Wittstadts Motion to Dismiss

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

DUSTIN JOHNSON, )

)

Plaintiff, )

)

v. ) CIVIL ACTION FILE

) NO. 1:14-CV-03457-SCJ

MORRIS SCHNEIDER )

WITTSTADT, LLC f/k/a MORRIS )

HARDWICK SCHNEIDER, LLC; )

MSLAW, INC. f/k/a MHSLAW, INC.; )

NATHAN HARDWICK IV, ESQ.; )

MARK WITTSTADT, ESQ.; )

GERARD WM. WITTSTADT JR., ESQ., )

)

Defendants. )

)

THE WITTSTADT DEFENDANTS MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS

Like many others, Dustin Johnson misplaced trust in Nat Hardwick, his

close friend. But that doesnt forgive the knowingly false conclusions Johnson

throws at Morris Schneider Wittstadt, LLC, MSWLaw, Inc. (improperly named

MSLaw, Inc.), Mark Wittstadt and Gerard Wm. (Rod) Wittstadt, Jr. (collectively

the Wittstadt Defendants) in this lawsuit. Because they lack any factual support

and are contrary to controlling law, the Court should dismiss with prejudice

Johnsons shotgun claims leveled at the Wittstadt Defendants.

Case 1:14-cv-03457-SCJ Document 9-1 Filed 11/03/14 Page 1 of 27

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I. FACTUAL BACKGROUND1

Stripped of rhetoric and speculation, Johnsons allegations boil down to this:

Hardwick told Johnson that if he entered into a promissory note and guaranty with

the Wittstadt Defendants, Johnson would earn $1 million on a $3 million loan.

(R.8, 3439.)2 Absent any communication with the Wittstadt Defendants, and

without ever executing, or even seeing, a written note or guaranty purporting to

obligate any of the Wittstadt Defendants, Johnson wired $3 million to an account

identified by Hardwick. (R.8, 3441, 5761.) Johnson learned that Hardwick

was accused of embezzling $30 million from the Wittstadt Defendants, but

Hardwick denied wrongdoing.3 (R.8, 6266.) Johnson never alerted the

Wittstadt Defendants to the supposed loan until his lawyer sent an October 14,

1 On this motion, the Court should accept the truth of facts alleged in the

Complaint but should not accept conclusory allegations, opinions, and legal

conclusions. See United Techs. Corp. v. Mazer, 556 F.3d 1260, 1269 (11th Cir.

2009); South Fla. Water Mgmt. Dist. v. Montalvo, 84 F.3d 402, 408 n.10 (11th Cir.

1996). After excising speculation, unsupported conclusions, and innuendo, not

much remains, and the Wittstadt Defendants do not admit that any of it is true.

2 Hardwick made assorted other representations regarding other investors and

the status of alleged loan documents; none were made by the Wittstadt Defendants.

(R.8, 4044.) 3 Likewise, when confronted by the Wittstadts, Hardwick denied wrongdoing

and said he would put money back into the firm to replace funds he had received

in error. Hardwick maintained, in writing and orally, that the funds were his moneyfrom his personal accounts or personally borrowed by him.


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2014 letter demanding $4 million. (R.8, 70, 72.) Shortly thereafter, Johnson

filed this suit.

Most of the remaining pleaded facts add flavor, but little else. Morris

Schneider Wittstadt (MSW) is a real estate law firm. (R.8, 3.) MSWLaw, Inc.

is the parent company of MSW. (Id., 2, 38.) Lawyers Mark and Rod Wittstadt

own and manage MSW. (Id., 21, 26.) Before being accused of embezzlement,

Hardwick was a member of MSWs and MSWLaws predecessors. (Id., 16, 31.)

Johnson is, or was, a professional golfer.4 (Id., p. 2.)

Johnson and Hardwick were very, very close. Hardwick played a

particularly unique and significant role of trust and confidence, serving as one of

Mr. Johnsons primary advisors on all matters relating to his career as a

professional golfer, as well as an officer in Mr. Johnsons professional

corporation. (Id.) Johnson says he relied to his detriment on Hardwicks

misrepresentations. (Id., 47, 48, 49, 57, 66, 67.)

Everything else asserted by Johnson consists either of patently false and

irrelevant facts, or completely unsupported, inactionable, conclusory statements.

4 Apparently his status is in doubt, as Johnson has taken an indefinite leave of

absence from the PGA Tour amid allegations of substance abuse. Hank Gola,

Report: Golf star Dustin Johnson hit with six-month ban from PGA Tour after

testing positive for cocaine, N.Y. DAILY NEWS (August 2, 2014).


