United States District Court, D. Idaho
DALE MIESEN, an individual bringing suit in the right of AIA Services Corporation, Plaintiff,
v.
AIA INSURANCE, INC., an Idaho corporation; AIA SERVICES CORPORATION, an Idaho corporation; 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; GEMCAP LENDING I, LLC, a Delaware limited liability company, Defendants, and CROP USA INSURANCE AGENCY, INC., an Idaho corporation; CONNIE TAYLOR HENDERSON, an individual; JOLEE DUCLOS, an individual; R. JOHN TAYLOR, an individual; MICHAEL W. CASHMAN SR., an individual; JAMES BECK, an individual, Defendants/Third-Party Plaintiffs,
v.
REED TAYLOR, an individual, Third-Party Defendant.
MEMORANDUM DECISION AND ORDER (DKT. 252)
CANDY
W. DALE UNITED STATES MAGISTRATE JUDGE.
INTRODUCTION
Pending
before the Court are two combined motions filed by Third
Party Defendant Reed Taylor (Reed):[1] a motion to dismiss for lack
of jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(1), and a motion for a more definite statement pursuant
to Federal Rule of Civil Procedure 12(e). (Dkt. 252.)
The
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
considering the parties' written memoranda, relevant case
law, and the parties' arguments, for the reasons that
follow, the Court will deny both motions.
PROCEDURAL
AND FACTUAL BACKGROUND
The
motions before the Court are made in regard to a Third Party
Complaint (Dkt. 218) that is ancillary to the overarching
complaint filed on August 1, 2010, now in its third amended
version (“Third Amended Complaint”). (Dkt. 211.)
The
original complaint was filed on behalf of the minority
shareholders of AIA Services, Inc., and its wholly-owned
subsidiary, AIA Insurance, Inc. (together “AIA
entities”). In part, the suit alleges that numerous
managers and directors of the AIA entities (herein “AIA
controlling defendants”) engaged in fraud and breached
their fiduciary duties to the AIA minority shareholders. A
number of defendants to the suit filed the Third Party
Complaint on May 22, 2017 (herein “Third Party
Plaintiffs”).[2] They seek contribution from Reed for his
involvement as manager and director of AIA Services, Inc.
from 1983 to 2001.[3] Specifically, the Third Party Complaint
seeks contribution from Reed should the Third Party
Plaintiffs be found liable for breaches of fiduciary duty and
fraud under Counts I, II, IV-V, and IX of the Third Amended
Complaint.
In his
motion before the Court, Reed argues the Court may
not have subject matter jurisdiction over the Third Party
Complaint because there is not complete diversity between the
Third Party Plaintiffs and the Third Party Defendant. Third
Party Plaintiffs Crop USA and JoLee Duclos are citizens of
Idaho, as is Reed. Reed argues, that within the context of 28
U.S.C. § 1332(b), “plaintiff” has been
interpreted to refer to both original plaintiffs and third
party plaintiffs, thereby extending the requirements of
complete diversity to a Third Party Complaint. Under this
reasoning, Reed suggests the Court must do one of two
things-either dismiss the Third Party Complaint (Dkt. 218) in
its entirety for lack of subject matter jurisdiction or
remove Crop USA and Duclos to restore complete diversity
between the parties to the Third Party Complaint.
Alternatively,
Reed argues if the Court finds it may exercise supplemental
jurisdiction, the Court should decline to do so because one
of the claims against Reed is based on novel or complex
issues of state law.[4] Specifically, Reed asserts that the Idaho
Supreme Court has not addressed the question of whether there
is a right to contribution from a member of a company's
advisory board related to findings of others' breaches of
fiduciary duty.
Finally,
if the Court does exercise supplemental jurisdiction over the
Third Party Complaint, Reed contends it should order the
Third Party Plaintiffs to amend the complaint to provide a
more definite statement of their claims. Reed argues it is
impossible to file a responsible pleading because the Third
Party Complaint is “convoluted.” As part of the
Third Party Complaint, the Third Party Plaintiffs attached
the Third Amended Complaint and incorporated the allegations
in Counts I, II, IV-V, and IX. Reed argues this is
insufficient because the dates and associated factual
allegations in these counts do not match up with the dates
Reed was actually managing AIA Services, Inc. He asks the
Court to order the Third Party Defendants to set forth the
specific allegations and corresponding dates in more detail
within the Third Party Complaint. Reed also contends any
allegations of fraud in the Third Party Complaint should
comport with the heightened pleading standards set forth in
Federal Rule of Civil Procedure 9(b).
DISCUSSION
1.
Federal Rule of Civil Procedure 14 and 12 U.S.C. §
1367
According
to Federal Rule of Civil Procedure 14, a defending party may,
as a third party plaintiff, bring suit against a non-party
who is or may be liable to the defending party for all or
part of the claim asserted against the defending party in the
original complaint. Fed.R.Civ.P. (a)(1). This type of action
is known as a “third party complaint” or an
“impleader” action.
A
federal court must have subject matter jurisdiction over
third-party claims. However, in certain contexts, federal law
provides special rules for federal courts to exercise
supplemental jurisdiction. That is, jurisdiction over claims
that arise out of the same transaction or occurrence as the
claims set forth in the original complaint. 28 U.S.C. §
1367. This includes supplemental jurisdiction over
third-party claims based on state law so long as they arise
out of the same transaction or occurrence ...