Opinion
Case. No. 01-2599-JAR
September 18, 2002
MEMORANDUM AND ORDER GRANTING PLAINTIFF'S MOTION TO DISMISS COUNTERCLAIM
This matter is before the Court on Plaintiff's Motion to Dismiss Counterclaim (Doc. 61) filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Defendants filed a Response (Doc. 64) and plaintiff Michael Dean ("Plaintiff Dean") filed a Reply (Doc. 66). The Court has reviewed the parties' filings, and for the reasons set forth below, Plaintiff Dean's motion to dismiss shall be granted.
I. BACKGROUND
On April 3, 2002, Plaintiff Dean filed a First Amended Complaint (Doc. 34) alleging common law claims of fraud, negligence, and conversion; violations of Kansas securities law; securities fraud in violation of Federal law; and recision for use of an unregistered broker dealer in violation of Federal securities law. The basis of Plaintiff Dean's complaint stems from a transaction occurring in November of 2001. At that time, defendants Baker and Waterhouse approached W.K. Jenkins, Plaintiff Dean's business associate, soliciting an investment in defendant Pegasus Engineering, L.L.C ("Pegasus"). Later, W.K. Jenkins forwarded the materials he received from Baker and Waterhouse, regarding the possible investment in Pegasus, to Plaintiff Dean. Plaintiff Dean began communicating with defendant Anderson. Plaintiff Dean's discussions with Anderson culminated in a check for $55,000 made to Anderson and drawn from Plaintiff Dean and Guadlupe Dean's joint bank account. The memo line on the check contains the following language, "personal loan, 10% per annum." Defendants claim that the $55,000 did not come from Plaintiff Dean's personal funds, but instead, the money actually belonged to W.K. Jenkins and Plaintiff Dean was working as his agent.
After Plaintiff Dean's complaint was filed, defendants filed a motion to dismiss or transfer based on venue. The Court denied defendants' motion in a Memorandum and Order ("MO") dated May 2, 2002. In defendants' motion to dismiss or transfer venue they argued that venue was not proper in Kansas because contacts between defendants and Plaintiff Dean that occurred in Kansas did not serve as a basis for venue. Defendants alleged that the transaction actually occurred between defendants and W.K. Jenkins, who is a Missouri resident; and Plaintiff Dean merely acted as an agent. The relevant contacts, according to defendants, would have been the contacts with W.K. Jenkins. In rejecting this assertion, the Court noted that the record was clearly contrary to defendants' contentions. The Court found that while defendants may have initially approached W.K. Jenkins, "defendants later sought out plaintiff's personal investment." The Court noted that defendants' own correspondence pointed to the fact that the deal was with Plaintiff Dean, not with W.K. Jenkins.
Dean v. Anderson, No. 01-2599-JAR, 2002 WL 1067454 (D.Kan. May 2, 2002).
Id. at *2.
After the Court denied defendants' motion to dismiss, defendants filed a "Counterclaim/Third Party Claim" seeking declaratory relief (Doc. 50). Defendants' counter-claim seeks "a judicial determination as to whether the $55,000 described in counterdefendant Michael Dean's First Amended Complaint is owed and to whom, and a judicial determination binding counterdefendants Guadlupe Angelica Dean and W.K. Jenkins to any judgment entered in this case with respect to the $55,000." (Doc. 50 at 3). Defendants further seek "a judicial determination as to whether [W.K.] Jenkins has a claim for violations of state securities fraud or Federal securities fraud." While it is not completely clear from the face of defendants' pleading exactly what they are attempting to accomplish, it appears that defendants are asserting a counterclaim against Plaintiff Dean, Guadlupe Dean, and W.K. Jenkins pursuant to Rule 13 of the Federal Rules of Civil Procedure. It also appears that defendants are asserting a third-party complaint against Guadlupe Dean and W.K. Jenkins pursuant to Rule 14 of the Federal Rules of Civil Procedure. However, defendants' Response to Plaintiff Dean's motion to dismiss the counterclaim discusses the necessity of joining Guadlupe Dean and W.K. Jenkins as parties pursuant to Rules 19 and 20 of the Federal Rules of Civil Procedure. Incidentally, defendants have not moved to join Guadlupe Dean or W.K. Jenkins as parties pursuant to Rules 19 or 20. In any event, this order will only address defendants' counterclaim against Plaintiff Dean and defendants' counterclaim against Guadlupe Dean and W.K. Jenkins. Whether defendants have properly asserted a third-party claim against Guadlupe Dean and W.K. Jenkins or whether Guadlupe Dean and W.K. Jenkins should be joined as parties is not before the Court.
II. STANDARD OF REVIEW
The court will dismiss a counterclaim for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure when it appears beyond a doubt that the counterclaimant can prove no set of facts supporting its counterclaim which would entitle it to relief. In considering a Rule 12(b)(6) motion, the court must assume as true all well-pleaded facts, as distinguished from conclusory allegations, and must draw all reasonable inferences in favor of the nonmovant.
