The opinion of the court was delivered by: Judge Joan H. Lefkow
MEMORANDUM OPINION AND ORDER
Plaintiff, William R. Wehrs, has filed a five-count complaint seeking damages from his former securities broker, Benson York Group, Benson York's employees, Kevin Brennan and Kevin Wells, and Benson York's clearing broker, North American Clearing, Inc. ("NAC") (collectively, "defendants"). Wehrs alleges that defendants are liable for violations of both Section 10b of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5, as well as for common law fraud, negligence, and breach of fiduciary duty.
The only claim brought against NAC is a claim for breach of fiduciary duty (Count V). NAC has filed a motion to dismiss Count V for failure to state a claim upon which relief may be granted under Fed. R. Civ. P. 12(b)(6). For the following reasons, the court grants NAC's motion to dismiss [#16].*fn1 Count V and NAC will be dismissed from this case without prejudice.
The following facts are taken from Wehrs's complaint and are accepted as true for the purpose of this motion to dismiss. On June 23, 2005, Wehrs placed an order with Wells to purchase on margin 4,000 shares of Cyberonics, Inc. at $43.75 each.*fn2 Instead, on June 24, 2005, without Wehrs's knowledge, consent, or authorization, Wells purchased on margin 4,100 shares of the stock at $46.99, charging a commission of $9,553.00. On June 27, 2005, Wells sold the stock at $44.33, charging Wehrs a $100 commission fee. Later that same day, again without authorization, Wells repurchased on margin all 4,100 shares of the stock at $44.33, charging a commission of $8,979.00. NAC served as the clearing house for both purchases.
After learning of the unauthorized transactions, Wehrs contacted Wells, who promised Wehrs that his losses would be remedied. When that did not happen, and because the Cyberonics stock was steadily decreasing in value, Wehrs contacted NAC directly and asked it to sell the stock. NAC refused, stating that any order to sell had to be placed by Benson York. The majority of the Cyberonics shares held in Wehrs's account have now been sold on margin call by NAC.*fn3 The current value of Wehrs's account at Benson York is less than $5,000, and Wehrs has suffered losses in excess of $92,000.00.
II. Legal Standard Applicable to Motion to Dismiss
A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint for failure to state a claim upon which relief may be granted. General Elec. Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1080 (7th Cir. 1997). In ruling on a motion to dismiss, the court accepts as true all well-pleaded facts alleged in the complaint and draws all reasonable inferences from those facts in the plaintiff's favor. Dixon v. Page, 291 F.3d 485, 486 (7th Cir. 2002); Jackson v. E.J. Brach Corp., 176 F.3d 971, 977 (7th Cir. 1999). Dismissal is appropriate only if it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed. 2d 80 (1957); Kennedy v. Nat'l Juvenile Det. Assoc., 187 F.3d 690, 695 (7th Cir. 1999); but see Bell Atlantic Corp. v. Twombly, -- U.S. --, 127 S.Ct. 1955, 1964, 167 L.Ed. 2d 929 (2007) ("Rule 8(a)(2) still requires a 'showing,' rather than a blanket assertion, of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only 'fair notice' of the nature of the claim, but also 'grounds' on which the claim rests.").
Wehrs invokes the court's supplemental jurisdiction over his common law claims, including the breach of fiduciary duty claim at issue here. See Houben v. Telular Corp., 309 F.3d 1028, 1032 (7th Cir. 2002) (citing Felder v. Casey, 487 U.S. 131, 151, 108 S.Ct. 2302, 101 L.Ed. 2d 123 (1998)) (finding that the Erie doctrine applies to state law claims brought in federal court on the basis of supplemental jurisdiction). Neither party addresses the choice of law issue. Where the parties fail to raise a choice of law issue, the question is one of procedure: whether the court will address an issue that the parties have chosen not to address. Wood v. Mid-Valley Inc., 942 F.2d 425, 426-27 (7th Cir. 1991); Matter of Iowa R. Co., 840 F.2d 535, 543 (7th Cir. 1988). "The operative rule is that when neither party raises a conflict of law issue in a diversity case, the federal court simply applies the law of the state in which the federal court sits." Wood, 942 F.2d at 426. But if the parties agree that a different law applies, the court will not raise the issue sua sponte. Id.
In briefing this motion, both parties rely heavily on cases decided by the district courts of New York. Wehrs cites only Faturik v. Woodmere Sec., Inc., 442 F. Supp. 943 (S.D.N.Y. 1977), for the substance of his argument that he has properly stated a claim. NAC does not argue that some other law should apply but rather addresses Faturik on its merits. Because neither party disputes the applicability of New York law, the court will apply it in ...