SHARON L. GLEASON, District Judge.
This order addresses each of the following motions:
At Docket 209 is Plaintiff NordAq Energy, Inc.'s ("NordAq") motion under Rule 12(b)(6) to dismiss in part Defendant Paul L. Devine's counterclaims filed within his Second Amended Counterclaim (Docket 200). Mr. Devine opposed at Docket 238. NordAq replied at Docket 270.
At Docket 211 is NordAq's motion under Rule 12(b)(6) to dismiss in part Defendant John Edward Aitken Kidd's counterclaims filed within his First Amended Counterclaim (Docket 199). Mr. Kidd opposed at Docket 239. NordAq replied at Docket 271.
At Docket 215 is Third-Party Defendant David Pfeiffer's motion under Rule 12(b)(6) to dismiss the claims against Mr. Pfeiffer in Mr. Devine's Second Amended Third-Party Complaint (Docket 201). Mr. Devine opposed at Docket 240. Mr. Pfeiffer replied at Docket 274.
At Docket 216 is Mr. Pfeiffer's motion under Rule 12(b)(6) to dismiss the claims against Mr. Pfeiffer in Mr. Kidd's Second Amended Third-Party Complaint (Docket 202). Mr. Kidd opposed at Docket 241. Mr. Pfeiffer replied at Docket 275.
At Docket 217 is NordAq's second motion under Rule 12(b)(6) for partial dismissal or under Rule 12(c) for partial judgment on the pleadings of Mr. Kidd's First Amended Counterclaim (Docket 199) for conversion against NordAq. Mr. Kidd opposed at Docket 253. NordAq replied at Docket 269.
At Docket 219 is Third-Party Defendant Robert Warthen's motion under Rule 12(b)(6) to dismiss the claims against Mr. Warthen in Mr. Kidd's Second Amended Third-Party Complaint (Docket 202). Mr. Kidd opposed at Docket 254. Mr. Warthen replied at Docket 278.
At Docket 221 is Third-Party Defendant Doris Cheng's motion under Rules 12(b)(6) and 9(b) to dismiss the claims against Ms. Cheng in Mr. Devine's Second Amended Third-Party Complaint (Docket 201). Mr. Devine opposed at Docket 255. Ms. Cheng replied at Docket 273.
At Docket 223 is Ms. Cheng's motion under Rule 12(b)(6) to dismiss the claims against Ms. Cheng in Mr. Kidd's Second Amended Third-Party Complaint (Docket 202). Mr. Kidd opposed at Docket 256, and corrected his opposition at Docket 259. Ms. Cheng replied at Docket 272.
At Docket 226 is Nuoxin Co., Ltd.'s ("Nuoxin") motion under Rules 12(b)(6), 9(b), and 12(b)(2) to dismiss the claims against Nuoxin in Mr. Devine's Second Amended Third-Party Complaint (Docket 201). Mr. Devine opposed at Docket 257. Nuoxin replied at Docket 276.
At Docket 228 is Nuoxin's motion under Rules 12(b)(6), 9(b), and 12(b)(2) to dismiss the claims against Nuoxin in Mr. Kidd's Second Amended Third-Party Complaint (Docket 202). Mr. Kidd opposed at Docket 258. Nuoxin replied at Docket 277.
Oral argument on the foregoing motions was held on August 16, 2018, at Anchorage, Alaska.
This order addresses the second round of motions to dismiss that have been filed in this case. NordAq initiated this case by filing a complaint against Paul Devine on November 18, 2016; on August 31, 2017, Mr. Devine filed a Second Amended Answer with First Amended Counterclaims.
Much of the relevant background to this dispute is set out in the Court's prior order and is not repeated here. In that order, the Court dismissed Mr. Devine's tort claims seeking indemnification, tortious and intentional interference claims, tort-based claims related to incentive pay, and RICO claims. The remaining claims pleaded by Mr. Devine—consisting of claims for fraud and intentional misrepresentation, conversion, third party beneficiary claims, and related conspiracy claims—were dismissed with leave to amend.
After the Court entered its order, two answers with counterclaims and two third-party complaints were filed. On March 13, 2018, Mr. Devine filed a Second Amended Answer and Second Amended Counterclaim against NordAq,
Now before the Court are several motions to dismiss various claims raised in these four pleadings, each of which is discussed in turn below.
