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Gibson v. Confie Insurance Group Holdings, Inc.

United States District Court, D. South Carolina, Charleston Division

July 10, 2017

KAREN GIBSON and LETESHA NESMITH, individually and on behalf of all others similarly situated, Plaintiffs,
v.
CONFIE INSURANCE GROUP HOLDINGS, INC., DRIVER'S CHOICE INSRUANCE SERVICES, LLC; and NATION MOTOR CLUB, LLC, d/b/a NATION SAFE DRIVERS Defendants.

          ORDER

          DAVID C. NORTON UNITED STATES DISTRICT JUDGE

         The following matters are before the court on defendant Nation Motor Club, LLC d/b/a Nation Safe Drivers's (“NSD”) motion to dismiss, ECF No. 17, defendants Confie Insurance Group Holdings, Inc. (“Confie”) and Drivers Choice Insurance Services LLC's (“Driver's Choice”) motion to dismiss, ECF No. 19, and Confie and Drivers Choice's motion to strike, ECF No. 20.

         For the reasons set forth below, the court (1) grants in part and denies in part NSD's motion to dismiss, ECF No. 17, granting as to the United States Racketeer Influenced and Corrupt Organizations Act (“RICO”) claim but denying as to the breach of contract and unjust enrichment claims; (2) grants in part and denies in part Confie and Driver's Choice's motion to dismiss, ECF No. 19, granting as to the court's personal jurisdiction over Confie but denying the motion as to the RICO, Truth in Lending Act (“TILA”), and unjust enrichment claims against Driver's Choice; and (3) denies in full Confie and Driver's Choice's Motion to Strike, ECF No. 20.

         I. BACKGROUND

         This is a putative class action by plaintiffs Karen Gibson (“Gibson”) and Latesha Nesmith (“Nesmith”) (collectively, “plaintiffs”) filed against defendants Confie, Driver's Choice, and NSD on August 18, 2016. Plaintiffs allege that they were defrauded by defendants in the purchase of automobile insurance policies from Confie and/or its subsidiaries and the purchase of multiple TowBusters policies-optional roadside service policies that can be purchased either directly from NSD or sold through Confie or its subsidiaries, including Driver's Choice. The TowBusters policy is an ancillary six-month policy that is $36-40 if purchased upfront for the full six-month time period and $10/month for a total of $60 when purchased on a monthly basis.

         Plaintiff Gibson purchased an automobile insurance policy from a Driver's Choice insurance broker in Sumter, South Carolina on October 8, 2015, for a six-month term from October 8, 2015 until April 8, 2016. At the same time that she purchased her insurance policy, Gibson also purchased a six-month TowBusters policy at a rate of $10 per month. Gibson failed to make a monthly payment on her automobile insurance policy, leading to its lapse. However, the missed payment did not cause the TowBusters policy to lapse. Gibson then purchased a new automobile policy from a different Driver's Choice insurance broker lasting from February 8, 2016 until August 8, 2016. At this point, Gibson also purchased a new six-month TowBusters policy up front for $36, even though her old TowBusters policy was still in place.

         Nesmith purchased an automobile insurance policy from a Driver's Choice insurance broker in Charleston, South Carolina. The insurance policy term was for a six-month period, from November 23, 2015 through May 23, 2016. Nesmith elected to purchase a six-month TowBusters policy for $36 up front at the time of her purchase of the automobile insurance policy, which ran from the same six-month period of November 23, 2015 until May 23, 2016. Nesmith then failed to make the monthly payment on the auto policy and the automobile insurance policy lapsed, at which point she purchased a new automobile policy from the same Driver's Choice insurance broker lasting from March 7, 2016 until September 7, 2016. When purchasing her new insurance policy, Nesmith purchased a six-month TowBusters policy that ran concurrently with the new automobile policy, even though her old TowBusters policy was still in place.

         Plaintiffs allege that defendants Confie and NSD conspired together to double charge those consumers who missed the deadline to make a monthly premium payment on their automobile policies, and then charged for a new TowBuster policy when reinstating the automobile insurance policy. Plaintiffs seek to certify two classes. The first putative subclass (“Subclass A”) includes:

all persons (“customers”) who purchased a TOW BUSTERS emergency roadside service policy issued by NSD and an automobile insurance policy through any one of defendant CONFI's retail insurance brokerage outlets in the United States and the customer:
(i) failed to pay the monthly automobile insurance premiums, resulting in the cancellation of their automobile policy; and
(ii) purchased a replacement automobile insurance policy from a CONFI owned or controlled retail brokerage outlet; and
(iii) was sold an additional TOW BUSTERS policy during the membership term of the initial TOW BUSTERS policy, without being provided any credit for the value of the unexpired term of the initial TOW BUSTERS policy within four (4) years from the commencement of this action.

