Huerta Rodriguez v. Brandenburger

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MARTA ALICIA HUERTA RODRIGUEZ, Plaintiff, v. BARRY BRANDENBURGER, Defendant.

No. 4:21-CV-04146-KES

United States District Court, D. South Dakota, Southern Division

August 3, 2023

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

KAREN E. SCHREIER, UNITED STATES DISTRICT JUDGE

Plaintiff Marta Rodriguez, sued Defendant, Barry Brandenburger, for fraud, conversion, breach of fiduciary duty, and unjust enrichment. See Docket 12. Barry moves for summary judgment on all counts. See Docket 19. Rodriguez opposes the motion in its entirety. See Docket 26. For the following reasons, the court grants in part and denies in part Barry's motion for summary judgment.

I. Factual Background

Viewing the facts in the light most favorable to Rodriguez, the court recites the following factual background.^[1] In 2006, Neil Brandenburger married Marta Rodriguez. Docket 21 ¶ 2; Docket 28 ¶ 2. Rodriguez lived in Mexico and Neil lived in South Dakota. Docket 21 ¶¶ 3, 9; Docket 28 ¶¶ 3, 9. The two texted each other daily and Neil travelled to Mexico to visit Rodriguez on several occasions. Docket 21 ¶¶ 3-4; Docket 28 ¶¶ 3-4. Neil had five children with his first wife. Docket 21 ¶ 1; Docket 28 ¶ 1. One of Neil's children was Barry Brandenburger. Docket 21 ¶ 1; Docket 28 ¶ 1. Barry first spoke with Rodriguez over the phone and had limited contact with Rodriguez. See Docket 29-7 at 2; see also Docket 21 ¶ 6 (stating that none of Neil's children had met Rodriguez); Docket 28 ¶ 6 (objecting only to the relevance of such a claim).

In May 2017, Neil became sick and was eventually diagnosed with cancer. Docket 21 ¶ 8; Docket 28 ¶ 8. Barry moved in with Neil, who normally lived alone, so that Barry could take care of Neil. Docket 21 ¶ 9; Docket 28 ¶ 9.

Neil had a life insurance policy with a $500,000 death benefit. Docket 21 ¶ 13; Docket 28 ¶ 13. Neil first obtained this policy in 2002 and listed Rodriguez and his daughter Deidre as his primary beneficiaries, with Rodriguez getting 80% and Deidre getting 20%. See Docket 21 ¶ 14; Docket 28 ¶ 14. The insurance policy allowed Neil to change his beneficiaries during his lifespan. See Docket 22-6 at 1; see also Docket 23-2; Docket 23-3. In 2009, Neil exercised this right and made Rodriguez the sole beneficiary of his life insurance. See Docket 21 ¶ 15; Docket 28 ¶ 15. Neil began to have conversations about his life insurance benefits in May or June of 2017. See Docket 21 ¶ 16; Docket 28 ¶ 16. Pamela Steen, another one of Neil's daughters, testified in her deposition that at one point when talking with Neil, Neil proposed designating Rodriguez as the beneficiary of $200,000 of the life insurance proceeds. See Docket 29-1 at 23; Docket 21 ¶ 1; Docket 28 ¶ 1. On July 19, 2017, Neil amended his life insurance beneficiary form again and made Barry the sole beneficiary. See Docket 23 ¶ 10; Docket 21 ¶ 23; Docket 28 ¶ 23. Neil died in December 2017. Docket 21 ¶ 24; Docket 28 ¶ 24. Barry received $500,000 in accordance with Neil's life insurance beneficiary designation. See Docket 29-1 at 28.

Immediately following Neil's death, Pamela and her other siblings “didn't know” who was/were the beneficiary(ies) of Neil's life insurance policy. See Docket 29-1 at 25. When Pamela called the life insurance company to inquire about Neil's life insurance policy, the life insurance company would not speak with her because she was not a beneficiary. See id. Pamela noticed that Barry spoke with the life insurance company, and so Pamela said to Barry, “Okay, so you must have been the beneficiary.” Id. Barry replied, “Yes I was one of them.” Id. Barry then said that “he got 300,000.” Id. at 25-26. Barry gave Pamela and her other siblings each $60,000 because Barry said that “Dad wanted me to share it with you guys.” See Docket 29-1 at 28. Barry kept the remaining $200,000. See id.^[2]

II. Legal Standard

Under Federal Rule of Civil Procedure 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” “[A] genuine issue of material fact exists if: (1) there is a dispute of fact; (2) the disputed fact is material to the outcome of the case; and (3) the dispute is genuine, that is, a reasonable jury could return a verdict for either party.” Morrow v. United States, 47 F.4th 700, 704 (8th Cir. 2022) (alteration in original) (quoting RSBI Aerospace, Inc. v. Affiliated FM Ins. Co., 49 F.3d 399, 401 (8th Cir. 1995)). In reviewing the record, the court views the facts in the light most favorable to the non-moving party. Lissick v. Andersen Corp., 996 F.3d 876, 882 (8th Cir. 2021). While “[t]he mere existence of a scintilla of evidence in support of the [movant's] position will be insufficient[,]” Turner v. XTO Energy, Inc., 989 F.3d 625, 627 (8th Cir. 2021), a party moving for summary judgment is not entitled to summary judgment just because the facts he offers may appear to be more plausible or because the adversary may be unlikely to prevail at trial, see Handeen v. Lemaire, 112 F.3d 1339, 1354 (8th Cir. 1997).

