Scott v. Wollney
| Decision Date | 10 September 2021 |
| Docket Number | Civil Action 3:20-CV-2825-M-BH |
| Parties | GREGORY ALAN SCOTT d/b/a THE SCOTT LAW FIRM, Plaintiff, v. SCOTT D. WOLLNEY, JOSEPH R. SHGRUE, PAUL A ROMANO, and ATLAS FINANCIAL HOLDINGS, INC., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Referred to U.S. Magistrate Judge[1]
FINDINGS, CONCLUSIONS, AND RECOMMENDATION
Before the Court for recommendation are Defendant Atlas Financial Holdings, Inc.'s Motion to Dismiss Tort Claims Asserted Against It in Plaintiff's Fourth Amended Complaint, filed June 23, 2021 (doc. 81), and Plaintiff's Rule 54(d)(2)(A) Motion for Attorney Fees, filed July 1, 2021 (doc. 93). Based on the relevant filings, evidence, and applicable law, the defendant's motion to dismiss should be GRANTED, the remaining claims against it should be DISMISSED with prejudice, and the plaintiff's motion for attorney's fees should be DENIED.
Gregory Alan Scott (Plaintiff), a Texas attorney, sues Atlas Financial Holdings, Inc. (Defendant) and its Chief Executive Officer (CEO), Chief Financial Officer (CFO), and Chief Operating Officer (COO) (collectively Corporate Officers) for his unpaid attorney fees and expenses. (doc. 73 at 9-21.)[2] A. Factual Background
Plaintiff alleges that between 2014 and 2020, Defendant provided commercial vehicle insurance in Texas through its insurance companies and subsidiaries, Gateway Insurance Company (GIC) and American Country Insurance Company (American Country). (Id. at 5.) In 2014, COO, Defendant's Vice President of Claims (VP), and its Litigation Manager met with Plaintiff in Dallas, Texas “to retain his legal services related to defending what was anticipated to be dozens of Texas lawsuits involving hundreds of Texas claimants.” (Id. at 9.) At the meeting, COO entered into a “preliminary, verbal attorney-client agreement” with him for the benefit of Defendant at the direction of CEO. (Id.)
Between 2014 and 2020, Defendant's “highest corporate officers” retained his law firm “via email to provide legal services for new civil lawsuits filed in Texas.” (Id.) Plaintiff represented GIC, or its policyholders and insureds, in 90 lawsuits filed in Texas, and he “performed 100% of the legal services requested by [Defendant] in every Texas lawsuit.” (Id. at 10.) He received the “Atlas Financial Defense Billing Guidelines, ” which set out the policies and procedures for submission of invoices by counsel, and he submitted invoices in accordance with those billing guidelines. (Id. at 10-11.) He alleges that Defendant, “through its insurance companies/subsidiaries, ” paid his attorney fee bills between 2014 and 2019, but in late 2019, it “began slow-paying & non-payment of the remaining attorney fee statements.” (Id. at 11-12.)
On June 11, 2020, GIC was declared insolvent and placed into liquidation by the Circuit Court of Cook County, Illinois. (See doc. 25-5.) The following day, the Office of the Special Deputy Receiver (the Receiver) issued a notice to GIC's defense counsel informing them of the state court's liquidation order, where they could obtain a copy of the order, as well as informing them that their retention by GIC had concluded as of the date of the liquidation order. (See doc. 25-7 at 2.) The state court's liquidation order also “activated the statutory protection” of the state's Guaranty Fund or Association, which would determine whether the claim or claims being defended by the vendors were “covered claims” as defined by statute, and a representative from the Guaranty Fund would contact them to discuss their handling of the claims. (See id.) A separate email was sent to undisclosed recipients from a litigation analyst, advising them that the Receiver would address any unpaid expenses billed to GIC from October 16, 2019 through June 10, 2020. (Id. at 3.) Those seeking payment for unpaid expenses billed to GIC within that timeframe were directed to mail itemized invoices to the Receiver. (Id.) For unpaid expenses prior to October 16, 2019, a claim was to be filed in GIC's liquidation proceedings. (Id.)
