Quantlab Group, LP et al v. Dempster et al

Filing 41

MEMORANDUM AND ORDER denying 5 Rule 12(b)(6) Motion to Dismiss.(Signed by Judge Nancy F Atlas) Parties notified.(TDR, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
QUANTLAB GROUP, LP, et al.,
Plaintiffs,
v.
ALLEN HERMAN DEMPSTER,
et al.,
Defendants.

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December 19, 2018
David J. Bradley, Clerk

CIVIL ACTION NO. H-18-2171

MEMORANDUM AND ORDER
This case is before the Court on the Rule 12(b)(6) Motion to Dismiss (“Motion
to Dismiss”) [Doc. # 5] filed by Defendants Allen Dempster and Dempster & Dietler,
LLP, to which Plaintiffs Quantlab Group, LP and Quantlab Financial, LLC, filed a
Response [Doc. # 9], and Defendants filed a Reply [Doc. # 29].1 Having reviewed the
record and the applicable legal authorities, the Court denies the Motion to Dismiss.
I.

BACKGROUND
Plaintiffs allege that Defendant Dempster and his firm Dempster & Dietler,

LLP, served for many years as Plaintiffs’ attorney and accounting advisor. Plaintiffs
allege that Defendants prepared partnership agreements and a Voting Trust Agreement

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Also pending is Defendants’ Motion to Dismiss Under the Texas Citizens’
Participation “Anti-SLAPP” Act [Doc. # 6], which the Court will address in a separate
Memorandum and Order.

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that enabled two of Quantlab Group’s minority partners, Bruce P. Eames and Andrey
Omeltchenko, to attempt to take control of Quantlab Group and its related companies.
Plaintiffs filed this lawsuit asserting a breach of fiduciary duty claim and a
malpractice claim. Plaintiffs seek monetary and injunctive relief. Defendants filed
a Motion to Dismiss, which has been fully briefed and is now ripe for decision.
II.

LEGAL STANDARD FOR RULE 12(b)(6) MOTION
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil

Procedure is viewed with disfavor and is rarely granted. Turner v. Pleasant, 663 F.3d
770, 775 (5th Cir. 2011) (citing Harrington v. State Farm Fire & Cas. Co., 563 F.3d
141, 147 (5th Cir. 2009)). The complaint must be liberally construed in favor of the
plaintiff, and all facts pleaded in the complaint must be taken as true. Harrington, 563
F.3d at 147.
The complaint must, however, contain sufficient factual allegations, as opposed
to legal conclusions, to state a claim for relief that is “plausible on its face.” See
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Patrick v. Wal-Mart, Inc., 681 F.3d 614,
617 (5th Cir. 2012). When there are well-pleaded factual allegations, a court should
presume they are true, even if doubtful, and then determine whether they plausibly
give rise to an entitlement to relief. Iqbal, 556 U.S. at 679. Rule 8 “generally requires

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only a plausible ‘short and plain’ statement of the plaintiff’s claim, not an exposition
of his legal argument.” Skinner v. Switzer, 562 U.S. 521, 530 (2011).
III.

ANALYSIS
A.

Breach of Fiduciary Duty Claim

“Generally, the elements of a claim for breach of fiduciary duty are (1) the
existence of a fiduciary duty, (2) breach of the duty, (3) causation, and (4) damages.”
First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex.
2017). Plaintiffs allege factually that Defendants, as their attorneys, owed them a
fiduciary duty. See Complaint [Doc. # 1], ¶ 13, ¶ 28. Plaintiffs allege that Defendants
breached this duty when they assisted Eames and Omeltchenko in activities that were
against Plaintiffs’ interest. See id., ¶¶ 22-23, ¶ 30. Plaintiffs allege that Defendants’
breach of their fiduciary duty caused Plaintiffs to suffer damages. See id., ¶ 27. As
a result, Plaintiffs have adequately alleged a factual basis for their breach of fiduciary
duty claim, and Defendants’ Motion to Dismiss this claim is denied.
B.

Malpractice Claim

To state a claim for legal malpractice, the plaintiff client must allege that:
“(1) the lawyer owed a duty of care to the client; (2) the lawyer breached that duty;
and (3) the lawyer’s breach proximately caused damage to the client.” See Rogers v.
Zanetti, 518 S.W.3d 394, 400 (Tex. 2017) (citing Stanfield v. Neubaum, 494

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S.W.3d 90, 96 (Tex. 2016)). Plaintiffs have alleged that Defendants, as their
attorneys, owed them a duty of ordinary care, to act “in a manner consistent with the
standard of care that would be expected to be exercised by a reasonably prudent
professional.” Complaint, ¶ 33. Plaintiffs have alleged that Defendants breached that
duty when they prepared documents that were contrary to Plaintiffs’ interest and when
they disclosed Plaintiffs’ confidential information. See id., ¶ 20, ¶ 33. Plaintiffs
allege that Defendants’ breach of their duty of care caused monetary and other damage
to Plaintiffs. See id., ¶ 27, ¶ 34. Plaintiffs have alleged a factual basis for the
malpractice claim and, as a result, Defendants’ Motion to Dismiss this claim is denied.
IV.

CONCLUSION AND ORDER
Plaintiffs have adequately alleged a factual basis for the breach of fiduciary

duty and malpractice claims. As a result, it is hereby
ORDERED that Defendants’ Motion to Dismiss [Doc # 5] is DENIED.
SIGNED at Houston, Texas, this 19th day of December, 2018.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

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