United States District Court, D. Nebraska
MEMORANDUM AND ORDER
F. Rossiter, Jr. United States District Judge
matter is before the Court on Defendant William E.
Bitters's Amended Motion to Dismiss for Failure to State
a Claim (Filing No. 104); Defendant Robert W. Boland,
Jr.'s Amended Motion to Dismiss for Failure to State a
Claim (Filing No. 106); and Defendant John L. Henry's
Motion for a Cease and Desist Order (Filing No. 111), Motion
to Dismiss (Filing No. 112), and Motion to Surpress [sic] and
Request for Sanctions (Filing No. 120). This is an action
brought by the Estate of Joyce Petersen
(“Estate”) for damages and injunctive relief in
connection with alleged investment advice imparted by
defendants Bitters and Boland and a promissory note executed
by defendant Henry. Jurisdiction is based on diversity of
citizenship under 28 U.S.C. § 1332(a).
Estate of Joyce Petersen, formerly known as Joyce Scroggins
(“decedent”) alleges ten causes of action: (1)
breach of fiduciary duty; (2) negligence; (3) negligent
misrepresentation; (4) breach of contract; (5) breach implied
duty of good faith and fair dealing; (6) fraud; (7)
assumpsit; (8) violations of the Racketeer Influenced and
Corrupt Organizations Act (“RICO”), 18 U.S.C.
§ 1961 et seq.; (9) violations of the Nebraska Uniform
Deceptive Trade Practices Act (“NUDTPA”), Neb.
Rev. Stat. § 87-301 et seq.; and (10)
violations the Nebraska Consumer Protection Act
(“NCPA”), Neb. Rev. Stat. § 59-1601 et
seq. The Estate alleges that Bitters, doing business as
United Financial Information Services and/or United Financial
Services, LLC, is registered with the Nebraska Department of
Insurance as a “Producer” with an active license.
He is also licensed in Iowa to sell life insurance and
annuities. He allegedly gave financial advice to the
decedent's husband, William Scoggins, during her marriage
to Mr. Scoggins, and continued to advise the decedent after
Mr. Scoggins's death in exchange for compensation
pursuant to a written or oral contract. The Estate alleges
Boland is Bitters's “partner” and knew or
should have known of Bitters's conduct. On Bitters's
advice, the decedent allegedly loaned Henry the sum of $150,
000.00. Henry executed a promissory note in connection with
that loan in Nebraska on February 8, 2008. The note was due,
together with compound interest of 11% per annum, one year
later, with an optional one-year renewal. Henry subsequently
defaulted on the note.
Estate alleges that Bitters misrepresented to the decedent
that the loan to Henry was a sound and reasonable investment.
It alleges that these false statements were made during
meetings at the Comfort Inn & Suites in Omaha. Bitters
allegedly persuaded the decedent that a loan to Henry was a
better investment than her annuities, and she sold $150, 000
in annuities to make the loan to Henry. Bitters allegedly
told the decedent over the telephone that she had a
“guaranteed return” on all of her investments
with him. The representations were also made in an accounting
statement dated June 4, 2012, that Bitters allegedly mailed
to the decedent. The Estate also alleges that Bitters
received “commissions and/or kick-backs” out of
the $150, 000 investment.
Estate further alleges that from 2011 to 2013 Bitters assured
the decedent that she would be paid. The Estate alleges that
the decedent did not discover the defendants' allegedly
wrongful conduct until 2013. It also alleges that in phone
calls that took place between 2009 and 2013, Bitters misled
the decedent into believing she would be repaid, and he
discouraged her from taking legal action. The decedent died
on October 20, 2013. This action was filed on December 1,
asserts that all of the claims in the Estate's First
Amended Complaint are subject to dismissal for failure to
state a claim on which relief can be granted. Further, he
contends the claims are barred by statutes of limitation, and
are not subject to equitable estoppel.
contends there are no allegations in the First Amended
Complaint that relate to him and also argues that the
Estate's claims are barred by statutes of limitation.
pro se, moves to dismiss the plaintiff's
breach-of-contract claim as time-barred and also argues
insufficiency of process.
the Federal Rules of Civil Procedure, a complaint must
contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2); accord Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 556 n.3 (2007). “Specific
facts are not necessary; the statement need only ‘give
the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.'” Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (quoting
Twombly, 550 U.S. at 555). When ruling on a
defendant's motion to dismiss, a judge must rule
“on the assumption that all the allegations in the
complaint are true, ” Twombly, 550 U.S. at
555, and draw all reasonable inferences in favor of the
non-moving party. Braden v. Wal-Mart Stores, Inc.,
588 F.3d 585, 595 (8th Cir. 2009).
follow a “two-pronged approach” to evaluate
Federal Rule of Civil Procedure 12(b)(6) challenges.
