United States District Court, W.D. Virginia, Big Stone Gap Division
H.S. MARTIN CONSTRUCTION CORP., DBA INSURANCE CLAIMS CONSTRUCTION SERVICES, Plaintiff,
LEE COUNTY SCHOOL BOARD, ET AL., Defendants.
I. Berenshteyn and K. Justin Hutton, The Senter Law Firm,
Bristol, Tennessee, and Russell L. Egli, Egli Law and Loss
Claim Specialist, Knoxville, Tennessee, for Plaintiff
Melissa W. Robinson and Johneal M. White, Glenn Robinson
& Cathey, PLC, Roanoke, Virginia, for Defendant Risk
Management Programs Inc.; and Jennifer D. Royer, Guynn &
Waddell, P.C., Salem, Virginia, for Defendant Lee County
OPINION AND ORDER
P. Jones United States District Judge.
case invoking the court's diversity jurisdiction, the
plaintiff, H.S. Martin Construction Corp., doing business as
Insurance Claims Construction Services (“H.S.
Martin”), has asserted two breach-of-contract claims
against defendant Lee County School Board (“School
Board”), as well as a claim of bad faith breach of
contract against defendant Risk Management Programs, Inc.
(“Risk Management”), and a claim of intentional
interference with prospective economic advantage against
defendants Robinson & Associates, Inc.
(“Robinson”), Highlands Claims Services, LLC
(“HCS”), and William Curtis Prater. The School
Board and Risk Management have moved to dismiss the Amended
Complaint for failure to state any viable claims against
them. In response, H.S. Martin has moved for leave to amend
its Amended Complaint. For the reasons that follow, I will
grant the motions to dismiss and deny the Motion for Leave to
plaintiff alleges the following facts, which I must accept as
true for the purpose of deciding the pending motions.
Martin is a Tennessee corporation with its principal place of
business in Tennessee. The School Board, a public entity
located in Lee County, Virginia, owns and operates Pennington
Gap Middle School (“Middle School”) and Lee
County High School (“High School”). Risk
Management is a group self-insurance risk pool based in
Richmond, Virginia. Robinson is a Virginia corporation with a
principal place of business in Lynchburg, Virginia. HCS is a
Virginia corporation with a principal place of business in
Abingdon, Virginia. Prater, a citizen of Virginia, was a
senior claims specialist working for Robinson and HCS. He was
hired by Risk Management to work as the claims adjuster for
the School Board for claims related to damages sustained
during two separate weather incidents that occurred in 2014
and 2015. Prater was named as a defendant in this lawsuit,
but he died several months before the plaintiff filed its
original complaint in this case, and Prater's estate has
not been served with process.
27, 2014, the Middle School suffered damage due to a weather
incident. The same day, the School Board contacted H.S.
Martin and requested estimates for emergency mitigation and
reconstruction. A representative of the School Board signed
an Authorization to Pay form that stated:
I am authorizing the third party named below to be added as a
“named party” on the initial and all future
“approved” payments from the claim payable
proceeds as a result of my insurance claim arising out of
Hail damage. Claim number: 052B2014107694 I
understand that I will be named and listed on the initial and
subsequent checks, due to me being the named insured on the
policy in force and binding contract I have with you, as
being my insurance carrier.
I am invoking my right as a policy holder through the
“Terms and Conditions” portion of my policy, for
cause that if a situation arises out of the handling of my
claim, that the third party named below will be able to
discuss, negotiate, and assist in concluding my insurance
claim on my behalf.
I am giving my allocation to them as the named insured on the
policy, or appointed representative of the named insured.
This joint agreement allows third party to protect and
preserve their security interest through and by, being a
named party on the insurance proceeds, payable through
endorsed check from you as my insurance carrier and or
I also understand that my signing of this agreement does not
waive any of my rights as the named insured or policy holder.
