Saturday, July 29, 2006
Interesting comments on Nebraska 12b6 motion practice from the supreme court: The district court may rely on judicially noticeable facts when ruling on a defendant's Rule 12b6 motion without converting it into a motion for summary judgment; Nebraska supreme court further holds that action against law firm for improper registration of securities (Neb. U.C.C. § 8-404(a)(1) and 8-407) is not a professional negligence action. Plaintiffs brought derivative claims on behalf of Aaron Ferer & Sons Co. (AFSC) against the Erickson & Sederstrom (E&S) law firm and the corporation to recover for the law firms allegedly negligent representation of the corporation. Plaintiff brought an individual action against the same defendants to recover for the alleged wrongful registration of his AFSC shares of common stock. The district court granted law firm's Rule 12b6 motion to dismiss. The district court treated the plaintiff's 8-404 claim as one for professional malpractice and concluded that E&S, who served as corporate counsel and transfer agent for AFSC, did not owe a duty to the plaintiff. With regard to the appellants' derivative claims, the district court found that the appellants did not fairly and adequately represent the shareholders of AFSC. Supreme Court agrees with the District court on its dismissing the derivative action but reverses the District Court on the registration claim under Neb. U.C.C. § 8-404(a)(1) (Reissue 2001). 8-407 claim was not a malpractice claim E&S was not acting as legal counsel with respect to the allegedly wrongful registration of Aaron's stock. Rather, it was alleged to be acting as transfer agent for AFSC.E&S was alleged to be acting in its capacity as transfer agent for AFSC, not in its capacity as legal counsel, when it transferred Aaron's shares of AFSC stock. Hence, E&S may potentially be held liable under § 8-407 for wrongful registration.Aaron has alleged in his operative complaint that E&S transferred his shares of AFSC to Harvey Ferer and then to Matthew Ferer and Whitney Ferer, despite his failure to endorse the stock certificate or authorize the transfer. If Aaron's allegations are true, which we must assume for purposes of a motion to dismiss, see Carruth v. State, 271 Neb. 433, 712 N.W.2d 575 (2006), E&S would be liable under Â§ 8-407 because of the alleged ineffective endorsement. We therefore conclude that Aaron has stated a claim for wrongful registration, and the district court erred in concluding otherwise. Court when ruling on a Rule 12b6 motion to dismiss may look at publicly known facts12(b)(6) motions test the legal sufficiency of the complaint, not the claim's substantive merits. A court may typically look only at the face of the complaint to decide a motion to dismiss. See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977 (9th Cir. 2002). However a court considering a rule 12b6 motion may take judicial notice of "'matters of public record'" without converting a rule 12(b)(6) motion to dismiss into a motion for summary judgment. Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001); Neb. Rev. Stat. § 27-201(6) (Reissue 1995) judicialicial notice may be taken at any stage of the proceeding"). See, also, Watterson v. Page, 987 F.2d 1 (1st Cir. 1993). Thus, the district court may, and in this case did, consider the other lawsuits filed by the appellants in determining whether the district court erred in granting E&S' rule 12(b)(6) motion. conclusionAaron has stated a claim against E&S for wrongful registration under § 8-407. We therefore reverse the district court's dismissal of Aaron's individual claim against E&S. We affirm, however, the court's dismissal of the appellants' derivative claims against E&S for the reason that they do not fairly and adequately represent AFSC.
Posted by stan_sipple at 3:12 PM