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Great Divide Insurance Co. v. Workforce Management Solutions, Inc.

United States District Court, D. Maryland

August 30, 2017



          Richard D. Bennett, United States District Judge.

         Plaintiff Great Divide Insurance Company (“Great Divide” or “plaintiff”) has filed this action against defendants Workforce Management Solutions, Inc. (“Workforce”) and WMS Solutions, LLC (“WMS”) based on Workforce's failure to pay insurance premiums owed under a workers compensation insurance policy (“the Policy”) issued by Great Divide. (ECF No. 14 at ¶¶ 9-22.) Plaintiff alleges that Workforce and WMS are related business entities which share owners, operators, and employees, and that both entities have been unjustly enriched by their non-payment of the insurance premiums. (Id. at ¶¶ 24-25.)

         Defendant WMS has filed a Motion to Dismiss plaintiff's Amended Complaint (“WMS's Motion”), asserting that WMS was not a party to the Policy and, therefore, cannot be liable for Workforce's alleged failure to pay premiums owed. (ECF No. 18.) Workforce has not filed any response to plaintiff's Complaint, and the Clerk of Court entered a default against Workforce on August 22, 2017.[1] (ECF No. 30.)

         This Court conducted an off-the-record telephone conference with the parties on August 9, 2017 to discuss certain arguments set forth in the parties' briefs. No additional hearing is required. See Local Rule 105.6 (D. Md. 2016). For the reasons stated below, WMS's Motion to Dismiss (ECF No. 18) is GRANTED IN PART and DENIED IN PART. Specifically, it is GRANTED as to the breach of contract claim against WMS (Count I), and it is DENIED as to the unjust enrichment claim against WMS (Count II).


         On September 5, 2014, plaintiff Great Divide Insurance Company issued a renwal Workers Compensation and Employers Liability Insurance Policy (“the Policy”) to defendant Workforce. (ECF No. 14 at 9.) Premiums under the policy were based on the estimated employee wages to be paid by Workforce during the applicable policy period. (Id. at ¶ 10.) While Workforce submitted an estimated employee wage amount of $1, 562, 200, an audit conducted on January 8, 2016 revealed that Workforce's actual employee wages for the applicable period amounted to $10, 500, 631. (Id. at ¶¶ 10, 13.) Based on this disparity, Great Divide determined that Workforce owed additional premiums in the amount of $1, 630, 632. (Id. at ¶ 14.) Workforce challenged the results of the audit, and following a re-audit, Great Divide determined that Workforce owed additional premiums in the amount of $635, 161. (Id. at ¶¶ 15-16.) After deducting amounts previously paid, commissions, and surcharges, Great Divide demanded payment from Workforce in the amount of $609, 560.76. (Id. at ¶ 17.) Workforce has refused to make payment on this balance. (Id. at ¶ 20.) Plaintiff's Amended Complaint alleges that both Workforce-the insured-and WMS-a “related compan[y], which share[s] owners, operators and/or employees [with Workforce]”-have derived an unjust benefit from the services provided by Great Divide. (Id. at ¶ 25.)


         Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a complaint if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). The purpose of Rule 12(b)(6) is “to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006); see also Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165-66 (4th Cir. 2016). The sufficiency of a complaint is assessed by reference to the pleading requirements of Rule 8(a)(2), which provides that a complaint 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).

         To survive a motion under Fed.R.Civ.P. 12(b)(6), a complaint must contain facts sufficient to “state a claim to relief that is plausible on its face.” Bell Atl., Corp. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009). Under the plausibility standard, a complaint must contain “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555; see Painter's Mill Grille, LLC v. Brown, 716 F.3d 342, 350 (4th Cir. 2013).

         In reviewing a Rule 12(b)(6) motion, a court “‘must accept as true all of the factual allegations contained in the complaint'” and must “‘draw all reasonable inferences [from those facts] in favor of the plaintiff.'” E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011) (citations omitted); see Houck v. Substitute Tr. Servs., Inc., 791 F.3d 473, 484 (4th Cir. 2015); Semenova v. Maryland Transit Admin., 845 F.3d 564, 567 (4th Cir. 2017). While a court must accept as true all the factual allegations contained in the complaint, legal conclusions drawn from those facts are not afforded such deference. Iqbal, 556 U.S. at 678 (“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to plead a claim); see A Society Without a Name v. Virginia, 655 F.3d 342, 346 (4th. Cir. 2011).


         I. Breach of Contract

         Defendant WMS Solutions, LLC has moved to dismiss plaintiff's breach of contract claim, asserting that because WMS is not a party to the Policy, Great Divide fails to state a plausible claim against it. (ECF No. 18.) Great Divide argues in opposition that WMS and contract signatory Workforce are related entities and that “[e]ven if the Great Divide Amended Complaint pleads the claim inartfully, it plainly alleges a relationship in fact between WMS and Workforce such that WMS benefitted from the workers compensation insurance provided by Great Divide.” (ECF No. 21 at 1.) Great Divide asserts that it should be allowed to undertake discovery “to ascertain the nature of this relationship and whether these two entities-sharing a common address, working on common projects for common customers, and…common employees” are so related so as to give rise to liability on the part of non-signatory WMS. (Id. at 2.)

         “To prevail in an action for breach of contract, a plaintiff must prove that the defendant owed the plaintiff a contractual obligation and that the defendant breached that obligation.” Taylor v. NationsBank N.A., 365 Md. 166, 175 (2001). “Normally a person cannot be held liable under a contract to which he was not a party.” Snider Bros. v. Heft, 271 Md. 409, 414, 317 A.2d 848, 851 (1974). See Kurland v. ACE Am. Ins. Co., JKB-15-2668, 2017 WL 354254, at *2 (D. Md. Jan. 23, 2017). Here, the Amended Complaint alleges that Workforce, not WMS, was a party to the insurance contract giving rise to Great Divide's claims. Although non-contracting parties may become bound by a contract, Great Divide has not alleged such ...

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