Filed: Oct. 18, 2013
Latest Update: Mar. 28, 2017
Summary: The, Second Hawaii [Decision I] ruled that Wagner diverted WBGI funds, [for] personal purposes. Defendant WBGI filed a motion to dismiss;Given the findings made by these [state] courts, [the, magistrate judge] found that the Nevada [D]ecision barred Mr., Wagners claim related to record-keeping;
FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS October 18, 2013
Elisabeth A. Shumaker
TENTH CIRCUIT Clerk of Court
WALTER L. WAGNER,
Plaintiff - Appellant,
v. No. 13-4082
(D.C. No. 2:11-CV-00784-RJS)
PRESTON MICHIE; KENNETH (D. Utah)
FRANCIK; LESLIE COBOS; MARK
ROBINSON; ANNETTE EMERSON;
STEVEN BRYANT; WORLD
BOTANICAL GARDENS, INC.,
Defendants - Appellees.
ORDER AND JUDGMENT *
Before TYMKOVICH, ANDERSON, and BACHARACH, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination
of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 32.1.
Plaintiff and appellant, Walter L. Wagner, proceeding pro se, appeals the
dismissal of claims he brought against the World Botanical Gardens, Inc.
(“WBGI”) and former and current board members of WBGI. 1 For the following
reasons, we affirm that dismissal.
BACKGROUND
Mr. Wagner is a former officer and shareholder of WBGI. In his amended
complaint in the instant case, Mr. Wagner brought six causes of action against
WBGI and the other defendants. He brought claims for slander and libel on three
different topics: his (Mr. Wagner’s) record-keeping, alleged misappropriation by
Mr. Wagner of WBGI funds, and the circumstances surrounding a 2004
promissory note (“2004 Note”). Mr. Wagner also alleged that WBGI had engaged
in fraud, waste, and mismanagement.
In addition to the instant matter, there are three state court decisions
involving Mr. Wagner that are related to this case and of which the district court
took judicial notice. As described by the magistrate judge and the district court,
these actions are:
1
The defendant Board Members are Preston Michie, Kenneth Francik,
Leslie Cobos, Mark Robinson, Annette Emerson, and Steve Bryant.
We note that this appeal is currently abated as it relates to WBGI only (but
not the remaining defendants), because that organization filed a Chapter 11
bankruptcy petition in April. That abatement shall continue.
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1. World Botanical Gardens, Inc. v. Walter Wagner, et al.;
Second Judicial District for the State of Nevada, Washoe
County; Case No. CV05-02079; dated October 2, 2006
(“Nevada Decision I”).
2. Walter Wagner v. World Botanical Gardens, Inc.; Third Circuit
Court for the State of Hawaii; Civil No. 04-1-0232; dated
November 13, 2007 (“First Hawaii Decision I”).
3. World Botanical Gardens, Inc. v. Walter Wagner, et al.; Third
Circuit for the State of Hawaii; Case No. 05-1-0210; dated
October 9, 2008 (“Second Hawaii Decision I”).
Report & Recommendation I (03/05/2012) at 3. Each of the above state court
decisions resulted in further state court proceedings/history, of which the district
court also took judicial notice:
1. Walter L. Wagner, et al. v. World Botanical Gardens, Inc.,
Supreme Court of the State of Nevada, Washoe County, Case
No. 48428, dated January 15, 2008 (unpublished), cert. denied,
555 U.S. 827 (2008) (“Nevada Decision II”).
2. Walter Wagner v. World Botanical Gardens, Inc., 268 P.3d 443
(Haw. Ct. App. 2011) (“First Hawaii Decision II”).
3. World Botanical Gardens, Inc. v. Walter Wagner, et al., 265
P.3d 493 (Haw. Ct. App . 2011), cert. denied, 2011 Haw.
LEXIS 265 (Haw. 2011) (“Second Hawaii Decision II”).
Report & Recommendation II (11/05/2012) at 4.
As the above citations indicate, on January 15, 2008, the Nevada Supreme
Court issued the Nevada Decision II, which affirmed the Nevada Decision I and,
on October 6, 2008, the United States Supreme Court denied Mr. Wagner’s
petition for a writ of certiorari. On December 23, 2011, the Intermediate Court of
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Appeals of Hawaii issued the First Hawaii Decision II. The First Hawaii
Decision II reversed the First Hawaii Decision I on Mr. Wagner’s claim for
quantum meruit, but affirmed the First Hawaii Decision I in all other respects.
