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LLC v. Wright National Flood Insurance Co.

United States Court of Appeals, Fourth Circuit

March 9, 2018

SLAY'S RESTORATION, LLC, Plaintiff-Appellant,
v.
WRIGHT NATIONAL FLOOD INSURANCE COMPANY; COLONIAL CLAIMS CORPORATION; KLSM CONSULTING GROUP, INC., d/b/a JD Consulting & Appraisal Group; CIS GROUP LLC; SAMUEL WOODARD; JEFFREY NICHOLL; JEFFREY P. KAISER; MICHAEL CARMELIA, Defendants-Appellees.

          Argued: December 7, 2017

         Appeal from the United States District Court for the Eastern District of Virginia, at Newport News. Raymond A. Jackson, District Judge. (4:15-cv-00140-RAJ-LRL)

         ARGUED:

          Joseph H. Langerak, IV, JACKSON KELLY PLLC, Evansville, Indiana, for Appellant.

          Theodore Ira Brenner, FREEBORN & PETERS, LLP, Richmond, Virginia, for Appellees Wright National Flood Insurance Company, Colonial Claims Corporation, and Jeffrey Nicholl.

         ON BRIEF:

          James D. Johnson, JACKSON KELLY PLLC, Evansville, Indiana; John S. Wilson, WILSON & MCINTYRE PLLC, Norfolk, Virginia, for Appellant.

          Alexander S. de Witt, FREEBORN & PETERS LLP, Richmond, Virginia, for Appellees Wright National Flood Insurance Company, Colonial Claims Corporation, and Jeffrey Nicholl. Ramsay C. McCullough, Kristina H. Vaquera, JACKSON LEWIS PC, Norfolk, Virginia, for Appellees KLSM Consulting Group, Inc., CIS Group, Inc., Samuel Woodard, and Jeffrey Kaiser.

          Before NIEMEYER and AGEE, Circuit Judges, and Paula XINIS, United States District Judge for the District of Maryland, sitting by designation.

          Affirmed by published opinion. Judge Niemeyer wrote the opinion, in which Judge Agee and Judge Xinis joined.

          NIEMEYER, Circuit Judge.

         In this appeal, we hold that a subcontractor hired by a property owner's contractor to repair flood damage to the owner's property was not injured in its business or property by reason of a pattern of racketeering allegedly carried out by the property owner's insurance company and its independent consultants to reduce the amount paid on the property owner's insurance claims for reimbursement of the repair costs. Accordingly, the injury alleged by the property owner's subcontractor - in this case, Slay's Restoration, LLC - was not proximately caused by conduct of the insurance company, and Slay's Restoration therefore failed to state a plausible claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO") against the insurance company and its consultants upon which relief could be granted. See 18 U.S.C. §§ 1962(c), 1964(c).

         When an apartment complex owned by City Line Associates, LP, was damaged by flooding, City Line hired First Atlantic Restoration, Inc., to make repairs. First Atlantic, in turn, hired the plaintiff, Slay's Restoration, as a subcontractor to perform some of the work. Using documentation provided by Slay's Restoration describing the work it did, City Line submitted several insurance claims for payment of its costs of repair to its insurance company, Wright National Flood Insurance Company. To adjust the claim, Wright Insurance hired Colonial Claims Corporation, and Colonial Claims, in turn, hired two consulting firms to provide professional assessments of the repair work done. Based on the consulting firms' assessments, Wright Insurance offered to pay its insured, City Line, less than one-half of the amount City Line requested.

         Slay's Restoration commenced this action against Wright Insurance and its consultants contending that they fraudulently conspired to reduce City Line's claim, in violation of RICO, thereby injuring City Line's ability to pay Slay's Restoration fully for its work. On the defendants' motions, the district court dismissed Slay's Restoration's complaint, concluding (1) that Slay's Restoration did not plausibly allege that its injury was proximately caused by the defendants' alleged violation of RICO, as required by the statute, and, alternatively, (2) that ...


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