United States District Court, W.D. Kentucky, Louisville Division
MEMORANDUM OPINION AND ORDER
N. STIVERS, JUDGE.
matter is before the Court on Defendants' Motions to
Dismiss (DN 13, 26). The motions have been fully briefed and
are ripe for adjudication. For the reasons outlined below,
the motions are GRANTED.
STATEMENT OF FACTS AND CLAIMS
a Federal Tort Claims Act (“FTCA”) action in
which Plaintiff Jeffery Woodcox (“Plaintiff”)
makes claims for abuse of process and malicious prosecution
against Defendants, the United States and the Council on
Occupational Education (“COE”) (collectively
“Defendants”), as well as a negligence claim
against the United States. (Am. Compl. ¶¶ 39-68, DN
5). Plaintiff was an officer, member of the board of
directors, shareholder, surety on a bond, and guarantor of
Decker College, Inc. (“Decker”), a private,
two-year career institution which filed for bankruptcy
following a Program Review by the United States Department of
Education (“ED”). (Compl. ¶ 11, DN 1; Am.
Compl. ¶¶ 1-2, 33). Plaintiff alleges that the
ED's Program Review, which ultimately disqualified Decker
for federal student aid funding resulting in its bankruptcy,
relied on fabricated evidence coerced from the COE
“with the specific intent of harming Decker's
shareholders and principals.” (Am. Compl. ¶ 1).
STANDARD OF REVIEW
standards for dismissal under Fed.R.Civ.P. 12(b)(1) and
12(b)(6) differ in the Sixth Circuit. See RMI Titanium
Co. v. Westinghouse Elec. Corp., 78 F.3d 1125,
1134 (6th Cir. 1996). Threshold challenges to subject matter
jurisdiction under Fed.R.Civ.P. 12(b)(1) should generally be
decided before any ruling on the merits under Fed.R.Civ.P.
12(b)(6). See Bell v. Hood, 327 U.S. 678, 682
(1946). In most circumstances, the plaintiff bears the burden
to survive Fed.R.Civ.P. 12(b)(1) motions to dismiss for lack
of subject matter jurisdiction. See id.
to subject matter jurisdiction come in several varieties.
Facial attacks challenge a plaintiff's establishment of
jurisdiction in their complaint and require the court to
examine the jurisdictional basis. See United States v.
Ritchie, 15 F.3d 592, 598 (6th Cir. 1994) (citation
omitted). Factual attacks contest the existence of factual
prerequisites to jurisdiction. See Id. In such
motions, the district court is empowered to resolve the
factual disputes affecting any jurisdictional prerequisites.
See Rogers v. Stratton Indus., Inc., 798 F.2d 913,
915 (6th Cir. 1986). A plaintiff bears the burden in both of
these situations. See Bell, 327 U.S. at 682.
immunity may serve as a basis for a Fed.R.Civ.P. 12(b)(1)
motion to dismiss for lack of jurisdiction. See
Muniz-Muniz v. U.S. Border Patrol, 741 F.3d 668, 671
(6th Cir. 2013). “‘[W]hile the Eleventh Amendment
is jurisdictional in the sense that it is a limitation on the
federal court's judicial power, ' the defense
‘is not coextensive with the limitations on judicial
power in Article III.'” Nair v. Oakland Cty.
Cmty. Mental Health Auth., 443 F.3d 469, 474 (6th Cir.
2006) (quoting Calderon v. Ashmus, 523 U.S. 740, 745
n.2 (1998)). “[U]nlike subject- matter jurisdiction,
‘the entity asserting Eleventh Amendment immunity has
the burden to show that it is entitled to
immunity.'” Id. (citation omitted).
considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6),
courts must presume all factual allegations in the complaint
to be true and make all reasonable inferences in favor of the
non-moving party. Total Benefits Planning Agency,
Inc. v. Anthem Blue Cross & Blue Shield,
552 F.3d 430, 434 (6th Cir. 2008) (citation omitted).
“But the district court need not accept a bare
assertion of legal conclusions.” Tackett v. M &
G Polymers, USA, LLC, 561 F.3d 478, 488 (6th Cir. 2009)
(citation omitted). “A pleading that offers labels and
conclusions or a formulaic recitation of the elements of a
cause of action will not do. Nor does a complaint suffice if
it tenders naked assertion[s] devoid of further factual
enhancement.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (internal quotation marks omitted)
(citation omitted). When a plaintiff is proceeding pro se,
the Court is required to liberally construe the complaint and
hold it to a less stringent standard than a similar pleading
drafted by an attorney. Haines v. Kerner, 404 U.S.
