Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_13-cv-02461/USCOURTS-azd-2_13-cv-02461-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Fiduciary Duty

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Stanley Dyck, 

Plaintiff, 

v. 

Michael J. Blake, et al., 

Defendants.

No. CV-13-02461-PHX-DGC

AMENDED ORDER 

 Defendant Ameritas Investment Corp. has filed a motion to dismiss under 

Rule 12(b)(6). Doc. 24. The motion has been fully briefed. For the reasons set forth 

below, the motion will be denied.1

I. Background. 

 Plaintiff, who resides in New Mexico, alleges that he opened a personal retirement 

account and retirement accounts for his employees with Defendant Michael Blake, a 

securities representative and alleged agent of Defendant Ameritas Investment Corp. 

(“Ameritas”). Doc. 1. Plaintiff executed a written statement that he was a conservative 

investor, with minimal tolerance for risk. Id., ¶¶ 21-22. Plaintiff gave Blake discretion 

over the Ameritas accounts, allowing him to buy and sell without Plaintiff’s prior 

approval, which Blake did. Ameritas sent annual summaries of the account activities to 

 

1

 Defendant’s request for oral argument is denied because the issues have been 

fully briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 

78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 

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Plaintiff. Id., ¶¶ 20, 23-24. Blake allegedly represented to Plaintiff in writing that all 

investment advice rendered by Blake was through Defendant. ¶ 26. 

 Blake eventually moved to Arizona, at which time he informed Plaintiff that he 

was doing business as “Olympus Financial Advisors, LLC” and “Olympus Financial 

Advisors Peak,” and began using the email address mblake@ofapeak.us for 

communications with Plaintiff. Id. ¶¶ 27-30. Plaintiff alleges that these emails contained 

a statement that securities were being offered solely through Ameritas. Id. ¶ 32. 

 In July 2008, Blake contacted Plaintiff by telephone and convinced him to invest 

$100,000 in a bridge loan for an office building in the Chicago area, advising Plaintiff 

that the developers were successful and profitable, the investment was safe, and the loan 

would generate a 25% annual return. Id. ¶¶ 39-44. Blake instructed Plaintiff to make his 

$100,000 check payable to “Longest Drive LLC,” which Plaintiff alleges was wholly 

owned by Blake and his wife. Id., ¶¶ 34, 44. Plaintiff does not allege that Ameritas was 

involved in the bridge loan or knew Blake was offering it to Plaintiff, but that “based on 

the broker-dealer relationship with Ameritas, [Blake] ostensibly represented that this was 

investment advice being provided by Ameritas and thus this was an Ameritas investment 

transactions, [sic] the same as plaintiff’s other Ameritas investments.” Id., ¶ 48. 

 Plaintiff claims that he was defrauded in connection with the $100,000 investment. 

Id., ¶¶ 50-63. Plaintiff asserts that Blake concealed key facts about the transaction, 

including the property address, that there was no collateral, and that the project was in 

financial trouble. Id. at 64. Plaintiff has sued Blake for fiduciary misconduct and fraud, 

and Ameritas for breach of fiduciary duty. Id. 

II. Legal Standard. 

When analyzing a complaint for failure to state a claim to relief under Rule 

12(b)(6), the well-pled factual allegations are taken as true and construed in the light 

most favorable to the nonmoving party. Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th 

Cir. 2009). Legal conclusions couched as factual allegations are not entitled to the 

assumption of truth, Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009), and therefore are 

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insufficient to defeat a motion to dismiss for failure to state a claim, In re Cutera Sec. 

Litig., 610 F.3d 1103, 1108 (9th Cir. 2010). To avoid a Rule 12(b)(6) dismissal, the 

complaint must plead enough facts to state a claim to relief that is plausible on its face. 

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This plausibility standard “is not 

akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a 

defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 

556). “[W]here the well-pleaded facts do not permit the court to infer more than the mere 

possibility of misconduct, the complaint has alleged B but it has not ‘show[n]’ B ‘that the 

pleader is entitled to relief.’” Id. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).

III. Analysis. 

 Ameritas argues that Plaintiff has failed to support his allegation that Ameritas had 

a fiduciary duty to Plaintiff, and, even if such a duty existed, that Ameritas breached the 

duty. Id. at 9-12. 

 A. Duty. 

 Plaintiff asserts that Ameritas had a fiduciary relationship with Plaintiff because 

the company held $700,000 of his investment funds. Id., ¶ 67. Plaintiff argues that 

Ameritas had a duty to oversee the dealings that its agent Blake had with Plaintiff, 

“including auditing and reviewing incoming and outgoing e-mails regarding all matters,” 

overseeing Blake’s management of customers’ investments, and ascertaining whether or 

not Blake was selling unregistered securities by “monitor[ing] his activities, examin[ing] 

his emails, incoming and outgoing, sent through the ofapeak.us address.” Id., ¶¶ 73-75. 

 Ameritas admits that Blake had a fiduciary duty to his customers under the 

Investment Advisor’s Act (“IAA”), but argues that broker-dealers like Ameritas do not. 

Doc. 24 at 11. Ameritas argues that it had no discretion or control over Plaintiff’s 

investment accounts or decisions regarding those accounts, and therefore was required to 

comply only with the federal “suitability standards” promulgated under Conduct Rule 

2111 of the Financial Industry Regulatory Authority (FINRA), rather than any fiduciary 

duty to Plaintiff. Id. at 11-12. 

