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Wiemer v. Rubino

United States District Court, S.D. Mississippi, Southern Division

January 14, 2019

ROBERT WIEMER, MD PLAINTIFF
v.
DENISE RUBINO and JON DOE 1-5 DEFENDANT

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          LOUIS GUIROLA, JR. UNITED STATES DISTRICT JUDGE.

         THIS CAUSE came before the Court for a hearing on damages to be awarded in favor of Counter-Claimant Denise Rubino and against Counter-Defendant Robert Wiemer. Weimer initiated the case as a "Complaint for Permanent Restraining Order and Other Relief' against Dr. Rubino seeking return of items allegedly taken by Dr. Rubino when their medical practice business relationship disintegrated. Dr. Rubino brought multiple counterclaims. After finding that Wiemer had willfully failed to comply with his discovery obligations, the Court ordered default judgment in favor of Dr. Rubino in regard to her counterclaims against Wiemer as a sanction under Federal Rule of Civil Procedure 37(e)(2). Thereafter, the Court conducted a hearing on damages, at which both parties appeared and testified. After consideration of the pleadings, arguments of counsel, testimony at the hearing, and the relevant law, the Court assesses damages and enters a default judgment in favor of Dr. Rubino and against Dr. Wiemer.

         I. THE LEGAL STANDARD

         "After a default judgment, the plaintiffs well-pleaded factual allegations are taken as true, except regarding damages . . . [and] personal jurisdiction." Jackson v. FIE Corp., 302 F.3d 515, 525 (5th Cir. 2002) (citations omitted). A defendant "may not challenge the sufficiency of the evidence" in the wake of a default judgment. Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 496 (5th Cir. 2015). But while a default judgment conclusively establishes a defendant's liability, such liability exists "only so far as it is supported by well-pleaded allegations." Leedo Cabinetry v. James Sales & Distribution, Inc., 157 F.3d 410, 414 (5th Cir. 1998); Wooten, 788 F.3d at 496. Therefore, the Court must apply the Federal Rule of Civil Procedure 12(b)(6) standard to each claim to determine if there can be liability under that claim. Wooten, 788 F.3d at 500. Under Rule 12(b)(6), the Court must determine whether Henry's Complaint contains "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "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." Id.; see also In re Great Lakes Dredge & Dock Co., 624 F.3d 201, 210 (5th Cir. 2010) ("To be plausible, the complaint's '[f]actual allegations must be enough to raise a right to relief above the speculative level.'") (quoting Twombly, 550 U.S. at 555).

         The Court previously affirmed its subject-matter jurisdiction in the [15] Memorandum Opinion and Order Denying Motion to Remand, and Dr. Wiemer's Mississippi residence gives this Court personal jurisdiction over him. Accordingly, the only remaining question is the damages available for each well-pleaded claim.

         II. FACTS ALLEGED[1]

         In her [49] First Amended Answer, Affirmative Defenses and Counterclaim, Dr. Rubino alleges an elaborate scheme devised by Wiemer to defraud her out of hundreds of thousands of dollars and personal property in order to fund his own personal and professional endeavors.

         In the early 2000s, Dr. Wiemer and Dr. Rubino met and eventually became romantically involved. Throughout their relationship, Dr. Wiemer consistently told Dr. Rubino that they would be married, and, in fact, often called Dr. Rubino his "wife" throughout their relationship.

         On or about November 11, 2009, Dr. Wiemer filed a voluntary petition for Chapter 11 Bankruptcy in the United States Bankruptcy Court for the Eastern District of California (Petition No. 09-44733). During the time of Dr. Wiemer's original Bankruptcy proceeding, Dr. Rubino supported Dr. Wiemer financially in his professional and personal activities based on his continued and consistent promise that all investments would be shared by Dr. Wiemer and Dr. Rubino equally.

