Sutherland v. Domer
| Decision Date | 14 September 2018 |
| Docket Number | 1:17CV769 |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | SUSAN SUTHERLAND, Plaintiff, v. JANE AGNEW DOMER, individually and as Attorney-in-Fact for EDWARD P. AGNEW, and LAWRENCE R. SHOVAR, individually and as Attorney-in-Fact for EDWARD P. AGNEW, Defendants. |
Before the court is the motion to dismiss filed by Defendants Jane Agnew Domer ("Domer") and Lawrence R. Shovar ("Shovar") (collectively the "Defendants"). (Doc. 10.) Defendants move to dismiss Plaintiff's claims of breach of fiduciary duty (Count II), undue influence (Count III), constructive fraud (Count IV), unjust enrichment (Count V), and conversion (Count VI) pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim and a lack of standing. (Mem. in Supp. of Mot. to Dismiss ("Defs. Mem.") (Doc. 11) at 1.) Defendants move to dismiss the remaining claim for breach of contract (Count I) and an accounting (Count VII) pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction. (Id.) For the reasons that follow, this court finds that Defendants' motion should be granted. Counts II through VI will be dismissed pursuant to Fed. R. Civ. P. 12(b)(6), and Counts I and VII will be dismissed pursuant to Fed. R. Civ. P. 12(b)(1).1 The dismissal will be without prejudice.
Plaintiff has brought this action alleging a number of state law claims as to Defendants. Jurisdiction is based upon diversity of citizenship under 28 U.S.C. § 1332. (Id. ¶ 6.) In summary, the allegations contained in Plaintiff Susan Sutherland's ("Plaintiff") Complaint, construed in the light most favorable to Plaintiff, show the following.
Plaintiff is a resident of Colorado. (Id. ¶ 3.) Plaintiff's mother was married to Edward Agnew ("Agnew") for over 42 years, id. ¶ 11), and Plaintiff is Agnew's step-child. (Id. ¶ 12.) Domer is Agnew's daughter (id. ¶ 9), and Shovar is Domer's partner. (Id. ¶ 10.) Plaintiff makes a number of allegations as to the relationships between Plaintiff and Agnew and Domer and Agnew, (see id. ¶¶ 14-17); those facts, while described in some detail in the Complaint, are not generally relevant to Defendants' motion and will be described only as necessary in the analysis.
As relevant to Defendants' motion, Plaintiff alleges that, on May 30, 2014, Plaintiff "filed an action in Larimer County, Colorado for the appointment of an emergency guardian, a permanent guardian, a special conservator, and a permanent conservator for Mr. Agnew." (Id. ¶ 18.) The parties to that action, including Plaintiff, Agnew, and Domer, were ordered to participate in mediation. (Id. ¶ 22.) The parties reached agreement at mediation to resolve the action, and a written Memorandum of Agreement (the "MOA") was signed by the parties and their counsel. (Id. ¶ 23, Ex. 1.)2 The MOA was entered by the court in Colorado. (Id. ¶ 27.) Of particular note to Defendants' motion, the MOA states that Agnew desired to revoke a will executed in 2013, and further that Agnew desired "to divide his assets that remain after his death 50% to Susan Sutherland and 50% to Jane Agnew Domer by POD or other designations . . . [and that] Edward Agnew and Jane Agnew Domer as attorney-in-fact agree to make POD designations to achieve this result." (Id., Ex. 1 at 1.) The Complaint does not describe or attach the "POD or other designations."
The MOA recognized that Agnew desired for Domer to continue to make Agnew's "medical and financial decisions to the extent he cannot make them himself," (id.), and Domer agreed to "provide an annual accounting starting October 31, 2014" of all accounts and securities owned by Agnew. (Id.)
Plaintiff makes a number of allegations regarding Defendants' handling and mismanagement of Agnew's finances as well as alleging issues relating to the relationship between Plaintiff, Agnew, and Defendants, all following entry of the MOA. (Compl. (Doc. 1) ¶¶ 28-39.)
Additional facts will be addressed in the analysis where relevant.
A federal court sitting in diversity jurisdiction generally applies the relevant substantive law of the state in which the court sits, while applying federal procedural law. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 72-73, 79-80 (1938); see also Hanna v. Plumer, 380 U.S. 460, 465-66 (1965).
