Catholic Order of Foresters v. U.S. Bancorp Piper
| Decision Date | 27 September 2004 |
| Docket Number | No. C 03-0081-MWB.,C 03-0081-MWB. |
| Citation | 337 F.Supp.2d 1148 |
| Parties | CATHOLIC ORDER OF FORESTERS; Federated Life Insurance Co.; Homesteaders Life Co.; Mennonite Mutual Aid Assoc.; and United Life Insurance Co., Plaintiffs, v. U.S. BANCORP PIPER JAFFRAY, INC.; Timothy Oswald; Michael Cebuhar; Best & Flanagan, L.L.P.; Morris Knopf; Brick, Gentry, Bowers, Swartz, Stoltze, Schuling & Levis, P.C.; Amy Beattie; Lyle Fairs; Richard Woodside; Larry Crosser; and Mark Shields, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
Kimberly Holst Blankenship, Timothy J. Hill, William T. McCartan, Bradley & Riley, Cedar Rapids, IA, for Plaintiffs.
Leonard T. Strand, Simmons Perrine Albright Ellwood, Cedar Rapids, IA, Nathan P. Brenna, Steven M. Phillips, Anthony Ostlund & Baer, P.A., Lewis A. Remele, Jr., Mark R. Whitmore, Robin Ann Williams, Bassford Remele, PA, Minneapolis, MN, Glenn L. Smith, Finley Alt Smith Scharnberg Craig Hilmes & Gaffney, PC, Des Moines, IA, Tamara K. Hackmann, Meyer Capel, Champaign, IL, Thomas A. Finley, Finley Alt Smith Scharnberg Craig Hilmes & Gaffney, PC, Des Moines, IA, Thomas J. Joesen, Finley, Alt, Smith, Scharnberg, Craig, Hilmes & Gaffney, PC, Lawrence P. McLellan, Sullivan & Ward, PC, Des Moines, IA, for Defendants.
TABLE OF CONTENTS
I. INTRODUCTION ............................................................1151
II. LEGAL ANALYSIS .........................................................1153
A. Improper Venue ........................................................1153
1. Arguments of the parties ...........................................1153
2. Applicable standards ...............................................1154
a. Rule 12(b)(3) ...................................................1154
b. Venue statutes ..................................................1154
i. The "general" venue statute ..................................1154
ii. The "special" venue statute for federal securities claims ....1155
3. Analysis ...........................................................1157
B. Failure To State A Claim ..............................................1158
1. Arguments of the parties ...........................................1158
2. Applicable standards ...............................................1159
3. Analysis ...........................................................1160
a. The automatic stay in bankruptcy ................................1160
b. Scope of Crestland Cooperative's automatic stay .................1162
c. "Assets of the bankruptcy estate" bar ...........................1163
III. CONCLUSION ............................................................1164
In this action, the plaintiffs assert numerous claims against various defendants arising from the plaintiffs' purchases in 1998 and 1999 of over $10.5 million in bonds of Crestland Cooperative, a cooperative now under bankruptcy protection.1 Because their claims arise from their purchase of bonds, the plaintiffs will be referred to hereinafter as "the Bondholders." The defendants allegedly were the sellers of the Crestland bonds, underwriters of those bonds, or entities otherwise involved in the preparation or dissemination of information about the bonds or Crestland Cooperative that was intended for potential purchasers of the bonds. The Bondholders' original Complaint, filed on June 30, 2003, asserted twenty-six claims against six entities or individuals, while their First Amended Complaint, filed on July 30, 2003, asserts forty claims against ten entities or individuals. The additional defendants in the First Amended Complaint are the so-called "Crestland Defendants," as the Bondholders identify Lyle Faris, who was allegedly the president of Crestland, Richard Woodside, who was allegedly the secretary, Larry Crosser, who was allegedly the chief executive officer, and Mark Shields, who was allegedly the executive vice president. The fourteen additional claims in the First Amended Complaint are all against the Crestland Defendants.2
Many of the defendants answered the First Amended Complaint. However, on November 13, 2003, the Crestland Defendants instead filed a Motion To Dismiss (docket no. 28). In their motion, the Crestland Defendants seek dismissal of all fourteen claims against them pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure for improper venue. In addition, Larry Crosser seeks dismissal of the claims against him pursuant to Rule 12(b)(6) for failure to state claims upon which relief can be granted. The Bondholders resisted the Crestland Defendants' motion on December 5, 2003 (docket no. 38).
A magistrate judge of this court held in abeyance the scheduling order for this case pending resolution of the Crestland Defendants' motion to dismiss. On April 9, 2004, the magistrate judge also ruled that the federal securities violations alleged in the First Amended Complaint invoke a mandatory stay of discovery under the Private Securities Litigation Reform Act, which stays all discovery, including initial disclosures, on all claims, until after the court has ruled on any pending motions to dismiss. See Order of April 9, 2004 (docket no. 51) (citing 15 U.S.C. § 78u-4(b)(3)(B)). Therefore, the parties have not commenced discovery in this action even though the action has been pending for more than a year.
This case, including the Crestland Defendants' motion to dismiss, was originally assigned to United States District Court Judge Linda R. Reade. However, on July 20, 2004, Judge Reade recused herself, and this case was reassigned to the undersigned. The undersigned finds that the Crestland Defendants' motion to dismiss is now long overdue for disposition. The court acknowledges that the Crestland Defendants requested that they be heard orally on their motion. However, the belated reassignment of this case to the undersigned, the pressing need to get this case moving, and the undersigned's present involvement with a federal death penalty trial — already in its seventh week and likely to continue for as much as another two months-have not permitted the hearing of oral arguments. In addition, the court finds that oral arguments are not necessary in light of the issues presented in the Crestland Defendants' motion to dismiss. Therefore, the Crestland Defendants' motion to dismiss will be resolved on the basis of the parties' written submissions without a hearing or oral arguments.
