COR Clearing, LLC v. Calissio Resources Group, Inc. et al
Filing
160
MEMORANDUM AND ORDER that the Clearing Firm Defendants' joint motion to dismiss is denied. Plaintiff's motion for leave to file sur-reply is denied as moot. Ordered by Senior Judge Lyle E. Strom. (LAC)
IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
COR CLEARING, LLC, a Delaware )
limited liability company,
)
)
Plaintiff,
)
)
v.
)
)
CALISSIO RESOURCES GROUP,
)
INC., a Nevada corporation,
)
ADAM CARTER, an individual,
)
SIGNATURE STOCK TRANSFER,
)
INC, A Texas corporation; and )
DOES 1-50, TD AMERITRADE
)
CLEARING, INC., a Nebraska
)
corporation, NATIONAL
)
FINANCIAL SERVICES LLC, a
)
Delaware limited liability
)
company, SCOTTRADE, INC., an )
Arizona corporation, and
)
E-TRADE CLEARING, LLC, a
)
Delaware limited liability
)
company,
)
)
Defendants.
)
______________________________)
8:15CV317
MEMORANDUM AND ORDER
This matter is before the Court on a joint motion to
dismiss filed by National Financial Services, LLC, TD Ameritrade
Clearing, Inc. (“TDAC”), Scottrade, Inc., and E-Trade Clearing,
LLC, (hereinafter collectively the “Clearing Firm Defendants”)
(Filing No. 137).
The Clearing Firm Defendants have submitted a
brief (Filing No. 138), an index of evidence (Filing No. 139) and
a reply brief (Filing No. 151) in support of the motion.
The
plaintiff, COR Clearing, LLC, (“plaintiff” or “COR”), has filed a
brief in opposition to the joint motion to dismiss (Filing No.
149) as well as an index of evidence in support of its brief in
opposition to the motion (Filing No. 150).
After review of the
motion, the parties’ briefs, and the applicable law, the Court
finds as follows.
BACKGROUND
On August 26, 2015, COR Clearing filed its first
complaint against Calissio Resources Group, Inc. (“Calissio”),
Adam Carter (“Carter”), Signature Stock Transfer, Inc.
(“Signature”), and Does 1-50 (Filing No. 1).
Plaintiff’s
complaint alleged three causes of action including:
(1) a
request for declaratory judgment; (2) unjust enrichment; and (3)
fraud.
See id. at 9-13.
The complaint alleged that defendants
“calculated [a] scheme to defraud the marketplace and the
clearing system in order to obtain millions of dollars from
unsuspecting market participants by exploiting a weakness in the
dividend payment system of the third-party Depositary Trust
Clearing Corporation (“DTCC”).”
(Id. at 1).
On November 10, 2015, following a hearing, the Court
denied COR’s expedited motion (Filing No. 20) for the appointment
of a limited purpose receiver (Filing No. 80).
On December 8,
2015, the Court denied Signature’s motion (Filing No. 29) to
dismiss(Filing No. 85).
On April 21, 2016, the Court granted
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plaintiff’s application (Filing No. 108) for default judgment
against Calissio Resources Group, Inc. (Filing No. 109).
On May
23, 2016, the Court granted plaintiff’s motion (Filing No. 94) to
compel TDAC “to produce documents and things responsive to
[plaintiff’s] subpoena served on or about December 4, 2015.”
(Filing No. 116).
On August 2, 2016, the Court granted plaintiff leave to
file an amended complaint (Filing No. 122).
The amended
complaint (Filing No. 123) filed on August 2, 2016, adds the
Clearing Firm Defendants as named defendants and alleges the
lawsuit was filed “to recover proceeds of a fraudulent dividend
scheme . . . that caused harm to COR Clearing and its customers
in the amount of approximately $4 million.”
(Id. at 1).
Plaintiff accuses the Clearing Firm Defendants and Signature of
“[i]mproper [r]eceipt and [r]etention of the [f]raudulent
[d]ividends.”
(Id. at 13).
Plaintiff asserts a claim of unjust
enrichment against the Clearing Firm Defendants and Signature and
asks the Court to “impose a constructive trust . . . over the
funds traceable to Calissio’s fraud.”
(Id. at 19).
LAW
Determining whether a complaint states a plausible
claim for relief is “a context-specific task” that requires a
court “to draw on its judicial experience and common sense.”
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Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir.
2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S.
Ct. 1937, 173 L. Ed. 2d 868 (2009)).
Federal Rule of Civil
Procedure 8 requires a complaint to present “a short and plain
statement of the claim showing that the pleader is entitled to
relief.”