III. Applicable Law

Federal courts sitting in diversity apply the substantive law of the forum state. See Chew v. Am. Greetings Corp., 754 F.3d 632, 635 (8th Cir. 2014). In doing so, federal courts must follow the decisions of the state's supreme court interpreting the forum's law. See C.S. McCrossan Inc. v. Fed. Ins. Co., 932 F.3d 1142, 1145 (8th Cir. 2019). But if a state's supreme court “has not spoken on an issue, [federal courts] must predict how it would decide the issue[,]” and “may consider relevant state precedent, analogous decisions, considered dicta . . . and any other reliable data.” Olmsted Med. Ctr. v. Cont'l Cas. Co., 65 F.4th 1005, 1008 (8th Cir. 2023) (quoting Brill ex rel. Brill v. Mid-Century Ins. Co., 965 F.3d 656, 659 (8th Cir. 2020)). Here, the court is sitting in diversity and thus South Dakota substantive law applies. See Docket 1.

IV. Fraud

Under South Dakota law, common law fraud requires proof of three elements:

First, the representation at issue must be ‘made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made.' Second, the representation must have been ‘made with intent to deceive and for the purpose of inducing the other party to act upon it.' Third, the person to whom the representation was made must demonstrate ‘that he did in fact rely on it and was induced thereby to act to his injury or damage.'

Johnson v. Markve, 980 N.W.2d 662, 677 (S.D. 2022) (cleaned up) (quoting Aqreva, LLC v. Eide Bailly, LLP, 950 N.W.2d 774, 791 (S.D. 2020)). To satisfy the third element, the plaintiff must show that she relied on the alleged misrepresentation and took some action based on that reliance. See Estate of Johnson ex rel. Johnson v. Weber, 898 N.W.2d 718, 731 (S.D. 2017).

Rule 9(b) of the Federal Rules of Civil Procedure requires a party alleging fraud to “state with particularity the circumstances constituting fraud or mistake.” Complaints subject to Rule 9(b) “must identify who, what, where, when, and how.” United States ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818, 822 (8th Cir. 2009) (quoting United States ex rel. Costner v. United States, 317 F.3d 883, 888 (8th Cir. 2003)). The complaint must also “specify[] ‘the time, place, and content of the defendant's false representations, as well as the details of the defendant's fraudulent acts, including when the acts occurred, who engaged in them, and what was obtained as a result.' ” Id. (quoting United States ex rel. Joshi v. St. Luke's Hosp., Inc., 441 F.3d 552, 556-57 (8th Cir. 2006)) Similarly, “[p]arties alleging fraud must plead reliance with ‘sufficient particularity to state a plausible claim of justifiable reliance.' ” Ambassador Press, Inc. v. Durst Image Tech. U.S., LLC, 949 F.3d 417, 423 (8th Cir. 2020) (quoting OmegaGenesis Corp. v. Mayo Found. for Med. Educ. & Rsch, 851 F.3d 800, 805 (8th Cir. 2017)).

Here Barry alleged in his amended answer that Rodriguez failed to comply with Rule 9(b)'s requirements, and now reasserts that argument in moving for summary judgment. See Docket 14 ¶ 15; Docket 20 at 6-7. The court agrees: Rodriguez failed to plead with sufficient particularity the circumstances constituting fraud as required under Rule 9(b). In her amended complaint, Rodriguez alleges that Barry promised to Neil that Barry would give Rodriguez $200,000 of the life insurance proceeds and divide the remaining $300,000 between Barry and his four siblings. See Docket 12 ¶ 3. Crucially, Rodriguez alleges only that Neil Brandenburger, rather than Rodriguez herself, relied on Barry's promise that Barry would divide the proceeds that way, and that Neil Brandenburger changed the life insurance beneficiary from the plaintiff to Barry. See id. Rodriguez does not allege any facts to suggest that Rodriguez herself relied on any promises that Barry made either to herself or to Neil. Similarly, Rodriguez does not allege any steps or actions she took while relying on any alleged promises made by Barry. As a result, Rodriguez failed to meet Rule 9(b)'s requirements. See Ambassador Press, 949 at 423. And Rodriguez's failure to meet the pleading standard under Rule 9(b) justifies dismissal of Count I of Rodriguez's amended complaint. See Thayer v. Planned Parenthood of the Heartland, Inc., 11 F.4th 934, 939 (8th Cir. 2021) (affirming district court's grant of summary judgment when complaint failed to comply with Rule 9(b)); see also Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d 1066, 1070 (8th Cir. 1995) (“A district court may enter summary judgment dismissing a complaint alleging fraud if the complaint fails to satisfy...