Petersen et al v. Petersen et al

Filing 47

ORDER AND REASONS Denying in part and Granting in part 6 Motion to Dismiss for Failure to State a Claim as set forth in document. Signed by Judge Ivan L.R. Lemelle. (ijg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
LORRAINE PETERSEN
AND RICHARD PETERSEN

CIVIL ACTION

VERSUS

NO. 14-1516

KENNETH PETERSEN, SR.,
KAREN RUIZ PETERSEN AND
CARTER PROPERTIES, LLC

SECTION

“B”(5)

ORDER AND REASONS
Nature of Motion and Relief Sought
Before the Court is Defendants’ Rule 12(b)(6) motion to
dismiss for failure to state a claim upon which relief can be
granted. (Rec. Doc. No. 6).

Plaintiffs have filed a response.

(Rec. Doc. No. 8). Defendants subsequently filed a reply. (Rec.
Doc. No. 13).
IT

IS

ORDERED

that

Defendants’

Rule

12(b)(6)

motion

to

dismiss is:
1.

DENIED as to Kenneth and Karen Ruiz Petersen;

2.

GRANTED,

WITHOUT

PREJUDICE,

as

to

Carter

Properties, LLC. Plaintiffs are GRANTED leave to
amend their complaint as to Carter Properties,
LLC;
3.

GRANTED,
claim.

WITHOUT
Plaintiffs

PREJUDICE,
are

as

GRANTED

to
leave

the

fraud

to

amend

1

their complaint to specify the time and place of
the alleged fraud.
4.

Plaintiff shall have 21 days of this Court order
to

file

pleadings

containing

the

foregoing

amendments.
Cause of Action and Facts of the Case
Plaintiffs
Petersen.

to

this

action

are

Lorraine

and

Richard

Defendants are Kenneth Petersen, Sr., his wife Karen

Ruiz Petersen, and their corporate entity, Carter Properties,
LLC.

Kenneth Petersen is

Plaintiffs’ son.

Plaintiffs have

filed suit against all three Defendants, alleging fraud, breach
of fiduciary duty, breach of duty of mandatary, conversion, and
unjust enrichment. (Rec. Doc. No. 8).
Contentions of Movant
In

their

Lorraine

and

motion
Richard

Powers-of-Attorney”

to

dismiss,

Petersen

naming

Defendants
executed

Kenneth

claim

“Durable

Petersen

as

that

both

Financial
Plaintiffs’

agent. (Rec. Doc. No. 6). Kenneth Petersen claims, however, that
he received a letter from United Services Automobile Association
(USAA)

revoking

this

power-of-attorney

on

January

21,

2013.

Kenneth Petersen maintains that while he was acting pursuant to
this agency relationship, he did so faithfully and within its
boundaries. (Rec. Doc. No. 6 at 2-3).

Defendants also claim
2

that

Plaintiffs

authorized

the

financial

transactions

in

connection with their Hurricane Katrina house repair prior to
2007. (Rec. Doc. No. 6, at 3).
Contentions of Respondent
Plaintiffs contend that Lorraine Petersen gave Defendant
Kenneth Petersen a “financial power of attorney” while she and
her husband were in poor health. (Rec. Doc. No. 6-4 at 2-3).
Plaintiffs allege that Defendants harmed them by opening lines
of

credit

and

wrongfully

taking

money

from

various

sources,

including their IRA, money market, and bank accounts in breach
of

the

fiduciary

duty

created

by

the

financial

power

of

attorney. (Rec. Doc. No. 6-4 at 2-3).
Plaintiffs’

opposition

to

Defendants’

motion

to

dismiss

echoes many of the original factual allegations contained in
their

complaint.

Defendants

Due

allegedly

to

Plaintiffs’

undertook

debilitating

management

of

ailments,
Plaintiffs’

finances in 2007. Plaintiffs claim that, in the course of this
management,
credit

on

Petersen

Defendants
Plaintiffs’

that

she

was

defrauded
home

by

co-signing

them

by

opening

“misrepresenting
on

a

loan

Karen’s home.” (Rec. Doc. No. 8, at 3-4).

for

a
to

line

of

Lorraine

Kenneth

and

Plaintiffs allege

that Defendants proceeded to use this line of credit for their
personal and business use, without repayment, and this resulted
3

in the foreclosure on Plaintiffs’ home. (Rec. Doc. No. 8, at 34).

