Farm Credit Servs. of Am., FLCA v. Haun

• Decision Date: 20 August 2013
• Docket Number: 12–3078.,Nos. 12–3077,s. 12–3077
• Parties: FARM CREDIT SERVICES OF AMERICA, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Plaintiffs v. Brad HAUN; Michelle Haun; Cecil D. Haun; Carole L. Haun; Joseph H. Page; Frances K. Page; Carol Knisley; Shirley Knisley, each Individuals, Defendants Joseph H. Page; Frances K. Page, Counter Claimants–Appellants v. Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants–Appellees Brad Haun; Cecil D. Haun; Shirley Knisley; Michelle Haun; Carole L. Haun, Counter Claimants v. Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Plaintiffs v. Brad Haun; Michelle Haun; Cecil D. Haun; Carole L. Haun; Joseph H. Page; Frances K. Page; Carol Knisley; Shirley Knisley, each Individuals, Defendants Joseph H. Page; Frances K. Page, Counter Claimant v. Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants Brad Haun; Cecil D. Haun; Shirley Knisley; Michelle Haun; Carole L. Haun; Carol Knisley, Counter Claimants–Appellants v. Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants–Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

734 F.3d 800

FARM CREDIT SERVICES OF AMERICA, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Plaintiffs

v.Brad HAUN; Michelle Haun; Cecil D. Haun; Carole L. Haun; Joseph H. Page; Frances K. Page; Carol Knisley; Shirley Knisley, each Individuals, Defendants

Joseph H. Page; Frances K. Page, Counter Claimants–Appellants

v.Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants–Appellees

Brad Haun; Cecil D. Haun; Shirley Knisley; Michelle Haun; Carole L. Haun, Counter Claimants

v.Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants

Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Plaintiffs

v.Brad Haun; Michelle Haun; Cecil D. Haun; Carole L. Haun; Joseph H. Page; Frances K. Page; Carol Knisley; Shirley Knisley, each Individuals, Defendants

Joseph H. Page; Frances K. Page, Counter Claimant

v.Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants

Brad Haun; Cecil D. Haun; Shirley Knisley; Michelle Haun; Carole L. Haun; Carol Knisley, Counter Claimants–Appellants

v.Farm Credit Services of America, FLCA, a federally chartered instrumentality of the United States; Farm Credit Services of America, PCA, a federally chartered instrumentality of the United States, Counter Defendants–Appellees.

Nos. 12–3077, 12–3078.

United States Court of Appeals,

Eighth Circuit.

Submitted: May 15, 2013.

Filed: Aug. 20, 2013.

Joel M. Carney, argued, Omaha, NE, for appellants, Brad Haun, Michelle Haun, Cecil D. Haun, Carole L. Haun, Carol Knisley, Shirley Knisley.

Daniel F. Church, argued, Kansas City, MO (Angela M. Witten, on the brief), for appellant Joseph H. Page and Frances K. Page.

James J. Niemeier, argued, Omaha, NE (Robert J. Bothe, Lauren R. Goodman, on the brief), for appellee.

Before RILEY, Chief Judge, MELLOY and SHEPHERD, Circuit Judges.

MELLOY, Circuit Judge.

Brad Haun, Michelle Haun, Carole Haun, Cecil Haun, Carol Knisley, Shirley Knisley, Joseph Page, and Frances Page (collectively, “appellants”) appeal the district court's ¹ dismissal of their counterclaims against Farm Credit Services of America, FLCA and Farm Credit Services of America, PCA (together, “Farm Credit”). We affirm.

I.

Appellants are owners and/or managers of Big Drive Cattle, LLC (“Big Drive”), a Nebraska limited liability corporation. In 2010, Big Drive executed various promissory notes and loan agreements (“the notes” and “the loan agreements”) with Farm Credit. Pursuant to the loan agreements and/or the notes, Farm Credit reserved the right to inspect the loan collateral, which included cattle herds. Appellants were not party to the loan agreements or the notes in their individual capacities. Separate from the loan agreements and the notes, appellants personally guaranteed Big Drive's obligations to Farm Credit.

At some point after appellants signed the guarantees, appellants and Farm Credit discovered some of the cattle owned by Big Drive were missing. At oral argument, the parties acknowledged that an employee of Big Drive who had been responsible for keeping cattle counts had stolen some of the cattle. The employee had made inaccurate reports in order to cover his thefts.

When the notes matured and all amounts came due, Big Drive failed to pay. Big Drive subsequently filed for bankruptcy. Farm Credit then made demand on appellants for payment of the outstanding amounts and, when appellants refused, Farm Credit filed suit against appellants, seeking to enforce appellants' guarantees.

