Nelson et al v. Bitters et al

Filing 57

ORDER granting 41 Defendant's Motion for Summary Judgment; denying 46 Plaintiffs' Motion to Dismiss Without Prejudice; and denying 47 Plaintiffs' Motion for Leave of Court to Designate Experts Out of Time. (See order text) Signed by Magistrate Judge CJ Williams on 1/24/17. (ksy)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
CLARENCE G. NELSON, Jr., and
VALORA L. NELSON,
Plaintiffs,

No.

vs.

15-CV-4077-CJW
ORDER

WILLIAM E. BITTERS (d/b/a United
Financial Information Services),
Defendant.
____________________
I.

INTRODUCTION

This matter is before the Court pursuant to defendant’s Motion for Summary
Judgment (Doc. 41), plaintiffs’ Motion to Dismiss Without Prejudice (Doc. 46), and
plaintiffs’ Motion for Leave of Court for Plaintiffs to Designate Experts Out of Time
(Doc. 47).

On January 13, 2017, the Court heard argument on the motions. During

the hearing, the Court orally denied plaintiffs’ Motion for Leave of Court for Plaintiffs
to Designate Experts Out of Time (Doc. 47), but will explain in more detail the basis for
its ruling herein.

The Court now deems all motions fully submitted.

For the reasons that follow, the Court: (1) grants defendant’s Motion for Summary
Judgment (Doc. 41); (2) denies plaintiffs’ Motion to Dismiss Without Prejudice (Doc.
46); and denies plaintiffs’ Motion for Leave of Court for Plaintiffs to Designate Experts
Out of Time (Doc. 47).1
1

Defendant moved to strike plaintiffs’ resistance (Doc. 48) because one of the documents
plaintiffs attached to the resistance contained personal identifiers in violation of Federal Rule of
Civil Procedure 5.2 and Local Rule 10(h). (Doc. 49). Plaintiffs responded by filing a motion
to seal their resistance. (Doc. 51). The Court entered an order denying plaintiffs’ motion to
seal and instructing plaintiffs to forthwith submit to the Clerk of Court a redacted page 22 (the

II.

PROCEDURAL BACKGROUND

On September 21, 2015, plaintiffs filed a five-count complaint against defendant
and Robert W. Boland. (Doc. 2). Count I alleged a breach of trust.
gross negligence.

Count III alleged breach of contract.

Count II alleged

Count IV alleged federal

securities violations, and Count V alleged state securities violations.
On November 3, 2015, defendant Bitters filed a motion to dismiss the complaint.
(Doc. 11). On November 24, 2015, defendant Boland filed a motion to dismiss the
complaint.

(Doc. 15).

On December 8, 2015, plaintiffs filed a motion for leave to file an amended
complaint, with a proposed amended complaint attached.
plaintiffs filed a resistance to both motions to dismiss.

(Doc. 16). On the same day,
(Doc. 17).

On December 22, 2015, defendants filed a joint resistance to plaintiffs’ motion for
leave to file an amended complaint.

(Doc. 20).

On January 6, 2016, the Court granted plaintiffs’ motion for leave to file an
amended complaint.

(Doc. 21). In its order, the Court held that defendants’ pending

motions to dismiss would be deemed to apply to plaintiffs’ amended complaint, but
indicated the parties could file supplemental briefs on or before January 25, 2016.
On the same day, plaintiffs filed their amended complaint. (Doc. 22).
On February 9, 2016, the Court adopted the parties’ Proposed Scheduling Order
and Discovery Plan.

(Doc. 25).

The Scheduling Order provided that plaintiffs’

deadline for disclosing expert witnesses was May 6, 2016.
provided that the “trial ready date” was December 12, 2016.

(Id., at 1).

It further

(Id.). By consent of the

only page containing personal identifiers) so the Clerk could substitute it for the page containing
personal identifiers. The Court checked with the Clerk of Court on January 17, 2017, and
learned that plaintiffs did submit a redacted page 22 on Friday, January 13, 2017.

2

parties, this case was assigned to a United States Magistrate Judge for final disposition.
(Doc. 25).

The Court set this case for a bench trial on December 19, 2016. (Doc. 26,

at 1).
On March 18, 2016, the Court granted defendant Boland’s motion to dismiss, but
denied defendant Bitters’ motion to dismiss. (Doc. 27).
On April 6, 2016, plaintiffs filed an unresisted motion to amend the scheduling
order to extend the deadline to May 26, 2016, for filing motions to amend the pleadings.
(Doc. 29). The next day the Court granted plaintiffs’ motion.

(Doc. 30).

On May 26, 2016, plaintiffs filed a second unresisted motion to amend the
scheduling order to extend the deadline again for filing motions to amend the pleadings,
this time asking the deadline be extended to June 27, 2016. (Doc. 31).

The Court

granted plaintiffs’ motion the following day. (Doc. 32).
On June 27, 2016, plaintiffs filed a third unresisted motion to amend the scheduling
order to extend the deadline for filing motions to amend the pleadings, this time
requesting an extension to July 25, 2016. (Doc. 33).
granted plaintiffs’ motion.

(Doc. 34).

The following day the Court

Plaintiffs never have since filed a motion to

amend the pleadings.
On July 21, 2016, defendant filed a motion to continue the trial. (Doc. 36).
Plaintiffs filed a response in which they consented to the continuance of the trial date, so
long as other deadlines were also continued.

(Doc. 37).

On August 2, 2016, the Court

held a telephonic hearing on the pending motion to continue the trial. (Doc. 39). The
following day the Court entered an order continuing the trial to February 21, 2017.
(Doc. 40).

The Court granted an extension of the deadline for conducting discovery,

but denied plaintiffs’ request to extend deadlines for amending pleadings or disclosing
expert witnesses, and explained why.

3

Regarding the request to extend discovery deadlines, the Court finds that
the parties have acted with reasonable diligence and have shown good cause
for extending some deadlines in this case. As noted, the Court has
extended the deadlines for filing motions to amend pleadings and add parties
on three occasions and will not do so again. Either party may, of course,
file a motion seeking leave to add parties or amend pleadings out of time,
setting forth the justification for the untimely motion, and the Court will
consider it. Similarly, the Court will not extend the deadlines for expert
witness disclosures. The deadlines for those disclosures have long since
passed; and, during the hearing, the parties were unable to articulate any
reason why they were unable to comply with those deadlines. Again,
either party may file a motion seeking leave to disclose expert witnesses out
of time, setting forth the justification for the untimely motion, and the Court
will consider it.
(Doc. 40, at 4).