Plaintiffs contend that whatever gains Defendants realized

through their mismanagement of Plaintiffs’ money were funneled
into their corporate entity, Carter Properties, LLC. (Rec. Doc.
No. 8 at 8-9).
Law and Analysis
Motion to Dismiss as to Kenneth and Karen Ruiz Petersen
Rule 12(b)(6) provides that failure to state a claim upon
which relief can be granted is a defense and possible ground for
dismissal of a civil action in federal court.
Federal
jurisprudence

Rule

of

focus

on

Civil
the

Procedure

facts

a

12(b)(6)

plaintiff

can

and

its

truthfully

allege and the inferences and conclusions a court may reasonably
draw from those facts. It contains no requirement to plead legal
theories. Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 604
(5th Cir. 1981).
The U.S. Court of Appeals for the Fifth Circuit established
the following standard: “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its
face.’” Harold H. Huggins Realty, Inc. V. FNC, Inc., 634 F.3d
787, 796 (5th Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S.
662, 677 (2009)). “Plausible on its face" means the pleading
4

alleges factual content sufficient for the court to draw the
reasonable

inference

that

misconduct alleged.” Id.

defendants

are

liable

for

the

Conversely, a plaintiff’s complaint is

“implausible on its face” where these well-pleaded facts allow
no

more

than

an

inference

of

the

mere

“possibility

misconduct.” Id. (quoting Iqbal, 556 U.S. at 679).

of

So long as a

complaint alleges facts upon which relief can be granted, even
if it fails to categorize the properly applicable legal theories
underlying

that

claim,

then

the

complaint

will

survive

a

12(b)(6) motion. Dussouy, 660 F.2d at 604.
Defendants bear the burden of showing that plaintiffs can
prove no set of facts consistent with the allegations in the
complaint

which

would

entitle

them

to

relief.

Baton

Rouge

Building and Construction v. Jacobs Constructors, Inc., 804 F.2d
879,

881

(5th

Cir.

1986).

On

a

12(b)(6)

motion,

the

Court

accepts all well-pleaded factual allegations as true, and it
views

them

in

the

light

most

favorable

to

the

non-movant.

American Waste & Pollution Control Company, Inc. V. BrowningFerris, Inc., 949 F.2d 1384, 1386 (5th Cir. 1991).
A complaint’s factual allegations are sufficient where the
face of the complaint contains enough factual matter to raise a
reasonable expectation that discovery will reveal evidence of
the elements of plaintiffs’ claims. Lormand v. U.S. Unwired,
5

Inc.,

565

F.3d

228,

257

(5th

Cir.

2009).

The

foregoing

implements the well-settled principle that “[m]otions to dismiss
for failure to state a claim are viewed with disfavor and rarely
granted.” Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011).
In the instant case, Defendant relies on the argument that
“overall, Plaintiffs’ Petition for Damages fails as a matter of
law due [sic] its failure to plead laws and/or legal theories on
which relief can be granted,” and should therefore be dismissed.
(Rec. Doc. No. 6, pg. 4).
Plaintiff’s complaint generally sets out sufficient facts
from which this Court can reasonably infer, accepting as it must
that

Plaintiffs’

well-pleaded

allegations

are

true,

that

Defendants are liable for the alleged misconduct. Specifically,
paragraphs “V” through “XIII” set out various allegations of
legally cognizable misconduct. Paragraph VII (Rec. Doc. No. 6-4,
pg.

3)

alleges,

“Lorraine

learned

after

her

home

went

into

foreclosure that the mortgage that Lorraine believed she was
signing as a guarantor for Kenneth and Karen (Defendants), was
actually

for

a

line

of

credit

on

Lorraine

and

Richard’s

(Plaintiffs) own home in the amount of $112,500.” Paragraph VIII
alleges

a

potential

breach

of

fiduciary

duty

or

fraud:

“Defendants took the $112,500 from the line of credit secured by

6

the Petitioners’ home for Defendants’ personal and/or business
use.” (Rec. Doc. No. 6-4, pg. 3).
The complaint additionally alleges: “Defendants took and/or
cannot

account

for

and/or

incurred

over

$20,000

in

charges,

transfers and/or cash advances on several of Petitioners’ credit
cards...Defendants

took

and/or

cannot

account

for

at

least

$62,762.75 from two of Petitioners’ IRA accounts.” (Rec. Doc.
No. 6-4, pg. 3). These factual allegations raise legal theories
ranging

from

breach

of

fiduciary

duty

to

fraud

and

unjust

enrichment.1
Plaintiffs’

allegations,

while

failing

to

establish

the

precise legal theories on which Plaintiff seeks to rely, avoid
the threadbare recitation of conclusory legal statements that
12(b)(6)

and

its

jurisprudence

seek

to

exclude.2

Further,

Plaintiffs’ complaint is not required to set out the precise
legal theories on which it seeks to rely in order to survive
under a Rule 12(b)(6) attack. Dussouy, 660 F.2d at 604.
Plaintiffs allege sufficient facts from which this Court
can

reasonably

expect

that

discovery

will

reveal

further

1

See, e.g., Gerdes v. Estate of Cush, 953 F.2d 201, 204-5 (5th Cir. 1992) (discussing nature of fiduciary duty under
Louisiana law); Concise Oil & Gas Partnership v. Louisiana Intrastate Gas Corp., 986 F.2d 1463, 1468 (5th Cir. 1993)
(discussing elements of fraud under Louisiana law); Creely v. Leisure Living, Inc., 437 So.2d 816, 821-22 (La. 1983)
(discussing the elements of unjust enrichment under Louisiana law).
2

See Iqbal, 556 U.S. at 678 (the Rule 8 pleading standard does not require “detailed factual allegations, but it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”).
7

evidence to support and establish Plaintiffs’ legally cognizable
claims. The complaint thus establishes a reasonable inference of
the Defendants’ misconduct and Plaintiffs’ entitlement to relief
therefrom.

Accordingly, the Court denies Defendants’ 12(b)(6)

motion as to Kenneth and Karen Petersen.

Defendants’ Motion to Dismiss as to Carter Properties, L.L.C.
Federal Rule of Civil Procedure 8(a)(2) requires a pleading
to contain a

short and plain statement showing the pleader is

entitled to relief. The function of a complaint is to give a
defendant fair notice of plaintiff’s claim(s) and the grounds
upon

which

plaintiff

relies.

St.

Paul

Mercury

Ins.

Williamson, 224 F.3d 425, 434-35 (5th Cir. 2000).

Co.

V.

Rule 8(e)’s

provision for pleadings to be construed so as to do justice
buttresses this notice pleading doctrine, as justice is done
where defendants are put on notice of the claims against them.
Defendants

claim

that

Plaintiffs’

petition

lacks

any

reference to Carter Properties, L.L.C. and thus has failed to
state a claim against this entity. (Rec. Doc. No. 6, pg. 5).
Plaintiffs contend that Carter Properties, LLC, as an entity
owned and controlled by the Defendants, financially benefitted
from their wrongful actions. (Rec. Doc. No. 8, at 5).

8

While
beginning

Carter
of

the

Properties
complaint,

is

named

nothing

is

as

a

party

at

specifically

the

alleged

against it in the body of the complaint. (Rec. Doc. No. 6-4).
Defendants could likely speculate as to Plaintiffs’ allegations
against Carter Properties, but the dearth of any mention of
Carter in the body of the complaint fails to provide Defendants
the requisite Rule 8 notice.
Amendment as to Claim Against Carter Properties, LLC.
Federal

Rule

of

Civil

Procedure

15(a)(2)

states:

“...a

party may amend its pleading only with the opposing party’s
written consent or the court’s leave.

The court should freely

give leave when justice so requires.” Justice requires the Court
to grant Plaintiffs leave to amend their claims against Carter
Properties, LLC.
District courts have discretion over granting amendment,
upon consideration of the following factors: 1) undue delay; 2)
bad faith or dilatory motive on the part of the movant; 3)
repeated failures to cure deficiencies by amendments previously
allowed;

4)

undue

prejudice

to

the

opposing

party;

and

5)

futility of the amendment. Marucci Sports, L.L.C. v. NCAA, 751
F.3d 368, 378 (5th Cir. 2014) (citing Mayeaux v. La. Health
Serv. and Indent. Co., 376 F.3d 420, 426 (5th Cir. 2004)).

9

None

of

Plaintiffs

the

preceding

leave

to

factors

amend

militate

their

against

claims

granting

against

Carter

Properties. Plaintiffs have asserted their right to amendment.
(Rec. Doc. No. 8 at 12). Defendants advance no arguments against
amendment.

This

is

also

Plaintiffs’

first

motion

to

amend,

nullifying arguments under factors one and three, above.
remaining

factors

depend

largely

on

temporal

The

arguments,

grounding their salience in a plaintiff’s previous opportunities
to amend.

