Ride, Inc et al v. Bowshier et al

Filing 30

ORDER: (1) DENYING DEFENDANTS' MOTION TO DISMISS (Doc. 18 ); and (2) DENYING PLAINTIFFS MOTION TO AMEND (Doc. 24 ) AS MOOT. Plaintiffs shall file an amended complaint with the spoliation allegation (Doc. 17 ) as ordered on February 5, 2013. The amended complaint shall be filed forthwith. Defendants shall file the amended answer, counterclaim, and third party complaint within 14 days thereafter. Signed by Judge Timothy S. Black on 3/29/2013. (mr1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

RIDE, INC., et al.,
Plaintiffs,
vs.
JACK A. BOWSHIER, et al.,
Defendants.

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Case No. 3:12-cv-271
Judge Timothy S. Black

ORDER: (1) DENYING DEFENDANTS’ MOTION TO DISMISS (Doc. 18); and
(2) DENYING PLAINTIFFS’ MOTION TO AMEND (Doc. 24) AS MOOT
This civil action is before the Court on Defendants’ 1 motion to dismiss 2 (Doc. 18),
Plaintiffs’ 3 motion to amend (Doc. 24), and the parties’ responsive memoranda (Docs.
23, 29).
I.

FACTS AS ALLEGED BY THE PLAINTIFF

For purposes of this motion to dismiss, the Court must: (1) view the complaint in
the light most favorable to Plaintiffs; and (2) take all well-pleaded factual allegations as
true. Tackett v. M&G Polymers, 561 F.3d 478, 488 (6th Cir. 2009).

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Defendants include Jack A. Bowshier, Jack D. Bowshier, Just Wheels Used Cars Inc., Sky
River LTD, Wild Rides, Inc., and Jalin Nautical, LLC (collectively “Defendants”).
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Defendants’ motion to dismiss also presents in the alternative as a motion for leave to file an
amended answer, counterclaim, and third party complaint. (Doc. 18).
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Plaintiffs include Ride, Inc. and Cycles Unlimited, LLC (collectively, “Plaintiffs”).

A. The Instant Case
Plaintiffs’ complaint presents claims under the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. §§1961 et seq., as well as certain state law
claims.
The primary basis for Plaintiffs’ complaint is that the Defendants, Jack A.
Bowshier and Jack D. Bowshier, fraudulently embezzled and converted funds from the
Plaintiffs to facilitate the purchase of numerous automobiles, a yacht, a motor coach, and
personal home improvements. As set forth in the complaint, some of these expenditures
were paid directly from Ride, Inc., other payments were made to other entities owned, or
partially owned by Jack A. Bowshier and Jack D. Bowshier, and those entities
subsequently made the personal payments of Messrs. Bowshier. Plaintiffs also maintain
that Messrs. Bowshier fraudulently transferred title to certain vehicles purchased by Ride,
Inc. to either themselves or entities in which they have an ownership interest, without any
consideration. Additionally, unauthorized corporate and personal payments were made to
Messrs. Bowshier, including monthly bonuses and car payments.
Accordingly, Plaintiffs have brought claims in this Court against Defendants, for:
(1) violations of the federal RICO statute; (2) violations of the Ohio RICO statute;
(3) replevin; (4) fraud and constructive fraud; (5) unjust enrichment, constructive trust,
and disgorgement; (6) conversion; (7) breach of fiduciary duty and breach of duty of
loyalty; (8) a declaratory judgment as to the proper and correct ownership of certain

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classic vehicles, motorcycles and other property; and (9) injunctive relief (protecting
Plaintiffs’ assets).
B. The Indiana Lawsuit
On January 27, 2011, Plaintiffs, along with another Ohio corporation known as
Ride Motorcycles, Inc., filed a Verified Complaint in the Superior Court of Allen County,
Indiana (Cause No. 02D01-1101-PL-18). The only defendants in that case are Jack A.
Bowshier and Jack D. Bowshier. 4 The claims presented in the Indiana lawsuit are for
embezzlement, conversion, breach of contract, and replevin.
The Indiana lawsuit was filed in Indiana inasmuch as the Plaintiffs and Defendants
in that case were parties to an Agreement whereby Jack D. Bowshier and Shawn
Bowshier were to purchase the interests in the Plaintiff corporations, Ride, Inc. and
Cycles Unlimited, LLC, from another individual, Dean Kruse. (Doc. 23, Ex. 1 at ¶¶ 3,
4). 5 That agreement contained a forum selection clause requiring that any dispute
regarding the agreement be filed in Allen County, Indiana. (Id. at ¶ 7).
During the course of discovery in the Indiana lawsuit, Plaintiffs discovered that
many of the assets at issue were converted or transferred to, or through, several entities
owned by Jack A. Bowshier or Jack D. Bowshier. (Doc. 23, Ex. 1 at ¶ 8). These entities

