Forest Tire & Auto, LLC v. Catlin Specialty Insurance Co.

District Court, S.D. Mississippi·Decided August 27, 2020·No. 3:20-cv-00072·Unknown

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF MISSISSIPPI NORTHERN DIVISION

FOREST TIRE & AUTO, LLC PLAINTIFF

VS. CIVIL ACTION NO.: 3:20-CV-72-DPJ-FKB

CATLIN SPECIALTY INSURANCE COMPANY; ENGLE MARTIN & ASSOCIATES, LLC; RIMKUS CONSULTING GROUP, INC.; AND LAWRENCE L. WEDDERSTRAND DEFENDANTS

ORDER

This case presents an insurance-coverage dispute over storm damage to property owned by Plaintiff Forest Tire & Auto, LLC. Defendants Engle Martin & Associates, LLC; Rimkus Consulting Group, Inc.; and Lawrence L. Wedderstrand have separately filed motions to dismiss. The Court, having considered the parties’ submissions, finds Defendants’ motions [7, 10, 51] should be denied. I. Background Forest Tire & Auto says that on November 23, 2018, it discovered property damage caused by overnight storms. It filed an insurance claim for the alleged damage with its carrier, Defendant Catlin Specialty Insurance Co., which forwarded the claim to Engle Martin & Associates, LLC, for adjusting. Engle Martin retained an engineering firm, Rimkus Consulting Group, Inc., which assigned the inspection to a structural engineer, Lawrence L. Wedderstrand. Catlin ultimately determined that the damage predated the policy period and denied the claim. Aggrieved by that decision, Forest Tire & Auto sued Catlin, Engle Martin, Rimkus, and Wedderstrand in state court. Catlin removed the case based on diversity jurisdiction, asserting that the Complaint incorrectly identified Wedderstrand as a diversity-spoiling Mississippi citizen. Not. of Removal [1]. Initially, Forest Tire & Auto moved to remand. But after engaging in remand-related discovery, it withdrew that request, presumably because it discovered that all defendants are diverse. See Withdrawal [45]. At the root of the Complaint is Forest Tire & Auto’s belief that Defendants colluded to produce a false engineering report and deny the claim. It alleges that Catlin and Engle Martin intentionally retained Rimkus because it has “a reputation for identifying bases upon which an

insurer can deny coverage.” Compl. [1-1] at 8. It carries this theory to include Wedderstrand, who “is known in the community as an engineer who frequently ‘discovers’ preexisting conditions/damage (or either identifies non-covered wear and tear or long-term creep) at the sites he inspects on behalf of Rimkus.” Id. at 9. Forest Tire & Auto claims Catlin and Engle Martin, knowing of this predisposition, engaged Rimkus and Wedderstrand and the four Defendants worked together to secure a “sham” report and avoid any obligation under the policy. Id. To bolster this allegation, Forest Tire & Auto challenges the accuracy of Wedderstrand’s report. For example, it says the storm and wind damage were “noted throughout the area by a local police officer who responded to Plaintiff’s business after the storms set off burglary

alarms.” Id. at 7. It claims the winds “blew out the roll-up door of an outbuilding and Plaintiff’s roadside business sign located on the east side of the property.” Id. Plaintiff then takes issue with Wedderstrand’s reliance on wind-speed data out of Jackson, Mississippi––40 miles away. Id. at 8. And it faults him for using a “historical aerial image” from October 2014––rather than objective evidence––to support his finding that the damage pre-dated the policy. Id. at 8. According to Forest Tire & Auto, Wedderstrand ignored the damage to the sign and outbuilding as well as the statement of the officer who was on the scene shortly after the storm. Id. It concludes that Wedderstrand’s opinions were “knowingly false or were formed with a reckless indifference for the truth.” Id. at 9. Forest Tire & Auto advances four counts in its Complaint: (1) Bad Faith Refusal to Pay; (2) Civil Conspiracy; (3) Negligent and/or Intentional Filing of a False Insurance Investigation Report; and (4) Respondeat Superior. Id. at 10–13.1 The case is now before the Court on three motions to dismiss filed by Rimkus [7], Engle Martin [10], and Wedderstrand [51]. Briefing on the first two motions was initially stayed during remand-related discovery, but briefing is now

complete on all three motions. II. Standard In considering a motion under Rule 12(b)(6), the “court accepts ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.’” Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999) (per curiam)). But “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007)). To overcome a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555 (citations and footnote omitted). III. Analysis The motions to dismiss reflect some initial confusion as to which claims are advanced against each Defendant, but Forest Tire & Auto’s responses mostly clarified its position. It

1 The counts are numbered I, II, IV, and V––III is omitted. asserts a bad-faith-refusal-to-pay claim against Engle Martin and Catlin, claims for “gross negligence/intentional filing of a false insurance report” against Rimkus and Wedderstrand, and civil-conspiracy claims against all Defendants. Pl.’s Resp. [50] at 2. Finally, Plaintiff seeks to hold Catlin, Engle Martin, and Rimkus responsible for Wedderstrand’s actions, or inactions, under respondeat superior. Compl. [1-1] at 13. This Order considers those counts slightly out of

order. A. Count I, Bad-Faith Refusal to Pay: Engle Martin As explained, Catlin, the insurer, hired Engle Martin to adjust Forest Tire & Auto’s property-damage claim. Engle Martin inspected the property on November 29, 2018, then lined up Rimkus to perform another inspection. Forest Tire & Auto maintains that both Engle Martin and Catlin are liable for bad-faith denial of insurance benefits. Mississippi law distinguishes between an insurer that has entered a contract with the insured and agents/adjusters with no such contract. “[W]here a defendant acts as an agent for a known principal, the general rule of Mississippi law is that the defendant agent incurs no liability

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Forest Tire & Auto, LLC v. Catlin Specialty Insurance Co., (S.D. Miss. 2020).

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