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Government Employees Insurance Co. v. Clear Vision Windshield Repair LLC

United States District Court, M.D. Florida, Orlando Division

March 29, 2017

GOVERNMENT EMPLOYEES INSURANCE CO., GEICO INDEMNITY CO., GEICO GENERAL INSURANCE COMPANY and GEICO CASUALTY CO., Plaintiffs,
v.
CLEAR VISION WINDSHIELD REPAIR, LLC, MY CLEAR VIEW WINDSHIELD REPAIR, INC., DOUGLAS STROH, CENTRAL FLORIDA WINDSHIELD REPAIR, LLC, LIZZETTE LABELL, TRAVIS LABELL, J.C. WINDSHIELD REPAIR, LLC, JEAN CAROUSSO, GDB INDUSTRIES, LLC, GREGORY A. BECHTOLD and JOHN DOE DEFENDANTS 1-10, Defendants.

          ORDER

          JOHN ANTOON II District Judge.

         Plaintiffs allege an expansive fraudulent scheme carried out by Defendant windshield repair companies (Defendants) to defraud Geico insurance companies (Plaintiffs) by filing thousands of phony insurance claims for windshield repairs. Plaintiffs filed several fraud-based claims against Defendants to recover their losses from the alleged scheme, as well as claims for declaratory judgment and unjust enrichment. Defendants filed three[1] motions to dismiss, (Docs. 18, 19, and 20), and Plaintiffs responded. (Doc. 27). For the reasons stated below, Defendants' motions to dismiss must be denied.

         I. Background[2]

         Florida requires that insurance companies, including Plaintiffs, cover repair or replacement of damaged windshields of their insureds who have comprehensive coverage. (Compl., Doc. 1, ¶ 37; Fla. Stat. § 627.7288). Insureds are not required to pay a deductible on these claims. (Compl. ¶ 37). Ordinarily, an insured can choose who will perform this work, and the insured and Plaintiffs communicate to verify the loss, the nature of the damage, and the identification of the entity selected to do the repair. (Id. ¶41). An insured can then assign her rights to receive payment to her preferred windshield repair or replacement shop, who will then send a claim to Plaintiffs for payment. (Id., ¶¶ 42, 44). Defendants allegedly manipulated this process to defraud Plaintiffs.

         Defendants formed a deal with car dealerships to allow them on the car dealerships' premises to market their windshield repair service to the dealership customers. (Id. ¶ 73). Through this access, Defendants falsely informed the insureds that their windshields were chipped or cracked and offered to repair the chips or cracks at no cost to the insureds, (Id. ¶ 79). Defendants would sometimes use a repair kit that contained a liquid that had no reparative value to "fix" the windshield. (Jd ¶ 80). Other times, Defendants would simply submit claims without providing services or engaging with insureds. (Id. ¶ 81). Defendants sometimes sought assignments from insureds of their right to receive payment from Plaintiffs and obtained the insureds' signatures through misrepresentation or forgery. (Id. ¶¶ 83-86). Pursuant to this scheme, Defendants ultimately submitted fraudulent claims to Plaintiffs totaling $310, 000.00. (Id. ¶¶ 87-88).

         Based on these allegations, Plaintiffs bring claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), the Florida Civil Remedies for Criminal Practices Act (FCRCPA), and claims for common law fraud, declaratory judgment, and unjust enrichment. In response, Defendants filed three motions to dismiss. In their first motion, Defendants seek to dismiss the Complaint for lack of subject-matter jurisdiction under Rule 12(b)(1), claiming Plaintiffs do not have standing. (Doc. 20). In their second motion, Defendants seek to dismiss Plaintiffs' RICO, common law fraud, FDUTPA, FCRCPA, declaratory judgment, and unjust enrichment claims under Rules 12(b)(6) and 9(b). (Doc. 18). And in their third motion, Defendants seek to dismiss the Complaint for Plaintiffs' failure to join indispensable parties under Rule 12(b)(7). (Doc. 19).

         II. Motion to Dismiss under Rule 12(b)(1)

         Defendants contend that Plaintiffs do not have standing to "complain that the assignments were obtained through false pretenses and false misrepresentations to the insureds. Such a challenge would be the insureds' to make." (Doc. 20, ¶ 21). Standing is a threshold jurisdictional question. Stalley ex rel. U.S. v. Orlando Req'l Healthcare Svs., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). To demonstrate standing and thus survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1), a plaintiff must show: (1) an injury-in-fact; (2) a causal connection between the injury-in-fact and the defendant's actions; and (3) that the injury will be redressed by a favorable decision. Shotz v. Cates, 256 F.3d 1077, 1081 (11th Cir. 2001) (citing Luian v. Defenders of Wildlife. 504 U.S. 555, 560(1992)).

         Here, despite Defendants' argument that "[t]he parties to the contractual assignment are the [only] parties with standing to complain about the contract, " (Doc. 20 ¶21), Plaintiffs have not asserted claims arising from the contract. Rather, Plaintiffs have shown that they otherwise have standing: they paid $310, 000.00 in reimbursements for fraudulent claims; Defendants caused that injury by engaging in fraudulent practices and then seeking reimbursement for those practices from Plaintiffs; and their injury-the wrongful reimbursements-will be redressed by damages. Defendants' motion to dismiss for lack of standing must be denied.

         III. Motion to Dismiss under Rule 12(b)(6)

         Defendants move to dismiss all Counts of the Complaint for failure to state a claim upon which relief can be granted.

         A. Standards

         Generally, "[a] pleading that states a claim for relief must contain ... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). "[D]etailed factual allegations" are not required, but "[a] pleading that offers labels and conclusions' or 'a formulaic recitation of the elements of a cause of action will not do.'" Ashcroft v. Igbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly. 550 U.S. 544, 555 (2007)). "To survive a [Rule 12(b)(6)] 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.'" Id. (quoting Twombly, 550 U.S. at 570). In evaluating a complaint under this standard, the court must accept all well-pleaded factual allegations as true and construe them in the light most favorable to the Plaintiff. Ironworks Local Union 68 v. AstraZeneca Pharm., LP, 634 F.3d 1352, 1359 (11th Cir. 2011). The court may consider exhibits attached to a complaint in ruling on a motion to dismiss. Hoefling v. City of Miami, 811 F.3d 1271, 1277 (11th Cir. 2016).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With regard to the allegations of common law fraud, RICO, FDUTPA and FCRCPA, Defendants additionally argue that the Complaint lacks the specificity required by Federal Rule of Civil Procedure 9(b) to "state with particularity the circumstances constituting allegations of fraud or mistake." The stringent requirement of Rule 9(b) may be relaxed "when specific &#39;factual information [about the fraud] is peculiarly within the defendants&#39; knowledge or control, &#39;" Stonecreek-AAA, LLC v. Wells Fargo Bank N.A., No. 1:12-CV-23850-MGC, 2013 WL 5416970, at*3 <S.D. Fla. Sept. 26, 2013) (quoting Hill v. Morehouse Med. Assocs.. Inc.. No. 02-14429, 2003 WL 22019936, at *3 (11th Cir. Aug. 15, 2003)), and "in appropriate circumstances to aid those alleging prolonged multi-act schemes, " U.S. ex rel. Clausen v. Lab. Corp. of Am., 290 F.3d 1301, 1314 n. 25 (11th Cir. 2002). In such a circumstance, plaintiffs are "not required to provide 'a detailed allegation of all facts supporting each and every instance of submission of a false claim'... but the complaint must set forth a representative sample detailing]... the defendants' allegedly fraudulent acts, when they occurred, and who engaged in them." HE 2003 WL 22019936, at *3 ...


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