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Magee v. American Institute of Certified Public Accountants

United States District Court, District of Columbia

March 29, 2017

PETER J. MAGEE, Plaintiff,
v.
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, et al., Defendants.

          MEMORANDUM OPINION

          REGGIE B. WALTON United States District Judge

         The plaintiff, Peter J. Magee, brings this civil action against the American Institute of Certified Public Accountants (the “Institute”); Rebecca Ferris, Francine Calogero, Nancy Miller, Jennifer Goad, and Leonard Hecth, in their official capacities as employees of the Institute's Ethics Division; and Does 1-50, [1] asserting two claims for negligence, a claim for breach of the implied covenant of good faith and fair dealing, and a breach of fiduciary duty claim against the Institute, as well as claims for intentional infliction of emotional distress and negligent infliction of emotional distress against all defendants. See Complaint (“Compl.”) ¶¶ 3-10, 29-58. Currently before the Court is the defendants' Motion to Dismiss (“Defs.' Mot.”), which seeks dismissal of the plaintiff's Complaint pursuant to Rule 12(b)(6). Upon careful consideration of the parties' submissions, [2] the Court concludes that it must grant the defendants' motion to dismiss all of the plaintiff's claims with the exception of the claim for breach of the implied covenant of good faith and fair dealing against the Institute.

         I. BACKGROUND

         The plaintiff asserts the following in his Complaint. He is a certified public accountant currently operating an accounting business in Reno, Nevada, and whose clients include Indian tribes, tribal governments, and other tribal entities. See Compl. ¶¶ 11-12. He is a longstanding member of the Institute, a professional membership organization comprised of certified public accountants and incorporated as a nonprofit corporation in the District of Columbia. See Id. ¶¶ 4, 19-20. As a member of the Institute, the plaintiff agreed to subject himself to the rules and procedures of the Institute's Ethics Committee. See id. ¶ 21.

         Beginning in 2006, the Ethics Committee began investigating the services the plaintiff provided to a tribal client in California that was undergoing a federal audit. See id. ¶ 23. “The Ethic's Committee's concern was [the plaintiff's] use of language in the audit and inclusion or non-inclusion of related audit documentation, requested specifically by the [t]ribal client.” Id. This investigation is based out of the Institute's North Carolina offices. See Def.'s Mem. At 1. As a result of the investigation, the plaintiff has been under the oversight of the Ethics Committee for ten years, but the matter has not yet been resolved, nor has the Ethics Committee afforded the plaintiff a hearing to dispute the allegations. See Compl. ¶¶ 23-24. According to the plaintiff, he

has been subjected to increased levels of [Institute] scrutiny by the Ethics Committee and threatened with gestapo like tactics that included, but are not limited to, “take it or leave it” ethical resolution proposals subjecting [him] to additional Ethics Committee scrutiny and in which [he] was told he must acquiesce or face increasing scrutiny and[/]or discipline by the Ethics Committee; use by the Ethics Committee of documents provided by [him] of which the Ethics Committee would fabricate additional sanctions, concerns and generate additional correspondences and document requests for [his] response . . . .

Id. ¶ 24.

         The plaintiff filed his Complaint on May 17, 2016, see id. at 1, asserting the various common law claims against the defendants arising out of their investigation and discipline of the plaintiff, see id. ¶¶ 32-34, 37-38, 43-44, 47-48, 50-53, 55-58. The defendants filed their motion to dismiss on June 24, 2016. See Defs.' Mot. at 1.

         II. STANDARD OF REVIEW

         A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Thus, to survive a motion to dismiss for “failure to state a claim upon which relief can be granted, ” Fed.R.Civ.P. 12(b)(6), the 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 Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility 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. (citing Twombly, 550 U.S. at 556); see also Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994) (noting that the plaintiff is entitled to “the benefit of all inferences that can be derived from the facts alleged”). Although the Court “must treat the complaint's factual allegations as true [and] must grant [the] plaintiff the benefit of all reasonable inferences from the facts alleged, ” Trudeau v. Fed. Trade Comm'n, 456 F.3d 178, 193 (D.C. Cir. 2006) (alteration in original) (citation omitted), legal allegations devoid of factual support are not entitled to this assumption, see, e.g., Kowal, 16 F.3d at 1276. Moreover, a plaintiff must provide more than “a formulaic recitation of the elements of a cause of action.” Hinson ex rel. N.H. v. Merritt Educ. Ctr., 521 F.Supp.2d 22, 27 (D.D.C. 2007) (quoting Twombly, 550 U.S. at 555).

         III. ANALYSIS

         A. Choice of Law

         Although the defendants are the only party who briefed the question as to which jurisdiction's law applies in this diversity of citizenship matter, all parties rely on District of Columbia law in their submissions to the Court. See Defs.' Mem. at 2-5; Pl.'s Opp'n at 2-6. “When deciding state-law claims under diversity . . . jurisdiction, federal courts apply the choice-of-law rules of the jurisdiction in which they sit.” Mastro v. Potomac Elec. Power Co., 447 F.3d 843, 857 (D.C. Cir. 2006) (citations and internal quotation marks omitted). And, the choice-of-law rules in the District of Columbia dictate that “the [C]ourt must first determine if there is a conflict between the laws of the relevant jurisdictions.” Parnigoni v. St. Columba's Nursery Sch., 681 F.Supp.2d 1, 12 (D.D.C. 2010) (Walton, J.) (alteration in original) (citation omitted). If no conflict exists, District of Columbia law applies by default. See Brown v. Dorsey & Whitley, LLP, 267 F.Supp.2d 61, 70 (D.D.C. 2003).

