LaPorte Savings Bank v. Schmidt
Filing
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OPINION AND ORDER denying 16 Rule 12(b)(6) Motion to Dismiss filed by the defendant, Adele Schmidt. Signed by Magistrate Judge Andrew P Rodovich on 6/23/2011. (rmn)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
LaPORTE SAVINGS BANK fka
City Savings Bank,
)
)
)
Plaintiff
)
)
v.
)
)
ADELE A. SCHMIDT, as Trustee
)
of Trust No. 3 and individually,)
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Defendant
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Case No. 2:10 cv 491
OPINION AND ORDER
This matter is before the court on the Rule 12(b)(6) Motion
to Dismiss [DE 16] filed by the defendant, Adele Schmidt, on
April 11, 2011.
For the following reasons, the motion is DENIED.
Background
The defendant, Adele Schmidt, signed a personal guarantee to
secure the business loan her late son, Arthur Schmidt Jr., took
out to construct a chemical manufacturing company in Valparaiso,
Indiana.
The loan was financed through the plaintiff, LaPorte
Savings Bank, an Indiana chartered savings bank.
more than three million dollars from LaPorte.
Arthur borrowed
As additional
security, Arthur took out an insurance policy for one million
dollars and named LaPorte as the beneficiary.
The business
proved unsuccessful, and the loan became due.
LaPorte filed a claim in the Porter County Superior Court
seeking repayment of the loan from Arthur and Adele.
Adele’s
attorney informed LaPorte’s counsel that Adele’s signature was
forged on most of the loan documents and conceded to only one
authentic signature on a loan document for $360,000, limiting
Adele’s total liability to $400,000.
Adele represents that the
parties reached an agreement that she would refrain from filing a
motion to dismiss LaPorte’s complaint if LaPorte agreed not to
pursue its claim against Adele.
During the pendency of the litigation, Arthur passed away.
LaPorte received payment of the one million dollar life insurance
policy.
Adele and LaPorte eventually reached an agreement, and
LaPorte dismissed its complaint in the Porter County Superior
Court against Adele without prejudice.
Two months later, LaPorte
initiated the present case with this court, seeking to hold Adele
liable for the full amount of the debt due on the loans containing her signature.
Adele filed a motion to dismiss LaPorte’s complaint on
December 15, 2010.
In support of her motion, Adele submitted the
loan documents, her affidavit, and the affidavit of a handwriting
expert.
Adele’s affidavit stated that the only loan document she
signed was for $360,000 and that the handwriting expert’s affidavit supported her position.
Discussion
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Federal Rule of Civil Procedure 12(b)(6) allows for a
complaint to be dismissed if it fails to "state a claim upon
which relief can be granted."
Allegations other than those of
fraud and mistake are governed by the pleading standard outlined
in Rule 8(a), which requires a "short and plain statement" to
show that a pleader is entitled to relief.
Procedure 8(a)(2).
Federal Rule of Civil
The Supreme Court clarified its interpreta-
tion of the Rule 8(a)(2) pleading standard in a decision issued
in May 2009.
While Rule 8(a)(2) does not require the pleading of
detailed allegations, it nevertheless demands something more
"than an un-adorned, the-defendant-unlawfully-harmed-me accusation."
Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949,
173 L.Ed.2d 868 (2009).
In order to survive a Rule 12(b)(6)
motion, a complaint "must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is plausible
on its face.'"
Iqbal, 129 S.Ct. at 1949 (quoting Bell Atlantic
Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d
929 (2007)); Joren v. Napolitano, 633 F.3d 1144, 1146 (7th Cir.
2011).
This pleading standard applies to all civil matters.
Iqbal, 129 S.Ct. at 1953.
The court in Iqbal discussed two principles that underscored
the Rule 8(a)(2) pleading standard announced by Twombly.
See
Twombly, 550 U.S. at 555 (discussing Rule 8(a)(2)’s requirement
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that factual allegations in a complaint must "raise a right to
relief above the speculative level").
First, a court must accept
as true only factual allegations pled in a complaint; "[t]hreadbare recitals of the elements of a cause of action" that amount
to "legal conclusions" are insufficient.
1949.
Iqbal, 129 S.Ct. at
Next, only complaints that state "plausible" claims for
relief will survive a motion to dismiss:
if the pleaded facts do
not permit the inference of more than a "mere possibility of
misconduct," then the complaint has not met the pleading standard
outlined in Rule 8(a)(2).
Iqbal, 129 S.Ct. at 1949-50.
See also
Brown v. JP Morgan Chase Bank, 2009 WL 1761101, *1 (7th Cir. June
23, 2009)(defining "facially plausible" claim as a set of facts
that allows for a reasonable inference of liability).
The Supreme Court has suggested a two-step process for a
court to follow when considering a motion to dismiss.
First, any
"well-pleaded factual allegations" should be assumed to be true
by the court.
Next, these allegations can be reviewed to deter-
mine if they "plausibly" give rise to a claim that would entitle
the complainant to relief.
Iqbal, 129 S.Ct. at 1949-50.
Reason-
able inferences from well-pled facts must be construed in favor
of the plaintiff.
Murphy v. Walker, 51 F.3d 714, 717 (7th Cir.
1995); Maxie v. Wal-Mart Store, 2009 WL 1766686, *2 (N.D. Ind.
June 19, 2009)(same); Banks v. Montgomery, 2009 WL 1657465, *1
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(N.D. Ind. June 11, 2009)(same).
Generally, the court is limited to considering only the
allegations raised in the complaint when ruling on a motion to
dismiss under Rule 12(b)(6).