H. J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50 (1989).
Housing Auth. of the Kaw Tribe v. City of Ponca City, 952 F.2d 1183, 1187 (10th Cir. 1991); Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir. 1984).
III. DISCUSSION
Plaintiff Dean seeks dismissal of defendants' counterclaim, alleging the counterclaim is unnecessary, duplicative, and redundant. Plaintiff Dean argues that the subject of defendants' counterclaim has already been framed by the parties in their pleadings and has essentially been rejected by the Court in its May 2, 2002 MO.Defendants do not disagree that the subject of the counterclaim has already been framed by the parties, but defendants assert that their counterclaim is not duplicative because the counterclaim accomplishes the necessary joinder of Guadlupe Dean and W.K. Jenkins. Defendants claim that while the check was written out of Plaintiff Dean and Guadlupe Dean's bank account, W.K. Jenkins provided the money to Plaintiff Dean and he should therefore be bound by any judgment regarding the $55,000. Defendants assert that it is critical to join all parties of interest, including Guadlupe Dean and W.K. Jenkins, if this dispute is going to be resolved in one action.
Defendants' arguments regarding the necessity of joining Guadlupe Dean and W.K. Jenkins as parties are not persuasive in deciding whether the counterclaim should be dismissed. Defendants' arguments completely miss the mark. Contrary to defendants' assertion, filing a counterclaim against non-parties does not accomplish the task of joining those individuals as parties. To the extent defendants have attempted to assert a counterclaim against Guadlupe Dean and W.K. Jenkins, the supposed counterclaim is sua sponte dismissed. Guadlupe Dean and W.K. Jenkins are not "counterdefendants" as defendants refer to them in their pleadings. A counterclaim must be asserted against an existing, opposing party. Defendants may not circumvent this rule by asserting a third-party claim against Guadlupe Dean and W.K. Jenkins. Neither Guadlupe Dean nor W.K. Jenkins are existing or opposing parties for purposes of the counterclaim. Additionally, while it is true Rule 13(h) would permit the joinder of Guadlupe Dean and W.K. Jenkins in accordance with Rules 19 and 20, if there is no valid counterclaim against Plaintiff Dean, as discussed below, there can be no joinder of additional parties necessary to adjudicate the counterclaim. Furthermore, defendants have not moved to join Guadlupe Dean and W.K. Jenkins as parties to the counterclaim pursuant to Rule 13(h); nor have defendants moved to join Guadlupe Dean and W.K. Jenkins as parties to the original action pursuant to Rule 19 or 20.
See McKinney v. Okla. Dept. of Human Servs., 925 F.2d 363, 365 (10th Cir. 1991) (upholding a district court's sua sponte dismissal of a claim because it was obvious that no claim was stated in the complaint).
See Fed.R.Civ.P. 13; Ponderosa Dev. Corp. v. Bjordahl, 787 F.2d 533, 536 (10th Cir. 1986) ("An attempt to implead additional parties is materially different from a claim against an already opposing party under Rule 13(a).").
Moore's Federal Practice, § 13.90[2][b] (Matthew Bender 3d ed.) ("The defendant may not confer compulsory status upon a claim by using it as a basis for impleading third-party defendants not currently parties to the action.").
As to defendants' counterclaim against Plaintiff Dean, the Court finds that whether the funds in question came from Plaintiff Dean personally or from another individual is an issue that will be determined in the primary litigation and does not require a counterclaim. The proposed counterclaim against Plaintiff Dean will become moot upon disposition of his claims, and is therefore redundant. In their Response, defendants do not dispute that the issue raised by their counterclaim has already been framed by prior pleadings. Instead, defendants merely make arguments regarding the propriety of joining Guadlupe Dean and W.K. Jenkins. These arguments are irrelevant in determining the viability of defendants' counterclaim against Plaintiff Dean; and consequently, the Court finds the counterclaim shall be dismissed.
Mille Lacs Band of Chippewa Indians v. Minnesota, 152 F.R.D. 580, 582 (D.Minn. 1993) (citing Aldens, Inc. v. Packel, 524 F.2d 38, 51-52 (3d Cir. 1975)).
IV. CONCLUSION
Plaintiff Dean's motion to dismiss defendants' counterclaim shall be granted. The Court finds that the counterclaim is redundant as it applies to Plaintiff Dean and is therefore unnecessary. To the extent defendants assert a counterclaim against Guadlupe Dean and W.K. Jenkins, the counterclaim is also dismissed because Guadlupe Dean and W.K. Jenkins are not existing, opposing parties against whom a counterclaim may be asserted.
IT IS THEREFORE BY THIS COURT ORDERED that plaintiff's Motion to Dismiss Counterclaim (Doc. 61) is granted.
IT IS FURTHER ORDERED that defendant's counterclaim as it applies to Guadlupe Dean and W.K. Jenkins shall be dismissed.