Storey et al v. Owners Insurance Company et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM against Francina Swinton with Brief In Support

N.D. Ga.April 7, 2017

29450927 v2 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION JOHN W. STOREY and SUZANNE L. STOREY, as Administrators of the Estate of JOHN JARED STOREY, Plaintiffs, v. OWNERS INSURANCE COMPANY, AUTO-OWNERS INSURANCE COMPANY, and FRANCINA SWINTON, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) CIVIL ACTION FILE NO.: NO.: 1:17-cv-01247-WSD MOTION TO DISMISS FRANCINA SWINTON AS AN IMPROPERLY NAMED PARTY WITH SUPPORTING MEMORANDUM COMES NOW Francina Swinton, improperly joined to this action to defeat diversity jurisdiction,1 and moves to dismiss Plaintiffs' claims under Rule 12(b)(6). In support of this Motion, Swinton respectfully shows the Court the following: 1 Swinton files this motion with the defendants' Notice of Removal to further demonstrate that there is no possibility the complaint states a claim against her, and that Plaintiffs fraudulently-joined her to this action to defeat diversity jurisdiction. Swinton recognizes that some Courts have held "the proper remedy on a finding of Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 1 of 27 -2- 29450927 v2 I. INTRODUCTION Plaintiffs claim that Marietta Motorsports is responsible for a negligence incident that occurred on March 9, 2014. Marietta Motorsports had liability insurance policies with Owners Insurance Company and Auto-Owners Insurance at that time. Plaintiffs settled their potential claims against Marietta Motorsports for its applicable liability insurance limits. Plaintiffs are now regretting their settlement terms. Despite their dissatisfaction with their settlement, Plaintiffs are apparently unwilling to rescind their agreement with Marietta Motorsports. Plaintiffs are instead suing Marietta Motorsports' insurers and the "underwriting manager" Francina Swinton. Plaintiffs' claims concern a disputed umbrella insurance policy to which they are neither parties nor intended third-party beneficiaries. The insurers provided copies of Marietta Motorsports' insurance policies to Plaintiffs during their settlement negotiations. The insurers provided the disputed umbrella policy, which they advised was canceled by its own terms before the fraudulent joinder is not dismissal 'but to ignore the presence of the non-diverse defendant,'" but files this motion in an abundance of caution. Nelson v. Whirlpool Corp., 668 F. Supp.2d 1368, 1378 (S.D. Ala. 2009) (citing Henderson v. Washington Nat'l. Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006)). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 2 of 27 -3- 29450927 v2 incident. The insurers additionally provided Plaintiffs with the umbrella policy cancellation documents on which they based their coverage statements. Plaintiffs eventually settled their claims against Marietta Motorsports with the understanding that the umbrella policy, cancelled before March 9, 2014, provided no coverage for their loss. Plaintiffs now have changed their minds and seek to reject this understanding after the fact. In this new lawsuit, Plaintiffs contend that the insurers did not properly cancel the umbrella policy before the incident. Plaintiffs thus conclude that the defendants' statements about whether the policy was canceled were incorrect,2 including statements made in an 'Affidavit of Insurance' signed by Francina Swinton in her capacity as underwriting manager. (Compl. ¶ 40). Plaintiffs improperly named Swinton to this action to defeat diversity and prevent the insurers from availing themselves of federal jurisdiction. The Court should recognize and exercise its diversity jurisdiction, and dismiss Plaintiffs' claims against Swinton with prejudice. 2 Defendants deny this legal conclusion alleged by Plaintiffs and maintain that the insurers effectively canceled the Marietta Motorsports umbrella policy before the incident. Furthermore, the Plaintiffs' attorney had all the documentation and a full opportunity to consider the legal status of the policy before approving the release for his clients' signatures. Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 3 of 27 -4- 29450927 v2 Plaintiffs' complaint fails to state a claim against Swinton for a variety of reasons. First, Plaintiffs expressly released the insurers and their employees, including Swinton, from any and all liability by executing a settlement agreement with Marietta Motorsports. The release extinguished Plaintiffs' claims against Swinton and precludes this lawsuit. Second, Plaintiffs' claims are necessarily predicated on their legal conclusion that the Defendant insurers did not provide Marietta Motorsports with written notice sufficient to cancel the umbrella policy before the March 9, 2014 incident.3 That is not Plaintiffs' conclusion to make. Plaintiffs are