Thompson v. Kerr, No. C-3-81-035.
| Court | United States District Courts. 6th Circuit. United States District Courts. 6th Circuit. Southern District of Ohio |
| Writing for the Court | RICE |
| Citation | 555 F. Supp. 1090 |
| Docket Number | No. C-3-81-035. |
| Decision Date | 16 November 1982 |
| Parties | Shirley THOMPSON, et al., Plaintiffs, v. Robert A. KERR, et al., Defendants. |
555 F. Supp. 1090
Shirley THOMPSON, et al., Plaintiffs,
v.
Robert A. KERR, et al., Defendants.
No. C-3-81-035.
United States District Court, S.D. Ohio, W.D.
November 16, 1982.
Roger J. Makley, Coolidge, Wall, Matusoff, Womsley & Lombard Co., L.P.A., Robert P. Bartlett, Jr., Estabrook, Finn & McKee, Dayton, Ohio, for defendants.
DECISION AND ENTRY ON PENDING MOTIONS; DEFENDANTS' MOTION TO DISMISS ORIGINAL COMPLAINT SUSTAINED; DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT OVERRULED IN PART AND SUSTAINED IN PART; DEFENDANTS' MOTION TO STAY ACTION OVERRULED; CONFERENCE CALL SET
RICE, District Judge.
Plaintiffs in this action have filed two complaints. The original complaint was filed by Shirley Thompson and Joseph S. Thompson, citizens of Kentucky, and Thompson Mobile Modulars, Inc. (Modulars), a company incorporated in Kentucky, of which the individual Plaintiffs were president and vice-president, respectively. The first amended complaint was filed only by Modulars.1 The original complaint alleges that the named Defendants violated provisions of the National Bank Act, 12 U.S.C. § 21 et seq., while the first amended complaint alleges that Defendants violated provisions of the Act, and also states claims under Ohio law. Two motions are currently pending before the Court, to wit:
(1) Defendants' motion to dismiss the original complaint (docs. # 7 & 8), pursuant to Fed.R.Civ.P. 12(b)(1), (2), (5) & (6); and
(2) Defendants' motion to dismiss the first amended complaint (docs. # 15 & 16), pursuant to Fed.R.Civ.P. 12(b)(1), (2), (5) & (6), or, alternatively, to stay this action, pending the resolution of a proceeding in a court in the state of Kentucky.
For the reasons set forth below, Defendants' motion to dismiss the original complaint is sustained, for insufficiency of service of process, Rule 12(b)(5). Defendants' motion to dismiss the first amended complaint is overruled in part and sustained in part. Finally, Defendants' motion to stay this action is overruled.
I. PROCEDURAL BACKGROUND
As noted above, the original complaint was filed by three Plaintiffs. Said complaint named the seventeen members of the Board of Directors of Winters National Bank and Trust Company of Dayton, Ohio (Winters) as Defendants.2 These Defendants, the complaint alleges, knowingly permitted one R.L. Morgan, an agent of Winters, to act as an agent of Foremost Insurance Company. Original Complaint, ¶ 4. The complaint further alleges that Modulars financed the purchase of 32 mobile homes for a rental program from Winters in 1975, through a loan from Winters, that Winters required Modulars and the Thompsons to purchase "fire, theft, personal liability, vendor's security interest and comprehensive insurance coverage" for said mobile homes through Morgan, but that the insurance policies issued by Foremost Industries did not provide the coverage bargained for, since rental of mobile homes was excluded. ¶¶ 4-11. As a result, the complaint concludes,
Said acts of the Defendants were alleged to have violated the National Bank Act, 12 U.S.C. §§ 92, 93. ¶¶ 13-14. The jurisdiction of this Court was invoked pursuant to 12 U.S.C. § 93, and relief in the amounts of $22,094.98, plus interest, in actual damages, and $300,000.00 in punitive damages, was prayed for.
The First Amended Complaint, filed by Modulars in this Court on May 21, 1981, is divided into two Counts. The first Count, after reiterating the allegations in the original complaint, First Amended Complaint, Count I, ¶ 1, alleged that since 1972, Winters agreed to pay Modulars a finders fee for the sale of mobile homes financed by Winters, and that Winters would withhold a portion of the finders fee, in a separate account under the name of Modulars. ¶¶ 4-5. However, Count I further alleges, Winters commingled the funds held in said account into a general escrow account; Winters funded the latter account by deducting two (2) percent of the total monthly volume dollars of installment loan contracts purchased by Winters from mobile home dealers (including Modulars). ¶ 7. A provision in said agreement waiving Modulars' right and claims to any monies in the escrow account is alleged to be unconscionable and coercive. ¶ 9. Finally, Count I alleges that Defendants Robert Kerr and Winters ordered the elimination of the general escrow account. ¶ 10. Said acts were alleged to have violated 12 U.S.C. § 73, and jurisdiction of this Court was invoked under 12 U.S.C. § 93. ¶ 13.