The Court did, however, extended the deadlines for completing

discovery and for filing dispositive motions. (Id.).
On November 21, 2016, defendant filed a timely motion for summary judgment.
(Doc. 41). Pursuant to Local Rule 56:
b. Resisting Party’s Documents. A party resisting a motion for
summary judgment must, within 21 days after service of the motion, file
contemporaneously all of the following:
1. A brief that conforms with the requirements of Local Rule 7.e in which
the resisting party responds to each of the grounds asserted in the motion
for summary judgment;
2. A response to the statement of material facts in which the resisting party
expressly admits, denies, or qualifies each of the moving party’s
numbered statements of fact, filed as an electronic attachment to the
brief under the same docket entry;
3. A statement of additional material facts that the resisting party contends
preclude summary judgment, filed as an electronic attachment to the
brief under the same docket entry; and
4. An appendix that conforms with the requirements of section “e” of this
rule, filed as an electronic attachment to the brief under the same docket
entry.
A response to an individual statement of material fact that is not
expressly admitted must be supported by references to those specific pages,
4

paragraphs, or parts of the pleadings, depositions, answers to
interrogatories, admissions, exhibits, and affidavits that support the
resisting party’s refusal to admit the statement, with citations to the
appendix containing that part of the record. The failure to respond, with
appropriate citations to the appendix, to an individual statement of material
facts constitutes an admission of that fact.
Each individual statement of additional material fact must be concise,
numbered separately, and supported by references to those specific pages,
paragraphs, or parts of the pleadings, depositions, answers to
interrogatories, admissions, exhibits, and affidavits that support the
statement, with citations to the appendix containing that part of the record.
c. Unresisted Motion. If no timely resistance to a motion for
summary judgment is filed, the motion may be granted without prior notice
from the court. If a party does not intend to resist a motion for summary
judgment, the party is encouraged to file a statement indicating the motion
will not be resisted.
LR 56(b) & (c).
Allowing for the three-day mailing rule (which no longer exists for documents
filed electronically), plaintiffs’ resistance to the motion for summary judgment was due
December 15, 2016. On December 22, 2016, the Court entered a text order, noting
that plaintiffs had failed to timely file a resistance, pointed out Local Rule 56(c), and
indicated that if plaintiffs intended to resist the motion for summary judgment, they were,
by December 30, 2016, to “file a motion seeking leave to file an untimely resistance,
showing cause for failing to file a timely resistance.”

(Doc. 42).

On December 28, 2016, plaintiffs filed an unresisted motion for an extension of
time to file a resistance to defendant’s motion for summary judgment, asking for a twoweek extension and citing the holiday season as the reason for needing additional time.
(Doc. 43).

Plaintiffs did not file a motion for leave to file a resistance out of time, as

ordered, nor did their motion provide any explanation for their failure to file a timely

5

resistance.

Nevertheless, on January 4, 2017, the Court granted in part plaintiffs’

motion, extending to January 6, 2017, the deadline for filing a resistance.

(Doc. 44).

On January 6, 2017, plaintiffs filed the following with the Court: a two-page
“Resistance” to the motion for summary judgment (Doc. 45); a Motion to Dismiss
Without Prejudice (Doc. 46); a Motion for Leave of Court for Plaintiffs to Designate
Experts Out of Time (Doc. 47); and a brief purportedly in support of each of these
motions (Doc. 48).
As noted, on January 13, 2017, the Court held a telephonic hearing on all pending
motions. (Doc. 55). During the hearing, the Court pointed out that plaintiffs’ brief in
resistance to defendant’s motion for summary judgment (Doc. 48) was identical to their
resistance to defendant’s motion to dismiss filed in December 2015.

Plaintiffs replied

that they had refiled that prior brief in error and had actually prepared a resistance to the
motion for summary judgment. The Court therefore granted plaintiffs leave to file their
resistance to the motion for summary judgment out of time, which they did.

(Doc. 54).

The Court notes that plaintiffs did not provide a Statement of Additional Material Facts.
The Court further granted defendant until Wednesday, January, 18, 2017, leave to file a
reply brief, if he chose.

On January 18, 2017, defendant filed a reply brief. (Doc.

56).
III.

PLAINTIFFS’ MOTION FOR LEAVE OF COURT FOR PLAINTIFFS TO
DESIGNATE EXPERTS OUT OF TIME
Plaintiffs seek leave of the Court to designate expert witnesses out of time.

As

noted above, plaintiffs’ deadline for designating expert witnesses was May 6, 2016, some
eight months ago.

To permit plaintiffs to designate experts at this late date would

require the Court to modify its scheduling order.

A scheduling order may be modified

only for good cause and with the judge’s consent.

FED. R. CIV. P. 16(b)(4). Rule 16,

6

however, does not govern where, as here, a motion to extend deadlines is made after the
deadline has passed. Rule 6(b)(1)(B) of the Federal Rules of Civil Procedure provides
that “the court may, for good cause,” extend a deadline “on motion made after the time
has expired if the party failed to act because of excusable neglect.”

Rule 6 applies to

“any time period specified in [the Federal Rules of Civil Procedure], [and] in any local
rule or court order . . ..”

FED. R. CIV. P. 6.

The Federal Rules of Civil Procedure do not define “excusable neglect.”

In

Pioneer Inv. Servs. Co. v. Brunswick Assos. Ltd. P’ship, 507 U.S. 380, 392 (1993), the
Supreme Court found that “‘excusable neglect’ under Rule 6(b) is a somewhat ‘elastic
concept’ and is not limited strictly to omissions caused by circumstances beyond the
control of the movant.”

In determining whether excusable neglect exists, a court

therefore must consider “all relevant circumstances surrounding the party’s omission.”
Id., at 395.

See also Fink v. Union Central Life Ins. Co., 65 F.3d 722, 724 (8th Cir.

1995) (citing Pioneer, 507 U.S. at 395). These circumstances include:
(1) The danger of prejudice to the non-moving party;
(2) The length of delay and its potential impact on judicial proceedings;
(3) The reason for the delay, including whether it was within the reasonable control
of the movant; and
(4) Whether the movant acted in good faith.
Treasurer, Trustees of Drury Indus., Inc. Health Care Plan and Trust v. Goding, 692
F.3d 888, 893 (8th Cir. 2012) (citing Pioneer).

The four factors do not, however, carry

equal weight; “the excuse given for the late filing must have the greatest import.”

Lowry

v. McDonnell Douglas Corp., 211 F.3d 457, 463 (8th Cir. 2000).
The Court takes seriously the discovery deadlines it imposes so as to “secure the
just, speedy, and inexpensive determination of every” case.

FED. R. CIV. P. 1.

Parties

are expected to adhere to the deadlines imposed by the Court, especially when the parties
7

themselves propose the deadlines.

