LUCAS et al v. EVANS et al
Filing
18
OPINION. Signed by Judge Noel L. Hillman on 5/28/2020. (tf, n.m.)
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UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
______________________________
:
ANDREW LUCAS,
:
:
Plaintiff,
:
:
v.
:
:
S. LAVON EVANS, JR. and
:
S. LAVON EVANS, JR. OPERATING :
COMPANY,
:
:
Defendants.
:
______________________________:
1:18-cv-02791-NLH-AMD
OPINION
APPEARANCES:
ANDREW LUCAS
24 IRON ORE ROAD
MANALAPAN, NJ 07726
Plaintiff appearing pro se
PAUL CHRISTIAN JENSEN, JR.
FOLKMAN LAW OFFICES PC
1949 BERLIN ROAD
SUITE 100
CHERRY HILL, NJ 08003
On behalf of Defendants
HILLMAN, District Judge
Plaintiff, Andrew Lucas, appearing pro se, 1 claims that he
purchased oil and gas interests in Alabama and Texas pursuant to
1
Plaintiff also listed Lucas Capital Advisors, LLC and Lucas
Capital Exploration Venture I-IV as plaintiffs. As the Clerk
informed Plaintiff when he filed his complaint, such entities
require their own legal representation, and Plaintiff cannot
represent them pro se. See U.S. v. Cocivera, 104 F.3d 566, 572
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the misrepresentations by Defendants, S. Lavon Evans, Jr. and S.
Lavon Evans, Jr. Operating Company, that “the purchase proceeds
were to be used for drilling and completion work,” when
Defendants actually used the proceeds for their own legal fees.
Plaintiff claims that on January 27, 2010 he entered into a
settlement agreement with Defendants, but after two payments,
they failed to make the remaining payments under the agreement. 2
Plaintiff claims that Defendants’ actions constitute violations
of the federal securities laws, which Plaintiff contend provide
a five-year statute of limitations.
Plaintiff seeks
$1,143,948.06, plus interest and penalties. 3
(3d Cir. 1996) (explaining that a corporation may not appear pro
se, and it may not be represented by an officer not licensed to
practice law) (quoting Rowland v. California Men's Colony, 506
U.S. 194, 201-02 (1993) (“‘It has been the law for the better
part of two centuries . . . that a corporation may appear in the
federal courts only through licensed counsel.’”)).
2
Plaintiff’s complaint refers to the settlement agreement and
other documents as exhibits, but Plaintiff did not send to the
Clerk’s Office those exhibits as attachments for filing.
Consideration of those exhibits are not necessary for the
Court’s resolution of Defendants’ motion to dismiss.
3
Plaintiff avers that this Court has subject matter jurisdiction
over his action under 28 U.S.C. § 1332(a) (diversity of
citizenship and an amount in controversy exceeding $75,000) and
28 U.S.C. § 1331 (federal question). Plaintiff has not properly
averred the citizenship of the parties to establish subject
matter jurisdiction under § 1332(a), but because Plaintiff
claims that Defendants violated federal law, Plaintiff has
properly established subject matter jurisdiction under § 1331.
2
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Defendants have moved to dismiss Plaintiff’s complaint on
res judicata grounds. 4
On January 15, 2016, Plaintiff filed a
breach of contract action against Defendants in the Southern
District of Mississippi arising from the same claim that
Defendants breached their January 27, 2010 settlement agreement
after they made two payments.
See Lucas v. S. Lavon Evans, Jr.,
et al., Civil Action 2:16-10-KS-MTP (S.D. Miss.).
The district
court dismissed Plaintiff’s complaint because his breach of
contract claim was barred by Mississippi’s three-year statute of
limitations.
(Docket No. 13-3 at 13-17.)
for the Fifth Circuit affirmed.
The Court of Appeals
(Docket No. 13-3 at 19-25.)
The Fifth Circuit summarized Plaintiff’s claim and the
procedural history:
On January 27, 2010, Lucas and Evans executed a
settlement agreement which resolved certain “claims,
issues, and disputes relating to or arising from [the
4
Defendants filed their motion on June 25, 2019, and Plaintiff’s
opposition was due on July 22, 2019. On August 12, 2019,
Plaintiff requested an extension of time to file his opposition,
but as of December 10, 2019, Plaintiff had failed to file his
opposition or otherwise contact the Court. The Court provided
Plaintiff with an additional 20 days from December 10, 2019 to
file his response to Defendants’ motion, or indicate whether he
wished to discontinue pursuing his claims against Defendants.
