Marks One Car Rental, Inc. v. Auto Club Group Insurance Company et al

Filing 129

Memorandum and Order Granting in Part and Denying in Part Defendants' 103 104 124 Motions to Dismiss. Signed by District Judge Avern Cohn. (SCha)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

MARKS ONE CAR RENTAL, INC., MARKS
ONE LLC, d/b/a/ MARKS ONE COLLISION,
and MAHER WAAD,
Plaintiffs,
vs.

Case No. 13-14610

AUTO CLUB GROUP INSURANCE
COMPANY, THE FARMERS INSURANCE
EXCHANGE, BRISTOL WEST INSURANCE
COMPANY, 21st CENTURY INSURANCE COMPANY,
CITIZENS INSURANCE COMPANY OF AMERICA,
FOREMOST INSURANCE COMPANY
GRAND RAPIDS MICHIGAN, and
GEICO GENERAL INSURANCE COMPANY,

HON. AVERN COHN

Defendants.
______________________________________________/
MEMORANDUM AND ORDER
GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO
DISMISS (Docs. 103, 104, 124)
I. Introduction
This is a business tort case. Although the case has over 100 docket entries, it is
still in the pleading stages. Following motions to dismiss the original and amended
complaint, the Court granted leave to file a second amended complaint. The Second
Amended Complaint names as plaintiffs Marks One Car Rental, Inc., (a rental car
company), Marks One LLC, d/b/a Marks One Collision (a collision repair company) and
Maher Waad (the principal in both plaintiff companies). Broadly stated, plaintiffs say
that defendants have defamed plaintiffs in their respective investigations of plaintiffs’

repair and rental activity, causing a loss of business. They further contend that
defendants have a racial bias against Maher Waad. The Second Amended Complaint
asserts the following claims:
Count I

Tortious Interference with Business Expectancy (against all
defendants)

Count II

Defamation (against all defendants)

Count III

Violation of M.C.L. § 600.2911 (against all defendants)

Count IV

Civil Conspiracy (all defendants)

Count V

Unlawful Discrimination under 42 U.S.C. § 1981 (against
Farmers Insurance Exchange, Farmers Insurance Company,
Bristol West Insurance Company, 21st Century Insurance
Company only)

Count VI

Conspiracy under 42 U.S.C. § 1985(3) (against all
defendants)

Before the Court are dispositive motions filed by all of the defendants, to wit:
21st Century Insurance Company, Bristol West Insurance Company, Farmers
Insurance Exchange, Foremost Insurance Company of Grand Rapids’1 Motion to
Dismiss the Second Amended Complaint (Doc. 103).
Auto Club Group Insurance Company and Citizens Insurance Company of
America’s2 Motion to Dismiss the Second Amended Complaint (Doc. 104).
Geico General Insurance Company’s (Geico) Motion to Dismiss and/or For

1

For ease of reference, 21st Century Insurance Company, Bristol West Insurance
Company, Farmers Insurance Exchange, and Foremost Insurance Company of Grand
Rapids will be collectively referred to as “Farmers” as they are all affiliated with Farmers
Insurance Exchange.
2

For ease of reference, Auto Club Group Insurance Company and Citizens
Insurance Company of America will be collectively referred to as “Auto Club/Citizens”
except where appropriate to refer to them individually as “Auto Club” or “Citizens.”
2

Summary Judgment3 (Doc. 124)
For the reasons that follow, the motions will be granted in part and denied in part.
As plaintiffs’ concede,4 Count III, asserting a claim for violation of the Michigan
Consumer Protection Act, does not state a plausible claim and will be dismissed. Count
VI, asserting a federal conspiracy claim based on a racially motivated conspiracy, does
not state a plausible claim and will be dismissed. The remaining counts of the Second
Amended Complaint, Counts I, II, IV, and V, state plausible claims for relief. Important
for resolving the motions is the fact that the Court must accept the statements in the
Second Amended Complaint and exhibits as true. Whether the statements will hold up
after discovery is another matter.
II. Background
Plaintiffs filed the Second Amended Complaint after the Court granted them
leave to do so and after several of the defendants filed motions to dismiss the original
and amended complaint. In the order granting plaintiffs leave, the Court said: “no
further changes in the complaint will be allowed.” (Doc. 90 at p. 3).