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Examples of the former are false statements regarding the Wittstadt Defendants

response to Johnsons pre-suit $4 million demand.5 (Id., 7678.) Examples of

the latter are much too numerous and pervasive to recount here. In sum, while long

on hyperbole and inflammatory accusation, the Complaint is bereft of any facts

showing the Wittstadt Defendants to be any more than victims of Hardwicks

alleged misconduct.

II. ARGUMENT AND CITATION OF AUTHORITY

While Dustin Johnsons complaint against the Wittstadt Defendants may be

a tribute to creative fiction, it is a travesty to legal pleading. Purposely abusing the

Federal Court system to falsely accuse good, ethical lawyers of crimes and lies

should be severely punished, but today is not the day for that. Instead, the Wittstadt

Defendants show the Court that shotgun pleading to paint a patently false picture is

not condoned. Throwing libelous accusations against the wall to see if they stick

does not meet any acceptable pleading standard. And, spitting out terms like

racketeering and wire fraud with no legal or factual foundation cannot save a

meritless suit.

5 One must surmise that such falsehoods were included to attempt to purposely

malign the Wittstadt Defendants and discourage them from defending this suit.


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A. Johnsons Complaint Fails All Applicable Pleading Standards.

The Court should dismiss the Complaint because it is a shotgun pleading and

fails to state a claim under Federal Rules 8(a)(2) and 9(b).

1. Johnsons Complaint is an impermissible shotgun pleading.

Johnsons shotgun pleading has no place in this Court. See Paylor v.

Hartford Fire Ins. Co., 748 F.3d 1117, 1126 (11th Cir. 2014) (A defendant served

with a shotgun complaint should move the district court to dismiss the complaint

pursuant to Rule 12(b)(6)). The Eleventh Circuit has condemned shotgun

pleadings upwards of fifty times. Davis v. Coca-Cola Bottling Co., 516 F.3d

955, 979 n.54 (11th Cir. 2008); see also Paylor, 748 F.3d at 1125 n.3 (collecting

23 published cases in which [a]ll of the judges of this court, active and senior,

have either authored or concurred in an opinion condemning shotgun pleadings.).

Shotgun pleadings are those which: (1) fail to specify the facts relevant to

each claim, (2) assert claims against a number of defendants without specification,

and (3) contain a plethora of baseless causes of action. See Hon. Emmett Ripley

Cox, Thirty-Two Years on the Federal Bench, 99 FLA. L. REV. 1685, 169192

(2014). Johnsons Complaint fits this definition like a glove. First, each count

incorporates not only the Factual Allegations, but also the allegations of

Parties, Jurisdiction, and Venue. (See, e.g., R.8, 79.) Together, that makes


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78 allegations incorporated for each count (for a complaint with a total of 1,326

incorporated allegations and 1,541 total allegations). Second, the Complaint makes

no distinction among the [many] defendants charged, though geographic and

temporal realities make plain that all of these defendants could not have

participated in every act complained of. Magluta v. Samples, 256 F.3d 1282, 1284

(11th Cir. 2001). Johnson uses the generic term Defendants no fewer than 87

times. Third, Johnson includes 17 wholly baseless counts.

Plaintiffs file shotgun complaints and include frivolous claims to extort the

settlement of a meritorious claim; worse yet, they file shotgun complaints to extort

the settlement of unmeritorious claims. Davis, 516 F.3d at 982 (quotation

omitted). The result is a massive waste of judicial and private resources;

moreover, the litigants suffer, and society loses confidence in the courts ability to

administer justice. Johnson Enters. of Jacksonville, Inc. v. FPL Group, Inc., 162

F.3d 1290, 1333 (11th Cir. 1998) (quotation omitted). This Court should recognize

Johnsons shotgun Complaint for what it isan unmeritorious fiction designed to

extort a settlementand dismiss it with prejudice.6

6 [A] defendant faced with a [shotgun] complaint . . . is not expected to frame

a responsive pleading. Anderson v. Dist. Bd. of Trustees of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996). Instead, [a] defendant served with a shotgun complaint should move the district court to dismiss the complaint pursuant to Rule


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2. Johnsons Complaint fails under Rule 12(b)(6).