(Docket No. 15.) The Court further ordered that if Plaintiff
failed to respond to Defendants’ motion or contact the Court
within 20 days, the Court would consider Defendants’ motion to
dismiss as unopposed. On January 7, 2020, Plaintiff requested a
further extension of time to file his response (Docket No. 16),
which Plaintiff submitted for docketing on January 17, 2020
(Docket No. 17).
3
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parties’] various business ventures.” The agreement
imposed a number of obligations on both parties; at issue
in this case is Evans’s promise to pay Lucas $556,500 plus
interest. The agreement called for Evans to pay monthly
installments, starting at $10,000 per month and rising to
$20,000 per month, “until the unpaid principal, interest,
and all loan charges have been paid in full.” If Evans had
paid all his installments in a timely manner, the last
installment would have come due in November 2012. The
agreement also called for Evans to execute a promissory
note and deliver it to Lucas along with the agreement.
Evans failed to execute a promissory note. According
to Lucas, Evans did make three $10,000 payments to Lucas in
February, March, and April 2010. Evans has no record of
those payments but states that he made a partial payment of
$5,000 in February 2012. It is undisputed that Evans made
no additional payments thereafter. Lucas contacted Evans
as early as April 19, 2010, to complain about missed
payments and to threaten legal action.
Lucas sued Evans for breach of contract on January 15,
2016. Evans moved for summary judgment, arguing that
Lucas’s claim was barred by Mississippi’s three-year
statute of limitations applicable to breach of contract
actions. See Miss. Code § 15-1-49. In response, Lucas
argued that Evans was continuing to breach the settlement
agreement by not making payments. The district court
granted Evans’s motion for summary judgment and dismissed
Lucas’s claim. This appeal followed.
(Docket No. 13-3 at 22-23.)
The Fifth Circuit then explained why it affirmed the
district court’s decision:
The parties agree that Mississippi law controls. . . .
Lucas brought suit in January 2016; thus, for this action
not to be time-barred, the statute of limitations must have
accrued no later than January 2013.
It is undisputed that if Evans had timely paid all
monthly installments, his last installment would have come
due in November 2012. It is also undisputed that Lucas was
aware of Evans’s failure to make monthly installments as
4
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they came due. To escape these facts, Lucas argues that
Evans has continued to breach the settlement agreement by
not making monthly payments and points to a section of the
settlement agreement that obligates Evans to make payments
“until the unpaid principal, interest, and all loan charges
have been paid in full.” As the district court held,
applying the continuing breach doctrine based on this
section of the settlement agreement would effectively waive
the statute of limitations, which Mississippi law expressly
prohibits. Moreover, Lucas’s continuing breach argument
contradicts the Mississippi Supreme Court’s holding in
Freeman which defined the accrual date for unpaid
installments as the date “when [each installment] falls
due.”
Accordingly, the district court did not err in
holding that Lucas’s breach of contract claim is timebarred.
(Docket No. 13-3 at 24-25, internal citations omitted.)
Defendants argue that Plaintiff’s instant complaint raises
the same claims and issues as his Mississippi action, and it is
therefore barred under res judicata principles.
This Court
agrees.
The doctrine of res judicata consists of two distinct
concepts - issue preclusion and claim preclusion.
Migra v.
Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 77 n.1 (1984);
U.S. v. 5 Unlabeled Boxes, 572 F.3d 169, 174 (3d Cir. 2009)
(quoting Venuto v. Witco Corp., 117 F.3d 754, 758 n.5 (3d Cir.
1997)) (“Collateral estoppel customarily refers to issue
preclusion, while res judicata, when used narrowly, refers to
claim preclusion.
This court has previously noted that ‘the
preferred usage’ of the term res judicata ‘encompasses both
claim and issue preclusion.’”).
Res judicata is “not a mere
5
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matter of technical practice or procedure but a rule of
fundamental and substantial justice.
Equal Employment
Opportunity Comm'n v. U.S. Steel Corp., 921 F.2d 489, 492 (3d
Cir. 1990).
It is “central to the purpose for which civil
courts have been established, the conclusive resolution of
disputes,” and seeks to avoid the expense and vexation of
multiple lawsuits, while conserving judicial resources and
fostering reliance on judicial action by minimizing the
possibility of inconsistent decisions.
