United States District Court, E.D. Virginia, Newport News Division
MEMORANDUM OPINION AND ORDER
RAYMOND A. JACKSON UNITED STATES DISTRICT JUDGE.
the Court are Defendants' Motions to Dismiss. All
Defendants have moved to dismiss Plaintiffs Complaint on the
basis that it fails to state a claim for which relief can be
granted. All submitted briefs have been reviewed, and the
Court held a hearing on November 30, 2016. For the reasons
stated below, Defendants' 12(b)(6) Motions to Dismiss
(ECF Nos. 24, 26, 28, 59 and 63) are GRANTED.
FACTS & PROCEDURAL HISTORY
September 9, 2014, Newport News, Virginia experienced
excessive rainfall that resulted in stream flooding. Compl.
¶ 23. City Line Associates, LPs ("City Line"),
owned 200 apartment units that were "hard hit" by
the flooding, and "most" residents were forced to
evacuate. Id. To repair the damage, City Line
contracted with First Atlantic Restoration, Inc. ("First
Atlantic") to perform emergency services to its Newport
News, Virginia property. Id. ¶ 16. Thereafter,
First Atlantic subcontracted with Plaintiff Slay's
Restoration, LLC ("Plaintiff) to "dry" City
Line's flooded properties once the flood waters receded.
Line is the named insured under eighteen Standard Flood
Insurance Policies ("SFIP") issue by Wright
National Flood Insurance Company ("Wright
National") in its capacity as a Write Your Own (WYO)
Program carrier. ECF No. 60. City Line made 18 claims with
Wright National regarding the eighteen buildings that were
impacted by flooding. Id. ¶ 24. In response to
the claims, Wright National dispatched Colonial Claims
Corporation ("Colonial"), an adjusting firm,
Id. ¶ 8., to inspect City Line's property
and document the claims. Id. ¶ 24.
performed all drying services and provided all materials
because First Atlantic subcontracted the entire scope of the
work to Plaintiff. Id. ¶ 26. During the
repairs, City Line, First Atlantic, and Plaintiff took great
care to document the 18 claims, because City Line had prior
experiences with Wright National, where Wright National
"substantially" reduced the amount paid to City
Line for flood restorations even after Plaintiff and First
Atlantic objected. Id. ¶ 25. Because Plaintiff
conducted all of the drying services, Plaintiff was in direct
contact with Colonial and the consultants regarding the claim
adjustment. Id. ¶ 26.
Plaintiff and First Atlantic dried 18 of City Line's
buildings, Plaintiff and First Atlantic submitted
"materials" to City Line for submission to
Defendants regarding 18 claims. Id. ¶ 28. The
materials requested an excess of $1.2 million in payment for
First Atlantic and Plaintiffs work on the 18 claims.
Id. ¶ 28. After City Line submitted the
necessary materials to Defendants for payment, First Atlantic
contacted Patrick Durtschi, who was involved with the
adjusting and is believed to have been an employee with
Colonial on December 18 and 24, 2014, to determine whether
additional information was required from Plaintiff or First
Atlantic. Id. ¶ 29. Patrick Durtschi informed
First Atlantic that ". . . Defendants were waiting on
some technical data from a manufacturer and information would
be provided to the contractors as soon as Wright [National]
had it." Id. "Under the impression
Defendants were processing payment, Plaintiff allowed its
lien rights on the projects expire." Id.
18 claims, plaintiff elected to accept the amount proposed by
KD Consulting with respect to building 1 despite the
allegations that Plaintiff performed its services
incorrectly. Id. at 33. For Plaintiffs seventeen
objected claims, however, Plaintiff, First Atlantic and/or
City Line received some iteration of the following response
from KD Consulting and/or Nicholl, between January 9, 2015
and October 10, 2015: (1) that First Atlantic and Plaintiff
did not adhere to ANSI/IICRC S500 Standard and Reference
Guide for Professional Water Damage Restoration or FEMA
Memorandum W- 13025; (2) KD Consulting and Nicholl's
(see Compl. ¶ 22) reply report to Plaintiffs
objection bolstering its initial report, and a statement that
Plaintiffs "rebuttal report" was submitted to
Wright National; and subsequent claim payment reductions
varying between $18, 512.70 and $68, 235.92. Id.
Consulting's October 10, 2015 response to Plaintiffs
objections, KD Consulting stated that Rachel Adams ". .
. is a IICRC board member and environmental professional
expert who assisted Sam in the writing of the rebuttal
report. Rachel was instrumental in the development of the
IICRC standards." Id. ¶ 103. Rachel Adams
stated, however, that she "did not author, help author,
or give [her] opinion to any statements written in the Report
or the Reply. In fact, she does' not recall seeing them
until October 29, 2015." Compl. Ex. A.
result of the foregoing, Plaintiff filed a one-count
Complaint in this Court on December 22, 2015 against eight
Defendants. Compl. ¶¶ 123-27. Count One alleged
that Defendants "violated 18 U.S.C. § 1962(c) by
conducting or participating, directly or indirectly, their
affairs through a pattern of racketeering." Id.
at 125. Plaintiff asserted that it has been injured in its
business or property as a direct and proximate result of
Defendants' predicate acts, which makeup the
Defendants' patterns of racketeering activity.
