Firm v. Travelers Indemnity Co.

          MEMORANDUM OPINION AND ORDER

          TIMOTHY L. BROOKS UNITED STATES DISTRICT JUDGE.

         Currently before the Court are:

• Plaintiffs Parker Law Firm's and Tim Parker's Motion to Remand to State Court (Doc. 17) and Affidavit (Doc. 16) and Brief in Support (Doc. 18), Defendant The Travelers Indemnity Company's ("Travelers") Response (Doc. 29) and Brief (Doc. 30), and Plaintiffs' Reply (Doc. 40) and Brief (Doc. 41);

• Travelers' Motion to Dismiss (Doc. 11) and Brief in Support (Doc. 12), Plaintiffs' Response (Doc. 34) and Affidavits (Docs. 31-33) and Brief (Doc. 35), and Travelers' Reply (Doc. 50);

• Defendant PS Finance, LLC's ("PSF") Motion to Dismiss (Doc. 26) and Brief in Support (Doc. 27), and Plaintiffs' Response (Doc. 46) and Brief (Doc. 47);

• Plaintiffs' Motion for Leave to File Amended Complaint (Doc. 49), PSF's Response (Doc. 58), and Travelers' Response (Doc. 59); and

• Plaintiffs' Motion for Immediate and Permanent Injunctive Relief Preventing PSF from Pursuing Binding Arbitration (Doc. 51) and Brief in Support (Doc. 52), PSF's Response (Doc. 61), and Plaintiffs' Reply (Doc. 62).

         For the reasons given below, all of Plaintiffs' motions are DENIED, and the motions filed by Travelers and PSF are both GRANTED.

         I. BACKGROUND

         This is the second lawsuit in this Court between these Plaintiffs, Travelers, and PSF. In the first go-round, the Court granted Travelers' motion to dismiss, and dismissed Plaintiffs' complaint without prejudice. In that Opinion and Order, this Court described the background of the first lawsuit thus:

In 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 and Order.

Half a 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).

Parker Law Firm v. Travelers Indem. Co., 2018 WL 3999826, at *1 (W.D. Ark. Aug. 21, 2018).

         This Court went on, first, to dismiss PSF from the case because "the Complaint itself never seeks . . . any . .. relief against PSF and, indeed, quite literally fails to state any claim at all against PSF." See Id. at *2. Then the Court conducted a much more fulsome analysis of Plaintiffs' claims against Travelers, ultimately concluding that Plaintiffs' insurance policy with Travelers provided no coverage for the money that PSF sought to recover from Mr. Parker and his law firm in the New York Litigation, and no duty to defend Mr. Parker and his law firm in the New York Litigation. See Id. at *2-*3. Typically, when this Court dismisses complaints at the Rule 12(b)(6) stage for failure to state a claim, it does so without prejudice because it may be theoretically possible for the ...