3

In support of seeking summary judgment, Geico submits affidavits from its
employees who deny the allegations in the complaint. Geico’s request for summary
judgment, even if accompanied by affidavits, is premature. The Supreme Court has
explained, “the plain language of Rule 56[ ] mandates the entry of summary judgment,
after adequate time for discovery and upon motion, against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party's case,
and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986). Plaintiffs have not had discovery. At this point, the record as
to Geico contains competing factual assertions, rendering summary judgment
inappropriate. Thus, the Court will consider only Geico’s motion to dismiss.
4

See Doc. 126, Page ID 1867 at p. 26 (Plaintiffs’ brief in response to Geico’s
motion at p. 19).
3

The Court also stayed discovery pending resolution of the pending motions to
dismiss and ordered that “evidence pertaining to this matter shall be preserved and not
destroyed.” (Doc. 123).
III. Legal Standard
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests
the sufficiency of a complaint. In a light most favorable to the plaintiff, the Court must
assume that the plaintiff’s factual allegations are true and determine whether the
complaint states a valid claim for relief. See Albright v. Oliver, 510 U.S. 266 (1994);
Bower v. Fed. Express Corp., 96 F.3d 200, 203 (6th Cir. 1996). To survive a Rule
12(b)(6) motion to dismiss, the complaint’s “factual allegations must be enough to raise
a right to relief above the speculative level on the assumption that all of the allegations
in the complaint are true.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(internal citations and emphasis omitted). See also Ass’n of Cleveland Fire Fighters v.
City of Cleveland, Ohio, 502 F.3d 545, 548 (6th Cir. 2007). “[T]hat a court must accept
as true all of the allegations contained in a complaint is inapplicable to legal
conclusions. Threadbare recitals of all the elements of a cause of action, supported by
mere conclusory statements do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
The court is “not bound to accept as true a legal conclusion couched as a factual
allegation.” Id. at 679 (internal quotation marks and citation omitted). Moreover, “[o]nly
a complaint that states a plausible claim for relief survives a motion to dismiss.” Id.
“Determining whether a complaint states a plausible claim for relief will . . . be a contextspecific task that requires the reviewing court to draw on its judicial experience and
common sense. But where the well-pleaded facts do not permit the court to infer more
4

than the mere possibility of misconduct, the complaint has alleged – but it has not
shown – that the pleader is entitled to relief.” Id. (internal quotation marks and citation
omitted). Thus, “a court considering a motion to dismiss can choose to begin by
identifying pleadings that, because they are no more than conclusions, are not entitled
to the assumption of truth. While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations. When there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether
they plausibly give rise to an entitlement to relief.” Id. In sum, “[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a
claim for relief that is plausible on its face.” Id. at 678 (internal quotation marks and
citation omitted).
In ruling on a motion to dismiss, the Court may consider the complaint as well as
(1) documents referenced in the pleadings and central to plaintiff's claims, (2) matters of
which a court may properly take notice, (3) public documents, and (4) letter decisions of
government agencies may be appended to a motion to dismiss. Tellabs, Inc. v. Makor
Issues & Rights, Ltd., 551 U.S. 308, 127 S.Ct. 2499, 2509 (2007).
IV. Analysis
Farmers, Auto Club/Citizens, and Geico all present the same arguments in
support of dismissal. As such, the motions will be analyzed together and going forward,
they will be collectively referred to as “defendants” except where appropriate to refer to
them individually.