Id. ¶ 126. "Specifically, Plaintiff has
been injured in its business or property by having their
legitimate claims for work to be paid from [National Flood
Insurance Program ("NFIP")] proceeds but the claims
are being denied in whole or in part as a result of the
scheme employed by the Defendants." Id. ¶
contextual purposes, Defendant KLSM Consulting Group, doing
business as KD Consulting & Appraisal Group
("KLSM") is a Florida consulting and appraisal
firm. Id. ¶ 6. Defendant CIS Specialty Claims
Services Group LLC ("CIS") is a Texas adjusting and
consulting firm. Id. ¶ 7. Defendant Colonial
Claims Corporation ("Colonial") is a Florida
adjusting firm. Id. ¶ 8. Defendant Wright
National is a Florida insurance company carrying Write Your
Own ("WYO") insurance policies as a participant in
the National Flood Insurance Program ("NFIP").
Id. ¶ 9. Defendant Samuel Woodard
("Woodard") is a natural person residing in Texas
and employed as a mitigation reviewer by "either KLSM or
CIS." Id. ¶ 10. Defendant Jeffrey Nicholl
("Nicholl") is a natural person residing in Florida
and employed by Wright Flood. Id. ¶ 11.
Defendant Michael Carmelia ("Carmelia") is a
natural person residing in Florida and employed as a loss
consultant by KSLM Consulting. Id. ¶ 12.
Defendant Jeffrey P. Kaiser ("Kaiser") is a natural
person residing in Florida and was employed as a mitigation
professional by KLSM. Id. ¶ 13.
February 8, 2016, Colonial filed a Motion to Dismiss for
failure to state a claim upon which relief can be granted,
ECF No. 24, as did CIS and Woodard, ECF No. 26, and Wright
National, ECF No. 28. On February 26, 2016, Plaintiff filed
Memorandums in Opposition to the aforementioned Motions to
Dismiss. ECF Nos. 40, 41, 42. On March 7, Colonial filed a
Reply to Plaintiffs Opposition, ECF No. 56, as did Wright
National, ECF No. 57. On March 16, 2016, Plaintiff requested
a hearing on the pending Motions to Dismiss. ECF No. 58.
March 24, 2016, Nicholl filed a Motion to Dismiss for failure
to state a claim upon which relief can be granted. ECF No.
59. On April 6, 2016, Plaintiff filed a Memorandum in
Opposition to Nicholl's Motions to Dismiss. ECF No. 61.
On April 11, 2016, KLSM and Kaiser filed a joint Motion to
Dismiss for failure to state a claim upon which relief can be
granted. ECF No. 63. On April 12, 2016, Plaintiff filed an
Opposition Memorandum to KLSM and Kaiser's Motion to
Dismiss. ECF No. 66. On May 2, 2016, KLSM and Kaiser
filed a reply to Plaintiffs Memorandum in Opposition. ECF No.
67. Between May 3, 2016, and May 11, 2016, Colonial, ECF No.
69, Wright National, ECF No. 72, and CIS, Woodard, KLSM and
Kaiser, ECF No. 75, filed a Motion for Leave to Supplement
the Record with new case law authority in support of their
Motion to Dismiss. On May 16, 2016, Plaintiff filed a
response to Defendant Wright National's Motion for Leave
to Supplement the Record. ECF No. 77. On August 10, 2016, the
Court Granted Defendant's Motion for Leave to Supplement
the Record. ECF No. 78. On November 30, 2016, the Court held
a Motion Hearing regarding Defendants' Motions to
Dismiss. ECF No. 79.
motion to dismiss under Rule 12(b)(6) for failure to state a
claim upon which relief can be granted is a challenge to the
legal sufficiency of a complaint, as governed by Rule
8." Fed. Trade Comm'n v. Innovative Mktg,
Inc., 654 F.Supp.2d 378, 384 (D. Md. 2009). The Supreme
Court has recently held that "[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter,
accepted as true, to 'state a claim to relief that is
plausible on its face.' " Ashcroft v.
Iqbal, 556 U.S. 662, 129 (2009) (citing Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 127(2007)).
Supreme Court noted that "[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, " and
noted that "[determining whether a complaint states a
plausible claim for relief will ... be a context-specific
task that requires the reviewing court to draw on its
judicial experience and common sense." Id. See also
Harman v. Unisys Corp., 356 Fed.App'x. 638, 64(M1
(4th Cir. 2009). The Court added that "the tenet that a
court must accept as true all of the allegations contained in
the complaint is inapplicable to legal conclusions" and
that, "[t]hreadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not
suffice." Id. The Court further noted that