Brown v. Ajax Paving Indus. Inc.

• Decision Date: 28 February 2011
• Docket Number: Case No. 10–10137.
• Citation: 773 F.Supp.2d 727
• Parties: Jay BROWN, Plaintiff,v.AJAX PAVING INDUSTRIES, INC., American Contractors Insurance Group, Inc., Ward North America, LP, VeriClaims, Inc., NovaPro Risk Solutions, LP, NovaPro U.S. Risk, LLC, and Dr. Paul Drouillard, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

773 F.Supp.2d 727

Jay BROWN, Plaintiff,

v.AJAX PAVING INDUSTRIES, INC., American Contractors Insurance Group, Inc., Ward North America, LP, VeriClaims, Inc., NovaPro Risk Solutions, LP, NovaPro U.S. Risk, LLC, and Dr. Paul Drouillard, Defendants.

Case No. 10–10137.

United States District Court, E.D. Michigan, Southern Division.

Feb. 28, 2011.

Marshall D. Lasser, Southfield, MI, for Plaintiff.Brian P. Vincent, Joseph A. Fink, Dickinson Wright, Lansing, MI, D. Lee Khachaturian, Dickinson Wright, Daniel B. Tukel, Katherine D. Goudie, Butzel Long (Detroit), Lynn A. Sheehy, Kotz, Sangster, Wysocki & Berg, P.C., Detroit, MI, for Defendants.

OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS

GERALD E. ROSEN, Chief Judge.

I. INTRODUCTION

Plaintiff Jay Brown commenced this case in this Court on January 13, 2010, asserting claims under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq., against his former employer, Defendant Ajax Paving Industries, Inc., and a number of other Defendants. In support of these RICO claims, Plaintiff alleges that Defendants engaged in a scheme to deny him worker's compensation benefits for a workplace injury he suffered in July of 2005.

In lieu of answering Plaintiff's complaint, Defendant Paul Drouillard has filed a motion to dismiss the claims asserted against him for lack of subject matter jurisdiction or, alternatively, for failure to state a claim. Likewise, Defendants American Contractors Insurance Group, Inc., Ward North America, LP, VeriClaim, Inc.,¹ and NovaPro Risk Solutions, LP (collectively, the “Insurance Defendants”) have moved for dismissal of the claims against them, on the ground that Plaintiff has failed to adequately allege several of the elements necessary to state a viable RICO claim.² As the moving Defendants observe in their motions and in supplemental submissions, Judges Edmunds and Borman of this District have recently issued rulings dismissing RICO claims that are quite similar to those asserted by Plaintiff here. See Brown v. Cassens Transport Co., 743 F.Supp.2d 651 (E.D.Mich.2010) (Borman, J.); Jackson v. Sedgwick Claims Management Services, Inc., No. 09–11529, 2010 WL 931864 (E.D.Mich. Mar. 11, 2010) (Edmunds, J.).³

Having reviewed the parties' briefs in support of and opposition to the motions brought by Defendant Drouillard and the Insurance Defendants, as well as the record as a whole, the Court finds that the relevant allegations, facts, and legal arguments are adequately presented in these written submissions, and that oral argument would not aid the decisional process. Accordingly, the Court will decide Defendants' motions “on the briefs.” See Local Rule 7.1(f)(2), U.S. District Court, Eastern District of Michigan. For the reasons set forth below, the Court finds that each of these motions should be granted, and that Plaintiff's complaint is subject to dismissal on a number of grounds.

II. FACTUAL BACKGROUND

For present purposes, the pertinent facts may be briefly summarized, with more detail to follow as relevant to the particular issues raised in Defendants' motions. Plaintiff Jay Brown was employed by Defendant Ajax Paving Industries, Inc. from May of 2004 until September of 2009. Defendant American Contractors Insurance Group, Inc. (“ACIG”) was Ajax's insurance carrier, issuing a policy of insurance with respect to Ajax's obligation under Michigan's Workers' Disability Compensation Act (“WDCA”), Mich. Comp. Laws § 418.101 et seq. , to provide worker's compensation benefits to its employees. Defendants Ward North America, LP, NovaPro Risk Solutions, LP, and VeriClaim, Inc. served as third-party administrators under the insurance policy between Ajax and ACIG, handling claims for worker's compensation benefits on behalf of insurer ACIG.