Id. (quoting Montana v.
United States, 440 U.S. 147, 153–54 (1979)).
Issue preclusion prevents re-litigation of issues that were
necessarily decided in a previous case.
Burlington N. R.R. v.
Hyundai Merch. Marine Co., 63 F.3d 1227, 1232 (3d Cir. 1995).
There are four elements for issue preclusion to apply: (1) the
issue in the prior proceeding must be identical to the current
issue; (2) the issue must have been actually litigated; (3) the
issue must have been determined by a final, valid judgment; and
(4) the issue must have been essential to the judgment.
Id.
(citing In re Graham, 973 F.2d 1089, 1097 (3d Cir. 1992)).
Complete identity of parties in the two suits is not required
for the application of issue preclusion.
Id.
Claim preclusion prevents parties from re-litigating claims
that have been fully litigated or claims that could have been
6
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litigated in a prior action.
In re Mullarkey, 536 F.3d 215, 225
(3d Cir. 2008) (citing Post v. Hartford Ins. Co., 501 F.3d 154,
169 (3d Cir. 2007)).
Claim preclusion applies where three
elements are met: (1) there has been a final judgment on the
merits; (2) the parties are identical to the parties in the
prior action or are in privity with the identical parties; and
(3) the subsequent case is based on the same cause of action as
the prior case.
Churchill v. Star Enterprises, 183 F.3d 184,
194 (3d Cir. 1999); see also Bradley v. Pittsburgh Bd. of Educ.,
913 F.2d 1064, 1070 (3d Cir. 1990) (emphasizing that claim
preclusion prohibits reexamination not only of matters actually
decided in prior case, but also those that parties might have,
but did not, assert in that action).
While issue preclusion was intended to be a more-narrow
application of res judicata, “[t]he differences between claim
preclusion and issue preclusion in many cases may be more
fiction than fact.”
Purter v. Heckler, 771 F.2d 682, 690 n.5
(3d Cir. 1985); cf. McNasby v. Crown Cork and Seal Co., Inc.,
888 F.2d 270, 276 (3d Cir. 1989) (“This case provides a good
example of the difference between claim and issue preclusion.
Were we to uphold the district court’s application of claim
preclusion, we would affirm the dismissal of the plaintiffs’
suit.
On the other hand, the application of issue preclusion in
7
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the instant case would benefit the plaintiffs because many
issues were determined in their favor by the [Pennsylvania Human
Rights Commission].”).
Here, under either issue preclusion or
claim preclusion, Plaintiff’s complaint must be dismissed.
The
Court, however, will focus on how claim preclusion bars
Plaintiff’s claims.
As a primary matter, it is evident that Plaintiff is
attempting to circumvent the Fifth Circuit’s determination that
his claims against Defendants arising from the January 27, 2010
settlement agreement are barred by Mississippi’s three-year
statute of limitations by contending that Defendants’ actions
constitute federal securities fraud, rather than common law
breach of contract, and a five-year statute of limitations
applies to his current action, which he claims was filed within
the five-year window.
Plaintiff’s tactic is unavailing.
The repackaging of a claim under a different legal theory
does not prevent the application of res judicata.
“[N]ew legal
theories do not make the second case different for purposes of
claim preclusion.”
Haefner v. North Cornwall Tp., 40 F. App’x
656, 657–58 (3d Cir. 2002) (finding that the district court
properly applied the doctrine of claim preclusion where the
assertions in the plaintiff’s second civil complaint involved
the same operative facts and the same parties, or their privies,
8
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as in his prior civil complaint, and with the exception of two
new legal theories, the two lawsuits were identical); see also
Churchill v. Star Enterprises, 183 F.3d 184, 195 (3d Cir. 1999)
(“While Churchill cited different statutes to support her two
cases, the FMLA in Churchill I and the ADA and PHRA in Churchill
II, the court correctly observed that the fact that Churchill
advanced different legal theories does not mean that her second
action will not be precluded.
There is simply no escaping from
the fact that Churchill has relied on different legal theories
to seek redress from the Appellees for a single course of
wrongful conduct.
Because the claims were the same, Churchill
asserted a single cause of action in both cases that the
doctrine of claim preclusion required her to have joined in one
suit.
