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Estate of Petersen v. Boland

United States District Court, D. Nebraska

October 19, 2016

ESTATE OF JOYCE ROSAMOND PETERSEN, Plaintiff,
v.
ROBERT W. BOLAND, JR., UNITED FINANCIAL SERVICES, WILLIAM E. BITTERS and JOHN L. HENRY, Defendants.

          MEMORANDUM AND ORDER

          Robert F. Rossiter, Jr. United States District Judge

         This 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).

         I. FACTS

         The 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.

         The 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.

         The 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.[1] 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, 2014.[2]

         Bitters 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.

         Boland 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.

         Henry, pro se, moves to dismiss the plaintiff's breach-of-contract claim as time-barred and also argues insufficiency of process.

         II. DISCUSSION

         A. Pleading Standards

         1. Law

         Under 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).

         Courts 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).

         Under 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.

         A 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).

         2. Discussion

         The 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.

         Henry 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.

         As 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 cases.

         B. Negligence/Breach of Fiduciary Duty

         1. ...


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