Court Opinion

ID: 4172106
Source: CourtListenerOpinion
Date Created: 2017-05-26 15:04:16.415411+00
Date Added: 2024-06-11T14:39:22.350026
License: Public Domain

United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 16-2095
                        ___________________________

                  International Environmental Management, Inc.

                        lllllllllllllllllllll Plaintiff - Appellant

                                            v.

                          United Corporate Services, Inc.

                       lllllllllllllllllllll Defendant - Appellee
                                      ____________

                     Appeal from United States District Court
               for the Western District of Missouri - Jefferson City
                                 ____________

                            Submitted: January 12, 2017
                               Filed: May 26, 2017
                                 ____________

Before LOKEN, BEAM, and BENTON, Circuit Judges.
                           ____________

LOKEN, Circuit Judge.

       A foreign corporation doing business in Missouri, International Environmental
Management (IEM) must designate a registered agent for service of process by filing
a certificate of authority with the Missouri Secretary of State. See Mo. Rev. Stat.
§§ 351.586, 351.592(1), 351.594(1). At the end of 2007, IEM changed registered
agents, hiring CT Corporation Systems (CT) and terminating United Corporate
Services (UCS). However, a change of registered agent form was not filed in the
Secretary of State’s “active” file for IEM. In 2009, a state court process server
delivered a summons and petition against IEM to UCS as registered agent. IEM
defaulted, and the state court entered a default judgment and awarded plaintiffs more
than $9,700,000 in damages. The Missouri Court of Appeals affirmed the denial of
IEM’s motion for relief from that judgment. Sieg v. Int’l Envtl. Mgmt., Inc., 375
S.W.3d 145 (Mo. App. 2012). IEM paid the default judgment and then commenced
this action against UCS and CT, asserting breach of fiduciary duty, contract, and
negligence claims. Defendants removed the action to the Western District of
Missouri, invoking the court’s diversity jurisdiction.

       Both defendants moved to dismiss for failure to state a claim. The district court
granted UCS’s motion, dismissing all claims against it, but denied CT’s motion. Two
years later, after extensive discovery and motion practice, IEM and CT settled. The
district court denied IEM’s motion for reconsideration of the order dismissing claims
against UCS and entered final judgment. IEM appeals the initial Rule 12(b)(6)
dismissal and the denial of its motion to reconsider. Assuming the truth of fact
allegations in IEM’s Complaint, and reviewing the grant of a motion to dismiss de
novo, we reverse dismissal of IEM’s fiduciary duty claim and otherwise affirm. See
OmegaGenesis Corp. v. Mayo Found. for Med. Educ. & Research, 851 F.3d 800, 802
(8th Cir. 2017) (standard of review).

                                   I. Background.

      IEM is a Georgia corporation providing recycling and waste-reduction services
for shopping malls throughout the country, including the Columbia Mall in Boone
County, Missouri. In June 2006, IEM contracted with UCS, a New York corporation,
to provide registered agent services in Missouri and four other States. A certificate
of authority identifying UCS as IEM’s registered agent was filed with the Missouri
Secretary of State. In late 2007, IEM contracted with CT, a New York and Delaware

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corporation, to serve as its new registered agent in Missouri and elsewhere. On
November 5, 2007, CT filed a “Change of Registered Agent” form with the Missouri
Secretary of State in File No. 217, an inactive IEM file, but not in File No. 488, the
active IEM file. In December 2007, IEM advised UCS it was no longer IEM’s
registered agent in Missouri and elsewhere. UCS filed documents in other States
reflecting this change but filed no notice with the Missouri Secretary of State.
Consequently, the Missouri Secretary of State’s website continued to list UCS as
IEM’s registered agent.

      Ricky Sieg was injured when he received an electric shock from a trash
compactor at the Columbia Mall and commenced a negligence action against IEM in
2009. A process server delivered the summons and petition in the Siegs’ lawsuit to
the UCS office. UCS accepted service. IEM alleges that UCS failed to deliver the
service documents to IEM.1 Lacking notice of the lawsuit, IEM defaulted. IEM
alleges that it had no notice of the lawsuit until April 2011, when the Siegs’ counsel
contacted IEM regarding garnishment proceedings to collect the default judgment.

       In its motion to dismiss, UCS argued that its contractual and fiduciary duties
to IEM ceased when IEM terminated UCS as its agent; that IEM, the foreign
corporation, had the duty to notify the Missouri Secretary of State of the change of
registered agent; and UCS owed no post-termination fiduciary or contractual duty to
IEM. The district court agreed and granted the motion to dismiss, explaining:

      [T]here was never any agreement between the parties for UCS to
      provide any post-termination services. . . . [A]ny fiduciary duties ended

      1
        Discovery in IEM’s lawsuit against CT, and facts recited by the Missouri
Court of Appeals in Sieg, 375 S.W.3d at 149, suggest that UCS sent the summons and
petition to IEM by regular mail, to an address IEM changed after terminating its
registered-agent relationship with UCS. These matters outside the pleading are not
relevant to our review of the Rule 12(b)(6) dismissal.

