Antioch Litigation Trust, W. Timothy Miller, Trustee v. McDermott Will & Emery LLP et al

Filing 58

ORDER GRANTING DEFENDANT MWE'S MOTION FOR JUDGMENT ON THE PLEADINGS RE CLAIMS FOR AIDING AND ABETTING (Doc. 52 ). Signed by Judge Timothy S. Black on 1/4/2013. (mr1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
ANTIOCH LITIGATION TRUST,
W. TIMOTHY MILLER, TRUSTEE,

Case No. 3:09-cv-218
Judge Timothy S. Black

Plaintiff,
vs.
MCDERMOTT WILL & EMERY LLP,
Defendant.
ORDER GRANTING DEFENDANT MWE’S MOTION FOR JUDGMENT ON
THE PLEADINGS RE CLAIMS FOR AIDING AND ABETTING (Doc. 52)
This civil action is before the Court on Defendant McDermott Will & Emery’s
(“MWE”) motion for judgment on the pleadings regarding Plaintiff’s claim for aiding
and abetting (Doc. 52), and the parties’ responsive memoranda (Docs. 56, 57).
Specifically, Defendant maintains that Plaintiff’s allegation that it aided and abetted
breaches of fiduciary duty by members of the Morgan family with respect to the 2003
ESOP transaction should be dismissed because Ohio does not recognize claims for aiding
and abetting breaches of fiduciary duty.
I.

BACKGROUND FACTS

Plaintiff’s first amended complaint purported to make a single claim for legal
malpractice against MWE (Doc. 14), but the Court found that the complaint actually
asserted six separate claims, each having its own independent legal analysis. (Doc. 22 at
8-9). One of the claims for relief that the Court recognized was that “MWE advised the

majority shareholders (the Morgans) in breaches of their fiduciary duties.” Id. at 9, 23,
25. (See also Doc. 14 at ¶ 34, alleging that MWE “aided and abetted the Morgans’
conflict of interest and facilitates the [2003] transaction.”). In denying MWE’s motion to
dismiss as to this claim, the Court held that an issue “as to whether a fiduciary
relationship exits is necessarily fact specific” and therefore a claim relating to “the
existence of a fiduciary duty is usually not subject to dismissal under Rule 12(b)(6).”
(Doc. 22 at 24).
II.

STANDARD OF REVIEW

“The standard of review applicable to motions for ‘judgment on the pleadings’
under Fed. R. Civ. Pro. 12(c) is the same de novo standard applicable to motions to
dismiss under Rule 12(b)(6).” Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998).
A motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) operates to test the
sufficiency of the complaint and permits dismissal of a complaint for “failure to state a
claim upon which relief can be granted.” To show grounds for relief, Fed. R. Civ. P. 8(a)
requires that the complaint contain a “short and plain statement of the claim showing that
the pleader is entitled to relief.”
While Fed. R. Civ. P. 8 “does not require ‘detailed factual allegations,’ . . . it
demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S.
544 (2007)). Pleadings offering mere “‘labels and conclusions’ or ‘a formulaic recitation

-2-

of the elements of a cause of action will not do.” Id. (citing Twombly, 550 U.S. at 555).
In fact, in determining a motion to dismiss, “courts ‘are not bound to accept as true a legal
conclusion couched as a factual allegation[.]” Twombly, 550 U.S. at 555 (citing Papasan
v. Allain, 478 U.S. 265 (1986). Further, “[f]actual allegations must be enough to raise a
right to relief above the speculative level[.]” Id.
Accordingly, in order “[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.’” Iqbal, 129 S.Ct. at 1949. A claim is plausible where “plaintiff pleads factual
content that allows the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. Plausibility “is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.
“[W]here the well-pleaded facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the
pleader is entitled to relief.’” Id. (citing Fed. Rule Civ. Proc. 8(a)(2)).

III.
A.

ANALYSIS

Plaintiff’s Aiding and Abetting Claim

This Court recently held that a claim under Section 876 for aiding and abetting
tortious conduct is not cognizable under Ohio law. Antioch Co. Litig. Trust v. Morgan,

-3-

3:10cv156, 2012 U.S. Dist. LEXIS 182997, at *9 (S.D. Ohio Dec. 31, 2012) (J. Black).1
Accordingly, the only issue left to resolve is whether Plaintiff has in fact asserted a cause
of action for aiding and abetting.
Plaintiff argues that the Court should not construe its complaint as containing a
claim for aiding and abetting. (Doc. 56 at 2). However, Plaintiff clearly alleged that
MWE aided and abetted the alleged breaches of fiduciary duty by Lee Morgan and Asha
Moran. (Doc. 14 at ¶ 34).2 Additionally, in Plaintiff’s memorandum in opposition to
MWE’s motion to dismiss, Plaintiff explicitly maintained that “[t]he Trust states a claim
against MWE for aiding and abetting breaches of fiduciary duty by the Morgans.” (Doc.
18 at ii). Moreover, this Court already determined that Plaintiff’s First Amended
Complaint asserted six separate claims for legal malpractice, a finding to which Plaintiff
never objected. (Doc. 22 at 8-9). Accordingly, the Court finds that Plaintiff’s argument,
that “MWE confuses allegations with causes of action,” is not well taken.
B.

Plaintiff’s Failure to Advise Claim

Plaintiff also alleges that one of the ways in which MWE committed malpractice
was its failure “to advise the Antioch Board, at any time prior to June 5, 2008, of its

1

See also Pharos Capital Partners v. Touche (In re Nat’l Century Fin. Enters.), Nos.
2:03md1565, 2:03cv362, 2012 U.S. Dist. LEXIS 154042, at *66-67 (S.D. Ohio Oct. 26, 2012);
DeVries Dairy v. White Eagle Coop. Ass’n, 974 N.E.2d 1194 (Ohio 2012).
2

“Rather than advise the Board members that they should not approve the transaction as
structured, [MWE] aided and abetted the Morgans’ conflict of interest and facilitated the
transaction.” (Id. at 19).
-4-

potential claims against its financial advisors, including Deloitte & Touche and Houlihan
Lokey, for professional negligence in connection with the 2003 Transaction.” (Doc. 14
at ¶ 50).
In the bankruptcy adversary proceeding, Plaintiff alleges that one of those very
financial advisors, Houlihan Lokey, is liable for aiding and abetting breaches of fiduciary
duty in connection with the ESOP transaction. (Doc. 14 at ¶ 41). This Court recently
granted Houlihan’s motion and dismissed Plaintiff’s claim that Houlihan aided and
abetted breaches of fiduciary duty with respect to the 2003 transaction because Ohio does
not recognize such claims. Antioch Co. Litig. Trust, 2012 U.S. Dist. LEXIS 182997 at 9.
Accordingly, this Court must also dismiss Plaintiff’s claim that MWE should have
advised Antioch to bring such claim against Houlihan (or Deloitte). If Plaintiff cannot
succeed on its claim against Houlihan because the claim does not exist in Ohio, then
Plaintiff cannot contend that MWE erred by not advising Antioch to bring a claim with
no basis in law.
III.

CONCLUSION

Therefore, for the reasons stated here, Defendant’s motion for judgment on the
pleadings (Doc. 52) is GRANTED and Plaintiff’s malpractice claims for: (1) aiding and
abetting breaches of fiduciary duty; and (2) failure to advise Antioch to sue its financial
advisors are DISMISSED.

-5-

IT IS SO ORDERED.
s/ Timothy S. Black
Timothy S. Black
United States District Judge

Date: January 4, 2013

-6-