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A third Defendant, Shawn A. Bowshier, was dismissed from the Indiana lawsuit by Plaintiffs.

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Jack A. Bowshier also initially claimed the right to purchase shares of Ride, Inc. and units of
Cycles Unlimited, LLC by virtue of “side agreements.” (Doc. 23, Ex. 1 at ¶ 5). However, Jack
A. Bowshier has since abandoned that claim in the Indiana lawsuit after the Plaintiffs filed a
motion for summary judgment on the basis that Jack A. Bowshier failed to disclose such interests
during his 2003 bankruptcy proceedings. (Id. at ¶ 6).
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include Defendants Just Wheels Used Cars, Inc., Sky River, Ltd., Wild Rides, Inc. and
Jalin Nautical, LLC. (Id. at ¶ 9). To the best of Plaintiffs’ knowledge, none of the
foregoing corporate entities have done any business in Indiana and they are not parties to
the Indiana lawsuit. (Id. at ¶ 10).
Defendants have moved to dismiss Plaintiffs’ complaint pursuant to Fed. R. Civ.
P. 12(b)(6). (Doc 18). If this Court were to grant the motion to dismiss, Plaintiffs seek
leave to amend the complaint. (Doc. 24).
II.

STANDARD OF REVIEW

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
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

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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, 556 U.S. at 678. 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.

ANALYSIS

A. First-to-File
First, Defendants argue that the “prior pending action” doctrine, or the first-to-file
rule, requires this action be dismissed.
The first-to-file rule is a well-established doctrine that encourages comity among
federal courts of equal rank. The rule provides that when actions involving nearly
identical parties and issues have been filed in two different district courts, “the court in
which the first suit was filed should generally proceed to judgment.” In re Burley, 738
F.2d 981, 988 (9th Cir. 1984). The Sixth Circuit has referenced the rule without
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discussing it by name. See In re American Med. Sys., Inc., 75 F.3d 1069, 1088 (6th Cir.
1996).
The rule applies only when substantially similar actions have been filed in two
different federal district courts. “[W]hile the Defendants are correct that the
determination of HCC’s claims hinges on the determination of an issue already properly
before two other courts in cases involving substantially the same parties, the first-to-file
rule does not apply under these circumstances. Here, the actions similar to the matter sub
judice were previously filed in state court, not federal court. Thus, the first-to-file
doctrine is inapplicable in this case.” Healthcare Capital, LLC v. HealthMed, Inc., 213
F.Supp.2d 850, 856 (S.D. Ohio 2002). Accordingly, here, the first-to-file rule is
inapplicable where the prior-filed similar action was filed in state court, not federal court.
DPL, Inc. v. Sec. Litig., 28 F. Supp. 2d 1053, 1057 (S.D. Ohio 2003). Therefore,
inasmuch as the Indiana lawsuit is pending in state court, the prior pending action and
first-to-file rule is inapplicable to this case. 6
B. Sufficiency of the Complaint
Next, Defendants claim that Plaintiffs’ complaint should be dismissed for failure
to plead with the requisite specificity.