Courts should appreciate the difficulties and stresses

of litigation practice where attorneys juggle multiple cases which impose many deadlines.
At the same time, trial attorneys must develop practices to track deadlines immediately
when they are imposed so that the deadlines are not missed through oversight.
In evaluating the relevant circumstances in this case, the Court concludes that
plaintiffs have failed to demonstrate good cause or excusable neglect for failing to timely
designate an expert.

Plaintiffs indicated that “depositions of the parties were not held

until September 23, 2016,” and therefore “inadequate information was available to obtain
and confirm an expert with sufficient opinions and conclusions relevant hereto, all of
which is compounded by Plaintiff Clarence Nelson’s poor memory.”

(Doc. 47, at 1).

Plaintiffs also indicate that their “[c]ounsel has conferred with potential experts in
connection with the strength of [plaintiff Clarence Nelson’s] memory affecting his
testimony and have stated that they now have issues rendering expert opinions without
more facts.”

(Doc. 54, at 13).

Plaintiffs provided no explanation of what additional

information would be necessary to designate expert witnesses, why this information was
not discoverable earlier, what efforts are currently underway to obtain this additional
information, or even, for that matter, how much more time plaintiffs are requesting to
designate and disclose their experts.

Moreover, plaintiffs have failed to explain how

Clarence Nelson’s allegedly failing memory impacts in any way their ability to retain an
expert to opine as to whether defendant met the standard of care expected of financial
advisors.
This case is set for trial in approximately 30 days.

If the Court permitted

plaintiffs more time to designate and disclose experts, defendant will be required to
depose the expert(s), and presumably retain and designate his own expert(s).

Any

extension of time for plaintiffs to designate experts, therefore, will necessarily require a
continuance of the trial.
8

Turning to the factors for granting a motion to modify a scheduling order after the
deadline has passed, the Court finds almost every factor weighs against granting
plaintiffs’ motion.
plaintiffs’ motion.

The length of the delay in disclosure weighs against granting
Plaintiffs’ deadline for expert disclosure was May 6, 2016.

More

than eight months have passed after the deadline. Even were the Court to consider
plaintiffs’ explanation that they needed to depose plaintiff Clarence Nelson before
designating an expert, (the logic of which is lost on the Court), that occurred more than
three months ago.
The reason for the delay is weak; it constitutes “garden-variety attorney
inattention.”

Lowry, 211 F.3d at 464.

Plaintiffs provide no real explanation for why

they could not identify and designate an expert by the deadline, and provide no further
explanation for why, eight months after the deadline passed, they have not been able to
do so.

Plaintiffs have provided no information to the Court regarding what efforts they

have made since bringing this suit to locate and retain an expert to establish defendant’s
standard of care.

Plaintiffs’ explanation that they did not realize until plaintiff Clarence

Nelson’s deposition that he has memory problems provides no logical causal link for why
plaintiffs could not have retained and disclosed an expert to testify about defendant’s
alleged professional negligence.

During the hearing on the motions, counsel for

plaintiffs candidly admitted that “this hasn’t been handled well,” and “it didn’t get the
attention it should have.”

Were the Court to find excusable neglect under these

circumstances, “it is hard to fathom the kind of neglect that . . . would not [be] deem[ed]
excusable.”

Lowry, 211 F.3d at 464.

See also Mullen v. Heinkel Filtering Sys., Inc.,

2013 WL 4766785, *4 (N.D. Iowa Sept. 4, 2013) (unpublished) (denying motion to
extend expert disclosure deadline when it was missed through oversight by counsel).

9

Finally, the Court finds plaintiffs’ counsel have acted in good faith and “not in an
attempt to delay the process or escape the requirements of the rules.” Larson v. Farmers
Co-op Elevator of Buffalo Ctr., Iowa, 58 F. Supp.2d 1013, 1017 (N.D. Iowa 1999).
On balance, the Court finds that plaintiffs have not shown good cause or excusable
neglect for modifying the scheduling order to permit them to designate expert witnesses
eight months after the deadline and 30 days before trial.

Plaintiffs have failed to show

any justification for extending the deadline for designating expert witnesses.
Accordingly, the Court denies plaintiffs’ motion.
IV.

PLAINTIFFS’ MOTION TO DISMISS WITHOUT PREJUDICE

Plaintiffs move the Court to dismiss their suit without prejudice pursuant to Federal
Rule of Civil Procedure 41(a)(2).

That rule provides that “an action may be dismissed

at the plaintiff’s request only by court order, on terms that the court considers proper.”
“The purpose of Rule 41(a)(2) is primarily to prevent voluntary dismissals which unfairly
affect the other side.”

Paulucci v. City of Duluth, 826 F.2d 780, 782 (8th Cir. 1987).

“Courts generally will grant dismissals where the only prejudice the defendant will suffer
is that resulting from a subsequent lawsuit.”

Metro. Fed. Bank of Iowa, F.S.B. v. W.R.

Grace & Co., 793 F. Supp. 205, 206 (D. Minn. 1992) (quotation omitted).
Therefore, the Court is not required to dismiss a claim upon request, but, rather,
must determine whether doing so will prejudice defendant in this case.

Historically, the

Eighth Circuit has looked to four factors in deciding whether a court should grant a Rule
41(a)(2) motion, as follows: (1) the defendant’s effort and the expense involved in
preparing for trial; (2) excessive delay and lack of diligence on the part of the plaintiff in
prosecuting the action; (3) insufficient explanation of the need to take a dismissal; and
(4) the fact that a motion for summary judgment has been filed by the defendant.
Paulucci, 826 F.2d at 783 (quoting Pace v. Southern Express Co., 409 F.2d 331, 334
10

(7th Cir. 1969)).

The Eighth Circuit has more recently instructed courts to take a variety

of factors into account: “a court should consider factors such as whether the party has
presented a proper explanation for its desire to dismiss; whether a dismissal would result
in a waste of judicial time and effort; and whether a dismissal will prejudice the
defendants.”

Thatcher v. Hanover Ins. Group, Inc., 659 F.3d 1212, 1213-14 (8th Cir.

2011) (quoting Hamm v. Rhone–Poulenc Rorer Pharm., Inc., 187 F.3d 941, 950 (8th
Cir. 1999)).

Furthermore, “it is inappropriate for a plaintiff to use voluntary dismissal

as an avenue for seeking a more favorable forum.”
Rohan, 423 F.3d 815, 818 (8th Cir. 2005)).

Id. at 1214 (citing Cahalan v.

It is an error for a district court to dismiss

an action without first addressing whether the motion is an improper forum-shopping
measure.

Id. at 215.

Plaintiffs here argue that they “are not forum shopping or seeking any prejudicial
advantage over Defendant for dismissal without prejudice.”

(Doc. 54, at 15).

Plaintiffs argue that they did not delay proceedings in this case “on the chance that
Plaintiff Clarence Nelson’s memory would fail or how that would impact further
investigation on account on it.”