The case was remanded and is now apparently pending before the trial court.
When Mr. Wagner appealed the Second Hawaii Decision I to the Intermediate
Court of Appeals of Hawaii, the court affirmed that Second Hawaii Decision I
with the Second Hawaii Decision II. Mr. Wagner then filed a petition for a writ
of certiorari with the Hawaii Supreme Court, which rejected the petition.
The district court further described the substantive allegations in each state
court decision, as follows:
Nevada Decision [I]
WBGI sued Wagner in Nevada state court to obtain an
injunction against Wagner’s ongoing interference with WBGI’s
operations. After a three-day trial, the Nevada Court entered the
Nevada Decision [I]. The Nevada Decision [I] described “a
relentless conspiracy and campaign by Defendant Walter Wagner and
the other Remaining Defendants to gain control of WBGI at any
cost.” The Nevada [Decision I] found that Wagner:
had diverted funds to his personal accounts, failed to
keep proper financial records, . . . failed to pay
employment taxes, failed to file corporate income tax
reports, [and] failed to keep accurate records of
shareholders. [WBGI board members] also discovered
the Internal Revenue Service had placed a lien on
WBGI’s real property to secure payment of overdue
payroll taxes.
The Nevada [Decision I] also ruled that Wagner “intentionally and
illegally engaged in a fraudulent scheme to sell shares of WBGI
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stock to unsuspecting purchasers.” Based on its findings of fact, the
Nevada [Decision I] ruled that “[t]he removal of Defendant Walter
Wagner from the WBGI Board of Directors was proper.” The
Nevada [Decision I] also found that “[f]rom Defendant Walter
Wagner’s removal through the present, the WBGI Board of Directors
has properly managed the business and affairs of WBGI.”
The Nevada Court entered a permanent injunction against
Wagner ordering him to cease creating or participating in an alternate
board of directors, interfering with WBGI’s business affairs, altering
signature cards of WBGI bank accounts, or attempting to sell WBGI
property. . . .
First Hawaii Decision [I]
Wagner sued WBGI seeking recovery of “deferred salary” in
the form of the 2004 Note. WBGI purportedly executed the 2004
Note (and prior notes referenced in the 2004 Note) in favor of
Wagner in the amount of $340,736.75. The First Hawaii [Decision I]
found that the “promissory notes are fabrications” and that
“Wagner’s own statements to the Court also constitute admissions
that the promissory notes are fabrications.” The First Hawaii
[Decision I] ultimately ruled that “[t]he 2004 [Note] . . . was
fraudulently created.” In addition, the First Hawaii [Decision I]
stated that “Wagner has engaged in a course and pattern of fraud
dating to the period before WBGI was incorporated.” Among
Wagner’s conduct identified by the court was the following: signing
promissory notes as an officer of a nonexistent corporation, signing
promissory notes without shareholder approval, concealing
information about the promissory notes and the lawsuit from WBGI’s
shareholders and directors, and making fraudulent representations to
the court in order to induce the entry of a default judgment. . . .
Second Hawaii Decision [I]
WBGI initiated this case against Wagner to recover corporate
funds Wagner misappropriated and converted for his personal use.
The Second Hawaii [Decision I] issued extensive findings of fact,
conclusions of law, and an order detailing Wagner’s conduct. The
Second Hawaii [Decision I] ruled that Wagner “diverted WBGI funds
[for] personal purposes. These included funds for [a] personal
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mortgage, property tax payments[,] personal credit card payments[,]
and for debts incurred to creditors for personal expenditures. The
Second Hawaii [Decision I] found that Wagner mischaracterized
corporate funds as loans, business expenses, and salary.
The Second Hawaii [Decision I] went on to find Wagner guilty
of abuse of process and malicious prosecution, and declared Wagner
a vexatious litigant for “relitigating or attempting to relitigate in
propria persona and in bad faith the validity of final determinations
in Nevada adverse to defendants involving WBGI who prevailed on
all issues in dispute.”
Report & Recommendation I at 3-6 (footnotes and citations omitted). As the
above recitation states, these decisions were, in all but one small respect, affirmed
by the highest state court.