Many of the relevant legal standards were set out in this Court's prior order at Docket 194 and are not repeated here.
Before a court may dismiss any portion of a complaint for failure to state a claim upon which relief may be granted, the court must provide the plaintiff with a statement of the deficiencies in the complaint and an opportunity to amend or otherwise address the problems, unless to do so would be futile.
At Docket 209, NordAq moves to dismiss a portion of the Second Amended Counterclaim that Mr. Devine filed after the Court's order on NordAq's first motion to dismiss.
There are several aspects to Mr. Devine's fraud/intentional misrepresentation counterclaim. First, Mr. Devine maintains that acting through Doris Cheng, NordAq agreed with him to modify his employment agreement and to pay him as a consultant with an increased incentive bonus. He alleges that NordAq made these promises, but they were misrepresentations and fraudulent because, according to Mr. Devine, NordAq never intended to honor them. Mr. Devine appears to argue that he should be able to maintain tort claims for this alleged conduct because he is unable to maintain them as breach of contract claims in light of the terms of the 2012 employment contract, which he maintains expressly prohibited oral modification.
The second aspect of Mr. Devine's fraud/misrepresentation counterclaim alleges that Mr. Pfeiffer, allegedly acting on behalf of NordAq, told Mr. Devine that he was concerned for Mr. Devine's well-being and would carry out Mr. Devine's best interests. The Court agrees with NordAq that such statements, even if made, are not actionable in tort for fraud/misrepresentation.
Another aspect of Mr. Devine's fraud/misrepresentation claims appears to be for injuries that NordAq incurred, and particularly as to Nuoxin's alleged promises to it. The Court agrees with NordAq's analysis that Mr. Devine lacks standing to assert any claim that NordAq may have against Nuoxin, as it is the corporation itself, and not any individual shareholder, that may have suffered the alleged harm identified by Nuoxin's failure to invest additional monies in NordAq.
The Court previously dismissed Mr. Devine's negligent misrepresentation claim against NordAq and no material changes have been made to that claim by Mr. Devine after leave to amend was granted. Accordingly, that claim will also be dismissed with prejudice at this time.
In light of the foregoing, both the related acting-in-concert (civil conspiracy) and punitive damages claims related to the fraud/misrepresentation claims must also be dismissed with prejudice. To the extent Mr. Devine continues to maintain a claim for litigation conduct, including seeking recovery of the attorney's fees awarded against him previously in this case, such allegations fail as a matter of law at this time.
Accordingly, NordAq's motion to dismiss all of Mr. Devine's fraud/misrepresentation claims, and associated acting-in-concert and punitive damages claims, at Docket 209 will be granted. In light of Mr. Devine's "repeated failure to cure the deficiencies in [his] pleadings," these claims will be dismissed with prejudice.
At Docket 211, NordAq moves to dismiss with prejudice all of Mr. Kidd's counterclaims against NordAq apart from the breach of contract claims. This includes Mr. Kidd's claims for fraud/misrepresentation, acting-in-concert, and punitive damages.
NordAq argues that dismissal of Mr. Kidd's tort counterclaims is warranted for the same basic reasons that it sought dismissal of Mr. Devine's tort counterclaims. One aspect of Mr. Kidd's fraud/misrepresentation counterclaim appears to be that NordAq promised Mr. Kidd that he would receive a salary at an increased rate after the Nuoxin transaction closed in 2014. Similar to Mr. Devine's counterclaim alleging a modified employment contract, this aspect of Mr. Kidd's fraud/misrepresentation counterclaim alleges a breach of contract claim. It is not a viable tort cause of action.
Another aspect of Mr. Kidd's fraud/misrepresentation claims appears to be for injuries that occurred to NordAq, and particularly as to Nuoxin's alleged promises to it. The Court agrees with NordAq's analysis that Mr. Kidd lacks standing to assert any claim that NordAq may have against Nuoxin and/or Doris Cheng in this regard, as it is the corporation itself, and not any individual shareholder, that may have suffered any alleged compensable harm related to Nuoxin's failure to invest additional monies in NordAq.
