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Condos Brothers Construction Corp. v. Main Street America Assurance Co.

United States District Court, E.D. New York

November 17, 2017


          HENRY LAW GROUP BY: Chauncey D. Henry, Esq. Attorneys for Plaintiff.

          NELSON MULLINS RILEY & SCARBOROUGH, LLP BY: Frank Morreale, Esq. Attorneys for Defendants.



         Plaintiff, Condos Brothers Construction Corp. ("Plaintiff”or "Condos Brothers"), brings this civil RICO action against Defendant Main Street America Assurance Company ("Defendant" or "Main Street") for the alleged overpayment of workers' compensation insurance premiums over the course of several years. Before the Court is Defendant's motion to dismiss Counts I and II of Plaintiff s Amended Complaint, pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff opposes the motion. For the following reasons, Defendant's motion to dismiss is granted in its entirety.


         Plaintiff Condos Brothers is a construction company providing services within the Tri-State area that include custom masonry, asphalt paving and landscape design. (Am. Compl. ¶¶ 5, 32.) Defendant Main Street is a duly licensed insurance company who served as Plaintiffs worker's compensation insurance provider between 2010 and 2014. (Id. ¶¶ 7, 21, 35.) Main Street calculates its annual premiums for its worker's compensation policies pursuant to its independent manual of rules, rates, rating plans, and classifications of its insured's employees, all of which is maintained internally. (Id ¶ 22.)

         On or about April 23, 2010 and continuing through April 23, 2014, Condos Brothers and Main Street entered into an insurance contract whereby Main Street agreed to provide workers' compensation, commercial general liability and other insurance coverage to Condos Brothers in exchange for the payment of applicable premiums. (Id. ¶ 35.) As per the insurance contract, Main Street initially charged an estimated premium based on the payroll and sale amounts, which fluctuate throughout the year. (Id. ¶ 36.) The estimated premium was calculated using an estimated exposure base provided by Condos Brothers prior to commencement of the coverage period with respect to such items as number of employees, size of payroll and other known risk factors.

         The insurance contract provided for an audit at the end of the coverage period to determine whether the estimated premium paid represented the actual payroll and/or sales amount and to calculate the actual premium owed by Condos Brothers. (Id. ¶¶ 38-39.) Under the terms of the insurance contract, Main Street agreed to compare the audited premiums with the estimated premium paid and to either return or credit overpayments made by Condos Brothers against other sums owed. (Id. ¶ 40.) Similarly, Condos Brothers agreed to reimburse Main Street for deficiencies between the estimated premiums paid and the actual premiums owed, if warranted. (Id.)

         Condos Brothers commenced this action on August 25, 2016, alleging that Main Street willfully failed to correctly categorize Plaintiffs employees as listed on its payroll records with the appropriate classification code, resulting in inaccurate premium rates and overpayment of insurance premiums by Condos Brothers. (Id. ¶ 1.) Plaintiff filed an Amended Complaint, as of right, on December 9, 2016. The Amended Complaint contains three cause of action: (1) a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964(c); (2) conspiracy to violate RICO, 18 U.S.C. § 1962(d); and (3) breach of contract. Main Street now moves to dismiss the RICO claim and the RICO conspiracy claim, pursuant to Federal Rule of Civil Procedure 12(b)(6), for failure to state a claim upon which relief may be granted. Plaintiff opposes the motion in its entirety.


         I. Legal Standard

         "To survive a motion to dismiss [pursuant to Rule 12(b)(6)], a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly. 550 U.S. 544, 570 (2007)). "Facial plausibility" is achieved when the "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal. 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). As a general rule, the court is required to accept as true all of the allegations contained in the complaint, see Iqbal. 556 U.S. at 678; Kassner v. 2nd Ave. Delicatessen. Inc.. 496 F.3d 229, 237 (2d Cir. 2007), and to "draw[] all reasonable inferences in the plaintiffs favor." Troni, 2010 U.S. Dist. LEXIS 79670, at *5 (quoting In re NYSE Specialists Sec. Litig., 503 F.3d 89, 95 (2d Cir. 2007)).

         However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements ... are not entitled to the assumption of truth." Iqbal. 556 U.S. at 678-79 (citation omitted); see also Twombly, . 555 U.S. at 555 (stating that the Court is "not bound to accept as true a legal conclusion couched as a factual allegation"). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations, " which state a claim for relief. Iqbal. 556 U.S. at 679. A complaint that "tenders 'naked assertion[s]' devoid ...

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