Van Stelton v. Van Stelton

• Decision Date: 17 July 2013
• Docket Number: No. C11-4045-MWB,C11-4045-MWB
• Parties: VIRGIL VAN STELTON, CAROL VAN STELTON, AND ALVIN VAN STELTON, Plaintiffs, v. JERRY VAN STELTON, DONNA VAN STELTON, EUGENE VAN STELTON, GARY CHRISTIANS, DOUG WEBER, SCOTT GRIES, NATE KRIKKE, ROBERT E. HANSEN, DANIEL DEKOTER, OSCEOLA COUNTY, IOWA, THE CITY OF SIBLEY, IOWA, AND DEKOTER, THOLE AND DAWSON, P.C. Defendants.
• Court: U.S. District Court — Northern District of Iowa

VIRGIL VAN STELTON, CAROL VAN STELTON, AND ALVIN VAN STELTON, Plaintiffs,

v. JERRY VAN STELTON, DONNA VAN STELTON, EUGENE VAN STELTON,GARY CHRISTIANS, DOUG WEBER, SCOTT GRIES, NATE KRIKKE,ROBERT E. HANSEN, DANIEL DEKOTER, OSCEOLA COUNTY, IOWA,THE CITY OF SIBLEY, IOWA, AND DEKOTER, THOLE AND DAWSON, P.C. Defendants.

No. C11-4045-MWB

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA WESTERN DIVISION

Dated: July 17, 2013

MEMORANDUM OPINION AND

ORDER REGARDING DEFENDANTS'

MOTIONS TO DISMISS

TABLE OF CONTENTS

I. INTRODUCTION AND BACKGROUND..............................................4

A. Factual Background ............................................................... 4

1. The parties and principal actors......................................... 4

2. Osceola County's tax law ................................................. 5

3. The Enterprise .............................................................. 6

4. Tax protest and reaction .................................................. 6

5. The Van Stelton Trust kerfuffle ......................................... 9

B. Procedural Background ......................................................... 12

II. LEGAL ANALYSIS ...................................................................... 14

A. Standards For A Motion To Dismiss.......................................... 14

B. Sufficiency Of the § 1983 Allegations ........................................ 16

1. Requirements for § 1983 action ....................................... 16

2. Allegations against the Law Firm defendants....................... 19a. DeKoter's actions................................................21

b. The Law Firm's liability........................................22

C. Sufficiency Of RICO Allegations..............................................25

1. Purpose and scope of RICO............................................25

2. Requirements for RICO claim .........................................27

3. Analysis .................................................................... 29

D. First Amendment Right To Petition Claim Against The County Defendants ......................................................................... 32

1. Overview of the right to access and requirements for claim .....34

2. Analysis .................................................................... 35

E. State Law Claims .................................................................37

1. Carol Van Stelton's slander and libel claim.........................37

2. False arrest claim against the Law Firm defendants ..............37

3. Malicious prosecution claim against the Law Firm defendants ................................................................. 39

4. Defamation claim against the Law Firm defendants ..............42

5. Tortious interference with prospective business relations claims ....................................................................... 44

a. Requirements for a claim.......................................45

b. Claim against the Law Firm defendants.....................45

c. Claim against the County defendants ........................47

6. Fraud/breach of fiduciary duty........................................47

a. Fraud ............................................................... 47

b. Breach of fiduciary duty........................................49

7. Ongoing criminal conduct ..............................................52

a. Overview of the OCC............................................52

b. Analysis ............................................................ 54

F. The City Of Sibley's Motion....................................................54

III. CONCLUSION............................................................................55

In music, a "mashup" is a song "created by blending two or more pre-recorded songs, usually by overlaying the vocal track of one song seamlessly over the instrumental track of another." Mashup, http://en.wikipedia.org/wiki/Mashup_(music) (last visited July 15, 2013). Plaintiffs' Third Amended Complaint reads like a literary mashup of John Grisham's novel, "the Firm," and John Steinbeck's "East of Eden."¹ Plaintiffs allege that the defendant law firm controls and manipulates a wide array of legal matters in Osceola County, Iowa. The law firm allegedly maintains such control through symbiotic relationships it enjoys with the county attorney and sheriff, as well its attorneys' self-serving advice to county officials. Plaintiffs also allege a conflict between two sets of brothers over their interests in a family trust. In this sibling conflict, the defendant law firm has allegedly aligned itself with one set of brothers who, not by coincidence, are clients. Plaintiffs bring a panoply of claims against the law firm, one set of the brothers, and other defendants, including claims for civil rights violations under 42 U.S.C. § 1983; violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq.; and pendent state law claims for false arrest, malicious prosecution, slander and libel, and tortious interference with prospective economic advantage. Defendants' motions to dismiss require me to consider whether plaintiffs' allegations adequately state viable claims under Federal or Iowa law.