See United States v. $85,201.00 in
U.S. Currency, 2011 WL 612067, *2 (S.D. Ill. Feb. 15, 2011)
("While the Court typically cannot rely on matters outside the
pleadings in deciding a motion under Rule 12(b)(6), see
Fed.R.Civ.P. 12(d), it can rely on 'written instruments,' including affidavits and exhibits, attached to the complaint.").
When
a party seeks to introduce additional documents, the court may
convert the motion to dismiss into a motion for summary judgment
and allow the responding side to produce evidence in support of
its contentions, or it may elect to disregard the extraneous
evidence.
Rule 12(d) ("If, on a motion under Rule 12(b)(6) or
12(c), matters outside the pleadings are presented to and not
excluded by the court, the motion must be treated as one for
summary judgment under Rule 56."); Venture Associates Corp. v.
Zenith Data Systems Corp., 987 F.2d 429, 431 (7th Cir. 1993)
(citing Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232,
1234, 31 L.Ed.2d 569 (1972)); Employers & Cement Masons #90
Health & Welfare Fund v. Triple M. Contracting, Inc., 2007 WL
854004, *2, n.1 (S.D. Ill. March 16, 2007) (finding that affidavits not referenced in the complaint may not be considered in
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ruling on a motion to dismiss).
However, documents that are
referred to in the complaint and are central to the claim may be
considered on a motion to dismiss.
Albany Bank & Trust Co. v.
Exxon Mobil Corp., 310 F.3d 969, 971 (7th Cir. 2002); Venture
Associates, 987 F.2d at 431-32.
See also Wright v. Associated
Insurance Companies, Inc., 29 F.3d 1244, 1248 (7th Cir. 1994)
(discussing Venture Associates and determining that a contract on
which the claim is based is central to the claim and may be
considered on a motion to dismiss).
LaPorte argues that the allegations in its complaint comply
with the Rule 8 pleading standard and that a motion to dismiss is
improper.
Adele opposes this statement, arguing that LaPorte’s
claim is not plausible because it is based on forged documents.
Adele has introduced external documents in support of her motion
including the loan documents, her affidavit, and the affidavit of
a handwriting expert.
Because LaPorte’s complaint is based
entirely upon the loan documents and the loan documents are
central to the dispute, they may be considered with Adele’s
motion to dismiss.
See Wright, 29 F.3d at 1248 (holding that a
contract not attached to the complaint on which the claim is
based is central to the claim and may be considered on a motion
to dismiss).
However, in order for the court to consider such
extraneous documents, Adele must show that the affidavits were
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both referenced in the complaint and are central to the dispute.
See, Albany Bank & Trust, 310 F.3d at 971 (explaining that
documents that are both attached or referenced in the complaint
and central to the dispute may be considered on a motion to
dismiss); Venture Associates, 987 F.2d at 431-32 (same).
A
thorough review of the complaint does not reveal that the affidavits were incorporated, discussed, or in existence at the time
LaPorte filed its complaint.
See Triple M, 2007 WL 854004 at *2,
n.1 (declining to consider affidavits not referenced in the
complaint when ruling on a motion to dismiss).
it would be an error for the court to
For this reason,
consider the affidavits
with Adele’s motion to dismiss.
Although the court may consider the loan documents when
analyzing Adele’s motion to dismiss, it is not evident from the
face of the loan documents alone whether Adele’s signature is
authentic.
Therefore, Adele has failed to establish that her
signatures were forged and that LaPorte did not state a plausible
claim.
If the allegations in LaPorte’s complaint prove to be
true, LaPorte may recover.
Furthermore, if the court took the affidavits into consideration, it would be forced to make an impermissible credibility
determination.
The court may not assess authenticity and evalu-
ate credibility when ruling on a motion to dismiss for failure to
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state a claim upon which relief could be granted.
See Forge
Industrial Staffing, Inc. v. De La Fuente, 2006 WL 2982139, *4
(N.D. Ill. Oct. 16, 2006) (declining to conclude on a motion to
dismiss that the defendant was not a competitor of the plaintiff
based on the defendant’s website).
This particularly is true
where, as here, the court intends to assess the credibility of
Sapperstein v. Hager, 188 F.3d
statements made in an affidavit.
852, 856 (7th Cir. 1999).
It is difficult to discern from the
face of an affidavit whether the affiant is credible.
stein, 188 F.3d at 856.
Sapper-
The parties first must be afforded the
opportunity to conduct discovery so that the opposing party may
challenge the allegations made in the affidavit.
Sapperstein,
188 F.3d at 856.
Adele asks the court to conclude that the loan documents
were forged and has presented her affidavit and that of the
handwriting expert in support.
However, this is not conclusive
proof that Adele did not sign the loan documents.
Rather, Adele
is asking the court to make a credibility determination, afford
full weight to the statements she made in her affidavit, and
dismiss the claims against her without affording LaPorte any
opportunity to conduct discovery and refute her contentions.
This is not what the Supreme Court intended in Iqbal when it
instructed that a claim may be dismissed if it does not state a
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plausible allegation.
If this was the case, defendants always
would submit favorable evidence to have their claim dismissed
without affording the plaintiff an opportunity to discover
unfavorable information.
Because Adele has not explained how
LaPorte failed to state a plausible claim if its contentions are
taken as true, her motion must be DENIED.
_______________
For the foregoing reasons, the Rule 12(b)(6) Motion to
Dismiss [DE 16] filed by the defendant, Adele Schmidt, on April
11, 2011, is DENIED.
ENTERED this 23rd day of June, 2011
s/ ANDREW P. RODOVICH
United States Magistrate Judge
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