United States District Court, D. Nevada
THOMAS W. MCNAMARA, Plaintiff,
LINDA HALLINAN, et al., Defendants.
M. Navarro, District Judge.
before the Court is the Motion to Dismiss, (ECF No. 29),
filed by Defendants Carolyn Hallinan and Linda Hallinan
(collectively “Defendants”). Plaintiff Thomas W.
McNamara (“McNamara”) filed a Response, (ECF No.
33), and Defendants filed a Reply, (ECF No. 36).
pending before the Court is Defendants' Motion to Stay
Proceedings, (ECF No. 98). For the reasons discussed herein,
Defendants' Motion to Dismiss is GRANTED in part
and DENIED in part. Furthermore, Defendants Motion
to Stay is DENIED as moot.
case arises from McNamara's exercise of authority as
court-appointed monitor (“Monitor”) over the
judgment debtor's assets in Fed. Trade Comm'n. v.
AMG Servs., Inc., 2:12-cv-00536-GMN-VCF (“FTC
v. AMG”). In FTC v. AMG, the Court
granted summary judgment in favor of the Federal Trade
Commission (“FTC”) and against defendant Scott
Tucker (“Tucker”) and his businesses for a payday
lending scheme in violation of the FTC Act, 15 U.S.C. §
45(a)(1). See FTC v. AMG, No. 2:12-cv-00536-GMN-VCF,
2016 WL 5791416 (D. Nev. Sept. 30, 2016), aff'd sub
nom. Fed. Trade Comm'n v. AMG Capital Mgmt., LLC,
910 F.3d 417 (9th Cir. 2018).
initially brought its action against Tucker and his entities
in 2012, alleging that Tucker orchestrated a massive payday
lending enterprise engaging in criminal and deceptive
practices. Their Complaint brought claims for violations of
§ 5(a) of the FTC Act, the Truth in Lending Act, and the
Electronic Funds Transfer Act. The FTC also named as
defendants ten entities, including three of Tucker's loan
servicing companies (one of which was NM Service Corp.
(“NMS”)), three Indian tribes, and four corporate
lending companies, all allegedly under Tucker's control
in furtherance of his scheme. (See Am. Compl. ¶
24, ECF No. 20).
here, the Court found that the FTC's evidence established
that Tucker, through his loan servicing companies, including
NMS, directed the creation of sham lending corporations, also
under Tucker's control. FTC v. AMG, 2016 WL
5791416, at *6-7. The Court also concluded that the FTC put
forth “overwhelming evidence” demonstrating that
Tucker and his lending companies operated a common
enterprise, for which they are jointly and severally liable
for one another's wrongful conduct. Id. at *9.
Court granted FTC its requested injunctive relief, enjoining
Tucker from assisting “any consumer in receiving or
applying for any loan or other extension of Consumer
Credit.” Id. at *14. The Court also ordered
that Tucker and his entities pay approximately $1.27 billion
in equitable monetary relief to the FTC, based on consumer
losses between 2008 and 2012. Id. at *12.
parties subsequently negotiated a stipulated proposed order
to resolve post-judgment matters including, inter
alia, a stay of execution, asset freeze pending appeal,
and the appointment of a monitor to oversee the freeze and
preserve assets to support the Court's monetary judgment,
(ECF No. 195). The Court granted the parties' stipulated
order (the “Appointment Order”), and appointed
McNamara as Monitor, authorizing him to preserve and recover
assets on behalf of the Monitorship Estate. (See
Appointment Order § VII.R, Ex. A to Am. Compl., ECF No.
20-1). The Appointment Order defines the Monitorship Estate
as “[a]ll of Scott Tucker's . . . and the Monitor
Entities' Assets, wherever they may be located, in
whosever possession they may be found, whether owned directly
or indirectly.” (Id. § VI). Monitor
Entities are defined as several corporate defendants and
entities formerly controlled by Tucker, as well as their
successors, assigns, affiliates, subsidiaries. (Id.
Definitions § H). Assets, in turn, encompass “any
legal or equitable interest in, right to, claim to, any real,
personal, or intellectual property wherever located . . .
” (Id. Definitions § A).
the Appointment Order, McNamara is vested with authority to,
among other things, “[c]onduct such investigation and
discovery . . . as may be necessary to locate and account for
additional Assets (including Assets held by either Persons or
entities other than a Defendant) belonging to, or held by
others for the benefit of, any Defendant or Monitorship
Entity, for inclusion in the Monitorship Estate.”
(Id. § VIII.G). McNamara is also directed and
authorized to initiate or become a party to
“proceedings in state, federal or foreign courts that
the Monitor deems necessary and advisable to preserve or
recover the Monitorship Estate or to carry out the
Monitor's mandate under this order.” (Id.
§ VIII.R). Pursuant to this authority, McNamara filed a
series of suits, including the instant one, to claw back
allegedly fraudulent transfers on behalf of the Monitorship
to McNamara's appointment, Tucker exercised complete and
exclusive control over the common payday lending enterprise,
including, but not limited to, the Monitor Entities, all
related entities, and all assets of the Monitorship Estate.
(Am. Compl. ¶ 34). During the period of his control,
Tucker, through his various entities, never took any action
to address or mitigate the harms caused by his common
enterprise, instead electing to conceal his ill-gotten gains.
(Id. ¶ 35). According to McNamara, Tucker's
efforts to transfer assets were only uncovered and rendered
legally actionable upon his appointment as Monitor.
