United States District Court, E.D. Louisiana
RHINO SHIELD GULF SOUTH, LLC and JAMES M. REDMOND
RSUI GROUP, INC. and LANDMARK AMERICAN INSURANCE COMPANY
ORDER AND REASONS
L. C. FELDMAN UNITED STATES DISTRICT JUDGE.
the Court is RSUI Group, Inc. and Landmark American Insurance
Company's motion to dismiss pursuant to Rule 12(b)(6), or
in the alternative, motion for more definite statement
pursuant to Rule 12(e). For the reasons that follow, the
motion to dismiss is GRANTED, the plaintiffs' claims are
DISMISSED WITHOUT PREJUDICE, and the plaintiffs are granted
leave to file an amended complaint within thirty (30) days to
remedy the pleading deficiencies identified in this Order and
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 liability insurance policies.
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 Company
(“Landmark”). Issued to Rhino Shield LA, these
policies allegedly defined “insured” as follows:
A limited liability company, you are an insured. Your members
are also insureds, but only with respect to the conduct of
your business. Your managers are insureds, but only with
respect to their duties as your managers.
2013 and 2017, former Rhino Shield 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. According to Rhino Shield GS and Redmond, the former
customers asserted claims under Louisiana law,
“alleging liability covered by policies issued in
Louisiana by RSUI/Landmark to Rhino Shield LA.”
members further allege that their insurers - RSUI and
Landmark - and liability counsel - Brian T. Carr, APLC -
would respond to the lawsuits by negotiating settlements.
More specifically, they 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.
Shield GS and Redmond further claim that RSUI/Landmark used
appointed liability counsel or adjusters to extract
settlement contributions from Redmond and/or Rhino Shield GS
by misrepresenting that Redmond might face personal
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 Company, 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. In the alternative, the
plaintiffs allege that RSUI and Landmark committed fraud by
misrepresenting to plaintiffs that they had a duty to
contribute to any settlement. 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.
and Landmark timely removed the lawsuit to this Court on
November 20, 2018, invoking the Court's diversity
jurisdiction. Thereafter, the plaintiffs moved to remand on
the ground that Brian T. Carr, APLC is a forum defendant, and
defendant Carr moved to dismiss the claims asserted against
it pursuant to Rule 12(b)(6), or in the alternative, for a
more definite statement. In its Order and Reasons dated
January 9, 2019, the Court denied the plaintiffs' motion
to remand and granted Carr's motion to dismiss. RSUI and
Landmark now move to dismiss the plaintiffs' claims
asserted against them pursuant to Rule 12(b)(6), or in the
alternative, for a more definite statement pursuant to Rule