IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

SEACORE MARINE, LLC, et al., )

)

Plaintiffs, )

)

vs. ) CIVIL ACTION NO. 14-0596-CG-C

)

C & G BOAT WORKS, INC., et al., )

)

)

Defendants. )

ORDER 

This matter is before the Court on Plaintiffs’ motion for leave to file amended 

complaint (Doc. 86), Defendants’ objections thereto (Docs. 89 & 91), and Plaintiffs’ 

reply (Doc. 92). For the reason explained below, the Court finds that Defendants

have not shown that substantial reason exists to deny leave to amend. Accordingly, 

Plaintiffs’ motion will be granted.

Federal Rule of Civil Procedure 15(a) provides that leave to amend pleadings 

“shall be freely given when justice so requires.” See FED. R. CIV. P. 15(a). “The 

thrust of Rule 15(a) is to allow parties to have their claims heard on the merits, and 

accordingly, district courts should liberally grant leave to amend when ‘the 

underlying facts or circumstances relied upon by a plaintiff may be a proper subject 

of relief.’” In re Engle Cases, 767 F.3d 1082, 1123 (11th Cir. 2014)(citing Foman v. 

Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962)). The Eleventh 

Circuit recognized that Rule 15(a) “severely restricts” a district court’s discretion to 

deny leave to amend. Sibley v. Lando, 437 F.3d 1067, 1073 (11th Cir. 2005). 

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“Unless a substantial reason exists to deny leave to amend, the discretion of the 

District Court is not broad enough to permit denial.” Fla. Evergreen Foliage v. E.I. 

DuPont De Nemours and Co., 470 F.3d 1036, 1041 (11th Cir. 2006) (citation 

omitted). Though the Court’s discretion to grant motions for leave to amend is 

“liberal,” the standard is “...not an unqualified license to fix every new defect as the 

court uncovers them.” In re Engle Cases, 767 F.3d at 1123. Leave to amend can be 

properly denied under circumstances of “undue delay, bad faith or dilatory motive 

on the part of the movant, repeated failure to cure deficiencies by amendments 

previously allowed, undue prejudice to the opposing party by virtue of allowance of 

the amendment, [or] futility of amendment.” Equity Lifestyle Properties, Inc. v. Fla. 

Mowing and Landscape Service, Inc., 556 F.3d 1232, 1241 (11th Cir. 2009) (citation 

omitted). 

Defendants in this case oppose the proposed amendment because Plaintiff is 

attempting to reassert claims similar to those that were previously dismissed by 

this Court. Defendants argue that allowing the amendment would waste time and 

be futile, because Defendants would respond with a second motion to dismiss, which 

they contend should be granted. “When a district court denies the plaintiff leave to 

amend a complaint due to futility, the court is making the legal conclusion that the 

complaint, as amended, would necessarily fail.” St. Charles Foods, Inc. v. Am.’s 

Favorite Chicken Co., 198 F.3d 815, 822-23 (11th Cir. 1999). The futility threshold 

is akin to that for a motion to dismiss; thus, if the amended complaint could not 

survive Rule 12(b)(6) scrutiny, then the amendment is futile and leave to amend is 

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properly denied. See, e.g., Burger King Corp. v. Weaver, 169 F.3d 1310, 1320 (11th 

Cir. 1999) (denial of leave to amend justified by futility when “complaint as 

amended is still subject to dismissal”); Florida Power & Light Co. v. Allis Chalmers 

Corp., 85 F.3d 1514, 1520 (11th Cir. 1996) (amendment is futile if cause of action 

asserted therein could not withstand motion to dismiss); Amick v. BM & KM, Inc., 

275 F. Supp.2d 1378, 1381 (N.D. Ga. 2003) (“In the Eleventh Circuit, a proposed 

amendment is futile when the allegations of the proffered complaint would be 

unable to withstand a motion to dismiss.”). It follows that the burden is upon the 

defendants to demonstrate that the allegations of the proposed amended complaint 

would be unable to withstand a motion to dismiss. When considering whether a 

claim has been stated, “the pleadings are construed broadly,” and “the allegations in 

the complaint are viewed in the light most favorable to the plaintiff.” Watts v. Fla. 

Int'l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007) (citations omitted).

