United States District Court, D. Idaho
DONNA J. TAYLOR, an individual Plaintiff,
v.
RICHARD A. RILEY, an individual, Defendant.
MEMORANDUM AND ORDER
HON.
CANDY W. DALE, United States Magistrate Judge
INTRODUCTION
Pending
before the Court is Plaintiffs Motion to Stay and to Permit a
Limited Deposition of the Defendant During the Stay. (Dkt. 9)
The motion is ripe for the Court's consideration. All
parties have consented to the jurisdiction of a United
Magistrate Judge pursuant to 28 U.S.C. § 636(c). The
parties filed responsive briefing and the Court conducted a
hearing on August 28, 2017, at which the parties appeared and
presented their arguments. The Court has considered the
parties' written memoranda, relevant case law, and their
arguments. For the reasons outlined herein, the Court will
deny Plaintiff's motion and the corresponding request for
a limited deposition of the Defendant.
BACKGROUND
On May
10, 2017, Plaintiff Donna J. Taylor filed suit against
Defendant Richard Riley. (Dkt. 1) In her complaint, Taylor
alleges breach of assumed duty, breach of contract, breach of
representations and/or warranties, fraud, constructive fraud,
fraudulent concealment, and negligent misrepresentation. All
of these claims are related to a Letter Agreement composed by
Riley 22 years ago-in 1995. At the time, Riley was an
attorney with Eberle, Berlin, Kading, Turnbow & McKlveen,
Chartered (Eberle Berlin). He wrote the Letter Agreement on
behalf of the firm's client, AIA Services, Corp. (AIA).
In 1987
and 1988, AIA issued Series A Preferred shares to Donna
Taylor and Reed Taylor (Reed)[1] in connection with their divorce.
The share issuances were related to Taylor's and
Reed's prior investments in AIA and its wholly-owned
subsidiary, AIA Insurance, Inc. In 1995, AIA agreed to
increase the amortization period and applicable interest rate
for the redemption of Taylor's shares. This agreement was
memorialized in the Letter Agreement composed by Riley.
A
series of state and federal lawsuits have been filed related
to share redemption contracts and other matters between
Taylor, Reed, AIA and other parties. Directly pertinent here
is the June 15, 2015 decision issued by District Judge Jeff
M. Brudie in the consolidated state court cases CV08-1150 and
CV13-1075.[2]
One of
the questions Judge Brudie answered was what interest rate
legally applied to the Series A Preferred shares held by
Taylor. The court determined that, because shareholder
approval was necessary for the increased interest rate, and
because there was no record of shareholders ever voting to
authorize a higher rate, "[t]he only equitable remedy
for the situation as presented in 2015" was for the
court to recalculate the redemptions made for Taylor's
Series A Preferred shares based on the rates set forth in the
provisions of the AIA Articles of Incorporation. The court
found it was "the only lawful interest rate" in
effect at the time. The increased rates promised in the
Letter Agreement had never been approved by the shareholders
and thus were not legally binding.
Pursuant
to the court's recalculation of the interest rate, it
found that all but 7, 110 of Taylor's Series A Preferred
shares had been redeemed by AIA. The court's decision is
currently on appeal with the Idaho Supreme Court. Taylor
seeks to have the judgment reversed and a finding made that
she is entitled to the higher interest rate. If this were the
outcome, the recalculation would be reversed and the new
finding could be that she owns 41, 509 Series A Preferred
shares as previously alleged.
The
lawsuit before this Court is premised on the state district
court's conclusion that Taylor owns 7, 100 Series A
Preferred shares. Taylor claims Riley is responsible for the
damages Taylor incurred as a result that finding.
Taylor's claim is based on the contention that Riley
should have notified her, within the 1995 Letter Agreement,
of the requirement that the shareholders vote and approve the
higher interest rate.
The
motion to stay is made in part on the argument that this
lawsuit would become moot should Taylor be successful in her
appeal of the state court case. In other words, if the Idaho
Supreme Court reverses Judge Brudie's finding regarding
the lawful interest rate, the damages Taylor alleges Riley
caused would cease to exist. Taylor has argued also that the
Idaho Supreme Court should expand the scope of negligent
misrepresentation claims to include a cause of action in
cases of assumed duty by a lawyer. Currently, the law is
limited in application to accountants.
In
addition, Taylor requests a limited deposition of Riley
during the stay. Taylor claims that, if the stay is granted,
Riley may modify answers to questions in this matter based on
the outcome of the Idaho Supreme Court appeal. In support of
her argument, Taylor alleges Riley has a history of
concealing facts and refusing to be deposed in the state
court actions related to this controversy.
DISCUSSION
1.
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