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Travelers Casualty and Surety Company of America v. Morris

March 29, 2010

TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA PLAINTIFF
v.
ANNA B. MORRIS, ET AL. DEFENDANTS



The opinion of the court was delivered by: Stengel, J.

MEMORANDUM

On May 21, 2009, Travelers Casualty and Surety Company of America filed a complaint against Anna B. Morris, Kathy Morris, Mark A. Mellinger, James Holdaway, and Harold Long. On July 6, 2009, Travelers filed an amended complaint raising a common law conversion claim, a conversion claim pursuant to 13 Pa. Cons. Stat. Ann. § 3301, a fraud claim, an unjust enrichment claim, a conspiracy claim, an aiding and abetting a fraudulent act claim, and, against only Anna B. Morris, an indemnification claim. Harold Long filed this motion to dismiss the amended complaint.*fn1 I will deny the motion.

I. BACKGROUND*fn2

Anna B. Morris was secretary/treasurer of Drumore Township, located in Lancaster County. She submitted an application to Travelers for a public bond. Travelers issued public bond no. 004-S-103215397 to Drumore Township. Travelers alleges between 2001 and 2006 defendants engaged in a course of conduct to misappropriate funds and other assets from Drumore Township. This conduct included: forging signatures on checks and other legal instruments; manipulating and/or altering documents; adding spouses and/or non-Township employees on insurance policies; adjusting defendants' net pay; issuing checks where no goods or services were provided; issuing checks to defendants beyond that which was authorized; failing to properly challenge unemployment compensation claims; authorizing goods or services not properly approved; writing checks without support; failing to properly document disbursement of checks and proceeds; failing to properly issue appropriate tax documents; utilizing inappropriate or incorrect payment accounts; purchasing office supplies for defendants' own personal use, gain and benefit; purchasing bottled water for defendants' own personal use, gain and benefit; paying multiple vendors for the same services; and paying vendors where no services were rendered.

Travelers alleges defendants used Drumore Township's money to purchase clothes, invest in their personal retirement accounts, purchase gifts, pay personal credit card payments, add non-employees and/or otherwise ineligible individuals to Traveler's insurance policies, adjust their own pay, and receive payment without providing goods or services. When Drumore Township discovered the misappropriations, it made a claim on its bond. Travelers paid the Township $254.935.22 and took assignment of all claims arising out of the defendants' conduct.

Mr. Long filed this motion to dismiss arguing the applicable statutes of limitations bar the claims, the common law conversion claim is subsumed by the statutory conversion claim, and Travelers failed to plead its fraud claim and its aiding and abetting a fraudulent act claim with sufficient particularity as required by Federal Rule of Civil Procedure 9(b).

II. STANDARD

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure examines the legal sufficiency of the complaint. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The factual allegations must be sufficient to make the claim for relief more than just speculative. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). In determining whether to grant a motion to dismiss, a federal court must construe the complaint liberally, accept all factual allegations in the complaint as true, and draw all reasonable inferences in favor of the plaintiff. Id.; see also D.P. Enters. v. Bucks County Cmty. Coll., 725 F.2d 943, 944 (3d Cir. 1984).

The Federal Rules of Civil Procedure do not require a plaintiff to plead in detail all of the facts upon which he bases his claim. Conley, 355 U.S. at 47. Rather, the Rules require a "short and plain statement" of the claim that will give the defendant fair notice of the plaintiff's claim and the grounds upon which it rests. Id. The "complaint must allege facts suggestive of [the proscribed] conduct." Twombly, 550 U.S. at 564. Neither "bald assertions" nor "vague and conclusory allegations" are accepted as true. See Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir. 1997); Sterling v. Southeastern Pennsylvania Transp. Auth., 897 F. Supp. 893 (E.D. Pa. 1995). The claim must contain enough factual matters to suggest the required elements of the claim or to "raise a reasonable expectation that discovery will reveal evidence of" those elements. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556).

III. DISCUSSION

A. Statute of Limitations

Mr. Long alleges the applicable statutes of limitations bar Travelers' claims because Drumore Township had "notice of all potential claims in 1999 through 2001."*fn3

Travelers maintains the motion to dismiss should be denied because the accrual date of the causes of action cannot be determined from the amended complaint. In addition, it argues Mr. Long is estopped from raising a statute of limitations defense because of concealment.*fn4

In support of his statute of limitations argument, Mr. Long attached two documents to his motion to dismiss: (1) a newspaper article discussing Mr. Long's involvement in Drumore Township contracts that improperly were awarded to companies in which he had an interest and (2) a pre-sentence report prepared prior to Mr. Long's 2006 sentencing following a conviction for honest services mail fraud. When deciding a motion to dismiss, "[t]he [c]court may consider the allegations contained in the complaint, exhibits attached to it, matters of public record and records of which the [c]court may take judicial notice." Byrne v. Cleveland Clinic, 2010 WL 481007, at *4 (E.D. Pa. Feb. 5, 2010) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). "Where information beyond the pleadings is cited, the [c]court has the discretion to decide whether to exclude such information ...


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