Plaintiffs seek to amend their complaint to assert facts to support claims 

dependent on piercing the corporate veil against some of the corporate defendants 

in this action. This Court previously found that Plaintiffs had not alleged facts in 

their original complaint that would support piercing the corporate veil. (Doc. 67). In 

ruling on Defendants’ motion to dismiss (Doc. 34), this Court dismissed all claims 

that were dependent on piercing the corporate veil (Doc. 67). Specifically, this 

Court found that Plaintiffs had not alleged facts in their original complaint to 

support their conclusion that the other corporate defendants had misused their 

control over the contracting corporation. When instrumentality or alto ego is the 

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basis for piercing the corporate veil, three elements are essential: 

1) The dominant party must have complete control and domination of 

the subservient corporation's finances, policy and business practices so 

that at the time of the attacked transaction the subservient 

corporation had no separate mind, will, or existence of its own;

2) The control must have been misused by the dominant party. 

Although fraud or the violation of a statutory or other positive legal

duty is misuse of control, when it is necessary to prevent injustice or 

inequitable circumstances, misuse of control will be presumed;

3) The misuse of this control must proximately cause the harm or 

unjust loss complained of.

Messick v. Moring, 514 So. 2d 892, 894-895 (Ala. 1987) (citation omitted). This 

Court, noting that heightened pleading is not necessary to support piercing the 

corporate veil claims, but that conclusory allegations must be supported by factual 

allegations, reasoned that the claims should be dismissed for the following reasons: 

[Plaintiffs] point out that it is possible to pierce the corporate veil of a 

group of commonly controlled entities where “control is misused such 

that veil piercing would be justified, resulting in harm to a third 

party.” (Pls.’ Resp. 17, Doc. 42) While this legal theory is certainly 

true, Plaintiffs have failed to allege facts to support their theory—

particularly as to the element of misuse. 

Misuse of control means “fraud or the violation of a statutory or other 

positive legal duty” although misuse will be presumed where “it is 

necessary to prevent injustice or inequitable circumstances.” Messick, 

514 So. 2d at 895. The Complaint alleges no fraud or violation of 

statutory or legal duty, nor does it present facts amounting to injustice 

or inequity. Regarding misuse, Plaintiffs argue that the Complaint 

“plausibly pleaded misuse of corporate control” in that “the Defendants 

have improperly received funds that rightfully belong to Plaintiffs and 

that the Defendants have improperly used the assets of one another.” 

But “improper” is not synonymous with the foregoing definition of 

misuse. [FN 10 “Improper” receipt of funds or use of assets could 

encompass many scenarios—some consistent with misuse, some not. 

But allegations merely “consistent with liability” are not enough. Iqbal, 

556 U.S. at 678.]

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Plaintiffs cite specific portions of the Complaint to demonstrate that 

they have pled the element of misuse. Upon closer examination, those 

facts are clearly insufficient. The first citation—paragraphs 75-78—

refers only to Janson Graham’s alleged misuse of C&G and makes no 

mention of the Related Entities. The next citation, paragraph 87, 

asserts “the Related Entities are commonly controlled and misused by 

Janson Graham and C&G.” That conclusory statement is followed by 

allegations that C&G and the Related Entities: (1) have common 

ownership and/or control; (2) have common officers and/or directors; (3) 

have made cross-entity payments for employees, benefits and 

insurance; (4) have common and cross-entity funding; (5) improperly 

treat[ed] property and assets held by individual entities as common 

property and assets. (Compl. ¶ 87.) The first two allegations are 

clearly examples of control, not misuse. The next two allegations—

cross-entity payments and common or cross-entity funding—provide no 

facts from which one could infer that the payments and funding were 

somehow “unfair, fraudulent, or otherwise not legitimate.” Heisz v. 

Galt Indus., Inc., 93 So.3d 918, 931 (Ala. 2012). As to the final 

allegation, simply describing the common use of property and assets as 

“improper” does not provide factual support for the legal element of 

misuse.

(Doc. 67, pp. 9-11) (footnote 11 omitted). This Court also found that allegations that 

the entities converted and/or sold property that belonged to Plaintiffs, cannot be 

used to support their piercing of the corporate veil claims as their “remedy is selfevident in Plaintiffs’ claims for conversion and unjust enrichment”, claims which 

are not premised on piercing the corporate veil, but on individual liability for their 

own actions. (Doc. 67, pp. 11, 14-15). 

