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Inc. v. Roberts

United States District Court, D. Nevada

January 13, 2014

THE 24-7 GROUP OF COMPANIES, INC., a Nevada corporation, Plaintiff,
TERRY ROBERTS, et al., Defendants.


MIRANDA M. DU, District Judge.


Before the Court is Defendant Wells Fargo Bank, N.A.'s ("Wells Fargo") Motion to Dismiss Fourth Claim for Relief Against Wells Fargo Bank, N.A. ("Motion") (dkt. no. 10). The Motion is granted in part and denied in part.


Plaintiff The 24-7 Group of Companies, Inc., filed a First Amended Complaint ("Complaint") in the Second Judicial District Court of the State of Nevada in and for the County of Washoe, and Wells Fargo removed the action to this Court on the basis of diversity jurisdiction. (Dkt. no. 1.).

The Complaint alleges the following. Plaintiff operates an auto parts distribution business and hired Defendant Terry Roberts as an independent contractor. Mr. Roberts' wife Melanie Roberts, who was never employed by Plaintiff, delivered a request for credit on behalf of Plaintiff to Williams Scotsman, a California company. Mrs. Roberts falsely identified herself as Plaintiff's bookkeeper in the request for credit, which she signed. Mr. Roberts executed a lease agreement with Williams Sctosman for the rental of a mobile office and named Plaintiff as the lessee. Mr. Roberts signed the lease agreement as "Director Authorized Representative." Mr. Roberts was not authorized to execute this lease agreement on behalf of Plaintiff.

Mr. and Mrs. Roberts ("Individual Defendants") opened a bank account in Plaintiff's name at Wells Fargo. They "conducted business in the name of [Plaintiff] from this account, paying Williams Scotsman, and possibly others, from this account." (Dkt. no. 1, Ex. A at 3 ¶ 18.) Wells Fargo's policies require several documents to be provided in order for an individual to open a business bank account for a corporation, including Articles of Incorporation and a Corporate Resolution. (Dkt. no. 1, Ex. A at 3 ¶ 19; dkt. no. 11, Ex. 1.) The Articles of Incorporation provided by Individual Defendants to Wells Fargo in their account application do not list their names or grant them authority to open an account on behalf of Plaintiff, and no Corporate Resolution was provided or verified. (Dkt. no. 1, Ex. A at 3-4 ¶ 21; dkt. no. 11, Exs. 2, 3.) Plaintiff did not authorized Individual Defendants to "open bank accounts, sign checks, deposit funds, or in any other manner conduct financial transactions" on Plaintiffs behalf. (Dkt. no. 1, Ex. A at 4 ¶ 22.)

The Complaint alleges claims for intentional interference with prospective economic advantage, constructive fraud and constructive trust against the Individual Defendants. The Complaint's Fourth Claim for Relief asserts negligence and violation of NRS 104.3405 against Wells Fargo. Wells Fargo now moves to dismiss the Fourth Claim for Relief under Fed.R.Civ.P. 12(b)(6). The Individual Defendants filed a joinder to the Motion. (Dkt. no. 16.) Plaintiff opposed the Motion (dkt. no. 11) and Wells Fargo replied (dkt. no. 14.)


The Complaint's Fourth Claim for Relief contains two claims: (1) violation of NRS 104.3405, which is Nevada's version of the Uniform Commercial Code ("UCC") section 3-405; and (2) common law negligence.[1] Wells Fargo moves to dismiss the former claim on grounds that the Complaint does not sufficiently allege a violation of NRS 104.3405, and the latter claim on grounds that it is barred by the economic loss doctrine. The Court agrees that Plaintiff has failed to state a claim under NRS 104.3405 but finds that Plaintiff's claim for common law negligence is not barred by the economic loss doctrine.

A. Legal Standard

A court may dismiss a plaintiff's complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) ( citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). "Factual allegations must be enough to rise above the speculative level." Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678 (internal citation omitted).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, a district court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Iqbal, 556 U.S. at 679. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678. Second, a district court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow a court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678. Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has "alleged-but not shown-that the pleader is entitled to relief." Id. at 679 (internal quotation marks omitted). When the claims in a complaint have not crossed the line from conceivable to plausible, the complaint must be dismissed. Twombly, 550 U.S. at 570.

A complaint must contain either direct or inferential allegations concerning "all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562 ( quoting Car Carriers, Inc. v. Ford Motor ...

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