Advanced Risk Managers, LLC v. Equinox Management Group, Inc.

Background

Advanced Risk Managers, LLC (ARM), an insurance consulting firm, alleged that it entered an agreement with Equinox Management Group, Inc. in September 2015. ARM said it provided services including claims-notification management, claims-reserve evaluation, and review and negotiation of large claims to identify overbilling and billing errors. The agreement allegedly required Equinox to pay ARM 28% of net claims savings when the review was used to resolve a claim, and $195 per hour for other services.

ARM alleged that it audited 37 claims and created $8,812,123.71 in savings for Equinox. It estimated that 28% of the validated savings would equal $2,467,394.64, but said Equinox refused to provide the net-savings information needed to calculate and invoice the fee.

Equinox’s attorney later asserted that a release agreement effective October 17, 2018, involving Equinox, ARM, Mimi Choi, and Renaissance Reinsurance US Inc., released ARM’s claims against Equinox. ARM disputed that interpretation, alleging that the release concerned a separate lawsuit and agreement involving Renaissance and did not release future claims under the ARM-Equinox agreement.

ARM asserted four claims: breach of contract, anticipatory breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief. Equinox moved to dismiss the complaint under Rule 12(b)(6), which tests whether a complaint alleges enough facts and a legally recognized basis for relief.

Requests to Consider Additional Materials

Equinox asked the court to take judicial notice of several documents and to treat other documents as incorporated into the complaint. Judicial notice allows a court to accept certain facts that are not reasonably disputable, while incorporation by reference can allow the court to consider a document treated as part of the complaint in limited circumstances.

The court granted judicial notice of the existence of ARM’s separate lawsuit against Renaissance, the claims made in that action, and the fact that documents were filed there. It otherwise denied judicial notice as to factual assertions within those filings. For two documents offered as exhibits in that earlier lawsuit, the court took notice only that they had been exhibits. The court denied judicial notice of Mimi Choi’s deposition transcript and of a document attached to that transcript.

The court also declined to incorporate by reference an email chain concerning ARM’s requests for net-savings information. The complaint referred to contacts and repeated requests but did not extensively refer to emails. The court likewise declined to incorporate the release agreement. ARM’s claims were based on its alleged agreement with Equinox, while the release agreement was offered as a defense to those claims. The parties disputed the release’s meaning and scope, making resolution of that issue inappropriate at the pleading stage.

The court also declined to consider an eight-page reply supporting Equinox’s request for judicial notice because Equinox filed it in addition to a separate reply and exceeded the applicable page limit.

Reasons for Denial

Equinox’s dismissal arguments depended on materials outside the complaint. Its release argument relied on the release agreement, its interpretation, and Choi’s alleged deposition testimony. Its judicial-estoppel argument also relied on the release agreement and Choi’s testimony. Its argument that ARM failed to allege claims arising after October 17, 2018 relied on the release agreement and email chain, and its claim-preclusion argument relied on Choi’s testimony.

Because the court declined to consider those materials for purposes of the Rule 12(b)(6) motion, and because the arguments were not confined to the complaint, the court denied the motion. The denial was without prejudice to renewing the arguments on a full record at summary judgment.

Disposition

The court denied Equinox’s motion to dismiss. It vacated the December 19, 2019 case-management conference and continued it to February 5, 2020, and required the parties to file an updated joint case-management statement.