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Nations Title Agency of Kansas, Inc. v. Sloat

United States District Court, W.D. Missouri, Western Division

August 1, 2014

NATIONS TITLE AGENCY OF KANSAS, INC. Plaintiff,
v.
CHAD A. SLOAT, et. al., Defendants.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND MOTION FOR JUDGMENT ON THE PLEADINGS

GREG KAYS, Chief District Judge.

This interpleader action involves a dispute over $10, 000 located in an escrow account. Plaintiff Nations Title Agency of Kansas ("NTA"), the escrow agent overseeing the funds, alleges that multiple claimants are requesting the money. Accordingly, pursuant to 28 U.S.C. § 1331 and Federal Rule of Civil Procedure 22, NTA filed this interpleader action against Defendant-Claimants Chad A. Sloat ("Sloat"), Beyond Medicine, LLC ("Beyond Medicine"), Nicole Tice ("Tice"), the United States of America (the "Government"), the Lawrence E. Winder Trust (the "Winder Trust"), and Lawrence and Nila Winder (collectively the "Winders").

Now before the Court is the Government's "Motion to Dismiss Pursuant to Rule 12(b)(1) and 12(b)(6) and Motion for Judgment on the Pleadings Pursuant to Rule 12(c)" (Doc. 15). For the reasons discussed below, the motion is DENIED WITHOUT PREJUDICE.

Factual and Procedural Background

The Court obtained the following facts from NTA's complaint (the "Complaint") (Doc. 1), the documents attached to it, and available public court documents. On February 22, 2012, a grand jury empaneled in the United States District Court for the Western District of North Carolina indicted Sloat and several other individuals for various federal offenses related to an alleged Ponzi scheme. Besides alleging several federal statutory violations, the indictment also included an allegation of forfeiture pursuant to 18 U.S.C. §§ 981, 982 and 28 U.S.C. § 2461(c). The forfeiture allegation sought approximately $40, 000, 000, which represented the criminal defendants' alleged proceeds from the Ponzi scheme. In October 2012, Sloat pled guilty to one count of conspiracy to commit securities fraud, in violation of 18 U.S.C. § 371, and he consented to the forfeiture allegation.

Around six months later, Tice agreed to buy a home in Parkville, Missouri, from the Winder Trust. The purchase contract for the home required Tice to provide a $10, 000 escrow deposit, so the parties retained NTA to oversee the funds. Tice then sent NTA a $10, 000 cashier's check which was purchased by Beyond Medicine, a company wholly owned by Sloat. Shortly before the closing on May 1, 2013, Tice informed NTA that she would not finalize the purchase. Under the purchase contract, if Tice defaulted, the Winder Trust could either retain the earnest money as liquidated damages or pursue another remedy. It is unclear from the Complaint whether the Winder Trust or the Winders invoked this clause. The Complaint, however, does allege that Tice requested NTA return the earnest money, but the Winders or the Winder Trust objected.

On August 6, 2013, the United States District Court for the Western District of North Carolina issued a restraining order which prohibited any party from transferring or distributing any funds belonging to Beyond Medicine. The order specified that certain property owned by Sloat was subject to forfeiture to satisfy the forfeiture allegation, that Sloat was the sole owner of Beyond Medicine, and that the Government was entitled to any property belonging to Beyond Medicine. Sometime between August 2013 and December 2013, NTA received the restraining order because the escrow funds purportedly came from Beyond Medicine.

On December 4, 2013, NTA filed this interpleader action requesting the Court determine the rightful owner of the escrow funds. According to the returns of service, NTA served the Government, Tice, the Winders, and the Winder Trust. However, there is no return of service indicating that NTA properly served Sloat or the designated representative of Beyond Medicine. To date, Tice and the Government are the only Defendant-Claimants to appear in this case. On January 29, 2014, Tice answered the Complaint and disclaimed all interest in the contested funds. Rather than file an answer on the required date, the Government filed the instant motion, requesting dismissal or judgment in its favor.

Standard

A. The standard of review for motions challenging the Court's subject-matter jurisdiction.

Motions asserted pursuant to Rule 12(b)(1) challenge the court's power to adjudicate the claims before it. Giandinoto v. Chemir Analytical Servs., Inc., 545 F.Supp.2d 952, 956 (E.D. Mo. 2007). If the court finds that jurisdiction is not present, it must dismiss the case. Fed.R.Civ.P. 12(h)(3). Where, as here, the court's jurisdiction is challenged based upon the face of the pleadings, the standard for determining the 12(b)(1) motion is the same as the standard for Rule 12(b)(6) motions. Giandinoto, 545 F.Supp.2d at 956. Under Rule 12(b)(6), the court assumes that the factual allegations in the complaint are true and construes them in the light most favorable to the plaintiff. Data Mfg. Inc. v. UPS, Inc., 557 F.3d 849, 851 (8th Cir. 2009).

B. The standard of review for motions challenging the sufficiency of the pleadings.

A court must dismiss a complaint if it fails to state a claim on which relief can be granted. Fed R. Civ. P. 12(b)(6). To survive a 12(b)(6) motion to dismiss, the complaint must do more than recite the bare elements of a cause of action. Ashcroft v. Iqbal, 556 U.S. 662, 687 (2009). Rather, it must include "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "While a complaint... does not need detailed factual allegations, " a plaintiff must provide the grounds of his entitlement with more than mere "labels and conclusions, " or "a formulaic recitation of the elements of a cause of action...." Benton v. Merrill Lynch & Co., Inc., 524 F.3d 866, 870 (8th Cir. 2008) (quoting Twombly, 550 U.S. at 555 (internal ...


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