Chubb & Son v. C&C Complete Servs., LLC

• Decision Date: 23 January 2013
• Docket Number: Civil Action No. 8:12–cv–01127–AW.
• Citation: 919 F.Supp.2d 666
• Court: U.S. District Court — District of Maryland
• Parties: CHUBB & SON et al., Plaintiffs, v. C & C COMPLETE SERVICES, LLC et al., Defendants.

919 F.Supp.2d 666

CHUBB & SON et al., Plaintiffs,

v.C & C COMPLETE SERVICES, LLC et al., Defendants.

Civil Action No. 8:12–cv–01127–AW.

United States District Court,

D. Maryland,

Southern Division.

Jan. 23, 2013.

Joseph S. Crociata, Andrew Butz, Bonner Kiernan Trebach and Crociata LLP, Washington, DC, for Plaintiffs.

Edward Woodrow Cameron, Joanna Lee Faust, Sean Patrick Roche, Cameron McEvoy PLLC, John Patrick Molloy Sherry, The Law Offices of David L. Marks, Fairfax, VA, for Defendants.

MEMORANDUM OPINION

ALEXANDER WILLIAMS, JR., District Judge.

Pending before the Court are the following Motions: Defendants' Motion to Dismiss; Defendants' Motion to Strike Surreply; and Plaintiffs' Motion for Leave to File Surreply. The Court has reviewed the record and deems a hearing unnecessary. For the following reasons, the Court GRANTS IN PART and DENIES IN

PART

Defendants' Motion to Dismiss, GRANTS Defendants' Motion to Strike Surreply, and DENIES Plaintiffs' Motion for Leave to File Surreply.I. FACTUAL AND PROCEDURAL BACKGROUND

This case sounds in breach of contract and fraud. Plaintiffs are a group of insurance companies. The Complaint does not specify the relationship between Plaintiffs other than to say that they are related and that Plaintiff Chubb & Son is a division of Plaintiff Federal Insurance Company. The Complaint also names the following insurance companies as Plaintiffs: Chubb Custom Insurance Company; Great Northern Insurance Company; Pacific Indemnity Company; and Vigilant Insurance Company. Unless otherwise indicated, the Court will use the denomination “Plaintiffs” when referring to Plaintiffs as a whole.

Defendant C & C Complete Services, LLC (Complete) is a Maryland LLC. Complete engages in recovery, restoration, and reconstruction services on buildings and other structures that have sustained water, fire, smoke, and other damage. Defendant David L. King was Complete's operations manager and a member of Complete at all relevant times. Likewise, Defendant William Cornelius was Complete's president and a member of Complete at all relevant times.

Non-party Disaster Kleenup International, LLC (Disaster) engages in recovery services and the brokering of recovery services. In late October 2008, Defendant Chubb & Son entered into a Master Services Agreement (the Master Agreement) with Disaster. The Master Agreement describes Chubb & Son as follows: “Chubb & Son, a division of Federal Insurance Company, for itself and as servicer for The Chubb Corporation and its non-insurance company subsidiaries, or as manager of its Insurance company subsidiaries, an Indiana corporation.” Doc. No. 5–2 at 11. Under the Master Agreement, Disaster would provide disaster services (e.g., recovery, restoration, and reconstruction) to certain properties (e.g., buildings and other structures). The Master Agreement specifies that Disaster would provide such services to Chubb & Son's policyholders through work orders and contemplates Disaster's contracting with contractors to provide such services. The Master Agreement requires Disaster to provide the contractors with the Master Agreement and secure the contractors' acknowledgment that the contractors intend for its terms to bind them. See id. at 2 § 1.

Plaintiffs allege that Disaster entered into written contracts and other agreements with Complete to provide the disaster services. In turn, Plaintiffs allege that Complete entered into contracts with Plaintiffs' insureds to perform the disaster services, engaging subcontractors to provide some of these services. As a part of the contracting process, Plaintiffs allege that Complete submitted certain estimates or bids to Plaintiffs and/or their policyholders. The estimates detailed the services that would be performed and certified that the billed cost accurately reflected such services. Plaintiffs aver that Complete falsely represented that the estimates accurately reflected the true cost of the services. According to Plaintiffs, these misrepresentations resulted in payment for services that were not provided and overpayment for services that were provided.

The record contains one such work order/estimate. Doc. No. 5–4. ¹ Apparently, the work order/estimate ² is between Disaster, Complete, an insurance company referred to as “Chubb Group,” and Lynn Hargis, owner of a District of Columbia property. The work order states that Complete will invoice the insurance carrier and requires Hargis to provide any insurance payments to Complete. See id. at 2. The work order also states a payment schedule and references a “Scope of Work dated October 27, 2010” that an insurance adjuster purportedly approved. See id. at 3.

