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Arvest Bank v. Rill

April 14, 2008

ARVEST BANK, PLAINTIFF,
v.
LEWIS RILL, DEFENDANT, AND LEWIS RILL, INDIVIDUALLY, AND D/B/A RILL CONSTRUCTION COMPANY AND RILL CATTLE COMPANY, THIRD-PARTY PLAINTIFF,
v.
ARVEST BANK GROUP, INC. AND ARVEST HOLDINGS, INC., THIRD-PARTY DEFENDANTS.



OPINION AND ORDER

Before the Court for its consideration is the Motion to Dismiss Counterclaims and Third-Party Complaint (Docket No. 30) filed by Plaintiff, Arvest Bank ("Arvest Bank"), and Third-Party Defendants, Arvest Bank Group, Inc. ("ABG"), and Arvest Holdings, Inc. ("AHI"), pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Arvest, ABG, and AHI seek the dismissal of all claims asserted against them by Defendant and Third-Party Plaintiff, Lewis Rill ("Rill"), in Rill's Counterclaim and Third-Party Complaint (Docket No. 18)*fn1 . The following counterclaims and third-party claims are the subject of this Motion to Dismiss: (1) respondeat superior liability for violation of the Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c); (2) negligence; (3) actual fraud; (4) constructive fraud; (5) violation of the Oklahoma Consumer Protection Act, 15 O.S. § 751 et seq.; (6) intentional infliction of emotional distress; (7) outrageous conduct; (8) undue influence; (9) conversion; (10) breach of contract; and (11) libel and slander, and damage to credit. For the reasons stated below, the Court finds that the Motion to Dismiss Counterclaims and Third-Party Complaint (Docket No. 30) should be granted in part and denied in part.

I.

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a party asserting a counterclaim or third-party claim must present in his pleading "a short and plain statement of the claim showing that [he] is entitled to relief." For purposes of reviewing the instant motion to dismiss, the Court is required to take all factual allegations of Rill's counterclaims and third-party claims as true and to draw all reasonable inferences in his favor. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974); Ridge at Red Hawk L.L.C. v. Scheider, 493 F.3d 1174, 1177 (10th Cir. 2007)(on review of a motion to dismiss counterclaims and third-party claims, the Court "assumes the truth of [defendant's] well-pleaded factual allegations and views them in the light most favorable to the [defendant]").

For years, the Court's analysis of a Rule 12(b)(6) motion has been guided by the standard that dismissal was appropriate only where "it appears beyond a doubt that the [non-moving party] can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Recently, however, in Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007), the Supreme Court held that this "standard has earned its retirement," id. at 1969, and it set forth "a new inquiry . . . to be used in reviewing a dismissal: whether the [counterclaim/third-party claim] contains 'enough facts to state a claim to relief that is plausible on its face.'" Ridge at Red Hawk, 493 F.3d at 1177 (quoting Twombly, 127 S.Ct. at 1974). As noted by the Tenth Circuit, this new standard "seeks to find a middle ground between 'heightened fact pleading,' which is expressly rejected . . . and allowing complaints that are no more than 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action,' which the [Supreme] Court stated 'will not do.'" Robbins v. State of Oklahoma, et al., 2008 WL 747132, at *2 (10th Cir. March 21, 2008) (citations to Twombly omitted). While detailed factual allegations are not necessary, the assertion of "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 127 S.Ct. at 1965; see also LeBlanc v. Michigan, 2007 WL 2225860, at *2 (E.D. Mich. Aug. 1, 2007)(application of Twombly to case involving RICO). Thus, in order survive a Rule 12(b)(6) motion, Rill is required to "nudge[] [his] claims across the line from conceivable to plausible." Twombly, 127 S.Ct. at 1974.

II.

At the heart of this action is a scheme to defraud perpetrated by Jim Woodrow "Woody" Eubanks, the President of the Arvest Bank branch in Stilwell, Oklahoma. During the course of Eubanks' tenure as President of the Stilwell branch, Rill was a banking customer with Arvest. Rill alleges in his Counterclaims and Third-Party Complaint that from 2003 to 2006 Eubanks conducted an elaborate scheme of mail, wire, and bank fraud to defraud Rill and others of various sums of money. As part of this scheme, it is alleged that on December 26, 2003, and February 10, 2004, Eubanks created false loan documents in Rill's name and diverted funds from those loans to his own personal use. Rill further alleges that Eubanks defrauded him on January 8, 2004, when Eubanks stole the proceeds of a Stilwell Livestock Auction check which Rill had endorsed and given to Eubanks with instructions to apply to outstanding loan balances. It is alleged that Eubanks used his position as the "Autonomous President" of Arvest to perpetrate this fraud upon Rill. Eubanks was terminated from his employment with Arvest on June 16, 2004.

On July 12, 2006, Eubanks was indicted in the United States District Court for the Eastern District of Oklahoma on twelve counts of bank fraud against Arvest and two other banks. On October 24, 2006, Eubanks pled guilty to three counts of bank fraud. On March 16, 2007, Eubanks was sentenced by the Honorable Ronald White to forty-one months in federal prison and to repay Arvest and Armstrong Bank in Stilwell a combined amount of nearly $300,000. The diversion of loan proceeds in Rill's name was not the subject of Eubanks' federal prosecution nor was it considered as relevant conduct for purposes of Eubanks' sentencing.

Following Eubanks' criminal prosecution, Arvest contacted Rill in the summer of 2007 to inform him that it was reviewing Eubanks' conduct with respect to the December 26, 2003, and February 10, 2004, loans taken out in Rill's name. During the course of this review, Rill was provided with all the banking records he requested. On October 3, 2007, Arvest paid Rill $61,599.12, an amount Arvest contends represents "the entire original amount borrowed for the two loans, less the amounts credited to Rill's checking account (that was not diverted by Eubanks), the interest Rill paid on the loans, the interest Rill paid since refinancing the loans, as well as a time value of money factor for the sums Rill disbursed." Complaint at ¶ 21. Rill contends this amount is not sufficient to cover the damages inflicted on him by Eubanks' actions as Arvest's "Autonomous President." Rill has made a demand on Arvest for an amount in excess of $3,000,000 for Arvest's alleged RICO violations and breach of contract, along with various other state law claims. Arvest initiated this action by filing its Complaint wherein it seeks a declaration that it is not liable to Rill under RICO and that it has no breach of contract liability to Rill. Rill thereafter filed his Counterclaim and Third-Party Complaint.

III.

Invoking the doctrine of respondeat superior, Rill attempts to hold Arvest, ABG, and AHI liable for Eubanks' asserted violation of RICO, 18 U.S.C. § 1962(c), which provides:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a ...


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