DMK Biodiesel, LLC v. McCoy
| Decision Date | 24 May 2013 |
| Docket Number | No. S–12–699.,S–12–699. |
| Citation | 830 N.W.2d 490,285 Neb. 974 |
| Parties | DMK BIODIESEL, LLC, a Nebraska limited liability company, and Lanoha RVBF, LLC, a Nebraska limited liability company, appellants, v. John McCOY et al., appellees. |
| Court | Nebraska Supreme Court |
OPINION TEXT STARTS HERE
Syllabus by the Court
[285 Neb. 974]1. Motions to Dismiss: Appeal and Error. A district court's grant of a motion to dismiss is reviewed de novo.
2. Motions to Dismiss: Pleadings: Appeal and Error. When reviewing an order dismissing a complaint, the appellate court accepts as true all facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the plaintiff's conclusion.
3. Statutes: Appeal and Error. Statutory interpretation is a question of law that an appellate court resolves independently of the trial court.
4. Motions to Dismiss: Rules of the Supreme Court: Pleadings. Because a motion pursuant to Neb. Ct. R. Pldg. § 6–1112(b)(6) tests the legal sufficiency of the complaint, not the claim's substantive merits, a court may typically look only at the face of the complaint to decide a motion to dismiss.
5. Rules of the Supreme Court: Pleadings. Dismissal under Neb. Ct. R. Pldg. § 6–112(b)(6) should be granted only in the unusual case in which a plaintiff includes allegations that show on the face of the complaint that there is some insuperable bar to relief.
6. Motions to Dismiss: Rules of the Supreme Court: Summary Judgment: Pleadings. Neb. Ct. R. Pldg. § 6–1112(b) provides that when matters outside the pleading are presented by the parties and accepted by the trial court with respect to a motion to dismiss under § 6–1112(b)(6), the motion shall be treated as a motion for summary judgment as provided in Neb.Rev.Stat. §§ 25–1330 to 25–1336 (Reissue 2008) and the parties shall be given reasonable opportunity to present all material made pertinent to such a motion by statute.
7. Judicial Notice: Motions to Dismiss: Rules of the Supreme Court: Summary Judgment: Pleadings. A court may take judicial notice of matters of public record without converting a motion to dismiss under Neb. Ct. R. Pldg. § 6–1112(b)(6) into a motion for summary judgment.
8. Rules of the Supreme Court: Pleadings: Appeal and Error. Because Nebraska's current notice pleading rules are modeled after the Federal Rules of Civil Procedure, appellate courts look to federal decisions for guidance.
9. Motions to Dismiss: Pleadings. For purposes of a motion to dismiss, a trial court generally must ignore materials outside the pleadings, but it may consider some materials that are part of the public record or do not contradict the complaint, as well as materials that are necessarily embraced by the pleadings.
10. Complaints: Pleadings. Documents embraced by the complaint are not considered matters outside the pleading.
[285 Neb. 975]11. Complaints: Pleadings. Documents embraced by the pleadings are materials alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading.
12. Appeal and Error. An appellate court is not obligated to engage in an analysis that is not necessary to adjudicate the case and controversy before it.
13. Trial: Appeal and Error. An issue not presented to or decided on by the trial court is not an appropriate issue for consideration on appeal.
David A. Domina, Omaha, and Brandon B. Hanson, of Domina Law Group, P.C., L.L.O., for appellants.
Daniel L. Lindstrom and Justin R. Herrmann, of Jacobsen, Orr, Lindstrom & Holbrook, P.C., L.L.O., Kearney, for appellees John McCoy et al.
Steve Grasz, Omaha, and Andrew Weeks, Lincoln, of Husch Blackwell, L.L.P., for appellee Renewable Fuels Technology, LLC.
DMK Biodiesel, LLC (DMK), and Lanoha RVBF, LLC (Lanoha), filed suit against Renewable Fuels Technology, LLC (Renewable Fuels), John McCoy, John Hanson, Phil High, and Jason Anderson in the Buffalo County District Court alleging fraudulent inducement. Renewable Fuels and the individual defendants filed a motion to dismiss for failure to state a claim and a motion to take judicial notice of the private placement memorandum and the subscription agreements. Both motions were granted, and DMK and Lanoha now appeal. Because the private placement memorandum and the subscription agreements are properly considered “matters outside the pleading,” an evidentiary hearing was required. Accordingly, we reverse the judgment of the district court and remand the cause with directions.
