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McRae v. Minor

United States District Court, S.D. Mississippi, Northern Division

May 4, 2017




         This breach-of-contract case is before the Court on Defendants' Motion to Dismiss Plaintiffs' Amended Complaint [12] and Plaintiffs' Motion to Strike, or in the Alternative, for Discovery [20]. For the reasons that follow, the motion to strike is denied, and the motion to dismiss is granted in part as to the open-account claim.

         I. Facts and Procedural History

         In late 2010, Defendant Paul S. Minor engaged the legal services of Plaintiffs Chuck McRae, Oliver Diaz, Jr., and their law firms to handle a lawsuit brought by Minor and the estate of his late wife against the Minors' property insurer, USAA. The parties did not enter into a written fee agreement. Instead, Plaintiffs contend that Minor verbally agreed to a contingent-fee agreement whereby “Plaintiffs would provide legal representation in exchange for 35% of the gross recovery, plus expenses.” Am. Compl. [3] ¶ 12. For their part, Defendants agree that a contingent-fee agreement existed. But they say its terms were that McRae and Diaz would each earn 10% of the net recovery, after the deduction of expenses.[1] Id. at Ex. D [3-4].

         The Minors, represented by Plaintiffs, ultimately obtained a jury verdict against USAA in excess of $1.5 million and paid some portion of the proceeds to Plaintiffs. But Plaintiffs say they were underpaid and therefore filed this lawsuit against Minor, his late wife's estate, and Minor's two children on September 27, 2016. In addition to breach-of-contract and unjust-enrichment claims asserted by all Plaintiffs arising out of the contingent-fee agreement, McRae and his law firm assert a separate claim against Minor for nonpayment of the balance owed on an open account arising from other legal work those Plaintiffs performed. Defendants moved to dismiss, Plaintiffs responded in opposition, and Defendants timely filed a reply. Plaintiffs then moved to strike an exhibit submitted with Defendants' reply or, alternatively, for discovery. Defendants responded to that motion; Plaintiffs failed to file a reply, and the time to do so under the local rules has now expired. The Court has personal and subject-matter jurisdiction and is prepared to rule.

         II. Standard

         In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the “court accepts ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam)). But “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To overcome a motion to dismiss, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555 (citations and footnote omitted).

         III. Analysis

         A. Motion to Strike

         Defendants attached to their reply in support of their motion to dismiss the trial testimony of Defendant Stephen Minor from the underlying lawsuit. They included it to refute the allegation in the Amended Complaint that Stephen testified at trial “that a contingency contract existed wherein payment to the Plaintiffs for legal representation was agreed upon at the rate of [35]% of the gross recovery plus expenses.” Am. Compl. [3] ¶ 20; see also Pls.' Mem. [17] at 2 (repeating allegation). But Stephen did not so testify at the trial, as shown by the transcript Defendants submitted.

         Plaintiffs have moved to strike the transcript; alternatively, they ask the Court to convert Defendants' motion to dismiss into a motion for summary judgment and allow discovery prior to ruling on the motion. See Fed. R. Civ. P. 12(d). Ordinarily, in considering a motion to dismiss under Rule 12(b)(6), the Court “must limit itself to the contents of the pleadings, including attachments thereto.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). An exception to this rule exists for “[d]ocuments that a defendant attaches to a motion to dismiss [that] are referred to in the plaintiff[s'] complaint and are central to [their] claim.” Id. at 499 (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). Additionally, the Court may consider “matters of public record” of which it may take judicial notice in ruling on a Rule 12(b)(6) motion. Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007).

         Defendants say that the trial transcript is properly before the Court under both the central-to-the-claim and the judicial-notice exceptions. Turning to the latter, Federal Rule of Evidence 201 permits the Court to take judicial notice of “a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). The Court agrees that Stephen's trial testimony-offered to show that he did not testify as Plaintiffs alleged-is a matter of public record. See Joseph v. Bach & Wasserman, L.L.C., 487 F. App'x 173, 178 n.2 (5th Cir. 2012) (concluding that court could take judicial notice of pleading filed in Louisiana state court in ruling on motion to dismiss). Indeed, Plaintiffs do not dispute the authenticity of the transcript and “concede” that their argument regarding it was mistaken. Pls.' Mem. [21] at 2. Under these circumstances, the Court takes judicial notice of the transcript and may consider it when ruling on the motion to dismiss. Conversion under Rule 12(d), and a stay for discovery, is therefore not required. Plaintiffs' motion to strike is denied.[2]

         B. Motion to Dismiss

         1. Contingent-Fee-Agreement ...

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