Dan Nestor v. Karen Poore, Ellen Donahue and Creative Planning, LLC ( 2024 )

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
SELENA E. MOLINA LEONARD L. WILLIAMS JUSTICE CENTER
MAGISTRATE IN CHANCERY 500 NORTH KING STREET, SUITE 11400
WILMINGTON, DE 19801-3734
Final Report: January 29, 2024
Date Submitted: October 23, 2023
Jason C. Powell, Esquire Aaron E. Moore, Esquire
Thomas J. Reichert, Esquire Marshall Dennehey Warner
The Powell Firm, LLC Coleman & Goggin
1813 North Franklin Street 1007 North Orange Street, Suite 600
Wilmington, DE 19802 Wilmington, DE 19899
Joseph H. Huston, Jr., Esquire
Stacy A. Scrivani, Esquire
Stevens & Lee, P.C.
919 North Market Street, Suite 1300
Wilmington, DE 19801
Re: Dan Nestor v. Karen Poore, Ellen Donahue, and Creative Planning,
LLC, C.A. No. 2022-0066-SEM
Dear Counsel:
This report addresses the entity defendants’ motions to dismiss for failure to
state a claim. For the reasons that follow, I find the plaintiff failed to provide
adequate notice of, or plead sufficient factual predicate to support, the claims against
the entity defendants. The entity defendants should, thus, be dismissed from this
action.
Dan Nestor v. Karen Poore, Ellen Donahue and Creative Planning, LLC,
C.A. No. 2022-0066-SEM
January 29, 2024
Page 2 of 7
I. BACKGROUND
This decision follows my May 31, 2023 final report (the “First Report”),
which provides the background, and definitions, on which I rely. 1
In the First Report, in pertinent part, I stayed my ruling on the arbitration
arguments pending further inquiry and briefing and declined to address the
arguments for dismissal under Court of Chancery Rule 12(b)(6) until that
jurisdictional gating exercise was complete. 2 But, after I resolved a dispute about
how that exercise would proceed, the moving parties mooted the issue. 3 On October
16, 2023, the remaining members of the CFG Defendants withdrew their argument
that the Arbitration Agreement renders the Court without subject matter
jurisdiction. 4 MMLIS followed suit on October 23, 2023, advising that it withdrew
its motion to compel arbitration.5 Thus, on October 24, 2023, I took all remaining
portions of the Motions under advisement.
This is my final report.
1
Docket Item (“D.I.”) 46.
2
Id.
3
See D.I. 47, 49.
4
D.I. 50.
5
D.I. 51.
Dan Nestor v. Karen Poore, Ellen Donahue and Creative Planning, LLC,
C.A. No. 2022-0066-SEM
January 29, 2024
Page 3 of 7
II. ANALYSIS
CFG and MMLIS (the “Entity Defendants”) seek dismissal of all claims
against them for failure to state a claim under Court of Chancery Rule 12(b)(6). The
standard of review under Court of Chancery Rule 12(b)(6) is settled:
(i) all well-pleaded factual allegations are accepted as true; (ii) even
vague allegations are “well-pleaded” if they give the opposing party
notice of the claim; (iii) the Court must draw all reasonable inferences
in favor of the non-moving party; and [(iv)] dismissal is inappropriate
unless the “plaintiff would not be entitled to recover under any
reasonably conceivable set of circumstances susceptible of proof.” 6
Applying this standard, I find the Complaint fails to provide notice to the Entity
Defendants of the claims against them and fails to support a reasonably conceivable
theory of respondeat superior liability.
Initially, Nestor’s practice of group pleading makes it difficult to discern
which of Nestor’s eight (8) counts are pled against the Entity Defendants. “Although
group pleading is not prohibited under Delaware law, it is generally disfavored.” 7
Such disfavor supports dismissal when the group pleading leaves the defendants
unable to discern the claims pled against them. 8
6
Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002) (citations omitted).
7
In re Swervepay Acq., LLC, 2022 WL 3701723, at *9 (Del. Ch. Aug. 26, 2022) (cleaned
up).
8
Id. at *10 (finding group pleading failed to support imputing conduct of one defendant
to others).
