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Certain Underwriters at Lloyd's v. R.J. Wilson & Associates, Ltd.

United States District Court, Fourth Circuit

June 28, 2013

CERTAIN UNDERWRITERS AT LLOYD'S, LONDON
v.
R. J. WILSON & ASSOCIATES, LTD. Et al.

MEMORANDUM

Catherine C. Blake United States District Judge

Certain Underwriters at Lloyd's, London ("Underwriters") brought this action for breach of contract, breach of fiduciary duty, fraud, and unjust enrichment against two business partners in the United States, R.J. Wilson & Associates ("Wilson") and Medical Benefits Administrators of MD, Inc. ("MBA"). On July 17, 2012, the court granted Wilson's motion for leave to file a third-party complaint against Northshore International Insurance Services, Inc. ("NiiS"). NiiS has filed a motion to dismiss the third-party complaint. For the reasons stated below, the motion will be granted in part and denied in part.

BACKGROUND

As set forth fully in the court's memorandum and order granting Wilson leave to file the third-party complaint, Certain Underwriters at Lloyd's, London v. R.J. Wilson & Assoc, Ltd., 2012 WL 2945489, at *l-4 (D. Md. July 17, 2012), this dispute concerns the "Client First" insurance program through which Underwriters provided excess loss coverage to certain employer self-funded benefit plans in the United States. (Compl., ECF No. 1, ¶ 4.) On March 3, 2005, Underwriters entered into a contract (the "Client First Binding Authority") with Wilson, a Maryland company, to provide for the administration of the program. (See Client First Binding Authority, ECF No. 1, Ex. B.) The contract authorized Wilson to function as an insurance agent or "coverholder" for the program and identified MBA as the claims administrator for the program.[1] The Client First program included a mechanism through which Underwriters would provide the insured benefit plans with an advancement of funds once claims reached a certain level. The insureds would then repay Underwriters to the extent that the funds were not needed to pay out covered claims in excess of the plan deductibles. (Compl. ¶¶ 21-24.) The terms of this mechanism were stated in an amendment to each certificate of insurance, denominated the Monthly Aggregate Accommodation ("MAA") agreement. {See Compl., Ex. C.) Underwriters allege that Wilson was in charge of administering the advancements and recouping the repayments under the MAA mechanism and was required to submit monthly "bordereaux" reports to Underwriters detailing the claims, advancements, and repayments. (Compl. ¶ 28.)

According to the complaint, Wilson's June 2008 bordereaux report "revealed more than a million dollars in accommodation advances that had never been repaid to Underwriters." (Id. at 30.) As a result, Underwriters allege, they "employed [NiiS] to conduct a reconciliation review of aggregate accommodation advances and credits related to the Client First Certificates." (Id. at ¶ 31.) Underwriters allege that NiiS's audit "was hampered by Wilson and MBA's failure to maintain records as required by the Certificates." (Id. At ¶ 36.) Allegedly, nearly half the files associated with the monthly reports were "discovered to be missing." {Id) Underwriters therefore could only rely on the numbers reported by Wilson in the June 2008 report and as a result issued a demand for repayment of $1, 035, 450.34 in overpayment accommodations. (Id. at 42.) Wilson responded to Underwriters by asserting that, based on its own calculations, Underwriters owed Wilson $236, 969.05. (Id. at ¶ 43.)

On June 30, 2011, Underwriters filed this action, alleging breach of contract, breach of fiduciary duty, fraud, and unjust enrichment against Wilson and MBA. The complaint was largely based on the discrepancy in the June 2008 report and the irregularities during the audit process. (Compl.¶41.) The court subsequently granted Wilson's motion for leave to file a third-party complaint which alleges that NiiS wrongfully interfered with and improperly interrupted Wilson's insurance contracts, claims processes, and business practices "for its own pecuniary gain" and, therefore, that NiiS is liable for any injury caused to Underwriters. (Third-Party Compl. ("IPC") ¶ 21-26, ECF No. 29-1.) The TPC contains three counts: tortious interference with contractual obligations (Count I), indemnification (Count II), and contribution (Count III). NiiS argues that the TPC fails to state any claim and should be dismissed.

ANALYSIS

When ruling on a motion under Rule 12(b)(6), the court must "accept the well-pled allegations of the complaint as true, " and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). "Even though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints." Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). "The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To survive a motion to dismiss, the factual allegations of a complaint "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)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations and alterations omitted). "To satisfy this standard, a plaintiff need not 'forecast' evidence sufficient to prove the elements of the claim .... However, the complaint must allege sufficient facts to establish those elements." Walters, 684 F.3d at 439 (quotations and citation omitted). "Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is 'probable, ' the complaint must advance the plaintiffs claim 'across the line from conceivable to plausible.'" Id. (quoting Twombly, 550 U.S. at 570).

I. Agency

NiiS first argues that none of the claims against it could stand because it was acting exclusively as an agent of Underwriters and cannot be held separately liable under any of Wilson's theories. NiiS bases its argument on Wilson's allegation that NiiS was "sent by" and acting "on behalf of' Underwriters. (TPC ¶ 17, 38.) Wilson notes, however, that it also pled, in the alternative, that NiiS was "acting on its own accord" when it allegedly engaged in wrongful conduct. (Id. ¶ 21.) Thus, whether NiiS is potentially immune from liability because it was, in fact, an agent of Underwriters is a question that cannot be resolved on NiiS's motion to dismiss. The scope of any principal-agent relationship between NiiS and Underwriters, and whether NiiS acted outside that scope, are issues that cannot be determined by relying on the complaint alone, because the TPC contains allegations both that NiiS was directed by Underwriters and that it exceeded any such authority. See Green v. H&RBlock, Inc., 735 A.2d 1039, 1047-48 (Md. 1999) ("The existence of an agency relationship is a question of fact which must be submitted to the factfinder if any legally sufficient evidence tending to prove the agency is offered.") (citing Faya v. Almaraz, 620 A.2d 327, 339 (Md. 1993)). Accordingly, whether NiiS was acting at all times only as Underwriters' agent such that it is immune from liability is a factual dispute to be resolved after discovery.

II. Tortious Interference

In addition to its agency argument, NiiS argues separately that Wilson has failed to state a claim of tortious interference. Because the agreements between Underwriters and Wilson were terminable at will, NiiS had a "broader right to interfere with economic relations" between them than if NiiS was alleged to have induced a breach of a non-terminable contract. See Natural Design, Inc. v. Rouse Co., 485 A.2d 663, 674 (Md. 1984). Under these circumstances, to plead a claim of intentional interference with economic relations, Wilson must allege:

(1) intentional and wilful acts; (2) calculated to cause damage to [it] in [its] lawful business; (3) done with the unlawful purpose to cause such damage and loss, without right or justifiable cause on the part of [NiiS] (which constitutes malice); and (4) actual damage and loss resulting.

Blondell v. Littlepage, 991 A.2d 80, 97 (Md. 2010). Although competition is generally "just cause" for causing such economic damage, where a defendant has employed wrongful or unlawful means he or she may still be liable for the tortious act. See Natural Design, 485 A.2d at 676 (quoting Restatement (Second) of Torts § 768 (1977)). "While a plaintiff may prove that a defendant acted improperly or wrongfully by showing that he or she used violence, intimidation, injurious falsehood or other fraud, violated the criminal law, and instituted, or threatened, groundless civil suits or criminal prosecutions in bad faith, ... in fact, conduct that is quite subtle, nevertheless, can be improper or wrongful." Macklin v. Robert Logan Assoc, 639 ...


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