Gupta v. Lynch
| Decision Date | 20 June 2013 |
| Docket Number | CIVIL ACTION NO: 12-1787 |
| Parties | SUMAN GUPTA, ET AL. v. MERRILL LYNCH, ET AL. |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court is a Motion for a More Definite Statement (R. Doc. 23) filed by Defendant Merrill Lynch & Co., Inc. ("ML&Co.") and a Motion to Dismiss or in the Alternative to Compel Arbitration or in the Alternative to Transfer Venue (R. Doc. 34) filed by Defendant Anil Chaturvedi ("Chaturvedi"). For the following reasons, the motions are DENIED.
This dispute arises from the alleged mismanagement of a trust—the Nova Scotia Limited(the "Trust"). The Trust is based in the Cayman Islands and was settled by Pushpa Bajaj ("Bajaj") on April 10, 2011. The beneficiaries are Plaintiffs Suman Gupta, Neel Gupta, Jagan Gupta, and Narinder Gupta, and the trustee is Defendant Merril Lynch Bank & Trust Company ("MLBT"). Merril Lynch, Pierce, Fenner & Smith, Incorporated ("MLPFS") services the investments contained in the Trust pursuant to an International Account Application and Agreement (the "CMA"). The Trust is the only party that signed the CMA. The CMA contains an arbitration provision.
Prior to the institution of this action, the Gupta Family allegedly communicated all orders with respect to the Trust through Chaturvedi—a securities broker employed by MLPFS. On or shortly after May 23, 2002, Plaintiffs notified Chaturvedi that Bajaj passed away. Approximately five years later, Narinder Gupta instructed Chaturvedi to terminate the Trust. Plaintiffs aver that Chaturvedi failed to honor this request, as well as several subsequent requests for termination. Plaintiffs further allege that Chaturvedi and ML&Co. placed some or all of the Trust funds with MLBT.
On July 10, 2012, Plaintiffs filed suit against Chaturvedi, MLBT, and ML&Co. (R. Doc. 1.) MLPFS was not named as a Defendant. Plaintiffs seek to terminate the Trust and have the principal and fruits thereof distributed. (Id. at ¶XX.) They also seek to recover against ML&Co. for "failure to adequately supervise its employee broker and agent, Anil K. Chaturvedi." (Id. at ¶XXI.)
On October 9, 2012, ML&Co. filed a Motion for a More Definite Statement (R. Doc. 23), which Plaintiffs opposed on October 29, 2012 (R. Doc. 28). ML&Co. filed a reply on November 7,2012 (R. Doc. 39). On November 2, 2012, Chaturvedi filed a Motion to Dismiss, or in the Alternative to Compel Arbitration, or in the Alternative to Transfer Venue (R. Doc. 34), which Plaintiffs opposed on December 10, 2012 (R. Doc. 58). Chaturvedi filed a reply on December 18, 2012 (R. Doc. 61). The Court heard oral argument on January 30, 2013, after which the Motions were taken under submission. (R. Doc. 70.)
A district court will grant a motion for a more definite statement under Rule 12(e) when the challenged pleading "is so vague orambiguous that the [moving] party cannot reasonably prepare a response." Fed. R. Civ. P. 12(e). The moving party "must point out the defects complained above and the details desired." Id.
"When evaluating a motion for a more definite statement, the Court must assess the complaint in light of the minimal pleading requirements of Rule 8." Babcock & Wilcox Co. v. McGriff, Siebels & Williams, Inc., 235 F.R.D. 632, 633 (E.D. La. 2006). Rule 8(a)(2)requires that a pleading contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). "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) (internal quotation marks and citations omitted).
In light of the liberal pleading standard set forth in Rule 8(a), Rule 12(e) motions are disfavored. See Mitchell v. E-Z Way Towers, Inc., 269 F.2d 126, 132 (5th Cir. 1959); Who Dat Yat Chat, LLC v. Who Dat, Inc., No. 10-1333, 10-2296, 2012 WL 2087439, at *6 (E.D. La. June 8, 2012). This Court "has considerable discretion in deciding whether to grant a Rule 12(e) motion." Murungi v. Texas Guaranteed, 646 F. Supp. 2d 804, 811 (E.D. La. 2009) (citations omitted).
Chaturvedi styled his motion to dismiss based on the arbitration clause in the CMA as a Rule 12(b)(1) or Rule 12(b)(3) motion. The Fifth Circuit has repeatedly declined to address the proper procedural vehicle for bringing such motions. Noble Drilling Servs., Inc. v. Certex USA, Inc., 630 F.3d 469, 472 n.2 (5th Cir. 2010) (collecting cases). Because the Fifth Circuit has accepted Rule 12(b)(3) as a proper method for dismissal based on an arbitration clause, see, e.g., id.; Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 902 (5th Cir. 2005), the Court analyzes Plaintiffs' motion under Rule 12(b)(3). See also Sinners and Saints, LLC, v. Noire Blanc Films, LLC, No. 12-866, 2013 WL 1335732 (E.D. La. Mar. 29, 2013) ().
