Thomas v. Thomas

• Decision Date: 30 March 2015
• Docket Number: Case No.: 1:14-cv-00131-REB
• Court: U.S. District Court — District of Idaho
• Parties: BEN THOMAS, an individual, and LINDA FERRIS, an individual, Plaintiffs, v. BOB and KELLY THOMAS, husband and wife, Defendants.

BEN THOMAS, an individual, and LINDA FERRIS, an individual, Plaintiffs, v. BOB and KELLY THOMAS, husband and wife, Defendants.

Case No.: 1:14-cv-00131-REB

UNITED STATES DISTRICT COURT DISTRICT OF IDAHO

March 30, 2015

MEMORANDUM DECISION AND ORDER RE: DEFENDANTS' (1) RULE 12(b)(6) MOTION TO DISMISS DAMAGE CLAIMS; (2) RULE 12(b)(7) MOTION TO DISMISS DAMAGE CLAIMS; AND (3) RULE 12(b)(1) MOTION TO DISMISS CLAIMS FOR DISSOLUTION OF PARTNERSHIP, WIND-UP, AND SETTLEMENT OF PARTNERSHIP ACCOUNTS, AND CONSTRUCTIVE TRUST

(Docket No. 6)

Now pending before the Court is Defendants' (1) Rule 12(b)(6) Motion to Dismiss Damage Claims; (2) Rule 12(b)(7) Motion to Dismiss Damage Claims; and (3) Rule 12(b)(1) Motion to Dismiss Claims for Dissolution of Partnership, Wind-Up, and Settlement of Partnership Accounts, and Constructive Trust (Docket No. 6). Having carefully considered the record, participated in oral argument, and otherwise being fully advised, the undersigned enters the following Memorandum Decision and Order:

I. BACKGROUND¹

1. Plaintiffs Ben Thomas and Linda Ferris (collectively "Plaintiffs") and Defendants Bob Thomas and Kelly Thomas (collectively "Defendants") are partners in the Thomas BrothersRanch partnership (the "Partnership"). See Compl., ¶ 7 (Docket No. 1). The Partnership has no partnership agreement. See id. at ¶ 8.

2. The Partnership owns a substantial ranch in Oreana, Idaho. See id. at ¶ 9. The Defendants live on the ranch with their adult sons, operating a separate cattle grazing operation. See id. at ¶¶ 10-11. Plaintiff Ben Thomas lives in Woodland, Washington; Plaintiff Linda Ferris lives in Palmer, Alaska. See id. at ¶¶ 1-2.

3. According to Plaintiffs, Defendant Bob Thomas "makes decisions regarding the [P]artnership, and does not allow or accept oversight regarding his decisions" which, in turn, alienates Plaintiffs from the Partnership's business. Id. at ¶¶ 12-13. Plaintiffs contend that "[t]his alienation has allowed [Defendants] to violate their duties to the [P]artnership through allowing the use of [P]artnership property to operate other cattle grazing operations and as a personal residence and source of funds." Id. at ¶ 14. For example:

a. Defendants "have built their personal residence on the ranch property and have not compensated the [P]artnership for their use." Id. at ¶ 15.

b. Defendant Bob Thomas "has denied access to the ranch property and the books of the partnership, because [Plaintiffs] were unwilling to sign a personal guaranty for additional financing." Id. at ¶ 16.

c. Defendant Bob Thomas "increased the [P]artnership's line of credit significantly over the last year, with no input or consent from [Plaintiffs]." Plaintiffs believe that "this line of credit supports [Defendants'] lifestyle on the ranch, and the separate grazing operation, rather than the [Partnership]." Id. at ¶¶ 17-18.

4. Plaintiffs claim to have put money into the Partnership throughout its existence. See id. at ¶ 20.

5. The Partnership turned a profit for the past four to five years, but no money has been paid to Plaintiffs. See id. at ¶ 21.

6. The parties dispute the best use of the Partnership's real property - Plaintiffs "believe it could be put to better use as vacation property or hunting grounds in addition other valuable uses," while Defendants "believe it should be continued to be used for their cattle gazing operation and personal residence." Id. at ¶¶ 22-24. Plaintiffs "believe that to continue to use the ranch for cattle grazing and as [Defendants'] residence would be to commit waste upon the property." Id. at ¶ 25. Plaintiffs submit that "there is a clear conflict between that which is best for the [P]artnership and that which most benefits [Defendants] and their family." Id. at ¶ 26.