Fed. R. Civ. P. 8(a)(2).
“[A] complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”
Braden, 588 F.3d at 594
(quoting Iqbal, 556 U.S. at 678) (citing Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929
(2007)).
“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.”
Iqbal, 556 U.S. at 678 (internal cite
omitted).
When considering a motion to dismiss under Rule
12(b)(6), well-pled allegations are considered to be true and are
viewed in the light most favorable to the plaintiff.
F.3d at 591, 595.
Braden, 588
In viewing the facts in the light most
favorable to the plaintiff, a court must determine whether the
complaint states any valid claim for relief.
Jackson Sawmill
Co., Inc. v. United States, 580 F.2d 302, 306 (8th Cir. 1978).
Recitations of elements of a cause of action with mere conclusory
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statements fail to meet Rule 8’s pleading requirements.
556 U.S. at 678.
Iqbal,
However, plaintiffs may use legal conclusions
to provide the framework of a complaint, so long as factual
allegations support those legal conclusions.
Id. at 678-79.
Thus, a dismissal is likely “only in the unusual case in which a
plaintiff includes allegations that show on the face of the
complaint that there is some insuperable bar to relief.”
Jackson
Sawmill, 580 F.2d at 306.
DISCUSSION
I. Materials to be Considered
As an initial matter, the parties disagree about what
the Court can, and ought to consider in deciding this joint
motion to dismiss.
Compare Filing No. 138 at 3, n.2 (“C[OR] was
more explicit in its letters to the Clearing Firm Defendants,
which were specifically referenced in the Amended Complaint
. . . .
Since the [p]laintiff specifically references the three
letters discussed in the text in its [a]mended [c]omplaint . . .
the Court can and should consider those in connection with this
[m]otion.”) with Filing No. 149 at 10 (“the Brokerage Defendants’
reliance on COR Clearing’s demand letter . . . is not
appropriately considered on a motion to dismiss . . . .”).
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Federal Rule of Civil Procedure 12(d) provides:
If on a motion under Rule 12(b)(6)
or 12(c), matters outside the
pleadings are presented to and not
excluded by the court, the motion
must be treated as one for summary
judgment under Rule 56. All parties must be given a reasonable
opportunity to present all the material that is pertinent to the
motion.
Fed. R. Civ. P. 12(d).
However, the United States Court of
Appeals for the Eighth Circuit has held that “Rule 12(b)(6)
motions are not automatically converted into motions for summary
judgments simply because one party submits additional matters in
support of or [in] opposition to the motion.”
State ex rel.
Nixon v. Coeur D’Alene Tribe, 164 F.3d 1102, 1107 (8th Cir. 1999)
(citing Martin v. Sargent, 780 F.2d 1334, 1336-37 (8th Cir.
1985)).
Exceptions exist that allow some extra-pleading
materials to be considered.
See, e.g., Coeur D’Alene Tribe, 164
F.3d at 1107 (determining that materials that are part of the
public record or that do not contradict the complaint can be
considered); Piper Jaffray Cos., Inc. v. Nat’l Union Fire Ins.
Co. of Pittsburgh, Pa., 967 F. Supp. 1148, 1152 (D. Minn. 1997)
(stating that materials that are “necessarily embraced by the
pleadings” can be considered in 12(b)(6) motions).
The Eighth Circuit has directed that “‘documents
necessarily embraced by the complaint are not matters outside the
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pleading[s]’” under the meaning of Rule 12(d).
Gorog v. Best Buy
Co., Inc., 760 F.3d 787, 791 (8th Cir. 2014) (quoting Ashanti v.
City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012)
(internal marks and cites omitted)).
Courts may “‘consider . . .
documents whose contents are alleged in a complaint and whose
authenticity no party questions, but which are not physically
attached to the pleading.’”
Kushner v. Beverly Enterprises,
Inc., 317 F.3d 820, 831 (8th Cir. 2003) (quoting In re Syntex
Corp. Sec. Litig., 95 F.3d 922, 926 (9th Cir. 1996)).
Finally,
district courts have “‘complete discretion to determine whether
or not to accept any material beyond the pleadings that is
offered . . . .’”
Svoboda v. Tri-Con Industries, Ltd., No.
4:08CV3124, 2008 WL 4754647, at *2 (D. Neb. Oct. 27, 2008)
(quoting Stahl v. U.S. Dept. of Agriculture, 327 F.3d 697, 701
(8th Cir. 2003) (internal quotation omitted)) (emphasis added).
