 1).3 In the contract, ATM Services, is referred to as the “Placement Company” that is “securing [a] location for an assigned owner of an ATM machine that wishes to provide the Location and its patrons, guests, and customers an ATM Machine (hereinafter referred to as ‘Equipment’).” (Id.). At some point thereafter, McKinney and Peggy L. Waldow became assignees of the contract executed between Greenetrack and ATM Services. As set out by the contract, Greenetrack was to provide an “appropriate, highly visible area of its premises” for the ATM machine and the plaintiffs were to be responsible for maintenance of the machine and keeping the machine in good working condition. (Ex. 1). Consumers using the machine were to be charged a $2.50 transaction fee. As consideration for having the machine on its premises, Greenetrack received $.50 per transaction and McKinney and Waldow received the remaining $2.00. (Complaint at ¶ 8; Ex. 1 at ¶ 8).4 The term of the initial contract expired on November 2, 2002, but the contract contained a provision that read as follows: The Agreement shall be automatically renewed for an additional five year term, unless Location [Greenetrack] gives 120 day [sic] written notice prior to the termination of the lease not to renew the Agreement. Owner may terminate this Agreement at any time without penalty. 3The exhibit is attached to document 12 in the record. 4The complaint is located at document 1 in the record. 2 Case 2:05-cv-01239-JEO Document 23 Filed 11/04/05 Page 3 of 16 (Ex. 1 at ¶ 9). At the end of the initial five year term, Greenetrack had not taken the requisite steps to cancel the contract so a second term began on November 3, 2002. (Ex. 1 at ¶ 9). At some date in 2004, however, Greenetrack removed the plaintiffs’ ATM machine from its location and installed a machine owned by someone other than the plaintiffs in this case. (Complaint at ¶ 10). The plaintiffs then filed the present lawsuit. The plaintiffs assert that this court has diversity jurisdiction over this breach of contract and conversion action under Title 28, United States Code, Section 1332. Specifically, the plaintiffs contend that the parties in this suit are diverse and that the amount in controversy exceeds the $75,000.00 jurisdictional minimum. II. MOTION TO DISMISS/SUMMARY JUDGMENT A. Standard Because briefs and affidavits have been presented in support of and in opposition to the defendant’s motion to dismiss, the court will treat the motion as a motion for summary judgment pursuant to FED. R. CIV. P. 12(b) (“If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided for in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.”). Summary judgment is to be granted only if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the declarations, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” FED. R. CIV. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 3 Case 2:05-cv-01239-JEO Document 23 Filed 11/04/05 Page 4 of 16 2548, 91 L. Ed. 2d 265 (1986). The party asking for summary judgment “bears the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. Only when that burden has been met does the burden shift to the nonmoving party to demonstrate that there is indeed a material issue of fact that precludes summary judgment.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991); Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970). The movant can meet this burden by presenting evidence showing there is no dispute of material fact, or by showing that the nonmoving party has failed to present evidence in support of some element of her case on which she bears the ultimate burden of proof. Celotex, 477 U.S. at 322-23; see FED. R. CIV. P. 56(a) and (b). Once the moving party has met her burden, Rule 56(e) “requires the nonmoving party to go beyond the pleadings and by . affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. at 324. The nonmoving party need not present evidence in a form necessary for admission at trial; however, the movant may not merely rest on the pleadings. (Id.). After a motion has been responded to, the court must grant summary judgment if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The substantive law will identify which facts are material and which are irrelevant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). “[T]he judge’s function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249. 4 Case 2:05-cv-01239-JEO Document 23 Filed 11/04/05 Page 5 of 16 B. DISCUSSION In its motion to dismiss, the defendant asserts that the plaintiffs’ claims are due to be dismissed because the court lacks subject matter jurisdiction and because the plaintiffs’ complaint fails to state a claim for which relief can be granted. (Doc. 5). Specifically, the defendant argues that the contract was void because it contained an automatic renewal clause that is unconscionable and that the plaintiff’s claims fail to meet the jurisdictional minimum required to maintain a diversity action. (Doc. 6 at pp. 2-3). 1. Unconscionablilty The defendant argues that “Alabama courts have found some automatic renewal provisions to be unconstitutional.” (Doc. 6 at p. 3). In the first case cited by the defendant in support of its argument, the contract in question provided that the lease “may” be renewed with “mutual consent” of the parties. The court found that the contract was not automatically renewable because of the use of the words “may” and “mutual consent.” Mobile Eye Center, P.C. v. Van Buren Partnership, 826 So. 2d 135 (Ala. 2002). Specifically, the court stated: We hold that the renewal provision here did not operate to automatically renew the lease. That provision clearly states that the lease “may” be renewed “[w]ith the mutual consent of the parties.” Although it does state that the lessee shall give written notice if it does not intend to renew the lease, it does not say that if no such notice is given the renewal is automatic. Therefore, the renewal provision was merely an agreement to agree to a renewal of the lease, which is not enforced in Alabama. Muscle Shoals Aviation, Inc. v. Muscle Shoals Airport Auth., 508 So. 2d 225, 227 (Ala. 1987); Dixieland Food Stores, Inc. v. Geddert, 505 So.
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