BENTON – On June 29, the U.S. District Court for the Southern District of Illinois denied defendant Alan Johnson’s motion to dismiss certain counts of a fraud case filed against him by a St Louis-based mining and metals company.
Brady McCasland Inc. (BMI) filed a nine-count complaint against defendants Johnson, James Womack, and Jordan Womack.
The dispute arises out of BMI’s claim that Johnson, who was the BMI plant manager and a 25-year employee, allegedly underloaded railroad cars of iron that led to BMI paying for millions of pounds of iron it did not receive. BMI alleges that Johnson made false representations by working a “scheme” with the Womacks to underload the railcars.
Counts directed at Johnson include fraud, conspiracy to commit fraud, aiding and abetting fraud, breach of fiduciary duty, and conspiracy to breach fiduciary duty.
BMI stated that Johnson’s alleged wrongful conduct occurred from 2005 until its discovery in 2014.
Johnson’s motion to dismiss was denied by District Judge David R. Herndon.
In his ruling, Herndon wrote that “cumulative shortage of iron and the equivalent number of railcars…give an indication of the frequency of the alleged misrepresentations by Johnson and raise questions of fact not appropriate for dismissal on a motion to dismiss.”
In his motion to dismiss, Johnson argued that BMI didn’t allege how he provided aid and assistance to underload the railroad cars. The court, however, ruled that BMI did allege sufficient facts to show Johnson provided aid, assistance, and encouragement to the Womacks, and that fraud was sufficiently pled in the case.
Johnson argued that his tenure as an employee of BMI does not establish a “special confidence” for a fiduciary relationship to have existed, refuting the charge against him. The court disagreed and said he was a longtime employment who was given trust and confidence and who breached his fiduciary duty by participating in the “scheme,” authorizing invoices, and ensuring the Womacks’ involvement. Furthermore, the court felt that Johnson demonstrated concerted action to breach his fiduciary duty to BMI.
Herndon also denied a statute of limitations challenge by Johnson because there was “question as to when the last injury occurred.”