SRH Holdings, LLC v. Government Employees Insurance Company et al
| SRH Holdings, LLC |
| Government Employees Insurance Company and Geico Insurance Agency, Inc. |
| 1:2023cv10325 |
| February 13, 2023 |
| US District Court for the District of Massachusetts |
| Denise J Casper |
| Contract: Other |
| 28 U.S.C. § 1332 Diversity-Other Contract |
| Both |
Docket Report
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| Filing 32 Judge Denise J. Casper: ELECTRONIC ORDER entered granting #28 Motion for Leave to File a Memorandum in Support that Exceeds the Page Limit by Geico Insurance Agency, Inc., Government Employees Insurance Company (Hourihan, Lisa) |
| Filing 31 MEMORANDUM in Support re #30 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by Geico Insurance Agency, Inc., Government Employees Insurance Company. (Attachments: #1 Exhibit A, #2 Exhibit B)(Cole, John Nathan) |
| Filing 30 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM by Geico Insurance Agency, Inc., Government Employees Insurance Company.(Cole, John Nathan) |
| Filing 29 MOTION to Seal GEICO's Commission Schedules and Related Commission Documentation by Geico Insurance Agency, Inc., Government Employees Insurance Company. (Attachments: #1 Exhibit A)(Cole, John Nathan) |
| Filing 28 Assented to MOTION for Leave to File a Memorandum in Support that Exceeds the Page Limit by Geico Insurance Agency, Inc., Government Employees Insurance Company.(Cole, John Nathan) |
| Filing 27 NOTICE of Appearance by Adam Stone on behalf of Geico Insurance Agency, Inc., Government Employees Insurance Company (Stone, Adam) |
| Filing 26 NOTICE of Appearance by Kaytie Michelle Pickett on behalf of Geico Insurance Agency, Inc., Government Employees Insurance Company (Pickett, Kaytie) |
| Filing 25 AMENDED COMPLAINT Second Amended Complaint against All Defendants, filed by SRH Holdings, LLC.(Cosentino, Michael) |
| Filing 24 Judge Denise J. Casper: ELECTRONIC ORDER entered re: #17 Motion to Amend Complaint and #22 Motion for Extension of Time. Given that Defendants indicate that they do not oppose Plaintiff's motion to amend, D. 22 at 1, the Court ALLOWS Plaintiff's motion to file the second amended complaint, D. 17-2 and Plaintiffs must file it by March 20, 2023. As requested by Defendants in their assented-to motion, D. 22 at 2, the Court gives Defendants until April 3, 2023 to answer or otherwise respond to the second amended complaint. (Hourihan, Lisa) |
| Filing 23 Judge Denise J. Casper: ELECTRONIC ORDER entered re: #5 Motion for Preliminary Injunction. Plaintiff SRH Holdings, LLC ("SRH Holdings") seeks a preliminary injunction and temporary restraining order against Defendants Government Employees Insurance Company ("GEICO") and GEICO Insurance Agency, Inc. (collectively, "GEICO"), in connection with the termination of the GEICO Field Representative Agreement ("the GFR Agreement"). D. 5. SRH Holdings originally filed suit in Norfolk Superior Court on February 10, 2023. D. 1-1. GEICO removed the case to this Court on February 13, 2023. D. 1. SRH Holdings filed an amended complaint on February 24, 2023. D. 11. The Court heard the parties on March 9, 2023 regarding such injunctive relief. D. 21. For the following reasons, the Court DENIES the motion.Factual Background. Richard Hurwitz formed SRH Holdings "solely for the purpose of selling insurance on behalf of" GEICO. D. 11 8. On May 13, 2020, SRH Holdings and GEICO entered into the GFR Agreement. Id. 9; see D. 12-1 at 6. On December 11, 2020, SRH Holdings and GEICO entered into a revised GFR Agreement, which superseded their original agreement and remains the operative agreement. D. 12-1 at 25, 31. Under the GFR Agreement, GEICO appointed SRH Holdings "as an independent contractor captive agent for the purpose of soliciting and procuring applications for insurance and/or providing various services to applicants and policyholders on behalf of GEICO." Id. at 25. Either party could terminate the GFR Agreement upon thirty days prior written notice. Id. at 30. According to GEICO, in late December 2022, it "learned that SRH Holdings' employees were sharing log-on information and passwords to the GEICO system" in an unauthorized manner. D. 12 at 3. On December 29, 2022, GEICO suspended SRH Holdings' access to its systems pending an investigation. D. 11 4344. On January 12, 2023, GEICO gave SRH Holdings a thirty-day notice that it was terminating the GFR Agreement, with termination effective on February 12, 2023. Id. 46; D. 11-3.Standard of Review. Injunctive relief "is an 'extraordinary and drastic remedy.'" Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 32 (1st Cir. 2011) (quoting Munaf v. Geren, 553 U.S. 674, 68990 (2008)). To obtain such relief, the Court must consider: (1) the movant's likelihood of success on the merits; (2) the likelihood of the movant suffering irreparable harm in the absence of injunctive relief; (3) the balance of equities between the parties; and (4) whether granting the injunction is in the public interest. Corp. Techs., Inc. v. Harnett, 731 F.3d 6, 9 (1st Cir. 2013). Plaintiffs "bear the burden of establishing that these four factors weigh in [their] favor." Esso Standard Oil Co. (P.R.) v. Monroig-Zayas, 445 F.3d 13, 18 (1st Cir. 2006) (citation omitted).Likelihood of Success on the Merits. SRH Holdings brings claims for breach of contract, renewal commissions, unjust enrichment, breach of the implied covenant of good faith and fair dealing and misrepresentation, D. 11, but it relies solely upon its breach of contract claim for injunctive relief. See D. 6 at 68; D. 19 at 12. Having considered the parties' arguments, the Court concludes that SRH Holdings has not shown that it is reasonably likely to succeed on the merits of its claims.The GFR Agreement is governed by Maryland law. D. 12-1 at 31. "To prevail in an action for breach of contract" under Maryland law, "a plaintiff must prove that the defendant owed the plaintiff a contractual obligation and that the defendant breached that obligation." Taylor v. NationsBank, N.A., 365 Md. 166, 175 (2001). Even though the original agreement provided for sixty days prior notice, D. 12-1 at 17, the operative GFR Agreement provided that it could be terminated by either party on thirty days prior written notice. D. 12-1 at 30. Because SRH Holdings does not dispute that GEICO provided such thirty days prior written notice, see D. 11 46; D. 11-3, it is unlikely to succeed on any claim of breach of contract on the length of notice it received prior to the termination of the agency relationship. SRH Holdings also has not shown it is likely to succeed in challenging GEICO's decision to suspend SRH Holdings' access to its systems prior to the termination. Under Section II(D) of the GFR Agreement, SRH Holdings and its employees were obligated to "only use the password, User ID, or other 'log-on' authorization individually assigned to them when accessing GEICO systems" and were prohibited from "permit[ting] any other individual to use the same." D. 12-1 at 29. "[A]ny violation of any of [SRH Holdings'] responsibilities with regard to [Section II(D)] is alone sufficient for and may, at GEICO's sole discretion... result in the suspension or revocation of [SRH Holdings'] access to GEICO's systems or termination of this Agreement." Id. Accordingly, GEICO reserved the unilateral right to suspend SRH Holdings' access to its systems if it determined that SRH Holdings allowed unauthorized individuals to access its systems.To the extent that SRH Holdings alleges that GEICO "locked [it] out of all of [GEICO's] systems, re-routed all of its customer calls and denied [it] the ability to interact with new and existing customers preventing them from earning commissions" right before and during the thirty-day notice period, D. 6 at 7, SRH Holdings has not demonstrated a reasonable likelihood of succeeding in showing that this was a breach of the GFR Agreement for at least two reasons. First, as noted above, GEICO retained the right under the GFR Agreement to suspend or terminate SRH Holdings access to its systems if there was a violation of the contractual provisions regarding same. Moreover, there is a factual dispute between the parties about the extent and length of that suspension. See D. 12-3 10 (stating that SRH Holdings' access to GEICO's systems was restored approximately ten days into the termination notice period); D. 19-1 13 (disputing that such restoration occurred). Second, to the extent that such suspension to access to GEICOs systems was during the 30-day notice of termination period, the GFR Agreement does not expressly entitle SRH Holdings to access GEICO systems during this period.Irreparable Harm. "In the preliminary injunction context, the First Circuit measures irreparable harm 'on a sliding scale, working in conjunction with a moving party's likelihood of success on the merits, such that the strength of the showing necessary on irreparable harm depends in part on the degree of likelihood of success shown.'" Hearst Stations Inc. v. Aereo, Inc., 977 F. Supp. 2d 32, 40 (D. Mass. 2013) (quoting Braintree Lab'ys., Inc. v. Citigroup Glob. Mkts. Inc., 622 F.3d 36, 4243 (1st Cir. 2010)). Given that SRH Holdings has not shown a likelihood of success on the merits, the showing as to irreparable harm needs to be stronger. See Hearst Stations Inc. , 977 F. Supp. 2d at 4041 (concluding that plaintiff's "minimal showing of irreparable harm" did not overcome its "inability to demonstrate a likelihood of success on the merits").Furthermore, "economic loss alone does not usually rise to the level of irreparable harm which a party must establish to obtain a preliminary injunction." Akebia Therapeutics, Inc. v. Azar, 443 F. Supp. 3d 219, 230 (D. Mass. 2020), aff'd, 976 F.3d 86 (1st Cir. 2020) (quoting Suero v. Fed. Home Loan Mortg. Corp., No. 13-cv-13014, 2013 WL 6709001, at *7 (D. Mass. Dec. 17, 2013)). SRH Holdings has not shown that it has "no adequate remedy at law, i.e. that money damages alone will not adequately redress [its] injuries." Ruggieri v. M.I.W. Corp., 826 F. Supp. 2d 334, 336 (D. Mass. 2011) (citing Charlesbank Equity Fund II v. Blinds To Go, Inc., 370 F.3d 151, 162 (1st Cir. 2004)). SRH Holdings claims that by "failing to restore [SRH Holdings'] systems back to pre-December 29, 2022 form... [GEICO's] actions have robbed [SRH Holdings] of its goodwill, it[sic] current and future revenue streams from policies which [SRH Holdings] has already written and could write in the future, and caused [SRH Holdings] to incur substantial debt with respect to its start-up costs and lease obligations." D. 6 at 56. SRH Holdings' lost revenues, start-up costs and lease obligations, however, are calculable and redressed by money damages. While "goodwill and reputation cannot be easily measured or fully compensable in damages," Arborjet, Inc. v. Rainbow Treecare Sci. Advancements, Inc., 187 F. Supp. 3d 217, 223 (D. Mass. 2016) (citing Ross-Simons of Warwick, Inc. v. Baccarat, Inc., 102 F.3d 12, 20 (1st Cir. 1996)), given that SRH Holdings was formed solely for the purpose of selling insurance on behalf of GEICO, D. 11 8, and given that this contractual relationship appears to have been terminated in accordance with the terms of the GFR Agreement, it is not clear to the Court what goodwill, if any, SRH Holdings has lost. SRH Holdings has not identified what its new business purpose is, nor has it provided sufficient information about client relationships that were permanently and negatively impacted by its lack of access to GEICO's systems.Balance of Equities and the Public Interest. The final considerations in weighing the grant of a preliminary injunction are a balance of equities between the parties and the service of the public interest if the injunctive relief is granted. Arborjet, Inc. v. Rainbow Treecare Sci. Advancements, 794 F. 3d 168, 171 (1st Cir. 2015). Both factors favor the denial of an injunction here. "The Court must balance 'the hardship that will befall the nonmovant if the injunction issues... with the hardship that will befall the movant if the injunction does not issue.'" Dunkin' Donuts Franchised Rests. LLC v. Wometco Donas Inc., 53 F. Supp. 3d 221, 23132 (D. Mass. 2014) (quoting MercadoSalinas v. Bart Enter. Intern., Ltd., 671 F.3d 12, 19 (1st Cir. 2011)). "A preliminary injunction must also be in the public interest." Id. (citing Voice of the Arab World, Inc., 645 F.3d at 32). "The public interest that is referred to in the test [is] the public's interest in the issuance of the injunction itself." Id. (emphasis and alteration in original) (quoting Braintree Lab'ys., |
| Filing 22 Assented to MOTION for Extension of Time to File Responsive Pleading by Geico Insurance Agency, Inc., Government Employees Insurance Company.(Fioravanti, Anthony) |
| Filing 21 Electronic Clerk's Notes for proceedings held before Judge Denise J. Casper: Motion Hearing held on 3/9/2023 re #5 MOTION for Preliminary Injunction and Temporary Restraining Order filed by SRH Holdings, LLC. Arguments. Court denies #20 Motion to Strike and takes under advisement #5 Motion for Preliminary Injunction. (Court Reporter: Debra Joyce at joycedebra@gmail.com.)(Attorneys present: Michael Consentino for the plaintiff. Anthony Fioravanti, Kaytie Pcketss andd Adam Stone for the defendants.) (Hourihan, Lisa) |
| Filing 20 MOTION to Strike #19 Opposition to Motion, by Geico Insurance Agency, Inc., Government Employees Insurance Company.(Cole, John Nathan) |