The second Count also reiterated the allegations found in the original complaint, First Amended Complaint, Count II, ¶ 1, and set forth factual allegations identical to those in Count I. However, said acts are alleged to have violated the "implied covenant of good faith and fair dealing ... as a result of the business relationship between" Modulars and the Defendants. ¶ 11. For Count II, the jurisdiction of this Court was invoked pursuant to the diversity statute, 28 U.S.C. § 1332(a)(1). Unlike the original complaint, the First Amended Complaint also named Winters as a Defendant.
II. DEFENDANTS' MOTION TO DISMISS THE ORIGINAL COMPLAINT IS SUSTAINED
Defendants advance three grounds in support of their motion to dismiss the original complaint, pursuant to Fed.R.Civ.P. 12(b), to wit: (1) service of process on the directors did not satisfy the requirements of Fed.R.Civ.P. 4(d)(1) & (7), (2) the complaint failed to state a claim upon which relief could be granted as to three of the Defendants, who were not members of the Board of Directors of Winters at the time of the acts alleged in the complaint, and (3) Plaintiffs, in any event, lacked standing, under 12 U.S.C. § 93, to maintain this action.
For the reasons set forth below, the Court finds the first ground to be well taken, and, therefore, finds it unnecessary to address the other grounds for dismissal advanced by the Defendants.
In considering a motion to dismiss, pursuant to Rule 12(b)(5), this Court must accept as true all well pleaded allegations of the complaint, Amersbach v. City of Cleveland, 598 F.2d 1033, 1034-35 (6th Cir.1979), although reference to the record is permissible to determine the alleged insufficiency of service of process. 5 C. Wright & A. Miller, Federal Practice and Procedure, § 1353 at 581 (1969).
The record indicates that the original complaint was served, by certified mail, at the corporate offices of Winters, not upon the individual Defendants. Federal Rule 4(d)(1) requires that service upon individuals be made to the individual personally, at his dwelling house, or through his authorized agent. Said requirements were not complied with herein. In addition, the requirements of Rule 4(d)(1) are not satisfied by service upon a defendant's place of work or business. Gipson v. Township of Bass River, 82 F.R.D. 122, 125 (D.N.J.1979);
Under Federal Rule 4(d)(7), however, an individual may be served "in the manner prescribed by the law of the state in which the district court is held...." The applicable Ohio rule, Ohio R.Civ.P. 4.1(1), permits service upon individuals by certified mail to the address set forth in the caption of the complaint, as was done herein. Nevertheless, the Ohio Rules must be further construed to conform with the requirements of due process: service must be "reasonably calculated" to reach the interested party. Samson Sales, Inc. v. Honeywell, Inc., 66 Ohio St.2d 290, 421 N.E.2d 522 (1981).
By an uncontradicted affidavit (doc. # 7, ex. B, ¶ 2), Defendants assert that the Winters' Board of Directors only meet at the Winters business address once a month. It is doubtful that service upon a business, only irregularly visited by some or all of the directors, would satisfy the reasonable notice requirements embodied in due process. For example, the Ohio Supreme Court, in construing Ohio Rule 4.1(1), recently held that service upon a business address, only sporadically visited (2 or 3 times a month) by an advisor to that business, was not "reasonably calculated" to reach that individual, and thus was not sufficient to satisfy due process. Akron-Canton Regional Airport Authority v. Swinehart, 62 Ohio St.2d 403, 406 N.E.2d 811 (1980). In light of Swinehart, it would be anomalous to hold that service of the original complaint in the within matter was sufficient, when Defendants herein visit the Winters business address only once a month, while the individual sought to be served in Swinehart visited the business address two or three times a month.