519, 520 (1972); Hahn v. Star Bank, 190 F.3d 708,
715 (6th Cir. 1999). Even pro se complaints, however, must
satisfy basic pleading requirements. Wells v. Brown,
891 F.2d 591, 594 (6th Cir. 1989).
survive a motion to dismiss under Rule 12(b)(6), the
plaintiff must allege “enough facts to state a claim to
relief that is plausible on its face.” Traverse Bay
Area Intermediate Sch. Dist. v. Mich. Dep't of
Educ., 615 F.3d 622, 627 (6th Cir. 2010) (internal
quotation marks omitted) (quoting Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). A claim becomes
plausible “when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).
“A complaint will be dismissed pursuant to Rule
12(b)(6) if no law supports the claims made, if the facts
alleged are insufficient to state a claim, or if the face of
the complaint presents an insurmountable bar to
relief.” Southfield Educ. Ass'n v. Southfield
Bd. of Educ., 570 Fed.Appx. 485, 487 (6th Cir. 2014)
(citing Twombly, 550 U.S. at 561-64).
COE's Motion to Dismiss
seeks dismissal of Plaintiff's claims against it, and
mounts four arguments to that effect. (Def. COE's Mot.
Dismiss 1-2, DN 13; Def. COE's Mem. Supp. Mot. Dismiss
1-9, DN 13-1 [hereinafter Def. COE's Mem.]). Each
argument is addressed in turn.
Standing & Release of Claims by Bankruptcy Trustee
asserts that Plaintiff lacks standing for his claims, because
as a shareholder, his claims are derivative of the injuries
suffered by Decker, and he therefore “lacks standing to
assert them in his own name.” (Def. COE's Mem.
2-4). COE further argues that, even if Plaintiff had standing
for his claims, his suit should nonetheless be dismissed
because his derivative claims were released by the Settlement
Agreement and Release executed between COE and Decker in the
bankruptcy proceedings. (Def. COE's Mem. 4-6). Plaintiff
appears to assert that his standing to sue COE arises because
“COE is a quasi-government agency” against which
Plaintiff can bring suit under the FTCA. (Pl.'s Resp.
Def. COE's Mot. Dismiss 4, DN 29 [hereinafter Pl.'s
Resp. Def. COE]). COE responds that Plaintiff's claims
against it are not properly grounded in the FTCA, given that
it grants consent for the United States government be sued,
and does not apply to COE. (Def.'s Reply Supp. Mot.
Dismiss 3, DN 31 [hereinafter Def. COE's Reply] (citing
Fulcher v. United States, 88 F.Supp.3d 763, 770
(W.D. Ky. 2015))). Plaintiff did not address COE's
argument regarding his claims being derivative of claims of
Decker, or COE's argument regarding release by the
order to satisfy Article III's standing requirement,
“a plaintiff must assert his own legal rights and
interests, and cannot rest his claim to relief on the legal
rights or interests of third parties.” Coyne v. Am.
Tobacco Co., 183 F.3d 488, 494 (6th Cir. 1999) (internal
quotation marks omitted) (citation omitted). “[A]n
action to redress injuries to a corporation . . . cannot be
maintained by a stockholder in his own name . . . .”
Canderm Pharmacal, Ltd. v. Elder Pharm., Inc., 862
F.2d 597, 603 (6th Cir. 1988) (internal quotation marks
omitted) (citations omitted); see also Cherry v.
FCC, 641 F.3d 494, 495 (2d Cir. 2011) (holding that the
plaintiff, the shareholder of a company, lacked standing to
challenge the FCC's approval of radio license assignments
because the alleged injuries were not caused by the
assignments, but instead the plaintiff's injuries were
traced to the company's default on its loan obligations);
Heart of Am. Grain Inspection Serv., Inc. v. Mo.