strangers to the Marietta Motorsports policy and lack standing to challenge or enforce its terms against the insurers. Any claim against the insurers for failing to effectively cancel the umbrella policy before the incident or for misrepresenting its coverage inures to Marietta Motorsports -- not to Plaintiffs. Plaintiffs cannot step into Marietta Motorsports' shoes to state a claim against the insurers, let alone against a mere employee of one of the insurers like Swinton. Swinton owed the Plaintiffs no contractual or common law legal duty, and she cannot be personally liable to them 3 Plaintiffs do not allege that the insurers failed to provide Marietta Motorsports with any notice of cancellation before the incident. They instead allege that the insurers did not provide Marietta Motorsports with notice far enough in advance of March 9, 2014 to effectively cancel the umbrella policy by that date. (Compl. ¶¶ 43-54). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 4 of 27 -5- 29450927 v2 for ministerial representations she makes on behalf of her employer about a contract to which neither Plaintiffs nor Swinton are parties. Third, Plaintiffs' Georgia RICO Act claim against Swinton fails for Plaintiffs' failure to plausibly allege the existence of a qualifying enterprise, and failure to plausibly allege the commission of a pattern of racketeering activity. Plaintiffs allege that Swinton misrepresented the status of a contractual relationship between the insurers and Marietta Motorsports, and that the insurers themselves made similar misrepresentations about the same contractual relationship. This is not racketeering activity, let alone a pattern of racketeering activity. Plaintiffs' claims against Swinton should be dismissed. II. PLAINTIFFS' ALLEGATIONS Marietta Motorsports adjusted the carburetor on John Jared Storey's ("Jared") motor bike. (Compl. ¶ 11). Plaintiffs allege that Marietta Motorsports did not make the adjustments in "an appropriate, reasonable, and safe manner." (Compl. ¶ 13). On March 9, 2014, Jared's motor bike "cut out" during a jump, "causing the bike to go end over end" and injuring Jared. (Compl. ¶¶ 9, 14). Plaintiffs allege that Marietta Motorsports' carburetor adjustment caused the "cut out." (Compl. ¶ 14). Jared died from his injuries on December 10, 2015. (Compl. ¶ 37). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 5 of 27 -6- 29450927 v2 Marietta Motorsports had liability insurance policies with Owners Insurance Company ("Owners") and Auto-Owners Insurance Company ("Auto-Owners"). (See generally, Compl.). Plaintiffs contacted Auto-Owners to request identification "of all policies of insurance which might provide coverage for the March 9, 2014 incident" under O.C.G.A. § 33-3-28.4 (Compl. ¶ 17). The insurers' coverage counsel identified for Plaintiffs two liability insurance policies issued by Owners to Marietta Motorsports. (Compl. ¶ 23). Plaintiffs allege that the insurers had "actual knowledge" of an additional umbrella policy providing coverage for Marietta Motorsports, but that they "intentionally did not identify this policy" at this time. (Compl. ¶ 24). Plaintiffs allege that Marietta Motorsports' "counsel had mentioned the possible existence of an umbrella or excess policy" in October 2015. (Compl. ¶ 4 Section 33-3-28 enables claimants to make written requests to insurers for coverage information. See O.C.G.A. § 33-3-28(a). Upon receiving a written request from a claimant, the insurer shall identify known policies of insurance, the name of the insurer, the name of the insured, and the limits of coverage. Id. The insurer may discharge this duty by providing the claimant with copies of applicable declaration pages, and is charged with amending its disclosures "upon the discovery of facts inconsistent with or in addition to the information provided." O.C.G.A. §§ 33-3-28(a); (d). Claimants do not have private causes of action against insurers for alleged violations of section 33-3-28. See Parris v. State Farm Mut. Auto. Ins. Co., 229 Ga. App. 522, 524, 494 S.E.2d 244 (1997) ("The language of OCGA § 33-3-28 does not specifically create any cause of action for breach thereof."). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 6 of 27 -7- 29450927 v2 30). Plaintiffs requested a copy of the umbrella policy from Owners and Auto- Owners. (Compl. ¶ 30). The insurers provided a copy of the policy to Plaintiffs. (Compl. ¶ 32). However, the insurers' counsel sent a letter to Plaintiffs stating that the umbrella policy did not cover the March 9, 2014 incident, and that there "was only $1,000,000.00 in available insurance limits due to a duplication of coverage provision[.]" (Compl. ¶ 33). Plaintiffs settled their liability claims against Marietta Motorsports for $1,000,000 on December 4, 2015. (Compl. ¶ 35). Plaintiffs executed a Settlement Agreement and Release of All Claims on February 19, 2016. (Compl. ¶ 39). In connection with their settlement with Marietta Motorsports, Plaintiffs allege that "Francina Swinton, in her capacity as underwriting manager" signed an "Affidavit of Insurance" for and on behalf of the insurers stating that the umbrella policy was cancelled on January 31, 2014 and did not provide coverage for the loss. (Compl. ¶¶ 40, 41). Notwithstanding the "Affidavit of Insurance," Plaintiffs had copies of the umbrella policy and cancellation documents at the time they settled their claims with Marietta Motorsports and executed the Settlement Agreement. (Compl. ¶ 32). Plaintiffs now file this action against Marietta Motorsports' insurers and individual employee Swinton for violations of Georgia's RICO Act, negligent misrepresentation, and fraud and deceit. Plaintiffs file this action despite settling Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 7 of 27 -8- 29450927 v2 and releasing all claims against Marietta Motorsports, the insurers, and Swinton, and despite the fact that they are not in a contractual or legal relationship with any of the defendants. Plaintiffs allege that the defendants violated Georgia's RICO Act by engaging in a criminal enterprise involving the use of mail and wire fraud. More specifically, Plaintiffs allege that the defendants intentionally misrepresented the cancellation of the umbrella policy "for the sole purpose of deceiving Plaintiffs in an effort to deprive them of additional insurance coverage afforded for the March 9, 2014 loss." (Compl. ¶ 55). Plaintiffs allege that the defendants made these alleged misrepresentations through "information, statements, letters, writings, and communications to be delivered by the U.S. Postal Service," "by means of wire communication and interstate commerce," and through "numerous telephone calls." (Compl. ¶¶ 66, 85). Plaintiffs allege that they relied on these representations to "agree[] to a settlement [with Marietta Motorsports] for $1,000,000 when they would have only accepted $2,000,000 had they been rightfully informed of the actual coverages and limits available." (Compl. ¶ 88). Plaintiffs' allegations fail to state a claim for relief against any defendant upon which relief can be granted, but they are particularly deficient as to Swinton. Plaintiffs only specifically allege that Swinton executed the "Affidavit of Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 8 of 27 -9- 29450927 v2 Insurance" containing misstatements about the status of Marietta Motorsports' contractual relationships with the insurers. Plaintiffs are strangers to the contracts between Marietta Motorsports and the insurer defendants, and lack standing to challenge the contracting parties' performances under the contracts. Like Plaintiffs, Swinton was not a party to those contracts - she is a mere employee of a contracting party who acted for and on behalf of her employer. Like that employer, Swinton owes the Plaintiffs no contractual or legal duty, and is not liable to Plaintiffs for Georgia RICO Act violations or derivative claims. Plaintiffs' claims against Swinton fail as a matter of law, and should be dismissed. III. MOTION TO DISMISS STANDARD OF REVIEW Plaintiffs' Complaint fails to state a claim against Swinton upon which relief can be granted. The Court should therefore dismiss Plaintiffs' Complaint as to Swinton under Rule 12(b)(6). To survive a motion to dismiss, Plaintiffs "must state a claim for relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955 (2007) (stating that complaint that failed to "nudge[] … claims across the line from conceivable to plausible" must be dismissed). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Ashcroft v. Iqbal, 556 U.S. 662, 678-79, Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 9 of 27 -10- 29450927 v2 129 S.Ct. 1937 (2009) (stating that complaint is insufficient if it "tenders [only] naked assertion[s] devoid of further factual enhancement"). When considering this motion to dismiss, the Court must accept Plaintiffs' factual allegations as true and view them in the light most favorable to Plaintiffs. Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359 (11th Cir. 2006). The Court need not, however, accept as true Plaintiffs' "legal conclusion[s] couched as ... factual allegation[s]." Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932 (1986). IV. ARGUMENT AND CITATION OF AUTHORITY A. Plaintiffs released their claims against Swinton. Plaintiffs executed a Settlement Agreement and Release of All Claims (the "Settlement Agreement") in connection with their settlement with Marietta Motorsports.5 Under the terms of the Settlement Agreement, Plaintiffs "fully, finally, and forever completely release[d] Marietta Motor Sports, Inc., KTM 5 A true and correct copy of the Settlement Agreement is attached hereto as Exhibit "A." The Court may consider the Settlement Agreement without converting this motion to dismiss into one for summary judgment. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) (finding that court may consider document attached to motion to dismiss if document is "(1) central to plaintiff's claim and (2) undisputed. In this context, 'undisputed' means that the authenticity of the document is not challenged.") (citing Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002)). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 10 of 27 -11- 29450927 v2 World, and Highland Park together with all of these individuals' and entities' insurers … [and] their …employees[.]" (See Ex. "A" at p. 1, ¶ 1). The Settlement Agreement thereby extinguished Plaintiffs' causes of action against Swinton, and should compel the Court to dismiss Plaintiffs' Complaint against Swinton wholesale. See Miller v. Grand Union Co., 270 Ga. 537, 538, 512 S.E.2d 887 (1999) (stating that release "extinguishes a cause of action" against the alleged tortfeasors named in the release). Plaintiffs' allegations that the defendants fraudulently induced them into executing the Settlement Agreement do not revive their claims against Swinton. "In general, a party alleging fraudulent inducement to enter a contract has two options: (1) affirm the contract and sue for damages from the fraud or breach; or (2) promptly rescind the contract and sue in tort for fraud." Dodds v. Dabbs, Hickman, Hill and Cannon, LLP, 324 Ga. App. 337, 340, 750 S.E.2d 410 (2013) (affirming summary judgment in favor of released accounting firm for claims the firm fraudulently-induced plaintiff into executing release). To rescind a contract for fraud, a contracting party "must restore or tender back the benefits received under the contract, or show a sufficient reason for not doing so." Wender & Roberts, Inc. v. Wender, 238 Ga. App. 355, 360, 518 S.E.2d 154 (1999). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 11 of 27 -12- 29450927 v2 Here, Plaintiffs have not restored, or offered to restore any of the $1,000,000 they received pursuant to their settlement with Marietta Motorsports. They must therefore affirm the Settlement Agreement, including the release of Swinton, to sue for fraud. The Settlement Agreement includes the express acknowledgment that Plaintiffs "assume the risk that the facts or law may be other than them or their attorney believes," and that "even if their understanding of the facts or law change, [the] settlement is full, forever final and completely binding." (See Ex. "A" at p. 2, ¶ 5). Plaintiffs executed the Settlement Agreement with actual knowledge of the umbrella policy and the cancellation. Indeed, Plaintiffs had a copy of the umbrella policy "as well as the referenced cancellation." (Compl. ¶ 32). The Settlement Agreement specifically precludes Plaintiffs from suing the released parties, including Swinton, because they now conclude the insurers did not timely cancel the umbrella policy according to its own terms. See Dodds, 324 Ga. App. at 342-43 (finding that plaintiff necessarily affirmed settlement agreement by suing for fraudulent inducement without returning settlement consideration, and that plaintiff is estopped from arguing fraudulent inducement on account of agreement's "entire agreement" clause). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 12 of 27 -13- 29450927 v2 The issue of whether the insurers cancelled the umbrella policy according to its own notice terms is an issue of law. See O.C.G.A. § 13-2-1 ("The construction of a contract is a question of law for the court."); Austin v. Bank of Am., N.A., 293 Ga. 42, 743 S.E.2d 399 (2013) (finding that issue of sufficiency of notice required by contractual agreement is question of law). The Plaintiffs accepted that the insurers cancelled the umbrella policy at the time Plaintiffs executed the Settlement Agreement, and assumed the risk that "the law may be other than them or their attorney believes." (See Ex. "A" at p. 2, ¶ 5). Pursuant to the Settlement Agreement's own terms, Plaintiffs are now estopped from suing Swinton on a theory that the "law is other" and the insurers did not properly cancel the umbrella policy. The Court should dismiss Plaintiffs' claims against Swinton with prejudice. B. Swinton does not owe the Plaintiffs any contractual or legal duty. If Plaintiffs wish to rescind and renegotiate their settlement, they must do so through an action against Marietta Motorsports, not a RICO lawsuit against Marietta Motorsports' insurers and Swinton. Though Plaintiffs allege the defendants made misrepresentations during Plaintiffs' settlement negotiations, the insurers were under no duty to provide Plaintiffs with advice about the legal status of Marietta Motorsports' insurance policies. See, e.g., Superior Ins. Co. v. Dawkins, 229 Ga. App. 45, 494 S.E.2d 208 (1997) (finding that automobile liability