Albe v. Lenter, No. 2:2018cv05389 - Document 19 (E.D. La. 2019)
Court Description: ORDER AND REASONS granting in part and denying in part 12 Motion to Dismiss for Failure to State a Claim. For the reasons stated herein, defendants' motion to dismiss the complaint is DENIED IN PART and GRANTED IN PART. Plaintiff's claim for bad faith breach of contract is DISMISSED. Signed by Judge Sarah S. Vance on 1/3/2019. (cg)
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Albe v. Lenter Doc. 19 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA J OSEPH G. ALBE CIVIL ACTION VERSUS NO. 18-5389 ROBERT A. LENTER, ET AL. SECTION “R” (4) ORD ER AN D REASON S Before the Court are (1) the defendants’ m otion to dism iss, and (2) the parties’ supplem ental briefs regarding whether the Court has jurisdiction over this action. Because the Court finds that plaintiff’s com plaint satisfies the am ount-in-controversy requirement, it concludes it has diversity jurisdiction. Having established its jurisdiction, the Court also denies in part and grants in part defendants’ m otion to dism iss for failure to state a claim upon which relief can be granted. Defendants’ m otion to dism iss is granted with respect to plaintiff’s claim for bad faith breach of contract, but is denied as to all other claim s. Dockets.Justia.com I. BACKGROU N D This lawsuit arises out of a contract dispute between two law partners. 1 Plaintiff J oseph G. Albe alleges that he practiced law for over twenty years with defendant Robert A. Lenter. 2 Plaintiff alleges that he and Lenter entered into oral and written agreem ents concerning their joint legal representation of clients. 3 Under these alleged agreements, Lenter would pay all litigation costs, plaintiff would perform the majority of the legal work, and they would split all of the attorney fees evenly. 4 Lenter allegedly failed to pay plaintiff m oney he is owed under the terms of these agreem ents. 5 Plaintiff specifically alleges that Lenter collected fees for two cases that settled in October 20 17 and J anuary 20 18, but failed to pay plaintiff his half, which allegedly amounted to $ 70 ,0 0 0 . 6 On May 29, 20 18, plaintiff filed this lawsuit in federal court against Lenter and defendant Hurt on the J ob? Robert A. Lenter, Attorneys at Law, LLC. 7 Plaintiff seeks to recover the am ount owed under the contracts, dam ages for mental pain and anguish, 1 2 3 4 5 6 7 R. Doc. 3 at 1 ¶ 1. Id. at 1 ¶ 1, 2 ¶ 3. Id. at 2 ¶ 3. Id. ¶ 4. Id. Id. at 2-3 ¶¶ 5-8, 3-4 ¶¶ 9-11, 5 ¶ 14. Id. at 2 ¶ 2. 2 attorney fees, and his costs and expenses for bringing this action. 8 Plaintiff contends that the total sum of his damages is $ 10 0 ,0 0 0 . 9 On August 2, 20 18, defendants m oved to dism iss the com plaint. 10 Defendants contended that there is not com plete diversity of citizenship between the parties, which deprives the Court of jurisdiction over plaintiff’s com plaint. Defendants also asserted that plaintiff’s com plaint should be dism issed under Federal Rule of Civil Procedure 12(b)(6), because plaintiff has not provided enough factual support for his claim s. 11 On December 3, 20 18, the Court held that there was diversity of citizenship between the parties. 12 But the Court ordered the parties to file supplemental briefs addressing whether the am ount-in-controversy requirement has been met to grant the Court diversity jurisdiction. 13 Because the Court’s jurisdiction over the action was uncertain, it did not rule on defendants’ m otion to dism iss for 8 9 10 11 12 13 Id. at 5 ¶ 14. Id. ¶ 16. R. Doc. 12. See id. R. Doc. 16 at 6-8. Id. at 10 -11. 3 failure to state a claim . 14 The parties have now filed their supplemental briefs. 15 II. LEGAL STAN D ARD A. D ive rs ity Ju ris d ictio n Federal courts are courts of lim ited jurisdiction and possess power over only those cases authorized by the United States Constitution and federal statutes. Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996). Two possibilities for jurisdiction exist: federal question jurisdiction under 28 U.S.C. § 1331 and diversity jurisdiction under 28 U.S.C. § 1332. Diversity jurisdiction exists only when there is com plete diversity of citizenship, and the am ount in controversy exceeds $ 75,0 0 0 , exclusive of interests and costs. 