Plaintiffs’ proposed amended complaint is 16 pages longer than the original 

complaint and includes many more factual allegations regarding the transferring 

and use of funds and property between the defendant corporate entities and Janson 

Graham. (Doc. 86-1). Under a section labeled “Inter-Defendant Transactions and 

Activities,” the amended complaint lists numerous payments or transfers of money

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between the entities and points out differences in amounts paid by C&G for rent as 

compared to the amounts paid by Graham Gulf for rent. (Doc. 86-1, pp. 23-33). 

Plaintiffs allege that the “unjustified and unsupported fluctuation in the monthly 

rent Davenport charged C&G was unfair, fraudulent or otherwise not legitimate.” 

(Doc. 86-1, ¶ 84). Plaintiffs also allege that the management fees charged to C&G 

“were far in excess of the market value for the services provided” and were unfair, 

fraudulent or otherwise not legitimate.” (Doc. 86-1, ¶¶ 85, 86). Plaintiffs allege that 

C&G constructed vessels for Graham Gulf at costs lower than reasonable market 

rates and/or did not invoice or bill Graham Gulf for work performed by C&G on 

Graham Gulf vessels. (Doc. 86-1, ¶ 87). Janson Graham and Graham Gulf are 

alleged to have used funds belonging to C&G for their own benefit. (Doc. 86-1, ¶¶ 

88-90, 92). C&G allegedly used progress payments made by Plaintiffs to satisfy a 

debt associated with a vessel C&G was constructing for another customer. (Doc. 86-

1, ¶ 91). Janson Graham allegedly received significantly more in payroll in 2014, 

after it became apparent that C&G could not complete the hulls in accordance with 

the contracts with Plaintiffs. (Doc. 86-1, ¶ 93). From 2012-2014, Graham Holding 

paid more than $300,000 to Janson Graham in non-payroll payments and made 

non-rental payments to Davenport Properties of more than $2.4 million. (Doc. 86-1, 

¶¶ 94-96). From 2012 to 2014, inconsistent with any ownership percentage 

interests, Davenport Properties paid Janson Graham at least $130,000, paid SLG 

Investments at least $2,579,000, and paid Silver King Golf Club, LLC $15,000. (Doc. 

86-1, ¶¶ 97-99). The proposed amended complaint continues to detail additional

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payments between the entities from 2013 to 2014, noting that several payments to 

C&G of amounts that were then paid out to the other entities the same day they 

were received. (Doc. 86-1, ¶¶ 100-104). Plaintiffs allege that all of these 

transactions were unfair, fraudulent or otherwise not legitimate.

Many of the newly proposed allegations are similar to the allegations 

contained in the original complaint in that they concern cross-entity payments and 

common or cross-entity funding. The Court is wary of allowing Plaintiffs to reassert 

claims that were dismissed based on a lack of factual support where the new factual 

allegations are simply more numerous. The Court found previously that simply 

describing the common use of property and assets as “improper” does not provide 

factual support for the legal element of misuse. Allegations that are merely 

“consistent with liability” are not enough. The question is whether the new 

allegations regarding cross-entity payments and common or cross-entity funding

provide facts different from those previously offered and whether one could infer 

from those facts that the payments and funding were somehow “unfair, fraudulent, 

or otherwise not legitimate.” After taking a close look at the newly proposed 

allegations, the Court finds that there are sufficient facts alleged from which a jury 

could infer that control was misused by the defendant parties. 

The original complaint stated generally that Janson Graham had received 

funds and that there were cross-entity payments for employees, benefits and 

insurance and common and cross-entity funding. (Doc. 1, ¶¶ 75-77, 87). The 

proposed amended complaint provides many more detailed and specific facts 

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regarding alleged cross-entity payments and common or cross-entity funding. 

Plaintiffs also allege factual bases why such payments and funding were improper. 