Finally, Mr. Kidd alleges that NordAq committed the torts of fraud and misrepresentation in 2015 through Ms. Cheng when she omitted communicating to Mr. Kidd at that time that NordAq would challenge Mr. Kidd's stock holdings later in 2016. These so-called "promises by omission" are not actionable against NordAq as fraudulent misrepresentations. Mr. Kidd cites to no authority for the proposition that a non-closely held corporation such as NordAq can be held liable in tort when one member of the corporation's board does not share certain information about the corporation's future intended actions with another board member, even if it were to be proven that Ms. Cheng knew in 2015 that NordAq intended to take action against Mr. Kidd's shares later in 2016.
Because the Court finds that Mr. Kidd has failed to plead any viable claim for fraud/misrepresentation (including any claim for negligent misrepresentation), the corresponding claims for acting-in-concert (or civil conspiracy) and punitive damages will also be dismissed. In addition, any claims related to an alleged "litigation campaign" against Mr. Kidd should be dismissed, for the reasons set out in the Court's prior order of dismissal and in the preceding discussion in this order with respect to Mr. Devine.
The Court also finds that Mr. Kidd's counterclaims against NordAq should be dismissed with prejudice. Although normally a court should grant at least one opportunity to amend before dismissing a claim with prejudice, here the Court finds that dismissal with prejudice is warranted for the following reasons: the Court has previously issued an order of dismissal as to Mr. Devine's counterclaims, who had pled claims substantially similar to Mr. Kidd's, and granted leave to amend as to those claims. But, as discussed above, Mr. Devine has failed to state viable tort claims on his next attempt, and dismissal of those claims with prejudice will be granted. Mr. Devine and Mr. Kidd are represented by the same attorneys in this case.
At Docket 215, David Pfeiffer moves to dismiss Paul Devine's Second Amended Third-Party Complaint (Docket 201) against Mr. Pfeiffer. The motion seeks dismissal of all the claims that Mr. Devine asserted against Mr. Pfeiffer: fraud/misrepresentation, tortious interference with contract, conspiracy and acting-in-concert, conversion, breach of contract, and punitive damages. In his opposition, Mr. Devine indicates that he "drops and no longer asserts his claims for conversion and breach of contract against Mr. Pfeiffer."
With respect to Mr. Devine's fraud/misrepresentation claims against Mr. Pfeiffer, one aspect appears to allege that Mr. Pfeiffer fraudulently misrepresented to Mr. Devine that he would "carry out the best interests of Devine, Kidd, and Clearview by, inter alia, making sure that Devine's and Kidd's monies received from NordAq were properly accounted for via the Clearview entity when in fact Pfeiffer and NordAq would then subsequently claim in this lawsuit that this structure was done in an effort to conceal and misappropriate funds from NordAq."
A second aspect of Mr. Devine's fraud/misrepresentation claim alleges that Mr. Pfeiffer told Mr. Devine that he "was concerned for Mr. Devine's wellbeing" and "would not act to take advantage" of Mr. Devine's health issues.
In light of the Court's prior order on NordAq's motion to dismiss against Mr. Devine, which granted leave to amend, the Court finds that dismissal of these related claims against Mr. Pfeiffer with prejudice is warranted, as according to Mr. Devine an additional opportunity to try to file an amended complaint that would state a viable cause of action for fraud/misrepresentation against Mr. Pfeiffer appears to be futile.
Mr. Devine also brings a claim for tortious interference with contract against Mr. Pfeiffer. Here, Mr. Devine groups Mr. Pfeiffer together with the other third party defendants he has named—Doris Cheng and Nuoxin—and asserts that they together conspired to cause NordAq to breach its employment contact with Mr. Devine. But as Mr. Pfeiffer correctly notes, Mr. Devine alleges no facts that plausibly explain when, how, and in what manner Mr. Pfeiffer interfered with Mr. Devine's employment contract, his compensation, or any incentive-bonus arrangement that Mr. Devine may have had with NordAq.
Mr. Devine appears to acknowledge that Mr. Pfeiffer cannot be held liable under this tort when Mr. Pfeiffer was acting as NordAq's agent.
Based on the foregoing, the Court finds that Mr. Devine's Third-Party Complaint against Mr. Pfeiffer should be dismissed in its entirety for failure to state a plausible claim for relief. Further, the dismissal should be with prejudice, because given the Court's prior instructions to Mr. Devine with respect to the rules of pleading, and the subsequent Third-Party Complaint that was filed, the Court finds that an opportunity for amendment to permit the filing by Mr. Devine of another Third-Party Complaint against Mr. Pfeiffer would be futile.
