United States District Court, D. Nevada
LLOYD D. GEORGE, District Judge.
The plaintiff, Rivercard, LLC, filed the instant complaint against the defendant, Scot Patriquin, alleging various contractual claims, fraud-based claims, or, alternatively, unjust enrichment. In April 2010, Rivercard entered into an escrow agreement with Patriquin, in order to purchase shares of a Canadian company, Post Oak Productions, Inc. Rivercard alleges that Patriquin, through "multiple telephonic and electronic communications, " misrepresented the status of certain conditions contained in the agreement. Believing the conditions had been met, Rivercard authorized Patriquin to release $800, 000 from the account. Patriquin moves to dismiss (#6). Rivercard opposes the motion (#9). The Court will grant the motion in part and deny it in part.
Motion to Dismiss
The defendant's motion to dismiss, brought pursuant to Fed.R.Civ.P. 12(b)(6), challenges whether the plaintiff's complaint states "a claim upon which relief can be granted." In ruling upon this motion, the court is governed by the relaxed requirement of Rule 8(a)(2) that the complaint need contain only "a short and plain statement of the claim showing that the pleader is entitled to relief." As summarized by the Supreme Court, a plaintiff must allege sufficient factual matter, accepted as true, "to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Nevertheless, while a complaint "does not need detailed factual allegations, a plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id., at 555 (citations omitted). In deciding whether the factual allegations state a claim, the court accepts those allegations as true, as "Rule 12(b)(6) does not countenance... dismissals based on a judge's disbelief of a complaint's factual allegations." Neitzke v. Williams, 490 U.S. 319, 327 (1989). Further, the court "construe[s] the pleading s in the light most favorable to the nonmoving party." Outdoor Media Group, Inc. v. City of Beaumont, 506 F3.d 895, 900 (9th Cir. 2007).
However, bare, conclusory allegations, including legal allegations couched as factual, are not entitled to be assumed to be true. Twombly, 550 U.S. at 555. "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal 556 U.S. 662, 678 (2009). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id., at 679. Thus, this court considers the conclusory statements in a complaint pursuant to their factual context.
To be plausible on its face, a claim must be more than merely possible or conceivable. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not show[n]' - that the pleader is entitled to relief." Id., (citing Fed. R. Civ. Proc. 8(a)(2)). Rather, the factual allegations must push the claim "across the line from conceivable to plausible." Twombly. 550 U.S. at 570. Thus, allegations that are consistent with a claim, but that are more likely explained by lawful behavior, do not plausibly establish a claim. Id., at 567.
In the spring of 2010, the plaintiff, Rivercard, LLC, sought to invest in Post Oak Productions, Inc., a Canadian company. The defendant, Scot Patriquin, was the attorney for Post Oak, and "not only actively assisted with negotiations but also drafted and/or provided all documents relevant" to the transaction (#1, ¶ 14).
Rivercard deposited $800, 000 into an escrow account managed by Patriquin, in order to purchase a 25% interest in Post Oak (#1, ¶ 13). The money was to be released from the escrow account following the completion of certain conditions (#1, ¶ 50). First, Post Oak was to complete a licensing agreement with Harrah's Interactive Entertainment ("Harrah's Agreement") to gain exclusive rights to operate and market the World Series of Poker Academy website (#1, ¶ 18). As a part of this agreement, Post Oak was to execute contracts with celebrity poker players to "provide video-based and/or live stream instruction and analysis" for the website (#1, ¶ 20).
Additionally, Patriquin was to ensure the completion of a Unanimous Shareholders Agreement, a Subscription Agreement for the $800, 000 transaction, and a Loan Agreement for an additional $200, 000 prior to the release of the escrow funds. Finally, Rivercard was to receive a "duly executed original share certificate" for 346, 668 shares in Post Oak (#1, ¶ 28).
Prior to the closing of the deal, Rivercard alleges that "by and through multiple telephonic and email communications, Patriquin made numerous material representations" that the above conditions had been met (#1, ¶ 21). As an example of such communications, Rivercard cites an email from Patriquin at the close of the deal from April 7, 2010, the subject of which stated "Executed Closing Documents" (#1, ¶ 22). Rivercard alleges that Patriquin led them "to believe that the Harrah's agreement was in fact complete and that all preconditions and requirements of the Harrah's agreement had been satisfied" and that the "players' agreements had been signed by the players" (#1, ¶¶ 19 & 20). Shortly thereafter, on April 15, 2010, believing that all conditions had been met, Rivercard sent an email approving the release of the funds held in escrow (#6, 4:4-5).
Rivercard subsequently discovered that the shares it was issued were in an empty shell corporation (2084701 Ontario, Inc.) that was also known as Post Oak Productions (#1, ¶ 29). It also discovered that the Unanimous Shareholders Agreement had not been fully executed, that conditions of the Subscription Agreement were incomplete, that the Harrah's Agreement was incomplete, that conditions within that agreement were unfulfilled, and that players' contracts were incomplete (#1, ¶¶ 19, 20, 30). "In or around October or November 2010" Rivercard discovered that Post Oak was "technically insolvent and lacked funds to continue operations, " and that "substantial portions of their investment funds" had unknowingly been used to pay Post Oak's prior debts (#1, ¶¶ 41-42). These payments included debts collected by Patriquin (#1, ¶ 44).
Rivercard's complaint raises seven distinct claims: breach of contract, breach of the covenant of good faith and fair dealing, tortious breach of the covenant of good faith and fair dealing, breach of fiduciary duty, negligent/false representation, violation of U.S. securities laws, and, in the alternative, unjust enrichment. Patriquin argues that Rivercard is statutorily barred and equitably estopped from raising the first three claims (the "contractual claims"); that unjust enrichment cannot be concurrently ...