United States District Court, W.D. Arkansas, Fayetteville Division
MEMORANDUM OPINION AND ORDER
TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE
before the Court are:
The Travelers Indemnity Company's ("Travelers")
Motion to Dismiss (Doc. 12) and Brief in Support (Doc. 13);
Parker Law Firm's and Tim Parker's Response in
Opposition (Doc. 17), Brief in Opposition (Doc. 18), and
Supplemental Response and Brief in Opposition (Doc. 19); and
Travelers' Reply (Doc. 26);
Parker Law Firm's and Tim Parker's Motion for Default
Judgment Against Separate Defendant PS Finance, LLC
("PSF") (Doc. 30); and
Parker Law Firm's and Tim Parker's Motion for Summary
Judgment Against All Defendants (Doc. 32), Memorandum Brief
in Support (Doc. 33), and Statement of Uncontested Material
Facts in Support (Doc. 34).
reasons given below, the Motion to Dismiss is
GRANTED, the Motion for Default Judgment is
DENIED, the Motion for Summary Judgment is
MOOT, and the Complaint is DISMISSED
early 2017, Tim Parker and the Parker Law Firm were sued by
PSF in the Richmond County Supreme Court in Staten Island,
New York. PSF, a litigation-financing company, claimed that
Mr. Parker and his law firm breached their contract, breached
the covenant of good faith and fair dealing, and breached
their fiduciary duty, by failing to pay PSF settlement funds
that a Parker Law Firm client received through litigation
that PSF had financed. After being served with the lawsuit
papers, Mr. Parker delivered them to Travelers, with whom the
Parker Law Firm had an insurance policy, and asked Travelers
to provide coverage and a defense in the lawsuit. Travelers
denied this request, on the grounds that the policy does not
provide coverage for that type of event, and does not give
rise to any duty to defend against that type of claim. Near
the end of 2017, the Richmond County Supreme Court directed
the parties in that lawsuit to arbitration. For clarity, that
lawsuit and the subsequent arbitration will be referred to as
"the New York Litigation" throughout this Opinion
year after those parties were directed to arbitration, Mr.
Parker and the Parker Law Firm filed a Complaint in
this Court against Travelers and PSF. Their
Complaint asserts four causes of action against Travelers:
breach of contract, violation of the Arkansas Deceptive Trade
Practices Act ("ADTPA"), violation of the Arkansas
Insurance Code Trade Practices Act, and a request for
declaratory and injunctive relief compelling Travelers to
provide a defense to them and to pay any of PSF's claims
against them. All four of these counts concern Travelers'
denial of Mr. Parker's and his law firm's request for
coverage and defense in the New York Litigation. Essentially,
they all boil down to the same contention: that Travelers is
obligated under their insurance policy to provide coverage
and a defense, and that by refusing to do so, Travelers has
harmed them. Travelers has filed a Motion to Dismiss (Doc.
12) all of these claims against it under Fed.R.Civ.P.
12(b)(6). That Motion has been fully briefed and will be
discussed below, but first the Court will quickly take up
the matter of PSF's role in this case.
Mr. Parker's and his law firm's Complaint also names
PSF as a defendant, it does not identify any specific cause
of action or claim against PSF. See Doc. 1,
¶¶ 25-40. Instead, it explains simply that
"PSF is named as a party to this action because it is
likely to claim an interest in the subject litigation and in
its absence complete relief may not be afforded to all
parties." Id. at ¶ 3. It further asserts
that this Court has in rem or quasi in rem
jurisdiction over PSF because, in the New York Litigation,
PSF claimed damages "due to money it claims passed
through Parker Law Firm." See Id. To date, no
attorney has entered an appearance on behalf of PSF in this
Court, and PSF has not filed any motion or pleading in
response to the Complaint in this case.
Parker and his law firm have filed a Motion for Default
Judgment against PSF under Fed.R.Civ.P. 55, asking that
"default judgment be entered against [PSF] to the effect
that the Plaintiffs owe nothing to [PSF]" under the
litigation-financing contract that is the subject of the New
York Litigation. See Doc. 30, ¶ 6. The Court is
perplexed by this request, given that the Complaint itself
never seeks this (or any other) relief against PSF and,
indeed, quite literally fails to state any claim at all
against PSF. Neither the Motion for Default Judgment nor its
Brief in Support identifies any paragraph or cause of action
in the Complaint on which the requested relief is predicated.
Therefore, the Motion for Default Judgment will be
DENIED. With that matter out of the way, the
Court will return to the Motion to Dismiss filed by
survive a Rule 12(b)(6) motion to dismiss, a 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). The purpose of this requirement is to
"give the defendant fair notice of what the ... claim is
and the grounds upon which it rests." Erickson v.
Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The Court
must accept all of the Complaint's factual allegations as
true, and construe them in the light most favorable to the
plaintiff, drawing all reasonable inferences in the
plaintiffs favor. See Ashley Cnty., Ark. v. Pfizer,
Inc., 552 F.3d 659, 665 (8th Cir. 2009).
the complaint "must contain sufficient factual matter,
accepted as true, to 'state a claim to relief 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. "A
pleading that offers labels and conclusions' or 'a
formulaic recitation of the elements of a cause of action
will not do.' Nor does a complaint suffice if it tenders
'naked assertion[s]' devoid of 'further factual
enhancement."' Id. In other words, while
"the pleading standard that Rule 8 ...