Bonnell et al v. Karels et al

Filing 10

MEMORANDUM AND ORDER regarding Amended Complaint 9 . Pursuant to initial review, Defendant Devan Eisenmenger is dismissed as a party to this action on Plaintiff's motion. Defendant Kenneth James Karels is dismissed as a party to this action f or Plaintiff's failure to state a claim upon which relief may be granted against said Defendant. Clerk to complete summons and 285 form for service by U.S. Marshal for Defendant Great Western Bancorp. This case is removed from the pro se docke t. The clerk's office shall randomly assign new judges to this case and request a reassignment order from the Chief Judge. Ordered by Senior Judge Richard G. Kopf. (Copy mailed to pro se party. Copy of summons, 285 form and certified copy of order to USM)(JAB)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
KATHLEEN T. BONNELL,
Plaintiff,
v.
KENNETH JAMES KARELS,
GREAT WESTERN BANCORP,
INC., and DOES 1 THROUGH 25,
Defendants.

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4:18CV3066

MEMORANDUM
AND ORDER

Plaintiff filed this case on May 3, 2018, and has been granted leave to proceed
in forma pauperis. The court previously conducted an initial review of Plaintiff’s
Complaint (Filing 1), and, in a Memorandum and Order entered on May 22, 2018
(Filing 7), questioned whether it has subject matter jurisdiction over this case. The
court therefore gave Plaintiff 30 days to amend her pleading in order to show there is
complete diversity of citizenship and the amount in controversy exceeds $75,000.00.
See 28 U.S.C. § 1332. Plaintiff filed an Amended Complaint (Filing 9) on June 15,
2018. The court now conducts an initial review of Plaintiff’s Amended Complaint to
determine whether summary dismissal is appropriate under 28 U.S.C. § 1915(e)(2).
I. SUMMARY OF PLEADINGS
Because Plaintiff’s Amended Complaint specifically incorporates by reference
the allegations of her original Complaint and its attached exhibits (see Filing 9, ¶ 3),
and does not repeat those allegations or duplicate the exhibits, the court will consider
the Amended Complaint as supplemental to, rather than superseding, the original
Complaint. See NECivR 15.1(b) (“In considering pro se litigants’ amended pleadings,
the court may consider the amended pleading as supplemental to, rather than as

superseding, the original pleading, unless the pleading states that it supersedes the
prior pleading.”).
A.

Original Complaint

Plaintiff alleges that her mother maintained a checking account at the Great
Western bank in Ord, Nebraska, which passed to Plaintiff upon her mother’s death on
September 17, 2017, and that on October 2, 2017, the bank paid $2,151.85 out of the
account to Plaintiff’s brother, who wrote an unauthorized check to himself. It is
alleged that a power of attorney granting Plaintiff’s brother the right to act on behalf
of the mother automatically expired upon her death.
Plaintiff seeks reimbursement, plus $75,000.00 for emotional distress and
approximately $1,000.00 for attorney fees that were incurred in attempting to resolve
the matter. Named as Defendants are Great Western Bancorp, Inc., its CEO, Kenneth
Karels, and its Ord branch bank manager, Devan Eisenmenger.
B.

Amended Complaint

Plaintiff has removed Devan Eisenmenger as a Defendant in order to have
complete diversity of citizenship (see Filing 9, ¶ 2), and has increased the amount of
damages by claiming the emotional distress she suffered has caused her to be unable
to obtain employment as a truck driver. Plaintiff’s theories of recovery include breach
of contract, breach of fiduciary duty, and either intentional or negligent infliction of
emotional distress. Attached to the Amended Complaint are additional documents
pertaining to the banking transaction, and Plaintiff’s mental health records.
Plaintiff claims loss of present and future earnings of $70,000.00 per year, and
a total damage award of $1,050,000.00 for such economic loss and her emotional
distress. Plaintiff also alleges she incurred a $10,000.00 debt for unsuccessful
completion of truck driver training.
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II. STANDARDS ON INITIAL REVIEW
The court is required to review in forma pauperis complaints to determine
whether summary dismissal is appropriate. See 28 U.S.C. § 1915(e). The court must
dismiss a complaint or any portion of it that states a frivolous or malicious claim, that
fails to state a claim upon which relief may be granted, or that seeks monetary relief
from a defendant who is immune from such relief. 28 U.S.C. § 1915(e)(2)(B).
Pro se plaintiffs must set forth enough factual allegations to “nudge[] their
claims across the line from conceivable to plausible,” or “their complaint must be
dismissed.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 569-70 (2007); see also
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.”).
“The essential function of a complaint under the Federal Rules of Civil
Procedure is to give the opposing party ‘fair notice of the nature and basis or grounds
for a claim, and a general indication of the type of litigation involved.’” Topchian v.
JPMorgan Chase Bank, N.A., 760 F.3d 843, 848 (8th Cir. 2014) (quoting Hopkins v.
Saunders, 199 F.3d 968, 973 (8th Cir. 1999)). However, “[a] pro se complaint must
be liberally construed, and pro se litigants are held to a lesser pleading standard than
other parties.” Topchian, 760 F.3d at 849 (internal quotation marks and citations
omitted).
III. DISCUSSION
For purposes of initial review, the court will assume that Nebraska substantive
law applies to this diversity case. See BBSerCo, Inc. v. Metrix Co., 324 F.3d 955, 960
n.3 (8th Cir. 2003) (citing Wood v. Mid-Valley Inc., 942 F.2d 425, 426 (7th Cir.
1991)) (“The operative rule is that when neither party raises a conflict of law issue in

