In re Gaudette, Bankruptcy No. 96-12653-MWV. Adversary No. 98-1125-MWV.

• Decision Date: 02 November 1999
• Docket Number: Bankruptcy No. 96-12653-MWV. Adversary No. 98-1125-MWV.
• Citation: 241 BR 491
• Parties: In re Reginald GAUDETTE, Debtor. Richard R. Erricola, Trustee, Plaintiff, v. Reginald Gaudette, et al., Defendants.
• Court: U.S. Bankruptcy Court — District of New Hampshire

241 B.R. 491 (1999)

In re Reginald GAUDETTE, Debtor.

Richard R. Erricola, Trustee, Plaintiff, v. Reginald Gaudette, et al., Defendants.

Bankruptcy No. 96-12653-MWV. Adversary No. 98-1125-MWV.

United States Bankruptcy Court, D. New Hampshire.

November 2, 1999.

Geraldine Karonis, Manchester, NH, United States Trustee.

William S. Gannon, Manchester, NH, Thomas Raftery, Carlisle, MA, for plaintiff.

Ralph F. Holmes, Joseph A. Foster, Linda M. Peruzzi, Manchester, NH, for Louise Gaudette, individually and in her representative capacities; OFS Lending, Inc.; Reginald L. Gaudette Family Limited Partnership I; Louise L. Gaudette Family Limited Partnership II; J & L Family Limited Partnership III; Boulevard Drive-In, Inc.; The Resource Clinic, Inc.; LLG Services Corporation; and C & G Investments.¹

Richard R. Erricola, Chapter 7 Trustee.

Robert Daniszewski, for Thomas J. Thomas, Jr., Mark L. Van de Water, Glenn C. Raiche, and Thomas, Utell, Van de Water & Raiche, P.A. ("Law Firm Defendants").

Deborah Barrett, Concord, NH, for the Small Business Administration.

David Carr, for JAAJ Realty.

Ronald J. Caron, Manchester, NH, for Lisa A. Robinson, Lisa A. Robinson as Guardian of Jennifer and Michelle Robinson, Edith M. Gaudette, Lionel H. Gaudette and Jeffrey Gaudette.

Daniel Sklar, Jo Ann J. Brighton, Manchester, NH, for Richard Choate.

Rodney Stark, Cynthia L. Fallon, Manchester, NH, Janine Gawryl, Nashua, NH, for Mark S. Ring, C.P.A. and Wheeler, Ring & Dolan, P.C.

MEMORANDUM OPINION ON DEFENDANTS' MOTION TO DISMISS COUNTS I AND V

MARK W. VAUGHN, Chief Judge.

The Court has before it a motion to dismiss Count I of the Plaintiff's complaint filed by Thomas J. Thomas Jr., Marc L. Van De Water, Glenn C. Raiche, and Thomas, Utell, Van De Water & Raiche, P.A. ("Law Firm Defendants") and a motion to dismiss Count I and V of Plaintiff's complaint filed by Reginald L. Gaudette, individually, and in his representative capacities; Louise L. Gaudette, individually, and in her representative capacities;² Reginald L. Gaudette Family Limited Partnership I; Louise L. Gaudette Family Limited Partnership II; J & L Family Limited Partnership III; Boulevard Drive-In, Inc.; The Resource Clinic; LLG Services Corporation; and C & G Investments (hereinafter collectively referred to as "Defendants").

Richard Choate has joined in the pending motions to dismiss.³ Further, Defendants Mark S. Ring, C.P.A. and Wheeler, Ring & Dolan, P.C. have joined in the Defendants' Motion to Dismiss.⁴

For the following reasons, the Court grants the Defendants' motion to dismiss.

This Court has jurisdiction of the subject matter and the parties pursuant to 28 U.S.C. §§ 1334 and 157(a) and the "Standing Order of Referral of Title 11 Proceedings to the United States Bankruptcy Court for the District of New Hampshire," dated January 18, 1994 (DiClerico, C.J.). This is a core proceeding in accordance with 28 U.S.C. § 157(b).

INTRODUCTION

Count I of the Plaintiff's complaint, "Evasion of Tax Liabilities, Concealment of Assets and Liabilities and Common Law Civil Conspiracy," is alleged against:

(i) the Debtor Reginald Gaudette; (ii) Louise Gaudette; (iii) Richard V. Choate ("Choate"), (iv) C & G Investments ("C & G"), (v) the Trustees, Plan Administrators, Employers and Plan Sponsors, the Beneficiary of the Pension Plans and all other fiduciaries with respect to such Pension Plans (collectively, "Plan Fiduciaries"), (vi) the general partners of the Gaudette Family Limited Partnerships and such limited partnerships, (vii) Boulevard Drive-In, Inc. ("BDI"), (viii) Logicon Corporation ("Logicon") (ix) TRC, (x) Thomas, Utell, Van De Water & Raiche and each of their members (collectively, the "Thomas Firm" and singly "Thomas", "Utell", "Van De Water" and "Raiche") (xi) Wheeler, Ring & Dolan and each of its members (collectively, the "Wheeler Firm" and singly "Wheeler", "Ring" and "Dolan") during the period between 1987 and the present (the "Enterprise Term") and (xii) each of the John Doe Defendants named and added to this Count from time to time as discovery progresses (collectively, the "John Doe Defendants").

