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Howard v. Selene Finance

United States District Court, D. Idaho

April 4, 2019

LEANNA HOWARD, Plaintiff,
v.
SELENE FINANCE, a limited partnership company operating in the State of Idaho, Defendant.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill, U.S. District Court Judge.

         INTRODUCTION

         Pending before the Court is Defendant's Motion to Dismiss (Dkt. 3). The motion is fully briefed, and the Court finds the matter appropriate for decision without oral argument. For the reasons described below, the Court will deny Defendant's Motion to Dismiss.

         BACKGROUND

         Plaintiff Leanna Howard filed a complaint against Defendant Selene Finance LP in District Court in Clearwater County, Idaho on November 16, 2018. Ms. Howard asserted claims of conversion and unjust enrichment against Selene Finance, arguing that the Defendant wrongfully negotiated a $100, 400 insurance check under Plaintiff's insurance policy. Ms. Howard alleges that Selene Finance had no legal right to the insurance proceeds, and that Selene Finance failed to respond to Plaintiff's reasonable demand for those funds. Selene Finance removed the case to this Court on December 18, 2018 on the basis of diversity jurisdiction. Selene Finance now moves to dismiss Ms. Howard's Complaint in its entirety under Federal Rule of Civil Procedure 12(b)(6).[1]

         LEGAL STANDARD

         Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief, ” in order to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While a complaint attacked by a Rule 12(b)(6) motion to dismiss “does not need detailed factual allegations, ” it must set forth “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Id. at 570. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. at 556. The plausibility standard is not akin to a “probability requirement, ” but it asks for more than a sheer possibility that a defendant has acted unlawfully. Id. Where a complaint pleads facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of ‘entitlement to relief.'” Id. at 557.

         The Supreme Court identified two “working principles” that underlie Twombly in Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). First, the court need not accept as true legal conclusions that are couched as factual allegations. Id. Rule 8 does not “unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79. Second, to survive a motion to dismiss, a complaint must state a plausible claim for relief. Id. at 679. “Determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id.

         Under Rule 12(b)(6), the Court may examine documents referred to in the complaint, although not attached thereto, without transforming the motion to dismiss into a motion for summary judgment. See Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).

         ANALYSIS

         1. The Deed of Trust Does Not Preclude Ms. Howard's Claims for Conversion and Unjust Enrichment

         Selene Finance moves to dismiss Ms. Howard's claims of conversion and unjust enrichment on the basis that Ms. Howard has no right to recover any of the funds at issue. Dkt. 3-1 at 2. As proof, Selene Finance points to a Deed of Trust, which Plaintiff references throughout her complaint, and which Defendant attaches to its Motion to Dismiss. See Id. Defendant argues that the Court should consider the Deed of Trust, that it controls the rights and obligations of the parties, and that it should prevent Ms. Howard from bringing claims for conversion and unjust enrichment in the first place. Id.

         The Court has evaluated the Deed of Trust, but does not agree that it controls the outcome of the case. The Ninth Circuit has pointed out that at the motion to dismiss stage a district court should not assume the truth of an incorporated document if there are factual disputes about its application. See e.g. Sgro v. Danone Waters of N. Am., Inc., 532 F.3d 940, 942, n.1 (9th Cir. 2008) (finding it proper to consider disability benefits plan referenced in complaint, but declining to accept truth of the plan's contents where the parties disputed whether defendant actually implemented the plan according to its terms); see also Khoja v. Orexigen Therapeutics, Inc., 899 F.3d 988, 1003 (9th Cir. 2018) (“[I]t is improper to assume the truth of an incorporated document if such assumptions only serve to dispute facts stated in a well-pleaded complaint.”). Furthermore, under Idaho law, if there is ambiguity surrounding the language of a deed of trust like the one at issue here, contract interpretation and meaning become questions of fact, not appropriate for determination at the motion to dismiss stage. Foster v. Johnstone, 685 P.2d 802, 806 (Idaho 1984).

         As a result, although the Court may consider the Deed of Trust, it does not have enough facts to determine whether the Deed of Trust is still in effect. The parties disagree whether the Deed of Trust still applies following the foreclosure on January 20, 2016, and subsequent sale of the property secured by the Deed. See Dkt. 1-3 ¶10-11, Dkt. 3-1 at 1-2, Dkt. 6 at 5. Ms. Howard argues the Deed of Trust “was extinguished by the Trustee's Deed on January 20, 2016, and the coverage period for the policy in force on that date was November 1, 2015 to November 1, 2016. Compl. at ¶¶ 10-11.” Dkt. 6 at 5. Selene Finance, on the other hand, contends that the “Deed of ...


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