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Tri-State Truck Ins., Ltd. v. First National Bank of Wamego

United States District Court, D. Kansas

March 14, 2013

TRI-STATE TRUCK INSURANCE, LTD., et al., Plaintiffs,
v.
FIRST NATIONAL BANK OF WAMEGO, Defendant

Page 1121

For Tri-State Truck Insurance, LTD., TST, LTD., Andrew B. Audet, Plaintiffs: John R. Weist, Scott C. Long, LEAD ATTORNEY, Long & Luder, PA, Overland Park, KS.

For First National Bank of Wamego, Defendant: J. Loyd Gattis, III, Nathan A. Orr, W. Joseph Hatley, LEAD ATTORNEYS, Spencer Fane Britt & Browne LLP - KC, Kansas City, MO.

OPINION

Kathryn H. Vratil, United States District Judge.

Page 1122

MEMORANDUM AND ORDER

Tri-State Truck Insurance, Ltd., TST, Ltd. and Andrew B. Audet bring suit against First National Bank of Wamego (" FNB Wamego" ) for making false statements in Uniform Commercial Code filings. See Complaint For Damages (Doc. #1) filed May 5, 2012. Specifically, under Pennsylvania, Kansas and North Dakota law, plaintiffs assert claims for UCC violations (Count I), injurious falsehood (Count II) and slander of title (Count III). Id. This matter comes before the Court on Defendant's Motion To Dismiss Complaint (Doc. #5) filed June 11, 2012 and Plaintiffs' Motion For Leave To File Sur-Reply (Doc. #10) filed July 20, 2012. As a preliminary matter, the Court sustains plaintiffs' motion for leave to file a surreply.[1] Under Rule 12(b)(6), Fed. R. Civ. P., defendant seeks to dismiss plaintiffs' claims based on res judicata. For reasons stated below, the Court sustains defendant's motion.

I. Legal Standards

In ruling on a motion to dismiss under Rule 12(b)(6), the Court assumes as true all well-pleaded factual allegations and determines whether they plausibly give rise to an entitlement of relief. Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). To survive a motion to dismiss, a complaint must contain sufficient factual matter to state a claim which is plausible -- and not merely conceivable -- on its face. Id.; Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In determining whether a complaint states a plausible claim for relief, the Court draws on its judicial experience and common sense. Iqbal, 556 U.S. at 679-80.

Res judicata includes both claim preclusion and issue preclusion. Issue preclusion, or collateral estoppel, prevents re-litigation of an issue bye a party against whom the issue has been conclusively determined in a prior action. See Am. Home Assurance Co. v. Pac. Indem. Co., 672 F.Supp. 495, 498 (D. Kan. 1987); Crutsinger v. Hess, 408 F.Supp. 548, 551 (D. Kan. 1976); Jackson Trak Group, Inc. v. Mid States Port Auth., 242 Kan. 683, 690, 751 P.2d 122, 128 (1988); see also Phelps v. Hamilton, 122 F.3d 1309, 1318 (10th Cir. 1997). Claim preclusion, on the other hand, prevents parties or their privies from re-litigating a cause of action that has been finally adjudicated by a court of competent

Page 1123

jurisdiction. Am. Home Assurance, 672 F.Supp. at 498; Crutsinger, 408 F.Supp. at 551. It applies not only to claims that were actually litigated, but also to claims that should have been litigated in the first action but were not. Am. Home Assurance, 672 F.Supp. at 498; Jackson Trak Group, 242 Kan. at 690, 751 P.2d at 128; Penachio v. Walker, 207 Kan. 54, 56-57, 483 P.2d 1119, 1121 (1971); see also Phelps, 122 F.3d at 1320. Claim preclusion bars a second action based on the same claim, demand or cause of action. Penachio, 207 Kan. at 57, 483 P.2d at 1121. It is founded on the principle that the party has litigated or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction.

Res judicata is an affirmative defense on which defendant bears the burden of proof. See Fed.R.Civ.P. 8(c); Nwosun v. Gen. Mills Rests., Inc., 124 F.3d 1255, 1256 (10th Cir. 1997). Defendant may properly raise the defense in a Rule 12(b)(6) motion when all relevant facts are shown by the court's own records, of which the court takes judicial notice. Merswin v. Williams Cos., Inc., 364 Fed.Appx. 438, 441 (10th Cir. 2010); Day v. Moscow, 955 F.2d 807, 811 (2d Cir. 1992); Hemphill v. Kimberly-Clark Corp., 605 F.Supp.2d 183, 186 (D.D.C. 2009). In addition, the Court may take judicial notice of public records from other proceedings. United States v. Ahidley, 486 F.3d 1184, 1192 n.5 (10th Cir. 2007); Hemphill, 605 F.Supp.2d at 186.