A. Statutory Immunity
5

Defendants contend that they are not subject to any state tort claims (under
Counts I, II, and IV) because they are statutorily immune from such claims. They first
cite M.C.L. § 500.4509(3), which reads in full as follows:
In the absence of malice, an insurer, or any officer, employee, or agent of an
insurer, or any person who cooperates with, furnishes evidence, or
provides information regarding suspected insurance fraud to an authorized
agency, the national association of insurance commissioners, or any
organization, or who complies with an order issued by a court of competent
jurisdiction acting in response to a request by any of these entities to furnish
evidence or provide testimony, is not subject to civil liability for libel, slander, or
any other tort, and a civil cause of action of any nature does not exist
against the person, for filing a report, providing information, or otherwise
cooperating with an investigation or examination of any of these entities,
unless that person knows that the evidence, information, testimony, or
matter contains false information pertaining to any material fact or thing.
M.C.L. § 500.4509 (emphasis added).
Defendants contend that they are immune from liability because the clause “who
cooperates furnishes evidence, or provides information regarding suspected
insurance fraud to an authorized agency, the national association of insurance
commissioners, or any organization” only applies to a “person” under the last
antecedent rule of statutory construction.5 That is, because there is not a comma after
“person,” the following language only applies to a “person” and not an “insurer.” In §
500.4509(3), the “last word, phrase, or clause that can be made an antecedent without
impairing the meaning of the sentence” of the phrase plaintiffs emphasize is “any

5

See 2A Sutherland Statutory Construction § 47.33 at 499-500. The last
antecedent rule provides that “qualifying words and phrases, where no contrary
intention appears, refer solely to the last antecedent. The last antecedent is the last
word, phrase, or clause that can be made an antecedent without impairing the meaning
of the sentence.” Id. at 498.
6

person.” Thus, defendants say that their actions - in communicating with their policy
holders about suspected fraudulent and/or bad practices by plaintiffs - cannot form the
basis for civil liability. Plaintiffs contend that applying the last antecedent rule would
give the statute an unreasonable interpretation.
Plaintiffs say that this section should be interpreted to apply the qualifying phrase
to insurers, officers, employees or agents of the insurer and a person. In other words,
any of them who provide evidence or information regarding fraud to an authorized
agency, the national association of insurance commissioners, or any organization are
immune. Plaintiffs go on to argue that the conduct here does not fall within this
interpretation because defendants were not providing evidence or information to an
agency, but rather making defamatory statements to policyholders and plaintiffs’
customers about plaintiffs’ business practices.
Plaintiffs have the better view. There is scant authority interpreting this section.
One Michigan court has described the purpose of the section as follows:
The purposes of both MCL 29.4 of the Fire Prevention Code and MCL 500.4509
of the Insurance Code similarly foster the communicative and evaluative
processes related to fire prevention and insurance-fraud prevention. And, both
statutory provisions clearly grant the protection of immunity to persons who have
provided information related to investigations of suspected arson and
suspected insurance fraud if they acted without malice.
Radu v. Herndon & Herndon Investigations, Inc., 302 Mich. App. 363, 379 (2013)
(emphasis added). Moreover, the Michigan Non-Standard Jury Instructions suggest
that this section is intended to protect everyone, insurers included, who provides
information or evidence to an organization or agency in the course of an investigation.
See Mich. Non-Standard Jury Instr. Civil §§ 46:47, 57:14. Because the conduct
7

described in the Second Amended Complaint does not fall within that context, the
statute does not provide defendants with immunity.
Moreover, even if the statute somehow applied to defendants, they would not be
entitled to immunity if they acted with malice. While defendants argue that the conduct
does not constitute malice, such an argument is not appropriate on a motion to dismiss.
The complaint and exhibits–consisting of declarations from plaintiffs’ customers and
policyholders of defendants–sets forth sufficient facts to make a plausible finding that
the statements made about plaintiffs’ were done with malice. Discovery may reveal
otherwise, but plaintiffs have plead malice.
Defendants also cite another statutory section to argue they are immune. The
applicable statute, M.C.L. § 500.2124(1) reads as follows:
There shall be no civil liability on the part of, and a cause of action of any
nature shall not arise against, the commissioner, an insurer, an employee of
an insurer, an authorized representative, agent, or employee of the
commissioner, or any licensed insurance agent furnishing to an insurer
information required pursuant to sections 2122 and 2123 relating to reasons for
cancellation, nonrenewal, or declination, for any statement made by them
concerning an insured or applicant for insurance.
Id. (emphasis added). Defendants interpret this section as providing them with
immunity for any statements made “concerning an insured” and the statements its
employees made about plaintiffs were to its insureds and therefore were “concerning”
an insured. Defendants say that the qualifier “relating to reasons for cancellation,
nonrenewal or declination” applies, under the last antecedent rule, to “any licensed
insurance agent.”
Plaintiffs say that the qualifier applies to everyone, including an insurer, and