Plaintiffs also attach a spreadsheet to the Complaint. The spreadsheet lists nineteen alleged transactions and includes the following basic information regarding each: the insured's last name; the city and state of the transaction; the claim number; the date or date of the loss; the date or date of Complete's estimate; and the insurer. Doc. No. 1–1. Dissimilar to the work order discussed above, the spreadsheet sets forth no specifics surrounding the nineteen supposed transactions.

On April 12, 2012, Plaintiffs filed their 12–Count Complaint. Counts 1–4 are for various varieties of fraud. Counts 5–7 are for breach of various contracts. For its part, Count 8 is for unjust enrichment. Counts 9–11 are for violations of the state consumer protection statutes of, respectively, Maryland, Virginia, and the District of Columbia. Finally, Count 12 asserts a claim for civil conspiracy.

On May 11, 2012, Complete filed a Motion to Dismiss or, Alternatively, Motion to Drop Parties and/or Sever Claims (Motion to Dismiss). The Parties have concluded briefing on this Motion. Also pending before the Court are (1) Complete's Motion to Strike Surreply and (2) Plaintiffs' Motion for Leave to File Surreply Nunc Pro Tunc.

II. STANDARD OF REVIEW

The purpose of a 12(b)(6) motion to dismiss is to test the sufficiency of the plaintiff's complaint. See Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir.1999). In two recent cases, the U.S. Supreme Court has clarified the standard applicable to Rule 12(b)(6) motions. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). These cases make clear that Rule 8 “requires a ‘showing,’ rather than a blanket assertion, of entitlement to relief.” Twombly, 550 U.S. at 556 n. 3, 127 S.Ct. 1955 (quoting Fed.R.Civ.P. 8(a)(2)). This showing must consist of at least “enough facts to state a claim to relief that is plausible on its face.” Id. at 570, 127 S.Ct. 1955.

In deciding a motion to dismiss, the court should first review the complaint to determine which pleadings are entitled to the assumption of truth. See Iqbal, 129 S.Ct. at 1949–50. “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 1950. In so doing, the court must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir.1999). The Court need not, however, accept unsupported legal allegations, Revene v. Charles County Commissioners, 882 F.2d 870, 873 (4th Cir.1989), legal conclusions couched as factual allegations, Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986), or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir.1979).

III. LEGAL ANALYSISA. Motion to Dismiss

1. Counts 1 and 2—Fraud and Intentional Misrepresentation

a. Choice of Law

A federal court sitting in diversity applies the choice of law rules of the state in which it sits. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496–97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). “In cases sounding in tort ..., Maryland applies the venerable maxim of lex loci delicti.” Harvard v. Perdue Farms, Inc., 403 F.Supp.2d 462, 466 (D.Md.2005) (citations omitted). “Under this rule, the substantive tort law of the state where the wrong occurs governs.” Williams v. Gyrus ACMI, Inc., 790 F.Supp.2d 410, 414 (D.Md.2011) (citation and internal quotation marks omitted). Where the events giving rise to a tort action occur in more than one state, courts must apply the law of the state where the last event required to constitute the tort occurred. Id. (citation omitted).

In this case, it is unclear where the fraud of which Plaintiffs complain occurred. The Complaint and incorporated documents support the inference that it took place in Maryland, Virginia, and the District of Columbia. However, as Plaintiffs found their Complaint on a minimum of nineteen transactions and fail to provide specific facts regarding all of them except one, it is unclear what law (e.g., Maryland, Virginia, or District of Columbia) applies to which alleged instance of fraud. As the Parties rely primarily on Maryland law to support their respective arguments regarding the viability, or lack thereof, of the fraud claims, the Court will follow suit and apply Maryland law.

b. Analysis

The elements for fraudulent misrepresentation under Maryland law are well-established. They are: “(1) that the defendant made a false representation to the plaintiff, (2) that its falsity was either known to the defendant or that the representation was made with reckless indifference as to its truth, (3) that the misrepresentation was made for the purpose of defrauding the plaintiff, (4) that the plaintiff relied on the misrepresentation and had the right to rely on it, and (5) that the plaintiff suffered compensable injury resulting from the misrepresentation.” Nails v. S & R, Inc., 334 Md. 398, 639 A.2d 660, 668 (1994) (citing cases). The elements of fraud must be proved by clear and convincing evidence. See id. at 664.

Fraud...