As indicated, the instant case involves Mr. Wagner’s claims of slander,
libel, fraud, waste and mismanagement by WBGI and the other individual
defendants. Defendant WBGI filed a motion to dismiss; Mr. Wagner filed a
motion for a preliminary injunction.
The magistrate judge addressed these motions in his Report &
Recommendation I. He recommended that the court deny Mr. Wagner’s motion
for a preliminary injunction. With respect to WBGI’s motion to dismiss, the
magistrate judge divided Mr. Wagner’s claims into two categories: First, the
magistrate judge recommended that the court grant WBGI’s motion to dismiss as
it pertained to Mr. Wagner’s claims for fraud, waste and mismanagement because
Mr. Wagner lacked standing to bring those claims. Second, regarding
Mr. Wagner’s claims for defamation, the magistrate judge recommended that they
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be dismissed under the doctrine of issue preclusion since Mr. Wagner had
litigated these matters in the various state court actions described above and of
which the court took judicial notice. As the district court stated,
Given the findings made by these [state] courts, [the
magistrate judge] found that the Nevada [D]ecision barred Mr.
Wagner’s claim related to record-keeping; that the First Hawaii
[D]ecision [I] barred Mr. Wagner’s claim concerning the 2004
promissory note; and that the Second Hawaii [D]ecision [I] barred
Mr. Wagner’s claim about misappropriation.
Mem. Decision & Order at 2. At the time of the (first) Report &
Recommendation I, however, the state court decisions were not final. Because of
that circumstance, the magistrate judge found that WBGI had not satisfied a
required element (finality) to establish issue preclusion. Accordingly, the
magistrate judge recommended that the district court deny WBGI’s motion to
dismiss as it pertained to the defamation claims without prejudice to refile if and
when the state court decisions became final.
After the magistrate judge had issued his (first) Report & Recommendation
I, WBGI submitted a second motion to dismiss, and the individual defendants
similarly filed a motion to dismiss. In these motions, the defendants presented
evidence that the Nevada Decision I was final; that the Intermediate Court of
Appeals of Hawaii had reversed the First Hawaii Decision I on the quantum
meruit claim but had affirmed the decision in all other respects; and that the
Hawaii Supreme Court had denied a petition for a writ of certiorari for the Second
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Hawaii Decision I, which was affirmed by the Intermediate Court of Appeals of
Hawaii.
As a result, the parties argued that the state law decisions were, for the
most part, final and that, therefore, Mr. Wagner’s defamation claims relating to
his poor record-keeping and misappropriation of funds should be dismissed, and
the court should stay the remaining defamation claim concerning the 2004
promissory note until there was a final decision in the First Hawaii Decision I
proceedings. The magistrate judge agreed with these arguments in his Report &
Recommendation II.
Mr. Wagner then filed with the district court objections to both Reports &
Recommendations. With respect to Report & Recommendation I, regarding the
question of the preclusive effect of the Nevada Decisions, the district court held
that, in reaching its ultimate decision as to which of two competing boards of
directors should control WBGI, the “Nevada court resolved a number of related
factual and legal issues, including whether Mr. Wagner misappropriated funds,
whether he kept proper records, and whether his removal from the board of
directors was proper. Mr. Wagner had ample opportunity to argue these issues
during the Nevada litigation and is now barred from asking this court to
reconsider factual matters that the Nevada court has already addressed.” Mem.
Dec. & Order at 3. The court therefore concluded that Mr. Wagner’s claims of
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defamation relating to alleged poor record-keeping and misappropriation of funds
should be dismissed.
The district court also rejected Mr. Wagner’s contention that he did not
have a full and fair opportunity to litigate the issues (regarding claims of Mr.
Wagner’s misappropriation and conversion of funds) addressed by the Second
Hawaii Decisions. The court similarly rejected his challenge to the conclusion
that he lacked standing to bring his fraud, waste and mismanagement claims
against WBGI. On this latter point, the district court remarked that Mr. Wagner
was, in essence, “asking a federal court to question the sufficiency of a state court
proceeding for reasons wholly unrelated to any federal law.” Id. at 4. The court
“decline[d] Mr. Wagner’s invitation” to engage in such questioning.