         With the exception of the negligent infliction of emotional distress claim, the elements for each claim asserted by the plaintiff are the same in the District of Columbia, Nevada, and North Carolina, the three jurisdictions that have some connection with this case. The elements of a negligence claim in all three jurisdictions are (1) duty, (2) breach, (3) causation, and (4) damages. Compare Powell ex rel. Ricks v. District of Columbia, 634 A.2d 403, 406 (D.C. 1993) (providing the elements of negligence in the District of Columbia), with Gibson v. Ussery, 675 S.E.2d 666, 668 ( N.C. Ct. App. 2009) (providing the elements of negligence in North Carolina), and Sadler v. PacifiCare of Nev., 340 P.3d 1264, 1267 (Nev. 2014) (providing the elements of negligence in Nevada). To establish a claim for intentional infliction of emotional distress in the three jurisdictions, a plaintiff must plead that: (1) the defendant acted in an extreme and outrageous manner, (2) either intentionally or recklessly, which (3) caused the plaintiff severe emotional distress. Compare Ortberg v. Goldman Sachs Grp., 64 A.3d 158, 163 (D.C. 2013) (stating the elements of intentional infliction of emotional distress in the District of Columbia), with Turner v. Thomas, 794 S.E.2d 439, 446 ( N.C. 2016) (stating the elements of intentional infliction of emotional distress in North Carolina), and Nelson v. City of Las Vegas, 665 P.2d 1141, 1145 (Nev. 1983) (stating the elements of intentional infliction of emotional distress in Nevada). For breach of fiduciary duty claims, each jurisdiction requires that (1) a fiduciary relationship exists between the parties, and (2) the defendant breached that duty. Compare Gov't of Rwanda v. Rwanda Working Grp., 227 F.Supp.2d 45, 64 (D.D.C. 2002) (stating the elements for breach of fiduciary duty in the District of Columbia), with White v. Consol. Planning, Inc., 603 S.E.2d 147, 155 ( N.C. Ct. App. 2004) (stating the elements of breach of fiduciary duty in North Carolina), and Stalk v. Mushkin, 199 P.3d 838, 843 (Nev. 2009) (stating the elements of breach of fiduciary duty in Nevada). Finally, to establish a breach of the implied covenant of good faith and fair dealing in all three jurisdictions, the plaintiff must plead that (1) the defendant has taken steps, or refused to take steps, (2) which destroyed or injured the plaintiff's right to receive the fruits of the contract. Compare Mero v. City Segway Tours of Wash. D.C., LLC, 826 F.Supp.2d 100, 106 (D.D.C. 2011) (stating the elements of breach of the implied covenant of good faith and fair dealing in the District of Columbia), with Williams v. Craft Dev., LLC, 682 S.E.2d 719, 723 ( N.C. Ct. App. 2009) (stating the elements of breach of the implied covenant of good faith and fair dealing in North Carolina), and Hilton Hotels Corp. v. Butch Lewis Prods., Inc., 808 P.2d 919, 923 (Nev. 1991) (stating the elements of breach of the implied covenant of good faith and fair dealing in Nevada). Consequently, because no true conflict exists between the applicable laws of Nevada, North Carolina, or the District of Columbia with respect to the aforementioned claims, the Court will apply the law of the District of Columbia.

         For claims of negligent infliction of emotional distress, both the District of Columbia and North Carolina require a plaintiff to plead that: (1) the defendant owed a duty or held a relationship with the plaintiff; (2) the defendant engaged in conduct that would foreseeably cause the plaintiff severe emotional distress; and (3) the defendant's conduct caused the plaintiff severe emotional distress. Compare Sibley v. St. Albans Sch., 134 A.3d 789, 797-98 (D.C. 2016) (stating the elements of negligent infliction of emotional distress in the District of Columbia), with Acosta v. Byrum, 638 S.E.2d 246, 250 ( N.C. Ct. App. 2006) (stating the elements of negligent infliction of emotional distress in North Carolina). In Nevada, however, in order for a plaintiff to assert a negligent infliction of emotional distress claim, a plaintiff must plead that he “suffer[ed] ‘serious emotional distress which result[ed] in physical symptoms caused by apprehending the death or serious injury of a loved one due to the negligence of the defendant.'” Barmettler v. Reno Air, Inc., 956 P.2d 1382, 1387 (Nev. 1998) (quoting Chowdry v. NLVH, Inc., 851 P.2d 459, 462 (Nev. 1993)).

         Because a conflict exists regarding the elements a plaintiff must plead to allege a negligent infliction of emotional distress claim, in deciding which jurisdiction's law controls, the Court “must determine which jurisdiction has the most significant relationship to the claims being pursued by the plaintiff[].” Parnigoni, 681 F.Supp.2d at 12. In making this determination, the Court must consider the following factors: “(a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties; and (d) the place where the relationship is centered.” Id. (quoting District of Columbia v. Coleman, 667 A.2d 811, 816 (D.C. 1995)). Upon consideration of these factors, the Court concludes that North Carolina law must be applied to the plaintiff's negligent infliction of emotional distress claim for the following reasons. The place where the injury occurred is Nevada, where the plaintiff resides and conducts his business. See Compl. ¶¶ 3, 11. The place where the conduct causing the plaintiff's alleged injury occurred is North Carolina, because the Institute's investigation of the plaintiff is based in its North Carolina office. See Defs.' Mem. at 1. The plaintiff's domicile and place of business is Nevada, see Compl. ¶¶ 3, 11, while the Institute's place of incorporation is the District of Columbia, and the place of business of its Ethics Division is North Carolina, see Defs.' Mem. at 1. Finally, the place where the relationship is centered is North Carolina, because that is where the ...


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