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a diversity case, the federal court simply applies the law of the state in which the
federal court sits”).
A. Claims Against Defendant Karels
As an initial matter, the court does not find any allegations of fact to support a
plausible claim for relief against Defendant Karels. “Generally, a corporation is
viewed as a complete and separate entity from its shareholders and officers, who are
not, as a rule, liable for the debts and obligations of the corporation.” Christian v.
Smith, 759 N.W.2d 447, 462 (Neb. 2008). “An officer who takes no part in the
commission of the tort is not personally liable to third persons for the torts of other
agents, officers, or employees of the corporation.” Huffman v. Poore, 569 N.W.2d
549, 559 (Neb. App. 1997). Because Karels is not alleged to have participated in any
wrongdoing, he will be dismissed from the action without prejudice.1
A. Breach of Contract
Plaintiff’s breach-of-contract claim is governed by Article 4 of the Uniform
Commercial Code (“U.C.C.”). “The foundation of the relationship between a bank and
its customer is the bank’s agreement to pay out the customer’s money only on his or
her order, and the bank’s relation to its depositor is that of debtor and creditor. Section
4-401, U.C.C., provides that a bank may charge against a customer’s account any item
which is ‘properly payable’ from that account.” Maddox v. First Westroads Bank, 256
N.W.2d 647, 652 (Neb. 1977).
“The measure of damages for failure to exercise ordinary care in handling an
item is the amount of the item reduced by an amount that could not have been realized
by the exercise of ordinary care. If there is also bad faith it includes any other damages
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Such a dismissal will not preclude Plaintiff from making Karels a defendant
at a later date if she is able to allege facts to support a finding of personal liability.
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the party suffered as a proximate consequence.” Neb. Rev. Stat. U.C.C. § 4-103(5).
In other words, Plaintiff’s potential damages under this section cannot exceed the
amount of the alleged mispayment ($2,151.85), unless she can establish bad faith on
the part of the bank. See Berman v. U. S. Nat. Bank, 249 N.W.2d 187, 195 (Neb. 1976)
(observing that section 4-103(5) “provides for consequential damages proximately
caused if there has been bad faith.”); see also Braesch v. Union Ins. Co., 464 N.W.2d
769, 778 (Neb. 1991). (“Damages for mental anguish are not, as a general rule,
recoverable in actions for breach of contract unless the breach amounts in substance
to willful or independent tort.”).
The term “bad faith” is not defined in Article 4 of the Uniform Commercial
Code, but “the connotation is the absence of good faith.” See Neb. Rev. Stat. U.C.C.
§ 4-103, comment 6 (also stating that the “proximateness” of other damages “is to be
tested by the ordinary rules applied in comparable cases”). “Good faith” means
“honesty in fact and the observance of reasonable commercial standards of fair
dealing.” Neb. Rev. Stat. U.C.C. § 3-103(6).
Plaintiff alleges that the bank repeatedly has refused to refund the withdrawn
funds, despite knowing that the withdrawal of funds was unauthorized, and has also
engaged in certain misleading and unethical conduct. At least for purposes of initial
review, the allegations of the Complaint and Amended Complaint, with attached
exhibits, are sufficient to state a plausible “bad faith” claim.
Because Plaintiff’s “other damages” for emotional distress and economic loss
might be enough to meet the jurisdictional threshold, this action will be allowed to
proceed. See Federated Mut. Ins. Co. v. Moody Station & Grocery, 821 F.3d 973, 977
(8th Cir. 2016) (a complaint that alleges the jurisdictional amount in good faith will
suffice to confer jurisdiction, but the complaint will be dismissed if it appears to a
legal certainty that the claim is really for less than the jurisdictional amount); Kopp
v. Kopp, 280 F.3d 883, 885 (8th Cir. 2002) (“As we see it, the federal court has
jurisdiction here unless, as a matter of law, [the plaintiff] could not recover ... damages
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for emotional distress, the amount of damages that she could recover is somehow
fixed below the jurisdictional amount, or no reasonable jury could award damages
totaling more than $75,000 in the circumstances that the case presents.”).
B. Breach of Fiduciary Duty
“To recover on a breach of fiduciary duty claim, a plaintiff must prove: (1) the
defendant owed it a fiduciary duty; (2) the defendant breached the duty; (3) the breach
was the cause of the injury to the plaintiff; and (4) the plaintiff was damaged.” Estate
of Joyce Rosamond Petersen, 2016 WL 6102339, at *3 (citing McFadden Ranch, Inc.
v. McFadden, 807 N.W.2d 785, 790 (Neb.App. 2011)). The existence of a fiduciary
duty and the scope of that duty are questions of law for a court to decide. Id. (citing
Gonzalez v. Union Pac. R.R., 803 N.W.2d 424, 446 (Neb. 2011)). “Under Nebraska
law, ‘[a] fiduciary duty arises out of a confidential relationship which exists when one
party gains the confidence of the other and purports to act or advise with the other’s
interest in mind.’” McCormack v. Citibank, N.A., 100 F.3d 532, 540 (8th Cir. 1996)
(quoting Wolf v. Walt, 530 N.W.2d 890, 898 (Neb. 1995)).
There is a “presumption under Nebraska law that ordinarily ‘the relationship
