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Carmichael v. Carmichael

United States District Court, D. New Jersey

January 31, 2014



DENNIS M. CAVANAUGH, District Judge.

This matter comes before the Court upon the Motion of Defendant Merlin Securities, LLC ("Defendant") to dismiss the Complaint of Plaintiff Joseph P. Carmichael ("Plaintiff"). Pursuant to FED. R. CIV. P 78, no oral argument was heard. Based on the following and for the reasons expressed herein, Defendant's Motion to Dismiss is granted.


Plaintiff states that Robert Carmichael ("Robert") is the founder and President of Equity Rising LP ("Equity Rising") and Carmichael Country, Inc. Plaintiff claims that Robert represented to him that he was an expert in the financial planning and securities industries and that he had the knowledge, experience, and ability to safeguard and effectively oversee and manage Plaintiff's investments. Plaintiff also alleges that Robert told him that he would safeguard Plaintiff's retirement funds and maintain a careful, conservative investment strategy, including minimum risk and steady growth. Plaintiff states that, based on Robert's representations, he transferred $429, 505.49 from his securities retirement account into the care and custody of Robert to safeguard and invest prudently.

Plaintiff claims that shortly after making the investment, Defendant began to send him regular account statements that reflected the transfer of his retirement investments into 416, 571 shares in Equity Rising. Plaintiff alleges that the statements initially reflected a value of $416, 571 for the Equity Rising shares. Plaintiff claims that on or about January 28, 2009 and January 29, 2010 he received account statements from Defendant indicating that the value of his ownership interest in Equity Rising was $416, 571.

In June 2012, Plaintiff alleges that he received a quarterly account statement that indicated that although the account had declined, it still had a value of almost $300, 000. Plaintiff states that the next account statement that he received from Defendant, dated August 3, 2012, indicated that his investment's net equity for the period ending August 31, 2012 was zero. Plaintiff claims that before receiving this statement, he had unsuccessfully attempted to contact Robert in order to gain information about his funds. Plaintiff alleges that after receiving the last statement, he contacted Defendant and was told that his account had no real value for "months - or longer." Plaintiff claims that Defendant could not explain the deceptive and false nature of its periodic statements and alleges that if the statements had been true, he would have been able to salvage some or most of his retirement funds.

Plaintiff filed a ten count complaint on April 15, 2013 (ECF No. 1). Defendant filed the instant Motion to Dismiss on July 22, 2013 (ECF No. 18). Plaintiff filed an Opposition on October 11, 2013 (ECF No. 27). Defendant filed a Reply on November 25, 2013 (ECF No. 30).


In deciding a motion under FED. R. CIV. P. 12(b)(6), the District Court is "required to accept as true all factual allegations in the complaint and draw all inferences in the facts alleged in the light most favorable to the [plaintiff]." Phillips v. Cnty. of Allegheny , 515 F.3d 224, 228 (3d Cir. 2008). "[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555 (2007). However, the plaintiff's "obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions and a formulaic recitation of the elements of a cause of action will not do." Id . On a motion to dismiss, courts are "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain , 478 U.S. 265, 286 (1986). Plaintiff's complaint is subject to the heightened pleading standard set forth in Ashcroft v. Iqbal:

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." 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.... Determining whether a complaint states a plausible claim for relief will... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. But where the well pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not "show[n]" - "that the pleader is entitled to relief."

556 U.S. 662, 678-679 (2009) (quoting Twombly , 550 U.S. at 557, 750).


A. Counts Two, Three, and Four

Count two of the Complaint alleges common law fraud, count three alleges a violation of the New Jersey Uniform Securities Act ("NJUSA"), and count four alleges a violation of Section 10(b) of the Securities and Exchange Act of 1934 ("ยง 10(b)"). Fraud claims are subject to the heightened pleading standard set forth in Federal Rule of Civil Procedure 9(b), which provides that "[i]n alleging ...

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