Given that the Wittstadt Defendants had no contact with Johnson, it is not

surprising that he failed to plead a single actionable claim. Johnson has not, and

cannot, set forth enough factual matter (taken as true) to suggest [each] required

element. See Watts v. Fla. Intl Univ., 495 F.3d 1289, 1295 (11th Cir. 2007)

(quotation omitted). The Supreme Court condemned Johnsons technique when it

held that pleading requires more than labels and conclusions, and a formulaic

recitation of the elements of a cause of action will not do. Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007).7

Johnson teed up claims resting entirely on labels and conclusions. Beginning

in Count 1, Johnson concludes [a]ll Defendants participated in the aforementioned

activities as part of a joint enterprise to engage in racketeering against their

targets. (R.8, 84.) But this is no more than a paraphrase of a required RICO

element. See U.S. v. Browne, 505 F.3d 1229, 1257 (11th Cir. 2007) ([T]he

12(b)(6). Paylor, 748 F.3d at 1126. Or, the court, acting sua sponte should [strike] the plaintiffs complaint. Anderson, 77 F.3d at 367 n.5.

7 [A] complaint must contain 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) (quotation omitted). The plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Rule 8 . . . does not unlock the doors of discovery for a plaintiff armed with nothing more than

conclusions. Id. at 67879.


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defendants participated . . . in the conduct of the enterprise . . . through a pattern of

racketeering activity.). This pattern of formulaic recitations continues for all 17

counts and dooms each of them from the start. Twombly, 550 U.S. at 555, 570.

3. Johnson Does Not Come Close to Satisfying Rule 9(b).

Johnson premises his Complaint on the far-fetched notion that the Wittstadt

Defendants conspired with the man accused of defrauding them out of $30 million

to defraud Johnson out of $3 million. Rule 9(b) nips this hypothesis at the bud.

Rule 9(b) requires that [i]n alleging fraud or mistake, a party must state

with particularity the circumstances constituting fraud or mistake. Fed. R. Civ. P.

9(b). Such particularity is required to ensure that defendants have fair notice of

the precise misconduct with which they are charged and to safeguard defendants

against spurious charges of immoral and fraudulent behavior. Wagner v. First

Horizon Pharm. Corp., 464 F.3d 1273, 1277 (11th Cir. 2006) (quotation omitted).

To satisfy Rule 9(b), a plaintiff must allege:

(1) precisely what statements were made in what documents or oral

representations or what omissions were made, and (2) the time and

place of each such statement and the person responsible for making

(or, in the case of omissions, not making) same, and (3) the content of


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such statements and the manner in which they misled the plaintiff, and

(4) what the defendants obtained as a consequence of the fraud.

Ziemba v. Cascade Intl, Inc., 256 F.3d 1194, 1202 (11th Cir. 2001) (quotation

omitted). In short, Johnson must set forth the who, what, when, where, and how

of the Wittstadt Defendants allegedly fraudulent behavior. Belmont Holdings

Corp. v. SunTrust Banks, Inc., 896 F. Supp. 2d 1210, 1219 n.9 (N.D. Ga. 2012).

Instead, Johnson simply concludes, Hardwick made representations,

identified above and fully incorporated herein, to Johnson which Hardwick knew

were false. (R.8, *91.)8 This is the exact opposite of pleading precisely what

statements were made and wholly fails to satisfy either the Twombly standard or

the Ziemba requirements. Ziemba, 256 F.3d at 1202.

B. Hardwicks Conduct Cannot Be Imputed to the Wittstadt Defendants.

Johnsons Complaint posits that, while the Wittstadt Defendants did nothing

wrong themselves, they are responsible for Hardwicks illegal acts. To support his

hypothesis, Johnson regurgitates boilerplate, conclusory legaleseHardwick

acted as a duly authorized agent of [defendant] as the principal, with such

principal legally bound for the care and loyalty of Hardwick in its business and

8 On page 35 of the Complaint, paragraph numbers jump from 138 back to

83. The repetitive numbers are identified by using the label *#.


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bound for the neglect and fraud of Hardwick in the transaction of such business.

(See, e.g., R.8, 10.) But reciting legal-sounding magic words does not make an

action viable, and this gambit fails as a matter of settled Georgia law.