| Filing 19 Opposition re #5 MOTION for Preliminary Injunction and Temporary Restraining Order filed by SRH Holdings, LLC. (Attachments: #1 Affidavit Affidavit of Richard Hurwitz, #2 Affidavit Affidavit of Michael Cosentino)(Cosentino, Michael) |
| Filing 18 Notice of Service of Process filed by SRH Holdings, LLC. Individual(s)/Entities served: Government Employees Insurance Company. (Cosentino, Michael) |
| Filing 17 MOTION to Amend #11 Amended Complaint, by SRH Holdings, LLC. (Attachments: #1 Exhibit Exhibit 1 - Notice from AG, #2 Exhibit Exhibit 2 - Second Amended Complaint)(Normand, Jennifer) |
| Filing 16 NOTICE of Appearance by Anthony B. Fioravanti on behalf of Geico Insurance Agency, Inc., Government Employees Insurance Company (Fioravanti, Anthony) |
| Filing 15 ELECTRONIC NOTICE Resetting Hearing on Motion #5 MOTION for Preliminary Injunction and Temporary Restraining Order : Motion Hearing set for 3/9/2023 10:00 AM in Courtroom 11 (In person only) before Judge Denise J. Casper. (Hourihan, Lisa) |
| Filing 14 ELECTRONIC NOTICE Setting Hearing on Motion #5 MOTION for Preliminary Injunction and Temporary Restraining Order : Motion Hearing set for 3/9/2023 12:00 PM in Courtroom 11 (In person only) before Judge Denise J. Casper. (Hourihan, Lisa) |
| Filing 13 Judge Denise J. Casper: ELECTRONIC ORDER entered granting D. #8 Motion for Leave to Appear Pro Hac Vice Added Adam Stone; D. #9 Motion for Leave to Appear Pro Hac Vice Added Kaytie Pickett. Attorneys admitted Pro Hac Vice must have an individual PACER account, not a shared firm account, to electronically file in the District of Massachusetts. To register for a PACER account, go the Pacer website at # https://pacer.uscourts.gov/register-account. You must put the docket number on your form when registering or it will be rejected.Pro Hac Vice Admission Request Instructions # https://www.mad.uscourts.gov/caseinfo/nextgen-pro-hac-vice.htm.A Notice of Appearance must be entered on the docket by the newly admitted attorney. (Currie, Haley) |
| Filing 12 Opposition re #5 MOTION for Preliminary Injunction and Temporary Restraining Order filed by Geico Insurance Agency, Inc., Government Employees Insurance Company. (Attachments: #1 Exhibit A, #2 Exhibit B, #3 Exhibit C)(Cole, John Nathan) |
| Filing 11 AMENDED COMPLAINT against All Defendants, filed by SRH Holdings, LLC.(Cosentino, Michael) (Attachment(s) added on 2/28/2023: #1 Exhibit A, #2 Exhibit B, #3 Exhibit C) (Main document separated from exhibits and replaced on docket (Currie, Haley). |
| Filing 10 STATE COURT Record. (Currie, Haley) |
| Filing 9 MOTION for Leave to Appear Pro Hac Vice for admission of Kaytie Pickett Filing fee: $ 125, receipt number AMADC-9721625 by Geico Insurance Agency, Inc., Government Employees Insurance Company. (Attachments: #1 Affidavit of J. Nathan Cole in Support of Motion for Pro Hac Vice)(Cole, John Nathan) |
| Filing 8 MOTION for Leave to Appear Pro Hac Vice for admission of Adam Stone Filing fee: $ 125, receipt number AMADC-9721544 by Geico Insurance Agency, Inc., Government Employees Insurance Company. (Attachments: #1 Affidavit of J. Nathan Cole in Support of Motion for Pro Hac Vice)(Cole, John Nathan) |
| Filing 7 Judge Denise J. Casper: ELECTRONIC ORDER entered re #5 MOTION for Preliminary Injunction and Temporary Restraining Order filed by SRH Holdings, LLC. Defendants to file their response to D. 5 by 2/27/23. (Hourihan, Lisa) |
| Filing 6 Memorandum in support of #5 MOTION for Preliminary Injunction and Temporary Restraining Order filed by SRH Holdings, LLC. (Cosentino, Michael) |
| Filing 5 MOTION for Preliminary Injunction and Temporary Restraining Order by SRH Holdings, LLC.(Cosentino, Michael) |
| Filing 4 Certified Copy of Notice of Removal Provided to Defense Counsel by Email (Kelly, Danielle) |
| Filing 3 ELECTRONIC NOTICE of Case Assignment. Judge Denise J. Casper assigned to case. If the trial Judge issues an Order of Reference of any matter in this case to a Magistrate Judge, the matter will be transmitted to Magistrate Judge Jennifer C. Boal. (Finn, Mary) |
| Filing 2 ELECTRONIC NOTICE TO COUNSEL: The Category form filed with the Notice of Removal indicates there are pending motions that need this court's attention. Please re-file any pending motions from State Court into this District Court Record. (Kelly, Danielle) |
| Filing 1 NOTICE OF REMOVAL by Geico Insurance Agency, Inc., Government Employees Insurance Company ( Filing fee: $ 402, receipt number AMADC-9715920 Fee Status: Filing Fee paid) (Attachments: #1 Exhibit A, #2 Civil Cover Sheet, #3 Category Form)(Cole, John Nathan) |
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