between a bank and a customer ... imposes no fiduciary duty upon the bank.’”
McCormack, 100 F.3d at 540-41 (quoting Chase v. Deneau, No. A-91-1015, 1993 WL
70947, at *2 (Neb. Ct. App. Mar.16, 1993)). Because the facts alleged by Plaintiff do
not show the existence of a confidential relationship, she cannot recover any damages
on a theory that the bank breached its fiduciary duty.
C. Intentional or Negligent Infliction of Emotional Distress
“To recover for intentional infliction of emotional distress, a plaintiff must
prove (1) intentional or reckless conduct (2) that was so outrageous in character and
so extreme in degree as to go beyond all possible bounds of decency and is to be
regarded as atrocious and utterly intolerable in a civilized community and (3) that the
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conduct caused emotional distress so severe that no reasonable person should be
expected to endure it.” Roth v. Wiese, 716 N.W.2d 419, 431 (Neb. 2006) (citing
Brandon v. County of Richardson, 624 N.W.2d 604 (Neb. 2001)). “Whether conduct
is extreme and outrageous is judged on an objective standard based on all the facts and
circumstances of the particular case. The facts must be such that when heard, an
average member of the community would resent the actor and exclaim ‘Outrageous!’
Mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities
that result from living in society do not rise to the level of extreme and outrageous
conduct. In determining whether certain conduct is extreme and outrageous, the
relationship between the parties and the susceptibility of the plaintiff to emotional
distress are important factors to consider. Conduct which might otherwise be
considered merely rude or abusive may be deemed outrageous when the defendant
knows that the plaintiff is particularly susceptible to emotional distress.” Id. at 432
(citations omitted). “Although outrageous conduct and severe emotional distress are
separate elements of the tort of intentional infliction of emotional distress, the two are
related in that the extreme and outrageous character of the conduct is itself important
evidence that severe emotional distress existed on account of the conduct. Id. at 433.
The Nebraska Supreme Court has “set a high hurdle for establishing outrageous
conduct,” Heitzman v. Thompson, 705 N.W.2d 426, 431 (Neb. 2005), but the facts
alleged in this case indicate the bank was put on notice by Plaintiff that the withdrawal
of funds by her brother was unauthorized. If the bank also had knowledge of other
facts alleged, such as Plaintiff’s financial situation and mental condition, a plausible
claim exists for intentional infliction of emotional distress based on the bank’s
continued refusal to honor its repayment obligation to its customer. See, e.g., Dale v.
Thomas Funeral Home, 466 N.W.2d 805 (Neb. 1991) (finding actionable conduct
where funeral home refused to release body until widow paid $490 embalming fee).
“Severe emotional distress is also an element of the tort of negligent infliction
of emotional distress.” Kant v. Altayar, 704 N.W.2d 537, 540 (Neb. 2005). “In
Nebraska, where there is no impact or physical injury to the plaintiff, the plaintiff
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seeking to bring an action for negligent infliction of emotional distress must show
either (1) that he or she is a reasonably foreseeable ‘bystander’ victim based upon an
intimate familial relationship with a seriously injured victim of the defendant’s
negligence or (2) that the plaintiff was a ‘direct victim’ of the defendant’s negligence
because the plaintiff was within the zone of danger of the negligence in question.”
Catron v. Lewis, 712 N.W.2d 245, 248-49 (Neb. 2006) (citing Hamilton v. Nestor, 659
N.W.2d 321 (Neb. 2003); James v. Lieb, 375 N.W.2d 109 (Neb. 1985)). In this case,
Plaintiff claims to be a “direct victim” of the bank’s alleged negligence in permitting
her brother to withdraw funds from the checking account and in failing to respond
appropriately to Plaintiff’s demands for reimbursement.
To recover damages for either intentional or negligent infliction of emotional
distress, the “emotional anguish or mental harm must be medically diagnosable and
must be of sufficient severity that it is medically significant.” Hamilton , 659 N.W.2d
at 329; Schleich v. Archbishop Bergan Mercy Hosp., 491 N.W.2d 307, 310-11 (Neb.
1992). Plaintiff’s mental health records indicate she has a history of both major
depressive disorder and post-traumatic stress disorder, and has sought counseling
since her brother withdrew the money from the checking account. This is sufficient
to demonstrate the existence of compensable injury. See Roth, 716 N.W.2d at 433
(expert testimony established that plaintiff suffered from posttraumatic stress disorder
and chronic depression, caused at least in part by defendant’s harassment).
IV. CONCLUSION
Liberally construing Plaintiff’s Complaint, as supplemented by the Amended
Complaint, the court finds probable subject matter jurisdiction and concludes there is
a sufficient factual basis for the case to proceed against Great Western Bancorp, Inc.,
on theories of breach of contract (pursuant to the U.C.C.) and either intentional or
negligent infliction of emotional distress. The court cautions Plaintiff that this is only
a preliminary determination based on her pleadings, and is not a determination of the
merits of her claims or potential defenses thereto.
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IT IS THEREFORE ORDERED:
1.