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Additionally, the Indiana lawsuit does not involve “substantially the same issues and parties.”
Healthcare Capital, 213 F.Supp. 2d at 856. None of the corporate Defendants in this action are
parties to the Indiana lawsuit. Moreover, inasmuch as the tortious activity alleged by the
Plaintiffs occurred in Ohio, there appears to be no basis for jurisdiction over such Defendants in
Indiana. The federal RICO and Ohio RICO claims have not been brought in Indiana against any
of the Defendants.
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1) “Defendants argue that plaintiff has not alleged a pattern of racketeering
activity with the requisite specificity. Rule 9(b) of the Fed. R. Civ. P. requires
the Plaintiff to state the identity of the person who made the misrepresentation,
the time, place and content of the misrepresentation, and the method by which
the misrepresentation was communicated to the Plaintiff.” (Doc. 18 at 5).
2) “Plaintiffs have failed to plead with particularity a long term and habitual
nature of the alleged criminal actions of the Defendants. Therefore, the RICO
claim should be dismissed.” (Doc. 18 at 6).
Fed. R. Civ. P. 9(b) provides: “[i]n 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.” To
satisfy Rule 9(b), a plaintiff must allege, at a minimum, the time, place, and content of
the alleged misrepresentation; the fraudulent scheme; the fraudulent intent of the
defendant; and the injury resulting from fraud. U.S. ex rel. Mariar v. BWXT Y-12, LLC,
525 F.3d 439, 445 (6th Cir. 2008).
If fraud is the predicate act on which a civil RICO matter is based, the pleading is
governed by Rule 9(b). Vild v. Visconsi, 956 F.2d 560, 567 (6th Cir. 1992). “Fraud
alleged in a RICO civil complaint for mail fraud must state with particularity the false
statement of fact made by the defendant which the plaintiff relied on and the facts
showing the plaintiff’s reliance on defendant’s false statement of fact.” Blount Fin.
Servs., Inc. v. Walter E. Heller & Co., 819 F.2d 151, 152 (6th Cir. 1987). As to the level
of specificity required, “a RICO plaintiff must, at a minimum, describe the predicate acts
[of fraud] with some specificity and state the time, place, and content of the alleged

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communications perpetrating the fraud.” Goren v. New Vision Int’l, 156 F.3d 721, 726
(7th Cir. 1998).
With respect to Defendants’ 9(b) argument, this court has held that
“[i]t is a principle of basic fairness that a plaintiff should have an
opportunity to flesh out her claim through evidence unturned in
discovery. Rule 9(b) does not require omniscience; rather the Rule
requires that the circumstances of the fraud be pled with enough
specificity to put defendants on notice as to the nature of the claim.”
Michaels Bldg. Co. v. Ameritrust Co., N.A., 848 F.2d 674, 680 (6th Cir.
1988). “Especially in a case in which there has been no discovery,
courts have been reluctant to dismiss the action where the facts
underlying the claims are within the defendant’s control.” Id.
Williams v. Duke Energy Int., Inc., No. 10-3604, 2012 U.S. App. LEXIS 11189, at *33
(6th Cir. 2012).
With regard to the RICO claims based upon predicate acts of wire and mail fraud,
Plaintiffs maintain that it was Defendants’ omission of information that was fraudulent,
i.e., the ongoing failure of Defendants in their fiduciary capacity to inform the Plaintiffs
of their embezzlement and conversion of millions of dollars. Accordingly, the usual
“who, what, where, and how” pleading requirements are inapplicable. The Court finds,
however, that the 34 paragraphs in the complaint explaining the who, what, where, and
how are sufficiently detailed to put Defendants on notice and enable them to formulate a
response. (See Doc. 1 at ¶¶ 20-21, 23-26, 29, 35-36, 39-47, 54-68, 84-86, 88-89). 7

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When making this determination, the Court also considered that the information regarding the
transactions at issue were within the knowledge and control of Jack A. Bowshier and Jack D.
Bowshier. (Doc. 23, Ex. 1 at ¶ 11). Moreover, Plaintiffs allege that on the date of their
termination, the Defendants erased hard drives on their computers that contained information
relating to the transactions. (Id. at ¶ 14).
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IV.

CONCLUSION

Accordingly, for the foregoing reasons: (1) Defendants’ motion to dismiss (Doc.
18) is DENIED; (2) Defendants’ alternative motion to file an amended answer,
counterclaim, and third party complaint is GRANTED; 8 and (3) Plaintiffs’ second
motion to amend (Doc. 24) is DENIED as MOOT.
IT IS SO ORDERED.
Date: 3/29/13

s/ Timothy S. Black
Timothy S. Black
United States District Judge

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First, however, Plaintiffs shall file an amended complaint with the spoliation allegation (Doc.
17) as ordered on February 5, 2013. The amended complaint shall be filed forthwith.
Defendants shall file the amended answer, counterclaim, and third party complaint within 14
days thereafter.
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