I. INTRODUCTION AND BACKGROUND

A. Factual Background

"When ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555-56 (2007)). Thus, the factual background presented here is based on the plaintiffs' allegations in their Third Amended Complaint.

1. The parties and principal actors

Plaintiffs Virgil Van Stelton and his wife, plaintiff Carol Van Stelton, are residents of Iowa. They both live in Sibley, Iowa, which is located in Osceola County. Both own real estate in Osceola County and pay real estate taxes there. Plaintiff Alvin Van Stelton is also a resident of Iowa. He lives in Ashton, Iowa, which is also located in Osceola County. He too owns real estate in Osceola County and pays real estate taxes there. Defendants Jerry Van Stelton, Donna Van Stelton, and Eugene Van Stelton are residents of Iowa, all living in Sibley. Virgil, Alvin, Jerry, and Eugene are brothers. Jacob Van Stelton and Margaret Van Stelton were their father and stepmother.

Defendants Gary Christians, Doug Weber, Scott Gries, Nate Krikke, Robert E. Hansen, and Daniel E. DeKoter are also residents of Iowa. Weber is the Osceola County Sheriff. Hansen is the Osceola County Attorney. Defendant DeKoter, Thole, and Dawson, P.L.C. ("the Law Firm") is a law firm with its principal offices in Sibley. DeKoter and Harold D. Dawson are attorneys and partners in the Law Firm. Sibley is one of the Law Firm's clients.

Dawson also serves as compensation counsel to the Osceola County Board of Supervisors. DeKoter is legal counsel for the Osceola County Economic Development Commission. The Osceola County Economic Development Commission provideseconomic development funds to business interests in Osceola County through banks in Sibley. The banks are clients of the Law Firm. The business interests which receive economic development project funds are referred to the Law Firm for legal services in connection with the development projects.

2. Osceola County's tax law

Osceola County allocates its real estate tax proceeds under what is termed "the Unified Law". The Law Firm's predecessor entities were instrumental in Osceola County implementing the Unified Law as part of its home rule powers.² Osceola County's rural taxpayers pay the majority of the county's property taxes. The Unified Law has been administered in such a way as to "provide disproportionate benefits" to the county seat, Sibley, and disproportionate funding of Osceola County's central administration. The Unified Law continues to be followed in Osceola County even though it has been repealed or its term has expired. Sibley's taxpayers benefit from the Unified Law by receiving a disproportionate allocation of tax funding under it. As a result, Sibley taxpayers support the Unified Law in order to maintain a reduced tax burden.

3. The Enterprise

DeKoter, the Law Firm, County Attorney Hansen, and Sheriff Weber have formed an association ("the Enterprise"). The Enterprise's members benefit from the Unified Law's maladministration because it funds a corrupt political base of support which furthers the Enterprise's actions. Hansen was elected and has been reelected with the support of DeKoter, the Law Firm, and the Law Firm's clients. Hansen serves the Enterprises' and Sibley's interests by failing to properly advise Osceola County government officials on the Unified Law's requirements and administration. In turn, the Law Firm assures that Hansen is overcompensated through Dawson's advice to the Osceola County Board of Supervisors in his role as its compensation counsel. Weber is also overcompensated as a reward for his "doing the bidding" of DeKoter and the Law Firm.

Hansen and Weber selectively enforced criminal laws and ordinances to benefit the Law Firm's clients and used their official positions to suppress local political activities in order to maintain the balance of power within the county. The Enterprise controls elections to the Osceola County Board of Supervisors in order to benefit Sibley voters and uses intimidation to control the board members. If the board was perceived to be taking any action detrimental to Sibley's interests or threatening Hansen or Weber's compensation, DeKoter or his partner Dawson would threaten a lawsuit against the board.

4. Tax protest and reaction

Some rural citizens of Osceola County formed the Osceola County Taxpayers Association ("OCTA") to investigate what they perceived to be the disproportionate allocation of real estate tax proceeds in Osceola County. The OTCA concluded that Sibley receives 60 percent of the funding provided by the...