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Trusted Transportation Solutions, LLC v. Guarantee Insurance Co.

United States District Court, D. New Jersey

June 8, 2018

TRUSTED TRANSPORTATION SOLUTIONS, LLC, Plaintiff,
v.
GUARANTEE INSURANCE COMPANY, et al., Defendants.

          MEMORANDUM OPINION

          HON. JEROME B. SIMANDLE, District Judge

         In this action, Plaintiff Trusted Transportation Solutions ("Plaintiff") alleges that Defendants Guarantee Insurance Company ("Guarantee"), Patriot Underwriters, Inc. ("Patriot"), Douglas Cook ("Cook"), [1] Brown & Brown of New Jersey, LLC ("Brown & Brown"), and John F. Corbett ("Corbett") misrepresented the terms of a workers' compensation insurance policy that Plaintiff purchased from them. [See generally Docket Item 38.] Pending before the Court is the motion of Brown & Brown and Corbett (collectively, the "Brown & Brown Defendants") to dismiss Counts One through Six and Eight through Ten of the Amended Complaint for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6), Fed. R. Civ. P.[2] [Docket Item 46.] Plaintiff opposed the motion to dismiss [Docket Item 62], and the Brown & Brown Defendants filed a reply brief.[3] [Docket Item 64.] The motion is decided without oral argument pursuant to Rule 78, Fed.R.Civ.P. For the reasons discussed below, the Brown & Brown Defendants' motion will be granted. The Court finds as follows:

         1. Factual and Procedural Background.[4]

         Plaintiff originally filed a Complaint in New Jersey Superior Court against Guarantee, Patriot, and Cook (collectively, the "Insurer Defendants"). Shortly thereafter, the Insurer Defendants removed the Complaint to federal court. [Docket Item 1.] Plaintiffs subsequently filed, with leave of the Court, an Amended Complaint, which added the Brown & Brown Defendants as parties, along with four new claims (Counts Seven through Ten). [Docket Item 38.]

         2. Counts One through Six of the Amended Complaint assert claims against "all defendants" for: violation of the New Jersey Consumer Fraud Act (Count One); Common Law Fraud (Count Two); Breach of Contract (Count Three); violation of the Covenant of Good Faith and Fair Dealing (Count Four); Breach of Fiduciary Duty (Count Five); and Conversion (Count Six).[5] [Id. at ¶¶ 38-80.] In support of these claims, Plaintiff alleges that in or about March 2015, "defendants' agents and representatives, including Mr. Cook, " (an employee of Patriot), offered Plaintiff the opportunity to participate in a "Large Deductible" Worker's Compensation Program. [Id. at ¶¶ 4-7.] Plaintiff was allegedly told the deductible amount for the program was $250, 000, a Loss Fund would be set up with a contribution of $650, 000, and that no administrative fees would be taken out of the loss fund. [Id. at ¶¶ 8-11.] Plaintiff signed a Term Sheet and was told the premium would be $303, 228.00. [Id. at ¶¶ 17-18.] Plaintiff claims that unnamed "defendants" made unauthorized deductions from the Loss Fund, its premium payment was higher than represented, and some claims may have been improperly paid. [Id. at ¶¶ 21-37.] Plaintiff also claims that it did not execute or receive a 21-page "Program Agreement" referred to on the Term Sheet until June 13, 2016, which was after Plaintiff informed the Insurer Defendants it would not provide another $650, 000 for a new Loss Fund around April 3, 2016. [Id. at ¶¶ 29-34.]

         3. Counts Seven through Ten assert claims against only Brown & Brown and Corbett individually and/or jointly and severally for: Negligence/Broker Malpractice (Count Seven); Breach of Fiduciary Duty (Count Eight); Breach of Special Relationship (Count Nine); and Common Law Fraud (Count Ten). [Id. at ¶¶ 81-106.] Specifically, Plaintiff alleges that Brown & Brown and Corbett, an employee of Brown & Brown, made misrepresentations while assisting Plaintiff in obtaining worker's compensation insurance and failed to exercise reasonable care and fully investigate the proposal provided by the Insurer Defendants. [Id. at ¶¶ 82-89.] Plaintiff also claims that the Brown & Brown Defendants obtained the Program Agreement from the Insurer Defendants but failed to provide the Program Agreement or disclose the terms of the Program Agreement to Plaintiff. [IcL at ¶ 105(d)-(e).]