28 U.S.C. § 1332(a). The am ount in controversy m ust be either facially apparent or established by a preponderance of the evidence. Felton v. Grey hound Lines, Inc., 324 F.3d 771, 773 (5th Cir. 20 0 3). If a district court lacks jurisdiction over the subject m atter of a plaintiff’s claims, it m ust dism iss the case. See Fed. R. Civ. P. 12(b)(1). The 14 15 Id. at 11. See R. Doc. 17; R. Doc. 18. 4 lack of subject m atter jurisdiction m ay be raised at any tim e during the pendency of the case by any party or by the court. See Kontrick v. Ry an, 540 U.S. 443, 456 (20 0 4) (“A litigant generally m ay raise a court’s lack of subjectm atter jurisdiction at any tim e in the sam e civil action, even initially at the highest appellate instance.”); McDonal v. Abbott Labs., 40 8 F.3d 177, 182 n.5 (5th Cir. 20 0 5) (“[A]ny federal court m ay raise subject m atter jurisdiction sua sponte.”). “The citizenship of a party at the com m encem ent of the action is controlling for purposes of determ ining diversity jurisdiction and subsequent actions do not affect the court’s jurisdiction.” Aetna Cas. & Sur. Co. v. Hillm an, 796 F.2d 770 , 776 (5th Cir. 1986) (citing Oliney v. Gardner, 771 F.2d 856, 858 (5th Cir. 1985)) (emphasis in original). In ruling on a Rule 12(b)(1) m otion to dism iss, the court m ay rely on (1) the com plaint alone, presum ing the allegations to be true, (2) the com plaint supplem ented by undisputed facts, or (3) the com plaint supplem ented by undisputed facts and by the court’s resolution of disputed facts. Den Norske Stats Oljeselskap As v. HeereMac Vof, 241 F.3d 420 , 424 (5th Cir. 20 0 1) (citing Barrera-Montenegro v. United States, 74 F.3d 657, 659 (5th Cir. 1996)). When exam ining a factual challenge to subject m atter jurisdiction that does not im plicate the m erits of the plaintiff’s cause of 5 action, the district court has substantial authority “to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Arena v. Gray bar Elec. Co., 669 F.3d 214, 223 (5th Cir. 20 12). B. Fe d e ral Ru le o f Civil Pro ce d u re 12 ( b) ( 6 ) To survive a Rule 12(b)(6) m otion to dism iss, the plaintiff m ust plead “sufficient factual m atter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atl. Corp. v. Tw om bly , 550 U.S. 544, 570 (20 0 7)). A claim is facially plausible when the plaintiff pleads facts that allow the court to “draw the reasonable inference that the defendant is liable for the m isconduct alleged.” Id. at 678. A court m ust accept all well-pleaded facts as true and m ust draw all reasonable inferences in favor of the plaintiff. See Lorm and v. US Unw ired, Inc., 565 F.3d 228, 232 (5th Cir. 20 0 9). A legally sufficient com plaint m ust establish m ore than a “sheer possibility” that the plaintiff’s claim is true. Iqbal, 556 U.S. at 678. It need not contain detailed factual allegations, but it m ust go beyond labels, legal conclusions, or form ulaic recitations of the elem ents of a cause of action. Id. In other words, the face of the com plaint m ust contain enough factual m atter to raise a reasonable expectation that discovery will reveal relevant evidence 6 of each elem ent of the plaintiff’s claim. Lorm and, 565 F.3d at 257. The claim m ust be dism issed if there are insufficient factual allegations to raise a right to relief above the speculative level, Tw om bly , 550 U.S. at 555, or if it is apparent from the face of the com plaint that there is an insuperable bar to relief, Jones v. Bock, 549 U.S. 199, 215 (20 0 7). III. D ISCU SSION A. D ive rs ity Ju ris d ictio n The Court previously ordered the parties to brief the issue of whether plaintiff has satisfied the am ount-in-controversy requirem ent for diversity jurisdiction—$ 75,0 0 0 —because plaintiff concedes that he is owed only $ 70 ,0 0 0 under the relevant contracts. 16 Because in his com plaint plaintiff claim ed a total am ount of dam ages in excess of $ 75,0 0 0 , the plaintiff satisfies the am ount-in-controversy requirement unless “from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the am ount claim ed.” See St. Paul Mercury Indem . Co. v. Red Cab Co., 30 3 U.S. 283, 288 (1938). The Court noted that plaintiff’s claim for m ental pain and anguish dam ages and attorney fees m ay not be available for his breach 16 R. Doc. 16 at 8. 7 of contract claim . 