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Travelers Casualty and Surety Company of America v. Firm

United States District Court, D. Nevada

March 25, 2014

TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, Plaintiff(s),
v.
PENGILLY ROBBINS SLATER LAW FIRM, et al., Defendant(s)

ORDER

JAMES C. MAHAN, District Judge.

Presently before the court is defendants' motion to dismiss. (Doc. # 14). Plaintiff has filed a response (doc. # 18) and defendants have filed a reply (doc. # 21).

I. Background

This matter arises in connection with a $120, 000 retainer paid by non-party Peek Construction Company ("Peek") to the defendant law firm, Pengilly, Robbins, Slater ("PRS"). Plaintiff Travelers Casualty and Surety Company of America ("Travelers") alleges that PRS colluded with Peek in order to illegally deprive Travelers of its alleged security interest in the $120, 000.

On or about November 27, 2006, Travelers executed a general indemnity agreement with non-party Williams Brothers, Inc. ("Williams"). On or about April 15, 2009, Travelers executed another general indemnity agreement with non-party El Camino Construction Company. On or about March 29, 2010, Peek became the successor to El Camino and agreed to be bound by the April 15, 2009, indemnity agreement.

Those agreements provided that, in the event of default, Peek and Williams conveyed all rights, title, and interest in property used as collateral to Travelers. "Property" was defined to include all current and after-acquired sums due then or thereafter, and all equipment, tools, materials, supplies, inventory, and vehicles. Travelers alleges it perfected this interest on or about September 26, 2011, when it filed a UCC-1 financing statement with the Nevada Secretary of State.

Sometime in 2011, Peek and Williams allegedly defaulted under the terms of the indemnity agreement. Peek thereafter began liquidating the alleged collateral construction equipment through sales to various third parties.

Travelers initiated suit regarding the alleged breach of indemnity agreement in a separate case in this district, Travelers Casualty and Surety Company of America v. Peek Construction Company, et al., 2:12-cv-00058-LDG-NJK. In that case, Peek retained PRS as counsel and issued a check in the amount of $120, 000 as a retainer. That litigation is currently ongoing. Travelers alleges in the instant suit that the retainer was issued using proceeds obtained from liquidating the collateral. Travelers further alleges that Peek had no right to liquidate said collateral, that PRS was aware that Peek was liquidating equipment subject to Travelers' security interest, and that PRS was aware Travelers had the right to the proceeds from the sale of said equipment. Travelers alleges Peek and Williams carried out these sales based on the advice of PRS and, in particular, defendant James Pengilly, Esq.

Based on these allegations, Travelers contends it is entitled to the $120, 000 payment. In response, PRS asserts that it simply gave legal advice to Peek instructing it that Travelers' interest was not perfected and Peek was within its rights to liquidate the equipment.

The amended complaint contains causes of action for (1) conversion; (2) fraudulent transfer; (3) tortious impairment of security interest; (4) tortious interference with contract; (5) claim and delivery; (6) aiding and abetting; (7) unjust enrichment; and (8) constructive trust. The defendant has filed the instant motion seeking to dismiss all causes of action for failure to state a claim.

...

II. 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, 129 S.Ct. 1937, 1949 (2009) (citation omitted). "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, 129 S.Ct. at 1949 (citation omitted).

In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering motions to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 1950. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 1949. Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 1950. A claim is facially plausible when the ...


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