The Court finds that the letters sent by plaintiff to
the Clearing Firm Defendants are necessarily embraced by the
complaint.
In paragraph 66 of plaintiff’s first amended
complaint, plaintiff alleges the Clearing Firm Defendants
received actual and constructive
notice from DTCC and COR Clearing
that the due bills were erroneously
assessed . . . . Further, on at
least three occasions COR Clearing
notified [the Clearing Firm
Defendants] that the Calissio due
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bills were fraudulent and that COR
Clearing had a superior claim to
the funds that DTCC credited [the
Clearing Firm Defendants] as
payment for the Calissio due bills.
(Filing No. 123 at 13).
Furthermore, in paragraphs 68-71 of the
amended complaint, plaintiff specifically references the letters
at issue.
See id. at 14.
The Court will therefore consider the
letters in ruling on the joint motion to dismiss.1
II. Motion to Dismiss Under Rule 12(b)(6)
The Clearing Firm Defendants move to dismiss
plaintiff’s sole claim against them of unjust enrichment under
Federal Rule of Civil Procedure 12(b)(6) (Filing No. 137 at 2).
The Clearing Firm Defendants argue “[i]t is axiomatic that unjust
enrichment requires . . . that the defendant be enriched . . .
[and that] the target of the [constructive] trust have title to
the subject property.
neither.”
The Clearing Firm Defendants have
(Filing No. 138 at 2) (emphasis in original).
The
Clearing Firm Defendants further contend that because the
Calissio shareholders, and not the Clearing Firm Defendants,
“were the beneficial and ultimate recipients of the dividends or
1
The Court also notes that plaintiff’s brief in opposition
to the Clearing Firm Defendants’ joint motion to dismiss
references the aforementioned paragraphs within the complaint in
seeking to establish the Clearing Firms Defendants’ knowledge of
COR’s demand and claim of fraud (Filing No. 149 at 5, 8).
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due bill payments,” the Clearing Firm Defendants could not have
been enriched (Id.).
Finally, the Clearing Firm Defendants claim
that the amended complaint “does not allege . . . the Clearing
Firm Defendants ever acquired title to the funds, nor does it
allege any benefit the Clearing Firm Defendants received in
connection with the funds . . . .”
(Id. at 9).
At the heart of
the Clearing Firm Defendants’ motion is the amended complaint’s
failure to adequately plead the second element of an unjust
enrichment claim.
See Filing Nos. 138 at 6-9 and 151 at 1-10.
By contrast, plaintiff states that “COR has set forth specific
allegations in the [a]mended [c]omplaint that clearly and fully
state a claim for relief against the [Clearing Firm] Defendants.”
(Filing No. 149 at 1).
Under Nebraska state law, “[t]o recover on a claim for
unjust enrichment, a plaintiff must show that (1) the defendant
received a benefit, (2) the defendant retained possession of the
benefit, and (3) the defendant in justice and fairness ought to
pay the plaintiff for the benefit.”
ACI Worldwide Corp. v.
MasterCard Technologies, LLC, No 8:14CV31, 2014 WL 7409750, at *8
(D. Neb. Dec. 31, 2014) (citing Kanne v. Visa U.S.A. Inc., 723
N.W.2d 293, 302 (Neb. 2006)).
Considering plaintiff’s well-pled
allegations to be true, and in viewing those allegations in light
most favorable to COR, a plain reading of the face of the
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complaint allows the Court to reasonably infer that the Clearing
Firm Defendants may be liable under a theory of unjust enrichment
requiring a judicial imposition of a constructive trust.
Thus
the Court finds plaintiff’s amended complaint satisfies Rule 8's
plausibility standard.
Therefore, the Clearing Firm Defendants’
joint motion to dismiss for failure to state a claim under Fed.
R. Civ. P. 12(b)(6) will be denied.
III. Motion for Leave to File Sur-Reply
On December 7, 2016, plaintiff sought leave to file a
sur-reply to the Clearing Firm Defendants’ reply brief (Filing
No. 159).
Plaintiff requests that it “be permitted to respond to
. . . new arguments” regarding certain rules of the DTCC.
at 1).
(Id.
The Court will deny the motion as moot due to its denial
of the Clearing Firm Defendants’ joint motion to dismiss.
Accordingly,
IT IS ORDERED:
1) The Clearing Firm Defendants’ joint motion to
dismiss is denied.
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2) Plaintiff’s motion for leave to file sur-reply is
denied as moot.
DATED this 9th day of December, 2016.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court
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