Theriault et al v. New Direction IRA, Inc. et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
JOSEPH THERIAULT and WILLIAM WEIGEL,
individually and on behalf of all those similarly
situated,
Plaintiffs,
v. 	Case No. 23-2477-JWB
NEW DIRECTION IRA, INC., NEW DIRECTION
TRUST COMPANY, and MAINSTAR TRUST,
Defendants.
CHRISTY WALLACE
on behalf of herself and all others similarly situated,
Plaintiff,
v. 	Case No. 24-2007-JWB
NEW DIRECTION IRA, INC., NEW DIRECTION
TRUST COMPANY, and MAINSTAR TRUST,
Defendants.
MEMORANDUM AND ORDER
This matter comes before the court on Defendants’ motions for summary judgment in both
captioned cases above (Theriault Doc. 132, Wallace Doc. 84), in addition to Defendants’ objection
to Magistrate Judge Mitchell’s denial of Defendants’ motion to stay proceedings pending the
determination of the motions for summary judgment. (Theriault Doc. 160.) These motions are all
fully briefed and ripe for decision. 	(Theriault Docs. 140, 156, 160, 161, 162, 168, 169, 170,
Wallace Docs. 97, 104, 109, 110.) 	For the reasons stated herein, the motions for summary
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judgment are denied without prejudice and the objection to the Magistrate Judge’s order is denied
as moot.
I. 	Facts
This court has previously set out the facts underlying this dispute in its previous order on
the summary trial regarding the issue of arbitrability. See Theriault v. New Direction IRA, Inc.,
No. 23-2477-JWB, 2025 WL 958255, at *1–*3 (D. Kan. Mar. 31, 2025). However, it will briefly
repeat the relevant facts.
Defendants New Direction IRA and New Direction Trust Company (hereinafter “New
Direction” when they act together) provide account administration and custodian services for self-
directed individual retirement accounts (“IRAs”). New Direction offers both traditional and Roth
self-directed IRAs, each of which permits account holders a tax privileged way to hold alternative
assets, such as private equity, real estate, and precious metals. 	Given that New Direction is a
nonfiduciary and does not secure any assets of their account holders, their business comprises
keeping records, preparing all mandatory IRS reports, and passively holding title to the account
holder’s assets. New Direction IRA was originally created as a franchise of Entrust Group in 2003
(and was called Entrust Group New Direction at that time). However, Entrust Group changed their
business model in 2011 and allowed Bill Humphrey and Katherine Wynne to purchase the New
Direction franchise. Thereafter, Mainstar Trust became the custodian of the accounts while New
Direction IRA existed as a third-party administrator. In 2018, New Direction Trust Company was
founded to become the custodian for New Direction IRA accounts in response to changing market
conditions and competitor behavior, and Mainstar Trust transferred title for these accounts to New
Direction Trust Company.
Plaintiffs in this matter are three individual account holders of self-directed IRA’s which
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are administered by New Direction. Plaintiff Dr. Gil Theriault is a family medicine physician from
Vermont, who has had numerous accounts with New Direction, but he opened the self-directed
Roth IRA account most relevant to this matter in September 2012. Plaintiff William Weigel is a
Kansas resident who opened his traditional self-directed IRA with New Direction in October 2016.
Plaintiff Christy Wallace is a California resident who opened her traditional self-directed IRA with
New Direction in July 2016. Each of these Plaintiffs chose to open a New Direction self-directed
retirement account for the purpose of investing in gold and other precious metals. As part of the
account creation process, each Plaintiff submitted a Depository Election Form, directing that the
precious metals purchased in each of their accounts were to be stored at First State Depository
(“FSD”) in Wilmington, DE, which was an institution affiliated with New Direction and to which
New Direction steered their account holders. Each Plaintiff also submitted a Precious Metals Buy
Direction Letter to New Direction and received confirmation that their purchase had been executed
as they had directed.
According to Plaintiffs, the Commodity Futures Trading Commission filed a lawsuit in
2022 against FSD and against its owner, Robert Higgins, in the U.S. District Court for the District
of Delaware alleging that FSD and Higgins had stolen more than $110 million of the precious
metals deposited at FSD. A large amount of the stolen assets included precious metals from self-
directed IRA accounts, including the New Direction accounts of each of the Plaintiffs. Plaintiffs
then filed two complaints alleging various counts of fraud, negligence, breach of fiduciary duties,
and violations of state consumer protection laws in addition to requesting dueling class
certifications.
In response, Defendants filed motions to dismiss and compel arbitration according to April
2019 amended Custodial Agreement and Disclosure Statement documents in which the Defendants
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attempted to add a binding arbitration agreement. Given that the two cases presented similar issues
and identical Defendants, the court ordered a single summary trial on the issue of arbitrability and
ordered that both cases would have coordinated hearings. The court then held the summary trial
on arbitrability on March 4–5, 2025. 	After hearing testimony and considering the evidence
presented, the undersigned denied Defendants’ motion to compel arbitration.
Shortly thereafter, Defendants moved for summary judgment based on the exhibits
admitted at the summary trial regarding arbitration. Defendants’ motion was filed one month after
the scheduling order was entered and less than three months after they filed their respective
answers. In response to the motions, Plaintiffs asserted that they needed to conduct discovery in
order to respond to some of the material facts at issue and submitted an affidavit from their counsel,
Scott Nehrbass, in support. In reply, Defendants do not address all of Plaintiffs’ contentions as to
issues needing further discovery; rather, Defendants assert that the material facts of the contracts
undergirding the self-directed IRA accounts are undisputed and the language of these contracts
absolve Defendants of any liability for investment losses in the IRA accounts.
