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Rhino Shield Gulf South LLC v. Rsui Group Inc.

United States District Court, E.D. Louisiana

April 15, 2019

RHINO SHIELD GULF SOUTH, LLC and JAMES M. REDMOND
v.
RSUI GROUP, INC. and LANDMARK AMERICAN INSURANCE COMPANY

         SECTION “F”

          ORDER AND REASONS

          Martin . C. Feldman, United States District Judge.

         Before 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, 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 Reasons.

         Background

         This bad faith claims adjustment and legal malpractice suit accuses claims adjusters and liability counsel of extracting settlement contributions from insureds by misrepresenting protections afforded under liability insurance policies.

         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 obtained liability insurance policies from RSUI Group, Inc. (“RSUI”) and Landmark American Insurance Company (“Landmark”). Between 2013 and 2017, former Rhino Shield LA customers filed lawsuits and otherwise asserted claims in Louisiana against Rhino Shield LA that implicated coverage under the RSUI/Landmark policies. In response, the insurers - RSUI and Landmark - and appointed liability counsel -Brian T. Carr, APLC - would extract settlement contributions from James M. Redmond (one of Rhino Shield LA's members) and/or Rhino Shield Gulf South, LLC (a related entity) by misrepresenting that Redmond might face personal liability.

         On October 9, 2018, Rhino Shield Gulf South, LLC (“Rhino Shield GS”) 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. The plaintiffs alleged that RSUI and Landmark violated their duties of good faith and fair dealing under Louisiana law by misrepresenting policy terms to plaintiffs, failing to fully pay claims with third parties until plaintiffs made contributions, and failing to appoint counsel to adequately defend them.

         After RSUI and Landmark removed the lawsuit to this Court, defendant Brian T. Carr, APLC was dismissed with prejudice; RSUI and Landmark then moved to dismiss the claims asserted against them pursuant to Rule 12(b)(6), or in the alternative, for a more definite statement pursuant to Rule 12(e). In its Order and Reasons dated February 5, 2019, the Court granted the defendants' motion to dismiss, without prejudice, finding that the plaintiffs had failed to: (1) plausibly allege their status as insureds under any RSUI/Landmark policy; (2) plead facts sufficient to establish a statutory claim of bad faith insurance practices; or (3) satisfy Rule 9(b)'s heightened pleading standard for fraud. The Court also granted the plaintiff leave to file an amended complaint within thirty days to remedy the pleading deficiencies identified. In accordance with that Order, the plaintiffs filed an amended complaint on March 6, 2019.

         The plaintiffs allege in their first amended complaint that “Rhino Shield LA was a two-member LLC” comprised of James M. Redmond and his business partner at that time, Kevin Mmahat. The amended complaint further alleges that Rhino Shield LA operated in Louisiana pursuant to an agreement with Rhino Shield GS, a Florida limited liability company whose sole member was and is James M. Redmond. With respect to the liability insurance policies allegedly at issue, the plaintiffs claim that Rhino Shield LA was insured by RSUI policies between April 24, 2011 and April 24, 2015, that Mr. Redmond was an insured by virtue of his status as a member of Rhino Shield LA, [1] and that Rhino Shield GS was named as an “additional insured” under these policies between May 8, 2013 and April 24, 2015.

         It is further alleged that, beginning in 2013, former Rhino Shield LA customers filed claims and lawsuits in Louisiana against Rhino Shield LA, alleging liability covered by the RSUI/ Landmark/Covington policies. The amended complaint explains that these lawsuits dealt directly with the faulty or defective installation of the Rhino Shield product in Louisiana. The complaint then lists twelve lawsuits and claims asserted against Rhino Shield LA, and alleges that each one “also named James M. Redmond and/or Rhino Shield GS as direct defendants:” Lawsuits

(1) Danny J. Delahoussaye, et al. v. Rhino Shield of Louisiana, LLC - 16th Judicial District Court for the Parish of Iberia, No. 120-721;
(2) Henry Gill, et al. v. Rhino Shield of Louisiana, LLC, Rhino Shield Gulf South, LLC and Hallmark Specialty Ins. Co. - 19th Judicial District Court for the Parish of East Baton Rouge, No. 629-162;
(3) Ronald Henry v. Rhino Shield of Louisiana, LLC - Second Parish Court for the Parish of Jefferson, No. 122-182;
(4) Raymond Landry, et al. v. Rhino Shield of Louisiana, LLC, Rhino Shield Gulf South, LLC, and Amcoat Industries, Inc. - Civil District Court for the Parish of Orleans, No. 2014-894;
(5) Torrin Poe v. Rhino Shield of Louisiana, LLC et al. - Civil District Court for the Parish of Orleans, No. 2015-9230;
(6) Shane Raimer, et al. v. Rhino Shield of Louisiana, LLC, Rhino Shield Gulf South, LLC and Amcoat Industries, Inc. - Civil District Court for the ...

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