Miller v. Reminger Co.

• Decision Date: 17 February 2012
• Docket Number: CIVIL ACTION NO. 3:11-cv-315-CRS
• Parties: MICHELLE MILLER and DONALD LEE MILLER, II PLAINTIFFS v. REMINGER CO., L.P.A. and SHEA CONLEY DEFENDANTS
• Court: U.S. District Court — Western District of Kentucky

MICHELLE MILLER and DONALD LEE MILLER, II PLAINTIFFS v. REMINGER CO., L.P.A. and SHEA CONLEY DEFENDANTS

CIVIL ACTION NO. 3:11-cv-315-CRS

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY AT LOUISVILLE

February 17, 2012

MEMORANDUM OPINION

This matter is before the court on motion of the plaintiffs, Michelle Miller ("Michelle") and Donald Lee Miller, II ("Donald" and collectively, "Plaintiffs"), to remand this action to Jefferson County Circuit Court (DN 8), and to stay proceedings (DN 9). Defendants, Reminger Co., L.P.A. ("Reminger") and Shea Conley ("Conley" and collectively, "Defendants") removed this action (DN 1) and filed a motion to dismiss (DN 5). For the reasons set forth below, Plaintiffs' motion to remand will be denied, rendering Plaintiffs' motion to stay moot.

Reminger is an Ohio corporation. Conley and Plaintiffs are all Kentucky citizens, which destroys diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). However, Defendants argue Conley was fraudulently joined, and removal was proper under 28 U.S.C. § 1441. Fraudulent joinder exists where there is no colorable basis for a claim against the non-diverse defendant. Salisbury v. Purdue Pharma, LP, 166 F.Supp2d 546, 548 (E.D. Ky. 2001) (citing Jerome Duncan, Inc. v. Auto-By-Tel, 176 F.3d 904 (6th Cir. 1999)). The burden of proof is on Defendants to show that Plaintiffs cannotestablish a cause of action against the non-diverse defendants under state law. Burns v. Wyeth, Inc., 352 F.Supp.2d 773, 774 (E.D. Ky. 2004).

The standard for ruling on a motion to remand where fraudulent joinder is alleged involves determining "whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved." Walker v. Philip Morris USA, Inc., 443 Fed.Appx. 946, 951, 2011 WL 5119441 at *4 (6th Cir. Oct. 31, 2011) (quoting Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 949 (6th Cir. 1994)). "Any disputed questions [of] fact and ambiguities in the controlling state law should be resolved in favor of the nonremoving party." Id. Plaintiffs assert three causes of action against Conley: (1) breach of fiduciary duty; (2) fraud; and (3) intentional infliction of emotional distress. Because we find that there is no likelihood of success on these claims, the motion to remand will be denied.

Plaintiffs' first claim against Conley for breach of a fiduciary duty fails because no fiduciary relationship existed between the parties. A plaintiff must establish a fiduciary relationship to state a claim for breach of a fiduciary duty. Abney v. Amgen, Inc., 2005 WL 1630154 at *9 (E.D. Ky. July 8, 2005). The general definition for a fiduciary relationship under Kentucky law is that a fiduciary relationship "is one founded on trust or confidence reposed by one person in the integrity and fidelity of another and which also necessarily involves an undertaking in which a duty is created in one person to act primarily for another's benefit in matters connected with such undertaking." Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 485 (Ky. 1991).

We do not find that a fiduciary relationship existed between Donald and Conley, because they were both employees of a corporation and not business partners, as Plaintiffs argue. The Employment Agreement between Donald and Reminger declares Donald an employee:

THIS AGREEMENT [is] made this 9th day of March, 2009, between Reminger Co., L.P.A., an Ohio professional corporation, ("Employer"), and DONALD L. MILLER, II, ("Employee"). ...

Employee desires to accept employment to practice law as a corporate employee of Employer.

Reminger Co., L.P.A. desires to employ the Employee for such compensation and other benefits as are hereinafter set forth, and Employee is willing to accept employment on such terms.

(DN 13, Exhibit 2, Employment Agreement). The parties' "Supplemental Employment Agreement For Senior Attorneys Not Licensed in Ohio" explains that Donald "is not licensed to practice law in the State of Ohio, and is therefore not eligible to hold stock in Reminger." (DN 13, Exhibit 3). Also, the Employment Agreement specifically provides, "This employment contract may be terminated by either Employer or Employee without cause or fault of Employer or Employee, upon giving thirty (30) days' written notice to the other party." (DN 13, Exhibit 2, Employment Agreement). Reviewing the Employment Agreement, we find that it explicitly contemplates an employment at will relationship. It is undisputed that Conley is also not licensed to practice law in Ohio and there is no contention that Conley has any ownership interest in Reminger. Therefore, as an at will employee, Donald's claim for breach of fiduciary duty against another employee, Conley, fails as a matter of law. See Gresh v. Waste Services of America, Inc., 311 Fed. Appx. 766, 771, 2009 WL 383727 (6th Cir. Feb. 17, 2009).

