Schuster v. Anderson, No. C04-4089-MWB.
| Court | United States District Courts. 8th Circuit. Northern District of Iowa |
| Writing for the Court | Bennett |
| Citation | 378 F.Supp.2d 1070 |
| Decision Date | 12 July 2005 |
| Docket Number | No. C04-4089-MWB. |
| Parties | Orville SCHUSTER, Schuster Co., Lemars Truck & Trailer, Inc. and William Schlichte, Plaintiffs, v. Fay ANDERSON, F.H. Anderson Company, P.C., F.H. Anderson Company, Carl Anderson, Anderson Accounting & Tax Services, Inc., Cal Cleveringa and American State Bank, Defendants. |
v.
Fay ANDERSON, F.H. Anderson Company, P.C., F.H. Anderson Company, Carl Anderson, Anderson Accounting & Tax Services, Inc., Cal Cleveringa and American State Bank, Defendants.
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Terrence D. Brown, Hixson & Brown, PC, Clive, IA, Timothy A. Clausen, Klass, Stoik, Mugan, Villone, Phillips, Orzechowski, Clausen & Lapierre, LLP, Sioux City, IA, for Plaintiffs.
Edward M. Mansfield, Belin, Lamson, Mccormick, Zumbach, Flynn, Des Moines, IA, Lloyd W. Bierma, Oostra, Bierma & Schouten, Sioux Center, IA, John C. Gray, Heidman, Redmond, Fredregill, Patterson, Plaza, Dykstra & Prahl, Sioux City, IA, Stephen G. Olson, II, Robert Keith, Engles, Ketcham, Olson & Keith PC, Omaha, NE, Michael R. Hellige, Hellige, Frey & Roe, Sioux City, IA, for Defendants.
MEMORANDUM OPINION AND ORDER REGARDING DEFENDANTS' MOTIONS TO DISMISS AND PLAINTIFF SCHUSTER'S MOTION FOR LEAVE TO FILE A THIRD AMENDED AND SUBSTITUTED COMPLAINT
BENNETT, Chief Judge.
TABLE OF CONTENTS
I. INTRODUCTION AND BACKGROUND ............................................1075
A. Procedural Background ..............................................1075
B. Factual Background .................................................1078
1. Relationships of the parties ...................................1078
2. Yournet related entities & the Witherspoon affair ..............1078
3. Plaintiffs' investments in Yournet related entities and the
Witherspoon affair ................................................1079
II. LEGAL ANALYSIS .........................................................1081
A. Rule 12(b)(6) Standards ............................................1081
B. Civil RICO Claims — Counts XIV-XVI ................................1083
1. The RICO claims generally ......................................1083
2. Pleading fraud with particularity ..............................1084
a. Arguments of the parties ...................................1084
b. The law ....................................................1086
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c. The Complaint ..............................................1088
d. Analysis ...................................................1088
i. Wire transfers ........................................1089
ii. Circumstance constituting fraud .......................1092
3. Pleading the "enterprise" requirement ..........................1094
a. Arguments of the parties ...................................1094
b. The law ....................................................1095
c. The Complaint ..............................................1097
d. Analysis ...................................................1097
4. Respondeat superior theory of liability against ASB ............1099
a. Arguments of the parties ...................................1099
b. The law ....................................................1100
c. Analysis ...................................................1102
5. Ultimate disposition of RICO claims ............................1105
C. Breach of Fiduciary Duty Claims — Counts IV & XX ..................1106
1. The Complaint ..................................................1106
2. Arguments of the parties .......................................1106
3. Breach of fiduciary duty under Iowa law ........................1108
4. Analysis .......................................................1109
D. Fraudulent Misrepresentation And Fraudulent Nondisclosure —
Counts VI & VII ..................................................1110
1. The Complaint ..................................................1110
2. Arguments of the parties .......................................1111
3. Fraudulent misrepresentation and fraudulent nondisclosure under
Iowa law .....................................................1112
4. Analysis .......................................................1113
E. Subject Matter Jurisdiction — Counts I, II & III ..................1114
1. The Complaint ..................................................1114
2. General law regarding subject matter jurisdiction ..............1115