For similar reasons, service upon the Winters address was inadequate with respect to the directors who were not residents of Ohio. By uncontradicted affidavit (referred to above), Defendants aver that four of the directors were not residents of Ohio.3 Fed.R.Civ.P. 4(e) permits service upon a non-resident party in the manner prescribed by the relevant state rule. In turn, Ohio R.Civ.P. 4.3(B)(1) permits service of process to be made on an out-of-state defendant by certified mail, to the address set forth in the caption of the complaint as, again, was done herein. But Ohio Rule 4.3(B)(1) must also be applied in light of due process requirements, see Mitchell v. Mitchell, 64 Ohio St.2d 49, 413 N.E.2d 1182 (1980) (service upon non-resident's address in divorce action). As argued above, the service of the original complaint was not "reasonably...
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Federal Deposit Ins. Corp. v. Haddad, No. 90-0779-CIV.
...First Bank, N.A., 837 F.2d 476 (6th Cir. 1988) (refusing to imply a private right of action under 12 U.S.C. § 73); Thompson v. Kerr, 555 F.Supp. 1090, 1097 (S.D.Ohio 1982). (Same).6 Accordingly, dismissal of Count IV with prejudice is C. Count V—Breach of Contract In Count V, plaintiff brin......
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In re Fidelity Bank Trust Fee Litigation, No. 93-CV-0025.
...LEXIS 3962, at 6 (N.D.Ill. March 24, 1993)); Golar v. Daniels & Bell, Inc., 533 F.Supp. 1021, 1027 (S.D.N.Y.1982); Thompson v. Kerr, 555 F.Supp. 1090, 1097 (S.D.Ohio 1982). See also Saker v. Community First Bank, 87-3133, 1988 WL 4463, at 1-3, 1988 U.S.App. LEXIS 878, at 5-6 1988 U.S.App. L......
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Beth v. BY YVONNE V. v. CARROLL, Civ. A. No. 93-4418.
...raised and decided issue of private right of action, but reversing based on interim developments in substantive law); Thompson v. Kerr, 555 F.Supp. 1090, 1097 n. 8 (S.D.Ohio 1982) (proper for court to raise, sua sponte, issue of private right of action); International Union, UAW v. National......
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FDIC v. Gonzalez-Gorrondona, No. 91-2791-CIV.
...124 F.R.D. 662 (D.Kan.1988); Fries v. Kyriakides, No. 85-3722-CIV-HOEVELER, slip op. at 2 (S.D.Fla. Feb. 20, 1987); Thompson v. Kerr, 555 F.Supp. 1090, 1098 n. 9 (S.D.Ohio 1982). Notably, the FDIC did not even contest this argument in its Consolidated Response to the motions to dismiss. See......
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Federal Deposit Ins. Corp. v. Haddad, No. 90-0779-CIV.
...First Bank, N.A., 837 F.2d 476 (6th Cir. 1988) (refusing to imply a private right of action under 12 U.S.C. § 73); Thompson v. Kerr, 555 F.Supp. 1090, 1097 (S.D.Ohio 1982). (Same).6 Accordingly, dismissal of Count IV with prejudice is C. Count V—Breach of Contract In Count V, plaintiff brin......
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In re Fidelity Bank Trust Fee Litigation, No. 93-CV-0025.
...LEXIS 3962, at 6 (N.D.Ill. March 24, 1993)); Golar v. Daniels & Bell, Inc., 533 F.Supp. 1021, 1027 (S.D.N.Y.1982); Thompson v. Kerr, 555 F.Supp. 1090, 1097 (S.D.Ohio 1982). See also Saker v. Community First Bank, 87-3133, 1988 WL 4463, at 1-3, 1988 U.S.App. LEXIS 878, at 5-6 1988 U.S.App. L......
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Beth v. BY YVONNE V. v. CARROLL, Civ. A. No. 93-4418.
...raised and decided issue of private right of action, but reversing based on interim developments in substantive law); Thompson v. Kerr, 555 F.Supp. 1090, 1097 n. 8 (S.D.Ohio 1982) (proper for court to raise, sua sponte, issue of private right of action); International Union, UAW v. National......
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FDIC v. Gonzalez-Gorrondona, No. 91-2791-CIV.
...124 F.R.D. 662 (D.Kan.1988); Fries v. Kyriakides, No. 85-3722-CIV-HOEVELER, slip op. at 2 (S.D.Fla. Feb. 20, 1987); Thompson v. Kerr, 555 F.Supp. 1090, 1098 n. 9 (S.D.Ohio 1982). Notably, the FDIC did not even contest this argument in its Consolidated Response to the motions to dismiss. See......