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Bonhomme Investment Partners, LLC v. Hayes

United States District Court, E.D. Missouri, Eastern Division

May 19, 2015

SHAUN HAYES, et al., Defendants.


CATHERINE D. PERRY, District Judge.

Plaintiffs are investors who bring claims of securities and other fraud against a failed bank and its officers and directors arising out of a complicated investment transaction in which plaintiffs ultimately lost more than six million dollars. The matter is now before me on motions to dismiss filed by one of the directors and the Federal Deposit Insurance Corporation in its capacity as receiver for the failed bank. I will grant the motions in part.


Plaintiffs are Bonhomme Investment Partners, LLC, and its two members, Donald Davis and Richard Lehman. Defendant Federal Deposit Insurance Corporation (FDIC) is a federal agency acting as Receiver for Truman Bank, a failed Missouri bank that went into receivership in September 2012. Defendant Truman Bancorp, Inc. ("Bancorp"), was the parent holding company of Truman Bank. Defendant Wayne was a director at both Truman Bank and Bancorp. Defendant Shaun Hayes, who is one of the two people alleged to have made numerous false representations, was a shareholder of Bancorp and consultant for Truman Bank. Now-deceased Richard Miller, who was Chief Executive Officer and a director of both entities, was the other person alleged to have directly made false statements.

Plaintiffs allege that in early 2009, Miller and Hayes approached plaintiffs and sought a $6 million loan from Bonhomme to Bancorp for Truman Bank's benefit (the "Truman Loan"). Bancorp secured the Truman Loan by pledging to Bonhomme all its Truman Bank stock (the "Truman Stock") and its stock in FFC Financial Corporation (collectively, "the Bancorp Collateral"). On June 19, 2009, Bonhomme made the loan and Bancorp executed a promissory note (the "Bancorp Note") and security agreements. Hayes represented to plaintiffs that Sun Security Bank[1] would lend Bonhomme the $6 million needed to fund the Truman Loan and that Sun would accept the Bancorp Collateral as collateral for the Sun loan.

Unknown to plaintiffs, at the time of the Truman Loan and Sun loan, Bancorp had already pledged the stock comprising the Bancorp Collateral to secure a securities placement in 2003 for over $7 million and a securities placement in 2007 for $5 million. Plaintiffs allege that the defendants knew or should have known at that time that Bancorp could not pledge the Bancorp Collateral and failed to disclose those facts.

In early 2010, Hayes and Miller falsely told plaintiffs that the FDIC and Federal Reserve Bank had informed them that the Truman Stock could not be pledged because Bonhomme could not legally own that stock in event of default by Bancorp. Wayne and the other defendants again failed at this time to disclose to plaintiffs that the reason the Truman Stock could not be pledged was that it had already been encumbered. The plaintiffs obtained permission from Sun, arranged by Hayes, to substitute Bancorp convertible debentures for the Bancorp Note.[2] Truman Bank eventually went into receivership, and the FDIC notified Bonhomme that its claim against Truman Bank was disallowed.

Plaintiffs initially sued Hayes, Miller, Bancorp, the FDIC, and Truman's successor bank, Simmons First National Bank. In the Second Amended Complaint they dropped Simmons, substituted Miller's estate for Miller, and added seven individuals, including Wayne, who were directors of Truman Bank and Bancorp.[3]

Plaintiffs' Second Amended Complaint is confusingly pleaded, and a close reading of each count is necessary to determine who is actually being sued. It now appears that four claims are brought against all defendants: Count I, a claim for federal securities fraud under the Securities Exchange Act and Rule 10b-5 implementing that Act; Count II, a claim for securities fraud under Missouri law; Count IV, for common law fraud; and Count V for negligent misrepresentation. Count III is a claim for breach of implied covenant of good faith and fair dealing, but is brought only against Bancorp, although both the FDIC and Wayne moved to dismiss it in case it was brought against them. The final count, Count VI, alleges that Bancorp and Truman Bank were unjustly enriched, and so is apparently brought only against Bancorp and the FDIC. Plaintiffs have already obtained default judgment on all counts against Bancorp.

Defendant Wayne moved to dismiss all counts against him. Wayne argues that he is not liable under Counts III and VI and that he was not intended to be sued under those counts; plaintiffs fail to address these arguments and so they are presumed to have conceded them. Wayne argues that he is not liable under Count II, the Missouri securities fraud claim, because he lacked the requisite relationship with the plaintiffs; the plaintiffs affirmatively concede that Count II should be dismissed as to Wayne. Finally, Wayne contends that Count I must be dismissed for failure to allege scienter and that Counts IV and V must be dismissed because plaintiffs do not allege that he owed a duty to disclose the omitted information.

The FDIC moved to dismiss Counts II and III on the same grounds as argued by Wayne. It moved to dismiss Count I because plaintiffs failed to allege that Truman Bank sold or had control over the seller of the securities in question. Plaintiffs did not respond at all to the FDIC's motion.


Legal standards

Defendants Wayne and the FDIC move to dismiss these claims under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure. To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a complaint must contain factual allegations sufficient "to raise a right to relief above the speculative level.'" Parkhurst v. Tabor, 569 F.3d 861, 865 (8th Cir. 2009) (quoting Bell Atl. v. Twombly, 550 U.S. 544, 555 (2007)). Stated another way, "the complaint must allege only enough facts to state a claim to relief that is plausible on its face." B&B Hardware, Inc. v. Hargis Indus., Inc., 569 F.3d 383, 387 (8th Cir. 2009) (internal quotation marks and citation omitted). "The plausibility of a complaint turns on whether the facts alleged allow [the court] to draw the reasonable inference that the defendant is liable for the misconduct alleged." Lustgraaf v. Behrens, 619 F.3d 867, 873 (8th Cir. 2010) (internal citation and quotation marks omitted). The court ...

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