Dunkel v. Hedman

• Decision Date: 17 August 2016
• Docket Number: NO. 3:15-CV-948-J-34PDB,3:15-CV-948-J-34PDB
• Parties: PAMELA DUNKEL, Plaintiff, v. KEITH HEDMAN, Defendant.
• Court: United States District Courts. 11th Circuit. United States District Court of Middle District of Florida

PAMELA DUNKEL, Plaintiff,
v.
KEITH HEDMAN, Defendant.

NO. 3:15-CV-948-J-34PDB

United States District Court Middle District of Florida Jacksonville Division

August 17, 2016

Report & Recommendation

In 2013, in separate federal criminal cases in the Eastern District of Virginia, Michael Dunkel and Keith Hedman pleaded guilty to major fraud against the United States, in violation of 18 U.S.C. § 1031.¹ Michael Dunkel's wife, Pamela Dunkel, without a lawyer, now sues Hedman for torts based on her contention Hedman's fraud caused her husband's conviction.² Doc. 17. Before the Court is Hedman's motion to

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dismiss under Federal Rules of Civil Procedure 12(b)(2), (b)(3), and (b)(6) for lack of personal jurisdiction, improper venue, and failure to state a claim upon which relief may be granted, Doc. 19, Dunkel's response in opposition, Doc. 23, Dunkel's motion for leave to amend the complaint to add exhibits, Doc. 34, and Hedman's response in opposition, Doc. 35. The motion to dismiss does not request dismissal with prejudice. See generally Doc. 19.

I. Procedural Background

Dunkel filed the original complaint in July 2015. Doc. 1. Hedman moved to dismiss it under Rules 12(b)(1), (b)(2), (b)(3), and (b)(6) for lack of subject-matter jurisdiction, lack of personal jurisdiction, improper venue, and failure to state a claim upon which relief may be granted. Doc. 7. The Court struck the complaint due to insufficient jurisdictional allegations and denied the motion to dismiss as moot. Doc. 13. Dunkel filed an amended complaint. Doc. 17. The Court found its sua sponte inquiry into subject-matter jurisdiction satisfied. Doc. 18. Hedman filed the current motion to dismiss. Doc. 19. The parties later met and filed a case management report, and the Court entered a case management and scheduling order. Docs. 26, 31. Hedman moved to stay discovery pending a decision on the motion to dismiss. Doc. 32. The Court granted the motion and stayed all deadlines in the case management and scheduling order. Doc. 33. Dunkel moved for leave to amend the complaint to add exhibits. Doc. 34. There are no other pending motions.

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II. Amended Complaint

The amended complaint alleges the following facts. Dunkel is a citizen of Florida. Doc. 17 ¶ 2. She is married to Michael Dunkel. Doc. 17 ¶ 33. Hedman is a citizen of Maryland. Doc. 17 ¶ 3. Security Assistance Corporation ("SAC") is a Virginia corporation with its principal place of business in Virginia. Doc. 17 ¶ 8. SAC participated in the 8(a) Business Development Program administered by the United States Small Business Administration.³ Doc. 17 ¶ 10. Hedman "assisted in fraudulent insertion of Dawn Hamilton as the owner of SAC, who had 8(a) designation to control the company." Doc. 17 ¶ 21. Hedman actually controlled SAC as its owner and chief executive officer. Doc. 17 ¶¶ 7, 22. He also owned and controlled Protection Strategies, Inc., another Virginia corporation. Doc. 17 ¶ 9.

From 2005 to 2012, Michael Dunkel had a business relationship with Hedman and SAC. Doc. 17 ¶ 23. He misled Dunkel "into believing that he [had] appropriate certifications to deal with" the National Aeronautics and Space Administration ("NASA") and other government agencies. Doc. 17 ¶¶ 24. He knew he did not because he knew SAC had no minority owner and therefore did not qualify for participation in the 8(a) program. Doc. 17 ¶ 25. He concealed from the Dunkels that SAC should not have participated in the 8(a) program. Doc. 17 ¶ 42. As a result, Michael Dunkel

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"entered into a [fraudulent] contractual relationship" with him, was associated with the fraud, was convicted of a federal crime "in which he had no knowledge of any wrongdoing," was sentenced to 60 months' imprisonment, and was ordered to forfeit $2.9 million. Doc. 17 ¶¶ 38-40, 44, 48.

Michael Dunkel's imprisonment has caused Dunkel depression, emotional distress, and financial loss. Doc. 17 ¶¶ 29, 30, 31, 35. She lost her home, had to move to rental property, and had to find work over an hour away. Doc. 17 ¶ 30. She lost his "society, affection[,] and companionship" after "29 years of partnership." Doc. 17 ¶ 33. She has to do things he used to do and work "endless hours" to meet "daily living obligations" and care for her elderly mother-in-law. Doc. 17 ¶¶ 34, 35.

