NEW ORLEANS – The U.S. District Court for the Eastern District of Louisiana has again granted a motion to dismiss an insurance malpractice lawsuit filed by protective coatings company Rhino Shield Gulf South (Rhino Shield GS).
U.S. District Judge Martin Feldman issued an opinion April 15 in a dispute involving Rhino Shield Gulf South and its sole member, James Redmond, and their insurers, RSUI Group and Landmark American Insurance Company. dissolved in 2015
The dispute involves Rhino Shield of Louisiana, a two-member limited liability company comprised of Redmond and Kevin Mmahat, which dissolved in 2015, court filings said. The company, which operated in Louisiana under an agreement with Rhino Shield Gulf South, a Florida LLC, bought liability policies through RSUI and Landmark.
Between 2013 and 2017, Rhino Shield customers filed claims and lawsuits against the company. In response, RSUI and Landmark, as well as appointed liability counsel Brian Carr, got settlement contributions from Redmond and Rhino Shield Gulf South “by misrepresenting that Redmond might face personal liability,” court filings said.
Redmond filed a state lawsuit in October alleging bad faith claims-adjusting practices against RSUI and Landmark and a legal malpractice claim against Carr. RSUI and Landmark removed the case to federal court, after which Carr was dismissed with prejudice.
On Feb. 5, the court granted the insurers’ motion to dismiss, without prejudice, finding the plaintiffs didn’t plausibly allege they were insured under an RSUI or Landmark policy and didn’t plead enough facts to sustain the bad faith or fraud claims. The plaintiffs amended that complaint in March, citing 12 lawsuits from customers dealing directly with defective installations or faulty Rhino Shield products and a list of nine payments Redmond and the company made to settle disputes.
“The amended complaint stops short of alleging that any of these lawsuits or claims named Mr. Redmond, as opposed to his single-member LLC (Rhino Shield GS), as a defendant, so as to trigger Redmond’s status as an insured,” Feldman wrote.
The judge further said that while the amended complaint clarifies Rhino Shield GS was named as an “additional insured” for some policies Covington Specialty Insurance Company issued, and which RSUI administered, between May 8, 2013, and April 24, 2015, the complaint doesn’t clarify which policies may have been triggered by each of the cited claims, providing “no basis to infer that Rhino Shield GS is an insured with respect to any claim that is alleged to have been asserted against it.”
Feldman also said the list of payments Redmond cited in the amended complaint lacked the requisite specificity, as it didn’t include details about which plaintiff made which payments, but rather said they were “made directly by Rhino Shield GS and/or James M. Redmond.”
Redmond argued the lack of clarity came because RSUI didn’t adequately communicate which entity was supposed to pay “or which dismissals the settlement funds of each check purported to secure,” Feldman wrote. “But, the plaintiffs overlook that, regardless of how any payment was allegedly used or characterized, their complaint fails to allege which plaintiff issued each settlement check.”
Feldman granted the insurers’ motion to dismiss, again without prejudice, granting leave for a second amended complaint within 30 days. Should Redmond fail to meet that deadline, Feldman said he would dismiss the complaint with prejudice.