February 2016, during the pendency of the FTC's civil
suit against Tucker and his affiliated entities, Tucker was
indicted on fourteen felony counts in the Southern District
of New York arising from his payday lending operation.
(Id. ¶¶ 37-38). On October 13, 2017,
Tucker was convicted on all fourteen counts as charged and
was subsequently sentenced to serve 200 months in prison.
(Id. ¶ 39). In March 2016, Charles Hallinan
(“Hallinan”), Tucker's co-conspirator and
owner of one half of the profits and assets of NMS, was
indicted on seventeen counts in connection with his related
payday lending enterprise. (Id. ¶ 40). Based
upon evidence gathered in Tucker's indictment, Hallinan
was alleged to have participated with Tucker in a conspiracy
to collect unlawful debts, make usurious loans, and shield
these activities from regulators by engaging in sham
transactions. (Id. ¶¶ 41-42). Hallinan was
convicted on all seventeen counts in the Eastern District of
Pennsylvania on November 27, 2017. (Id. ¶ 43).
present case, McNamara alleges that Defendants-the adult
daughters of Hallinan, Tucker's co-conspirator-received
hundreds of thousands of dollars from Monitor Entities in the
form of purported “interest payments” on a loan.
(Am. Compl. ¶¶ 4-5, ECF No. 20). In July 2002,
Defendants supposedly made a $500, 000 loan to C.B. Service
Corp.-an entity controlled by Tucker, owned by Monitor Entity
NMS, and allegedly established as a sham to conceal Tucker
and Hallinan's identity and minimize risk of legal
exposure. (Id. ¶¶ 13, 67-68). The loan
carried an interest rate of 24 percent per annum, based upon
which, C.B. Service Corp. sent Defendants monthly payments
between 2003 and 2008, totaling $630, 000. (Id.
to McNamara, the loan was a mechanism designed to deprive NMS
and related Tucker-controlled entities of their money by
diverting the assets to Defendants, the family of
Tucker's close business partner and co-conspirator.
(Id. ¶ 15). McNamara contends there was no
legitimate purpose behind these payments; rather they were
intended to “hinder, delay, or defraud the Monitor
Entities, ” in contravention of their interests and
against their will. (Id. ¶ 18).
filed the instant action to claw back these allegedly
fraudulent transfers on behalf of the Monitorship Estate.
(Id. ¶ 21). McNamara brings the following
causes of action against Defendants: (1) fraudulent transfer;
(2) restitution/unjust enrichment; and (3) equitable
accounting. (Id. ¶¶ 103-121). Defendants
now move to dismiss, contending, inter alia, that
McNamara has exceeded his authority under the Appointment
Order by bringing this suit. (See generally
Defs.' Mot. to Dismiss (“MTD”), ECF No. 29).
is appropriate under Rule 12(b)(6) where a pleader fails to
state a claim upon which relief can be granted. Fed.R.Civ.P.
12(b)(6); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). A pleading must give fair notice of a legally
cognizable claim and the grounds on which it rests, and
although a court must take all factual allegations as true,
legal conclusions couched as factual allegations are
insufficient. Twombly, 550 U.S. at 555. Accordingly,
Rule 12(b)(6) requires “more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id. “To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”
Id. This standard “asks for more than a sheer
possibility that a defendant has acted unlawfully.”
a district court may not consider any material beyond the
pleadings in a ruling on a Rule 12(b)(6) motion.”
Hal Roach Studios, Inc. v. Richard Feiner & Co.,
896 F.2d 1542, 1555 n.19 (9th Cir. 1990). “However,
material which is properly submitted as part of the complaint
may be considered.” Id. Similarly,
“documents whose contents are alleged in a complaint
and whose authenticity no party questions, but which are not
physically attached to the pleading, may be considered in a
Ruling on a Rule 12(b)(6) motion to dismiss. Branch v.
Tunnell, 14 F.3d 449, 454 (9th Cir. 1994). On a motion
to dismiss, a court may also take judicial notice of
“matters of public record.” Mack v. S. Bay
Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986).
Otherwise, if a court considers materials outside of the
pleadings, the motion to dismiss is converted into a motion
for summary judgment. Fed.R.Civ.P. 12(d).
court grants a motion to dismiss for failure to state a
claim, leave to amend should be granted unless it is clear
that the deficiencies of the complaint cannot be cured by
amendment. DeSoto v. Yellow Freight Syst., Inc., 957
F.2d 655, 658 (9th Cir. 1992). Pursuant to Rule 15(a), the
court should “freely” give leave to amend
“when justice so requires, ” and in the absence
of a reason such as “undue delay, bad faith or dilatory
motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, futility of the amendment, etc.” Foman
v. Davis, 371 U.S. 178, 182 (1962).
move to dismiss McNamara's Amended Complaint (the
“Complaint”) on the following grounds: (a)
McNamara's suit exceeds the scope of his authority under
the Appointment Order; (b) the fraudulent transfer claim
fails because the underlying allegations are not pleaded with
sufficient particularity; (c) the unjust enrichment claim is
not cognizable under these facts and, regardless, is barred
by the applicable statute of limitations; and (d) the claim
for equitable accounting fails to state a claim. (MTD
4:16-14:14, ECF No. 29).
Court turns first to the threshold issue of whether the
Appointment Order vests McNamara ...