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      when plaintiff terminated UCS’s services. Both Missouri caselaw and
      Missouri statutes state that it was IEM’s responsibility to notify third
      parties and file the change of registered agent forms. . . . UCS owed no
      fiduciary or contractual duties to IEM after its services were terminated
      in December 2007.

       On the eve of settlement with CT, IEM timely moved for reconsideration of the
order dismissing its claims against UCS, arguing that deposition admissions by
UCS’s chief executive officer “show that after termination of its agency, UCS
continued to act as IEM’s agent and accepted service on IEM’s behalf at its office and
then failed to transmit that process.” The district court denied reconsideration,
concluding that “the duties and rules for changing registered agents are already
established by statute and Missouri caselaw and it is clear that the duty to inform third
parties of any changes rests with the principal and not with the former agent.”

        In its reply brief supporting the motion to reconsider, IEM for the first time
asserted claims against UCS for bailment and conversion, but it never moved to
amend its Complaint to add these claims. The court concluded that IEM’s pleadings
fail to state a claim for bailment or conversion, denied the motion for reconsideration,
and entered final judgment granting IEM’s and CT’s stipulation of dismissal with
prejudice and dismissing the claims against UCS. This appeal followed.

                                    II. Discussion.

       In this diversity case, we must apply Missouri law as declared by the Supreme
Court of Missouri and may not disregard decisions of the Missouri Court of Appeals.
See, e.g., Council Tower Ass’n v. Axis Specialty Ins. Co., 630 F.3d 725, 728 (8th
Cir. 2011). Federal pleading standards govern despite our application of state
substantive law. See, e.g., Hamilton v. Palm, 621 F.3d 816, 817-18 (8th Cir. 2010).

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      A. Breach of Fiduciary Duty Claim. To state a claim for breach of fiduciary
duty under Missouri law, IEM must show: (1) a fiduciary relationship existed; (2)
breach; (3) causation; and (4) harm. Robert T. McLean Irrevocable Tr. v. Patrick
Davis, P.C., 283 S.W.3d 786, 792-93 (Mo. App. 2009).

       The relation of an agent to his principal “is universally recognized as being
fiduciary in nature . . . . An agent is a fiduciary with respect to matters within the
scope of his agency.” A.G. Edwards & Sons, Inc. v. Drew, 978 S.W.2d 386, 394
(Mo. App. 1998) (citation omitted). “Once an agency relationship has been
established, a fiduciary relationship arises as a matter of law.” Emerson Elec. Co. v.
Marsh & McLennan Co., 362 S.W.3d 7, 13 n.5 (Mo. 2012) (quotation omitted).
Though agency is a consensual relationship, a statute can give rise to specific, limited
agency duties beyond the four corners of the principal-agent contractual agreement.
See Mid-West Eng’g & Constr. Co. v. Campagna, 397 S.W.2d 616, 628 (Mo. 1965).

      In its Complaint, IEM alleged both a contractual agency relationship, and that
UCS was IEM’s registered agent. Focusing on the former, the district court
concluded that IEM terminated the contractual relationship in December 2007, which
ended the fiduciary as well as the contractual relationship. We agree with the court’s
contractual analysis, but we cannot agree that UCS’s statutory duty as registered
agent ended when IEM terminated the contractual relationship.

       By statute in Missouri, “[t]he registered agent of a foreign corporation . . . is
the corporation’s agent for service of process, notice, or demand required or permitted
by law to be served on the foreign corporation.” Mo. Rev. Stat. § 351.594(1). The
statutes provide that the statutory registered agent may be changed if the foreign
corporation files a change document with the Secretary of State, Mo. Rev. Stat.
§ 351.588, which IEM and CT failed to do; or if the registered agent unilaterally files
a statement of resignation with the Secretary of State, Mo. Rev. Stat. § 351.592(1),
which UCS failed to do. Though the Missouri Court of Appeals decision in Sieg is

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not controlling, we agree with its conclusion that UCS -- the last registered agent on
IEM’s most recent certificate of authority -- remained the registered agent for
receiving service of process because that statutory agency was not revoked in
accordance with the statute. 375 S.W.3d at 154, 157 n.10.

