United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER GRANTING DEFENDANTS' MOTIONS
D. NOCE UNITED STATES MAGISTRATE JUDGE.
action is before the court on the motions of defendants
Resource Converting, LLC; Tim Danley; and Rick Kersey to
dismiss plaintiff's second amended complaint (Doc. 329);
all defendants to strike plaintiff's prayer for relief
for attorney fees (Doc. 337); defendant David Wolf to dismiss
him from Counts 1 and 4 (Doc. 338); defendants Sebright
Products, Inc.; Gary Brinkmann; NewWay Global Energy, LLC;
David Wolf, Jerry Flickinger; and JWR, Inc., to dismiss
Counts 1, 5, 6, 7, and 8 for failure to state a claim (Doc.
340); and defendant NewWay to dismiss Count 4. (Doc. 342).
Plaintiff has opposed all motions. The Court heard oral
arguments from the parties on February 1, 2019.
Counts remaining in this action are Count 1 for fraudulent
misrepresentation/concealment against all defendants, Count 2
for fraudulent inducement/rescission against Resource, Count
4 for unjust enrichment against defendants Resource and
NewWay, and Counts 5-8 for civil conspiracy against various
groupings of all defendants. The Court will not repeat the
background facts it has set forth in numerous memoranda and
orders, but will address each motion to dismiss or strike in
MOTIONS TO DISMISS
Federal Rule of Civil Procedure 12(b)(6), a party may move to
dismiss part or all of a case for the complaint's failure
to state a claim upon which relief can be granted. Fed. R.
Civ. Pro. 12(b)(6). A complaint “must include enough
facts to state a claim to relief that is plausible on its
face, ” providing more than just labels and
conclusions. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). Such a complaint will “allow the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged, ” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009), and will state a claim
for relief that rises above mere speculation.
Twombly, 550 U.S. at 555.
reviewing the pleadings under this standard, the court
accepts all of the plaintiff's factual allegations as
true and draws all inferences in the plaintiff's favor,
but the court is not required to accept the legal conclusions
the plaintiff draws from the facts alleged. Retro
Television Network, Inc. v. Luken Commc'ns, LLC, 696
F.3d 766, 768-69 (8th Cir. 2012).
Motions to Dismiss
Resource Converting, LLC; Tim Danley; and Rick Kersey have
moved to dismiss the entire action based on the law of the
case doctrine, res judicata, the rule against
claim-splitting, and the first-filed rule. (Docs. 329,
330). For the reasons discussed in its opinion
denying similar motions over two years ago, the Court will
not address the claim-splitting or first-filed rule
arguments. (Doc. 97). However, the Court finds that res
judicata applies to bar some of plaintiff's claims.
second amended complaint (Doc. 319) alleges the following. In
August 2015, based on representations and negotiations
between the parties to this lawsuit, plaintiff Dunne entered
into a licensing agreement with defendant Resource Converting
for a “PAD” system that would convert municipal
solid waste into renewable fuel. (Doc. 319). Dunne made an
initial payment of $400, 000, promising to make an additional
payment of $600, 000 in November 2015. However, Dunne became
convinced that the PAD system did not work as advertised, or
at all, so he withheld the second payment. On December 1,
2015, Resource Converting demanded full payment from
plaintiff. In June 2016, counsel for Dunne submitted a demand
letter to defendants, asserting that the contract had been
fraudulently procured and demanding return of the partial
contractual sum already paid. Less than two weeks after
sending that letter, defendant Resource Converting filed suit
against Dunne in Iowa state court for breach of contract. On
August 19, 2016, Dunne removed that case to the United States
District Court for the Southern District of Iowa and also
commenced the instant case in this District Court. See
Resource Converting, LLC, v. Dunne, 4:16 CV 470 JAJ-SBJ
(S.D. Iowa) (Doc. 1).
action, the defendant(s) filed motions to transfer to the
other court, where they had filed their cases as plaintiff.
This Court denied defendants' motion to transfer this
case to Iowa on December 6, 2019. One week later, on December
13, 2016, the Southern District of Iowa denied Dunne's
corresponding motion to transfer to this Court.
Accordingly, the cases proceeded simultaneously.
Iowa, Dunne filed a counterclaim for fraudulent
misrepresentation. A jury trial was held in May 2018, and the
jury returned a verdict for Dunne and against Resource
Converting, awarding Dunne no compensatory damages but $200,
000 in punitive damages. (Id., Doc. 206) (May 29,
2018). The parties have filed post-trial briefs that are
currently pending before that court.
judicata, or claim preclusion, bars further claims by parties
based on the same cause of action where there has already
been a final determination on the merits. See In re
Kapp, 611 F.2d 703, 707 (8th Cir. 1979) (citing
Montana v. United States, 440 U.S. 147, 153 (1979)).
“‘Res judicata prevents litigation of all grounds
for, or defenses to, recovery that were previously available
to the parties, regardless of whether they were asserted or
determined in the prior proceeding.'”
Kapp, 611 F.2d at 707 (quoting Chicot County
Dist. v. Bank, 308 U.S. 371, 378 (1940)).
claim preclusion will only bar a subsequent suit when:
“(1) the first suit resulted in a final judgment on the
merits; (2) the first suit was based on proper jurisdiction;
(3) both suits involved the same cause of action; and (4)
both suits involved the same parties or their privies.”
Elbert v. Carter, 903 F.3d 779, 782 (8th Cir. 2018).
Furthermore, the party against whom res judicata is asserted
must have had a full and fair opportunity to litigate the
matter in the proceeding that is to be given preclusive
effect. In re Anderberg-Lund Printing Co., 109 F.3d
1343, 1346 (8th Cir. 1997).
assert that claim preclusion applies to bar plaintiff's
claims in this case. The Court addresses each of the elements
in turn. First, a final judgment has been reached in the
federal district court in Iowa. The Eighth Circuit has held
that “the pendency of an appeal does not diminish the
res judicata effect of a judgment rendered by a
federal court.” In re Ewing, 852 F.2d 1057,
1060 (8th Cir. 1988). While the Eighth Circuit has not
addressed the res judicata impact of post-trial
proceedings in a district court on a judgment, such
proceedings do not lessen the finality of a judgment for res
judicata purposes. A district court judgment is
“final” for purposes of res judicata even if a
Rule 59(e) motion or an appeal from that judgment is pending.
Tripati v. Henman, 857 F.2d 1366, 1367 (9th Cir.
1988), cert. denied, 488 U.S. 982 (1988);
cf., Hubbell v. United States, 171 U.S.
203, 209-10 (1898) ("Indeed, it may well be doubted
whether the pendency of a motion for a new trial would