3. Arguments of the parties .......................................1116
a. Arguments for dismissal ....................................1116
i. The Carl Anderson defendants ..........................1116
ii. The Anderson defendants ...............................1117
b. The plaintiffs' arguments in resistance ....................1117
c. The Anderson, and Carl Anderson, defendants' reply .........1119
4. Analysis .......................................................1119
F. Plaintiff Schuster's Motion For Leave To Amend .....................1122
III. CONCLUSION .............................................................1123
On September 21, 2004, plaintiffs Orville Schuster ("Schuster") and William Schlichte ("Schlichte") filed a complaint against defendants American State Bank ("ASB"), Cal Cleveringa ("Cleveringa") and Fay Anderson ("Anderson") alleging ten causes of action. (Doc. No. 2). The defendants each proceeded to file motions to dismiss in October and early November 2004. (Doc. Nos.9, 10, 14). Following several extensions of time in which to file their resistances, as well as the withdrawal of counsel due to conflicts of interest with the defendants, a status conference was held by United States Magistrate Judge Paul A. Zoss. Following the status conference, Judge Zoss ordered that issues surrounding Schlichte's legal representation be resolved by February 1, 2005, giving the plaintiffs until February 15, 2005, in which to file amended complaints, and denying the outstanding motions to dismiss without prejudice. (Doc. No. 42). On February 15, 2005, Schuster, Schlichte and newly-added plaintiffs Schuster Co. and
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Lemars Truck & Trailer, Inc. ("LTT"), filed a Second Amended and Substituted Complaint ("Complaint") which alleged twenty counts against original defendants Anderson, Cleveringa and ASB, as well as newly added defendants F.H. Anderson Company, P.C., F.H. Anderson Company, Carl Anderson, Anderson Accounting & Tax Services, Inc., and William & Company, C.P.A. (Doc. No. 44). The twenty causes of action asserted are as follows:
I. Schuster's professional negligence claim against defendants Anderson, F.H. Anderson Company, P.C. and F.H. Anderson Company;
II. Schuster Co.'s professional negligence claim against defendants Anderson, F.H. Anderson Company, P.C., F.H. Anderson Company, Carl Anderson, and Anderson Accounting & Tax Services, Inc.;
III. LTT's professional negligence claim against Carl Anderson and Anderson Accounting & Tax Services, Inc.;
IV. Schuster's breach of fiduciary duty claim against Anderson, F.H. Anderson Company, P.C. and F.H. Anderson Company;
V. Schuster and Schlichte's breach of fiduciary duty claim against Cleveringa and ASB;
VI. Schuster's claim for fraudulent misrepresentation against Anderson, F.H. Anderson Company, P.C. and F.H. Anderson Company;
VII. Schuster's fraudulent nondisclosure claim against Anderson, F.H. Anderson Company, P.C. and F.H. Anderson Company;
VIII. Schuster and Schlichte's fraudulent misrepresentation claim against Cleveringa and ASB;
IX. Schuster and Schlichte's fraudulent nondisclosure claim against Cleveringa and ASB;
X. Schuster's claim for negligent misrepresentation against Anderson, F.H. Anderson Company, P.C. and F.H. Anderson Company;
XI. Schuster and Schlichte's negligent misrepresentation claim against Cleveringa and ASB;
XII. Schuster and Schlichte's claim for fraud in the inducement based on fraudulent misrepresentations by ASB;
XIII. Schuster and Schlichte's claim for fraud in the inducement based on fraudulent nondisclosures;
XIV. Schuster and Schlichte's claim of an 18 U.S.C. § 1962(b)-Racketeer Influenced and Corrupt Organizations Act ("RICO") violation by Anderson, F.H. Anderson Company, P.C., F.H. Anderson Company, Cleveringa and ASB;
XV. Schuster and Schlichte's claim of an 18 U.S.C. § 1962(c)-RICO violation by Anderson, F.H. Anderson Company, P.C. F.H. Anderson Company, Cleveringa and ASB;
XVI. Schuster and Schlichte's claim of an 18 U.S.C. § 1962(d)-RICO violation by Anderson, F.H. Anderson Company, P.C. F.H. Anderson Company, Cleveringa and ASB;
XVII. Schuster and Schlichte's claim for negligent supervision against Anderson, F.H. Anderson Company, P.C. and F.H. Anderson Company;
XVIII. Schuster and Schlichte's negligent supervision claim against ASB;
XIX. Schlichte's breach of contract claim against Anderson;
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XX. Schlichte's breach of fiduciary duty claim against Anderson, F.H. Anderson Company, P.C. and F.H. Anderson Company.
