IFA AND INSURANCE SERVICES, INC. et al v. CONSECO MARKETING, LLC et al
Filing
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ORDER OVERRULING OBJECTIONS TO 25 REPORT AND RECOMMENDATION AND ADOPTING SAME ON WHICH FINAL JUDGMENT SHALL NOW ENTER - The Objections interposed by Plaintiffs, accordingly, are overruled. The Motion to Dismiss is granted, and Judgment of Dismissal with Prejudice shall enter. Signed by Judge Sarah Evans Barker on 3/6/2014. (JD)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
IFA AND INSURANCE SERVICES, INC. a
California corporation,
RETIRING AMERICA, INC. a California
corporation,
Plaintiffs,
vs.
CONSECO MARKETING, LLC an Indiana
Limited Liability Company,
DOES 1 THROUGH 25,
Defendants.
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No. 1:13-cv-00123-SEB-MJD
ORDER OVERRULING OBJECTIONS TO MAGISTRATE JUDGE’S REPORT
AND RECOMMENDATION AND ADOPTING SAME ON WHICH FINAL
JUDGMENT SHALL NOW ENTER
The March 14, 2013, motion to dismiss filed by Defendants Conseco Marketing,
LLC., Does 1 Through 25 (“Conseco”) [Dkt. 8] challenging the Complaint filed by
Plaintiff IFA and Insurance Services, Inc., Retiring American, Inc., (“IFA”) was referred
to the assigned Magistrate Judge pursuant to Rule 72(b) and 28 U.S.C. § 636(b)(1)(B).
The Magistrate Judge’s Report and Recommendation was issued on October 29, 2013
[Dkt. 25] and Plaintiffs’ Objection was timely filed on November 12, 2013 [Dkt. 26]
Plaintiffs’ objection is now before the Court. Our review is de novo.
Plaintiffs object to the Magistrate Judge’s analysis and conclusion clearly
explicated in the Report and Recommendation holding that Plaintiffs’ claims are
“inextricably intertwined” with the judgment previously entered by the Hamilton Circuit
Court and thus barred by the Rooker-Feldman doctrine. As such, the Magistrate Judge
concluded, the Court lacks subject matter jurisdiction of this suit under Rule 12(b)(1).
Plaintiffs contend that the claims in this case are distinguishable from the
Hamilton (Indiana) Circuit Court case because they arise under a Letter of
Understanding, rather than the original contractual agreement between the parties, which
was the basis of the state court adjudication. Plaintiffs further contend that Defendants’
motion to dismiss should have been treated by the Magistrate Judge as a Rule 12(b)(6)
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motion, rather than as a Rule 12(b)(1) factual challenge to this court’s subject-matter
jurisdiction based on the Rooker-Feldman doctrine. Had the motion been deemed a Rule
12(b)(6) issue, Plaintiffs maintain they would have been allowed to conduct discovery to
prove that the two agreements between the parties were/are not the same.
IFA’s Complaint omits any mention the prior Agreement between the parties
which IFA was found to have breached, thus obligating it to pay substantial damages
to Conseco. The Magistrate Judge, in order to determine whether the Court had subject
matter jurisdiction over IFA’s Complaint under the Rooker-Feldman doctrine,
necessarily reviewed both the prior judgment and the underlying Agreement, whose
view conflicted with Plaintiffs’ argument opposing the Motion to Dismiss, namely, that
“the Letter of Understanding was a ‘brand new contract’. This assertion by Plaintiff, as the Magistrate Judge put it, did not ‘hold water.’”
(R&R, page 5) The
Magistrate Judge wrote:
At most, the Court finds the Letter of
Understanding to be a modification of the
Agreement between the parties regarding their
insurance sales. Although the Letter of
Understanding perhaps illustrates a more
personalized payment structure than was
reflected in the original sales Agreement, the
underlying contract remains the same:
Plaintiffs agree to sell insurance, and the
Defendant(s) agree() to pay them in return.
In this second Complaint, Plaintiffs claim that Conseco breached the parties’
insurance sales agreement with intent to deceive Plaintiffs for which injury they seek
damages in excess of $5 million. However, the state court judgment ruled that
Plaintiffs, not Defendants, were in breach of their agreement resulting in damages
exceeding $650,000. It would be impossible to sort out the entitlements and issues
in the Letter of Understanding without re-examining the issues and claims in the prior
Indiana judgment. This is a classic Rooker-Feldman situation and, following those dictates,
we decline to exercise subject matter jurisdiction since the issues are inextricably intertwined.
IFA acknowledges in its Objections that “Conseco has a Judgment,” but argues
that that Judgment “has very little to do with the issues set forth in the Complaint.” In
phrasing its position this way, IFA concedes that the prior judgment has at least something
to do with the issues they have raised in the Complaint. No matter how that nexus
between the two actions is specifically characterized or quantified, that connection
establishes that the respective claims are, indeed, to some extent “inextricably intertwined.”
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Plaintiffs have the burden of persuasion in establishing that the Court has subjectmatter jurisdiction, which it must show by a preponderance of the evidence. In making
such a determination, the Court is obligated to consider all the relevant evidence in the
the record before it.
In re Safeco Ins. Co. of America, 585 F. 3d 328, 329 (7th Cir.
2009); Meridian Sec. Ins.Co. v. Sadowski, 441 F.3d 536, 540 (7th Cir. 2006). Plaintiffs
have failed to establishe subject matter jurisdiction here by a preponderance of the evidence.
Upon careful, de novo review, we are convinced of the correctness of the
Magistrate Judge’s recommended disposition. His finding that the Letter of Understanding
is not a separate, new contract vis-a-vis the prior contract is sound: both agreements cover
the same wet of mutual obligations – IFA agreed to sell insurance and Conseco agreed in
return to pay IFA. We accept this finding and concur in his view set out in his R&R --that it would be impossible to find in favor of Plaintiffs on their Complaint without
making a decision that would be contrary to the Indiana Judgment.
The Objections interposed by Plaintiffs, accordingly, are overruled. The Motion
to Dismiss is granted, and Judgment of Dismissal with Prejudice shall enter.
IT IS SO ORDERED.
Date: 03/06/2014
_______________________________
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana
Distribution:
Steven Kenneth Huffer
S.K. HUFFER & ASSOCIATES, P.C.
steveh@hufferlaw.com
Kenneth Dale Sisco
SISCO & NARAMORE
skend1@yahoo.com
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