Catlin Insurance Company, Inc. v. Danko

Background

Catlin Insurance Company, Inc. alleged that it made two settlement payments of $180,000 to Danko Meredith’s trust account in connection with an earlier California state-court wrongful-death action. According to the amended complaint, Catlin wired the first payment on April 30, 2018, then accidentally sent a second check for the same amount two days later. Catlin alleged that Meredith knew about the duplicate payment, did not disclose it, and refused to return the additional funds after Catlin discovered the mistake in July 2019.

Catlin brought claims for unjust enrichment, conversion, and breach of fiduciary duty. Meredith responded that a February 2019 global settlement agreement, which included the heirs, Able Air Corporation, and Catlin, waived claims arising from the plane crash and related litigation. Meredith also argued that the lawsuit arose from protected litigation-related activity under California’s anti-SLAPP statute, that California’s litigation privilege barred the claims, and that Meredith owed Catlin no duty.

Motion to Strike

The court denied Meredith’s anti-SLAPP motion. California’s anti-SLAPP statute permits a special motion to strike claims arising from protected speech or petitioning activity concerning a public issue, unless the plaintiff shows a probability of prevailing. The court explained that the analysis focuses on the conduct supplying the elements of the claim, rather than conduct that merely provides background or context.

The court concluded that Catlin’s claims arose from the alleged retention of the duplicate $180,000 payment, not from the earlier litigation, settlement discussions, or the Mutual Waiver Agreement. The references to those matters supplied context for Catlin’s theory but did not make the protected litigation activity the wrongful conduct alleged. Because Meredith failed to make the required threshold showing, the court did not decide whether Catlin had shown a probability of prevailing.

Motion to Dismiss

The court granted in part and denied in part Meredith’s motion under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. The court rejected Meredith’s argument that California’s litigation privilege barred the claims because the claims were based on the alleged retention of the duplicate payment, not on communications related to the underlying state-court action.

The court granted dismissal of Catlin’s breach-of-fiduciary-duty claim. That claim required Catlin to allege a fiduciary relationship, a breach, and resulting harm. Although Catlin alleged that lawyers owe trust-accounting duties regarding funds held for others, the court found that the cited authorities did not establish a fiduciary relationship between adverse parties, or between an adverse party and the other party’s counsel, based solely on exchanging a settlement payment. The court therefore found that Catlin had not established a fiduciary relationship with Meredith.

The court stated that the defect could not be cured by adding more facts because of the nature of the relationship between the parties. It dismissed the fiduciary-duty claim without leave to amend and denied the motion to dismiss the unjust-enrichment and conversion claims.

Disposition

The court denied the motion to strike; granted in part the motion to dismiss without leave to amend as to Catlin’s fiduciary-duty claim; and otherwise denied the motion to dismiss in its entirety. The order also set a telephonic case-management conference for March 16, 2021.