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Board of Trustees of the Southern Nevada Joint Management v. Fava

United States District Court, D. Nevada

July 3, 2018

BOARD OF TRUSTEES OF THE SOUTHERN NEVADA JOINT MANAGEMENT AND CULINARY AND BARTENDERS TRAINING FUND, Plaintiff(s),
v.
CHRISTOPHER FAVA, et al., Defendant(s).

          ORDER

         Presently before the court is defendant Federal Insurance Company's (“Federal”) motion to dismiss. (ECF No. 29). Plaintiff Culinary Academy of Las Vegas (“CALV”) filed a response (ECF No. 42), to which Federal replied (ECF No. 46).

         I. Facts

         This case involves an insurance coverage dispute related to a claim involving two former CALV employees' alleged breaches of their fiduciary duty.

         In January of 2012, CALV hired Christopher Fava as vice president of food and beverage and chief operating officer, and later as its chief executive officer. (ECF No. 1). CALV is a Nevada nonprofit employee benefit trust fund and is a provider of training for entry-level and incumbent workers in the Las Vegas hospitality industry. Id. Fava's position involved overseeing and managing CALV's assets and expenditures. Id.

         In April of 2015, Jaime Monardes joined CALV as vice president of finance and accounting. Id. Monardes was responsible for oversight of program operations, including the expenditure and use of CALV's assets. Id.

         On January 19, 2016, Fava and Monardes entered into an allegedly impermissible transaction with the Eclipse Theater LLC (“Eclipse Theater”). Id.

         CALV maintained a policy of fiduciary liability insurance (“the policy”) with Federal. Id. Fava and Monardes were insureds under the policy because of their employment at CALV and their actions as functional fiduciaries of CALV. Id.

         On December 19, 2016, CALV notified Federal of potential prohibited transactions incurred by Fava and Monardes and requested a coverage determination. Id. On December 21, 2016, Federal told CALV it would conduct an investigation and evaluation for possible coverage. Id. During phone calls between CALV and Federal, Federal indicated it did not believe CALV could make a claim against Fava and Monardes because all parties were insured under the policy. Id.

         On June 22, 2017, CALV filed a formal claim on the Federal policy, including details of its claims against Fava and Monardes. Id. On July 12, 2017, Federal responded to CALV and stated that no claim had been made because no third party asserted liability. Id.

         On August 4, 2017, Federal wrote to CALV and stated that it had not received CALV's claim against Fava and Monardes. Id. On August 14, 2017, CALV sent Federal a copy of its latest claims against Fava and Monardes. Id.

         On August 16, 2017, Federal wrote to CALV and said it would wait for Fava and Monardes to ask Federal for coverage. Id. On August 22, 2017, CALV replied to Federal and pointed out that the policy did not require that Fava and Monardes invoke coverage. Id.

         On August 28, 2017, CALV wrote to Federal demanding payment under the policy and noting that Federal had not articulated any basis for denying its claim. Id. On September 1, 2017, Federal refused to discuss the matter further with CALV. Id.

         On January 9, 2018, CALV filed the underlying complaint asserting fourteen claims for relief against several individual and entity defendants. Id. In the instant motion, Federal moves to dismiss the two state law claims CALV asserts against it. (ECF No. 29).

         II. Legal Standard

         A court may dismiss a 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) (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, 556 U.S. 662, 678 (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 678-79. Mere recitals of the elements of a cause of action, supported only by conclusory statements, do not suffice. Id. at 678.

         Second, the 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 the 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. (internal quotation marks omitted). When the allegations in a complaint have not crossed the line from ...


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