Republican Valley Biofuels, LLC (RVBF), issued a confidential private placement memorandum with an effective date of May 7, 2007, seeking investors in a biodiesel production facility. DMK and Lanoha invested $600,000 and $400,000 respectively in RVBF, which was being promoted by McCoy, Hanson, High, and Anderson. Renewable Fuels is listed with the Nebraska Secretary of State as the manager of RVBF.
On August 17 and August 28, 2007, DMK and Lanoha, respectively, entered into and executed separate subscription agreements with RVBF. Paragraph 1 of the subscription agreements states, “Subscriber understands that the offering of limited liability company units ... of the Company to which this Subscription Agreement relates is being made only pursuant to the Company's Confidential Private Placement Memorandum dated May 7, 2007, including the exhibits attached and any supplements thereto....” It further states in paragraph 4.c. that “[s]ubscriber has relied solely upon the information furnished in the Memorandum and Subscriber has not relied on any oral or written representation or statement, except as contained in the Memorandum, in making this investment.” The private placement memorandum itself states that “[n]o person has been authorized to make any representation or warranty, or give any information, with respect to RVBF or the units offered hereby except for the information contained herein.”
On January 5, 2009, DMK and Lanoha filed a complaint against Renewable Fuels, McCoy, Hanson, High, and Anderson in Buffalo County District Court alleging that each defendant fraudulently induced them to invest funds in RVBF. The original complaint had three claims: (1) violations of the Securities Act of Nebraska, see Neb.Rev.Stat. § 8–1101 et seq. (Reissue 2012), due to alleged misrepresentations and omissions by the defendants; (2) violations of fiduciary duties; and (3) for an accounting at law.
Renewable Fuels promptly filed a motion to dismiss and a motion to take judicial notice. Shortly thereafter, the individual defendants filed similar motions. The motion to take judicial notice requested the district court to take judicial notice of the confidential private placement memorandum for RVBF and the subscription agreements executed between RVBF and DMK and Lanoha, respectively. All three documents were attached as exhibits to the motion to dismiss.
In response, DMK and Lanoha filed a motion to continue hearing on the defendants' Neb. Ct. R. Pldg. § 6–1112 (rule 12) motions to allow discovery. The motion stated, first, that “[j]udicial notice is not permitted by Neb Rev Stat § 27–201 et seq.” Second, the motion primarily argued that taking judicial notice would convert the rule 12 motion into a summary judgment motion.1 DMK and Lanoha argued that if the motion converted, then they were entitled to conduct discovery pursuant to Neb.Rev.Stat. § 25–1335 (Reissue 2008).2
The district court granted the motion to dismiss and the motion to take judicial notice. The court noted that the private placement memorandum and the subscription agreements were “an intricate part of the pleadings whether they are set forth by [DMK and Lanoha] or not.” The district court thereafter received the exhibits and considered the exhibits for purposes of the motion to dismiss. On the motion to dismiss, the district court found “as a matter of law that [DMK and Lanoha] are not allowed to proceed with their causes of action for fraud, deception and misrepresentation arising from events occurring prior to the execution of the subscription agreements.” The court sustained the motion to dismiss, but allowed DMK and Lanoha to file an amended complaint based on actions of RVBF and the individual defendants after the entry of the subscription agreement that violated the subscription agreement, private placement memorandum, or the fiduciary obligations created by those documents.
DMK and Lanoha filed an amended complaint that asserted postsale fiduciary duties were owed and breached, while also seeking derivative relief. Litigation continued on the derivative claims until 2012, when the district court dismissed the amended complaint at the request of all parties. DMK and Lanoha now appeal the September 29, 2009, dismissal of the direct claims.
DMK and Lanoha allege, restated and summarized, that the district court erred by taking judicial notice, entering judgment without a proper summary judgment hearing, and dismissing the claims, because the dismissal resulted in the defendants' benefiting from the illegal sale of securities under § 8–1118(5) of the Securities Act of Nebraska.
A district court's grant of a motion to dismiss is reviewed de novo.3 When reviewing an order dismissing a complaint, the appellate court accepts as true all facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the plaintiff's conclusion.4
Statutory interpretation is a question of law that an appellate court resolves independently of the trial court.5
DMK and Lanoha's main argument, found both in their motion to continue hearing on the defendants' rule 12 motions to allow discovery and in their brief, is that by taking judicial notice of the private placement memorandum and the subscription agreements, the motion to dismiss...
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