(Pl.'s Compl. at 8.)⁵

Count V of the Plaintiff's complaint, "Violation of Civil RICO 18 U.S.C. § 1962," is alleged against:

(A) the following persons, as such term is defined in Section 1961(3) collectively, the ("RICO Defendants"): (I) the Debtor; (ii) Louise Gaudette; (iii) the Trustee, Plan Administrators, Employers and Plan Sponsors, the Beneficiary of the Pension Plans and all other fiduciaries with respect to such Pension Plans (collectively "Plan Fiduciaries") during the period between 1987 and the present (the "Enterprise Term") including, without limitation, the Debtor, Louise Gaudette, LLG Services and OFS Lending and the persons in control of them (iv) Gaudette Family Limited Partnership II and its general partners, OFSPP and Louise Gaudette and (vi) each of the John Doe Defendants named and added to this Count from time to time as discovery progresses (collectively, the "John Doe Defendants").

(Pl.'s Compl. at 63.)

The Law Firm Defendants' Motion to Dismiss requests that the Court "enter an order dismissing each of the Law Firm Defendants as a defendant in this action" for the following reasons:

1. Since Reginald Gaudette could not have brought a civil conspiracy action against himself under the New Hampshire doctrine of in pari delicto, the Trustee has no standing to bring these claims as he succeeds to the Debtor\'s property under section 541 of the Bankruptcy Code.

2. The Trustee\'s civil conspiracy claim does not allege an underlying tort in which the Law Firm Defendants are alleged to have participated and therefore fails as a matter of New Hampshire law.

3. Any claims against Attorney Raiche individually should be dismissed for failure to allege any facts indicating his involvement in the conspiracy.

4. Any allegations of breaches of duties owed to the R & R Associates of Hampton bankruptcy⁶ estate be stricken from the complaint since they are irrelevant to this action.

(Law Firm Defs.' Mot. to Dismiss at 1-2.)⁷ The Plaintiff Trustee filed an objection to the Law Firm Defendants' Motion to Dismiss which asserts the following:

1. The in pari delicto defense cannot be used against a New Hampshire bankruptcy trustee as a matter of law.

2. The Plaintiff did not raise the statute of limitations issue in a motion but in a memorandum of law, so it is not properly before the Court. Further, because the statute of limitations issue is a question of fact, the Court may not dismiss Counts I and V on the grounds of whether the statute of limitations has run.

3. No underlying tort is required to plead a civil conspiracy claim under New Hampshire law; however, if one is required, the Plaintiff accurately pleaded one or should be allowed to amend his complaint.

4. The Court should not dismiss the claims against Attorney Raiche because not all facts are known.

5. The allegations concerning the R & R Associates of Hampton bankruptcy should not be stricken because the allegations are relevant to this matter and 12(f) motions are disfavored, particularly when they relate to relevancy.

(Pl.'s Obj. to Law Firm Defs.' Mot. to Dismiss at 1-2.)⁸

In addition to the Law Firm Defendants' Motion to Dismiss, the Debtor and the other Defendants, represented by Attorney Holmes, have also moved to dismiss Counts I and V on the following grounds, many of which are similar to those articulated in the Law Firm Defendants' motion:

a. The Trustee has no legal authority or standing to assert these claims.

b. Count I is barred by the doctrine of in pari delicto.⁹ c. Count I fails to state a proper cause of action.

d. Both claims are barred by the statute of limitations.

e. Both claims are prohibited by the automatic stay.

(Debtor's Motion to Dismiss Counts I and V at 1.)¹⁰ Attorney Holmes amended this motion by filing an Amended Motion to Dismiss Counts I and V.¹¹ The Amended Motion, however, asserts the same bases as mentioned above in "a" through "e." In addition to his objection to the Law Firm Defendants' Motion to Dismiss, the Plaintiff has objected to the Debtor's Motion to Dismiss Counts I and V, of which the pertinent parts the Court quotes verbatim:

1. Taking the facts as pleaded by the Plaintiff as true, Counts I and V state a cognizable cause of action.

2. The Trustee has standing to bring the suit, and the action is timely filed.

3. No underlying tort is required by New Hampshire law to sustain an action for civil conspiracy, and because there is no danger that the estate will be dismembered by creditors in other forums, the automatic stay does not preclude the Complaint.

(Pl.'s Obj. to the Mot. to Dismiss Counts I and V by the Debtor and Other Defs. at 1-2.)¹²

Through previously filed motions and hearings in both this adversary proceeding and in adversary proceeding number 97-1096-MWV,¹³ the Court has dismissed all claims in this adversary proceeding against the Defendants Office and Financial Service Pension Plan ("OFSPP") and Gaudette Associates Pension Plan and Trust ("GAPPT") (collectively referred to as the "Pension Plan Defendants"). Therefore, the Pension Plan Defendants are not listed under the Appearances section for Attorney Holmes in this opinion.

DISCUSSION

I. Standard of Review.

In order to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a plaintiff's complaint must "set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery." Gooley v. Mobil Oil Corp., 851 F.2d 513, 515 (1st Cir.1988); see also Cooperman v. Individual, Inc., 171 F.3d 43, 46 (1st Cir. 1999) ("We accept as true all wellpleaded allegations and give plaintiffs the benefit of all reasonable inferences.") (internal citations and quotations omitted); Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir.1990) ("In reviewing a Rule 12(b)(6) dismissal, we take the...