insurer Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 13 of 27 -14- 29450927 v2 owed no duty to accident victim to give accurate legal advice regarding effect of release on claim for underinsured motorist); Fincher v. Dempsey, 209 Ga. App. 222, 223, 433 S.E.2d 78 (1993) ("It is clear that no fiduciary relationship exists between one having a claim against an insured and the agent of a liability carrier who seeks settlement of the claim") (citation omitted). Plaintiffs' allegations fail to state a claim against any defendant, but again, are particularly deficient as to Swinton. Marietta Motorsports had contractual relationships with the insurers, not Swinton. Even assuming Plaintiffs could state a cause of action against the insurers for their representations about their relationship with Marietta Motorsports, they could not state a possible claim against Swinton, who had no contractual or legal relationship with Marietta Motorsports. Swinton is not a party to any contract or in a fiduciary relationship with Marietta Motorsports or Plaintiffs. Swinton does not owe Plaintiffs any duty respecting the representations she made to Plaintiffs during their negotiations with Marietta Motorsports. See Daniel v. Conrad, 242 Ga. 119, 249 S.E.2d 603 (1978) ("Because no fiduciary relationship exists between a claimant and the insured's insurance carrier, a release obtained by the insurance agent is binding on the claimant even if the statements and representations made by the agent were incorrect or erroneous[.]"); see also White v. Lott, 175 Ga. App., 263, 264, 333 Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 14 of 27 -15- 29450927 v2 S.E.2d 118 (1985) (finding plaintiffs had no basis to invalidate release where they were not "prevented from reading the document before they signed it."). Plaintiffs fail to state a claim against Swinton, and their Complaint should be dismissed. C. Plaintiffs fail to state a Georgia RICO Act violation as a matter of law. Georgia's RICO statute makes it unlawful "for any person, through a pattern of racketeering activity or proceeds derived therefrom, to acquire or maintain, directly or indirectly, any interest in or control of any enterprise, real property, or personal property of any nature, including money." O.C.G.A. § 16-14-4(a). Under this section, "person" can mean a corporation or unincorporated association. Williams Gen. Corp. v. Stone, 280 Ga. 631, 631-32, 632 S.E.2d 376 (2006). Separately, Georgia's RICO statute makes it unlawful for "any person employed by or associated with any enterprise to conduct or participate in, directly or indirectly, such enterprise through a pattern of racketeering activity." O.C.G.A. § 16-14-4(b). "Enterprise" means any legal entity or group of individuals associated in fact. O.C.G.A. § 16-14-3(3).6 6 Georgia's "enterprise" definition mirrors the federal RICO statute "enterprise" definition. See 18 U.S.C. § 1961(4). Because the "Georgia RICO Act was modeled after the federal statute, [the Georgia Supreme Court] has found federal authority persuasive in interpreting the Georgia RICO statute[.]" Williams, 279 Ga. at 430. Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 15 of 27 -16- 29450927 v2 A "racketeering activity," also known as a "predicate act," is the commission of a crime prohibited by the statute. O.C.G.A. § 16-14-3(5)(A), (C). A "pattern of racketeering activity" means "[e]ngaging in at least two acts of racketeering activity in furtherance of one or more incidents, schemes, or transactions that have the same or similar intents, results, accomplices, victims, or methods of commission or otherwise are interrelated by distinguishing characteristics and are not isolated incidents[.]" O.C.G.A. § 16-14-3(4). It is not enough for a plaintiff to allege a defendant committed one or more predicate acts, such as mail or wire fraud, to state a plausible Georgia RICO claim. Instead, a plaintiff "must show that the defendant violated … the RICO statute; that as a result of this conduct the plaintiff has suffered injury; and that the defendant's violation of … the RICO statute was the proximate cause of the injury." Wylie v. Denton, 323 Ga. App. 161, 165, 746 S.E.2d 689 (2013) (citing Cox v. Mayan Lagoon Estates, 319 Ga. App. 101, 109, 734 S.E.2d 883 (2012)). Plaintiffs fail to allege facts supporting a plausible RICO Act claim against Swinton i. Plaintiffs fail to allege the existence of an association-in-fact sufficient to state a plausible RICO Act claim against Swinton. Here, Plaintiffs indiscriminately allege that the "defendants," including Swinton, violated Georgia's RICO Act by misrepresenting the status of the Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 16 of 27 -17- 29450927 v2 insurers' contractual relationship with Marietta Motorsports. The Plaintiffs accordingly allege that the "person" or "enterprise" of their