8

grants immunity if they give information to an insured relating to reasons for
cancellation, nonrenewal or declination. Plaintiffs again have the better view.6 This
portion of the statute deals with insurance entities communicating with other insurance
entities regarding why insureds had their insurance cancelled, not renewed, or declined.
In fact, the two sections directly preceding MCL 500.2124 are entitled “Declination of
Insurance” (MCL 500.2122) and “Termination of Insurance” (MCL 500.2123), which
indicates that the next section’s immunity for statements pertains to these topics only.
The conduct described here simply does not fall within the statute.
Having disposed of defendants’ immunity arguments, the question is whether the
complaint presents plausible claims for relief. Each count of the Second Amended
Complaint is discussed in turn below.
B. Count I - Tortious Interference
1. Defendants’ Arguments
Defendants contend that plaintiffs’ tortious interference claim fails for several
reasons. First, defendants contend that because the claim rests on defamation it fails.
Second, defendants contend that plaintiffs have not sufficiently plead a tortious
interference claim. The elements of tortious interference with a business relationship or
expectancy are (1) the existence of a valid business relationship or expectancy that is
not necessarily predicated on an enforceable contract, (2) knowledge of the relationship
or expectancy on the part of the defendant interferer, (3) an intentional interference by

6

The last antecedent rule of construction does not apply if “something in the
statute requires a different interpretation.” Hardaway v. Wayne Co., 494 Mich. 423, 427
(2013).
9

the defendant inducing or causing a breach or termination of the relationship or
expectancy, and (4) resulting damage to the party whose relationship or expectancy
was disrupted. Health Call of Detroit v. Atrium Home & Health Care Services, Inc., 268
Mich. App 83, 89–90 (2005). “One who alleges tortious interference with a contractual
or business relationship must allege the intentional doing of a per se wrongful act or the
doing of a lawful act with malice and unjustified in law for the purpose of invading the
contractual rights or business relationship of another.” Derderian v. Genesys Health
Care Sys., 263 Mich. App 364, 382 (2004)(internal quotation marks and citation
omitted). Therefore, the party asserting a claim of tortious interference “must establish
that the interference was improper.” Advocacy Org. for Patients & Providers v. Auto
Club Ins. Ass'n., 257 Mich. App 365, 383 (2003). “The ‘improper’ interference can be
shown either by proving (1) the intentional doing of an act wrongful per se, or (2) the
intentional doing of a lawful act with malice and unjustified in law for the purpose of
invading plaintiffs' contractual rights or business relationship.” Id.
2. Resolution
As an initial matter, defendants concede that Michigan courts are split on the
issue of whether a tortious interference claim can stand if the tortious interference is
incidental to a defamation claim. See Meyer v. Hubble, 117 Mich. App. 699, 709-11
(1982). At this point, it is not clear whether plaintiffs’ tortious interference claim is
subsumed within their defamation claim such that harm to the plaintiff businesses would
be taken into consideration in any damages award for defamation. As such, dismissal
of the tortious interference claim on this ground is not appropriate at this time.
a. Farmers
10

