Lagos et al v. Monster Painting, Inc. et al

Filing 62

ORDER Denying 39 Plaintiffs' Motion to Dismiss Defendants' Counterclaims as moot; Granting 52 Plaintiffs' second Motion to Dismiss Defendants' Counterclaims. Signed by Judge Larry R. Hicks on 06/22/2012. (Copies have been distributed pursuant to the NEF - AC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ANTONIO LAGOS and ARTURO
CARREÑO, individually and on behalf of
other persons similarly situated,

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Plaintiff,

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v.

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MONSTER PAINTING, INC., TREVOR
PHILLIP SCHAUS, and BRENDA LINGLE,

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Defendants.
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2:11-CV-00331-LRH-GWF
ORDER

Before the court is Plaintiffs Antonio Lagos and Arturo Carreño’s second Motion to

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Dismiss Defendants’ counterclaims (#521 ). Defendants Trevor Phillip Schaus and Brenda Lingle

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filed an opposition (#55) and Plaintiffs replied (#57).

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Also before the court is Plaintiffs’ initial Motion to Dismiss Defendants’ Counterclaims

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(#39). Given the superceding amended counterclaims and motion to dismiss, the initial motion

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shall be denied as moot.

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I.

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Facts and Procedural History
This is a putative class action brought by two employees of Monster Painting, Inc.,

involving allegations of unlawful and fraudulent activities in the payment and reporting of wages

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Refers to the court’s docket entry number.

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and overtime. Defendants are Monster Painting, owner and officer Trevor Phillip Schaus, and

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manager Brenda Lingle. Monster Painting has since filed for bankruptcy and is subject to the

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automatic bankruptcy stay.

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Plaintiffs filed their initial Complaint (#1) on March 2, 2011. On April 7, 2011, they filed a

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First Amended Complaint (#9) as of right and in response to Defendants’ first Motion to Dismiss

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(#8). Plaintiffs alleged five causes of action for violations of the Fair Labor Standards Act

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(“FLSA”), the Racketeer Influenced and Corrupt Organizations Act (“RICO), and Nevada overtime

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and waiting-time statutes, as well as for breach of contract or quasi-contract. Plaintiffs allege they

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were not paid for every hour they worked and were not paid an overtime premium of time-and-a-

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half for hours worked in excess of forty hours per week. Plaintiffs further allege that Defendants

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engaged in a fraudulent scheme in which Defendants paid wages sometimes with payroll checks

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through a third-party processor and other times with personal checks, but then they issued W-2

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forms that reported only the income and withholdings from the payroll checks and failed to report

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the income and withholdings from the personal checks.

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On April 19, 2011, Defendants moved to dismiss (#11) the First Amended Complaint for

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failure to state a claim under Rule 12(b)(6) and for failure to plead the RICO claim with sufficient

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particularity in accordance with Rule 9.

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While the motion was pending, the Magistrate Judge entered orders denying Defendants’

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request to stay discovery (#17) but granting the parties an extended initial discovery period of 280

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days (#19). Accordingly, on June 8, 2011, the Magistrate Judge entered a Scheduling Order (#20)

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setting September 12, 2011 as the last day to amend the pleadings and add parties, and December 8,

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2011 as the discovery cut-off. The parties completed discovery in accordance with this schedule.

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Thereafter, on December 29, 2011, the court issued an Order (#34) granting in part and

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denying in part Defendants’ motion to dismiss the first amended complaint. The court denied the

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motion only as to Plaintiff Carreño’s individual FLSA claim for the week of February 15 to 21,

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2011. All other FLSA claims were dismissed “without prejudice based on Plaintiffs’ failure to

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provide sufficient factual allegations to state a claim for relief.” Also, Plaintiffs’ civil RICO claims

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were dismissed for lack of particularity in accordance with Rule 9 and because Plaintiffs failed to

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state a cognizable theory of bank fraud. Finally, the court declined to address Plaintiffs’ remaining

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three causes of action under Nevada law because they were alleged only as to Monster Painting,

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which was subject to the automatic stay.

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On January 17, 2012, Plaintiffs filed a motion for leave to amend (#37). The proposed

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Second Amended Complaint sought to (1) correct the drafting deficiencies regarding Plaintiffs’

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FLSA and RICO claims by adding detailed factual allegations, (2) add an FLSA retaliatory

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discharge claim as to Carreño, and (3) add general contractor Doe defendants to the state law

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claims. On May 04, 2012, the court granted in part and denied in part the motion for leave to file a

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second amended complaint (#47). The court denied the motion only as to Plaintiffs’ attempt to add

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general contractors with whom Monster Painting contracted as Doe defendants. Subsequent to the

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court’s granting of the Plaintiffs’ second leave to amend, Plaintiff filed its Second Amended

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Complaint on May 07, 2012.

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On May 23, 2012, Defendants filed their answer to the Second Amended Complaint which

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included counterclaims as to all plaintiffs for tortious abuse of process and civil conspiracy (#50).

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Plaintiffs subsequently filed the instant Motion to Dismiss Defendants’ counterclaims pursuant to

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Federal Rule of Civil Procedure 12(b)(6) (#52).

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II.