17 There was thus a possibility that plaintiff would be unable to satisfy the am ount-in-controversy requirement. Plaintiff argues in his supplemental brief that in addition to his breach of contract claim , his complaint contains a claim for conversion, under which he m ay recover general dam ages under Louisiana law. 18 Plaintiff states in his com plaint that his action is for “bad faith breach of contract and [conversion] 19 of attorney fees.”20 Plaintiff later states in his com plaint that Lenter’s actions “constitute a breach of contract under Louisiana Civil Code Article 1994 and/ or bad faith breach of contract under Louisiana Civil Code Article 1997, for his conversion of attorney fees rightfully belonging to [plaintiff].”21 Plaintiff has adequately alleged a claim for conversion. See Ay m ond v. State, Dep’t of Revenue & Taxation, 672 So. 2d 273, 275 (La. App. 1 Cir. 1996) (“Conversion is an intentional tort and consists of an act in derogation of the 17 Id. at 9-10 . R. Doc. 18 at 1-2. 19 The com plaint uses the word “conversation” rather than “conversion.” But viewing this paragraph and the com plaint as a whole, it is clear that this was simply a typographical error, and that plaintiff intended to use the term “conversion.” 20 R. Doc. 3 at 1 ¶ 1. 21 Id. at 4 ¶ 12. 8 18 plaintiff’s possessory rights.”). Under Louisiana law, plaintiff is entitled to recover general dam ages for a claim of conversion. See Fenner v. Schley , 246 So. 3d 770 , 773 (La. App. 2 Cir. 20 18) (noting that “[the] m easure of damages for wrongful conversion is the return of the property,” but that “[g]eneral dam ages may also be awarded when appropriate”) (citing Quealy v. Paine, W ebber, Jackson & Curtis, Inc., 475 So. 2d 756 (La. 1985)). Because this claim perm its recovery of m ore than the am ount allegedly owed under the contracts, there is no “legal certainty” that plaintiff will not be able to recover m ore than the amount-in-controversy requirement. The Court therefore has diversity jurisdiction over plaintiff’s claim s. B. Mo tio n to D is m is s fo r Failu re to State a Claim Because the Court has established its jurisdiction over the action, it will now consider defendants’ m otion to dism iss under Rule 12(b)(6). Plaintiff’s com plaint contains four causes of action: (1) breach of contract, (2) bad faith breach of contract, (3) conversion, and (4) detrim ental reliance. 22 Defendants argue that plaintiff’s com plaint should be dism issed because plaintiff has failed to m eet the pleading standard set by Iqbal and 22 Id. 9 Tw om bly . 23 The Court finds that plaintiff has m et this pleading standard for his breach of contract, conversion, and detrim ental reliance claim s, but has failed to adequately allege his claim for bad faith breach of contract. 1. Breach of Contract and Bad Faith Breach of Contract Under Louisiana law, which governs this diversity action, “a contract is an agreement by two or m ore parties whereby obligations are created, m odified, or extinguished.” La. Civ. Code art. 190 6. Plaintiff alleges in his com plaint that he and Lenter entered into “oral and written agreements” to split evenly all attorney fees they received. 24 Plaintiff specifically alleges two instances in which Lenter received paym ents from clients but did not pay plaintiff his share of the proceeds. 25 Although plaintiff has not included in his com plaint the exact term s of the parties’ agreements, he has articulated the obligations the parties allegedly owed one another, and the way in which defendants breached those obligations. Plaintiff has therefore provided “sufficient factual m atter . . . to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678; cf. 20 0 2 JBO Trust N o. 1 v. Roy al Bank of Can., No. 12-1344, 20 13 WL 871537, at *9 (E.D. La. Mar. 8, 20 13) (dism issing 23 24 25 R. Doc. 12-2 at 2-3. R. Doc. 3 at 2 ¶ 3. Id. at 2-4 ¶¶ 5-11. 10 breach of contract allegation when plaintiff failed to plead “facts that would allow the [c]ourt to assess the obligations im posed on defendants by the contract and to determ ine whether” the defendants breached the contract term s). But plaintiff does not provide sufficient factual m atter to state a claim for bad faith breach of contract. Bad faith requires that the obligor “intentionally and m aliciously fail[] to perform his obligation.” La. Civ. Code art. 1997, Revision Com m ent (b). Bad faith is not “m ere bad judgm ent or negligence[;] it im plies the conscious doing of a wrong for dishonest or m orally questionable m otives.” Volentine v. Raeford Farm s of La., LLC, 20 1 So. 