In July of 2005, Plaintiff hurt his left shoulder while on the job, leading him to apply for worker's compensation benefits. In September of 2005, Plaintiff was directed to appear for an independent medical examination (“IME”) by Defendant Paul Drouillard, a board-certified orthopedic surgeon. In a report following this examination, Dr. Drouillard opined that Plaintiff's injury appeared to be work-related. Despite this report, Defendant Ajax denied Plaintiff's claim for worker's compensation benefits, evidently on the ground that Plaintiff had not suffered an injury arising out of his employment.

Plaintiff sought administrative review of this denial, and his case was heard by Magistrate Victor McCoy of the Michigan Worker's Compensation Agency in October of 2006. According to Plaintiff's complaint, Ajax, the Insurance Defendants, and their counsel attempted to bribe a witness to testify falsely that Plaintiff had injured his shoulder outside of work, and they also persuaded Dr. Drouillard to testify at the hearing that Plaintiff's injury was not work-related. Despite these efforts, and despite Dr. Drouillard's testimony in contravention of his earlier report, the magistrate awarded benefits to Plaintiff. In so ruling, the magistrate expressly found that Dr. Drouillard's testimony at the hearing was not credible, and that his attempt to explain the discrepancy between his testimony and his earlier report was “preposterous.” (Complaint at ¶ 9(E)(6).)

Ajax appealed this decision. While this administrative appeal remained pending, Plaintiff and Ajax agreed to a settlement of Plaintiff's claim for worker's compensation benefits. In connection with this settlement, Plaintiff signed a document dated September 1, 2009 and captioned “RESIGNATION, WAIVER OF SENIORITY AND RELEASE OF ALL CLAIMS.” (Defendant Drouillard's Motion, Ex. E (hereafter referred to as the “Release”).) In this document, Plaintiff agreed, in consideration for payment of a settlement amount of $70,000, that he would (i) “voluntarily quit his employment with Ajax Paving Industries, Inc.,”, (ii) “waive[ ] any and all seniority rights he may have,” (iii) “release[ ] any claim he may have for re-employment based on such seniority rights,” and (iv) “not apply for re-employment with Ajax Paving Industries, Inc. in the future.” (Release at 1.) The Release further provided:

... Jay E. Brown, in consideration for consent to this Agreement to Redeem Liability under the Workers' Disability Compensation Act, ... hereby forever release[s] and discharge[s] Ajax Paving Industries, Inc., its agents, attorneys, employees and successors of any and all liabilities, causes of action, damages, claims, and demands, of whatever kind and nature, arising out of the employment relationship.

( Id.) ⁴

On January 13, 2010, Plaintiff commenced the present action, alleging that Ajax, the Insurance Defendants, and Dr. Drouillard engaged in an unlawful scheme to deny and defraud Plaintiff and others of worker's compensation benefits. In the present motions, Dr. Drouillard and the Insurance Defendants contend that the present suit represents an impermissible “end run” around the exclusive procedures and remedies afforded under Michigan's WDCA. They further assert that Plaintiff's allegations, accepted as true, fail to establish several of the requisite elements of a viable RICO claim. Finally, the moving Defendants argue that the Release executed by Plaintiff operates to defeat all of his claims, and not just those asserted against his former employer Ajax, either because the remaining Defendants qualify as “agents” of Ajax that are entitled to the benefits of the Release, or because the Release serves to estop Plaintiff from claiming an entitlement to benefits beyond those he accepted to settle his claim under the WDCA.

III. ANALYSIS

A. The Standards Governing Defendants' Motions

Through the present motions, Dr. Drouillard and the Insurance Defendants seek the dismissal of Plaintiff's complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted.⁵ When considering a motion brought under Rule 12(b)(6), the Court must construe the complaint in the light most favorable to the plaintiff and accept all well-pled factual allegations as true. League of United Latin American Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir.2007). Yet, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). Moreover, “[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964–65, 167 L.Ed.2d 929 (2007) (internal quotation marks, alteration, and citations omitted). Rather, to withstand a motion to dismiss, the complaint's factual allegations, accepted as true, “must be enough to raise a right to relief above the speculative level,” and to “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 555, 570, 127 S.Ct. at 1965, 1974. “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.” Iqbal, 129 S.Ct. at 1949.

Arguably, to the extent that Defendants rely on the Release executed by Plaintiff as a ground for dismissal of Plaintiff's claims, Defendants have strayed beyond the pleadings and their motions should be treated as seeking summary judgment under Fed.R.Civ.P. 56. See Fed.R.Civ.P. 12(d). ⁶ Such conversion, in turn, is permissible so long as all parties are “given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d). In this case, Plaintiff has had ample opportunity to address the legal significance of the Release and to present any...