         4. On November 27, 2017 a Consent Order was filed in the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida, thereby staying all judicial actions against Guarantee. [Docket Item 68.] Several months later, Patriot filed a Voluntary Petition for Chapter 11 Bankruptcy. [Docket Item 77.] Plaintiff's claims against Guarantee, Patriot, and Cook were automatically stayed in this matter. [See Docket Item 83 at 4 n.3; see also Docket Items 68 & 71.] The Brown & Brown Defendants then filed a letter application requesting that the Court stay the entire case [Docket Item 75], which, after extensive briefing and oral argument, Magistrate Judge Schneider denied in an 18-page Memorandum Opinion and Order. [Docket Item 83.]

         5. The Brown & Brown Defendants have moved to dismiss all claims against them, except those alleged in Count Seven, for failure to state a claim upon which relief can be granted. [Docket Item 46.] This motion is now fully briefed and ripe for decision.[6]

         6. Standard of Review.

         Pursuant to Rule 8(a)(2), Fed. R. Civ. P., a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Specific facts are not required, and "the statement need only 'give the defendant fair notice of what the ... claim is and the grounds upon which it rests.'" Erickson v. Pardus, 551 U.S. 89, 93 (2007) (citations omitted). While a complaint is not required to contain detailed factual allegations, the plaintiff must provide the "grounds" of his "entitle[ment] to relief", which requires more than mere labels and conclusions. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         7. A motion to dismiss under Rule 12(b)(6), Fed. R. Civ. P., may be granted only if, accepting all well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the plaintiff, a court concludes that the plaintiff failed to set forth fair notice of what the claim is and the grounds upon which it rests. Id. A complaint will survive a motion to dismiss if it contains sufficient factual matter to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). Although a court must accept as true all factual allegations in a complaint, that tenet is "inapplicable to legal conclusions, " and "[a] pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do." Id. at 67 8.

         8. In addition, Rule 9(b), Fed. R. Civ. P., imposes a heightened pleading standard on fraud-based claims, requiring a party to "state the circumstances constituting fraud with particularity." Klein v. Gen. Nutrition Companies, Inc., 186 F.3d 338, 344 (3d Cir. 1999). To satisfy this standard, the plaintiff must "plead the date, time, and place of the alleged fraud, or otherwise inject precision into the allegations by some alternative means." In re Riddell Concussion Reduction Litig., 77 F.Supp.3d 422, 433 (D.N.J. 2015). This requirement is intended "to place the defendants on notice of the precise misconduct with which they are charged." Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984) .

         9. Discussion.

         The Brown & Brown Defendants argue that all of Plaintiff's claims asserted against them in the Amended Complaint, except for those alleged in Count Seven, should be dismissed for failure to state a claim upon which relief can be granted. As discussed next, Plaintiff does not address Brown & Brown's argument that Counts One through Six do not state a claim upon which relief can be granted against them, but otherwise opposes the Brown & Brown Defendants' motion. For the following reasons, the Court will grant the Brown & Brown Defendants' motion to dismiss.

         10. Claims Against "All Defendants" (Counts One Through Six). The Brown & Brown Defendants first argue that Counts One though Six should be dismissed against them because Plaintiff has not pled any facts as to Brown & Brown or Corbett in any of those Counts. (Def. Br. at 5-6.) Plaintiff did not respond to this argument in its opposition papers. The Court deems Plaintiff's opposition waived and will dismiss these claims against the Brown & Brown Defendants, but not the Insurer Defendants, with prejudice, for the reasons discussed below.

         11. Neither Brown & Brown nor Corbett are mentioned anywhere in the Amended Complaint until Count Seven. (See Am. Compl. at ¶¶ 82-83.) In an effort to resolve ambiguity within the Amended Complaint "without the need to resort to motion practice, " counsel for the Brown & Brown Defendants conferred with Plaintiff's attorney who apparently agreed that Counts One through Six were not directed at the Brown & Brown Defendants but nonetheless refused to replead the Amended Complaint. (Def. Br. at 5.) The Brown & Brown Defendants subsequently moved to dismiss Counts One through Six "as a formality." (Id.)

         12. The Court initially notes that, notwithstanding the fact that Counts One though Six reference "all defendants, " none of the allegations in those counts appear to be directed at the Brown & Brown Defendants who, as noted supra, are named for the first time in the Amended Complaint in Paragraphs 82 and 83 of Count Seven. In fact, Counts One through Six of the Amended Complaint are essentially identical to Counts One through Six of the original Complaint, which Plaintiff filed against only the Insurer Defendants and before the Brown & Brown ...


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