Thus, this case at bottom is simply a classic example of
splitting a cause of action.”).
Plaintiff claims that Defendants’ failure to complete their
payments under their settlement agreement constitutes securities
fraud. 5
This contention is simply a substitution of “breach of
contract” in his Mississippi complaint with “federal securities
violations” in his complaint here.
5
The factual allegations and
To the extent that Plaintiff alleges that Defendants’ use of
“the purchase proceeds” for their own legal fees instead of for
“drilling and completion work” constitutes a violation of
federal securities laws, the Court addresses that claim below.
9
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the parties in this case are identical to Plaintiff’s
Mississippi action, in which there has been a final judgment on
the merits.
Moreover, even if Defendants’ failure to make
payments under their agreement could support a claim for
securities fraud, rather than breach of contract, Plaintiff was
required to assert that claim in the Mississippi action because
it arises out of the same course of conduct as the one alleged
here.
Plaintiff’s complaint in this Court squarely meets all
the elements of claim preclusion.
Even if Plaintiff’s claims for federal securities law
violations were not barred by claim preclusion, Plaintiff’s
claims fail to meet the proper pleading standards for stating a
cognizable claim.
To determine the sufficiency of a complaint,
a court must take three steps: (1) the court must take note of
the elements a plaintiff must plead to state a claim; (2) the
court should identify allegations that, because they are no more
than conclusions, are not entitled to the assumption of truth;
and (3) when there are well-pleaded factual allegations, a court
should assume their veracity and then determine whether they
plausibly give rise to an entitlement for relief.
Malleus v.
George, 641 F.3d 560, 563 (3d Cir. 2011) (quoting Ashcroft v.
Iqbal, 556 U.S. 662, 664, 675, 679 (2009) (alterations,
quotations, and other citations omitted).
10
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Separate from his claims regarding the parties’ settlement
agreement, Plaintiff claims:
8. Defendants willfully violated the Securities Act of
1933 (15 U.S.C. §77) and the Securities Exchange Act of
1934 (15 U.S.C. §78) by defrauding the plaintiffs of
investment monies and a subsequent debenture (loan) to said
defendants.
9. The subject oil and gas interests, and the
subsequent debenture, were securities as defined by 15
U.S.C. §77b(a)(l) and 15 U.S.C. §78c(a)(l).
10. Plaintiffs relied upon the misrepresentations of
the defendants and purchased oil and gas interests
of leases in the Black Warrior Basin in Alabama.
11. The Plaintiffs further relied upon the
misrepresentations of the defendants and purchased
additional oil and gas interest in the Los Quelos Mineral
Trust near Laredo, Texas.
12. All purchases were made based upon the
misrepresentations of the defendants that the purchase
proceeds were to be used for drilling and completion work.
(Docket No. 1 at 1-2.)
Plaintiff alleges that he relied upon Defendants’
misrepresentations regarding the purchase of securities as
defined under federal securities laws, and he contends that this
violates federal securities laws.
Plaintiff fails, however, to
specify what provisions of the Securities Act of 1933 and the
Securities Exchange Act of 1934 that Defendants allegedly
violated. 6
6
Plaintiff cites to “15 U.S.C. § 77 and 15 U.S.C. § 78.” 15
U.S.C. § 77 is “Discrimination against neutral Americans in time
11
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The Securities Act of 1933 contains 78 subparts.
U.S.C. § 77a - § 77bbbb.
contains 129 subparts.
See 15
The Securities Exchange Act of 1934
See 15 U.S.C. § 78a - § 78lll.
Plaintiff’s conclusory allegation that Defendants wholesale
violated 207 sections of two federal statutes does not satisfy
Plaintiff’s “obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief,’” which “requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do . . . .”
Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (citations omitted).
Additionally, Plaintiff’s availment of the five-year
statute of limitations for these alleged securities law
violations is deficient on its face. 7
Under 28 U.S.C. § 1658(b):
of war” and 15 U.S.C. § 78 does not exist. The correct
citations are 15 U.S.C. § 77a, et seq. and 15 U.S.C. § 78a, et
seq.
7
The statute of limitations is an affirmative defense, see Fed.