For instance Janson Graham owns only 2% of Davenport Properties and its 

operating agreement requires any distributions to members to be made according to 

their respective ownership interests. (Doc. 86-1, ¶ 97). Yet Davenport Properties 

paid Janson Graham at least $130,000 directly. (Doc. 86-1, ¶ 97). The timing and 

the size of some of the alleged payments to Janson Graham and the related entities 

could also imply that they were improper. Janson Graham allegedly received 

$234,218 in payroll in 2014, which is more than $95,000 more than he received each 

of the prior two years. (Doc. 86-1, ¶ 93). Plaintiffs allege that this increase was 

after it became apparent that C&G could not complete the hulls in accordance with 

the contracts with Plaintiffs. (Doc. 86-1, ¶ 93). C&G allegedly paid Graham Holding 

far in excess of the market value, more than $4.1 million, for unreasonable and 

baseless management fees or management services. (Doc. 86-1, ¶¶ 85-86). C&G 

was charged unsupported fluctuating rates for rent by Graham Gulf that ranged 

from $77,000 to $40,000 per month. (Doc. 86-1, ¶¶83-84). Additionally, payments 

from C&G were made to a deer farm owned by family members, to pay for the 

mortgage on a condominium owned by Janson Graham’s mother, to gardeners for 

Janson Graham’s mother and to Silver King Golf Club employees. (Doc. 86-1, ¶¶ 89, 

90, 92). The allegations imply that Janson Graham controls and operates all of the 

corporate entities for his own benefit and at times charged C&G commercially 

unreasonable amounts for services without documentation or justification. As a 

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result, C&G’s funds were allegedly depleted and C&G was unable to fulfill its 

contractual obligations and is now without assets sufficient to meet its obligations.

The Court finds that the proposed amended complaint sufficiently alleges 

misuse of control that proximately caused the harm or unjust loss complained of. At 

this stage, the Court will not delve further into the parties’ factual disputes; as such 

issues are reserved for the summary judgment stage. Flowers v. Patrick, 869 F. 

Supp. 2d 1331, 1333 (M.D. Ala. 2012). Accordingly, the Court finds that Defendants 

have not shown that the amended complaint could not survive Rule 12(b)(6) 

scrutiny. 

Defendants also assert that allowing the amendment at this time would be 

prejudicial to all parties in interest. Defendants essentially contend that the 

amendment is prejudicial because the claims are due to be dismissed, which the 

Court addressed above, and because of the timing of the amendment. Generally, 

the passage of time alone is insufficient to deny a leave to amend, however “undue

delay may clearly support such a denial.” Hester v. Int'l Union of Operating Eng'rs,

941 F.2d 1574, 1578–79 (11th Cir. 1991) (citations omitted); see also Floyd v. E. 

Airlines, Inc., 872 F.2d 1462, 1490 (11th Cir. 1989) (“The mere passage of time, 

without anything more, is an insufficient reason to deny leave to amend.”), rev'd on 

other grounds, 499 U.S. 530, 111 S.Ct. 1489, 113 L.Ed.2d 569 (1991). Indeed, 

“undue delay” is often heavily dependent on the prejudice that might result if the 

motion were granted. See, e.g., In re Engle Cases, 767 F.3d 1082, 1118-19 (11th Cir. 

2014)(“It is true that in evaluating the tardiness of a motion to amend, courts 

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typically focus on the prejudice that would result if the motion were granted.”); see 

also Bryant, 252 F.3d at 1165 (“Because there is no evidence that allowing an 

amendment at this stage would prejudice the defendants, the district court should 

have allowed the plaintiffs to amend their complaint.”). Here, Plaintiffs’ motion to 

amend was timely filed within the deadline set by the Supplemental Rule 16(b)

Scheduling Order in this case. (Doc. 85). The Court finds that Defendants have not 

shown that any delay in moving to amend was “undue” or that allowing an 

amendment at this stage would prejudice the Defendants. 

For the reason explained above, the Court finds that Defendants have not 

shown that substantial reason exists to deny leave to amend. Accordingly, 

Plaintiffs’ motion for leave to file amended complaint (Doc. 86), is GRANTED.

The Clerk is directed to docket the First Amended Complaint attached as an 

exhibit to Doc. 86. The Parties are further directed to meet, confer and file a 

supplemental Rule 26(f) report within 14 days of today’s date as required by Judge 

Cassady’s Order dated November 10, 2015 (Doc. 127).

DONE and ORDERED this 3rd of March, 2016.

/s/ Callie V.S. Granade

UNITED STATES DISTRICT JUDGE

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