         Prior to and during Dr. Wiemer's Bankruptcy proceeding he owned two properties: a parcel located at 4490 North Lake Blvd., Carnelian Bay, CA 96140 ("Tahoe Property") and a parcel located at 4732 Illinois Ave., Fair Oaks, California 95628 ("Fair Oaks Property"). During the time of his Bankruptcy, Dr. Wiemer promised Dr. Rubino that he would put her name on the title of these properties, if she would pay the maintenance, utilities and taxes on them. She paid expenses totaling $17, 009.96.

         In addition to paying the maintenance, utilities and taxes, Dr. Rubino furnished both homes, and stored both clothes and personal property in the Tahoe Property, the Fair Oaks Property and in various places on the Mississippi Gulf Coast. Dr. Wiemer has Dr. Rubino's personal property in his possession and control. Dr. Wiemer has refused to pay for, return, or allow Dr. Rubino to collect her personal personal property. The total value of the personal property for which Dr. Rubino seeks a monetary award is $214, 840.00.

         On or about June of 2012, Dr. Rubino provided $50, 000.00 to Wiemer on his promise that all properties obtained with said monies would be owned equally by Dr. Rubino and Dr. Wiemer. Dr. Wiemer used the $50, 000.00 to pay the Bankruptcy Court for the privilege of keeping in his possession certain personal property. Dr. Wiemer never intended that Dr. Rubino would be an equal owner as to any personal property purchased with the $50, 000.00.

         On or about June 2, 2011, Dr. Wiemer persuaded Dr. Rubino to become one of two initial members of Live Oak Beauvoir, LLC. Dr. Wiemer and Dr. Rubino were equal members, each owning fifty percent of the LLC. Live Oak Beauvoir, LLC was created in order to purchase several parcels of land. Those parcels included Lots 2, 4, and 6 of Lafitte Estates, Lot 28 located at 128 Lafitte Drive, and 305 N. Beach Blvd, Waveland, MS (the "Waveland Properties"). The parcels were purchased through the recently created Live Oak Beauvoir, LLC. Dr. Wiemer informed Dr. Rubino that in order to obtain the Waveland Properties, she would need to make an initial payment of $152, 746.91 to the LLC. Dr. Rubino made this payment from her own separate funds. Dr. Wiemer promised Dr. Rubino that he would make an equal payment of $150, 000.00 in July of 2014 in order to provide his equal share to the LLC.

         In order to obtain the Waveland Properties, Dr. Wiemer and Dr. Rubino each signed a Note in favor of private lenders, Frederick L. and Lavina A. Tomlinson (the "Tomlinson Note"). This was done at the request of Dr. Wiemer. The Tomlinson Note required a balloon payment of $150, 000.00 on July 1, 2014. Dr. Wiemer promised Dr. Rubino that he would make that payment. Dr. Wiemer did not pay the balloon payment of $150, 000.00 on July 1, 2014 and never informed Dr. Rubino that he failed to make the payment. Dr. Wiemer never intended to make the balloon payment required by the Tomlinson Note and hid the fact that he had failed to make such a payment from Dr. Rubino.

         Due to the fact the Dr. Wiemer never informed Dr. Rubino of his failure to make the balloon payment, Dr. Rubino continued to pay the $8, 129.54 monthly payment. Dr. Rubino contributed a total of $ 195, 108.98 in monthly payments. Dr. Rubino learned that despite Dr. Wiemer's assertion that the Waveland Properties had been appraised, no appraisal had ever been completed.

         Dr. Wiemer never intended to make any payments toward the Tomlinson Note, nor did he ever intend to maintain Live Oak Beauvoir, LLC because Dr. Wiemer never intended to share any portion of the business or Waveland properties with Dr. Rubino.