Under federal law, "[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To be facially plausible, a claim must "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable" and must demonstrate "more than a sheer possibility that a defendant has acted unlawfully." Id. (citing Twombly, 550 U.S. at 556-57). When ruling on a motion to dismiss, a court must accept the complaint's factual allegations as true. Id. Further, "the complaint, including all reasonable inferences therefrom, [is] liberally construed in the plaintiff's favor." Estate of Williams-Moore v. All. One Receivables Mgmt., Inc., 335 F. Supp. 2d 636, 646 (M.D.N.C. 2004) (citation omitted).
Nevertheless, the factual allegations must be sufficient to "raise a right to relief above the speculative level" so as to "nudge[] the[] claims across the line from conceivable to plausible." Twombly, 550 U.S. at 555, 570; see also Iqbal, 556 U.S. at 680; Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (). A court cannot "ignore a clear failure in the pleadings to allege any facts which set forth a claim." Estate of Williams-Moore, 335 F. Supp. 2d at 646. Consequently, even given the deferential standard allocated to pleadings at the motion to dismiss stage, a court will not accept mere legal conclusions as true, and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, [will] not suffice." Iqbal, 556 U.S. at 678.
Standing is a threshold question in every federal case. Warth v. Seldin, 422 U.S. 490, 499 (1975).
The Art. III judicial power exists only to redress or otherwise to protect against injury to the complaining party, even though the court's judgment may benefit others collaterally. A federal court's jurisdiction therefore can be invoked only when the plaintiff himself has suffered "some threatened or actual injury resulting from the putatively illegal action . . . ."
Id. (quoting Linda R.S. v. Richard D., 410 U.S. 614, 616 (1973)) (other citations omitted). Ordinarily, a party "must assert his own legal rights . . . and cannot rest his claim to relief on the legal rights . . . of third parties." Id. As relevant to the present case, Plaintiff has alleged claims causing injury to Plaintiff but resting upon the legal rights of others (namely, the rights of Agnew). (See Compl. (Doc. 1) at 9.) To have standing, Plaintiff must assert her own legal rights.
In support of their motion to dismiss the fiduciary duty and related claims, Defendants argue that Plaintiff must establish a fiduciary duty between the parties as recognized by state law. (See Defs.' Mem. (Doc. 11) at 5.) Relying upon Hauser v. Hauser, ___ N.C. App. ___, ___, 796 S.E.2d 391, 395 (2017), Defendants contend that Plaintiff has not established a fiduciary relationship between Plaintiff and Defendants and that the breach of fiduciary duty claim must therefore be dismissed. (Defs.' Mem. (Doc. 11) at 7.) Finally, Defendants contend that Plaintiff has no standing to bring claims that challenge the transactions alleged in the complaint.3 (Id. at 8.)
Plaintiff responds to these arguments in two ways. First, Plaintiff appears to contend that Hauser is distinguishable because of the existence of prior litigation and the MOA in this case. (See Pl.'s Br. in Resp. to Defs.' Mot. to Dismiss ("Pl.'s Br." (Doc. 16) at 5-6.) Plaintiff also argues, without citation, that Domer's "breach of her fiduciary duty to Mr. Agnew flows through to affect the terms of the MOA, thereby providing Ms. Sutherland with standing to assert these claims against Defendant Domer directly." (Id. at 6.) Second, Plaintiff contends her claims are appropriate based upon the implied covenant of good faith and fair dealing implicitly included in the MOA. (Id.)
This court will address the claims individually.
Count II alleges a breach of fiduciary duty claim. (See Compl. (Doc. 1) at 9-10.) Count IV alleges a similar claim, constructive fraud, (id. at 12-13), which, like a breach of fiduciary duty claim, requires that Plaintiff establish a position of trust and confidence between Plaintiff and Defendants. As the North Carolina Supreme Court has explained:
Miller v. First Nat'l Bank of Catawba Cty., 234 N.C. 309, 316, 67 S.E.2d 362, 367-68 (1951) (quoting 37 C.J.S. Fraud § 2).
In order "[f]or a breach of fiduciary duty to exist, there must first be a fiduciary relationship between the parties." Dalton v. Camp, 353 N.C. 647, 651, 548 S.E.2d 704, 707 (2001) (citations omitted). A fiduciary relationship is present in any situation where "'there has been a special confidence reposed in one who in equity and good conscience is bound to act in good faith and with due regard to the interests of the one reposing confidence . . . .'" Id. (qu...
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