Id. Plaintiffs assert “[t]here is no waste of judicial

time or effort if the motion is granted, and the intention is not for a strategic advantage
of any kind.”

Id.

Finally, plaintiffs speculate that a lawsuit in another federal court

against defendant for alleged similar acts “may lead to some necessary discovery.”

Id.

The Court finds dismissal without prejudice would be inappropriate here.
Plaintiffs have provided no justification for their motion to dismiss without prejudice
other than that they have not been able to develop a viable case through discovery. They
offer nothing but speculation that litigants in another case against defendant in another
district may be able to develop evidence that could help them in this case.

Plaintiffs

have offered no explanation of just what that discovery would entail or why they have
been unable through their own discovery efforts to uncover evidence to support their
11

claims. Moreover, the Court notes that plaintiffs filed their motion to dismiss within
close proximity to the eve of trial (scheduled for February 21, 2017), and only after
defendant filed a motion for summary judgment.

As previously noted, plaintiffs have

not diligently prosecuted this case, which is illustrated by their failure to timely designate
experts. Contrary to plaintiffs’ assertion that judicial resources have not been wasted,
the Court notes that it has held two hearings and this is the fourth substantive order it has
entered. Finally, defendant has expended significant resources moving to dismiss the
complaint, conducting discovery, moving for summary judgment, and preparing for trial.
It would be inappropriate to allow plaintiffs to walk away from the lawsuit they brought
against defendant with the threat hanging over defendant’s head that they may someday
refile this lawsuit against him, again, and cause him to expend money and time once
again to fight it.

The Court does not find, however, that plaintiffs seek to dismiss their

suit as a means of forum shopping.
Accordingly, for the reasons set forth above, the Court denies plaintiffs’ motion
to dismiss without prejudice (Doc. 46).
V.

DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

Defendant moves for entry of summary judgment, arguing that plaintiffs’ claims
are barred by the statutes of limitations and on the ground that plaintiffs have failed to
designate an expert on the claim of professional negligence.

The Court finds summary

judgment appropriate.
A.

Findings of Fact

In a nutshell, this lawsuit arises out of a $200,000 loan by plaintiffs to a John L.
Henry, Treo Engineering, Inc., and Treo Engineering Company, JSJ Manufacturing,
Inc., on March 27, 2008 (the Henry Loan). Plaintiffs allege defendant, acting in his
capacity as a financial advisor, solicited plaintiffs to make the Henry Loan, which Henry
12

never repaid.

Plaintiffs sued Henry et al., and obtained a judgment against those

defendants in 2012.

(Doc. 22, at 4, ¶17). But John Henry never paid any money on

the judgment rendered of $220,000.

Plaintiffs have since filed this law suit seeking

compensation from defendant for their losses in relation to the failed Henry Loan.

The

following material facts are undisputed unless noted otherwise.
Clarence Nelson (Nelson) was born in Omaha, Nebraska, and has lived his entire
life there.

After graduating high school, Nelson began working for Union Pacific

Railroad (Union Pacific) in Omaha, where he worked his entire life before retiring in
1988. During that time, Nelson accumulated Union Pacific stock.
Nelson met defendant in 1988, after Nelson retired from Union Pacific and before
Nelson got married in 1998.

Defendant has a Bachelor’s Degree and a Master’s Degree

in Business from the University of Iowa.

Defendant is a Certified Financial Planner,

licensed in both Iowa and Nebraska. He took examinations to be licensed as a Certified
Financial Planner and Certified Senior Advisor, and also took examinations in relation to
insurance and annuity products.

Defendant conducts business from his Iowa home and

office and meets with clients in various locations in Iowa and Nebraska.

Most of the

interactions between Nelson and defendant were conducted in person in Omaha,
Nebraska. Nelson has never been to defendant’s office or home in Iowa.

Nelson has

never used the internet or looked at defendant’s website.
In 1998, Nelson married Valora Nelson. They maintain a joint bank account in
Omaha.

Nelson has always signed his own checks and managed his own finances. He

has always been confident in his ability to manage his own finances and make his own
financial decisions.
In February 2006, Nelson redeemed all of his stock certificates for cash in the
amount of $231,989.56 and deposited the funds in his Omaha bank account.
year, defendant first told Nelson about John Henry.
13

That same

Henry was a resident of Nebraska.

Henry was one of defendant’s clients. Defendant has received at least one commission
or payment from Henry in the past.

Defendant received adequate financial information

from both Nelson and Henry that an unsecured loan, to Henry, would be a reasonable
investment for Nelson.2 Nelson agreed to make an unsecured $200,000 loan to Henry.
Defendant drafted a promissory note for the transaction between Nelson and
Henry. Henry executed the promissory note on March 20, 2008. The promissory note
provided that Henry agreed to repay Nelson $200,000 plus interest in the amount of
$20,000, on or before September 25, 2008. The promissory note was drafted, signed,
and notarized in Nebraska.

The promissory note reflects a notarization of “Douglas

County, NE.” (Doc. 22-2). In an affidavit signed by counsel, plaintiffs allege the
promissory note was drafted by defendant in Sioux City, Iowa, and taken with him to
Nebraska to have John Henry sign it. (Doc. 48-1, at 5 ¶6). That affidavit provides no
citation to any record to support this assertion and the Court will therefore disregard it.3
Plaintiffs further assert, twice more, that defendant drafted the promissory note in Iowa.
(Doc. 48-2, at 1; Doc. 54, at 6.). Plaintiffs cite no evidence except for a deposition in
which defendant denied that assertion.

(Doc. 54, at 6).

The deposition records

defendant testifying that he prepared the promissory note in Omaha, Nebraska, in his
Comfort Inn & Suites office. (Doc. 41-4, at 98 (23:3–24:24)). No other evidence
supports plaintiffs’ assertion. Therefore, the Court finds there is no genuine issue of

2

See Doc. 48-1, at 13: Requests for admission 42 & 43 propounded by plaintiffs to defendant.

Federal Rule of Civil Procedure 56(c) requires that an affidavit filed in support of, or in
opposition to, a motion for summary judgment “be made on personal knowledge, set out facts
that would be admissible in evidence, and show that the affiant is competent to testify on the
matters stated.” FED. R. CIV. P. 56(c)(4). See also Postscripts Enterprises v. City of
Bridgeton, 905 F.2d 223, 226 (8th Cir. 1990) (holding that affidavit containing only conclusory
statements of plaintiff’s attorney was procedurally insufficient response to defendant’s summary
judgment motion and thus would be disregarded in determining appropriateness of summary
judgment).
3

14

material fact as to the location where the promissory note was drafted, signed or
notarized, and conclude that it was drafted, signed and notarized in Nebraska.
On March 27, 2008, Nelson wrote a check for $200,000 payable to Henry.
Nelson prepared and signed the check in Nebraska, and the check was drawn on Nelson’s
Omaha bank account. Nelson did not make any loan to defendant or write any check to
defendant. Nelson obtained the funds for the Henry Loan by taking a loan against his
annuity contract he purchased with the proceeds from the sale of his Union Pacific stock.
Nelson had taken other loans from his annuity for unrelated reasons, such as purchasing
pickup trucks.

