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In re Ricker

United States District Court, D. Nebraska

July 21, 2015

IN THE MATTER OF: RANDY S. RICKER and PAULA D. RICKER, Chapter 7, Debtors. THOMAS D. STALNAKER, Trustee of the Randy S. and Paula D. Ricker Chapter 7 Bankruptcy Estate, Plaintiff/Appellant,
COMPUTERSHARE TRUST COMPANY, INC., Defendant/Appellee. Bankruptcy Case No. 08-83110 Adversary Proceeding No. 11-08098


RICHARD G. KOPF, Senior District Judge.

Thomas D. Stalnaker, trustee for the bankruptcy estate of Randy S. and Paula D. Ricker, appeals from a final judgment entered by the bankruptcy court on September 22, 2014 (Bankruptcy Court Filing 74), which dismissed with prejudice all claims alleged by the trustee in an adversary proceeding brought against Computershare Trust Company, Inc. The bankruptcy court granted Computershare's motion for summary judgment and denied the trustee's motion for partial summary judgment. Having carefully reviewed the parties' briefs and the designated record on appeal, [1] I conclude that the bankruptcy court's judgment should be affirmed.

Standard of Review

In bankruptcy proceedings, the district court acts as an appellate court and applies the same standard of review as the court of appeals. See Contemporary Industries Corp. v. Frost, 564 F.3d 981, 984 8th Cir. 2009). The court reviews the bankruptcy court's grant of summary judgment de novo. See Ritchie Capital Management, LLC v. Stoebner, 779 F.3d 857, 860 (8th Cir. 2015). A choice of law determination is also reviewed de novo. Northwest Airlines, Inc. v. Astraea Aviation Services, Inc., 111 F.3d 1386, 1392 (8th Cir. 1997).

"Summary judgment was properly granted if, assuming all reasonable inferences favorable to the non-moving party, there is no genuine [dispute] as to any material fact and the moving party is entitled to judgment as a matter of law. Where [as here] the unresolved issues are primarily legal rather than factual, summary judgment is particularly appropriate." Ritchie Capital Mgmt., 779 F.3d at 861 (quoting In re Cochrane, 124 F.3d 978, 981-82 (8th Cir. 1997)).


The Rickers, who are Nebraska residents, filed their Chapter 7 petition in the United States Bankruptcy Court for the District of Nebraska on December 2, 2008. It is claimed they were forced into bankruptcy after Computershare, a transfer agent for Reclamation Consulting and Applications, Inc. ("RCAI"), refused to deliver unrestricted shares of RCAI stock they had purchased for themselves and others. Computershare and RCAI are both Colorado corporations.

The trustee filed a complaint against Computershare in the bankruptcy court on October 7, 2011, alleging common law claims for conversion, breach of fiduciary duty, and tortious interference with business relationship and expectancy, as well as a federal claim for securities fraud. Damages in excess of $2 million are alleged.

Computershare moved for summary judgment on February 12, 2014, asserting that the common law claims have been displaced by the Uniform Commercial Code, and that the federal claim is barred by the statute of limitations. Computershare further asserted that any UCC claim would barred by a 3-year statute of limitations under Colorado law (as opposed to a 4-year statute of limitations under Nebraska law). The trustee filed a motion for partial summary judgment on the conversion claim on March 26, 2014.

In a memorandum and order entered on September 22, 2014, the bankruptcy court applied Nebraska choice of law rules and determined that the trustee's common law claims are substantively based on Colorado law. The court reached this conclusion after weighing the factors set forth in Restatement (Second) of Conflicts of Laws §§ 6 and 145. The court then ruled that the common law claims have been displaced by the UCC's Article 8 ("Investment Securities"), Part 4 ("Registration"), and stated that amending the complaint to allege a UCC violation would be futile because all actions arising under the UCC in Colorado must be filed within 3 years after the cause of action accrues. Applying a discovery rule, the court found that the claims had accrued, at the latest, on June 19, 2008, by which time Computershare had denied requests for delivery of all stock certificates at issue. The court held that subsequent demands for delivery of the same certificates were immaterial because Colorado does not recognize the continuing tort doctrine in the context of UCC claims. With regard to the federal securities fraud claim, the bankruptcy court ruled that a 2-year statute of limitations also commenced running no later than June 19, 2008.

On appeal, the trustee argues that (1) Nebraska substantive law governs the common law claims because Nebraska has a more significant relationship to this controversy than Colorado, and Nebraska's interests outweigh those of Colorado; (2) under Neb. Rev. Stat. § 25-3203(2), Nebraska's 4-year statute of limitations applies; (3) the statute of limitations did not begin to run until sometime after October 7, 2008; (4) the continuing tort doctrine applies; (5) the federal securities fraud claim did not accrue before December 2009; and (6) summary judgment should be entered against Computershare on the conversion claim. In his reply brief, the trustee denies that the UCC applies to any claims and asserts that (1) the Rickers did not request a transfer of shares and (2) Computershare was not acting as a transfer agent.


The bankruptcy court found that "by alleging common law claims - breach of fiduciary duty, conversion and tortious interference with business relationship/ expectancy - the Trustee is seeking a remedy for Computershare's alleged failure to promptly transfer RCAI shares to Ricker" (bankruptcy court filing 72, at p. 13), and it concluded that these common law claims are displaced[2] by Section 8-401 of the Uniform Commercial Code, which provides:

(a) If a certificated security[3] in registered form[4] is presented to an issuer with a request to register transfer..., the issuer shall register the transfer as ...

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