State Farm Fire & Casualty Co. v. Allied & Associates
860 F. Supp. 2d 432
E.D. Mich.2012Background
- State Farm sues multiple Flint, Michigan defendants alleging a long-running arson-for-insurance scheme.
- Plaintiff identifies two core groups—the Sykes group and the Goodman group—connected by Allied & Associates, Inc. and public adjuster Gary Lappin.
- Plaintiff claims fires occurred across rental properties with Allied handling claims and Lappin facilitating fraudulent payments.
- Amended complaint adds relationships among defendants and alleges twelve-plus fraudulent fire-loss claims carried out over years.
- Court grants in part and denies in part motions to dismiss; severance denied, Jr. dismissed, and Hurt-Hatter’s counterclaim partly sustained.
- Amended complaint seeks voiding of some policies and multiple common-law claims including fraud and unjust enrichment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether State Farm adequately pleads fraud against Sr. Goodman | State Farm plausibly pleads concerted action and repeated fires. | Amended complaint lacks particularity; no actionable conduct by Sr. Goodman. | Sr. Goodman dismissed for lack of pleading specificity. |
| Whether Bruce Goodman can be liable for fraud and unjust enrichment | Allegations show Bruce acted with others in a conspiratorial scheme. | Some pleaded conduct insufficient; lack of direct fraud by Bruce. | Fraud and unjust enrichment claims against Bruce denied dismissal; claims survive. |
| Whether Johnnie Goodman, Jr. should be dismissed or granted summary judgment | Jr. participated through family connections and Kingdom Builders; plausibly tied to scheme. | No direct involvement pleaded; allegations are conclusory. | Johnnie Goodman, Jr. granted summary judgment; claims dismissed. |
| Whether severance of claims is proper under Rule 20 | All claims arise from same scheme; related transactions across defendants. | Possible burdens and lack of common facts with Sykes group. | Severance denied; claims remain in one action. |
| Whether Hurt-Hatter’s counterclaim states abuse of process or defamation | Counterclaim alleges improper use of process and defamatory statements. | Abuse-of-process claim insufficient; defamation claim pleaded with sufficient facts for slander. | Abuse of process claim dismissed; slander claim survives. |
Key Cases Cited
- People v. Mardlin, 487 Mich. 609 (Mich. 2010) (doctrine of chances discussed for evidentiary relevance in arson/insurance context)
- Cousineau v. Ford Motor Co., 140 Mich.App. 19 (Mich. Ct. App. 1985) (concert of action requires common design and underlying tort)
- Demyanovich v. Cadon Plating & Coatings, LLC, 2011 WL 3027901 (E.D.Mich. 2011) (discussed civil conspiracy elements (noting limitations of pleading))
- Twombly v. Bell Atl. Corp., 550 U.S. 544 (U.S. 2007) (plausibility standard for pleading; not mere possibility)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (plaintiffs must plead plausible claims; bare assertions insufficient)
- Friedman v. Dozorc, 412 Mich. 1 (Mich. 1981) (abuse-of-process requires more than filing)
- Long v. Adams, 411 F. Supp. 2d 701 (E.D. Mich. 2006) (pleading standards in federal court; Rule 8 sufficiency)
- Royal Palace Homes, Inc. v. Channel 7 of Detroit, 197 Mich.App. 48 (Mich. Ct. App. 1992) (defamation pleading standards under Michigan law)
- Shady Grove Orthopedic Assoc., P.A. v. Allstate Ins. Co., 559 U.S. 393 (U.S. 2010) (federal rules apply to pleading; diversity substantive law, federal procedure)