RICO claim is the unincorporated association of the insurers and Swinton, not the insurers themselves. Such an alleged racketeering enterprise - comprised of a corporation and its employees or agents - cannot support a RICO claim against Swinton as a matter of law. The United States Court of Appeals for the Eleventh Circuit recently affirmed the dismissal of RICO Act claims against a similar "enterprise." See Ray v. Spirit Airlines, Inc., 836 F.3d 1340 (11th Cir. 2016). In Spirit Airlines, the plaintiffs alleged that a racketeering enterprise consisting of Spirit Airlines, two of its officers, and certain of its subsidiaries and consultants committed mail and wire fraud relating to airline services pricing. Id. at 1345-46. In affirming dismissal of the plaintiffs' RICO Act claims, the Eleventh Circuit noted that the alleged Spirit Airlines enterprise was an "association-in-fact enterprise … not itself … a legal entity," and that "association-in-fact enterprises must possess three qualities: 'a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise's purposes." Id at 1352 (citing Boyle v. U.S., 556 U.S. 938, 946, 129 S.Ct. 2237 (2009)). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 17 of 27 -18- 29450927 v2 The Eleventh Circuit found that the plaintiffs did not plausibly allege a common purpose among the Spirit Airline's association-in-fact's participants. Id. at 1353. Specifically, the Eleventh Circuit noted that the plaintiffs did not plausibly allege that the subsidiaries and consultants "directly profited" from the alleged misrepresentations, "as opposed to simply receiving … fee[s] for the anodyne services [they] provided [to Spirit Airlines]." Id. at 1354. In other words, even assuming Spirit Airlines intended to mislead the plaintiffs and committed wire and mail fraud, the plaintiffs did not plausibly allege that the other "association-in-fact" participants shared or profited from that "common purpose." The Eleventh Circuit found that even if it was to assume a common purpose, the plaintiffs' "association-in-fact enterprise would still fail because in an association-in-fact enterprise, a defendant corporation cannot be distinct for RICO purposes from its own officers, agents, and employees when those individuals are operating in their official capacities for the corporation." Id. at 1355. The Eleventh Circuit noted that this requirement "arises from the statutory language making it 'unlawful for any person employed by or associated with any enterprise' to engage in racketeering activities through that enterprise." Id. (citing 18 U.S.C. § 1962(c)).7 7 Section 1962(c) is the federal equivalent of Georgia RICO Act section 16- 14-3(3). Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 18 of 27 -19- 29450927 v2 Summarized simply, "[i]t does not make sense for a person to employ or associate with himself. Thus, an enterprise may not simply be a person referred to by a different name." Id. (citing Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161, 121 S.Ct. 2087 (2001)). The Spirit Airlines case applies to bar Plaintiffs' RICO Act claim here. Plaintiffs allege only that Swinton executed an affidavit containing misrepresentations. Plaintiffs do not allege that Swinton "directly profited" by executing the affidavit, an "anodyne service" Swinton provided to her employer in the regular course of her employment. Plaintiffs therefore do not plausibly allege a "common purpose." Moreover, Plaintiffs' alleged "association-in-fact" fails as comprised of corporations and their own employee. The Court should therefore dismiss Plaintiffs' Civil RICO Act claim against Swinton with prejudice. See Almanza v. United Airlines, Inc., --- F.3d ---, No. 16-11048, 2017WL957191 (11th Cir. March 13, 2017) (finding no RICO "enterprise" where plaintiffs allege defendants engaged in parallel conduct). ii. Plaintiffs do not plausibly allege that the defendants committed a pattern of racketeering activity. Plaintiffs' Civil RICO Act claims fails for the additional reason that Plaintiffs' do not plausibly allege a "pattern of racketeering activity." Plaintiffs allege that the defendants committed the predicate acts of mail fraud, wire fraud, Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 19 of 27 -20- 29450927 v2 and making false statements and writings. (See generally, Compl.). Plaintiffs' "predicate acts" are each based on Plaintiffs' allegations that the defendants falsely represented the insurers' cancellation of the umbrella policy. Plaintiffs' allegations describe different methods (mail, wire) of delivering a single message relating to a single insurance policy. Plaintiffs' allegations fail to color a plausible RICO Act claim because they constitute a single extended transaction, not a "pattern of racketeering activity." The Eleventh Circuit Court of Appeals rejected a RICO Act claim for similar failures