Magnolia Financial Group LLC v. Antos et al

Filing 234

ORDER AND REASONS granting in part Twin City Fire Insurance Company's 211 Motion to Dismiss for Failure to State a Claim. Plaintiff's claims against Defendant Twin City are dismissed relative to policy 21HUSS3602 only, but remain otherwise. Signed by Judge Jane Triche Milazzo. (ecm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MAGNOLIA FINANCIAL GROUP

CIVIL ACTION

VERSUS

NO: 15-7144

KENNETH ANTOS, ET AL

SECTION “H”

ORDER AND REASONS
Before the Court is a Motion to Dismiss Under Federal Rule of Civil
Procedure

12(b)(6) filed

by

Defendant-in-Cross-Claim Twin

City

Fire

Insurance Company (“Twin City”) (Doc. 211). For the following reasons, the
motion is GRANTED IN PART.
BACKGROUND
This is a declaratory judgment action on a promissory note that was
removed from the 29th Judicial District Court for the Parish of St. Charles. On
November 11, 2013, Defendants KCI Investments, LLC (“KCI”), Kenneth
Antos, and David Becklean executed a Secured Promissory Note (the “Note”)
with Plaintiff Magnolia Financial Group, LLC, (“Magnolia”) for the principal
sum of $2,000,000 with an interest rate of 15% per annum. Defendant
Becklean also executed a Pledge and Security Agreement (the “Security

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Agreement”) in favor of Magnolia, wherein he pledged his interest in the
proceeds of a Settlement Agreement dated September 22, 2012 among Twin
Towers Trading Site Management, LLC (“Twin Towers”), Jeffrey Brandon,
Eric Scholer, Becklean, and SMG Group (the “Settlement Agreement”). This
pledge was recorded. Subsequently, on January 13, 2015, Defendants entered
into a second agreement to borrow an additional $100,000 from Magnolia (the
“Second Note”). Plaintiff contends that no principal payments were paid on the
Notes by the maturity dates and that $2,457,805.60 of principal and interest
remains due and owing on the Notes. On November 20, 2015 Plaintiff filed the
instant suit seeking a declaratory judgment recognizing its rights under the
Notes and the Security Agreement.
The Court granted Plaintiff summary judgment recognizing Plaintiff as
attorney-in-fact for the purposes of carrying out the Security Agreement and
establishing Plaintiff’s right to collect attorneys’ fees at the termination of the
litigation. 1
Twin Towers intervened in this action and filed an interpleader
complaint relative to a portion of the Settlement Agreement proceeds. Plaintiff
responded, averring that Twin Towers is not entitled to interpleader relief.
Plaintiff also brought cross claims against, inter alia, Twin Towers, Donald
Porges, and Porges & Eisenberg CPA, LLC (collectively the “Porges
Defendants”) for tortious interference with contractual relations, fraud, bad
faith breach of conventional obligation, negligent breach of contract, negligent
misrepresentation, and general negligence. 2 Plaintiff alleges that Porges,
acting personally and on behalf of the other Porges Defendants, represented to
Plaintiff that Twin Towers would forward payments under the Settlement

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2

Doc. 25.
Docs. 48, 123.

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Agreement to Plaintiff in the event of Defendants’ default, but later acted to
prevent Plaintiff from obtaining the funds.
On motions by the Porges Defendants, the Court dismissed Plaintiff’s
claims for tortious interference with contractual relations and denied summary
judgment as to the remaining claims against the Porges Defendants. 3
Plaintiff’s Cross-Claim also alleges that Defendant-in-Cross-Claim Twin
City has one or more insurance policies providing coverage to Twin Towers and
its officers, directors, members, agents, or employees, including Donald Porges,
for Plaintiff’s claims against it. Pursuant to Louisiana’s direct action statute,
Plaintiff asserts those claims against Twin City as a solidary obligor.
Defendant Twin City now moves to dismiss the claims against it under Rule
12(b)(6).
LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead
enough facts “to state a claim to relief that is plausible on its face.” 4 A claim is
“plausible on its face” when the pleaded facts allow the court to “draw the
reasonable inference that the defendant is liable for the misconduct alleged.” 5
A court must accept the complaint’s factual allegations as true and must “draw
all reasonable inferences in the plaintiff’s favor.” 6 The Court need not,
however, accept as true legal conclusions couched as factual allegations. 7
To be legally sufficient, a complaint must establish more than a “sheer
possibility” that the plaintiff’s claims are true. 8 “A pleading that offers ‘labels
Docs. 70, 200.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
5 Id.
6 Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).
7 Iqbal, 556 U.S. at 678.
8 Id.
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and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’’’
will not suffice. 9 Rather, the complaint must contain enough factual allegations
to raise a reasonable expectation that discovery will reveal evidence of each
element of the plaintiff’s claim. 10
LAW AND ANALYSIS
Plaintiff’s Amended and Supplemental Cross-Claim alleges that, “at all
times material herein [Twin City] had in force and effect a policy of insurance
bearing number 21HUSS3602 (or other policy) which provided or extended
coverage to . . . Twin Towers.” 11 Defendant Twin City argues that Plaintiff fails
to state a claim against it because Twin City’s policy insuring Twin Towers
provides coverage only for property damage or personal injury, neither of which
occurred in this instance. 12 Twin City also points out that the Court has
already determined that the policy identified in Plaintiff’s complaint, number
21HUSS3602, does not cover Plaintiff’s losses. Defendant-in-Cross-Claim
North River Insurance Company (“North River”) issued excess insurance
policies to Twin Towers that incorporated the Twin City policies. The Court
dismissed Plaintiff’s claims against North River on the grounds that North
River’s policies did not provide coverage for Plaintiff’s losses. 13 As part of that
motion, North River introduced policy number 21HUSS3602 from Twin City
and all parties agreed that the policy did not provide coverage. 14
This Court has already determined that, as a matter of law, Twin City
policy number 21HUSS3602 does not provide coverage. However, because

Id. at 678 (quoting Twombly, 550 U.S. at 555).
Lormand, 565 F.3d at 255–57.
11 Doc. 123 at 3–4.
12 Doc. 211.
13 Doc. 196.
14 Doc. 196.
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Plaintiff alleges in the Cross-Claim that another policy may exist, Plaintiff has
pleaded enough facts to survive a 12(b)(6) motion. Furthermore, without
summary-judgment-type evidence that policy number 21HUSS3602 was the
only policy Defendant Twin City issued to Twin Towers, the Court cannot at
this time convert Defendant Twin City’s Motion to Dismiss to a motion for
summary judgment.
CONCLUSION
For the foregoing reasons, Defendant-in-Cross-Claim Twin City’s Motion
to Dismiss Under Federal Rule of Civil Procedure 12(b)(6) is GRANTED IN
PART. Plaintiff’s claims against Defendant Twin City are dismissed relative
to policy 21HUSS3602 only, but remain otherwise.

New Orleans, Louisiana this 24th day of October, 2017.

____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE

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