II. 	Analysis
Federal Rule of Civil Procedure 56(d) “allows a court to stay or deny a summary judgment
motion in order to permit further discovery if the nonmovant states by affidavit that it lacks facts
necessary to oppose the motion.” 	Emp’rs Reinsurance Corp. v. Newcap Ins. Co., Ltd., 209 F.
Supp. 2d 1184, 1187, n. 3 (D. Kan. 2002) (citing Price v. W. Res., Inc., 232 F.3d 779, 783 (10th
Cir. 2000)). The general principle of Rule 56(d) is that “summary judgment [should] be refused
where the nonmoving party has not had the opportunity to discover information that is essential to
his opposition.” 	Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 n. 5 (1986)).
Plaintiffs have complied with the rule by submitting an affidavit and identifying the necessary
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discovery needed so that Plaintiffs may sufficiently respond to a motion for summary judgment.
(Theriault Doc. 161-2, Wallace Doc. 104-2.) Defendants argue that the account documents signed
by all Plaintiffs conclusively absolve Defendants of any and all liability for the financial losses
sustained by storing precious metals at FSD; however, Plaintiffs are alleging claims not only based
on fiduciary duties and stolen investments, but they are also alleging fraud between the New
Direction Defendants and FSD in steering account holders and potential kickback schemes.
Plaintiffs’ affidavit asserts that Defendants had a relationship with FSD and/or Higgins that
materially benefited Defendants based on FSD’s past practices. (Theriault Doc. 161-2 at 16–17.)
Further, Defendants may have had prior knowledge about the FBI seizing precious metals from
Higgins and FSD in the past. New Direction also may have performed audits on FSD but advised
FSD of the accounts being audited beforehand. (Id. at 21.) Based on the record, it is undisputed
that Plaintiffs have not had the opportunity to conduct discovery on the issue of fraud and the
relationship between Defendants and FSD. 	Further, Plaintiffs seek discovery on Defendants’
contract based defenses. Plaintiffs argue that the clauses Defendants point to are unenforceable
due to unconscionability and fraud, are inapplicable to the claims, and that Defendants owe other
duties to Plaintiffs. (Theriault Doc. 161.) Plaintiffs have requested discovery on these and other
issues but have not had the opportunity to complete discovery.
“Unless dilatory or lacking in merit, [a motion under Rule 56(d)] should be liberally
treated.” Comm. for First Amendment v. Campbell, 962 F.2d 1517, 1522 (10th Cir. 1992) (quoting
James W. Moore & Jeremy C. Wicker, Moore's Federal Practice ¶ 56.24 (1988)). Based on the
record, it is clear that the facts as to which Plaintiff seeks discovery are material to the issues in
this case. Plaintiffs’ counsel’s affidavit is extensive and identifies a significant number of facts
that may be material as to many issues in this case and documents the efforts to obtain those facts
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as soon as discovery opened. (Theriault Doc. 161-2 at 2–26.) Discovery in this case began shortly
before the briefing on the motions for summary judgment and it has continued after Magistrate
Judge Mitchell denied Defendants’ motion to stay. The discovery conducted prior to the hearing
on the motion to compel arbitration was limited to the issue of arbitrability. As such, Plaintiffs
were not able to seek discovery on the range of issues that are directly relevant to their claims in
this matter.
Defendants’ reply briefs addressing Plaintiffs’ Rule 56(d) affidavit are not persuasive. The
New Direction Defendants continue to assert that discovery is unnecessary as the language they
point to should control and that should be the end of the matter. More persuasive, Mainstar argues
that the limited facts at issue regarding its involvement should foreclose this matter and allow
summary judgment to be granted in its favor. Plaintiffs, however, have put forth an exhaustive
affidavit which outlines that they seek discovery on several topics including contract formation,
parties’ intent, any oral contracts, Defendants’ relationship with FSD and Higgins, the nature of
Defendants’ duties to Plaintiffs, timing of Defendants’ representations to Plaintiffs regarding FSD,
and whether any of the contract documents were procured by fraud. (Doc. 161-2 at 28.) Notably,
Plaintiffs also seek discovery of the close relationship between Mainstar and New Direction, given
that a majority of New Direction’s board of directors were executives of Midwest Trust, Mainstar’s
parent company.
Based on Plaintiffs’ counsel’s affidavit and the disputes at issue, the court denies
Defendants’ motions for summary judgment without prejudice and will allow Plaintiffs to conduct
discovery. In sum, after considering all circumstances, the court concludes that an opportunity for
discovery is necessary for a full and fair determination of the issues raised in this case.
IV. 	Conclusion
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The motions for summary judgment (Theriault Doc. 132, Wallace Doc. 84) are DENIED
WITHOUT PREJUDICE. 	The objection (Theriault Doc. 160) to Magistrate Judge Mitchell’s
denial of the motion to stay proceedings pending the determination of the motions for summary
judgment is DENIED AS MOOT.
IT IS SO ORDERED. Dated this 5th day of February, 2026.
__s/ John W. Broomes__________
JOHN W. BROOMES
CHIEF UNITED STATES DISTRICT JUDGE
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