At Docket 216, Mr. Pfeiffer moves to dismiss all of the claims that Mr. Kidd brought against him. In his response, Mr. Kidd indicates that he is dropping his claim for breach of contract against Mr. Pfeiffer.
With respect to the tortious interference claim, Mr. Kidd alleges in generalized terms that Mr. Pfeiffer, in cooperation with co-defendants Warthen, Nuoxin, and Cheng, was acting in his own self-interest to interfere with Mr. Kidd's contract with NordAq, as he was "motivated by a continuing desire to . . . financially ruin . . . Kidd."
Mr. Kidd's conversion claim appears to be premised on the stock that he held in a distinct legal entity, Nordik Energy Partners. As stated by Mr. Kidd in the Second Amended Third-Party Complaint, the "vast majority" of the NordAq shares at issue in the conversion claim were held by Nordik, and not by Mr. Kidd personally.
At Docket 217, NordAq moves to dismiss the conversion counterclaim that Mr. Kidd pleaded against it at Docket 199. The counterclaim is focused on the stock that Mr. Kidd owned in a separate legal entity, Nordik Energy Partners LLC. Specifically, it alleges that in February 2016, Nordik owned "1,001,982 shares of NordAq. . . . Thus, as a 40 % owner in Nordik, Mr. Kidd owned approximately 400,000 shares of NordAq at that time."
NordAq's motion is based on its assertion that "[a]s a matter of law, Nordik's property is not Kidd's property. AS 10.50.350(a). Kidd lacked a possessory interest in the NordAq stock that he asserts was taken from Nordik," and thus "he cannot establish that NordAq was a legal cause of loss to him."
Mr. Kidd responds by implicitly acknowledging that NordAq's legal argument has merit with respect to his shares in Nordik. Nowhere in his opposition does he explain how he has stated a viable claim for conversion against NordAq for the stock that he held in Nordik. Rather, in his opposition Mr. Kidd now asserts that in addition to the shares he held in Nordik, he also directly owned some shares in NordAq. Appended to Mr. Kidd's opposition is documentation which purports to show that 13,558 shares of NordAq stock was issued directly to Mr. Kidd in 2009.
In reply, NordAq notes that Mr. Kidd did not contest that Nordik's property is not his property. And it maintains that Mr. Kidd's allegations concerning the 13,558 shares are entirely new and that a claim based on those shares "cannot be reasonably inferred from the allegations stated in his counterclaim."
NordAq (and all the other parties that Mr. Kidd alleges wrongfully converted Mr. Kidd's NordAq shares) is entitled to dismissal of the conversion claim to the extent it is based upon Mr. Kidd's ownership of stock in Nordik. The dismissal of all such claims will be with prejudice because it would be futile for Mr. Kidd to plead a plausible conversion claim based on Nordik's stock.
With respect to any NordAq stock personally held by Mr. Kidd, the Court does not read Mr. Kidd's current pleadings to state a claim for the conversion of that stock. Rather, the Court agrees with NordAq that the clear focus of the pleadings is on Mr. Kidd's stock in Nordik. Mr. Kidd may seek to file a motion to amend his pleadings to raise such a claim, but in light of NordAq's attachments to its reply, it is not at all clear whether Mr. Kidd and his counsel have yet undertaken the reasonable inquiry required by Rule 11(b) of the Federal Rules of Civil Procedure with respect to that stock, which would be a necessary predicate prior to the filing of a motion to amend on that basis.
At Docket 219, Mr. Warthen seeks dismissal of each of the claims brought against him by Mr. Kidd in his Second Amended Third-Party Complaint (Docket 202).
The tortious interference with contract claim that Mr. Kidd brings against Mr. Warthen is similar to the tortious interference claims brought by both Mr. Kidd and Mr. Devine against Mr. Pfeiffer, in that it fails to state a plausible claim for relief. As with those claims, Mr. Kidd groups Mr. Warthen together with the other third party defendants he has named and asserts that they together conspired in some unspecified manner at some unspecified time and place to cause NordAq to breach its employment contract with Mr. Kidd. Similar to the allegations brought against Mr. Pfeiffer, Mr. Kidd alleges no facts that plausibly explain when, how, and in what manner Mr. Warthen interfered with Mr. Kidd's contractual relationship(s) with NordAq.
As with Mr. Devine, Mr. Kidd appears to acknowledge that Mr. Warthen cannot be held liable under this tort when he was acting as NordAq's agent.