When an alleged agents acts in fraudulently inducing the [plaintiff] to

invest money in a nonexistent fund which he falsely represented to be [the

defendants] fund were personal acts for his own benefit . . . there is no basis for

concluding that [the defendant] was vicariously liable . . . for [the alleged agents]

tortious conduct or for any contractual obligation. Hobbs v. Principal Fin Grp.,

Inc., 230 Ga. App. 410, 411 (1998). [W]here the tortious conduct of the employee

is personal to himself because it springs from purely personal motives, the

employee is deemed to have departed from the scope of his employment and the

master is not liable. Id. (quotation omitted); see also Witcher v. JSD Props., LLC,

286 Ga. 717, 719 (2010) ([W]hen the agent departs from the scope of the agency,

and begins to act for himself and not for the principal; when his private interest is

allowed to outweigh his duty as a representative; when to communicate the

information would prevent the accomplishment of his fraudulent scheme, he

becomes an opposite party, not an agent [. . . and] the law does not impute to the

principal notice of such fraud); Keenan v. Hill, 190 Ga. App. 108, 111 (1989)

(when an agent departs from the scope of his duties and acts in such a way that his


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private interest outweighs his obligation as a corporate representative, the law will

not impute his knowledge to the corporation.).

Hardwick, accused of embezzling millions from MSW, was the source of

every alleged communication regarding the supposed loan investment. (R.8, 34

39, 6266.) When Johnson finally decided to communicate with the Wittstadt

Defendants after he alleges the loan was made he learned that Hardwicks

alleged representations were false, and that he had no loan agreement. (R.8, 70

73, 75.) Georgia law prohibits Johnsons ex post facto attempt to impute

Hardwicks alleged illegal actions to the Wittstadt Defendants.

C. Counts 14 Fail to State a Valid Civil RICO Claim.

Johnsons woefully inadequate RICO allegations fail for both general and

specific reasons. As noted above and required by Rule 8(a)(2), allegations must

contain more than labels and conclusions, and a formulaic recitation of the

elements of a cause of action will not do. Twombly, 550 U.S. at 555. RICO

allegations must comply not only with the plausibility criteria articulated in

Twombly and Iqbal, but also with Fed. R. Civ. R. 9(b)s heightened pleading

standard.9 Am. Dental Assn v. Cigna Corp., 605 F.3d 1283, 1291 (11th Cir.

9 To satisfy the Rule 9(b) standard, RICO complaints must allege: (1) the

precise statements, documents, or misrepresentations made; (2) the time and place


12

2010). At the outset, Counts 14 must be dismissed because they fail to meet these

generally required pleading standards.

Specifically, to state a Federal RICO claim (Count 1), Johnson was required

to allege: (1) that an enterprise existed; (2) that the enterprise affected interstate

commerce; (3) that the defendants were employed by or associated with the

enterprise; (4) that the defendants participated, either directly or indirectly, in the

conduct of the enterprise; and (5) that the defendants participated through a pattern

of racketeering activity. Browne, 505 F.3d at 1257. To state a Georgia RICO

claim (Count 3) Johnson must allege that a person, [acted] through a pattern of

racketeering activity or proceeds derived therefrom, to acquire or maintain, directly

or indirectly, any interest in or control of any enterprise, real property, or personal

property of any nature, including money. O.C.G.A. 16-14-4(a).

To allege a pattern of racketeering under both Federal and Georgia RICO,

Johnson had to plausibly allege (1) two racketeering predicates, (2) that are related,

and (3) continuous. See Am. Dental, 605 F.3d at 129091; Adkins v. Cagle Foods

JV, LLC, 411 F.3d 1320, 1325 (11th Cir. 2005). Predicate acts extending over a

of and person responsible for the statement; (3) the content and manner in which

the statements misled the Plaintiffs; and (4) what the Defendants gained by the

alleged fraud. Ambrosia Coal & Constr. Co. v. Pages Morales, 482 F.3d 1309, 131617 (11th Cir. 2007).


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few weeks or months and threatening no future criminal conduct do not suffice.

Browne, 505 F.3d at 1259 (quotation omitted).

To survive a motion to dismiss, RICO conspiracy claims (Counts 2, 4)

require, inter alia, plausible allegations of a RICO violation. [I]f the underlying

allegations of RICO violations are not viable, a conspiracy claim based on those

violations must also fail. Fuller v. Home Depot Servs., LLC, 512 F. Supp. 2d

1289, 1295 (N.D. Ga. 2007).

Johnsons allegations as to each RICO element are non-existent or fail to

state a claim. They are uniformly conclusory and fail for that reason alone. See Am.

