Tunne v. Hendrickf
| Decision Date | 24 August 2012 |
| Docket Number | CIVIL ACTION NO. 5:10CV-00181-JHM |
| Parties | MARK TUNNE, pro se PLAINTIFF v. PAUL MAYNARD HENDRICK, et al. DEFENDANTS |
| Court | U.S. District Court — Western District of Kentucky |
This matter is before the Court on motions by Defendants, Wayne Shelton, Laxmaiah Manchikanti, Student Loan X-Press, Paul Maynard Hendrick, Jarrod Ashley Turner, to dismiss for failure to state a claim [DN 56, DN 60, DN 63, DN 66, DN 74] and on motions by Defendants, Wayne Shelton, Student Loan X-Press, and Jarrod Ashley Turner, to strike surreplies filed by Plaintiff [DN 112, DN 113, DN 114]. These matters are ripe for decision.
On October 12, 2010, Plaintiff, Mark Tunne, pro se, filed his original complaint. Plaintiff is a former student at the American Justice School of Law ("AJSL"), a for-profit law school, later known as the Barkley School of Law ("BSL"). AJSL opened in the fall of 2005. AJSL had approximately 250 students, full and part-time. The AJSL Charter Class was scheduled to graduate in May of 2008. The ABA Council on Law School Accreditation denied AJSL's first application for accreditation in April of 2007 and its second application for accreditation in August of 2007. On or about November 17, 2007, Thomas Osborne, a minority shareholder of AJSL, filed a derivative action against Paul Maynard Hendrick, Dean, President, and Owner of AJSL; Jarrod Ashley Turner, Assistant Dean and Secretary of AJSL; CPA Wayne Shelton, Treasurer of AJSL and law professor. The action alleged misconduct by Hendrick, Turner, and Shelton, involving misuse of student loan monies, misappropriation of SBA dues, kickbacks on student law books,manipulation of student grades, and providing false information to the ABA Committee on Accreditation. On February 18, 2008, an order was entered in that action indicating the parties had settled the action. As a result of the settlement, Hendrick, Turner, and Shelton transferred their shares of stock to Laxmaiah Manchikanti and resigned their offices and positions with AJSL. In March of 2008, the shareholders of the AJSL changed its name to the Barkley School of Law. The Barkley School of Law ultimately closed in December of 2008.
On October 12, 2010, Plaintiff instituted this action against Paul Maynard Hendrick; Jarrod Ashley Turner; CPA Wayne Shelton; Thomas L. Osborne, Chairman of the AJSL Board, Owner of BSL, and a law professor; Dr. Laxmaiah Manchikanti, subsequent Owner of BSL and its chief investor; Student Loan X-Press ("SLX"), the sole, private, student loan provider to AJSL; and John and Jane Does. In his complaint and amended complaint, Plaintiff alleges violations of various federal and state laws surrounding Defendants' alleged financial abuse and fraudulent use of students' loan proceeds and the law school's funds; mismanagement of the law school's operations; and corruption and fraud. Specifically, Plaintiff's claims include: (1) criminal and civil violations of the Racketeering and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(c); (2) wire fraud, 18 U.S.C. § 1443; (3) mail fraud, 18 U.S.C. § 1441; (4) bank fraud, 18 U.S.C. § 1344(2); (5) extortion in violation of 18 U.S.C. § 1951(a); (6) embezzlement/failure to make required disposition of property in violation of KRS § 514.070; (7) conspiracy in violation of 18 U.S.C. § 371; (8) tax fraud, 26 U.S.C. § 7206; (9) Unfair, False, Misleading and Deceptive Acts in the conduct of any trade under KRS § 367.170-175; (10) false statements to American Bar Association in violation of 18 U.S.C. § 1001; (11) negligence and gross negligence; (12) violation of the Civil Rights Act, 42 U.S.C. § 1983 and § 1985; (13) fraud; (14) conversion; (15) breach of fiduciary duty; (16) for an accounting; (17) breach of contract; (18) breach of the covenant of good faith and fair dealing; (19)violations of the Kentucky Consumer Protection Act; (20) intentional infliction of emotional distress; and (21) assorted constitutional violations. Additionally, in his amended complaint, Plaintiff requests certification as a class action on behalf of all former students of AJSL and clarifies the relief sought.