Plaintiffs argue that the court should look past the parties' agreements and find that Conley owed Donald a fiduciary duty despite his status as a fellow employee in Reminger's employment contract. (DN 8, Exhibit 1, Plaintiffs' Memorandum in Support of Their Motion to Remand, p. 6). Plaintiffs assert that we should consider Reminger web pages and press releases, naming Donald a "partner" and find that Conley and Donald acted as partners. (DN 8, Exhibit 1). Plaintiffs argue that"because the circumstances which may create a fiduciary relationship are so varied, it is extremely difficult, if not impossible to formulate a comprehensive definition of it that would fully and adequately embrace all cases." (DN 15, p.2) (quoting Steelvest, Inc., 807 S.W.2d at 485).

However, in Gresh v. Waste Services of America, Inc., the United States Court of Appeals for the Sixth Circuit, applying Kentucky law and faced with a similar argument, held that an at will employee could not ground his breach of fiduciary duty claim on his status as an at will employee. 311 Fed. Appx. at 771. In Gresh, the plaintiff argued that despite a written employment agreement that explicitly stated he was an at will employee, he and the defendants were "essentially partners, or co-owners" and thus he was owed a fiduciary duty. Id. at 771. In Gresh, the plaintiff attempted to use evidence outside of the agreement to convince the Court of an oral agreement between himself and the defendants to act as partners. Id. The Court rejected the plaintiff's argument and held that the plaintiff's "efforts to elevate the relationship to a de facto partnership" was in direct conflict with the agreed-upon terms in the parties' written agreement. Id. The Court held that under the agreement, the plaintiff was an at will employee in an "ordinary business relationship" and thus the defendants did not owe the plaintiff a fiduciary duty, dismissing the claim for breach of fiduciary duty as a matter of law. Id. at 772.

Similarly, in this case, Plaintiffs argues that the Court should look beyond the parties' employment agreement and find that Donald and Conley were business partners. However, the agreement between the parties is explicit that Donald was an at will employee and precludes Donald from having "partnership" status within the company. It is undisputed that Donald and Conley did not own any interest in the company. Reminger was established in Ohio as a professional association. Under Ohio law, a professional association can be organized only by "[a]n individualor group of individuals each of whom is licensed to render within this state the same kind of professional service..." ORC § 1785.02. Neither Conley nor Donald were licensed to practice law in Ohio and were thus not qualified to be shareholders in the company, as mandated by Ohio law, and as provided in Reminger's employment agreements. Further, such a professional association in Ohio is a corporation, not a partnership. O'Neil v. United States, 410 F.2d 888, 888 (6th Cir. 1969). Therefore, Conley and Donald were not partners, but employees. Similar to the United States Court of Appeals for the Sixth Circuit's ruling in Gresh, we reject Plaintiffs' argument that we should consider press releases by Reminger calling Donald a "partner." Reminger's employment agreement was specific that Donald was an at will employee within the company. Thus, Plaintiffs' claim for breach of fiduciary duty against Conley is not colorable, because no fiduciary relationship existed.

Plaintiffs' claim for fraud against Conley also fails as a matter of law. To state a viable claim of fraud, a plaintiff must plead six elements: (1) a material misrepresentation; (2) which is false; (3) known to be false or made recklessly; (4) made with inducement to be acted upon; (5) acted in reliance thereon; and (6) causing injury. United Parcel Service Co. v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999). Pursuant to Fed.R.Civ.P. 9(b), allegations of fraud must be pled with particularity. Scott v. Farmers State Bank, 410 S.W.2d 717, 722 (Ky. 1966). While it is not necessary to "recite each minute detail," a plaintiff is required to plead "the time, the place, the substance of the false representations, the facts misrepresented, and the identification of what was obtained by the fraud." Id.; U.S. ex rel. Bledsoe v. Cmty. Health Systems, Inc., 342 F.3d 634, 643 (6th Cir. 2003) ("In complying with Rule 9(b), a plaintiff, at a minimum, must allege the time, place, and content of thealleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.").

The allegations here do not meet the level of particularity required by Fed.R.Civ.P. 9(b). Plaintiffs' Amended Complaint states that Donald spoke with Conley before he agreed to take a position with Reminger, but Plaintiffs do not allege that Conley made any specific fraudulent statements to Donald, as is required to establish a claim of fraud. See In re Sallee, 286 F.3d 878, 905 (6th Cir. 2002). The only...