Dental, 605 F.3d at 129192 (Plaintiffs do not point to a single specific

misrepresentation . . . it follows that the complaint has not alleged a right to relief

that is plausible on its face.). While Johnson blindly concludes that RICO

violations exist, he fails to plausibly and factually allege the supposed enterprise,

that the enterprise had an effect on interstate commerce, that the Wittstadt

Defendants were employed by or associated with the enterprise, that any predicate

acts were committed, that each Wittstadt Defendant participated in the conduct of

the enterprise, or that the Wittstadt Defendants engaged in a pattern of racketeering

activity. See generally R.8, 79114.


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Counts 14 fail for three other reasons. First, the Eleventh Circuit requires

dismissal of RICO claims when plaintiffs have lumped together all of the

defendants in their allegations of fraud. Ambrosia Coal, 482 F.3d at 1317.

Johnson never once allege[s] facts with respect to each defendants participation,

Am. Dental, 605 F.3d at 1291, but instead solely refers to all Defendants

collectively. (R.8, 8284, 9193, 10002, 10911.) Second, the plaintiff has

not pleaded sufficiently the existence of an enterprise that is separate and distinct

from the person under the statute. Therefore, the Plaintiffs [RICO claim] must

fail. Fuller, 512 F. Supp. 2d at 1295. Third, because the underlying allegations of

RICO violations are not viable, a conspiracy claim based on those violations must

also fail. Id. at 1295.

D. Count 5 is Frivolous, at Best.

A party cannot directly recover civil damages under the federal mail or

wire fraud statutes because [t]he federal mail and wire fraud statutes do not, in

and of themselves, create a private right of action. Am. Gen. Life & Accident Ins.

Co. v. Ward, 509 F. Supp. 2d 1324, 1334 (N.D. Ga. 2007) (citing Napper v.

Anderson, Henley, Shields, Bradford & Pritchard, 500 F.2d 634, 636 (5th Cir.

1974)); see also id. at 1330 (Under Georgia law, the violation of a criminal statute

does not automatically give rise to a civil cause of action.) (quoting Oswald v.


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Am. Natl Can Co., 194 Ga. App. 882, 883 (1990)). Moreover, the only allegation

here, that MSW received a wire initiated by Johnson, is not wire fraud.

Respecting the Courts limited time, we say no more; the claim must be dismissed.

E. Counts 68 Fail to State a Breach of Contract Claim. No Written Contract Exists and the Statute of Frauds Precludes the Oral Contract

Claim.

First, no written contract exists between Johnson and the Wittstadt

Defendants.10

To assert otherwise, is a fraud on the Court. (R.8, 126, 132.)

A party who cannot point to any contractual provision that [the defendant]

breached . . . cannot state a claim for breach of contract . . . . Am. Casual Dining,

L.P. v. Moes Sw. Grill, LLC, 426 F. Supp. 2d 1356, 1369 (N.D. Ga. 2006).

Johnson can point to no breached contract provision because no contract exists.

His written contract counts (67) are spurious and his oral contracts fail for lack of

contract, lack of agency and under the statute of frauds. See O.C.G.A. 13-5-

30(2), (7) (Georgias statute of frauds); see also Hathaway v. Bishop, 214 Ga. App.

870, 873 (1994) ([O]ral guarantees are unenforceable under the statute of

frauds.)

10 Plaintiff has attached no loan agreement or guaranty between him and the

Wittstadt Defendants because none exists. Just as this Court could consider such

documents on a Rule 12(b)(6) motion if they did exist, Brooks v. Blue Cross &

Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997), it should consider

that no such documents exist here.


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Under the Georgia statute of frauds both (1) a promise to answer for the

debt, default, or miscarriage of another and (2) any commitment to lend money

must be in a signed writing to be binding on the promisor. O.C.G.A. 13-5-30(2),

(7); see also Hathaway, 214 Ga. App. at 873 ([O]ral guarantees are unenforceable

under the statute of frauds.). Johnsons conjectured oral guaranty and oral loan are

therefore barred as a matter of law.

Moreover, by law, Hardwick could not act as the Wittstadt Defendants

agent because an agent may not bind a principal on a promissory note made for the

agents own benefit. Ozburn v. Morris & Co., 22 Ga. App. 325, 325 (1918).

Equally important, agency to sign a promissory note must be conferred in express

terms. Exch. Bank v. Thrower, 118 Ga. 433, 433 (1903). Whoever lends to one

claiming the right to make or indorse negotiable paper in the name of another does

so in the face of all the danger signals of business . . . if the lender parts with his

money, he does so at his own peril. If the power was not in fact conferred, he must

bear the loss occasioned by his own folly . . . So strict is the rule that it will not be

presumed even from an appointment of one as general agent . . . [.] Id.