Nelson’s wife was unaware of and uninvolved in the Henry Loan.

Nelson made the loan to Henry with expectations, of course, that Henry would
repay the loan.
due.

But Henry did not repay the loan on September 25, 2008, when it was

When defendant became aware that Henry had not repaid the loan, he tried to

contact Henry to get some of the loan repaid. Henry continued to assure defendant that
Henry would make a payment and make good on the loan.

Based on these

representations, defendant suggested to Nelson that Nelson hold off on enforcement in an
attempt to receive payment.

On February 25, 2010, Nelson executed a Power of

Attorney, appointing defendant as an agent for Nelson for purposes of collecting the
Henry Loan.

The power of attorney was drafted by an Omaha attorney and signed and

notarized in Nebraska.4
In 2011, defendant helped Nelson hire an attorney, Aaron Rodenburg, to take legal
action against Henry. On January 26, 2011, defendant and Nelson met with Rodenburg
in his Council Bluffs, Iowa, office.

Nelson signed an attorney fee contract with

4

Plaintiffs assert the power of attorney was drafted by defendant in Iowa and signed in Carter
Lake, Iowa. (Doc. 54, at 6). In his deposition, defendant explained that he was provided the
power of attorney by an attorney in the Travel and Transport building on 72nd Street. (Doc. 481, at 27). That building is located in Omaha. The document itself shows it was signed and
notarized in Nebraska. (Doc. 22-5, at 2).

15

Rodenburg. Nelson expected Rodenburg to take legal action against Henry, knowing
that defendant was not an attorney and was unable to take legal action against Henry for
Nelson.
defendant.

Rodenburg also advised Nelson that Nelson might have a claim against
Nelson signed an “informed consent” document acknowledging that

Rodenburg had provided him that advice.

In April 2011, defendant sent an email to

Rodenburg stating “I made a mistake in trusting this man [Henry], usually I am a very
good judge of character.”
On May 6, 2011, Rodenburg filed suit against Henry on Nelson’s behalf in
Nebraska state court. Nelson was aware of the suit and actions Rodenburg was taking
to recover his money.

Nelson became aware that Rodenburg obtained a judgment

against Henry and his companies for the amount of money Nelson lent Henry.
Rodenburg advised Nelson that he needed an additional $500 to collect on the judgment,
but Nelson does not recall paying this amount or whether Rodenburg took efforts to
collect on the judgment.
Defendant did not receive anything of value in relation to the Henry Loan.

There

is no evidence defendant himself received any proceeds from the Henry Loan.
B.

Summary Judgment Standard

Summary judgment is appropriate when the movant shows that “there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law.”

FED. R. CIV. P. 56(a) (2016). A movant must cite to “particular parts of

materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations . . . admissions, interrogatory
answers, or other materials.”

FED. R. CIV. P. 56(c); see Celotex Corp. v. Catrett, 477

U.S. 317, 322 (1986). A fact is “material” if it “might affect the outcome of the suit
under governing law.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
16

“An issue of material fact is genuine if it has a real basis in the record[,]” Hartnagel v.
Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citation omitted), or “when a reasonable
jury could return a verdict for the nonmoving party on the question[,]” Wood v.
DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (internal quotation marks and
citation omitted).

Evidence that presents only “some metaphysical doubt as to the

material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986), or evidence that is “merely colorable” or “not significantly probative,” Anderson,
477 U.S. at 249-50, does not make an issue of fact genuine.

In sum, a genuine issue of

material fact requires “sufficient evidence supporting the claimed factual dispute” that it
“require[s] a jury or judge to resolve the parties’ differing version of the truth at trial.”
Anderson, 477 U.S. at 248-49 (internal quotation marks and citation omitted).
The party moving for summary judgment bears “the initial responsibility of
informing the district court of the basis for its motion and identifying those portions of
the record which show a lack of a genuine issue.”

Hartnagel, 953 F.2d at 395.

Once

the moving party has met this burden, the nonmoving party must go beyond the pleadings
and by depositions, affidavits, or other evidence designate specific facts showing that
there is a genuine issue for trial.

Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th

Cir. 2005).
In determining whether a genuine issue of material fact exists, courts must view
the evidence in the light most favorable to the nonmoving party, giving that party the
benefit of all reasonable inferences that can be drawn from the facts.
U.S. at 587-88 (internal citation omitted).

Matsushita, 475

See also Reed v. City of St. Charles, Mo.,

561 F.3d 788, 790 (8th Cir. 2009) (stating that in ruling on a motion for summary
judgment, a court must view the facts “in a light most favorable to the non-moving partyas long as those facts are not so ‘blatantly contradicted by the record ... that no reasonable
jury could believe’ them.”) (quoting Scott v. Harris, 550 U.S. 372, 380 (2007)).
17

A

court does “not weigh the evidence or attempt to determine the credibility of witnesses.”
Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir. 2004).

Rather, a

“court’s function is to determine whether a dispute about a material fact is genuine.”
Quick v. Donaldson Co., Inc., 90 F.3d 1372, 1376-77 (8th Cir. 1996).
C.

Discussion

Defendant argues that plaintiffs’ claims are barred by the statutes of limitations.
Defendant argues that equitable estoppel does not apply here to excuse plaintiffs’ failure
to bring suit within the statutes of limitations because there is no evidence to support
application of the equitable estoppel doctrine. Finally, defendant argues that plaintiffs’
claims against him are for professional negligence, and plaintiffs cannot maintain that
claim because they have failed to designate an expert witness to establish that defendant’s
conduct fell below the applicable standard of care. The Court will address each of these
arguments in turn.

All of these arguments require a determination of which state’s law

applies to this conflict, however, so the Court will decide that issue first.
1.

Conflict of Law

Before applying any conflict-of-law rules, the Court must determine whether or
not there is a “true conflict” between the laws of the two states at issue because if there
is no such “true conflict,” then no choice of law is required.

See Bacon v. Liberty Mut.

Ins. Co., 688 F.3d 362, 366 (8th Cir. 2012) (concluding that no choice of law analysis
is necessary where there was no “true conflict” between Iowa and Nebraska law); Modern
Equip. Co. v. Continental Western Ins. Co., Inc., 355 F.3d 1125, 1128 n.7 (8th Cir.
2004) (“If there is not a true conflict between the laws of Nebraska and Iowa on the
pertinent issue, then no choice-of-law is required.”). Defendant asserts a conflict exists
regarding the statute of limitations applicable to the dispute, and argues that Nebraska
18

law should apply.