Compl. ¶ 12. Both named plaintiffs, Gibson and Nesmith, are potential class representative members of this first proposed class. Id. at ¶ 13. The second class (“Subclass B”) includes:

all persons (“customers”) who financed the purchase of a TOW BUSTERS emergency roadside service policy or any other ancillary agent product “Agency Product” sold through any one of Defendant CONFI's retail insurance brokerage outlets in the United States pursuant to an installment payment plan requiring more than four (4) payments within one (1) year from the commencement of this action.

Id. at ¶ 12. Gibson is the only named plaintiff of this second proposed subclass.

         Plaintiffs' complaint states four causes of action: (1) NSD breached a contractual provision by charging customers for a second TowBusters policy before the expiration of the initial TowBusters policy; (2) Confie, Driver's Choice, and NSD were unjustly enriched by plaintiffs as a result of the payment for overlapping TowBusters policies; (3) Confie and Driver's Choice acted as creditors under TILA, 15 U.S.C. §§ 1601-1667f (2012), in offering a monthly installment payment plan for the TowBusters Policy, but failed to provide the required disclosures under TILA; and (4) Confie and NSD agreed to conduct the alleged unlawful affairs in violation of federal wire fraud and RICO statutes. Compl. ¶¶ 88-117.

         NSD filed a motion to dismiss on October 3, 2016, ECF No. 17, to which plaintiffs responded on November 3, 2016, ECF No. 26. NSD replied on November 10, 2016. ECF No. 28. Confie filed a motion to dismiss on October 3, 2016, ECF No. 19, to which plaintiffs responded on November 3, 2016, ECF No. 26. Confie replied on November 14, 2016. ECF No. 29. Confie filed a motion to strike on October 3, 2016, ECF No. 20, to which plaintiffs responded on November 3, 2016, ECF No. 26. Confie replied on November 14, 2016, ECF No. 30. The court held a hearing on December 13, 2016. All motions have been fully briefed and are now ripe for the court's review.

         II. STANDARD

         A. Rule 12(b)(6)

         A Rule 12(b)(6) motion for failure to state a claim upon which relief can be granted “challenges the legal sufficiency of a complaint.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009) (citations omitted); see also Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (“A motion to dismiss under Rule 12(b)(6) ... does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.”). To be legally sufficient, a pleading 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).

         A Rule 12(b)(6) motion should not be granted unless it appears certain that the plaintiff can prove no set of facts that would support his claim and would entitle him to relief. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). When considering a Rule 12(b)(6) motion, the court should accept all well-pleaded allegations as true and should view the complaint in a light most favorable to the plaintiff. Ostrzenski v. Seigel, 177 F.3d 245, 251 (4th Cir. 1999); Mylan Labs., Inc., 7 F.3d at 1134. “To survive a 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.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

         B. Rule 9(b)

         Although “[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally, ” when a party alleges “fraud or mistake, ” he or she “must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Particularity requires that the claimant state “the time, place and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999) (quoting 5 Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure: Civil § 1297 at 590 (2d 1990)). A primary purpose of Rule 9(b) is to ensure “that the defendant has sufficient information to formulate a defense by putting it on notice of the conduct complained of.” Harrison, 176 F.3d at 784 (internal citations omitted). Lack of compliance with Rule 9(b)'s pleading requirements is treated as a failure to state a claim under Rule 12(b)(6). See United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir.1997).

         C. Motion to Strike

         Rule 12(f) of the Federal Rules of Civil Procedure provides that “[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed.R.Civ.P. 12(f). “Rule 12(f) motions are generally viewed with disfavor ‘because striking a portion of a pleading is a drastic remedy and because it is often sought by the movant simply as a dilatory tactic.'” Waste Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 347 (4th Cir.2001) (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1380 (2d ed.1990)).

         III. DISCUSSION

         A. Confie and Drivers Choice's Motion to Dismiss

         Confie moves to dismiss the complaint because it fails to state a claim as to the RICO cause of action, the TILA violation, and for unjust enrichment. Confie also moves for an order dismissing the complaint entirely on the grounds that the court lacks personal jurisdiction. ECF No. 19 at 1. The court addresses the personal jurisdiction argument first, and finds that there is no personal jurisdiction over Confie in this court. It then moves to address the ...


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