The Crestland Defendants first assert that all claims against them should be dismissed pursuant to Rule 12(b)(3) of the Federal Rules of Civil Procedure for improper venue. They argue that, in the First Amended Complaint, the Bondholders alleged venue pursuant to 28 U.S.C. § 1391(b)(2) and (3), but that neither of the cited provisions of § 1391 would properly lay venue in the Northern District of Iowa. More specifically, they argue that the actions giving rise to the Bondholders' claims did not substantially arise or occur in this district, because the claims allegedly arose out of actions of the Crestland Defendants as corporate officers of a cooperative that is not located in the Northern District of Iowa. They also argue that there is no sufficient allegation that the bonds in question were delivered, documents related to the bonds were reviewed, or reliance placed on those documents in this district, because only one of the Bondholders has its corporate offices in this district. They argue, further, that the property involved in this action is not located in this district, because the real property owned by the Crestland Cooperative was located in Guthrie, Union, and Page Counties, all of which lie in the Southern District of Iowa. Finally, the Crestland Defendants argue that there is no allegation that there is no other district where this action could be brought, when three of the Crestland Defendants cannot be found in this district, all but one reside in the Southern District of Iowa, and any misdeeds allegedly occurred in the Southern District of Iowa.
On the other hand, the Bondholders argue that venue is proper in this district, owing to the special venue provisions for claims based on Section 10(b) of the Securities Exchange Act of 1934. They contend that, under Section 27 of the Act, 15 U.S.C. § 78aa, venue on a securities claim is proper wherever a plaintiff was a victim of a defendant's acts or omissions. Under this venue provision, the Bondholders contend, there is no requirement that the defendant be physically present or commit more than a single act in this district for venue to be proper here. Rather, they argue that telephone calls and mailings in connection with the securities law violations are adequate acts within the forum for venue to be proper here. The Bondholders contend, next, that the venue thereby established extends to all defendants involved in a common fraudulent scheme. They contend that they have adequately alleged that plaintiff United Life's chief investment advisor, Kevin Kubik, received all pertinent communications relating to United Life's purchase of Crestland bonds, by telephone and mailing, at United Life's place of business in Cedar Rapids, Iowa, which is in this district, and that all of the defendants were involved in the same scheme. Finally, they argue that all of their claims are premised on the same injury to all of the Bondholders arising from the same information, so that venue for all of the Bondholders' claims against all of the defendants, including the Crestland Defendants, is proper in this district.
Rule 12(...
To continue reading
Request your trial
-
Luverne Truck Equip., Inc. v. Worldwide Equip., Inc.
...of improper venue is merely an affirmative defense. Docket 12 at 20. Luverne cites Catholic Order of Foresters v. U.S. Bancorp Piper Jaffray, Inc. , 337 F.Supp.2d 1148, 1158 (N.D.Iowa 2004), to support this position. In Catholic Order, the district court stated the following:[I]n contrast t......
-
Biddle v. Bradshaw
...venue statute is applicable, the general venue statute, 28 U.S.C. § 1391, applies." Catholic Order of Foresters v. U.S. Bancorp Piper Jaffray, Inc., 337 F. Supp. 2d 1148, 1154 (N.D. Iowa 2004). However, the general venue statute does not apply to cases that have beenremoved from state to fe......
-
Foreman Elec. Servs. v. Haliron Power, LLC
...venue statute is applicable, the general venue statute, 28 U.S.C. § 1391, applies." Catholic Order of Foresters v. U.S. Bancorp Piper Jaffray, Inc., 337 F. Supp. 2d 1148, 1154 (N.D. Iowa 2004). Under that statute, a civil action founded on diversity of citizenship, like this case, may ordin......
-
In re Wright
...to Federal Rule of Evidence 201. Stutzka v. McCarville, 420 F.3d 757, 761 (8th Cir.2005); Catholic Order of Foresters v. U.S. Bancorp Piper Jaffray, Inc., 337 F.Supp.2d 1148, 1159 (N.D.Iowa 2004). In a Chapter 13 case pending in this district, In re Carleton, No. 08–01502, Doc. 77, AHMSI fi......
-
Disclosures
...party fears, include all litigation activity in general.”) (citation omitted); Catholic Order v. U.S. Bancorp Piper Jaৼray, Inc. , 337 F. Supp. 2d 1148, 1152 (N.D. Iowa 2004) (“stay of discovery under the Private Securities Litigation Reform Act, which stays all dis-covery, including initia......
-
Disclosures
...party fears, include all litigation activity in general.”) (citation omitted); Catholic Order v. U.S. Bancorp Piper Jaffray, Inc. , 337 F. Supp. 2d 1148, 1152 (N.D. Iowa 2004) (“stay of discovery under the Private Securities Litigation Reform Act, which stays all discovery, including initia......
-
Disclosures
...party fears, include all litigation activity in general.”) (citation omitted); Catholic Order v. U.S. Bancorp Piper Jaৼray, Inc. , 337 F. Supp. 2d 1148, 1152 (N.D. Iowa 2004) (“stay of discovery under the Private Securities Litigation Reform Act, which stays all discovery, including initial......