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Gray v. Wiese

United States District Court, D. Nebraska

August 25, 2016

ZACH GRAY AND SUSAN GRAY, Plaintiffs,
v.
PAT WIESE AND NANCY WIESE, Defendants.

          MEMORANDUM AND ORDER

          Robert F. Rossiter, Jr. United States District Judge

         This matter is before the Court on defendants' Motion to Dismiss (Filing No. 19) for lack of standing under Federal Rule of Civil Procedure 12(b)(1), for failure to join a required party under Rule 12(b)(7), and for failure to state a claim upon which relief may be granted under Rule 12(b)(6). This is an action for fraudulent concealment, fraudulent misrepresentation, and negligent misrepresentation in connection with the purchase of a heifer. Jurisdiction is based on diversity of citizenship under 28 U.S.C. § 1332.

         I. BACKGROUND

         In their Amended Complaint, the plaintiffs allege the defendants misrepresented the genetic makeup of a heifer, “Patty, ” that they purchased for breeding purposes. They allege they were told the heifer was fifty-percent “Maine, a highly desired breed” and they later learned through DNA testing that the heifer was only 12% Maine. They allege they relied on the representation in purchasing the heifer. Consequently, they allege they have been harmed in that they overpaid for the heifer and had to refund money to customers who had purchased the heifer's offspring. They seek recovery of actual and consequential damages, including their purchase price of $50, 500.00, outlays of over $34, 000.00 for housing, feeding, insuring, advertising and breeding the heifer, and over $45, 000.00 in sales commissions, refunds, and settlements with purchasers of offspring, as well as interest, attorney fees and costs.

         Defendants contend that the registration papers attached to the plaintiffs' Amended Complaint as Exhibit A show that Whitney Gray is the registered owner of the subject heifer, rather than plaintiffs Zach and Susan Gray. According to defendants, the plaintiffs lack standing to sue and further, they argue the Amended Complaint is subject to dismissal for failure to join Whitney Gray as a necessary party. Also, they contend that the plaintiffs have failed to allege fraud with particularity and the allegations of the Amended Complaint do not state a claim that is plausible on its face.

         II. DISCUSSION

         A. Standing

         1. Law

         If a litigant lacks standing under Article III of the Constitution, then a federal court has no subject matter jurisdiction over the suit. Iowa League of Cities v. EPA, 711 F.3d 844, 869 (8th Cir. 2013). “To show standing under Article III of the U.S. Constitution, a plaintiff must demonstrate (1) injury in fact, (2) a causal connection between that injury and the challenged conduct, and (3) the likelihood that a favorable decision by the court will redress the alleged injury.” Id. (quoting Young Am. Corp. v. Affiliated Computer Servs. (ACS), Inc., 424 F.3d 840, 843 (8th Cir. 2005)).

         “An injury-in-fact is a harm that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Steger v. Franco, Inc., 228 F.3d 889, 892 (8th Cir. 2000) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). Additionally, the injury must be “fairly traceable to the challenged action of the defendant.” Saunders v. Farmers Ins. Exch., 440 F.3d 940, 943 (8th Cir. 2006) (quoting Lujan, 504 U.S. at 560).

         In a diversity suit, a plaintiff must also have standing to sue under state law in order for a federal court to hear the state law claim. See Myers v. Richland County, 429 F.3d 740, 749 (8th Cir. 2005). To establish standing and invoke a court's jurisdiction, “one must have some legal or equitable right, title, or interest in the subject of the controversy.” Spring Valley IV Joint Venture v. Nebraska State Bank of Omaha, 690 N.W.2d 778, 781 (Neb. 2005). A party has standing to bring a cause of action to recover damages incurred personally resulting from fraud against them. See, e.g., Meyerson v. Coopers & Lybrand, 448 N.W.2d 129, 134 (Neb. 1989); McCracken v. Thomas Jackson Family Office, Inc., No. A-14-1107, 2016 WL 384977, at *4 (Neb. Ct. App. February 2, 2016) (stating the plaintiffs “would have standing to bring causes of action to recover damages incurred by them personally resulting from the breach of any contracts to which they were parties or resulting from fraud against them”).

         2. Analysis

         The Court finds the plaintiffs' Amended Complaint withstands the defendants' Rule 12(b)(1) challenge. In the Amended Complaint, the plaintiffs allege facts sufficient to show they have suffered an injury in fact. They allege they purchased the heifer and have suffered monetary losses as a result of the defendants' alleged misrepresentations with respect to the heifer's lineage. They allege they have incurred actual costs and outlays as a result of the defendants' allegedly wrongful conduct. The harm they allege is concrete and particularized and their allegations are more than conjectural or hypothetical. Accordingly, the Court finds the allegations of the Amended Complaint sufficiently allege that the plaintiffs have standing to sue.

         The defendants' reliance on the registration paperwork as evidence of ownership of the subject heifer by another person is unavailing at this point. While the document may have legal importance to this case, the plaintiffs sufficiently allege they are the persons who were injured by the defendants' wrongdoing. They allege they suffered damages as the result of the ...


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