Mr. Wagner’s objections to the magistrate judge’s Report &
Recommendation II fared no better. The court rejected Mr. Wagner’s argument
that the magistrate judge had “failed to consider a number of affidavits that
Mr. Wagner submitted in support of his contention that the Nevada and Hawaii
state court decisions were fraudulently obtained.” Id. The court stated that it
would “not overturn a state court decision on the grounds that Mr. Wagner
suggests, no matter how many affidavits he submits” because Mr. Wagner needed
first to “challenge those decisions using procedures outlined by state law.” Id. at
5.
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The district court also rejected Mr. Wagner’s argument that the Hawaii
courts had resolved his claims in the First Hawaii Decision in his favor: “It is
clear that the Court of Appeals took no issue with the First Hawaii court’s finding
that the 2004 promissory note was fraudulent. In any event, the appellate court
did not resolve Mr. Wagner’s claims in his favor, since even Mr. Wagner’s
quantum meruit claim faces a number of hurdles on remand.” Id. Finally, the
district court rejected Mr. Wagner’s claim that he should be allowed to proceed
with the “part of his defamation action that concerns an indictment against him
that the Defendants allegedly published on the WBGI website,” finding his claim
“to be nothing more than an assertion that the Defendants published a document
available in the public record.” Id. at 6.
The district court accordingly adopted all of the magistrate judge’s
recommendations contained in his Report & Recommendation II “except for one.
The court sees no reason to stay the case until resolution of the First Hawaii
decision because the court finds ample reasons to dismiss the case immediately.”
Id. Concluding that the any of Mr. Wagner’s claims based on the 2004
promissory note had been addressed adversely to him by the Second Hawaii
Decisions, the district court “dismisse[d] all of Mr. Wagner’s claims on the
grounds that they have been previously litigated.” Id. Indeed, the district court
found:
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a myriad of other reasons . . . to dismiss this case. If the court
determined that issue preclusion did not bar Mr. Wagner’s causes of
action, the court would nevertheless issue an Order to Show Cause
why the case should not be dismissed for failure to comply with Rule
11(b) of the Federal Rules of Civil Procedure. The court is
convinced that this case has been filed for the purpose of harassing
the Defendants. The Second Hawaii court labeled Mr. Wagner a
vexatious litigant for commencing at least five civil actions that were
determined adversely to him, as well as for filing in bad faith
numerous frivolous motions that were intended for the sole purpose
of causing unnecessary delay. The number of instances of Mr.
Wagner’s fraudulent conduct, false representations, and unauthorized
actions listed by both the Second Hawaii court and the Nevada court
are too legion to list here. As one example, Mr. Wagner was able to
obtain a default judgment against WBGI without its knowledge by
telling the Second Hawaii court that WBGI did not have any officers
or directors and that WBGI did not object to the default being taken.
Given this background, it is highly unlikely that Mr. Wagner’s
current suit was brought in good faith. It is also doubtful that Mr.
Wagner’s Complaint satisfies the pleading standards required by
Rule 8 of the Federal Rules of Civil Procedure. It is even doubtful
that the court has jurisdiction to hear this matter, as Mr. Wagner
presents no federal question and bases his claim to diversity
jurisdiction on unsupported assertions that the amount in controversy
is over $75,000. All of these observations support the court’s
decision to dismiss this case.
Id. at 6-7 (emphasis added, citation omitted). The district court accordingly
dismissed all of Mr. Wagner’s claims. We agree whole-heartedly with that
determination.
The magistrate judge’s two Reports & Recommendations in this convoluted
proceeding were lengthy, detailed and thorough. The district court’s decision
adopting, for the most part, those reports was equally thorough and persuasive.
We cannot improve on that court’s careful explanation as to why Mr. Wagner’s
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claims fail and the defendants’ motions to dismiss must be granted. We therefore
affirm the district court’s dismissal of this appeal, for substantially the reasons
contained in its decision.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s order granting
the individual defendants’ motion to dismiss and dismissing all of Mr. Wagner’s
claims. This matter is terminated as it relates to those individual defendants. The
abatement of that portion of the appeal concerning WBGI shall continue. Within
30 days of the date of this Order and Judgment, Mr. Wagner shall file a written
report regarding the status of the bankruptcy proceedings and the application of
the automatic stay. The failure to file that report in a timely fashion shall result
in the dismissal of the appeal as it relates to WBGI without further notice. See
10th Cir. R. 42.1.
ENTERED FOR THE COURT
Stephen H. Anderson
Circuit Judge
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