On a Rule 12(b)(3) motion to dismiss for improper venue, the court must accept as true all allegations in the complaint and resolve all conflicts in favor of the plaintiff. Braspetro Oil Servs. Co. v. Modec (USA), Inc., 240 F. App'x 612, 615 (5th Cir. 2007) (per curiam) (citations omitted); Ross v. Digioia, Jr., No. 11-1827, 2012 WL 72703, at *2 (E.D. La. Jan. 10, 2012). In deciding such motions,the Court may examine all evidence in the record. Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238 (5th Cir. 2009) (citations omitted).
When venue is challenged, district courts in the Fifth Circuit have been inconsistent in allocating the burden of proof. See Uviado, LLC v. United States, 755 F. Supp. 2d 767, 779 n.7 (S.D. Tex. 2010) (); Ross, 2012 WL 72703, at *2 n.4 (same). Most courts in this District, however, hold that a plaintiff bears the burden of proof. See, e.g., Summer v. Kenton, OH Policea, No. 11-3162, 2012 WL 1565363, at *4 (E.D. La. May 2, 2012); Vaughn Med. Equip. Repair Serv. LLC v Jordan Reses Supply Co., No. 10-00124, 2010 WL 3488244, at *4 (E.D. La. Aug. 26, 2010); Ross, 2012 WL 72703, at *2. This Court follows their lead and holds that Plaintiffs bear the burden of establishing proper venue. See also 14D Wright, Miller, & Cooper, Federal Practice and Procedure, § 3826 (3d ed. 2013) ().
For the following reasons, the Court finds that Plaintiffs' Complaint satisfies the minimal pleading requirements of Rule 8. Accordingly, the Motion is denied.
ML&Co. argues that the Complaint filed on behalf of Plaintiffs is impermissibly vague,because it fails to set forth any specific theory of recovery. Rather, Plaintiffs merely seek to recover from ML&Co. "under the applicable state and federal laws." (See R. Docs. 23; 1 at ¶XXI.) Plaintiffs counter that the Complaint sets forth causes of action against ML&Co. for failure to supervise a licensed security broker (Chaturvedi), breach of contract, and breach of fiduciary duty.
One of these causes of action—failure to supervise a licensed security broker—is pleaded with sufficient particularity as to satisfy the liberal pleading standards of Rule 8. In Paragraph XXI of the Complaint, under the subheading "RELIEF SOUGHT," Plaintiffs seek damages "as a result of [ML&Co.'s] failure to adequately supervise its employee broker and agent, Anil K. Chaturvedi." Given the allegations in the preceding paragraphs that Chaturvedi repeatedly failed to comply with Narinder Gupta's requests to terminate the Trust, Plaintiffs "set forth sufficient information to outline the elements of the claim or permit inferences to be drawn that these elements exist." Grand Time Corp. v. Watch Factory, Inc., No. 3:08-CV-1770-K, 2010 WL 92319, at *5 (N.D. Tex. Jan. 6, 2010) ). Whether Plaintiffs have pleaded facts sufficient to state a legally cognizable claim is a different issue—one that is more properly addressed in a motion to dismiss under Rule 12(b)(6).
The other two causes of action which Plaintiffs identify in their opposition memorandum —breach of contract and breach of fiduciary duty—are not explicitly stated in and cannot be reasonably inferred from the Complaint. As ML&Co. notes in its reply memorandum, the Complaint does not identify any contract between ML&Co. and Plaintiffs. In fact, the words"contract" or "breach" do not appear anywhere in the Complaint. Similarly, the Complaint does not identify any duties—fiduciary or otherwise—that ML&Co. owes to Plaintiffs, much less how those duties were breached. Indeed, the phrase "fiduciary duty" is not present in the Complaint.
In sum, there is a noticeable difference between the allegations actually present in the Complaint, and those which Plaintiffs contend are present in the Complaint. The opposition memorandum to the instant Motion contains numerous factual allegations and at least two causes of action not present in the original Complaint. Moreover, there are several exhibits attached to the opposition memorandum, most of which Plaintiffs do not reference in the original Complaint.
The Court construes the new factual allegations and causes of action asserted in Plaintiffs' opposition memorandum as a motion to amend the complaint. See Stover v. Hattiesburg Pub. Sch. Dist., 549 F.3d 985, 989 n.2 (5th Cir. 2008) (...
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