Marks One Car Rental, Inc. v. Auto Club Group Insurance Company
2:13-cv-14610
| E.D. Mich. | Oct 22, 2014Background
- Plaintiffs Marks One Car Rental, Marks One LLC (Marks One Collision), and principal Maher Waad sued several insurers alleging defendants defamed them, tortiously interfered with business, conspired, and discriminated on the basis of race; plaintiffs seek relief under state tort law, Michigan Consumer Protection Act, and federal civil-rights statutes (42 U.S.C. § 1981 and § 1985(3)).
- Defendants moved to dismiss; discovery was stayed and court treated the Second Amended Complaint and attached affidavits as true for Rule 12(b)(6) purposes.
- Defendants invoked two Michigan statutory-immunity provisions (MCL § 500.4509(3) and § 500.2124(1)), arguing their communications in insurance investigations are privileged/immune absent malice or falsity.
- Plaintiffs relied on multiple customer/policyholder affidavits alleging defendants made specific false statements (including accusations of forgery and insurance fraud), and that Farmers employees made overtly racial slurs toward Waad.
- The court evaluated Counts I (tortious interference), II (defamation), III (Michigan Consumer Protection Act), IV (civil conspiracy), V (§ 1981 against Farmers only), and VI (§ 1985(3) conspiracy), granting some dismissals and allowing other claims to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statutory immunity under MCL § 500.4509(3) and § 500.2124(1) | Statutes should be read to protect those who provide info to agencies but do not cover the alleged communications to customers; plaintiffs allege malice so immunity would not apply anyway | Defendants claim the qualifying language limits immunity and covers insurers communicating about suspected fraud or reasons for cancellation, insulating them from tort claims | Court rejects defendants' reading; statutes do not cover the alleged conduct to customers and malice pleaded precludes dismissal on immunity ground |
| Tortious interference with business expectancy (Count I) | Defendants intentionally and improperly contacted customers with false accusations, disrupting business expectancies | Defendants say actions were legitimate investigations or privileged and no reasonable expectancy existed | Court finds plaintiffs pleaded sufficient facts (particularized affidavits, pattern of conduct) to state plausible tortious interference claims against defendants |
| Defamation and qualified/shared-interest privilege (Count II) | Statements to customers went beyond necessary investigatory communications and were false/malicious | Defendants assert shared-interest (qualified) privilege for communications made in good faith to protect insureds from fraud; privilege requires plaintiff to prove actual malice | Court holds privilege is inapplicable because statements exceeded the proper scope and were directed to improper parties; malice sufficiently pleaded to survive dismissal |
| Civil conspiracy (Count IV) | Defendants acted in concert (same tactics, databases, investigations) to harm plaintiffs; underlying torts established | Defendants argue no underlying torts or agreement alleged | Because plausible tortious interference and defamation claims exist and pleadings suggest concerted action, conspiracy claim survives pleading stage |
| § 1981 discrimination claim against Farmers (Count V) | Farmers employees expressed racial animus (racial slurs, statements about not doing business with "Arabs") and terminated direct-billing relationship on that basis | Farmers says allegations are conclusory and insufficient to show race motivated termination | Court finds affidavit evidence of racial slurs and statements plausibly supports § 1981 claim against Farmers; claim survives dismissal |
| § 1985(3) federal conspiracy (Count VI) | Plaintiffs allege racially motivated conspiracy among insurers to deprive equal protection | Defendants say no underlying federal-right violation alleged against most defendants and no co-conspirator allegations tying them to § 1981 violations | Court dismisses § 1985(3) claim because plaintiffs failed to allege underlying § 1981 violations against multiple defendants and no plausible multi-party conspiracy pleaded at federal level |
Key Cases Cited
- Albright v. Oliver, 510 U.S. 266 (pleading standard and acceptance of allegations at motion to dismiss)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (legal conclusions vs. factual allegations for plausibility)
- Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (materials a court may consider on motion to dismiss)
- Bower v. Fed. Express Corp., 96 F.3d 200 (12(b)(6) standard in Sixth Circuit)
- Ass'n of Cleveland Fire Fighters v. City of Cleveland, Ohio, 502 F.3d 545 (pleading/plausibility discussion)
- Radu v. Herndon & Herndon Investigations, Inc., 302 Mich. App. 363 (construction and purpose of MCL § 500.4509)
- Health Call of Detroit v. Atrium Home & Health Care Servs., Inc., 268 Mich. App. 83 (elements of tortious interference)
- Derderian v. Genesys Health Care Sys., 263 Mich. App. 364 (improper interference/malice requirement)
- Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 257 Mich. App. 365 (improper interference analysis)
- Lucas v. Monroe County, 203 F.3d 964 (reasonable expectancy for future business)
- Zanley v. Hyde, 208 Mich. 102 (shared-interest/qualified privilege doctrine)
- Prysak v. R.L. Polk Co., 193 Mich. App. 1 (elements of qualified privilege)
- Urbain v. Beierling, 301 Mich. App. 114 (civil conspiracy requires underlying tort)
- Bass v. Robinson, 167 F.3d 1041 (§ 1985 requires class-based invidious discrimination)
- Johnson v. Hills & Dales Gen. Hosp., 40 F.3d 837 (elements of § 1985(3))
- Amini v. Oberlin Coll., 440 F.3d 350 (elements of § 1981 claim)