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Rhino Shield Gulf South LLC v. Rsui Group Inc.

United States District Court, E.D. Louisiana

January 9, 2019

RHINO SHIELD GULF SOUTH, LLC and JAMES M. REDMOND
v.
RSUI GROUP, INC.; LANDMARK AMERICAN INSURANCE COMPANY; and BRIAN T. CARR, APLC

         SECTION “F”

          ORDER AND REASONS

          MARTIN L. C. FELDMAN, UNITED STATES DISTRICT JUDGE

         Before the Court are two motions: (1) the plaintiffs' motion to remand; and (2) defendant Brian T. Carr, APLC's motion to dismiss, or in the alternative, motion for more definite statement. For the reasons that follow, the motion to remand is DENIED, and the motion to dismiss is GRANTED.

         Background

         This bad faith claims adjustment and legal malpractice suit concerns a claim that an LLC's insurers and counsel extracted significant settlement contributions from the LLC's members by misrepresenting protections afforded under a liability insurance policy.

         Rhino Shield of Louisiana, LLC (“Rhino Shield LA”) is a defunct limited liability company that dissolved in 2015. Prior to its dissolution, Rhino Shield LA allegedly obtained liability insurance policies from RSUI Group, Inc. (“RSUI”) and Landmark American Insurance Co. (“Landmark”). These policies named the LLC itself, as well as its members, as insureds. Between 2013 and 2017, former Rhino Shield of LA customers filed approximately nine lawsuits in Louisiana state court against the company, as well as two of its members - Rhino Shield Gulf South, LLC (“Rhino Shield GS”) and James M. Redmond. In each lawsuit, the former customers asserted claims under Louisiana law that allegedly implicated coverage under the RSUI/Landmark policies.

         According to Rhino Shield GS and Redmond, their insurers - RSUI and Landmark - and liability counsel - Brian T. Carr, APLC - would respond to the lawsuits by negotiating settlements. More specifically, Rhino Shield GS and Redmond allege that RSUI, Landmark, and Carr

would misrepresent to Mr. Redmond that Rhino Shield GS (a solvent Florida entity owned by Mr. Redmond) and/or Mr. Redmond personally could be responsible for any judgment, verdict, and/or settlement of the lawsuits or claims referenced herein, essentially raising coverage defenses with Mr. Redmond personally and/or mispresenting and/or failing to inform Mr. Redmond of the liability protections afforded him under corporate or bankruptcy laws.

         Rhino Shield GS and Redmond further allege that they “accidentally learned of RSUI/Landmark's and Brian T. Carr, APLC's egregious violations of the duty of good faith and fair dealing” on January 30, 2017. Exactly one year later, on January 30, 2018, the two members sued RSUI and Landmark in the 19th Judicial District Court for the Parish of Baton Rouge. Following removal to the U.S. District Court for the Middle District of Louisiana, the case was dismissed without prejudice, on May 10, 2018, for failure to amend the petition in response to the grant of a 12(b) motion for more definite statement.

         Several months later, on October 9, 2018, Rhino Shield Gulf South, LLC and James M. Redmond filed suit in the Civil District Court for the Parish of Orleans, asserting a claim of bad faith claims adjusting practices, or in the alternative, fraud against RSUI Group, Inc. and Landmark American Insurance Co., and a legal malpractice claim against Brian T. Carr, APLC. In their petition, the plaintiffs allege that RSUI and Landmark violated their duties of good faith and fair dealing under Louisiana law by misrepresenting the terms of the policy to plaintiffs, failing to fully pay claims with third parties until plaintiffs made contributions, and failing to appoint counsel to adequately defend them. The plaintiffs further allege that attorneys at Brian T. Carr, APLC failed to properly represent and defend them by negligently advising that they must contribute to settlements that fell under insurance policies providing full coverage and indemnity to plaintiffs. Finally, the plaintiffs seek to recover damages - including an estimated $115, 062.11 allegedly extracted from them - as well as costs, attorney's fees, interest, and punitive damages.

         RSUI and Landmark timely removed the lawsuit to this Court on November 20, 2018, invoking the Court's diversity jurisdiction. The plaintiffs now move to remand the case on the ground that removal was improper because Brian T. Carr, APLC is a forum defendant. And defendant Carr moves to dismiss the claims asserted against it pursuant to Rule 12(b)(6), or in the alternative, for a more definite statement pursuant to Rule 12(e).

         I.

         A.

         Although the plaintiffs challenge removal in this case, the removing defendants carry the burden of showing the propriety of this Court's removal jurisdiction. See Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); see also Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993). Given the significant federalism concerns implicated by removal, the removal statute is strictly construed “and any doubt about the propriety of removal must be resolved in favor of remand.” Gutierrez v. Flores, 543 F.3d 248, ...


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