Plaintiffs have not disputed defendant’s contention that the laws of

the two states are in “true conflict” and argue that Iowa law should apply.

The Court

finds there is a true conflict in the laws of the states at issue regarding the length of the
applicable statutes of limitations.

Therefore, the Court turns to the question of what

state’s law should apply.
In a diversity action such as this, to determine what state’s law applies, the Court
must use the choice-of-law rules of the forum state, in this case, Iowa.

See, e.g., Klaxon

Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941) (the conflict-of-laws rules to
be applied by a federal court are the rules of the forum state, because “[o]therwise the
accident of diversity of citizenship would constantly disturb equal administration of
justice in coordinate state and federal courts sitting side by side”); H & R Block Tax
Servs. L.L.C. v. Franklin, 691 F.3d 941, 943 (8th Cir. 2012) (“‘Federal courts sitting in
diversity apply the choice-of-law rules of the forum state.’”) quoting Cicle v. Chase Bank
USA, 583 F.3d 549, 553 (8th Cir. 2009)).
Regarding Iowa’s conflict-of-laws rules, the Iowa Supreme Court has explained:
Iowa has abandoned the lex loci delicti rule in which the law of the place of
injury governs every issue in a tort action. We now follow the Restatement
[ (Second) of Conflict of Laws]’s “most significant relationship”
methodology for choice of law issues. Cameron v. Hardisty, 407 N.W.2d
595, 597 (Iowa 1987); Berghammer v. Smith, 185 N.W.2d 226, 231 (Iowa
1971). The theory behind this approach is that rather than focusing on a
single factor, “the court of the forum should apply the policy of the state
with the most interest in the litigants and the outcome of the litigation.”
Fuerste v. Bemis, 156 N.W.2d 831, 834 (Iowa 1968).
Veasley v. CRST Int’l, Inc., 553 N.W.2d 896, 897 (Iowa 1996).

The Iowa Supreme

Court looks to the Restatement (Second) Conflict of Laws for guidance on conflict issues.
Harris v. Clinton Corn Processing Co., 360 N.W.2d 812, 814 (Iowa 1985).
(1)

In general:

The forum will apply its own statute of limitations barring the claim.
19

(2)

The forum will apply its own statute of limitations permitting the claim
unless:
(a) maintenance of the claim would serve no substantial interest of
the forum; and
(b) the claim would be barred under the statute of limitations of a
state having a more significant relationship to the parties and the
occurrence.

Restatement (Second) of Conflict of Laws, § 142 (1988).

See also Washburn v.

Soper, 319 F.3d 338, 341 (8th Cir. 2003) (concluding that the Iowa Supreme
Court would adopt the exceptions set forth in the Restatement (Second) of Conflict
of Laws, §142(2)).
In reviewing the facts of this case, the Court concludes that it should apply
Nebraska law as that state has the most significant relationship to the parties and
the occurrence.

Plaintiffs are residents of Nebraska. Nelson was employed in

Nebraska, banked in Nebraska, and withdrew the funds involved in the loan from
a Nebraska bank.

Henry was a Nebraska resident.

The promissory note

reflecting the Henry loan was drafted, signed, and notarized in Nebraska.

Most

of the interactions between Nelson and defendant were conducted in person in
Omaha, Nebraska. Nelson has never been to defendant’s office or home in Iowa.
Nelson obtained a judgment against Henry in Nebraska state court.

The only

connection to Iowa in this case is that defendant lived and had an office in Iowa,
and Nelson’s lawyer had his office in Iowa.
Plaintiffs argue that Iowa law should apply because “the policies and
practices of regulators over the home state insurance commissioner and state
banking and securities regulators would be greater in Iowa” and “the State of Iowa
should have a greater interest in the justified expectations of all customers of
financial planners and insurance agents in their headquartered state, than a
secondary state that a financial advisor may do business in.”
20

(Doc. 54, at 5).

Plaintiffs also opine that “it would be easier for this court to determine and apply
Iowa law as the court sits in Iowa, including equitable estoppel spawning from
acts mostly having occurred in the State of Iowa.”

Id.

The Court finds this

argument unpersuasive. When all of the relevant conduct took place in Nebraska,
and a Nebraska citizen is the plaintiff, the fact defendant was licensed in Iowa is
of secondary importance to the much more significant relationship that the parties
and the occurrence have to the State of Nebraska.

Moreover, this Court is as

able to determine and apply Nebraska law as it is to determine and apply Iowa
law. Finally, although plaintiffs argue that acts occurred in Iowa that led to a
claim of equitable estoppel, they cite to no acts and, as related below, the Court
finds no acts to support a claim of equitable estoppel.
Accordingly, the Court will apply Nebraska law to this case.
2.

Plaintiffs’ Claims are Time Barred

In plaintiffs’ Amended Complaint, they assert five causes of action: Breach of
Trust, Gross Negligence, Breach of Contract, Federal Securities Violations, and State
Securities Violations.
plaintiffs’ claims.

(Doc. 22).

Defendant argues the statute of limitations bar

To determine the applicable statute of limitations, the Court must

determine what claims plaintiffs have brought. Defendant argues that plaintiffs’ “causes
of action” are not all separate claims, but, rather, several theories of recovery, citing
Poppert v. Dicke, 747, N.W.2d 629 (Neb. 2008).

(Doc. 41-1, at 7).

In Poppert, the

court explained the difference between causes of action and claims:
A cause of action consists of the fact or facts which give one a right to
judicial relief against another; a theory of recovery is not itself a cause of
action. Thus, two or more claims in a complaint arising out of the same
operative facts and involving the same parties constitute separate legal
theories, of either liability or damages, and not separate causes of action.
Whether more than one cause of action is stated depends mainly upon (1)
21

whether more than one primary right or subject of controversy is presented,
(2) whether recovery on one ground would bar recovery on the other, (3)
whether the same evidence would support the different counts, and (4)
whether separate causes of action could be maintained for separate relief.
Poppert, 747 N.W. 2d at 566-67 (internal footnotes omitted). With this test in mind,
the Court recognizes that plaintiffs have, in their first two causes of action, asserted
various versions of a professional negligence or fraud cause of action, in their third cause
of action a breach of contract claim, and their last two claims are statutory.

The

applicable statute of limitations for negligence or fraud in Nebraska is four years.

NEB.

REV. STAT. §25-207.

The statute of limitations for professional negligence is two years

after the alleged act or omission occurred.

NEB. REV. STAT. §25-222.

limitations for an oral contract is similarly four years.

The statute of

NEB. REV. STAT. §25-206.

statute of limitations for a written contract is five years.