As to Farmers, plaintiffs state that during the course of investigating insurance
claims, representatives of Farmers all engaged in conduct that would statutorily qualify
as defamation per se or defamation. Under M.C.L. § 600.2911(1), the uttering and
publishing of words imputing the commission of a criminal offense constitutes
defamation per se. In such instances where ones words “impute the commission of a
criminal offense,” damage to a person’s reputation and feelings are presumed. Plaintiffs
state that Farmers violated M.C.L. § 600.2911, thereby tortiously interfering with
plaintiffs’ customers, by making direct contact with several of the plaintiffs’ customers
and asserting fraudulent and defamatory misrepresentations relative to Marks One
Collision’s quality of work product. The allegations included specific accusations that
the plaintiffs engage in fraudulent insurance schemes and the criminal act of forgery.
This conduct is described in particularity with respect to time, place and conduct. See
Complaint Exhibit F – Affidavit of Catherine Jackson; Complaint Exhibit G – Affidavit of
Linda Green; Complaint Exhibit H – Affidavit of Melody Garvin and Complaint Exhibit I –
Affidavit of Sherrell Jones).
The Court is satisfied that the foregoing assertions are sufficient to state a
plausible claim that Farmers undertook these actions to disrupt plaintiffs’ ongoing and
potential business relationships with its customer base and caused irreparable harm to
plaintiff’s business reputation. The allegations are pled with factual particularity and
meet the necessary standard to state a claim for tortious interference with business
relationship.

b. Auto Club/Citizens
11

As to Auto Club/Citizens, plaintiffs state that during the course of investigating
insurance claims, their representatives engaged in conduct that would statutorily qualify
as defamation per se or defamation. Plaintiffs state that Auto Club made direct contact
with several of the plaintiff’s customers and asserting fraudulent, derogatory and
defamatory misrepresentations relative to Marks One Collision’s quality of work product
and asserting the very specific defamatory and slanderous misrepresentation that
principal owner of Marks One Collision, Maher Waad, committed the felony crime of
Forgery. Furthermore, plaintiffs state that Auto Club placed customer insurance claims
under investigation for no other reason than the customer selected a non-Direct Repair
Program shop (Marks One Collision) for its repairs needs. An affidavit attached to the
Second Amended Complaint states that on or about the date of January 31st, 2014,
during a telephone conversation with Joseph Camaj, Auto Club Group Regional Claims
Manager, Christopher Bara, specifically accused Marks One Collision of committing the
felony crime of Forgery and advised Mr. Camaj. that “he would be going after Marks
One.” See Second Amended Complaint (Exhibits J, K, and L).
As to Citizens, plaintiffs state that Citizens intentionally sought to tortiously
interfere with Plaintiff’s business relationships by, inter alia, engaging in the following
improper conduct; Making direct contact with one of the plaintiffs’ customers and
asserting fraudulent, derogatory and defamatory misrepresentations relative to Marks
One Collision’s quality of work product and more notably stating that plaintiffs engage in
fraudulent insurance schemes. This conduct is described in particularity in Exhibit O to
the Second Amended Complaint.
The foregoing statements support a plausible claim that Auto Club/Citizens and
12

Citizens intentionally undertook these actions to disrupt plaintiffs’ ongoing and potential
business relationships with its customer base and caused irreparable harm to plaintiffs’
business reputation. As such, plaintiffs have met the necessary pleading standard to
set forth a tortious interference with business relationship claim.
c. Geico
As to Geico, plaintiffs say that paragraph 38 sets forth the existence of a
business relationship, while paragraph 39 confirms that the defendants were aware of
such a relationship because their insured motorists had “consistently used Plaintiff’s car
rental services, as well as Plaintiff’s collision shop services.” Paragraphs 44 through 46
in conjunction with customer affidavits, Exhibits P and Q to the Second Amended
Complaint details a pattern of intentional conduct by GEICO as its employees
aggressively pursued plaintiffs’ customers, using unsupported accusations of fraud and
theft in order to interfere with their business relationship or expectancy. The Court finds
these statements sufficient to set forth a tortious interference with business relationship
claim.
d. Defendants’ Other Arguments
To the extent defendants contend that they had legitimate business reasons for
their actions, thereby precluding a tortious interference claim, this argument does not
carry the day. The Second Amended Complaint and exhibits describe activity that
plausibly goes beyond defendants simply trying to protect their insureds from fraud.
Likewise, to the extent defendants contend that plaintiffs do not have a legitimate
expectancy of future business because the need for car-repair and car-rental services is

