United States District Court, D. Idaho
DALE L. MIESEN, an individual who is a shareholder and who is also bringing this action on behalf of and/or in the right of AIA Services Corporation and its wholly owned subsidiary AIA Insurance, Inc., Plaintiff,
CONNIE TAYLOR HENDERSON, an individual; JOLEE K. DUCLOS, an individual; HAWLEY TROXELL ENNIS & HAWLEY LLP, an Idaho limited liability partnership; GARY D. BABBITT, an individual; D. JOHN ASHBY, an individual; RICHARD A. RILEY, an individual; MICHAEL W. CASHMAN SR., an individual; JAMES BECK, an individual; R. JOHN TAYLOR, an individual; CROP USA INSURANCE AGENCY, INC., an Idaho corporation; AIA SERVICES CORPORATION, an Idaho corporation; AIA INSURANCE, INC.; an Idaho corporation; CROP USA INSURANCE SERVICES, LLC; an Idaho limited liability company; and GEMCAP LENDING I, LLC, a Delaware limited liability company, Defendants.
MEMORANDUM DECISION AND ORDER (DKT. 241; DKT.
Honorable Candy W. Dale, United States Magistrate
before the Court are two related motions: Plaintiff Dale L.
Miesen's Motion for Relief under Federal Rules of Civil
Procedure 12(d) and 56(d) (Dkt. 241), and Defendant Gem Cap
I, LLC's Motion to Dismiss Third Amended Complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6) for
failure to state a claim upon which relief may be granted.
motions are ripe for the Court's consideration. All
parties have consented to the jurisdiction of a United States
Magistrate Judge pursuant to 20 U.S.C. § 636(c). (Dkt.
260.) The parties filed responsive briefing, and the Court
conducted a hearing on September 6, 2017, at which the
parties appeared and presented their arguments. After
carefully considering the parties' written memoranda,
relevant case law, and the parties' arguments, for the
reasons that follow, the Court will deny Plaintiff's
motion for relief and will grant in part and deny in part
Defendant's motion to dismiss.
AND FACTUAL BACKGROUND
original complaint in this matter was filed on August 11,
2010. (Dkt. 1.) Donna J. Taylor and Dale L. Miesen filed the
suit on behalf of themselves and the other shareholders of
AIA Services, Inc., and its wholly-owned subsidiary, AIA
Insurance (together “AIA entities”). Taylor was
later removed from the lawsuit because her citizenship
destroyed complete diversity as required by 28 U.S.C. §
1332-enabling this Court to continue to exercise subject
complaint was filed against numerous managers and directors
of the AIA entities (herein “AIA controlling
defendants”), the AIA entities, and other individuals
and entities. GemCap I, LLC (GemCap) first entered this
lawsuit by filing a motion to intervene on July 18, 2016.
(Dkt. 14.) The intervention was for a sole purpose-to seal a
settlement agreement to which GemCap was a party that was
attached as an exhibit to a declaration filed by Miesen's
attorney. (Dkt. 128.) GemCap was added as a party on April 24,
2017, with Miesen's filing of the Third Amended
Complaint. (Dkt. 211.)
inclusion in this long-running controversy stems from a $10
million line of credit it extended to Defendant CropUSA
Insurance Agency Inc., and its wholly-owned subsidiary,
Defendant CropUSA Insurance Services, LLC (together
“CropUSA entities”). Security for the line of
credit was provided by the AIA entities.
and the AIA entities entered into two loan guarantees related
to the line of credit. The first-November 23, 2011, secured a
lesser portion of the line of credit, and the second-October
1, 2012, secured the entire $10 million. In this suit, Miesen
claims these two loan agreements were not authorized as
required by the AIA entities' governing documents. (Dkt.
211 at 37.) According to the Third Amended Complaint, GemCap
recorded its associated security interest in the AIA entities
on December 20, 2012, by filing a UCC financing statement
with the Idaho Secretary of State. Although the existence and
validity of the UCC financing statement is not disputed,
Miesen claims the AIA minority shareholders were not notified
of this filing, and as with the two loan agreements, it was
not authorized. (Dkt. 211 at 37.) In turn, GemCap alleges the
filing of the financing statement was itself sufficient to
put the AIA minority shareholders on notice of the guarantee
CropUSA entities defaulted on their loan payments, and on
July 30, 2013, GemCap filed a lawsuit in federal court in
California to collect on the loan guarantee agreements.
