United States District Court, M.D. Louisiana
RULING AND ORDER
A. JACKSON, UNITED STATES DISTRICT COURT CHIEF JUDGE
the Court is the Motion to Dismiss Counterclaims (Doc. 13)
and the Motion for Partial Summary Judgment (Doc. 19) filed
by Plaintiff Rodney Schoemann. The parties filed oppositions
(Docs. 21 and 25), and replies (Docs. 28 and 29). For the
following reasons, the Motion to Dismiss (Doc. 13) and the
Motion for Partial Summary Judgment (Doc. 19) are GRANTED.
alleges that he executed a promissory note ("Note")
with Defendant on August 16, 2016. (Doc. 1-2 at ¶ 1, p.
5). Plaintiff alleges that the Note required Defendant to pay
Plaintiff $213, 255.31 with interest, no later than November
14, 2016. Id. at ¶ 4. Plaintiff alleges that
Defendant has refused to pay the balance of the Note.
Id. at 1[ 8. Plaintiff also alleges that the Note is
governed by Louisiana law. Id. ¶ 1.
January 24, 2017, Plaintiff filed suit in the 19th
Judicial District in the Parish of East Baton Rouge,
Louisiana. (Doc. 1-2 at p. 2). Invoking the Court's
diversity jurisdiction, Defendant then removed the case on
March 3, 2017. (Doc. 1). Defendant then filed a counterclaim
against Plaintiff. (Doc. 7 at p. 8). Defendant alleges that
Plaintiff made a series of loans to Defendant with interest
rates that violated California law, notwithstanding the
Louisiana choice of law provision contained in the loans.
Id. at ¶ 34. Defendant also alleges that
Plaintiff was privy to certain "material non-public
information regarding eWellness and its financial
condition" which allowed Plaintiff to make certain
transactions into the trading market and/or engaged in fraud
or deceit. Id. at ¶ 65. Additionally, Defendant
claims that Plaintiffs "actions manipulated the market
price of eWellness Shares through a series of transactions
through his own brokerage account and the brokerage accounts
he controlled!.]" Id. at ¶ 67.
claims that Plaintiff is liable under: (1) California's
unfair competition law by extending commercial loans without
a license; (2) California's unfair competition law by
making loans with excessively high interest rates; (3)
California Civil Code § 1916-2 and 1916-3 by making
loans with excessively high interest rates; (4)
Louisiana's Unfair Trade Practices Act by extending loans
with interest rates that exceed the interest limitations on
commercial loans; (5) the Securities and Exchange Act of 1934
§ 17(a) ("Exchange Act") by engaging in
insider trading; and (6) the Exchange Act by engaging in
market manipulation. (Doc. 7 at p. 16-24)
Plaintiffs Motion to Dismiss Defendant's
motion to dismiss under Rule 12(b)(6) tests the sufficiency
of the complaint against the legal standard set forth in Rule
8, which requires "a short and plain statement of the
claim showing that the pleader is entitled to relief."
Rule 8(a)(2). "To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to 'state a claim to relief that is plausible on
its face.'" Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Ail. Corp. v. Twombly,
550 U.S. 544, 570 (2007)). "Determining whether a
complaint states a plausible claim for relief [is] . . . a
context-specific task that requires the reviewing court to
draw on its judicial experience and common sense."
Ashcroft, 556 U.S. at 679.
plausibility" exists "when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. at 678 (citing Twombly,
550 U.S. at 556). Hence, the complaint need not set out
"detailed factual allegations, " but something
"more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action" is
required. Twombly, 550 U.S. at 555. When conducting
its inquiry, the Court "accepts all
well-pleaded facts as true and views those facts in the light
most favorable to the plaintiff." Bustos v. Martini
Club Inc., 599 F.3d 458, 461 (5th Cir. 2010) (quotation
Counterclaim V-Insider Trading
claims that Plaintiff is liable for insider trading under
§ 17(a) of the Exchange Act. (Doc. 7 at ¶ 61).
However, the United States Court of Appeals for the Fifth
Circuit has held that § 17(a) does not create a private
right of action. See Landry v. All Am. Assurance
Co., 688 F.2d 381, 384-91 (5th Cir. 1982) ("[T]he
statutory language [of § 17(a)] does not suggest a
private cause of action"); Earle v. Aramark
Corp., No. 3-CV-2960, 2005 WL 473675, *3 (N.D. Tex.
2005) ("The Fifth Circuit does not recognize a private
right of action under Section 17(a) of the Securities Act of
1933"). Accordingly, Defendant's § 17(a) claim
also claims that Plaintiff is liable under Section 10b-5 of
the Exchange Act by making false statements about eWellness
shares. (Doc. 7 at ¶ 62). Plaintiff argues that
Defendant's 10b-5 claim fails the heightened pleading
requirement for a 10b-5 securities fraud claim. (Doc. 13-1 at
p. 6). Federal Rule of Civil Procedure 9(b) and the Private
Securities Litigation Reform Act together require "a
plaintiff pleading a false or misleading statement or
omission as the basis for a section 10(b) and Rule 10b-5
securities fraud claim [to] ... (1) specify . . . each
statement alleged to have been misleading, i.e., contended to
be fraudulent; (2) identify the speaker; (3) state when and
where the statement was made; (4) plead with particularity
the contents of the false representations; (5) plead with
particularity what the person making the misrepresentation
obtained thereby; and (6) explain the reason or reasons why
the statement is misleading, i.e., why the statement is
fraudulent." Goldstein v. MCI WorldCom, 340
F.3d 238, 24 (5th Cir. 2003) (quoting ABC Arbitrage
Plaintiffs Grp. V. Tchuruk, 291 F.3d 336, 350 (5th Cir.
fails to make allegations sufficient to overcome the
heightened pleading requirements for a 10b-5 claim. Indeed,
Defendant merely pleads the elements of a 10b-5 claim in a
conclusory fashion. (Doc. 23 at ¶ 65). Specifically,
Defendant fails to identify the specific misleading
statements that it alleges Plaintiff made, when and where
Plaintiff made them, the content of the statements, ...