Dunkel asserts common law tort claims for fraudulent misrepresentation (count I), intentional infliction of emotional distress (count II), loss of consortium (count III), fraud in the inducement (count IV), and concealment (count V). Doc. 17. She seeks compensatory and punitive damages, including damages for losing her home, losing her husband's current and future income, pain and suffering, and the $2.9 million forfeiture amount. Doc. 17 ¶¶ 46-48.

III. Motion to Dismiss & Response

Hedman argues the Court should dismiss the amended complaint under Rule 12(b)(2) for lack of personal jurisdiction and under Rule 12(b)(3) for improper venue, observing the amended complaint does not allege contact between him and Florida to satisfy Florida's long-arm statute or due process requirements. Doc. 19 at 3-9. He argues the Court should dismiss the claims under Rule 12(b)(6) for failure to state

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claims upon which relief may be granted, contending Dunkel has alleged insufficient facts to support any of them. Doc. 19 at 10-21. Within that argument, he contends Dunkel lacks standing to bring the fraud-based claims. Doc. 19 at 14. And he argues public policy should prevent recovery of the $2.9 million her husband forfeited. Doc. 19 at 21-23.

Hedman attaches to the motion: (1) the plea agreement in which Michael Dunkel pleaded guilty to major fraud against the United States, Doc. 19-2, and (2) a stipulated statement of facts in which Michael Dunkel stipulated to the truth and accuracy of facts supporting his plea, Doc. 19-1. The stipulated facts are detailed and lengthy. See generally Doc. 19-1. He admitted to having knowingly defrauded the United States through falsities bearing on SAC's ability to participate in the 8(a) program and obtain preferences for bids on government projects. See Doc. 19-1.

Dunkel responds the Court has personal jurisdiction over Hedman and venue is proper in this district because her husband's business was in Florida and SAC contracted with that business to perform work in Florida. Doc. 23 at 1-6. She contends her husband's guilty plea is not proof of his guilt because his decision to plead was a "business decision" based on age and health and he has moved for post-conviction relief under 28 U.S.C. § 2255 on the ground the plea was not knowingly, voluntarily, and intelligently made.⁴ Doc. 23 at 1, 7. She details facts she contends

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establish Hedman's fraud against her husband. Doc. 23 at 2-8.

IV. Motion for Leave to Amend & Response

Dunkel requests leave to amend the amended complaint to add exhibits and references to them. Doc. 34. She summarily states amendment is warranted because it will serve "the interest of justice" and the exhibits can be found on PACER. Doc. 34 at 1. The exhibits are: (1) documents showing Hedman's ownership of a home in Maryland, Doc. 34-1; (2) the plea agreement in which Hedman pleaded guilty to major fraud against the United States, Doc. 34-3; (3) a stipulated statement of facts in which Hedman stipulated to the truth and accuracy of facts supporting his plea, Doc. 34-2; (4) the criminal information from the criminal case against Hedman, Doc. 34-4; (5) the judgment from the criminal case against Hedman sentencing him to 72 months' imprisonment, Doc. 34-5; (6) a consent order of forfeiture of $6,149,730.88 from the criminal case against Hedman, Doc. 34-6; (7) a press release by the United States Attorney's Office for the Eastern District of Virginia concerning Hedman's agreement to pay $4.5 million to settle civil claims, Doc. 34-7; and (8) a printout from the United States Small Business Administration's website announcing the proposed disbarment of Hedman and others, Doc. 34-8. Like the stipulated facts in Michael Dunkel's criminal case, the stipulated facts in Hedman's criminal case are detailed and lengthy. See generally Doc. 34-2. He too admitted to having knowingly defrauded the United States through falsities bearing on SAC's ability to participate in the 8(a) program and obtain preferences for bids on government projects. See Doc. 34-2.

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Hedman responds amendment would be futile because the exhibits do not cure the deficiencies asserted in the motion to dismiss the amended complaint and would cause undue burden because Dunkel filed the motion over four months after he moved to dismiss the amended complaint and it would require him to expend additional resources to prepare and file a third motion to dismiss. Doc. 35.

V. Law & Analysis

A court must hold a pleading drafted by a pro se litigant to a less stringent standard than one drafted by a lawyer. Tannenbaum v. United States, 148 F.3d 1262, 1263 (11th Cir. 1998). Although a court must treat a pro se pleading leniently, the court cannot rewrite a deficient pleading for a party or otherwise serve as his de facto counsel. GJR Invs., Inc. v. Cty. of Escambia, 132 F.3d 1359, 1369 (11th Cir. 1998), abrogated on other grounds by Ashcroft v. Iqbal, 556 U.S. 662 (2009). Here, because Dunkel is unrepresented, that less-stringent standard applies.

A. Standing

"No principle is more fundamental to the judiciary's proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies." Spokeo v. Robins, 136 S. Ct. 1540, 1547 (2016) (quoted authority omitted). "Standing to sue is a doctrine rooted in the traditional understanding of a case or controversy." Id. "The doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong." Id. At a "constitutional minimum," a plaintiff must allege she "(1) suffered an injury in fact, (2) that is fairly traceable to the...