GemCap Lending I, LLC v. CropUSA Ins. Agency, Inc.,
No. 2:13-cv-05504-SJO-MAN (C.D. Cal.) (herein “GemCap
lawsuit”). The action was terminated when the parties,
including GemCap and several other entities and persons also
party to this litigation, entered into a settlement agreement
(herein “Settlement Agreement”) regarding the
determination of when the AIA minority shareholders knew
about the loan guarantees and the Settlement Agreement
between the AIA entities and GemCap is of key importance to
the motions before the Court.
clear the AIA Services minority shareholders learned about
the GemCap lawsuit soon after its filing in California. At
the September 6, 2017 hearing on these motions, Miesen's
attorney confirmed that certain AIA minority shareholders
knew about the GemCap lawsuit by August of 2013.
minority shareholders also learned about the Settlement
Agreement prior to its execution. As set forth in the Third
Amended Complaint, the shareholders communicated to GemCap
that the guarantees and proposed Settlement Agreement
“were unauthorized [by the shareholders] and illegal
and that AIA was not being properly operated.” (Dkt.
211 at 39.)
Settlement Agreement has an effective date of September 15,
2014. However, according to the Third Amended Complaint, the
contents of the Settlement Agreement show it was finalized
after the effective date and likely executed on or around
January 9, 2015.
Third Amended Complaint, Miesen asserts the following primary
claims against GemCap: that GemCap aided and abetted the AIA
controlling Defendants in breaching their fiduciary duties
(Count 2); that GemCap aided and abetted the AIA controlling
Defendants to commit fraud (Count 5); and that GemCap
violated the Idaho Consumer Protection Act (ICPA) by entering
into the two loan guarantees and the Settlement Agreement
(Count 10). Miesen asserts two derivative claims: declaratory
judgment that the guarantees and Settlement Agreement were
not lawful (Count 7); and statutory relief under Title 30,
Chapter 29, Section 304 of the Idaho Code (Count
8).This code section allows shareholders to
challenge a corporation's alleged ultra vires
acts, and if successful, provides shareholders a right to
enjoin or reverse the acts and collect damages. Idaho Code
filed the instant motion to dismiss all of Miesen's
claims, arguing Counts 2, 5, and 10 are barred by the
applicable statutes of limitation, and as derivative claims,
Counts 7 and 8 should be dismissed on the same bases.
Motion to Dismiss
motion to dismiss made pursuant to Federal Rule of Civil
Procedure 12(b)(6) tests the sufficiency of a party's
claim for relief. A 12(b)(6) motion may be based on the
expiration of the applicable statute of limitations period
for the claims asserted in the complaint. Review of the
merits of the 12(b)(6) motion is limited to the face of the
complaint. A court's inquiry is whether the allegations
in the pleading are sufficiently set forth. The plaintiff
need only present a “short and plain statement of the
claim” that shows the plaintiff is entitled to relief
and that provides the defendant with fair notice of the
grounds for the claim. Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007); Fed.R.Civ.P. 8(a)(2).
review of a complaint pursuant to a Rule 12(b)(6) motion, a
court must accept all non-conclusory factual allegations as
true. Ashcroft v. Iqbal, 556 U.S. 662 (2009). And a
court must draw all reasonable inferences in favor of the
plaintiff. Mohamed v. Jeppsen Dataplan, Inc., 579
F.3d 943, 949 (9th Cir. 2009).
Materials Outside the Pleadings; Motions to Take Judicial
either party submits materials outside the pleadings in
support of or in opposition to a Rule 12(b)(6) motion to
dismiss, and a court relies on those materials, the motion to
dismiss must be converted to a motion for summary judgment
Fed.R.Civ.P. 12(d) and 56(c)(2); Anderson v.
Angelon, 86 F.3d 932, 934 (9th Cir. 1996); Ross v.
Ada County, 730 F.Supp.2d 1237, 1244 (D. Idaho 2010).
a court may take judicial notice of certain documents and
facts without converting the motion. Examples of taking
judicial notice include noting that a document was signed by
a particular person or on a particular date, or that a
hearing simply took place. Lee v. City of Los
Angeles, 250 F.3d 668, 689 (9th Cir. 2001); Fed.R.Evid.
court may also consider documents “whose contents are
alleged in a complaint and whose authenticity no party
questions, but which are not physically attached to the
pleading.” Branch v. Tunnell, 14 F.3d 449, 454
(9th Cir.1994); See also Biondo v. Kootenai Hosp.
Dist., No. 1:17-CV-00039-BLW, 2017 WL 2198186, at *2 (D.
Idaho May 18, 2017).
a court may take judicial notice of documents that are
submitted as part of the complaint, or documents that are not
physically attached to the complaint but that the complaint
“necessarily relies” on, so long as their
authenticity is not contested. Lazy Y. Ranch, Ltd. v.
Wiggins, No. CV 06 340 S MHW, 2007 WL 1381805, at *5 (D.
Idaho Mar. 13, 2007), ...