         Dr. Wiemer and Dr. Rubino formed another LLC on or about November 1, 2013 - Georgia Peach Properties, LLC - in which they were equal partners. Dr. Wiemer asked Dr. Rubino to make the initial investment payment to Georgia Peach Properties, LLC in order to obtain certain properties. At this time, Dr. Rubino declined and stated that she would only agree if Dr. Wiemer paid an equal share of the initial investment. Dr. Wiemer agreed to Dr. Rubino's request, but unbeknownst to her, took funds from another jointly and equally owned business in order to provide his portion of the payment rather than take it from his own separate funds as Dr. Rubino had done. Dr. Wiemer purposefully hid the source of his funds in order to make Dr. Rubino believe he was contributing an equal share.

         On or about November 27, 2013, Georgia Peach Properties, LLC acquired a parcel of land located at 138 Lafitte Dr. Waveland, MS 39576 for a total amount of $15, 552.26. On or about February 27, 2014, Georgia Peach Properties, LLC acquired a parcel of land located at 136 Lafitte Dr. Waveland, MS 39576 for a total amount of $12, 545.75.

         As Dr. Wiemer's Bankruptcy was coming to a close, he suggested to Dr. Rubino that they move to Mississippi or Louisiana where they could open their own medical practice. Dr. Wiemer promised that any medical practice would be an equal partnership. Dr. Wiemer never intended for Dr. Rubino to be an equal partner in a medical practice but made such promises so that Dr. Rubino would fund the initial costs and other certain costs of maintaining a medical practice. Dr. Wiemer and Dr. Rubino were to be equal partners in Gulf Coast Live Oak Functional Medicine Institute, LLC and Gulf Functional Medicine Institute, LLC (collectively, the "Medical Practice"). Dr. Rubino made all initial investments to set up the medical practice, including but not limited to attorney's fees, rental payments for leased business space, and the purchase of furniture and medical equipment. Dr. Wiemer over-medicated Dr. Rubino during this time in order to diminish her capacity to question any business dealings.

         Dr. Wiemer promised Dr. Rubino that he would manage the Medical Practice and share with her the profits of such Medical Practice as an equal partner. Dr. Wiemer never intended to share the profits of the Medical Practice. Dr. Wiemer stole and/or misappropriated $1, 026, 317.62 (inclusive of 8% prejudgment interest compounded annually) from the Medical Practice for his own personal use. Dr. Wiemer was not entitled to this money.

         By March of 2015, Dr. Rubino moved back to California in order to care for her own medical issues. Dr. Wiemer promised that he would manage the Medical Practice in her absence and maintain the equal partnership. Dr. Wiemer started a new company without Dr. Rubino in order to maintain the Medical Practice to her exclusion. Dr. Wiemer's new company has all the same patients and employees as the previously shared Medical Practice. Dr. Wiemer has converted all furniture, medical equipment and office supplies previously used by the Medical Practice for use in his new separately owned medical practice. It was always Dr. Wiemer's intention to have his own medical practice separate and apart from Dr. Rubino. Dr. Wiemer knew his promises to maintain the practice as an equal partnership and manage it accordingly were false.

         Throughout 2011, 2012, 2013, 2014 and some of 2015, Dr. Wiemer and Dr. Rubino used jointly earned funds to purchase rare coins, silver, and precious jewelry as investments to share equally. Dr. Wiemer has hidden these items in order to convert them to his own personal property and for his own personal use. Dr. Rubino also purchased a Kubota Tractor and implements for Live Oak Beauvoir, LLC, all of which has been wrongfully retained and converted by Dr. Weimer.