3d 325, 338 (La. App. 2 Cir. 20 16). While plaintiff alleges that Lenter intentionally breached their agreements, he does not allege that the breach was m alicious, i.e., that Lenter intended to harm him or had som e other “dishonest or m orally questionable m otive[].” Id. Plaintiff’s bad faith breach of contract claim is therefore dism issed. See Hi-Tech Elec., Inc. of Del. v. T&B Constr. & Elec. Servs., Inc., No. 15-30 34, 20 18 WL 2268168, at *7 (E.D. La. May 17, 20 18) (dism issing bad faith breach of contract claim when the plaintiff alleged the defendant intentionally breached an agreem ent and m isrepresented the reasons for doing so, but did not allege that the 11 defendant had any m alicious or m orally questionable m otives); cf. Volentine, 20 1 So. 3d at 348 (affirm ing trial court’s finding of bad faith breach when evidence suggested defendant “singled [the plaintiff] out,” was “angry with him , and pursued a pattern of wrongdoing against” him ). 2. Conversion Conversion is a cause of action for “any wrongful exercise or assumption of authority over another’s goods.” Duhon v. Briley , 117 So. 3d 253, 261 (La. App. 4 Cir. 20 13). Conversion is frequently discussed in connection with movable property or other chattel. See, e.g., Dual Drilling Co. v. Mills Equip. Invs., Inc., 721 So. 2d 853, 857 (La. 1998) (listing seven instances in which an unlawful conversion is com m itted). But Louisiana courts have recognized that m oney allegedly owed to a plaintiff pursuant to a contract is a type of property interest that can serve as the basis for a conversion claim . See, e.g., La. Health Care Grp., Inc. v. Allegiance Health Mgm t., Inc., 32 So. 3d 1138, 1142-43 (La. App. 3 Cir. 20 10 ). Conversion is an intentional tort, but the intent required “is not necessarily that of conscious wrongdoing.” La. State Bar Ass’n v. Hinrichs, 486 So. 2d 116, 121 (La. 1986). “It is rather an intent to exercise a dom inion or control over the goods which is in fact inconsistent with the plaintiff’s rights.” Id. (noting that 12 “m istake of law or fact is no defense”). To prevail on a conversion claim under Louisiana law, plaintiff need only prove that (1) he owned or had the right to possess funds that were m isused by Lenter; (2) the m isuse was inconsistent with plaintiff’s right of ownership; and (3) the m isuse constituted a wrongful taking of the funds. Chry sler Credit Corp. v. Perry Chry sler Ply m outh, Inc., 783 F.2d 480 , 484 (5th Cir. 1986). Plaintiff alleges that he and Lenter had an agreem ent whereby plaintiff would receive a share of the proceeds for their legal work, and that Lenter has refused to relinquish plaintiff’s share of certain funds. Plaintiff has therefore stated sufficient facts to m aintain his claim for conversion. See La. Health Care Grp., Inc., 32 So. 3d at 1142-43. 3. Detrim ental Reliance Finally, plaintiff includes an alternative claim for detrim ental reliance. 26 The elem ents of detrim ental reliance under Louisiana law are “(1) a representation by conduct or word; (2) justifiable reliance; and (3) a change in position to one’s detrim ent because of the reliance.” Suire v. Lafay ette City -Par. Consol. Gov’t, 90 7 So. 2d 37, 59 (La. 20 0 5). Plaintiff alleges that he relied upon Lenter’s prom ises to split their attorney fees evenly, and that 26 Id. at 4 ¶ 12. 13 this reliance was justified given their prior working relationship. 27 Plaintiff further alleges that in reliance on this prom ise he agreed to undertake the legal work with Lenter, for which he was never paid. 28 Plaintiff has therefore pleaded each of the elements of his claim . See Cal. First N at’l Bank v. Boh Bros. Constr. Co., LLC, No. 16-2699, 20 18 WL 32170 9, at *4 (E.D. La. J an. 8, 20 18) (denying m otion to dism iss detrimental reliance claim when plaintiff alleged it perform ed additional work in reliance on defendant’s representation that it would pay plaintiff’s invoices, but defendant broke that prom ise). IV. CON CLU SION For the reasons stated above, defendants’ m otion to dism iss the com plaint is DENIED IN PART and GRANTED IN PART. Plaintiff’s claim for bad faith breach of contract is DISMISSED. New Orleans, Louisiana, this _3rd _ _ day of J anuary, 20 19. _______________________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 27 28 Id. Id. at 2 ¶ 4; 4 ¶ 12. 14
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