Because Plaintiff is proceeding in forma pauperis, the Court reviewed the complaint and amended complaint pursuant to 28 U.S.C. § 1915(e)(2). By Memorandum Opinion and Order entered May 2, 2011, the Court dismissed Plaintiff's claims based on 42 U.S.C. § 1983, 42 U.S.C. § 1985, 42 U.S.C. § 1986, and the Federal Tort Claims Act. In addition, the Court dismissed all claims asserted by Plaintiff based upon federal criminal statutes including alleged violations of 26 U.S.C. § 7206 (tax fraud), 18 U.S.C. § 371 (); 18 U.S.C. § 1341, § 1343, and § 1344(2)(mail fraud, wire fraud, and bank fraud); 18 U.S.C. § 1512 (); and 18 U.S.C. § 1951 (extortion). The Court also denied Plaintiff's request for certification as a class action.
The Court permitted Plaintiff's federal antitrust and civil RICO claims and all state law claims to proceed beyond initial review under 28 U.S.C. § 1915(e)(2). Defendants, Wayne Shelton, Laxmaiah Manchikanti, SLX, Paul Maynard Hendrick, and Jarrod Ashley Turner, have now filed motions to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(b). Additionally, Defendants, Wayne Shelton, SLX, and Jarrod Ashley Turner, filed motions to strike Plaintiff's surreplies filed in this matter. While Plaintiff attempted to contact counsel for the Defendants to request permission to file the surreplies, Plaintiff failed to obtain leave of Court to do so. In response to the motions to strike, Plaintiff filed corrected surreplies requesting leave of Court to file the tendered surreplies [DN 115, DN 116, DN 117]. Given the complicated nature of the case and given Plaintiff's pro se status, the Court grants Plaintiff leave to file these surreplies. Therefore,Defendants' motions to strike the surreplies are denied. The remainder of this Opinion will address the Defendants' motions to dismiss.
Upon a motion to dismiss for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6), the Court "must construe the complaint in the light most favorable to plaintiffs, accept all well-pled factual allegations as true," League of United Latin American Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007), and determine whether the "complaint states a plausible claim for relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Under this standard, the plaintiff must provide the grounds for his or her entitlement to relief which "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). A plaintiff satisfies this standard only when he or she "pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. A complaint falls short if it pleads facts "merely consistent with a defendant's liability" or if the alleged facts do not "permit the court to infer more than the mere possibility of misconduct. . . ." Id. at 678, 679. Instead, the allegations must "'show[ ] that the pleader is entitled to relief.'" Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). Since Plaintiff is proceeding pro se, the Court is mindful that pro se complaints are liberally construed and are held "to less stringent standards than formal pleadings drafted by lawyers." Williams v. Curtin, 631 F.3d 380, 383 (6th Cir. 2011).
Defendants, Shelton, Manchikanti, SLX, Hendrick, and Turner, filed motions to dismiss all claims against them for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6). Plaintiff did not respond to Defendant Manchikanti's motion to dismiss Plaintiff's claims based upon conversion,breach of contract, breach of fiduciary duty, intentional infliction of emotional distress, violations of KRS § 367.080-085, KRS § 525.020, KRS § 524.040 and KRS § 524.050; state and federal antitrust laws, and RICO claims. Similarly, Plaintiff did not respond to the motions by Defendants, Wayne Shelton and SLX, to dismiss Plaintiff's claims based upon conversion, breach of contract, and violations of KRS § 524.020, KRS § 524.040, and KRS § 524.050. Therefore, after examining the complaint and amended complaint under the standard set forth pursuant to Fed. R. Civ. P. 12(b)(6), the Court grants Manchikanti, Shelton, and SLX's motion to dismiss with respect to these claims.
Fraudulent misrepresentation requires proof of six elements: "(1) that the declarant made a material representation to the plaintiff, (2) that this representation was false, (3) that the declarant knew the representation was false or made it recklessly, (4) that the declarant induced the plaintiff to act upon the misrepresentation, (5) that the plaintiff relied upon the misrepresentation, and (6) that the misrepresentation caused injury to the plaintiff." Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544, 549 (Ky. 2009) (citing United Parcel Service Co. v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999)); Republic Bank & Trust Co. v. Bear Stearns & Co, Inc., 683 F.3d 239, 248 (6th Cir. 2012).
When a plaintiff pleads fraud or mistake, those claims are subject to the heightened pleading standard of Federal Rule of Civil Procedure 9(b), which provides that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake." Fed. R. Civ. P. 9(b). "At a minimum, the Sixth Circuit requires the allegations to contain the 'time, place, and content of the alleged misrepresentation on which he or she relied; the fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.'" Our Lady of Bellefonte Hosp., Inc. v. Tri-State Physicians Network, Inc., 2007...
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