13

dependent upon “wishful thinking,” this argument too misses the mark. Courts have
allowed a tortious interference claim brought by a company providing services that may
depend on fortuitous events but whose expectancy of future business was still a
reasonable probability. For example, in Lucas v. Monroe County, 203 F.3d 964 (6th Cir.
2000), the plaintiff towing companies sued the county and members of the sheriff's
department because the companies were excluded from a "call list" kept by the sheriff’s
department for use by deputies when in need of a tow truck. Id. at 967. The
defendants dropped the plaintiffs from the "call list" after the plaintiffs complained at a
county board of commissioners’ meeting that the sheriff's department gave preferential
treatment to companies on the list owned by political supporters of the sheriff, even
though the department was required to distribute references more or less evenly. Id. at
968-71. The Sixth Circuit reversed the district court's finding that these actions did not
constitute tortious interference with contracts, holding that the plaintiffs had "a
reasonable expectancy of an economic relationship with stranded motorists who
arranged for towing services.” Id. at 979.
Plaintiffs have stated that they have a similar reasonable expectancy of future
business from motorists following accidents, particularly from long-standing customers.
Plaintiffs have sufficiently alleged this element of a tortious interference claim.
C. Count II - Defamation
1. Defendants’ Arguments
Defendants argue that plaintiffs’ defamation claim must be dismissed because
any statements they made about plaintiffs are subject to the shared-interest privilege.
The question of whether a privilege applies is a question of law. Lawrence v. Fox, 357
14

Mich. 134, 139-40; 97 N.W.2d 719, 722 (1959). As explained in Zanley v. Hyde,
Where a party makes a communication and such communication is
prompted by a duty owed either to the public or to a third party, or the
communication is one in which the party has an interest and it is made to
another having a corresponding interest, the communication is privileged
if made in good faith and without actual malice.
....
It extends to all communications made bona fide upon any subject-matter
in which the party communicating has an interest, or in reference to
which he has a duty, to a person having a corresponding interest or duty.
And the privilege embraces cases where the duty is not a legal one, but
where it is of a moral or social character of imperfect obligation.
208 Mich. at 102 (internal quotation marks omitted). “The elements of a qualified
privilege are (1) good faith, (2) an interest to be upheld, (3) a statement limited in its
scope, (4) a proper occasion, and (5) publication in a proper manner and to proper
parties only.” Prysak v. R.L. Polk Co., 193 Mich. App. 1, 15 (1992). If a party shows it is
entitled to the protections of a qualified privilege the plaintiff must prove actual malice
and falsity. Pfeiffer, 320 Mich. at 269-270
Defendants argue that their statements are protected by the shared-interest
privilege. The statements, they say, were directed toward ensuring that quality work
was performed on damaged vehicles or uncovering insurance fraud or detecting
forgery. They say that there is no indication in the Second Amended Complaint that the
statements were made in bad faith. And they say that an an insurance company and
policyholder have a shared interest in preventing insurance fraud and forgery, as well as
ensuring that a vehicle is properly repaired, to prevent rate increases that would occur if
insurance fraud or forgery continued and if cars are not properly repaired. Defendants
further say that the statements detailed in the various affidavits were limited to claims
and investigations and suggested that policyholders seek another repair shop because
15