II. Facts

Based on the record in this case (" Tri-State II" ) and the record in a prior case in this Court, Tri-State Truck Ins., Ltd. et al. v. First Nat'l Bank of Wamego, Kan., 09-4158-SAC (" Tri-State I" ), the following facts are uncontroverted.[2]

A. Underlying Facts

Tri-State is a business entity organized in the State of Pennsylvania. Pretrial Order (Doc. #70) filed October 21, 2010 in Case No. 09-4158-SAC, Stipulation ¶ 1. TST is a business entity organized in the State of North Dakota. Id. ¶ 2. Audet is an individual residing in the State of Pennsylvania. Id. ¶ 3. At all relevant times, Audet has been chairman, chief executive officer and sole stockholder of Tri-State and TST. Id. FNB Wamego is a Kansas banking institution with its principal place of business in Wamego, Kansas. Id. ¶ 4.

On June 30, 2006, Tri-State entered into a commercial loan agreement with Brooke Credit Corporation (" BCC" ), which later became known as Aleritas Capital Corporation (" Aleritas" ). Id. ¶ ¶ 5-7. Under the agreement, Aleritas loaned Tri-State $8,216,000 (Loan No. 5483). Id. ¶ 8. Audet guaranteed the loan. Id. ¶ 9. On the same date, Aleritas loaned Audet $436,000 (Loan No. 5484). Id. ¶ 10. At the time, Tri-State and Audet understood that Aleritas often would sell participating interests in loans which it originated. Memorandum And Order (Doc. #102) in Case No. 09-4158-SAC at 3.[3] They did not know what percentage Aleritas might sell or to whom. Id.

On or about June 30, 2006, Aleritas entered into participation certificates and agreements whereby various lenders acquired interests in one or both loans. Id.

Page 1124

at 3-4. Initially, lenders collectively participated in approximately 95 per cent of the loans. Id. Prior to closing, Aleritas represented to potential participating lenders that it would retain a five per cent interest in Loan No. 5483 to show its support of the transaction. Id. At the time of closing, Aleritas retained an interest of 5.025 per cent in Loan No. 5483.[4] Id. FNB Wamego purchased a participating interest of 8.520 per cent in Loan No. 5483, but not Loan No. 5484. Id. at 4.

Less than six weeks later, i.e. before August 11, 2006, unbeknownst to the participating lenders, Aleritas sold its stake in Loan No. 5483, making both loans 100 per cent participated. Therefore, Aleritas no longer had an ownership interest in either loan. Id. Nevertheless, Aleritas remained identified as the " lender" in underlying loan documents. Pretrial Order (Doc. #70) filed in Case No. 09-4158-SAC, Stipulation ¶ 30.

On July 3, 2006, Aleritas filed UCC financing statements in Pennsylvania as to collateral of Tri-State (Pennsylvania Financing Statement No. 2006070703969) and Audet (Pennsylvania Financing Statement No. 2006070703971). Complaint For Damages (Doc. #1) in Case No. 12-2291-KHV ¶ ¶ 7, 11 and Exhibit 1A and 1C thereto. On July 5, 2006, Aleritas filed a UCC financing statement in Kansas as to collateral of Tri-State (Kansas Financing Statement No. 6195390).[5] See id. ¶ 22 and Exhibit 2A thereto. On July 11, 2006, Aleritas filed UCC financing statements in North Dakota as to collateral of Tri-State (North Dakota Financing Statement No. 06-000327061-9) and Audet (North Dakota Financing Statement No. 06-000327061-7). See id. ¶ ¶ 22, 37 and Exhibits 3A and 3C thereto.

Several months later, on January 19, 2007, Audet pledged the stock of TST to secure his indebtedness to Aleritas. The parties amended the loan documents to add TST as a borrower.[6] Pretrial Order (Doc. #70) in Case No. 09-4158-SAC, Stipulation ¶ 12. Both loan agreements required Aleritas to provide advice and/or consulting services. Loan No. 5483 required Aleritas to provide Tri-State and TST consulting services worth $500,000. Id. ¶ 15. Loan No. 5484 required it to provide Audet consulting services worth $250,000. Id. ¶ 16.

On January 17, 2007, Aleritas filed UCC filing statement amendments which added TST as a debtor on Pennsylvania Financing Statement No. 2006070703969 and Kansas Financing Statement No. 6195390. Complaint For Damages (Doc. #1) in Case No. 12-2291-KHV ¶ ¶ 9, 11 and Exhibit 1B and 2B thereto. On February 16, 2007 in North Dakota, Aleritas filed a UCC financing statement as to collateral of TST (North Dakota Financing Statement No. 06-000327061-8).[7] Id. ¶ 35 and Exhibit 3B thereto.

Until September 12, 2008, Aleritas acted as administrator for Loan Nos. 5483 and 5484. Memorandum And Order (Doc. #102)

Page 1125

in Case No. 09-4158-SAC at 4. As administrator, Aleritas promised participating lenders that it would collect payments and remit to participating lenders their respective percentages of ...


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