        Absent a broader contractual relationship, a registered agent’s fiduciary duty
is limited to the duty imposed by statute. “The scope of a registered agent’s agency
is to receive and transmit notices and process.” State ex rel. McDonald’s Corp. v.
Midkiff, 226 S.W.3d 119, 125 (Mo. 2007) (quotation omitted).2 As UCS’s status as
IEM’s statutory registered agent had not been revoked when UCS accepted service
of the Sieg summons and petition, UCS was still subject to this limited fiduciary duty.

       IEM’s Complaint alleged that UCS as registered agent had a fiduciary duty to
IEM. The Complaint plausibly pleaded the other elements of a breach of fiduciary
duty claim, alleging that UCS breached its duty by accepting service of the Sieg
summons and petition on IEM’s behalf and failing to provide delivery or notice to
IEM; that UCS’s breach of duty caused IEM harm because, after UCS accepted
service as IEM’s registered agent, the Sieg plaintiffs made no further attempt to serve
IEM; and that IEM was harmed because its lack of actual notice of the Sieg lawsuit
resulted in entry of a $9.7 million default judgment. Accepting as true IEM’s factual
allegations, the Complaint stated a plausible claim for breach of fiduciary duty. See
Preferred Physicians Mut. Mgmt. Group v. Preferred Physicians Mut. Risk, 918
S.W.2d 805, 811 (Mo. App. 1996). Accordingly, Rule 12(b)(6) dismissal of this
claim must be reversed.

      2
       UCS’s website states: “It is the registered agent’s job to forward [service of
process] to the entity at the legal address provided to UCS in a timely, safe and secure
manner so the company has as much time as possible to respond.”

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       B. Breach of Contract and Negligence Claims. The district court also
dismissed claims in IEM’s Complaint for breach of contract and negligence. Despite
appealing the dismissal order, IEM’s lengthy initial brief and reply brief failed to
argue the district court erred in dismissing these claims. Accordingly, IEM waived
its challenge to dismissal of these claims. See Montin v. Moore, 846 F.3d 289, 295
(8th Cir. 2017). We affirm dismissal with prejudice of the breach of contract and
negligence claims.

       C. Bailment and Conversion Claims. In its reply brief in support of the
motion to reconsider, IEM raised new claims for bailment and conversion. These
claims were untimely -- raised on the eve of final judgment years after the district
court dismissed all claims against UCS -- and were not accompanied and supported
by a motion for leave to amend the Complaint. Procedurally, this was no different
than another disfavored practice, a motion to alter or amend a final judgment to assert
arguments or claims that could have been raised earlier. The district court surveyed
IEM’s initial complaint and concluded that it failed to state a claim for bailment or
conversion. IEM argues the facts were there to support these new claims, but the
district court correctly noted that the complaint pleaded no facts to support several
required elements. There was no abuse of the district court’s substantial discretion
in denying the motion to reconsider. See Hagerman v. Yukon Energy Corp., 839 F.2d
407, 414 (8th Cir.), cert. denied, 488 U.S. 820 (1988) (standard of review).

      That part of the district court’s judgment dismissing IEM’s breach of fiduciary
claim is reversed, the judgment in all other respects is affirmed, and the case is
remanded for further proceedings not inconsistent with this opinion.

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BEAM, Circuit Judge, dissenting, in part.

      I would affirm the district court's dismissal of IEM's breach of fiduciary duty
claim because I agree with the district court that no fiduciary duty remained following
IEM's termination of its contractual relationship with UCS in December 2007.

        The court holds that UCS's statutory duty endured, at least in part, because
UCS failed to unilaterally file a statement of resignation under Missouri Revised
Statute § 351.592(1). Accepting that IEM terminated its contractual relationship with
UCS, I discern no affirmative duty under Missouri law for a registered agent to resign
its agency appointment from an already terminated position. Section 351.592 directs
that a registered agent may resign his agency and, if so, how to do so. However, UCS
could not and need not resign from a job it no longer had.

        As the district court noted, the onus was on IEM under Missouri law to change
its registered agent and notify third parties of that change–a task IEM appears to have
(regretfully I'm sure) delegated to CT Corporation. Sherman, Taff & Bangert, P.C.
v. Clark Equip. Co., 133 S.W.3d 125, 127 (Mo. Ct. App. 2004) (discussing that when
an agency ends, the principal has a duty to notify third parties). Thus, at least as a
statutory matter, and as between IEM and UCS, I believe no further affirmative duty
remained on UCS after being discharged. There is simply no plausible statutory basis
for the breach of fiduciary claim, and dismissal under Rule 12(b)(6) was appropriate.

       Because this view appears to run contrary to the court's opinion on this issue,
I respectfully dissent, in part.
                         ______________________________

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