         III. ANALYSIS OF THE ALLEGATIONS

         Fraud

         Rule 9(b) of the Federal Rules of Civil Procedure requires that, in all averments of fraud, the circumstances constituting fraud must be stated with particularity. "Pleading fraud with particularity in this circuit requires time, place and contents of the false representations, as well as the identity of the person making the misrepresentation and what that person obtained thereby." Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997) (citations and quotation marks omitted). The Fifth Circuit "interprets Rule 9(b) strictly, requiring the plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent." Flaherty & Crumrine Preferred Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5th Cir. 2009) (internal quotation marks omitted).

         a. Live Oak Beauvoir LLC

         Dr. Rubino's fraud allegations in regard to the Live Oak Beauvoir LLC are not completely clear. She seems to allege that Dr. Wiemer promised her that after she paid $150, 000 to the LLC in order to purchase properties, he would pay an equal amount to the LLC in July of 2014, also to go toward purchase of the properties. (Am. Counterclaim 21, ECF No. 49.) Meanwhile, joint funds were used to make the $8129.54 monthly payments on a Note signed by both doctors. Dr. Rubino alleges that Dr. Wiemer failed to make his promised $150, 000 contribution in July 2014, which appears to have been earmarked for a balloon payment due on the Note. Dr. Rubino alleges that she discovered that Dr. Wiemer had not made his promised $150, 000 payment only when the Note maker informed her one year later. (Id. at 22.) Dr. Rubino alleges that the properties purchased through the Live Oak LLC have been foreclosed upon and Dr. Wiemer allowed the LLC to be administratively dissolved. She seeks return of her initial $150, 000 investment in the LLC and the value of her half of the funds used to make the monthly payments, a total of $336, 979.42.

         The Court finds these allegations insufficient under Fed.R.Civ.P. 9(b) to state a claim of fraud against Dr. Wiemer in regard to the Live Oak Beauvoir LLC. Time and place allegations are missing, as is any allegation of what Dr. Wiemer obtained by making the alleged false representations. The properties and the LLC have been lost to Dr. Wiemer just as they have been to Dr. Rubino. Accordingly, this claim of fraud fails.

         b. Georgia Peach Properties, LLC

         Dr. Rubino's fraud allegations in regard to the Georgia Peach LLC are that when the LLC was formed, Dr. Wiemer promised to pay an equal share of the initial investment. Dr. Rubino alleges that Dr. Wiemer did not contribute an equal share because he used funds from a business he jointly owned with Dr. Rubino. Dr. Rubino alleges that she therefore has a seventy-five percent interest in the two properties purchased by the LLC, with a monetary value of $21, 073.51. (Am. Counterclaim 24, ECF No. 49.) Dr. Rubino further alleges that at some point Dr. Wiemer titled the two properties in his own name only, and allowed Georgia Peach LLC to be administratively dissolved. Dr. Rubino seeks an award of sole ownership of the properties. The Court finds these allegations insufficient under Fed.R.Civ.P. 9(b) to state a claim of fraud against Dr. Wiemer in regard to the Georgia Peach LLC, because they fail to establish when or where Dr. Wiemer made his alleged false promise. This fraud claim also fails.

         Conversion

         "Conversion requires an intent to exercise dominion or control over goods which is inconsistent with the true owner's right." Walker v. Brown, 501 So.2d 358, 361 (Miss. 1987). "Ownership of the property is an essential element of a claim for conversion." Wilson v. Gen. Motors Acceptance Corp., 883 So.2d 56, 68 (Miss. 2004). Conversion applies only to personal property, not real property. Hopson v. Specialized Loan Servicing, LLC, No. 3:17cv832-DPJ-FKB, 2018 WL 2449180, *5 (S.D.Miss. May 29, 2018).

         Normally, a claim of conversion cannot be brought to recover money. A cause of action exists for conversion of money only when money is earmarked or otherwise identifiable, such as enclosed in a container like a bag or chest. Hensley v. Poole, 910 So.2d 96, 101 (Ala. 2005); Blades v. Countrywide Home Loans, Inc., No. I:06cvl000-LG-JMR, 2007 WL 2746678, at *4 (S.D.Miss. Sep. 18, 2007). Dr. Rubino specifies physical property that she alleges she owns but Wiemer is exerting dominion over, such as furniture, household items, and medical practice items. She therefore adequately alleges a conversion claim.

         Breach of ...


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