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F. Count 9 Fails to State Actionable Fraud.

Johnsons fraud claim11 fails for three independent reasons: (1) he makes no

well-pleaded allegations that the Wittstadt Defendants (as opposed to Hardwick)

are liable for fraud; (2) he fails to plead with the particularity required by Rule

9(b); and (3) the alleged fraud consists only of broken promises.

Unable to point to a single interaction between him and any of the Wittstadt

Defendants, Johnson simply concludes that Hardwick acted on his own behalf,

and on behalf of [the Wittstadt Defendants], as a duly authorized agent and

employee, with their full knowledge, actual or constructive, and their full

authorization, express or implied. (R.8, *92, *101.) Conclusory statements bear

no weight. Iqbal, 556 U.S. at 679. And, Hardwick could not be acting as the agent

of any party to the alleged loan agreement because, if Johnsons allegations are to

be believed, Hardwick was defrauding all parties. See Pursley v. Stahley, 122 Ga.

11Actionable fraud requires: (1) a false representation by a defendant of a

material fact; (2) scienter, or knowledge of the falsity by the defendant; (3) an

intention to induce the plaintiff to act or refrain from acting; (4) justifiable reliance

by the plaintiff; and (5) damage to the plaintiff. Stiefel v. Schick, 260 Ga. 638, 639

(1990); Brown v. Morton, 274 Ga. App. 208, 210 (2005); Intl Indem. Co. v. Terrell, 178 Ga. App. 570, 574 (1986). Because the Complaint lacks plausible,

non-conclusory allegations supporting any of these five elements, Johnsons fraud claim is not actionable as a matter of law.


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362, 362 (1905) (attorney who fraudulently drafted note to increase his own profit

could not be agent of either party).

Second, and as set forth in Section II.A.3 above, Johnson fails to plead with

particularity. Johnsons allegation, Hardwick made representations, identified

above and fully incorporated herein is a hornbook Rule 9(b) violation. (R.8,

*91.)

Third, an allegation of fraud based on broken promises is not actionable.

The general rule is that actionable fraud cannot be predicated upon promises to

perform some act in the future. Nor does actionable fraud result from a mere

failure to perform promises made. Otherwise any breach of a contract would

amount to fraud. Equifax, Inc. v. 1600 Peachtree, LLC, 268 Ga. App. 186, 195

(2004) (quotation omitted). Hardwicks alleged promise to repay Johnson $4

million cannot equate to fraud against the Wittstadt Defendants under Georgia law.

G. Count 10, Alleged Breach of Fiduciary Duty, Fails for Two Reasons.

Johnson fails to state a claim for breach of fiduciary duty12

for two

independent reasons: (1) he makes no well-pleaded allegation for a fiduciary duty

12 Establishing a claim for breach of fiduciary duty requires proof of three

elements: (1) the existence of a fiduciary duty; (2) breach of that duty; and (3)

damage proximately caused by the breach. SunTrust Bank v. Merritt, 272 Ga. App. 485, 489 (2005) (quotation omitted).


19

between himself and the Wittstadts; and (2) he does not plead with particularity.

Par for Johnsons pleading course, he again rests entirely on a meaningless

conclusion: All defendants, and each of them, owed Johnson a fiduciary duty.

(R.8, *104.) This conclusion has no effect. Iqbal, 556 U.S. at 679. The Wittstadt

Defendants had no communications with Johnson regarding the supposed loan,

had no knowledge of the alleged loan, were not present for any of the alleged

communications between Johnson and Hardwick, and neither Wittstadt had an

attorney-client relationship with Johnson at any time.13

Contrary conclusory

statements mean nothing without plausible factual allegations to support them.

Second, and as set forth in Section II.A.3 above, Johnson fails to plead the

allegedly fraudulent breach with the particularity required by Rule 9(b). See

Wagner, 464 F.3d at 1278 (fraud allegations in a non-fraud claim must satisfy Rule

9(b)).

H. Counts 11-12 Fail to State Claims for Negligence or Negligence Per Se.

Count 11 is frivolous. Negligence per se requires violation of a statute or

ordinance, not alleged violations of professional rules. See Amick v. BM & KM,

Inc., 275 F. Supp. 2d 1378, 1382 (N.D. Ga. 2003) (outlining elements of

13 Johnson has no relationship whatsoever with the Wittstadts. None. He has

never met or spoken to Rod and has had no more than a single, brief, social

introduction to Mark.