Defendant Devan Eisenmenger is dismissed as a party to this action on
Plaintiff’s motion. Such dismissal is without prejudice.

2.

Defendant Kenneth James Karels is dismissed as a party to this action for
Plaintiff’s failure to state a claim upon which relief may be granted
against said Defendant. Such dismissal is without prejudice.

3.

The clerk of the court is directed to complete a summons form and a
USM-285 form for Defendant Great Western Bancorp, Inc., 225 South
Main Avenue, Sioux Falls, South Dakota 57104.

4.

The clerk shall forward the completed forms to the Marshals Service,2
together with copies of:
a.
b.

Plaintiff’s Amended Complaint (Filing 9); and

c.
5.

Plaintiff’s Complaint (Filing 1);

This Memorandum and Order.

The Marshals Service shall serve Defendant by certified mail or any
other method authorized by Federal Rule of Civil Procedure 4(h).3

2

Pro se litigants proceeding in forma pauperis are entitled to rely on service by
the United States Marshals Service. Wright v. First Student, Inc., 710 F.3d 782, 783
(8th Cir. 2013). Pursuant to 28 U.S.C. § 1915(d), in an in forma pauperis case, “[t]he
officers of the court shall issue and serve all process, and perform all duties in
such cases.” See Moore v. Jackson, 123 F.3d 1082, 1085 (8th Cir. 1997) (language
in § 1915(d) is compulsory).
3

“[A] domestic or foreign corporation ... must be served ... in a judicial district
of the United States: (A) in the manner prescribed by Rule 4(e)(1) for serving an
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6.

Federal Rule of Civil Procedure 4(m) requires service of the complaint
on a defendant within 90 days of filing the complaint. However, Plaintiff
is granted, on the court’s own motion, an extension of time until 90 days
from the date of this order to complete service of process.

7.

The United States Marshal shall serve all process in this case without
prepayment of fees from Plaintiff.

8.

This case is removed from the pro se docket. The clerk’s office shall
randomly assign new judges to this case and request a reassignment
order from the Chief Judge.

DATED this 11th day of July, 2018.
BY THE COURT:
s/ Richard G. Kopf
Senior United States District Judge

individual; or (B) by delivering a copy of the summons and of the complaint to an
officer, a managing or general agent, or any other agent authorized by appointment
or by law to receive service of process and–if the agent is one authorized by statute
and the statute so requires–by also mailing a copy of each to the defendant[.]” Fed. R.
Civ. P. 4(h)(1). “[A]n individual ... may be served in a judicial district of the United
States by: (1) following state law for serving a summons in an action brought in courts
of general jurisdiction in the state where the district court is located or where service
is made; or (2) doing any of the following: (A) delivering a copy of the summons and
of the complaint to the individual personally; (B) leaving a copy of each at the
individual’s dwelling or usual place of abode with someone of suitable age and
discretion who resides there; or (C) delivering a copy of each to an agent authorized
by appointment or by law to receive service of process.” Fed. R. Civ. P. 4(e). Under
Nebraska law, “[a]n individual party ... may be served by personal, residence, certified
mail, or designated delivery service.” Neb. Rev. Stat. § 25-508.01(1).
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