7. Plaintiffs believe that the total value of the Partnership, minus liabilities, is in excess of $4.6 million. See id. at ¶ 27.

8. Through this action, Plaintiffs assert the following claims: (1) Dissolution of Partnership, Wind-Up, and Settlement of Partnership Accounts (Count I); (2) Violation of Statutory Duties/Breach of Fiduciary Duty (Count II); (3) Conversion of Partnership Property (Count III); (4) Unjust Enrichment (Count IV); (5) Constructive Trust (Count V); (6) Trespass to Partnership Realty (Count VI). See id. at ¶¶ 28-50.

9. Defendants now move to dismiss Plaintiffs' Complaint, arguing that (1) certain of Plaintiffs' causes of action (identified by Defendants as "damage claims") are unaccompanied by sufficiently-detailed allegations and should be dismissed for failure to state a claim, putting into question the amount-in-controversy requirement for subject matter jurisdiction; and (2) the Partnership - not Plaintiffs - is the only party that can bring the damage claims, and thePartnership's corresponding joinder in the action as a plaintiff would destroy complete diversity, leaving this Court without subject matter jurisdiction. See Mem. in Supp. of Mot. to Dismiss, pp. 2-10 (Docket No. 7).

II. DISCUSSION

A. Legal Standards

1. FRCP 12(b)(6): Failure to State a Claim Upon Which Relief Can Be Granted

FRCP 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by an FRCP 12(b)(6) motion to dismiss "does not need detailed factual allegations," it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id.

To 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." Id. at 570. When reviewing a complaint under this Rule, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. See Thompson v. Davis, 295 F.3d 890, 895 (9^th Cir. 2002). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell, 550 U.S. 544 at 555. In other words, the complaint must plead "enough facts to state a claim to relief that is plausible on its face." Id. at 570. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. The plausibilitystandard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. "Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

A dismissal without leave to amend is improper unless it is beyond doubt that the complaint "could not be saved by any amendment." Harris v. Amgen, Inc., 573 F.3d 728, 737 (9^th Cir. 2009). The Ninth Circuit has held that "in dismissal for failure to state a claim, a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss and Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 247 (9^th Cir. 1990). The issue is not whether the plaintiff will prevail but whether he "is entitled to offer evidence to support the claims." Hydrick v. Hunter, 466 F.3d 676, 685 (9^th Cir. 2006).

2. FRCP 12(b)(7): Failure to Join a Party Under FRCP 19

FRCP 19, which governs the compulsory joinder of parties, presents a three-step inquiry. "First, the court must determine whether a nonparty should be joined under [FRCP] 19(a)." EEOC v. Peabody W. Coal Co., 610 F.3d 1070, 1078 (9^th Cir. 2010) (internal quotation marks omitted). Under FRCP 19(a), a party is "required" if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or

(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:

(i) as a practical matter impair or impede the person's ability to protect the interest; or(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest."

Fed. R. Civ. P. 19(a)(1).

Second, if the nonparty (or "absentee") is required and should be joined, the court must determine if it is feasible to do so. See Peabody, 610 F.3d at 1078.

Finally, "[i]f a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed." Fed. R. Civ. P. 19(b). The factors under FRCP 19(b) to determine whether the party is indispensable are: (1) the prejudice to any party or to the absent party; (2) whether relief can be shaped to lessen prejudice; (3) whether a judgment rendered in the person's absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder, i.e., whether there exists an alternative forum. See Fed. R. Civ. P. 19(b)(1-4). "There is no prescribed formula for determining in every case whether a person is an indispensable party." Provident Tradesmen Bank & Trust Co. v. Patterson, 390 U.S. 102, 118 n.14 (1968). To the contrary, "[FRCP] 19(b) requires the district court to analyze various equitable considerations within the context of particular litigation, rather than to decide a purely legal issue." Walsh v. Centeio, 692 F.2d 1239, 1242 (9^th Cir. 1982).

If the threshold requirements of FRCP 19(a) are not met, an FRCP 19(b) inquiry is unnecessary. See Temple v....