of prior problems with plaintiffs’ quality of work and/or fraudulent conduct. Thus, the
statements were made on a proper occasion (as part of an investigation into insurance
fraud or as a discussion relating to an insurance claim) and were published in a proper
manner and to proper parties.
2. Resolution
Plaintiffs say that the statements fall outside the shared interest privilege. The
Court agrees. The statements were not limited in its scope to its purpose. The
statements went beyond informing the policyholders regarding the quality of plaintiffs’
work and fraudulent conduct. Defendants’ representatives are alleged to have informed
plaintiffs’ customers (and defendants’ policyholders) that Mark Waad had (already)
committed forgery and that he (already) had a reputation for fraudulent conduct. The
statements directed to the customers are beyond the scope of what information could
reasonably be deemed necessary to convey to the customers. Moreover, if defendants’
motive was to prevent insurance fraud and forgery, the customers may not be the
proper parties to whom the statements should have been made. Allegations regarding
fraud should logically only be directed to law-enforcement authorities, not policyholders.
Defendants also argue that because they are entitled to a qualified privilege,
plaintiffs “must prove actual malice” which they say plaintiffs cannot do. Putting aside
that the privilege does not apply, plaintiffs have sufficiently plead malice.
D. Count IV - Civil Conspiracy
1. Defendants’ Arguments
Under Counts IV and VI, plaintiffs set forth conspiracy claims under state and

16

federal law. Defendants say that any conspiracy claim fails because “there is no
evidence of an underlying tort [necessary for state law], no evidence of an agreement”
between the defendants, and the claim is not sufficiently pled.
Under Michigan law, a civil conspiracy is defined as
a combination of two or more persons, by some concerted action, to accomplish
a criminal or unlawful purpose, or to accomplish a lawful purpose by criminal or
unlawful means. In addition, to establish a concert-of-action claim, a plaintiff must
prove that all defendants acted tortiously pursuant to a common design that
caused harm to the plaintiff. For both civil conspiracy and concert of action, the
plaintiff must establish some underlying tortious conduct.
Urbain v. Beierling, 301 Mich. App 114, 131–32 (2013) (citations and internal quotation
marks omitted).
2. Resolution
Here, because the Court has concluded that plaintiffs have stated plausible
claims for tortious interference and defamation, defendants’ argument for dismissal of
the civil conspiracy count on this ground fails.
Regarding whether plaintiffs have substantively plead a plausible conspiracy
claim under state law, a careful factual review of the Second Amended Complaint’s
supporting affidavits, shows that a reasonable inference can be made that it may not be
a coincidence that all the defendants employed the same investigative tactics, initiated
the same special investigative unit inquiries, implemented the same investigative
databases, and may have acted collectively and in concert remove plaintiffs from their
Direct Repair Programs. Discovery may reveal otherwise. In short, the Second
Amended Complaint makes out a civil conspiracy claim sufficient to survive a motion to
dismiss.
17

E. Count VI - Federal Conspiracy
1. In General
In order to establish a violation of 42 U.S.C. § 1985 (3), a plaintiff is required to
plead and prove: (1) a conspiracy involving two or more persons; (2) for the purpose of
depriving, directly or indirectly, a person or class or persons of the equal protection of
the laws; (3) an act in furtherance of the conspiracy; and (4) which causes injury to a
person or property, or deprivation of any right or privilege of a citizen of the United
States. Johnson v. Hills & Dales Gen. Hosp., 40 F.3d 837, 839 (6th Cir. 1994).
Additionally, plaintiff must allege “the conspiracy was motivated by racial, or other
class-based, invidiously discriminatory animus.” Bass v. Robinson, 167 F.3d 1041,
1050 (6th Cir. 1999).
2. Resolution
a. Geico and Auto Club/Citizens
Regarding plaintiffs’ federal conspiracy claim under § 1985 with respect to Geico
and Auto Club/Citizens, section 1985 is a remedial statute, and must be predicated on
an underlying violation of a constitutional right. Here, plaintiffs say that the violation of §
1981 is the predicate violation. See Second Amended Complaint at ¶ 88. However,
plaintiffs have not brought a § 1981 claim against Geico or Auto Club/Citizens. Absent
an underlying violation of a federal constitutional right, plaintiffs cannot plausibly bring a
§ 1985(3) conspiracy claim against Geico or Auto Club/Citizens. While the Second
Amended Complaint states that “discovery will reveal” evidence of a racially motivated
conspiracy, see Second Amended Complaint at ¶ 81, this is insufficient to plead a