R. Civ. P. 8(c)(1), but on a Rule 12(b)(6) motion, a complaint
may be dismissed on statute of limitations grounds, when the
statute’s applicability “is apparent on the face of the
complaint.” Ahn v. Cigna Health and Life Insurance Company,
2019 WL 5304628, at *5 (D.N.J. 2019) (citing Wisniewski v.
Fisher, 857 F.3d 152, 157 (3d Cir. 2017); Fried v. JP Morgan
Chase & Co., 850 F.3d 590, 604 (3d Cir. 2017)); see also
Chilcott v. Erie County Prison, 774 F. App’x 99, 101 n.1 (3d
Cir. 2019) (citing Adams v. Gould Inc., 739 F.2d 858, 870 n.14
(3d Cir. 1984)) (“Although statute of limitations and res
judicata are affirmative defenses, they can be asserted on a
motion to dismiss.”). In addition to arguing that Plaintiff’s
complaint is barred under res judicata, Defendants also argue
12
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[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, as
defined in section 3(a)(47) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(a)(47)), 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.
Plaintiff alleges that his complaint, which was filed on
February 23, 2018, was “brought within 5 years of the verbal
agreement for payment of the invested funds,” and “[s]uch
assertion to satisfy the debenture was made in September 2014.”
(Docket No. 1 at 2.)
Accepting as true Plaintiff’s contention
that September 2014 is the date that triggers the statute of
limitations under § 1658(b), it is the two-year limitations
period that governs, not the five-year period.
If either
Plaintiff discovered the alleged securities fraud in September
2014 or Defendants committed the alleged securities fraud in
September 2014, Plaintiff was required to bring his claims by
September 2016.
The five-year limitation period is only implicated in very
limited circumstances.
For example, a defendant commits a
securities violation on February 1, 2010, but the plaintiff does
that Plaintiff’s claims are barred by the statute of limitations
set forth in 28 U.S.C. § 1658(b).
13
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not discover facts constituting the violation until January 1,
2015.
The five-year limitations period under § 1658(b)(2) - the
date of the violation - would be February 1, 2015.
The two-year
limitations period under § 1658(a) - the date the violation was
discovered - would be January 1, 2017.
The five-year
limitations period would apply because it is the earlier of the
two limitations periods.
Here, two years from September 2014 - September 2016 - is
earlier than five years from September 2014 - September 2019.
Thus, the two-year limitations period applies, and Plaintiff’s
federal security law violation claims, which were filed on
February 23, 2018, are time-barred based on his own pleading of
when such alleged violations were either discovered or occurred. 8
Consequently, Plaintiff’s complaint must be dismissed in
its entirety for three reasons:
(1) it is barred by claim
8
Plaintiff’s statements in his complaint also negate his
contention that September 2014 is his discovery date of
Defendants’ alleged securities law violations. Plaintiff’s
complaint reveals that Defendants’ alleged misrepresentations
that constitute securities fraud occurred prior to January 2010
- the date Defendants allegedly proposed a settlement of
Plaintiff’s dispute with them, which arose out of their preJanuary 2010 misrepresentations which induced Plaintiff to buy
the oil and gas interests. January 2010 is well outside the
limitations periods in § 1658(b). The Court accepts, however,
Plaintiff’s attestation that the September 2014 date triggers
the statute of limitations as true for the purpose of resolving
Defendants’ motion to dismiss.
14
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preclusion, (2) it fails to state cognizable claims, and (3) it
is time-barred under 28 U.S.C. § 1658(b).
Plaintiff’s complaint
will be dismissed with prejudice. 9
An appropriate Order will be entered.
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
At Camden, New Jersey
9
See Ostuni v. Wa Wa's Mart, 532 F. App’x 110, 112 (3d Cir.
2013) (per curiam) (affirming dismissal with prejudice due to
expiration of statute of limitations); Family Civil Liberties
Union v. State, 386 F. Supp. 3d 411, 441 (D.N.J. 2019) (finding
that because all three requirements for claim preclusion were
satisfied, the plaintiffs’ complaint was dismissed with
prejudice). Moreover, except in civil rights cases, a court is
not obligated to afford a plaintiff the opportunity to amend his
complaint, either sua sponte or following the dismissal of the
complaint pursuant to a motion to dismiss. Fletcher Harlee
Corp. v. Pote Concrete Contractors, Inc., 482 F.3d 247, 251 (3d
Cir. 2007). Plaintiff has not asserted any civil rights
violations and he has not sought leave to file an amended
complaint.
15
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