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Fjellin v. Penning

United States District Court, D. Nebraska

September 2, 2014

JACQUELINE C. FJELLIN, for and as Trustee of the Leonard Van Liew Living Trust, and JAMES J. VAN LIEW, for and as Trustee of the Leonard Van Liew Living Trust, Plaintiffs,
v.
MARVIN PENNING, individually, MARY PENNING, individually, MYRON KAPLAN, individually, and MCGILL GOTSDINER WORKMAN & LEPP, P.C., L.L.O., Defendants

For Marvin Penning, Mary Penning, Defendants: Gerald L. Friedrichsen, LEAD ATTORNEY, FITZGERALD, SCHORR LAW FIRM, Omaha, NE.

For Jacqueline C. Fjellin, James J. Van Liew, Plaintiffs: Alex M. Hagen, LEAD ATTORNEY, CADWELL, SANFORD LAW FIRM, Sioux Falls, SD.

For McGill Gotsdiner Workman & Lepp, P.C., LLO, Myron Kaplan, Defendants: William M. Lamson, Jr., LEAD ATTORNEY, LAMSON, DUGAN LAW FIRM, Omaha, NE.

For Jacqueline C. Fjellin, James J. Van Liew, Plaintiffs: Steven W. Sanford, LEAD ATTORNEY, CADWELL, SANFORD LAW FIRM, Sioux Falls, SD.

For McGill Gotsdiner Workman & Lepp, P.C., L.L.O., Myron Kaplan, Defendants: Anastasia Wagner, LEAD ATTORNEY, LAMSON, DUGAN LAW FIRM, Omaha, NE.

Page 776

MEMORANDUM AND ORDER

Richard G. Kopf, Senior United States District Judge.

This is a diversity action brought by the trustees of the Leonard Van Lew Living Trust--which is alleged to be a perfected secured creditor--to recover for the wrongful termination of the Trust's financing statement and for the fraudulent misappropriation of the proceeds of the sale of its collateral. (Filing 1, Complaint ¶ 1.) Defendant and lawyer Myron Kaplan and his law firm, McGill, Gotsdiner, Workman & Lepp. P.C., L.L.O., move to dismiss Plaintiffs' cause of action against them pursuant to Fed.R.Civ.P. 12(b)(6). (Filing 10.)

Standard of Review

To survive a motion to dismiss based on Fed.R.Civ.P. 12(b)(6), " a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct.

Page 777

1937, 173 L.Ed.2d 868 (2009) (internal citations and quotations omitted). This " plausibility standard" is not one of probability, " but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." Id. (internal citations and quotations omitted).

Factual Allegations

In analyzing a motion to dismiss under Fed.R.Civ.P. 12(b)(6), I must " accept the allegations contained in the complaint as true and make all reasonable inferences in favor of the nonmoving party." Martin v. Iowa, 752 F.3d 725, 727 (8th Cir. 2014). The plaintiffs' factual allegations are as follows:

Plaintiffs Jacqueline Fjellin and James Van Liew are co-trustees of the Leonard Van Liew Living Trust, a revocable trust under South Dakota law. (Filing 1, Complaint ¶ 2.) Leonard Van Liew, Jacqueline's and James's father, was also a trustee, but he passed away after the events at issue. (Id. ¶ 3.)

From 2009 to 2011, the Trust made three loans to Four M Corporation, a Nebraska corporation formerly engaged in the business of operating three Dairy Queen stores in Nebraska. (Id. ¶ 14.) To secure Four M's repayment obligations, Four M granted the Trust a security interest in certain of its property, including the Dairy Queen stores. The Trust's security interest was perfected by the filing of a financing statement with the Nebraska Secretary of State that named the Trust as a secured creditor of Four M and listed the collateral in which the Trust held a security interest. (Id. ¶ ¶ 17-18 & Ex. C.)

Defendants Myron Kaplan and his law firm, McGill, Gotsdiner, Workman & Lepp, P.C., L.L.O., acted as corporate counsel for Four M Corporation prior to and through the events at issue. Kaplan prepared all the relevant notes, security agreements, and financing statements, and he personally dealt with Leonard Van Liew (then in his 90s) to obtain his signature and the loaned funds. (Id. ¶ 15, 19.) Kaplan and his law firm did not represent the Trust.

Besides being a secured creditor, the Trust was also a Four M shareholder, and Leonard Van Liew was a Four M director. (Id. ¶ 14.) Co-defendant Marvin Penning was a shareholder, director, and secured creditor of Four M Corporation. (Id. ¶ 14.) It appears from the complaint that co-defendant Mary Penning was a secured creditor of the Trust. (Id. ¶ 21.)

In February 2012, Four M contracted with Frauenshuh Hospitality Group of KY/IN, LLC, for the sale of the assets of three of its Dairy Queen stores. The sale included the collateral in which the Trust had a perfected security interest. (Id. ¶ 20.) Defendant attorney Kaplan prepared and obtained from Leonard Van Liew his consent as a Four M director to the Frauenshuh transaction. (Id. ¶ 23.) However, none of the plaintiff trustees gave their prior express written consent to the sale, as was required by the security agreements executed by Four M in favor of the Trust. (Id. ¶ 25.) On April 11, 2012, the sale closed with a purchase price of $1,035,000 in exchange for instruments of transfer of the sold assets, including the Trust's collateral. (Id. ¶ 26.)

Five days later, on April 16, 2012, attorney Kaplan, on behalf of Four M, filed an amendment to the Trust's financing statement, " unbeknownst to any of the trustees." (Id. ΒΆ 28 & Ex. D.) The amendment indicated the " Termination" of the previously filed financing statement, stating that " Effectiveness of the ...


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