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Snyder Insurance Services, Inc. v. Sohn

United States District Court, D. Kansas

July 3, 2017



          Daniel D. Crabtree United States District Judge

         This matter comes before the court on defendant Mark R. Sohn and Kulin-Sohn Insurance Agency's Motion to Dismiss (Doc. 12) plaintiffs' Snyder Insurance Services, Inc. (“SIS”) and Raymond F. Snyder's First Amended Complaint. This motion represents defendants' third motion to dismiss. Plaintiffs responded to the current motion (Doc. 16), and defendants now have replied (Doc. 17). For reasons explained below, the court grants defendants' motion, but only in part. The court explains its reasoning, below, and also explains what is granted and what is denied.

         I. Facts Governing Defendants' Motion to Dismiss

         The following facts are taken from plaintiffs' First Amended Complaint (Doc. 5). Because the current dismissal motion relies on Fed.R.Civ.P. 12(b)(6), the courts accepts the pleaded facts as true and views them in the light most favorable to them.[1]

         Defendant Mark R. Sohn, an Illinois resident, owns Kulin-Sohn Insurance Agency, Inc., an insurance company incorporated under Illinois law and having its principal place of business in Illinois. Plaintiff SIS is an insurance brokerage company that specializes in insuring amateur sports and children's fitness centers across the country. Plaintiff Raymond F. Snyder is SIS's president. The First Amended Complaint alleges that Mr. Snyder is a Kansas resident and that SIS is a Kansas corporation with its principal place of business in Kansas.

         In February 2016, defendants filed a complaint with the State of Washington Office of Insurance Commissioner (“Washington OIC”). Defendants' complaint to Washington OIC alleged that plaintiffs: (1) falsified and/or altered insurance documents; (2) misrepresented the number of students on their insurance applications to reduce the premiums charged on the policies; (3) defrauded insurance carriers; (4) repeatedly solicited clients with the intent of indirectly placing them with unauthorized insurers; (5) engaged in a pattern of fraud to gain a business advantage; and (6) violated Washington laws, regulations, and rules. Doc. 5 at 4. According to plaintiffs' allegations here-ones the court must accept as true for present purposes-defendants did not conduct reasonable due diligence to determine whether their allegations were true or false before filing their complaint. And, as a result of defendants' complaint, the Washington OIC launched an investigation into defendants' allegations, eventually concluding that they were false and unsubstantiated.

         In April 2016, Mr. Sohn contacted Precision Gymnastics (“Precision”), one of plaintiffs' clients in California. Mr. Sohn communicated to Precision that plaintiffs had lied to them, had misled them to make them believe they had insurance coverage when, in fact, they did not, and similarly had misled and defrauded other gyms. Like the assertions made in defendants' Washington OIC complaint, Mr. Sohn's statements to Precision are untrue ones.

         II. Legal Standard

         Defendants move to dismiss the case under Fed.R.Civ.P. 12(b)(6) for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Although this Rule “does not require ‘detailed factual allegations, '” it demands more than “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

         “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.'” Id. (quoting Twombly, 550 U.S. at 570). “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. (citing Twombly, 550 U.S. at 556). “Under this standard, ‘the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims.'” Carter v. United States, 667 F.Supp.2d 1259, 1262 (D. Kan. 2009) (quoting Ridge at Red Hawk, LLC v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007)).

         On a motion to dismiss under Rule 12(b)(6) the court must assumes that a complaint's factual allegations are true. But legal conclusions are different. The court need not accept mere legal conclusions as true. Id. at 1263. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements” are not enough to state a claim for relief. Iqbal, 556 U.S. at 678. In addition to the complaint's factual allegations, the court also may consider “attached exhibits and documents incorporated into the complaint by reference.” Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009) (citations omitted).

         III. Analysis

         Before addressing defendants' arguments, the court must determine which state's substantive law governs plaintiffs' claims. Rigby v. Clinical Reference Lab., Inc., 995 F.Supp. 1217, 1221 (D. Kan. 1998) (citing Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). Because the parties are citizens of different states and the amount in controversy exceeds $75, 000, the court has diversity subject matter jurisdiction over this case. See 28 U.S.C. § 1332. Federal courts sitting in diversity apply the choice of law rules of the forum state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). For tort claims, Kansas applies the law of the state where the tort occurred. Brown v. Kleen Kut. Mfg. Co., 714 P.2d 942, 944 (Kan. 1986); see also Atchison Casting Corp. v. Dofasco, Inc., 889 F.Supp. 1445, 1456 (D. Kan. 1995). Under this rule, the law of the “place of the wrong controls.” 889 F.Supp. at 1455. “The ‘place of the wrong' is that place where the last event necessary to impose liability took place.'” Dofasco, Inc., 889 F.Supp. at 1456 (quoting Ling v. Jan's Liquors, 703 P.2d 731, 735 (Kan. 1985)). “Under this rule, the tort is deemed to have occurred where the wrong was felt.” Altrutech, Inc. v. Hooper Holmes, Inc., 6 F.Supp.2d 1269, 1276 (D. Kan. 1998).

         Neither party disputes that Kansas law applies in this case. Indeed, both parties cite Kansas case law in their briefs. Also, plaintiffs are Kansas residents asserting defamation and tortious interference claims. Thus, the wrongs they experienced were felt in Kansas, ...

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