18

federal conspiracy claim against Geico and Auto Club/Citizens.
b. Farmers
As to a claim under § 1985, plaintiffs in particular point to the racially
discriminatory statements from a Farmers representative as sufficient to support an
allegation that the conspiracy was motivated by a racial bias. However, these
allegations form the basis for plaintiffs’ § 1981 claim which is brought only against
Farmers. In other words, there are no alleged co-conspirators with respect to plaintiffs
federal conspiracy claim predicated on an alleged racially based conspiracy. Absent a
co-conspirator, there can be no conspiracy. While plaintiffs say that discovery will show
the involvement of other defendants, plaintiffs’ failure to allege an underlying violation of
a constitutional right, i.e. a § 1981 claim, against the other defendants is fatal to
establishing a plausible federal conspiracy claim against Farmers.
E. Count V - Section § 1981
1. Farmers’ Arguments
This claim is brought only against Farmers. To make out a claim under § 1981, a
plaintiff is required to plead that “(1) he belongs to an identifiable class of persons who
are subject to discrimination based on their race; (2) the defendant intended to
discriminate against him on the basis of race; and (3) the defendant’s discriminatory
conduct abridged a right enumerated in section 1981.” Amini v. Oberlin Coll., 440 F.3d
350, 358 (6th Cir. 2006).
Farmers argues that plaintiffs only alleged a “handful of facts” that could arguably
support a claim and that plaintiffs have not set forth facts beyond conclusory allegations

19

from which a reasonable person could infer that Waad’s race factored into the decision
of to terminate the direct billing relationship.
2. Resolution
Plaintiffs contend that the allegations provide sufficient detail to raise this claim
above the speculative level. The Court agrees. Plaintiffs says the Second Amended
Complaint contains detailed factual allegations to support the contention that Farmers
factored race in the termination of the direct billing relationship with plaintiffs. As noted
in a witness affidavit, Michigan’s State Director of Claims, Mark Ott, specifically noted
he did not want to do business with “crooked Arabs” and “sand niggers.” Exhibit D to
the Second Amended Complaint. This statement was preceded by an incident in which
two Farmers Insurance adjusters, Steve Wezner and Kevin Wegrzyowicz, engaged in a
verbal altercation with Maher Waad calling him a “stupid Arab”, a “sand nigger” and
threatened to “get him.” Shortly after these racial attacks, Farmers had, in plaintiffs’
view, “got him,” when it terminated plaintiffs’ direct billing relationship. Furthermore,
plaintiffs say that the underlying racial discrimination and harassment exhibited by
Farmers, which gave rise to the decision not to “do business with Arabs,” was
acknowledged at the executive level of Farmers own Insurance Company. See Witness
Affidavit, Exhibit E to the Complaint.
Based on this conduct, despite a six months lapse in time between the
discriminatory remarks and removal from the direct billing program, it is plausible that
the decision to remove the plaintiffs from direct billing status was “(3) discriminatory
conduct that abridged a right enumerated in section 1981(a),” particularly as Farmers’
representatives specifically expressed their intention to “get” plaintiffs and to not do
20

business with Arabs. Therefore, plaintiffs’ discrimination claim under § 1981 cannot be
resolved on a motion to dismiss.
VI. Conclusion
For the reasons stated above, defendants’ motions are GRANTED IN PART
AND DENIED IN PART. Count III is DISMISSED. Count VI is DISMISSED. The case
continues against all defendants on Counts I, II, IV. It continues against Farmers on
Count V.
SO ORDERED.

S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE

Dated: October 22, 2014
Detroit, MI
I hereby certify that a copy of the foregoing document was mailed to the attorneys of
record on this date, October 22, 2014, by electronic and/or ordinary mail.

S/Sakne Chami
Case Manager, [phone]

21