Argo Wealth Management, Inc. v. Bremner

NC ole rr tk h eU r. nS D. D isi ts rt ir cic t ot C f Oou hr iot UNITED STATES DISTRICT COURT

Akron  NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

ARGO WEALTH MANAGEMENT, ) CASE NO: 5:22-cv-1137

INC, ET AL. )

)

Plaintiffs, ) JUDGE JOHN ADAMS

)

v. ) MEMORANDUM OF OPINION

) AND ORDER

JOHN BREMNER, ET AL. )

)

)

Defendants. )

)

Pending before the Court is a motion to dismiss filed by Defendants John Bremner,

William Reavis, and Thomas Burke (collectively “Defendants”). Upon review, the motion

to dismiss is GRANTED, and this matter is DISMISSED.

I. Factual Background

This action was brought by Plaintiffs Argo Wealth Management, Inc., Aurora Hill

Ltd., and Dan Miller against Defendants, all of whom are residents of the state of Illinois.

Dan Miller and Argo Wealth Management, Inc. are general partners of Aurora Hill Ltd.

Reavis suggested that Bremner invest in Aurora Hill Ltd, and Bremner invested $200,000

in January 2019. Following the investment, Bremner was admitted to Aurora Hill as a

limited partner. Bremner lost approximately half his investment in a matter of months and

in June 2019, gave notice of his desire to withdraw from the partnership effective

September 2019.Aurora Hill consented to Bremner’s withdrawal from the partnership.

In August 2019, Reavis sent an email to Bremner apologizing for introducing him

to the costly investment. Reavis and Bremner were both physically located in the state of

Illinois at the time this email was sent and received. The email, in relevant part, stated:

First, I’d like to say because of what transpired with Aurora Hill I have

completely disassociated myself from Dan Miller and Argo Futures. Our

gut feeling of the man we have found out was unfortunately spot on. As I

mentioned previously, I was led to that office via colleagues I thought were

trustworthy. I feel duped and in turn I’m sure you did as well. And it’s not

even like I was being compensated from this investment vehicle, although

I thought I would be to some regard, I never even received commissions for

activity in the Aurora Hill Fund and now it may cost me a nice client. Just

last week his lack of response to a simple question regarding portfolio

complexion is unprofessional to say the least.

As to your comment on my subsequent response to what transpired with

Aurora Hill. I feel, I couldn’t have been more aggressive in calling them out

on not managing it correctly by selling us on a product that was way overly

exposed to one manager. Now, this was more behind the scenes but I spent

weeks on the phone with them trying to make the situation right by you.

Too little too late [sic] I guess but I was able to get the fund redesigned on

a fashion that I felt would do well. But at that point I was basically in

damage control mode. And the reason they moved so quickly to get that

done is I was using compliance terms that, I believe, scared the crap out of

them. That is also why, again I believe, I was able to offer you the favorable

position I was able to offer you.

Doc #1, Page ID #14. This communication appears to form the basis of Plaintiffs’

defamation claims against Defendants.

In May of 2020, Plaintiffs filed a similar action in the Summit County Court of

Common Pleas against Reavis, alleging defamation per se, defamation per quod, and

tortious interference with business relations. Reavis successfully petitioned that court to

stay the proceedings and compel arbitration.

In August 2020, Bremner filed a complaint in Illinois with the National Futures

Association against Daniel Miller and Argo Wealth Management, Inc. in which Burke was

Bremner’s attorney. That matter was heard before a three-judge panel of the National

Futures Association who ruled in favor of Dan Miller and Argo Wealth Management. The

National Futures Association also determined that Miller cannot reapply for National

Futures Association membership status for a period of three years, and if Miller again seeks

and is granted National Futures Association membership, he cannot register or act as a

commodity pool operator, associated person of a commodity pool operator, or principal of

a commodity pool operator for an additional two years. The National Futures Association

also decided that Argo Wealth Management may never reapply for National Futures

Association Membership in any capacity or act as a principal for a National Futures

Association member.

Following Arbitration with the National Futures Association, Reavis filed a motion

to dismiss for lack of personal jurisdiction, similar to the one being decided here, in August

of 2021. The Summit County Court of Common Pleas dismissed the action for lack of

personal jurisdiction under R.C. § 2307.382(A)(1), R.C. § 2307.382(A)(6), and based on

the requirements of due process.

II. Personal Jurisdiction - Reavis

a. Collateral Estoppel

Plaintiffs are collaterally estopped from asserting that this Court has personal

jurisdiction over Reavis because the Summit County Court of Common Pleas issued a final

decision on this matter determining that Reavis was not subject to Ohio jurisdiction.

A dismissal for lack of personal jurisdiction has preclusive effect upon subsequent

litigation in a court bound by the same jurisdictional limits. Enginetec Corp. v. Boutin, No.

4:09CV568, 2009 U.S. Dist. LEXIS 147968 at *9 (N.D. Ohio July 27, 2009). “Collateral

estoppel [] prevents parties or their privies from relitigating facts and issues in a subsequent

suit that were fully litigated in a prior suit.” Thompson v. Wing, 70 Ohio St.3d 176, 183,

1994-Ohio-358. “[A] federal court must give to a state-court judgment the same preclusive

effect as would be given that judgment under the law of the State in which the judgment

was rendered.” Migra v. Warren City School District Board of Education, 465 U.S. 75, 81

(1984). The Sixth Circuit discussed in N.A.A.C.P, Detroit Branch v. Detroit Police Officers

Ass’n the requirements of collateral estoppel:

(1) the precise issue raised in the present case must have been raised and

actually litigated in the prior proceeding; (2) determination of the issue must

have been necessary to the outcome of the prior proceeding; (3) the prior

proceeding must have resulted in a final judgment on the merits; and (4) the

party against whom estoppel is sought must have had a full and fair

opportunity to litigate the issue in the prior proceeding.

821 F.2d 328, 220 (6th Cir. 1987).

There is no dispute that 1) the state court resolved the precise issue of personal

jurisdiction, 2) that its resolution of the issue was necessary to the outcome, 3) that the

prior proceeding was a judgment on the merits, and 4) that Plaintiffs had a full and fair

opportunity to litigate the matter.

With respect to the third component, the Court notes:

In Ohio, for an order to constitute a final judgment on the merits for

purposes of collateral estoppel, it must be an immediately appealable order.

Glidden Co. v. Lumbermens Mut. Cas. Co., 112 Ohio St. 3d 470, 2006 Ohio

6553, 861 N.E.2d 109, 118 (Ohio 2006) ("Essentially, collateral estoppel

prevents parties from relitigating facts and issues that were fully litigated in

a previous case. The question here is whether the previous facts and issues

were 'fully litigated,' given that the case terminated with a dismissal by the

plaintiffs. The issues must have been determined by a final appealable

order."); Anderson v. Eyman, 180 Ohio App. 3d 794, 2009 Ohio 102, 131,

907 N.E.2d 730 (Ohio Ct. App. 2009) ("[I]n order for [collateral estoppel]

to apply the issues must have been determined by a final appealable order.")

D'Ambrosio v. Bagley, 688 F. Supp. 2d 709, 735 (N.D. Ohio 2010). Here, the

Summit County Court of Common Pleas order explicitly states that its order is final

and appealable. Therefore, the previous proceedings resulted in a final judgment on

the merits.

Finally, with respect to the final prong set forth above, the Court must examine

whether the party against whom estoppel is sought must have had a full and fair opportunity

to litigate the issue in the prior proceeding. When determining whether collateral estoppel

applies to a party that was not in the original lawsuit, privity can be found through

contractual or beneficiary relationship or simply through “mutuality of interest, including

an identity of desired result.” Stewart v. IHT Ins. Agency Grp. LLC Welfare Ben. Plan, No.

2:16-cv-210, 2020 U.S. Dist. LEXIS 104375 at *15 (S.D. Ohio June 15, 2020). “An interest

in the result and active participation in the original lawsuit may also establish privity.” Id.

Two of the three Plaintiffs in this action were parties in the previous litigation. Argo Wealth

Management was not a party to the original litigation, but is the general partner of Aurora

Hill, Ltd., who was a party to the original litigation. Because of this, Argo Wealth

Management is in privity with the Plaintiffs in the prior action. Plaintiffs in the prior

proceedings had a full and fair opportunity to litigate the issue of personal jurisdiction over

Reavis in the prior proceedings, and therefore the final element of collateral estoppel is

present.

Plaintiffs seek to avoid the preclusive effect of the prior court decision by asserting

that certain claims were not ripe at the time of that dismissal. However, there are no facts

related to conduct in Ohio that have come into existence that would call into question the

state court’s decision finding that it lacked jurisdiction over Reavis. Accordingly, with all

elements of collateral estoppel present, the dismissal for lack of personal jurisdiction over

Reavis in the prior proceedings has a preclusive effect in the current case. Reavis is

dismissed from this action for lack of personal jurisdiction.

III. Claims Barred by the Relevant Statutes of Limitation

a. Malicious Prosecution

Plaintiffs’ claim of malicious prosecution is barred by the statute of limitations set

forth by Ohio Law. Ohio Law provides that a claim for malicious prosecution “shall be

commenced within one year after the cause of action accrued.” R.C. § 2305.11(A). The

malicious prosecution claim is derived from the NFA arbitration decisions that were issued

on March 17, 2021. Plaintiffs commenced this action on June 27, 2022, and therefore, on

its face, the claim is untimely.

Plaintiffs suggest that the claim is timely because they originally filed with this

Court on December 14, 2021. However, that action was dismissed for want of prosecution

on April 7, 2022. Fed.R. Civ.P. 41(b) provides:

If the plaintiff fails to prosecute or to comply with these rules or a court

order, a defendant may move to dismiss the action or any claim against it.

Unless the dismissal order states otherwise, a dismissal under this

subdivision (b) and any dismissal not under this rule—except one for lack

of jurisdiction, improper venue, or failure to join a party under Rule 19—

operates as an adjudication on the merits.

While the Court’s dismissal was “without prejudice,” the order was issued after the

expiration of the statute of limitations for this claim. As such, the dismissal was in practical

effect a dismissal on the merits. Moreover, the Court notes that the prior matter was

dismissed because Plaintiffs entirely failed to respond to the Court’s order to detail why

service had not been made. Under those unique circumstances, the Court finds it

appropriate to conclude that its prior dismissal was an adjudication on the merits.

Accordingly, Plaintiffs cannot rely on the savings statute, O.R.C. § 2305.19, and their claim

for malicious prosecution is barred by the one-year statute of limitations.

b. Civil Conspiracy

Under Ohio Law, “a claim for conspiracy cannot be made subject of a civil action

unless something is done which, in the absence of the conspiracy allegation, would give

rise to an independent cause of action.” Cully v. St. Augustine Manor, No. 67601, 1995

Ohio App. LEXIS 1643, at *10 (Ct. App. Apr. 20, 1995); Katz v. Banning, 84 Ohio App.

3d 543, 552 (1992); Palmer v. Westmeyer, 48 Ohio App. 3d 296, 300 (1988). “[T]he

applicable statute of limitations for the underlying cause of action applies to the civil

conspiracy charge.” Cully at *11.

Here, the underlying cause of action for Plaintiffs’ civil conspiracy claim is

malicious prosecution. Accordingly, the Court’s analysis above applies equally to this

claim and it is time barred.

c. Defamation Per Se & Defamation Per Quod.

Defamation per se occurs when the defamation is manifested by the very words

spoken. Gosden v. Louis, 116 Ohio App. 3d 195, 206 (1996). Defamation per quod occurs

when a statement that is innocent on its face becomes defamatory through interpretation or

innuendo. Id. In Ohio, the statute of limitations for defamation is one year. R.C. §

2305.11(A). Ohio has held that the statute of limitations for defamation, be it slander or

libel, begins to run at the time the words are written or spoken, not when the plaintiff

becomes aware of them. See, Hester v. Case Western Reserve Univ., 2019-Ohio-1991, ¶

11 (Ct. App.); Singh v. ABA Publishing ABA, 10th Dist. Franklin No. 02AP-1125, 2003-

Ohio-2314, ¶ 22; Lyons v. Farmers Ins. Group of Companies, 67 Ohio App.3d 448, 454

(1990); Rainey v. Shaffer, 8 Ohio App.3d 262, 263 (1983).

The operative facts giving rise to the defamation claims occurred in 2019. As the

savings statute is similarly inapplicable to these claims, they are also time barred.

Count Six – Breach of Contract against Bremner

Because Bremner entered into a limited partnership with an Ohio company, it

appears that personal jurisdiction may be appropriate. However, the complaint wholly fails

to state a cause of action for breach of contract. Instead, the complaint appears to allege

that the partnership voluntarily chose not to impose certain provisions of the agreement.

There is no allegation of any provision that Bremner breached. Accordingly, the complaint

does not state a cause of action for breach of contract.

IV. Conclusion

Based upon the above, Defendants’ motion to dismiss is GRANTED. This matter is

hereby DISMISSED.

IT IS SO ORDERED.

June 13, 2023 /s/ Judge John R. Adams

DATE JUDGE JOHN R. ADAMS

UNITED STATES DISTRICT COURT