The

NEB. REV. STAT. §25-205.

The statute of limitations for state securities violations is three years “after the contract
of sale or the rendering of investment advice.”

NEB. REV. STAT. §8-1118(4).

The

applicable statute of limitations for federal securities fraud provides:
(a) Except as otherwise provided by law, a civil action arising under an Act
of Congress enacted after the date of the enactment of this section [enacted
Dec. 1, 1990] may not be commenced later than 4 years after the cause of
action accrues.
(b) Notwithstanding subsection (a), a private right of action that involves a
claim of fraud, deceit, manipulation, or contrivance in contravention of a
regulatory requirement concerning the securities laws ... may be brought
not later than the earlier of—
(1) 2 years after the discovery of the facts constituting the violation; or
(2) 5 years after such violation.
28 U.S.C. § 1658.

Regarding Section 1658(b), the United States Supreme Court held

that “a cause of action accrues (1) when the plaintiff did in fact discover, or (2) when a
reasonably diligent plaintiff would have discovered, ‘the facts constituting the violation’—
22

whichever comes first.”

Merck & Co., Inc. v. Reynolds, 559 U.S. 633, 637 (2010)

(citing 28 U.S.C. § 1658(b)(1)).
In general, at the latest, the limitations period for plaintiffs’ causes of action began
when Henry defaulted on the loan, on September 25, 2008.

With regard to professional

negligence and state securities fraud, the cause of action accrued when the conduct or
advice was given, which at the latest was when the loan was made on March 27, 2008.
Therefore, plaintiffs’ causes of action became time barred as follows:
Negligence

September 25, 2012

Fraud

September 25, 2012

Oral contract

September 25, 2012

Written contract

September 25, 2013

Professional Negligence

March 27, 2010

State securities fraud

March 27, 2011

The cause of action for plaintiffs’ federal securities fraud cause of action accrued when
Henry defaulted on the loan on September 25, 2008, which means the latest the claim
could expire, absent a later discovery of the violation, March 20, 2013. Even if the
Court gave plaintiffs the benefit of the doubt and determined that they were not aware of
the possible cause of action against defendant until attorney Rodenburg advised Nelson
of the possible claim on January 26, 2011, the limitations period would have still expired
two years later on January 26, 2013.

See 28 U.S.C. § 1658(b)(1).

Plaintiffs filed this law suit on September 21, 2015.

This was almost a full two

years after the statute of limitations passed on the longest applicable statute of limitations.
Plaintiffs do not dispute this conclusion other than to assert that Iowa’s ten-year
statute of limitations for written contracts should apply to this case.

(Doc. 54, at 6-7).

Plaintiffs assert that the written contract consists of the “Power of Attorney” and “the
original contract and note,” apparently referring to the promissory note. (Doc. 54, at
23

7). First, the Court has found that Nebraska law applies, not Iowa law. In any event,
the Court finds there is no written contract between plaintiffs and defendant.

The

promissory note was between plaintiffs and Henry; defendant was not a party to that
document. The power of attorney authorized defendant to act on plaintiffs’ behalf to
pursue collection on the promissory note. There was no evidence of consideration given
for this authorization, or any other indicia that would make it a contract.

Finally,

plaintiffs admitted that there has never been a written contract with defendant.

(Doc.

41-3, at 90 (App. 86: Response to Request for Production of Documents No. 11); Doc.
41-4, at 77 (App. 166: Nelson Deposition at page 39)).
Accordingly, the Court finds plaintiffs causes of action, however labeled, are
barred by the applicable statutes of limitations. That is not, however, the end of the
analysis. Indeed, plaintiffs do not seriously dispute that the statutes of limitations would
bar their claims; rather, they pin their hopes on the doctrine of equitable estoppel to toll
the statutes of limitations. The Court will therefore next consider whether that doctrine
saves plaintiffs’ case, and concludes it does not.
3.

Equitable Estoppel Does Not Apply

Equitable estoppel can toll the statute of limitations.

In Reifschneider v. Nebraska

Methodist Hospital,447 N.W.2d 622 (Neb. 1989), the Nebraska Supreme Court
described the elements of equitable estoppel:
The elements of equitable estoppel are, as to the party estopped, (1) conduct
which amounts to a false representation or concealment of material facts,
or, at least, which is calculated to convey the impression that the facts are
otherwise than, and inconsistent with, those which the party subsequently
attempts to assert; (2) the intention, or at least the expectation, that such
conduct shall be acted upon by, or influence, the other party or other
persons; (3) knowledge, actual or constructive, of the real facts; as to the
other party, (4) lack of knowledge and of the means of knowledge of the
truth as to the facts in question; (5) reliance, in good faith, upon the conduct
24

or statements of the party to be estopped; and (6) action or inaction based
thereon of such a character as to change the position or status of the party
claiming the estoppel, to his injury, detriment, or prejudice.
Reifschneider, 447 N.W.2d at 627 (quotation omitted).

The Court finds equitable

estoppel inapplicable in this case for several reasons.
First, plaintiffs have produced no evidence defendant made false representations
or concealed material facts.

Second, to the extent that defendant made representations

regarding his conversations with Henry and Henry’s continued promises to make good
on the loan, plaintiffs have made no showing that Henry did not, in fact, make such
representations to defendant, or that defendant somehow knew the representations were
false.

Third, defendant’s conduct in suggesting that plaintiffs give Henry some time to

make good on the loan did not cause prejudice to plaintiffs because plaintiffs were able
to obtain a judgment against Henry.
Plaintiffs assert they have shown facts establishing a basis for equitable estoppel.
Plaintiffs allege that two documents (the power of attorney and the informed consent in
which Nelson acknowledged he could sue defendant) and “material facts” as alleged in
paragraphs 31 through 42 of their Amended Complaint show “deception” and “run to the
core of the fraudulent misrepresentation.”
exactly what those material facts are.

(Doc. 54, at 8).

Plaintiffs do not say

Plaintiffs go on to argue that the power of attorney

“came with the implied understanding that Clarence Nelson was going to forebear action
against Bitters if Bitters was truly intending to make Clarence Nelson whole.”

(Doc.

54, at 8-9). Plaintiffs conclude their argument that equitable estoppel applies by making
conclusory assertions that “the violations are so egregious, the ingratiation to Clarence
Nelson so great, and the fraudulent concealment by Bitters to deter Clarence Nelson and
his lawyer Aaron Rodenburg from taking legal action against them when they sued John
L. Henry in Douglas County, Nebraska instead.”
25

(Doc. 54, at 9).

Plaintiffs argument fails for several reasons. First, plaintiffs cannot simply point
to the allegations they made in their Amended Complaint to defeat a motion for summary
judgment.