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negligence per se claim under Georgia law). An allegation that an attorney has

failed to comply with the Georgia Rules of Professional Conduct does not

constitute negligence per se. Allen v. Lekoff, Duncan, Grimes & Dermer, P.C., 265

Ga. 374, 377 (1995).

In addition, Johnsons ordinary negligence14 theory fails to state a claim for

four reasons: (1) the underlying fraud is not pleaded with particularity; (2) the

Wittstadt Defendants owed no duty as a matter of law; (3) Johnsons breach

conclusions are inactionable; and (4) Georgias economic loss doctrine bars a

negligence claim.

First, negligence premised on an underlying fraud must be pleaded with

particularity. See Wagner, 464 F.3d at 1278. Otherwise, Johnson could make an

end-run around Rule 9(b). See id. Once again, Johnsons generic references to

Hardwicks alleged fraud, concealment, and false representations are insufficient.

Second, the Wittstadt Defendants have no duty to protect Johnson from

Hardwick, a third party, as a matter of law. As held by the Georgia Supreme Court,

14 To state a cause of action for negligence in Georgia . . . there must be (1)

a legal duty to conform to a standard of conduct raised by the law for the

protection of others against unreasonable risks of harm; (2) a breach of this

standard; (3) a legally attributable causal connection between the conduct and the

resulting injury; and (4) some loss or damage flowing to the plaintiff's legally

protected interest as a result of the alleged breach of the legal duty. City of Douglasville v. Queen, 270 Ga. 770, 771 (1999).


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one owes no duty to protect another from injuries inflicted by a third party. May

v. State, 295 Ga. 388, 398 (2014).

Third, Johnson only presents inactionable conclusions to the effect that the

Wittstadt Defendants allow[ed] Hardwick to make false representations and did

not take reasonable steps to prevent Hardwick from acting in such a manner with

no factual support. (R.8, *120.) To be sure, were there anything that could have

been done to stop Hardwick, the Wittstadt Defendants undeniably would have

acted to prevent their own loss of tens of millions of dollars.

Fourth, a party who suffers purely economic losses must seek his remedy in

contract and not in tort. Gen. Elec. Co. v. Lowes Home Ctrs., Inc., 279 Ga. 77, 78

(2005). Here, Johnson attempts to do both. But, Johnsons alleged economic loss

bars recovery under his negligence theories.

I. Count 13 Fails to State a Claim for Money Had and Received.

Claims for unjust enrichment and money had and received are not separate

causes of action. An action for money had and received is merely one form of

action to recover damages based on unjust enrichment. National City Bank v.

Busbin, 175 Ga. App. 103, 107 (1985). In addition to failing as a shotgun claim,

Johnsons purported claim for money had and received/unjust enrichment fails for


22

two additional reasons: (1) he alleges that only one Wittstadt Defendant received

money; and (2) this claim is only viable when there is no alleged contract.

Because the Complaint does not allege that any defendant other than MSW

received any money, it is improper as to all other Wittstadt Defendants for this

reason alone. (R.8, *124, *127.) See Haugabook v. Crisler, 297 Ga. App. 428,

432 (2009) (In order to maintain an action for money had and received it is

necessary to establish that defendants have received money belonging to the

plaintiff or to which he is in equity and good conscience entitled.) (quotation

omitted).

Equally important, Count 13 fails against all Wittstadt Defendants because

Johnson alleges the existence of a contract. Under Georgia law, [t]he theory of

unjust enrichment applies when there is no legal contract[.] Bolinger v. First

Multiple Listing Serv., Inc., 838 F. Supp. 2d 1340, 1366 (N.D. Ga. 2012) (quoting

Smith Serv. Oil Co. v. Parker, 250 Ga. App. 270, 271 (2001)). Count 13 expressly

incorporates, as if set forth herein, allegations of a valid promissory note and

guaranty. (R.8, *123 (incorporating 6874 alleging the existence of a

contract).) Even though Johnson is wrong in his misplaced contract allegations, an

unjust enrichment/money had and received claim cannot stand when, like here, a

complaint inconsistently alleges the existence of a contract and unjust enrichment


23

in the same count. See Am. Casual Dining, 426 F. Supp. 2d at 1372 (dismissing

claim incorporating inconsistent allegation of a valid contract).