Dep't of Agric., 123 F.3d 1098, 1102 (8th Cir.
1997). The rule applies even to a corporation's sole
shareholder. See Smith Setzer & Sons, Inc.
v. S.C. Procurement Review Panel, 20 F.3d 1311, 1317
(4th Cir. 1994). Likewise, guarantors to corporate liability
lack standing because their liability is derivative and will
not constitute an injury in fact. See, e.g., Mid-State
Fertilizer Co. v. Exch. Nat'l Bank of
Chicago, 877 F.2d 1333, 1335-37 (7th Cir. 1989).
Plaintiff was an officer, member of the board of directors,
shareholder, surety on a bond, and guarantor of Decker. (Am.
Compl. ¶ 2). The Court agrees with COE that none of
these confer standing upon Plaintiff, as his claims are
merely derivative of injuries suffered by Decker.
Plaintiff's claims against COE will therefore be
Plaintiff's Abuse of Process Claim
alternative, COE argues that Plaintiff's abuse of process
claim fails on both procedural and substantive grounds. (Def.
COE's Mem. 6).
Statute of Limitations
avers that Plaintiff's abuse of process claim is
time-barred by Kentucky's one-year statute of limitations
on such claims. (Def. COE's Mem. 6-7). Plaintiff's
Response did not address this argument.
to KRS 413.140(1)(a), Kentucky has a one-year statute of
limitations on abuse of process claims. Maqablh v.
Heinz, No. 3:16-CV-289-JHM, 2016 WL 7192124, at *8
(W.D. Ky. Dec. 12, 2016). Such claims are “generally
held to accrue . . . from the termination of the acts which
constitute the abuse complained of, and not from the
completion of the action in which the process issued.”
Dickerson v. City of Hickman, No. 5:08-CV-P53-R,
2010 WL 816684, at *5 (W.D. Ky. Mar. 4, 2010).
notes, Plaintiff's basis for his claim against COE is a
letter COE sent to ED in August 2005 as part of a program
review of Decker. (Am. Compl. ¶¶ 51, 53, 55; Am.
Compl. Ex. 7, at 2, DN 5-7). Plaintiff instituted the present
lawsuit on December 20, 2016. (Compl. 1, DN 1). Plaintiff has
not argued any reason the statute of limitations was tolled.
The Court therefore agrees that, even if Plaintiff has
standing to pursue his abuse of process claim against COE,
that claim is time-barred.
Failure to State a Claim
also contends that Plaintiff failed to establish the elements
of an abuse of process claim under Kentucky law. (Def.
COE's Mem. 7-9). Plaintiff did not substantively respond
to this position, merely stating that “[t]he Complaint
more than adequately pleads an abuse of process claim.”
(Pl.'s Resp. Def. COE 3).
defendant is liable for abuse of process where he or she used
“a legal process, whether criminal or civil, against
another primarily to accomplish a purpose for which that
process is not designed . . . .” Sprint
Commc'ns Co., L.P. v. Leggett, 307 S.W.3d 109, 113
(Ky. 2010) (citing Restatement (Second) of Torts § 682
(1977)). Under Kentucky law, there are two essential elements
of the claim:
(1) an ulterior purpose and (2) a willful act in the use of
the process not proper in the regular conduct of the
proceeding. Some definite act or threat not authorized by the
process, or aimed at an objective not legitimate in the use
of the process is required and there is no liability where
the defendant has done nothing more than carry out the
process to its authorized conclusion even though with bad
Simpson v. Laytart, 962 S.W.2d 392, 394-95 (Ky.
1998) (internal citations omitted) (citation omitted). Stated
another way, there is a “difference between the proper
use of process, though ill-motivated, and an abuse of
process.” Cherry v. Howie,191 F.Supp.3d 707,
716 (W.D. Ky. 2016). PLAINTIFF's abuse of process claim
alleges that “ED . . . and COE wrongfully employed the
Program Review to destroy Decker and attack the value of
shareholders in Decker . . . .” (Am. Compl. ¶ 53).
The Court concurs with COE's position that, “as the
Program Review is a process initiated by the Department of
Education[, ]” Plaintiff's abuse of process claim
will not lie against COE. (Def. COE's Mem. 8 (citing
Garland v. Brewer, No. ...