The Complaint alleges that this court has subject matter jurisdiction by virtue of federal question jurisdiction, 28 U.S.C. § 1331, in light of the RICO claims, and supplemental jurisdiction under 28 U.S.C. § 1367 over the state law claims. On February 23, 2003, the plaintiffs filed a notice of voluntary dismissal of defendant Williams & Company, C.P.A. (Doc. No. 45). On March 16, 2005, defendants Carl Anderson and Anderson Accounting & Tax Services, Inc. filed a Motion to Dismiss Counts I, II, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII, XIV, XV, XVI, XVII, XVIII, XIX and XX of Plaintiffs' Second Amended and Substituted Complaint Pursuant to F.R.C.P. 12(h)(2)(3)(sic). (Doc. No. 52). Specifically, Carl Anderson and Anderson Accounting & Tax Services, Inc. assert that Counts I, and IV-XX should be dismissed for failure to state a claim upon which relief can be granted, and that Counts II and III should be dismissed for lack of subject matter jurisdiction. On March 17, 2005,...
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...particularity required by Rule 9(b) of the Federal Rules of Civil Procedure in a number of prior decisions. See Schuster v. Anderson, 378 F.Supp.2d 1070, 1086 (N.D.Iowa 2005); Iowa Health Sys. v. Trinity Health Corp., 177 F.Supp.2d 897, 914 (N.D.Iowa 2001); Wright v. Brooke Group, Ltd., 114......
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Schuster v. Anderson, No. C04-4089-MWB.
...The procedural and factual background for this lawsuit is discussed extensively in this court's prior ruling. See Schuster v. Anderson, 378 F.Supp.2d 1070, 1075-81 (N.D.Iowa 2005). The court will therefore present here only procedural matters arising since the court dismissed the second ame......
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...on plaintiffs. In support of its position, U.S. Bank directs the court's attention to this court's decision in Schuster v. Anderson, 378 F.Supp.2d 1070 (N.D.Iowa 2005). Plaintiffs respond that the facts in Schuster are clearly distinguishable from those in this case and that the Schuster de......
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Bucco v. W. Iowa Tech Cmty. Coll., C21-4001-LTS
...Without the alleged predicate acts, the association-in-fact enterprise "had no form or structure." Id. See also Schuster v. Anderson , 378 F. Supp. 2d 1070, 1096-97 (N.D. Iowa 2005) ("As a matter of law, it is not sufficient that several organized, ongoing groups come together for one conce......
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Remmes v. International Flavors & Fragrances, Inc., No. C04-4061-MWB.
...particularity required by Rule 9(b) of the Federal Rules of Civil Procedure in a number of prior decisions. See Schuster v. Anderson, 378 F.Supp.2d 1070, 1086 (N.D.Iowa 2005); Iowa Health Sys. v. Trinity Health Corp., 177 F.Supp.2d 897, 914 (N.D.Iowa 2001); Wright v. Brooke Group, Ltd., 114......
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Schuster v. Anderson, No. C04-4089-MWB.
...The procedural and factual background for this lawsuit is discussed extensively in this court's prior ruling. See Schuster v. Anderson, 378 F.Supp.2d 1070, 1075-81 (N.D.Iowa 2005). The court will therefore present here only procedural matters arising since the court dismissed the second ame......
-
Armstrong v. AMERICAN PALLET LEASING INC., No. C07-4107-MWB.
...on plaintiffs. In support of its position, U.S. Bank directs the court's attention to this court's decision in Schuster v. Anderson, 378 F.Supp.2d 1070 (N.D.Iowa 2005). Plaintiffs respond that the facts in Schuster are clearly distinguishable from those in this case and that the Schuster de......
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Bucco v. W. Iowa Tech Cmty. Coll., C21-4001-LTS
...Without the alleged predicate acts, the association-in-fact enterprise "had no form or structure." Id. See also Schuster v. Anderson , 378 F. Supp. 2d 1070, 1096-97 (N.D. Iowa 2005) ("As a matter of law, it is not sufficient that several organized, ongoing groups come together for one conce......