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). First,
the Court divides the allegations between factual and legal
allegations; factual allegations should be accepted as true
but legal conclusions should be disregarded. Id.
Second, the Court reviews factual allegations for facial
plausibility. Id. “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.”
Id. at 677. The Court should not “incorporate
some general and formal level of evidentiary proof into the
‘plausibility' requirement of Iqbal and
Twombly.” Whitney v. Guys, Inc., 700
F.3d 1118, 1128 (8th Cir. 2012). The question at this
preliminary stage is not whether a plaintiff might be able to
prove its claim, but whether it has “adequately
asserted facts (as contrasted with naked legal conclusions)
to support” those claims. Id. The complaint,
however, must still “include sufficient factual
allegations to provide the grounds on which the claim
rests.” Drobnak v. Andersen Corp., 561 F.3d
778, 783 (8th Cir. 2009). When it appears from the face of
the complaint that a limitation period has run, a statute of
limitations defense may be asserted in a motion to dismiss
under Federal Rule of Civil Procedure 12(b)(6). Varner v.
Peterson Farms, 371 F.3d 1011, 1016 (8th Cir. 2004).
Federal Rule of Civil Procedure 9(b), a party alleging fraud
“must state with particularity the circumstances
constituting fraud.” Rule 9(b) is interpreted
“‘in harmony with the principles of notice
pleading, ' and to satisfy it, the complaint must allege
‘such matters as the time, place, and contents of false
representations, as well as the identity of the person making
the misrepresentation and what was obtained or given up
thereby.'” Drobnak, 561 F.3d at 783
(quoting Schaller Tel. Co. v. Golden Sky Sys., Inc.,
298 F.3d 736, 746 (8th Cir. 2002)). Essentially, the
complaint “must plead the ‘who, what, where,
when, and how' of the alleged fraud.'”
Id. (quoting United States ex rel. Joshi v. St.
Luke's Hosp., 441 F.3d 552, 556 (8th Cir. 2005)).
Because this higher degree of notice is intended to enable
the defendant to respond specifically and quickly to
potentially damaging allegations, conclusory allegations that
a defendant's conduct was fraudulent and deceptive are
not sufficient to satisfy the rule. Id.
defendant must raise an objection to the sufficiency of
process or service in his answer or pre-answer motion.
Fed.R.Civ.P. 12(h)(1). If objections to service are not
raised in the answer or pre-answer motion, they are waived.
Resolution Trust Corp. v. Starkey, 41 F.3d 1018,
1021 (5th Cir. 1995); see City of Clarksdale v. BellSouth
Telecomms., Inc., 428 F.3d 206, 214, n.15 (5th Cir.
2005) (holding that plaintiff's failure to properly serve
defendant with original pleading was not problematic because
defendant filed an answer and, therefore, “submitted to
the jurisdiction of the court” and waived its right to
object to service of process).
Court first finds no merit to Henry's assertion of
insufficient process. The record shows that Henry has made an
appearance pro se in this action and has filed an Answer
(Filing No. 110) to the First Amended Complaint (Filing No.
106). He did not raise insufficiency of service of process in
his Answer. Also, he acknowledges receiving a copy of the
First Amended Complaint.
has also filed motions for a “Cease and Desist Order,
” and “to Surpress [sic] and Request for
Sanctions.” He asks the Court to order the Estate to
“stop any and all attempts to serve him at Metro Audio
Dynamics, ” to enjoin the defendants from
“further harassment of the establishment known as Metro
Audio Dynamics” and to impose sanctions on the
plaintiff “as the court sees fit.” The court
finds these motions are frivolous and they will be denied.
discussed below, the Court finds that certain allegations in
Estate's First Amended Complaint survive the Rule
12(b)(6) and Rule 9(b) challenges, albeit barely so in some
Negligence/Breach of Fiduciary Duty