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 Ameritas has not shown that the alleged fiduciary duty in this case is legally 

unfounded. Ameritas cites Thomas v. Metro. Like Ins. Co., 631 F.3d 1153 (10th Cir. 

2011), without providing a page citation, but does not address whether the two 

requirements identified in that case – advice incidental to conduct as a broker and the 

absence of special compensation – are satisfied here. Nor does Ameritas address whether 

the holding of Thomas applies in light of Ninth Circuit law. 

 Ameritas also cites Hoffman v. UBS-AG, 591 F.Supp.2d 522 (S.D.N.Y. 2008), but 

that case relies on Press v. Chem. Inv. Servs. Corp., 166 F.3d 529, 536 (2d Cir.1999), 

which in turn relies on the New York common law of fiduciary duty. Id. Ameritas does 

not claim that New York common law applies in this case, nor does he address relevant 

Ninth Circuit law on the subject. 

 In addition, the complaint alleges a fiduciary duty owed to Plaintiff under the New 

Mexico Security Act. Doc. 1 at 19 (citing N.M.S.A. §§ 58-13-B-40(A); 58-13-C-501, 

502 and 509(B)). The New Mexico Act makes it unlawful for a person, “in connection 

with the offer, sale or purchase of a security, directly or indirectly: (A) to employ a 

device, scheme or artifice to defraud; (B) to make an untrue statement of a material fact 

or to omit to state a material fact necessary in order to make the statement made, in the 

light of the circumstances pursuant to which it is made, not misleading; or (C) to engage 

in an act, practice or course of business that operates or would operate as a fraud or deceit 

upon another person.” N.M.S.A. § 58-13C-501. The Act specifically prohibits such 

conduct by investment advisers (§ 58-13C-502) and imposes liability for the sale of 

securities “by means of an untrue statement of a material fact or an omission” (§ 58-13C509(B)). New Mexico law also imposes joint and several liability on “a person that 

directly or indirectly controls a person liable” for such conduct.2

 Id. at § 58-13C509(G)(1). A controlling person may avoid liability by showing that it “did not know, 

 

2

 In his Complaint, Plaintiff cites to numerous provisions of New Mexico’s Security Act, including §§ 58-13C-501, 502 and 509(B), but does not specifically cite subsection 509(G). The Court, however, will construe Plaintiff’s allegations to include the applicable section of the Act. 

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and in the exercise of reasonable care could not have known, of the existence of [the] 

conduct.” Id. at § 58-13C-509(G)(1). 

 Ameritas argues in a three-sentence footnote that if any state’s law applies, it is the 

law of Nebraska where the Ameritas accounts were based. Doc. 24 at 9 n. 3. But 

Ameritas provides no choice-of-law analysis and fails to address whether it is a 

controlling person under the New Mexico statute. 

 The Court concludes that Ameritas has not, at this stage of the litigation, shown 

the absence of a fiduciary duty. The Court cannot grant the motion to dismiss on this 

ground. 

 B. Breach and Proximate Cause. 

 Ameritas argues that even if a fiduciary duty existed, Plaintiff has not alleged any 

actions by Ameritas that constituted a breach of the duty or caused the injury complained 

of by Plaintiff. Doc. 24 at 12-15. Ameritas argues that the only factual averment in the 

complaint, “even implying that Ameritas breached its fiduciary duties,” is Plaintiff’s 

contention that on July 2, 2010, Blake sent Plaintiff an email from his ofapeak.us email 

address referencing the problems with the development project, and that the email 

contained a disclosure that the services and securities offered were through Defendant. 

Id. at 13. Ameritas claims this is insufficient to state a claim for breach of a fiduciary 

duty. In response, Plaintiff claims that Defendant’s fiduciary duty carried with it a duty 

to oversee the actions of Blake, and that Ameritas breached this duty because it “was 

aware or should have been aware that Michael Blake was selling unregistered loan 

securities under the Ameritas umbrella of trust.” Id., ¶¶ 71, 76. 

 Because the July 2, 2010 email was sent almost two years after Plaintiff made the 

bridge loan investment at issue in this case, Defendant’s failure to note the suspicious 

nature of the email could not have caused the injury alleged by Plaintiff. The same is true 

for the four emails that Plaintiff’s complaint notes were sent by Blake from a nonAmeritas email account beginning in October 2010. Doc. 1, ¶ 69. 

 Plaintiff’s complaint also asserts, however, that Defendant had a duty to oversee 

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Blake’s actions, including ascertaining whether Blake was selling unregistered loan 

securities. Id., ¶¶ 71, 73, 75. And Ameritas itself admits that it had an obligation to 

“ensur[e] trades made through the firm were appropriate based on Plaintiff’s investment 

profile.” Doc. 24 at 12 (emphasis in original). The complaint alleges that the bridge loan 

investment was not suitable and that the failure by Ameritas to oversee Blake’s actions 

was a proximate cause of Plaintiff’s injuries. These allegations sufficiently state a claim 

for breach of fiduciary duty. 

IT IS ORDERED that Defendants motion to dismiss claims against Defendant 

Ameritas (Doc. 24) is denied. 

 Dated this 16th day of May, 2014. 

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