Appellants filed counterclaims against Farm Credit for negligence, negligent misrepresentations, and breach of the duty of good faith and fair dealing. In support of their counterclaims, appellants alleged Farm Credit negligently inspected the loan collateral and then provided appellants with inaccurate reports on the state of the loan collateral. Appellants also alleged Farm Credit ignored an “express directive” to remove a particular employee from Big Drive's line of credit.² Farm Credit filed a motion to dismiss appellants' counterclaims for failure to state claims for relief. The district court granted Farm Credit's motion, dismissing appellants' counterclaims without prejudice, and granted appellants leave to file amended counterclaims. The district court ruled, in part, that it was “unable to discern whether the alleged duties [asserted in appellants' counterclaims] are believed to have arisen out of the loan agreements, the guarantees, or some other source.”

Appellants then filed amended counterclaims asserting the same causes of action, and Farm Credit moved to dismiss appellants' amended counterclaims with prejudice. The district court granted Farm Credit's motion. The district court concluded that appellants' amended counterclaim for negligence failed to specify the source of Farm Credit's alleged duty and lacked specific facts regarding Farm Credit's alleged breaches; that appellants' amended counterclaim for negligent misrepresentation failed to meet the particularity requirement of Federal Rule of Civil Procedure 9(b) for fraud claims; and that appellants' amended counterclaim for breach of the duty of good faith and fair dealing failed to include sufficient facts tying a specific contractual provision to Farm Credit's alleged breach and failed to offer anything other than a boilerplate claim for damages.

Following the district court's dismissal of their counterclaims with prejudice, appellants filed this timely appeal. Only appellants' counterclaims are before us. Farm Credit sought and was granted dismissal of its claims against appellants after it separately received full payment of the amounts due under the notes and the loan agreements.³

II.

We review a district court's order granting a motion to dismiss de novo, accepting the allegations in the complaint as true and drawing all reasonable inferences in favor of the nonmoving party. Young v. City of St. Charles, Mo., 244 F.3d 623, 627 (8th Cir.2001). “To survive a motion to dismiss, a complaint ... must contain ‘enough facts to state a claim to relief that is plausible on its face.’ ” Bradley Timberland Res. v. Bradley Lumber Co., 712 F.3d 401, 406 (8th Cir.2013) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “The plausibility standard requires a plaintiff to ‘plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Id. (alteration in original) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). “ ‘[C]onclusory statements' and ‘naked assertion[s] devoid of further factual enhancement’ are insufficient.” Retro Television Network, Inc. v. Luken Commc'ns, LLC, 696 F.3d 766, 768 (8th Cir.2012) (alterations in original) (quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937). We may affirm the district court's ruling “on any ground supported by the record.” Christiansen v. West Branch Cmty. Sch. Dist., 674 F.3d 927, 934 (8th Cir.2012) (quoting Wycoff v. Menke, 773 F.2d 983, 986 (8th Cir.1985)).

Before moving to our analysis, we address several of appellants' allegations. First, in their amended counterclaims appellants state that “Farm Credit undertook a duty related to the loans and guarantees ... of ensuring that certain counts regarding cattle and inventory were conducted on a monthly basis” and that “Farm Credit's duties arise from ... the promissory note, restructuring agreement, and guarantees.” ⁴ (Emphases added.) But as appellants acknowledged at oral argument, Farm Credit had no contractual duty to provide appellants with accurate reports on the state of the loan collateral. Therefore, appellants cannot rely on the loan agreements, the notes, the guarantees, or any other contracts for the source of the legal duty of accurate reporting they allege Farm Credit owed to them.

Second, appellants' allegation that Farm Credit ignored an “express directive” to remove a particular employee from Big Drive's line of credit is not relevant to their amended counterclaims. Assuming appellants have standing in this case to make a claim based on Farm Credit's alleged failure to follow the “express directive,” ⁵ Farm Credit's duty to follow such a directive would be a contractual duty arising from the guarantees, the notes, the loan agreements, or some other contract. In other words, if appellants have a claim against Farm Credit based on Farm Credit's alleged failure to follow the “express directive,” that claim is a contract claim, not a tort claim, and at oral argument appellants clearly stated that their counterclaims are exclusively tort claims.

We now address appellants' three amended counterclaims, all of which arise under Nebraska law.

A. Negligence and Negligent Misrepresentation

Appellants' first amended counterclaim is for negligence. “In order to recover in a negligence action, a plaintiff must show a legal duty owed by the defendant to the plaintiff, a breach of such duty, causation, and damages.” A.W. v. Lancaster Cnty. Sch. Dist. 0001, 280 Neb. 205, 784 N.W.2d 907, 913 (2010). The Nebraska Supreme Court has explained:

[T]he threshold inquiry in any negligence action is whether the defendant owed the plaintiff a duty. A “duty” is an obligation, to which the law gives recognition and effect, to conform to...