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Top Notch Solutions, Inc. v. Crouse And Associates Insurance Brokers, Inc.

United States District Court, W.D. Washington

November 6, 2017

TOP NOTCH SOLUTIONS, INC., et al., Plaintiffs,



         THIS MATTER comes before the Court on a motion for partial dismissal brought by defendant Crouse and Associates Insurance Brokers, Inc. (“Crouse”), docket no. 29, [1]and on a motion to dismiss brought by defendant Pucin & Freidland, P.C. (“Pucin”), docket no. 28. Having reviewed all papers filed in support of, and in opposition to, each motion, [2] the Court now enters the following order.


         Although not the model of clarity, plaintiffs' Amended Complaint appears to assert the following claims: (i) breach of contract; (ii) breach of the duty of good faith and fair dealing; (iii) violation of Washington's Insurance Code, namely RCW 48.30.140 & .150; (iv) conversion; (v) unjust enrichment; (vi) violation of Washington's Collection Agency Act (“WCAA”); (vii) fraud and negligent misrepresentation; (viii) violation of Washington's Consumer Protection Act (“CPA”); (ix) intentional infliction of emotional distress or outrage; and (x) intentional interference with business expectancy. See Am. Compl. at § IV (docket no. 26). Although all ten claims appear to be alleged against Crouse, Crouse moves for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) of only the first, third, sixth, seventh, eighth, and ninth claims. Pucin seeks dismissal of all of the claims that seem to be asserted against it, namely the sixth, seventh, eighth, and ninth claims.

         In July 2010, plaintiff Top Notch Solutions, Inc. (“Top Notch”), of which plaintiff Habib (Robert) Rashidi was chief officer, see id. at ¶¶ 1.1.1 & 1.1.2, entered into a Brokerage Agreement with Crouse. See Ex. 1 to Moore Decl. (docket no. 30). Pursuant to this agreement, Top Notch served as an insurance broker, obtaining policies for its clients, which were taxicab drivers, driver groups, or companies, through Crouse. See id.; see also Am. Compl. at ¶¶ 3.1-3.7 (docket no. 26). Plaintiffs allege that Crouse entered into agreements with Top Notch's competitors for the purpose of consolidating all taxicab insurance purchasing and taking such business away from Top Notch. See Am. Compl. at ¶ 3.16 (docket no. 26). According to plaintiffs, Crouse failed to support them in their efforts to collect premiums, and instead either created incentives for Top Notch's clients to cease paying premiums and switch to insurance policies obtained from Crouse's developing monopoly or advanced the premiums at issue to the insurance carriers and sought reimbursement from Top Notch. See id. at ¶¶ 3.20-3.25.

         Crouse employed Pucin, an Illinois-based law firm, to collect from plaintiffs the premiums Crouse had paid on behalf of Top Notch's clients. See id. at ¶¶ 3.25-3.26. During its collection efforts, Crouse and/or Pucin made complaints to the Washington State Insurance Commissioner about plaintiffs, which plaintiffs contend were false, and which led to multiple audits that plaintiffs assert were unwarranted. See id. at ¶¶ 3.23, 3.26, & 3.35. According to plaintiffs, Crouse improperly withheld earned commissions and converted plaintiffs' funds to its own use. Id. at ¶ 4.5. Top Notch has since been involuntarily dissolved, and Mr. Rashidi has allegedly suffered physical and emotional distress. Id. at ¶¶ 1.1.1 & 3.37.


         A. Standard of Review

         Although a complaint challenged by a Rule 12(b)(6) motion to dismiss need not provide detailed factual allegations, it must offer “more than labels and conclusions” and contain more than a “formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint must indicate more than mere speculation of a right to relief. Id. When a complaint fails to adequately state a claim, such deficiency should be “exposed at the point of minimum expenditure of time and money by the parties and the court.” Id. at 558. A complaint may be lacking for one of two reasons: (i) absence of a cognizable legal theory, or (ii) insufficient facts under a cognizable legal claim. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir. 1984). In ruling on a motion to dismiss, the Court must assume the truth of the plaintiff's allegations and draw all reasonable inferences in the plaintiff's favor. Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). The question for the Court is whether the facts in the complaint sufficiently state a “plausible” ground for relief. Twombly, 550 U.S. at 570. If the Court dismisses the complaint or portions thereof, it must consider whether to grant leave to amend. Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000).

         B. Contract Claim

         The Amended Complaint accuses Crouse of breaching its agreements and contracts with plaintiffs. Am. Compl at ¶ 4.2 (docket no. 26). It does not, however, indicate with particularity which agreements or contracts, or which provisions of such agreement or contracts, were breached. The only contract contained in the record is the Brokerage Agreement attached to Crouse's attorney's declaration. Ex. 1 to Moore Decl. (docket no. 30). Although plaintiffs clearly allege nonpayment of earned commissions, Am. Compl. at ¶ 4.5 (docket no. 26), the Brokerage Agreement does not itself require Crouse to pay commissions. Crouse's motion to dismiss is therefore GRANTED in part with respect to plaintiffs' breach of contract claim, and such claim is DISMISSED without prejudice and with leave to amend. In conjunction with any amended pleading, plaintiffs shall refer specifically to the agreements or contracts that were allegedly breached and shall attach copies of such documents.

         C. Statutory Claims

         1.Washington's Insurance Code

         The Amended Complaint alleges that Crouse violated RCW 48.30.140(1) and RCW 48.30.150(1). Am. Compl at ¶ 4.4 (docket no. 26). RCW 48.30.140(1) provides:

Except to the extent provided for in an applicable filing with the commissioner then in effect, no insurer, insurance producer, or title insurance agent shall, as an inducement to insurance, or after insurance has been effected, directly or indirectly, offer, promise, allow, give, set off, or pay to the insured or to any employee of the insured, any rebate, discount, abatement, or reduction of premium or any part thereof named in any insurance contract, or any commission thereon, or earnings, profits, dividends, or ...

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