On the conversion claim, even assuming that liability for an alleged conversion of Mr. Kidd's stock in Nordik could extend to Mr. Warthen, Mr. Kidd has failed to state a claim for conversion against Mr. Warthen with respect to Nordik's stock ownership in NordAq, for the same reasons discussed above with respect to Mr. Kidd's conversion claim against NordAq. And as also discussed above, the Court does not read the Second Amended Third-Party Complaint to state a plausible claim for relief with respect to NordAq stock that Mr. Kidd may have himself owned.
For the foregoing reasons, the Court will grant the motion to dismiss Mr. Kidd's Second Amended Third-Party Complaint at Docket 219 against Robert Warthen in its entirety. The dismissal will be with prejudice because granting Mr. Kidd leave to amend to plead viable claims for tortious interference with contract, conspiracy and acting-in-concert, and/or conversion would be futile.
At Docket 221, third-party defendant Doris Cheng moves to dismiss all of the claims brought by Paul Devine against her. The Second Amended Third-Party Complaint included the following claims against Ms. Cheng: fraud/misrepresentation, interference with contract or prospective advantage, conversion, breach of contract, litigation-related claims, and associated claims for civil conspiracy and punitive damages.
One aspect of Mr. Devine's fraud/misrepresentation claim against Ms. Cheng focuses on statements she allegedly made regarding whether Nuoxin would be providing additional funds to invest in NordAq in the fall of 2014. The Court agrees with Ms. Cheng's analysis of this claim: it fails to state each of the requisite elements of the test. First, the alleged statements made by Ms. Cheng regarding Nuoxin's second investment are not statements that are actionable for fraud; they are not false or misleading factual statements. Second, there is no showing that Mr. Devine could have justifiably relied on the statements that were made, or that he in fact did so.
Mr. Devine alleges other types of fraudulent misrepresentations by Ms. Cheng. He asserts that her promises to increase his compensation must be tortious misrepresentations because an oral modification of the employment agreement between Mr. Devine and NordAq was prohibited.
For the foregoing reasons, Ms. Cheng's motion to dismiss all the fraud/misrepresentation claims brought against her by Mr. Devine will be granted, and for the same reasons set forth above that dismissed other claims with prejudice at this juncture, that dismissal will be with prejudice. Permitting Mr. Devine an opportunity to amend to state a valid cause of action against Ms. Cheng related to the Nuoxin investment or to promises concerning Mr. Devine's compensation would be futile.
The tortious interference of contract claim against Ms. Cheng will be dismissed with prejudice for the same reasons that the Court dismissed these claims against Mr. Pfeiffer and Mr. Warthen: they are vague, conclusory, nonspecified allegations that fail to conform to the pleading requirements of Rule 8 of the Federal Rules of Civil Procedure.
Likewise, any litigation-related claims against Ms. Cheng will be dismissed with prejudice, although it is not clear whether Mr. Devine intended to continue to assert any such claims at this time.
At Docket 223, Ms. Cheng seeks dismissal of the claims brought against her in John Kidd's Second Amended Third-Party Complaint. The claims pleaded against her include fraud/misrepresentation, tortious interference with contract/prospective advantage, conversion, breach of contract, and associated claims for civil conspiracy and punitive damages. In his response, Mr. Kidd drops his claim for breach of contract against Ms. Cheng.
For the same reasons as discussed above with respect to each of the remaining claims, Ms. Cheng's motion to dismiss the entirety of Mr. Kidd's Second Amended Third-Party Complaint against her at Docket 223 will be granted, and the dismissal will be with prejudice in light of the futility of amendment.
Nuoxin seeks dismissal of the claims brought by both John Kidd and Paul Devine against it. It seeks dismissal for both failure to state a claim and for lack of personal jurisdiction as to each Third-Party Complaint. The Court does not reach the personal jurisdiction argument, as it finds that dismissal of all claims brought by both Mr. Devine and Mr. Kidd against Nuoxin is warranted for failure to state a claim, based on the same reasoning applied above as to NordAq, as applicable, and the remaining third-party defendants. Accordingly, the motions at Docket 226 and Docket 228 will both be granted for failure to state a claim. For the same reasons set forth above that dismissed other claims with prejudice at this juncture, that dismissal will be with prejudice.
In light of the foregoing, IT IS ORDERED as follows:
