DMK Biodiesel v. McCoy
285 Neb. 974
| Neb. | 2013Background
- DMK Biodiesel, LLC and Lanoha RVBF, LLC invested in Republican Valley Biofuels (RVBF) via private placement in 2007.
- Investors were marketed by McCoy, Hanson, High, and Anderson; Renewable Fuels Technology, LLC was listed as RVBF’s manager.
- DMK and Lanoha signed separate subscription agreements in August 2007, incorporating a memorandum stating reliance on the memorandum and no reliance on other representations.
- In 2009, DMK and Lanoha sued for fraud, alleging misrepresentations and fiduciary breaches related to RVBF.
- Defendants moved to dismiss under Rule 12(b)(6) and sought judicial notice of the private placement memorandum and subscription agreements.
- District court granted the motions, considered the documents, and dismissed the direct fraud claims; later amended complaints were dismissed in 2012, leading to the appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did judicial notice convert the motion to dismiss into summary judgment? | DMK/Lanoha contend notice caused summary judgment without a hearing. | RVBF/defendants contend notice is proper and may support dismissal | Yes; the district court erred by treating the motion as summary judgment without a hearing. |
| Whether the district court properly dismissed the direct fraud claims | Fraud pre-dating or post-dating subscription agreements was alleged to mislead. | Pre-subscription misrepresentations were not actionable under the pleadings. | Dismissal was improper; reversal required due to improper treatment of outside materials. |
| Whether the private placement memorandum and subscription agreements are embraced by the complaint | DMK/Lanoha did not rely on those documents in the complaint. | Courts may treat them as embraced or outside documents central to claims. | Documents were not clearly embraced; their consideration as outside materials required conversion to summary judgment. |
| Whether the securities claims can be adjudicated without a summary-judgment procedure | No summary-judgment hearing was held despite conversion error. | Proceedings could be resolved on the pleadings if properly supported. | Remand for proper summary-judgment procedure and evidentiary hearing required. |
Key Cases Cited
- Doe v. Omaha Pub. Sch. Dist., 273 Neb. 79 (2007) (guidance on notice pleading in Nebraska)
- BJC Health System v. Columbia Cas. Co., 348 F.3d 685 (8th Cir. 2003) (external documents treated as outside pleading; when proper to rely on them)
- In re Adoption of Kenten H., 272 Neb. 846 (2007) (illustrates judicial notice and public record considerations)
- State v. Nadeem, 284 Neb. 513 (2012) (standard for appellate review on necessity of issues raised)