in McGinnis v. Am. Home Mortgage Servicing, Inc., 817 F.3d 1241 (11th Cir. 2016). Specifically, the Eleventh Circuit considered an appellant mortgagor's ("McGinnis") arguments that her mortgagee's ("Homeward") collection and foreclosure conduct supported a Georgia RICO Act claim. The Eleventh Circuit affirmed summary judgment for Homeward, reasoning that McGinnis must show at least two predicate acts of racketeering activity, and that "the two alleged predicate incidents must be sufficiently 'linked' to form a RICO pattern, but nevertheless sufficiently distinguishable so that they do not become 'two sides of the same coin.'" Id. (citing S. Intermodal Logistics, Inc. v. D.J. Powers Co., 10 F. Supp. 2d 1337, 2359 (S. D. Ga. 1998)). Because McGinnis' alleged predicate acts (loan collection and subsequent foreclosure efforts) "are … Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 20 of 27 -21- 29450927 v2 most appropriately viewed as 'two sides of the same coin,' … [Homeward's] actions were not sufficiently distinguishable predicate acts to constitute a pattern of racketeering activity" and were insufficient to state a RICO Act claim. Id. ("Again, everything that occurred regarding McGinnis's loan on the 172 Hilton Street property [including foreclosure] was the logical result of the same core thread of misconduct."). The same reasoning applies here. Plaintiffs allege that the defendants repeatedly made the same representations about a single insurance policy. That these representations were allegedly transmitted by both "mail" and "wire" is irrelevant. The representations are not "sufficiently distinguishable predicate acts to constitute a pattern of racketeering activity." Plaintiffs' Georgia RICO Act claim against Swinton should therefore be dismissed. C. Plaintiffs fail to state a negligent misrepresentation claim against Swinton. Plaintiffs alternatively argue that the defendants made negligent misrepresentations to Plaintiffs about the cancellation. (Compl. ¶¶ 106-111). Plaintiffs' negligence claim against Swinton fails as a matter of law. The threshold issue in a negligence action is whether and to what extent the defendant owes a legal duty to the plaintiff. See Boller v. Robert W. Woodruff Arts Center, Inc., 311 Ga. App. 693, 695, 716 S.E.2d 713 (2011) ("The essential Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 21 of 27 -22- 29450927 v2 elements of a negligence claim are the existence of a legal duty; breach of that duty; a causal connection between the defendant's conduct and the plaintiff's injury; and damages.") (citing Seymour Elec. and Air Conditioning Service, Inc. v. Statom, 309 Ga. App. 677, 679, 710 S.E.2d 874 (2011)). Plaintiffs do not and cannot allege that Swinton owed them any contractual or legal duty of care as an employee of Marietta Motorsports' insurers. See, e.g., Home Ins. Co. v. Wynn, 229 Ga. App. 220, 226, 493 S.E.2d 622 (1997) (finding no fiduciary relationship between injured claimant and insured's insurance carrier because "the interest of an injured claimant is obviously antagonistic to that of the tortfeasor and his insurer [and] they deal at arm's length."); Riker v. McKneely, 153 Ga. App. 773, 774, 266 S.E.2d 553 (1980) ("[I]t is clear that no fiduciary relationship exists between one having a claim against an insured and the agent of a liability carrier … and a release obtained by him from a party have a claim for damages is binding). Plaintiffs' negligence claim against Swinton fails as a matter of law and should be dismissed. EnduraCare Therapy Mgmt., Inc. v. Drake, 298 Ga. App. 809, 815, 681 S.E.2d 168 (2009) ("If a defendant does not owe a plaintiff any legal duty which the defendant has neglected to perform, no action can be maintained against the defendant for negligence.") (citation omitted). Swinton does Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 22 of 27 -23- 29450927 v2 not owe the Plaintiffs any duty of care, and did not breach any duty. The Court should dismiss the Plaintiffs' negligence claims against Swinton with prejudice. D. Plaintiffs fail to state a fraud claim against Swinton. Plaintiffs allege that Swinton is liable to them for common-law fraud for executing an "Affidavit of Insurance indicating and affirming that [an] [u]mbrella policy … was effectively canceled … and did not provide coverage for the loss." (Compl. ¶ 41). Plaintiffs dispute that the insurers properly cancelled the umbrella policy before the incident, and thus conclude that the "Affidavit of Insurance" contains knowingly false information. Plaintiffs allege that they relied on this "false information" to their detriment. Plaintiffs' allegations fail to state a plausible fraud claim against Swinton as a matter of law. To sustain a fraud claim against Swinton, Plaintiffs must demonstrate that they justifiably relied on Swinton's alleged misrepresentations. See Dyer v. Honea, 252 Ga. App. 735, 739-40, 557 S.E.2d 20 (2001). "In order to prove the element of justifiable reliance, the plaintiff must show that he exercised his duty of due diligence." Id. at 740 (citing Hill v. Century 21 Max Stancil Realty, Inc., 187 Ga. App. 754, 371 S.E.2d 217 (1988)). Plaintiffs did not exercise their duty of due diligence, and cannot show justifiable reliance on Swinton's statements. Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 23 of 27 -24- 29450927 v2 It is undisputed that the insurers provided Plaintiffs with copies of the umbrella policy and the insurers' cancellation documents before Plaintiffs settled their claims against Marietta Motorsports in December 2015. (See Compl. ¶¶ 32 ("Attached to the October 16, 2015 email, coverage counsel for Owners/Auto- Owners provided a copy of the Umbrella policy as well as the referenced cancellation.")). Plaintiffs had access to the very policy and cancellation that Swinton relied upon to declare the "policy … was effectively canceled … and did not provide coverage for the loss." (Compl. ¶ 41). Plaintiffs cannot justifiably rely on Swinton's statements about a policy and cancellation that they themselves could read and interpret. See Mallard v. Jenkins, 179 Ga. App. 582, 347 S.E.2d 339 (1986) ("It is well established that a party who can read must read, or show a legal excuse for not doing so, such as an emergency which excused the failure to read; or fraud of the other party not merely as to what is in the document, but by some trick or device which actually prevented him from reading it.") (citations omitted). Plaintiffs do not allege that Swinton "prevented [them] from making an independent investigation regarding the legal effect" of the umbrella policy and cancellation, and thus cannot plausibly demonstrate justifiable reliance on Swinton's statements. Fincher v. Dempsey, 209 Ga. App. 222, 223, 433 S.E.2d 78 (1993) (rejecting plaintiff's claim that insurance adjuster fraudulently induced Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 24 of 27 -25- 29450927 v2 plaintiff to execute release that he possessed and had capacity to read). The Court should dismiss Plaintiffs' fraud claims against Swinton with prejudice. V. CONCLUSION Plaintiffs fail to state any claim against the fraudulently-joined Swinton upon which relief can be granted. The Court should recognize and exercise its diversity jurisdiction over this action, and dismiss Plaintiffs' claims against Swinton with prejudice. Respectfully submitted, this 7th day of April, 2017. /s/ Louis G. Fiorilla Louis G. Fiorilla Georgia Bar No. 910188 lfiorilla@burr.com Gregory F. Harley Georgia Bar No. 326815 gharley@burr.com BURR & FORMAN, LLP 171 Seventeenth Street, NW Suite 1100 Atlanta, Georgia 30363 Telephone: (404) 815-3000 Facsimile: (404) 817-3244 Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 25 of 27 29450927 v2 CERTIFICATION OF COUNSEL I hereby certify that I prepared the foregoing MOTION TO DISMISS FRANCINA SWINTON AS AN IMPROPERLY NAMED PARTY with supporting memorandum with Times New Roman, 14 point font, one of the font and point selections approved by the Court in LR 5.1B. /s/ Louis G. Fiorilla Louis G. Fiorilla Georgia Bar No. 910188 lfiorilla@burr.com BURR & FORMAN LLP 171 17th Street, Suite 1100 Atlanta, Georgia 30363 Telephone: (404) 815-3000 Facsimile: (404) 817-3244 Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 26 of 27 29450927 v2 CERTIFICATE OF SERVICE I hereby certify that on this 7th day of April, 2017, I electronically filed the foregoing MOTION TO DISMISS FRANCINA SWINTON AS AN IMPROPERLY NAMED PARTY with the Clerk of Court using the CM/ECF system, which will automatically forward a service copy of this document to the following: Andrew B. Cash Shane E. Bartlett Cash, Krugler & Fredericks, LLC 5447 Roswell Road, N.E. Atlanta, Georgia 30042 Telephone: (404) 659-1710 Facsimile: (404) 264-1149 Attorneys for Plaintiffs Laura K. Vickery The Vickery Law Firm 138 Bulloch Avenue Roswell, Georgia 30075 Telephone: (404) 593-2680 Facsimile: (844) 303-2003 Attorneys for Plaintiffs /s/ Louis G. Fiorilla Louis G. Fiorilla Georgia Bar No. 910188 lfiorilla@burr.com BURR & FORMAN LLP 171 17th Street, Suite 1100 Atlanta, Georgia 30363 Telephone: (404) 815-3000 Facsimile: (404) 817-3244 Case 1:17-cv-01247-WSD Document 3 Filed 04/07/17 Page 27 of 27 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 1 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 2 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 3 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 4 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 5 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 6 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 7 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 8 of 9 Case 1:17-cv-01247-WSD Document 3-1 Filed 04/07/17 Page 9 of 9