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Miesen v. AIA Insurance, Inc.

United States District Court, D. Idaho

October 3, 2017

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 ...


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