As Local Rule 56(b) points out, plaintiffs were required to provide a

statement of additional facts, with specific references to depositions, interrogatory
answers and the like, that establish contested facts.
additional facts.

Plaintiffs did not file a statement of

Plaintiffs’ Amended Complaint is simply an allegation.

It is not

evidence of anything. “The very mission of the summary judgment procedure is to
pierce the pleadings and assess the proof in order to see whether there is a genuine need
for trial.”

FED. R. CIV. P. 56 (Commentary to 1963 amendment to rule 56(e) of the

Federal Rules of Civil Procedure).

Second, putting aside plaintiffs’ conclusory,

pejorative labels of “deception,” “fraudulent concealment,” “misrepresentations” and the
like that pepper their Amended Complaint and brief, plaintiffs have failed to point to a
single factual representation defendant made that they have shown to be false in any way.
Plaintiffs have not shown that there is anything in the power of attorney or informed
consent (neither which were even drafted by defendant) that is false or misleading.
Plaintiffs want this Court to infer that defendant was untruthful when he stated that he
was trying to help Nelson collect his debt from Henry and that his conduct was really a
carefully crafted ruse to let the statute of limitations run out so that Nelson could not sue
him. Plaintiffs have provided no facts to support this inference. Rather, it is pure
speculation.
As previously noted, courts must view the evidence in the light most favorable to
the nonmoving party, giving that party the benefit of all reasonable inferences that can
be drawn from the facts.

Matsushita, 475 U.S. at 587-88 (citation omitted).

But that

is true only “as long as those facts are not so blatantly contradicted by the record ... that
no reasonable jury could believe them.”
marks and citation omitted).

Reed, 561 F.3d at 790 (internal quotation

Moreover, viewing the facts in the light most favorable to
26

the nonmoving party does not obligate the Court to accept speculation.

See Brown v.

Fortner, 518 F.3d 552, 558 (8th Cir. 2008) (“As with any summary judgment motion,
while we are required to make all reasonable inferences in favor of the non-moving party,
we do not resort to speculation.”)
In summary, there is simply no genuine dispute as to any material fact that would
establish a basis for equitable estoppel.
4.

Defendant’s Professional Negligence Claims Fail for Want of an
Expert

As previously noted, at least the first two causes of action plaintiffs allege in their
Amended Complaint state a claim for professional negligence, however captioned.
Plaintiffs allege that defendant, acting in his capacity as a licensed financial advisor,
negligently persuaded plaintiffs to loan money to Henry.

To prevail on a professional

negligence claim, a plaintiff must show a breach of the applicable standard of care.
As a general rule, this requires expert testimony.

See Bixenmann v. Dickinson,

Land Surveyors, Inc., 882 N.W.2d 910, 916 (Neb. 2016) (“The general rule is that expert
testimony is required to identify the applicable standard of care in professional negligence
cases.”). “Under the common knowledge exception, [however,] a party may make a
prima facie case of professional negligence even without expert testimony in cases where
the evidence and circumstances are such that the recognition of the alleged negligence
may be presumed to be within the comprehension of laypersons.” Id.
same under Iowa law.

The rule is the

See Kubik v. Burk, 540 N.W.2d 60, 64 (Iowa App. 1995)

(holding that expert testimony that a professional’s conduct “is negligent is necessary
unless proof is so clear a trial court can rule as a matter of law that the professional failed
to meet an applicable standard or the conduct claimed to be negligent is so clear it can be
recognized or inferred by a person who is not” a professional) (citation omitted).
27

Here, plaintiffs allege that defendant “should have known that an unsecured loan
in the amount of $200,000 from Plaintiff Clarence G. Nelson, Jr. to John Henry was not
an appropriate investment suitable for Plaintiffs.”
¶ 27).

(Doc. 22, at 5: Amended Complaint,

Plaintiffs further allege that defendant “failed to exercise due diligence in vetting

John Henry as a sound borrower on behalf of Plaintiffs . . ..”

(Id., ¶ 28).

Finally,

plaintiffs assert that “the high risk was foreseeable by any reasonable investment advisor
and that the standard of care by a reasonable investment advisor would have dictated that
no one in the financial stature of Plaintiffs should hold a high risk investment as an
unsecured personal loan with a stranger to that investor of most of the investor’s life
savings.”

(Doc. 22, at 10: Amended Complaint, ¶ 52).

Whether defendant should

have known this was an inappropriate investment, conducted adequate due diligence, and
breached the standard of care owed by an investment advisor are not assessments that are
so clear to be recognized or inferred by a person who is not in defendant’s profession.
Therefore, plaintiffs require an expert to prove these claims.
“Summary judgment may be appropriate in an instance in which expert testimony
is required to establish negligence and expert testimony is unavailable, because there is
then no genuine issue of fact which can be proved.”

Kubik, 540 N.W.2d at 64.

See

also Dancy v. Hyster, 127 F.3d 649, 654-55 (8th Cir. 1997) (affirming district court’s
granting of summary judgment after concluding that expert testimony was required to
establish the standard of care and finding that plaintiffs could not provide expert testimony
on the standard of care). Here, plaintiffs have failed to timely designate any experts to
establish the standard of care of a financial advisor.

The Court has twice denied

plaintiffs request for designating experts out of time because plaintiffs have simply failed
to make any showing of good cause or excusable neglect for why they have failed to
designate an expert more than a year after filing their lawsuit alleging breach of the
standard of care.

Accordingly, even if plaintiffs’ first two causes of action were not
28

barred by the statute of limitations, the Court would grant summary judgment on the first
two causes of action for want of an expert to prove defendant violated a standard of care.
VI.

CONCLUSION

The Court does not lightly grant summary judgment in this case. It is clear that
plaintiffs have tragically been deprived of their life savings because of a poor investment.
Whether defendant bore any responsibility for that poor investment to the point that he
should be held liable will never be determined because plaintiffs failed to pursue their
claim against him, like they pursued their claim against Henry, in a timely manner.
Although plaintiffs allege that they failed to pursue their claim because defendant misled
them or lulled them into foregoing bringing suit against him, the Court can find no
genuine issue of material fact that would support this allegation.
Therefore, for the reasons set forth herein, the Court:
(1) Denies plaintiffs’ Motion for Leave of Court for Plaintiffs to Designate Experts
Out of Time (Doc. 47);
(2) Denies plaintiffs’ Motion to Dismiss Without Prejudice (Doc. 46); and
(3) Grants defendant’s Motion for Summary Judgment (Doc. 41).

Plaintiffs’

Amended Complaint is dismissed with prejudice and judgment shall issue in
favor of defendant.
IT IS SO ORDERED this 24th day of January, 2017.

__________________________________
C.J. Williams
Chief United States Magistrate Judge
Northern District of Iowa
29