Rajagopalan et al v. Fidelity and Deposit Company of Maryland

Filing 21

ORDER Requesting Additional Briefing and Renoting Defendant's Motion by Judge Benjamin H. Settle. 8 MOTION to Dismiss Class Action Complaint: Noting Date 2/3/2017. (TG)

Download PDF
1 2 3 4 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 5 6 7 AMRISH RAJAGOPALAN, et al., 8 Plaintiffs, 9 10 11 v. FIDELITY AND DEPOSIT COMPANY OF MARYLAND, CASE NO. C16-5739BHS ORDER REQUESTING ADDITIONAL BRIEFING AND RENOTING DEFENDANT’S MOTION Defendant. 12 13 This matter comes before the Court on Defendant Fidelity and Deposit Company 14 of Maryland’s (“Fidelity”) motion to dismiss class action complaint (Dkt. 8). The Court 15 has considered the pleadings filed in support of and in opposition to the motion and the 16 remainder of the file and hereby rules as follows: 17 I. PROCEDURAL HISTORY 18 On July 18, 2016, Plaintiffs Amrish Rajagopalan, Marie Johnson-Peredo, Robert 19 Hewson, Donte Cheeks, Deborah Horton, Richard Pierce, Erma Sue Clyatt, Robert Joyce, 20 Amy Joyce, Arthur Fuller, Dawn Meade, Wahab Ekunsum, Karen Hea, and Alex Casiano 21 (“Plaintiffs”) filed a class action complaint against Fidelity in Pierce County Superior 22 ORDER - 1 1 Court for the State of Washington. Dkt. 1, Exh. A (“Comp”). Plaintiffs allege violations 2 of Washington’s Insurance Fair Conduct Act (“IFCA”), bad faith, violation of 3 Washington’s Consumer Protection Act (“CPA”), and negligence. Id. 4 On August 24, 2016, Fidelity removed the matter to this Court. Dkt. 1. 5 On August 31, 2016, Fidelity filed a motion to dismiss. Dkt. 8. On October 21, 6 2016, Plaintiffs responded. Dkt. 12. On November 4, 2016, Fidelity replied. Dkt. 17. 7 8 II. FACTUAL BACKGROUND Meracord, LLC (“Meracord”) was a payment processing company that provided 9 money transmission services nationwide. Comp., ¶ 1. Fidelity issued bonds in 19 states 10 backing Meracord’s money transmitter licenses (“the Bonds”). Id., ¶ 3. In 2011, 11 Meracord faced a series of class action lawsuits brought by consumers alleging that 12 Meracord had violated various state and federal laws in connection with its processing of 13 payments for the debt relief services industry. Id., ¶ 4. In October 2013, the Consumer 14 Financial Protection Bureau announced an enforcement action that effectively shut down 15 Meracord, imposing a $1.3 million penalty and barring Meracord and its owner, Linda 16 Remsberg, from the debt settlement industry. Id., ¶ 6. 17 Plaintiffs allege that a proposed settlement of their class action against Mericord 18 was reached that involved many moving parts. Relevant to the instant motion, the 19 settlement required Fidelity to contribute by partial tender of some of the Bonds. Id., ¶ 20 8–9. Fidelity refused to tender and the settlement fell through. Id., ¶ 10. Meracord 21 defaulted and suffered a $1.45 billion judgment against it. Id. Plaintiffs executed on the 22 final judgment, and on April 13, 2016, they acquired all claims that Meracord had against ORDER - 2 1 the sureties. Id., ¶ 16. Plaintiffs bring this action as the lawful owner of Meracord’s 2 claims against Fidelity. Id. 3 4 III. DISCUSSION As a threshold matter, the parties advance plausible, competing arguments for the 5 extension of existing law in Washington. In other words, the parties have presented 6 issues of first impression. Based on the parties’ briefs and independent research, the 7 Court is hesitant to issue an order resolving the questions under existing law. Thus, the 8 Court requests additional briefing regarding whether all four questions should be certified 9 to the Washington Supreme Court. Regarding the tort of bad faith, the Washington 10 Supreme Court has addressed the tort in the context of a duty the surety owes to the 11 obligee, but not the bond principal. Colorado Structures, Inc. v. Ins. Co. of the W., 161 12 Wn.2d 577, 597–607 (2007). Regarding the statutory causes of action, Washington 13 courts have not addressed the issue of whether a bond principal meets the definition of a 14 first party claimant under RCW 48.30.015(4). Regarding the negligence claim, Plaintiffs 15 rely on violations of Washington statutes to support the claim, which raises issues of first 16 impression. Therefore, the Court finds that these questions should most likely be 17 certified to the Washington Supreme Court. The Court requests the parties’ positions on 18 whether the questions should be certified and, if so, draft language of the particular 19 questions. 20 IV. ORDER 21 Therefore, it is hereby ORDERED that the parties may submit simultaneous 22 response briefs no later than January 27, 2017, and simultaneous reply briefs no later than ORDER - 3 1 February 3, 2017. The Clerk shall renote Fidelity’s motion for consideration on the 2 Court’s February 3, 2017 calendar. 3 Dated this 17th day of January, 2017. A 4 5 BENJAMIN H. SETTLE United States District Judge 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 ORDER - 4

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?