Plaintiffs here have had no such opportunity, and the

factors are not met.

The Court grants Plaintiffs leave to amend

their claims against Carter Properties, LLC.
Motion to Dismiss Fraud Claim
Federal

Rule

of

Civil

Procedure,

9(b)

provides:

“in

alleging fraud or mistake, a party must state with particularity
the

circumstances

constituting

fraud

or

mistake.

Malice,

intent, knowledge, and other conditions of a person’s mind may
be alleged generally.” Rule 9(b) supplements Rule 8's notice
pleading

doctrine,

serving

specifically

to

impede

meritless

fraud claims from reaching discovery. U.S. ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 185-6 (5th Cir. 2009).
The sufficiency of a fraud claim is tested on whether the
pleading alleges: “the time, place, and contents of the false
representation, as well as the identity of the persons making
10

the misrepresentation and what that person obtained thereby.”
Id. at 186 (quoting Williams v. WMX Technologies, Inc., 112 F.3d
175, 177 (5th Cir. 1997)).
Defendants

contend

that

Plaintiffs’

petition

is

insufficient as paragraph VII fails to allege the date/time of
the conversation leading to the commission of the alleged fraud.
(Rec.

Doc.

No.

6

at

6).

Plaintiffs

dispute

all

of

these

contentions, claiming that they have sufficiently pled the “who,
what,

when,

where,

and

how”

required

by

their

cited

jurisprudence. (Rec. Doc. No. 8 at 7-8). Defendants also claim
that Plaintiffs failed to allege “malice or intent or any other
required element.” (Rec. Doc. No. 6 at 6). As provided in Rule
9(b), however, Plaintiffs may allege these conditions of the
mind generally, and they have done so successfully. (Rec. Doc.
No. 6-4 at 2)
Plaintiffs allege simple fraud: that Defendants presented
them a mortgage to be signed and represented that it was on
Defendants’ home when it was actually for a line of credit on
Plaintiffs’

home.

allegation

establishes

misrepresentation,
representation,

and

(Rec.

the

Doc.

No.

the

requisite

identity

what

those

of

6-4

at

the

persons

2).

Plaintiffs’

content
persons

obtained

of

the

making

the

thereby.

See

Williams, 112 F.3d at 178-9.
11

Plaintiffs,

however,

failed

to

plead

with

sufficient

particularity when this fraud occurred. While they allege that
these financial transgressions generally coincided with their
“debilitating health problems beginning around 2007," Plaintiffs
do

not

explain

when

the

alleged

fraud

began–or

when

the

misleading conversation about the fraudulent mortgage occurred.
(Rec. Doc. No. 6-4 at 2).

Pleading the timing of fraud requires

more specificity than a broad statement rooting its beginnings
in 2007 and leaving a seven-year span in which it could have
occurred. See Berry v. Indianapolis Life Ins. Co., 600 F.Supp.
2d 805, 816-17 (N.D. Tex. 2009); see also Williams, 112 F.3d at
178-9.
Defendants’ motion to dismiss as to the fraud claims should
be granted, without prejudice, and Plaintiffs are granted leave
to amend their fraud claims to more specifically allege both the
time and place of the alleged fraud.

Granting leave to amend

these fraud allegations is governed by the same rules discussed
above.

The same facts also apply: Plaintiffs have asserted

their right to amendment without challenge, and this Court has
not previously granted Plaintiffs leave to amend.

Accordingly,

the Court finds that Plaintiffs should be granted leave to amend
their fraud allegations.
Conclusion
12

For

the

above

and

other

reasons,

IT

IS

ORDERED

that

Defendants’ Rule 12(b)(6) motion to dismiss is:
1.

DENIED as to Kenneth and Karen Ruiz Petersen;

2.

GRANTED,

WITHOUT

PREJUDICE,

as

to

Carter

Properties, LLC. Plaintiffs are GRANTED leave to
amend their complaint as to Carter Properties,
LLC;
3.

GRANTED,
claim.

WITHOUT
Plaintiffs

PREJUDICE,
are

as

GRANTED

to
leave

the

fraud

to

amend

their complaint to specify the time and place of
the alleged fraud.
4.

Plaintiff shall have 21 days of this Court order
to

file

pleadings

containing

the

foregoing

amendments.

New Orleans, Louisiana, this 17th day of November, 2014.

____________________________
UNITED STATES DISTRICT JUDGE

13