B. Procedural History
On August 11, 2020, Plaintiff filed this lawsuit in the 160th Judicial District Court, in Dallas County, Texas, asserting claims for breach of contract and suit on sworn account. (See doc. 1-2.) After it was removed to federal court on September 11, 2020, and Defendant answered, Plaintiff filed a motion for partial summary judgment on October 19, 2020. He subsequently amended his complaint, and was later granted leave to file a fourth amended complaint, which asserted claims against Defendant and Corporate Officers for breach of contract and suit on sworn account, as well as “common law” claims for theft of services, unjust enrichment, tortious interference with a contract, negligent and intentional misrepresentation, negligence, and fraudulent inducement, and sought $323, 722 in attorney's fees and $9, 318 in expenses. (docs. 36, 53, 72, 73 at 9-21, 25-26.) Prior to the filing of the fourth amended complaint, Defendant also filed a motion for summary judgment. (See doc. 57.) Plaintiff's claims against Corporate Officers were dismissed without prejudice for lack of personal jurisdiction on July 6, 2021. On August 28, 2021, it was recommended that Plaintiff's partial summary judgment motion be denied, Defendant's motion be granted, and the breach of contract and suit on sworn account claims be dismissed with prejudice. (See doc. 112.)
On June 23, 2021, Defendant moved to dismiss the remaining claims against it for failure to state a claim. (doc. 81.) On July 1, 2021, Plaintiff moved for attorney's fees. (doc. 93.) He responded to the motion to dismiss on July 12, 2021, and Defendant replied on July 28, 2021. (docs. 106, 111.) It did not respond the motion for fees.
Defendant moves to dismiss Plaintiff's “common law” claims against it for failure to state a claim under Rule 12(b)(6). (doc. 82.)
Rule 12(b)(6) allows motions to dismiss for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Under the 12(b)(6) standard, a court cannot look beyond the face of the pleadings. Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996); see also Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999), cert. denied, 530 U.S. 1229 (2000).
Pleadings must show specific, well-pleaded facts, not mere conclusory allegations to avoid dismissal. Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992). The court must accept those well-pleaded facts as true and view them in the light most favorable to the plaintiff. Baker, 75 F.3d at 196. “[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of [the alleged] facts is improbable, and ‘that a recovery is very remote and unlikely.' ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007) (citation omitted). Nevertheless, a plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action's elements will not do.” Id. at 555; accord Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (). The alleged facts must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. In short, a complaint fails to state a claim upon which relief may be granted when it fails to plead “enough facts to state a claim to relief that is plausible on its face.” Id. at 570.
A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a “probability requirement, ” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.'”
Iqbal, 556 U.S. at 678 (citations omitted). When plaintiffs “have not nudged their claims across the line from conceivable to plausible, their complaint must be dismissed.” Twombly, 550 U.S. at 570; accord Iqbal, 556 U.S. at 683.
As noted, a court cannot look beyond the pleadings in deciding a Rule 12(b)(6) motion. Spivey, 197 F.3d at 774; Baker, 75 F.3d at 196. When a party presents “matters outside the pleadings, ” a court has “complete discretion” to either accept or exclude the evidence for purposes of determining the motion. Isquith ex rel. Isquith v. Middle S. Utils., Inc., 847 F.2d 186, 193 n.3 (5th Cir. 1988); accord Gen. Retail Servs., Inc. v. Wireless Toyz Franchise, LLC, 255 Fed.Appx. 775, 783 (5th Cir. 2007). However, “[i]f ... matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56, ” and “[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d).
Nevertheless “pleadings” for purposes of a motion to dismiss include attachments to the complaint. See In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (citation omitted). Similarly, documents “attache[d] to a motion to dismiss are considered part of the pleadings, if they are referred to in the plaintiff's complaint and are central to her claim[s].” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000) (citation omitted). Accordingly, documents falling in these categories may be properly considered without...
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