(Compl. Ex. 6, ECF No. 1-6.) The “Third Party
Information” portion of the form was filled in with the
name, address, phone number, and tax identification number of
Martin's work at the Middle School was directed by
representatives of the School Board, Prater, and Risk
Management. On August 13, 2014, H.S. Martin contacted Prater
to request partial payment for work completed up to that
time. When it did not receive payment, H.S. Martin asked
representatives of the School Board for instruction on how to
bill for the emergency mitigation work that had been
September 10, 2014, a representative of Risk Management
informed H.S. Martin and the School Board that it would
release $250, 000 as advance payment for work completed and
would not issue any further payments until all work was
completed. On September 24, 2014, representatives of the
School Board authorized payment of $250, 000 to H.S. Martin.
On September 26, 2014, representatives of the School Board
and Risk Management discussed meeting with H.S. Martin to
reach an agreed price for the emergency mitigation work that
had been completed and the remaining repairs to be completed.
Sometime after September 27, 2014, H.S. Martin received check
number 147010 in the amount of $250, 000.
October 1, 2014, H.S. Martin contacted representatives of the
School Board and Risk Management to discuss issues of water
leaks through the temporary repairs and the use of additional
personnel to monitor barriers and keep students out of work
areas. H.S. Martin suggested spraying for airborne
contaminates, and representatives of the School Board
directed H.S. Martin to spray. On October 2, 2014, Prater
represented that Risk Management had authorized thermal
fogging and additional workers to provide on-site
supervision, and he directed H.S. Martin to complete work on
the Middle School roof as quickly as possible while also
taking every measure to avoid further leaks.
October 17, 2014, Alan Ingles, Maintenance Superintendant for
the School Board, sent an email to representatives of Risk
Management asserting that he had not received requested
paperwork from Risk Management and that he needed the
paperwork to show to the School Board. Prater was responsible
for providing the paperwork to Risk Management, the School
Board, and H.S. Martin. Prater responded, asserting that the
agreed price estimate would require one large appraisal of
the loss because Risk Management preferred to issue one
payment per claim, and that he had not been able to complete
October 28, 2014, H.S. Martin contacted representatives of
the School Board and Risk Management to request payment of
additional funds for the Middle School project. The following
day, Ingles requested that Risk Management pay H.S. Martin
for the work completed to date.
November 13, 2014, Prater represented to the School Board and
H.S. Martin that the agreed price appraisal had been
completed and forwarded to Risk Management. Risk Management
inspected the property on November 18, 2014, with Garry
Smith, Vice President of H.S. Martin. On December 23, 2014,
Risk Management issued a check to H.S. Martin in the amount
of $692, 608.05, indicating that the money was payment for
“Roof Repair, First Dry Out, Second Dry Out, Third Dry
Out, Fourth Dry Out, Agg Shop building, Football Field
Lights, Alternative Ed Building, Janitorial Equipment
Building, Greenhouse Building, and Structural Repairs.”
(Am. Compl. ¶ 50, ECF No. 32.) Risk Management indicated
that an additional $88, 435.68 was owed for the work listed,
but that money was being withheld pending receipt of further
information from H.S. Martin. The total price for all work
completed was $1, 491, 614.00, and the School Board and Risk
Management paid a total of $942, 608.05.
Martin provided the further information requested. On May 22,
2015, H.S. Martin completed all work and requested payment in
full for its services. Representatives of the School Board
forwarded the request for final payment to Risk Management.
School Board representatives were sent copies of
correspondence throughout the mitigation and construction
process and did not direct H.S. Martin to discontinue its
work at the Middle School. H.S. Martin has not received
payment of the outstanding balance of $549, 005.95 for work
performed at the Middle School.
January 6, 2015, the High School suffered damage from a
weather incident. The following day, Ingles contacted Smith
and informed him that an insurance claim had been submitted
to Risk Management for the weather damage. That day, at the
request of Ingles and the School Board, H.S. Martin began
making emergency repairs to the High School. On January 12,
2015, the Director of Maintenance, as a representative of the
School Board, signed an Authorization to Pay form for claim
number 052B2015118636, arising out of water damage at the
High School, that named H.S. Martin as the third ...