Dan Nestor v. Karen Poore, Ellen Donahue and Creative Planning, LLC,
C.A. No. 2022-0066-SEM
January 29, 2024
Page 4 of 7
Here, Nestor’s group pleading injects ambiguity into the Complaint. For
example, the Complaint defines “Defendants” as the Entity Defendants plus the
individual defendants, Poore and Donahue. Then, in Nestor’s first count, Nestor
pleads that “Defendants” owed fiduciary duties to him and breached them. Yet
Nestor concludes his first count with a specific reference to the Entity Defendants,
averring the Entity Defendants should be liable as employers. Other counts continue
this group pleading, alleging misconduct by “Defendants,” collectively, while
purporting to incorporate by reference the earlier employer-liability language.
Reviewing the Complaint as a whole, I find Nestor’s use of group pleading fails to
provide the Entity Defendants sufficient notice of the claims purportedly pled
against them.
Additionally, and insufficient notice aside, Nestor fails to plead sufficient
factual predicate supporting the Entity Defendants’ purported liability. Nestor seeks
to hold the Entity Defendants liable under the theory of respondeat superior.
Thereunder, an “employer is subject to liability for torts committed by employees
while acting within the scope of their employment.” 9 An employee acts within the
scope of their employment if “(1) it is of the kind he is employed to perform; (2) it
9
Verrastro v. Bayhospitalists, LLC, 208 A.3d 720, 724 (Del. 2019) (quoting Restatement
(Third) of Agency § 2.04; citing Restatement (Second) of Agency § 219 (1958)).
Dan Nestor v. Karen Poore, Ellen Donahue and Creative Planning, LLC,
C.A. No. 2022-0066-SEM
January 29, 2024
Page 5 of 7
occurs within the authorized time and space limits; (3) it is activated, in part at least,
by a purpose to serve the master; and (4) if force is used, the use of force is not
unexpectable by the master.” 10 Thus, to state a claim for the Entity Defendants’
liability Nestor needed to plead factual predicate making it reasonably conceivable
that the challenged actions of Poore and Donahue were within the scope of their
employment with the Entity Defendants. Nestor failed to do so.
The Complaint provides that Poore and Donahue “are business partners
working together within [the Entity Defendants] to provide services to clients in a
variety of areas including offering financial services of [MMLIS].” 11 And, Nestor’s
“information was obtained and utilized by [Poore and Donahue] as part of their
relationship with [MMLIS] and in reliance on the expertise that is provided by their
employment with [MMLIS].” 12 Further, “while in their employment with [the
Entity Defendants], [Poore and Donhue] attempted to blackmail [Nestor],
threatening to distribute incriminating/sensitive photographs and/or videos of
[Nestor] if he takes any action to protect his rights.” 13 Finally, Nestor pleads that
10
Hecksher v. Fairwinds Baptist Church, Inc., 115 A.3d 1187, 1200 (Del. 2015) (quoting
Restatement (Second) of Agency §228)).
11
D.I. 22 ¶ 10.
12
Id.
13
Id. ¶ 13.
Dan Nestor v. Karen Poore, Ellen Donahue and Creative Planning, LLC,
C.A. No. 2022-0066-SEM
January 29, 2024
Page 6 of 7
Poore and Donahue “as part of their employment with [the Entity Defendants]
agreed to, and did in fact, act as Plaintiff’s financial advisor from 1998 and rendered
services on Plaintiff’s behalf. [MMLIS] or its predecessors in interest were an active
participant in the services rendered during this time period.”14
These averments fail to support a reasonably conceivable claim that the
alleged bad acts by Poore and Donahue were within the scope of their employment
with the Entity Defendants. At most, Nestor pleads merely that Poore and Donahue
were employed by the Entity Defendants and their challenged conduct happened
while so employed. Nestor’s conclusory allegations that conduct was “within the
scope of” such employment are unsupported and insufficient to withstand the
Motions. With an unsupported theory of liability and lack of sufficient notice from
disfavored group pleading, Nestor’s claims against the Entity Defendants should not
survive the pleadings and the Entity Defendants should be dismissed from this
action.
III. CONCLUSION
For the above reasons, I find that the remaining portions of the Motions should
be granted. The claims against the Entity Defendants should be dismissed, leaving
14
Id. ¶ 44.
Dan Nestor v. Karen Poore, Ellen Donahue and Creative Planning, LLC,
C.A. No. 2022-0066-SEM
January 29, 2024
Page 7 of 7
Donahue as the sole remaining defendant. This is my final report and exceptions
may be filed under Court of Chancery Rule 144. The stay of exceptions to the First
Report is hereby lifted.
Respectfully submitted,
/s/ Selena E. Molina
Magistrate in Chancery