J. Count 14 Fails to State a Conversion Claim.

Johnsons conversion count fails for three independent reasons: (1) he does

not allege that any defendant but MSW has actual possession of any money; (2)

conversion is not the appropriate claim for failure to pay money allegedly owed;

and (3) he admits he had no right to the funds at the time of the alleged conversion.

First, actual possession is a necessary element for a conversion claim.

Washington v. Harrison, 299 Ga. App. 335, 338 (2009). Count 14 must be

dismissed as to all defendants but MSW because Johnson does not allege that any

defendant but MSW has actual possession of any property. (R.8, *124, *127.)

Second, under Georgia law, conversion is not a viable claim where there is

nothing more than a failure by the defendant to pay money owed to the plaintiff.

Internal Med. Alliance, LLC v. Budell, 290 Ga. App. 231, 239 (2008). Here, the

conversion allegation merely alleges that MSW owes Johnson $3 million.

Allowing Plaintiffs conversion claim to proceed would directly contradict

Budells clear statement of black letter Georgia law.

Third, Count 14 must be dismissed because Johnson admits that he

voluntarily relinquished control over his funds at Hardwicks request. (R.8, 59


24

60, *131). In Georgia, to maintain an action to recover for the conversion of

personalty, a plaintiff must establish . . . that either he or his predecessor in interest

had possession or an immediate right to possession of the converted property at the

time of the alleged conversion. Levenson v. Word, 286 Ga. 114, 11516 (2009)

(internal citation omitted). By Johnsons own admission, he had no right to

possession of the funds until months after he wired them and asserted the alleged

acceleration clause. (R.8, 6970.)

K. Count 15 Fails to State a Claim for Equitable Relief.

Johnson seeks equitable relief in the form of rescission or constructive trust.

(R.8, *147, *149.) Neither is available to him.

It is axiomatic that before Johnson can rescind a contract, he must have an

enforceable contract. As shown in Section II.E. above, Johnson has no contract. He

cant produce a written contract and, by law, has no oral contract. As such, to the

extent an equitable rescission count is asserted, it must be dismissed.

In Georgia, a constructive trust is a remedy created by a court in equity to

prevent unjust enrichment . . . it is not an independent cause of action . . . but a

device by which property might be recovered if [the Plaintiffs] unjust enrichment

claim were to prevail. St. Paul Mercury Ins. Co. v. Meeks, 270 Ga. 136, 137

(1998). Stating a wished-for remedy does not equate to stating a claim.


25

L. Counts 1617 Allege Remedies, Not Causes of Action.

Both attorneys fees and punitive damages are remedies, not causes of

action. And, as already discussed above, these remedies are not available to

Johnson because he cannot state a substantive claim for relief.

III. CONCLUSION

Johnsons conclusory and inflammatory assertions do not state a claim

against the Wittstadt Defendants. Simply put, what Johnson theorizes, did not

happen. No amount of re-pleading can revive Johnsons baseless claims. The Court

should dismiss with prejudice Johnsons Complaint as to the Wittstadt Defendants.

Respectfully submitted this 3rd day of November, 2014.

PARKER HUDSON RAINER & DOBBS LLP

/s/ William J. Holley, II

William J. Holley, II

Georgia Bar No. 362310

[email protected]

Scott E. Zweigel

Georgia Bar No. 786616

[email protected]

1500 Marquis Two Tower

285 Peachtree Center Avenue NE

Atlanta, Georgia 30303

Telephone: (404) 523-5300

Facsimile: (404) 522-8409

Attorneys for the Wittstadt Defendants


CERTIFICATE OF COMPLIANCE

In compliance with Local Rule 7.1D, I certify that the foregoing

WITTSTADT DEFENDANTS MEMORANDUM OF LAW IN SUPPORT OF

MOTION TO DISMISS has been prepared in conformity with Local Rule 5.1.

The foregoing memorandum was prepared with Times New Roman (14 point)

type, with a top margin of one and one-half (1 ) inches and a left margin of one

(1) inch. This memorandum is proportionately spaced, and is no longer than 25

pages.




CERTIFICATE OF SERVICE

I hereby certify that I have this day served a copy of the within and

foregoing THE WITTSTADT DEFENDANTS MEMORANDUM OF LAW

IN SUPPORT OF MOTION TO DISMISS with the Clerk of Court using the

CM/ECF system which will automatically send email notification of such filing to

the attorneys of record in this action.

This 3rd day of November, 2014.




Wittstadts Motion to Dismiss

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