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Legal Standard
To survive a motion to dismiss for failure to state a claim under FRCP 12(b)(6), a complaint

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must satisfy the Federal Rule of Civil Procedure 8(a)(2) notice pleading standard. See Mendiondo

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v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1103 (9th Cir. 2008). A complaint must contain “a

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short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.

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8(a)(2). The Rule 8(a)(2) pleading standard does not require detailed factual allegations; however,

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a pleading that offers only “labels and conclusions” or “a formulaic recitation of the elements of a

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cause of action” will not suffice. Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell

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Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

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Furthermore, Rule 8(a)(2) requires a complaint to “contain sufficient factual matter,

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accepted as true, to state a claim to relief that is plausible on its face.” Id. at 1949 (internal

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quotation marks omitted). A claim has facial plausibility when the pleaded factual content allows

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the court to draw the reasonable inference, based on the court’s judicial experience and common

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sense, that the defendant is liable for the misconduct alleged. See id. at 1949-50. “The plausibility

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standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a

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defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a

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defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to

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relief.” Id. at 1949 (internal quotation marks and citation omitted).

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In reviewing a motion to dismiss, the court accepts the facts alleged in the complaint as

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true. Id. (citation omitted). However, “bare assertions . . . amount[ing] to nothing more than a

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formulaic recitation of the elements of a . . . claim . . . are not entitled to an assumption of truth.”

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Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quoting Iqbal, 129 S. Ct. at 1951)

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(alteration in original) (internal quotation marks omitted). The court discounts these allegations

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because they do “nothing more than state a legal conclusion – even if that conclusion is cast in the

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form of a factual allegation.” Id. (citing Iqbal, 129 S. Ct. at 1951.) “In sum, for a complaint to

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survive a motion to dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from

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that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Id. (quoting

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Iqbal, 129 S. Ct. at 1949).

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III.

Discussion

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A. Tortious Abuse of Process

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In Nevada, the two essential elements which must be established in order to sustain an

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action for the tort of abuse of process are (1) an ulterior purpose for bringing a legal action other

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than resolving a dispute and (2) a willful act in the use of process not proper in the regular conduct

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of the proceeding. LaMantia v. Redisi, 118 Nev. 27, 30 (2002), Bull v. McCuskey, 615 P.2d 957,

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960 (1980). Here, Defendants allege that Plaintiffs committed a willful act not proper in the

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regular conduct of civil proceedings by (1) filing a lawsuit, (2) submitting discovery and production

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requests, (3) issuing subpoenas, and (4) conducting depositions on the basis of knowingly false

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statements.
Nevada courts have held that the filing of a complaint alone cannot constitute the willful act

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necessary for the tort to lie. Laxalt v. McClatchy, 622 F. Supp. 737m 752 (D. Nev. 1985). Here,

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Defendants assert that continuing to litigate an action improperly and in bad faith is an abuse of

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process. They claim that the Plaintiffs’ case is without merit and that their decision to continue

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litigating is evidence of this abuse.

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The ulterior purpose required of tortious abuse of process must be any purpose “other than

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resolution or settlement of the suit.” Rashidi v. Albright, 818 F. Supp. 1354, 1359 (D.Nev. 1993),

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aff’d, 39 F.3d 1188 (9th Cir. 1994). Defendants have not shown that Plaintiffs have a motive in

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maintaining their claims other than to resolve a legal dispute. Defendants allege that Plaintiffs are

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motivated by a desire to intimidate and embarrass Defendants into paying Plaintiffs wages which

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were not due to them. The rightness or wrongness of Plaintiffs’ claims to unpaid overtime wages is

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the subject matter of this dispute. The payment of those wages is thus not an ulterior motive, but an

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overt motive which falls within the acceptable use of process.

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The court concludes that the allegations presented do not state a claim upon which relief

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may be granted because Defendants have failed to allege an ulterior purpose for bringing a legal

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action other than resolving the instant dispute. Accordingly, the court shall grant Plaintiffs’ motion

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to dismiss Defendants’ counterclaim for tortious abuse of process.

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B. Civil Conspiracy

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The court finds no support for Defendants’ claim of Plaintiffs’ tortious abuse of process and

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therefore there is no grounds on which to find a civil conspiracy. Consequently, Defendants’ claim

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of Plaintiffs’ civil conspiracy is dismissed.

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C. Motion to Amend the Counterclaim

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Within its opposition, Defendants ask for leave to amend their counterclaim should the

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court determine that Defendants have failed to plead a proper claim. There is no proper motion

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before the court to consider this request. If Defendants wish to file an amended complaint, they

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may file a proper motion for leave in conformity with Local Rule 15-1.

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IV.

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Conclusion
IT IS THEREFORE ORDERED that Plaintiffs’ initial Motion to Dismiss Defendants’

Counterclaims (#39) is DENIED as moot.
IT IS FURTHER ORDERED that Plaintiffs’ second Motion to Dismiss Defendants’
Counterclaims (#52) is GRANTED.

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IT IS SO ORDERED.

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DATED this 22nd day of June, 2012.

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__________________________________
LARRY R. HICKS
UNITED STATES DISTRICT JUDGE

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