Document for Lawrence Malysa Plaintiff vs. Ladder Now LLC, et al Defendant

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                                Filing # 103141419 E-Filed 02/11/2020 04:07:34 PM

IN THE CIRCUIT COURT OF THE 17th

JUDICIAL CIRCUIT
IN AND FOR BROWARD COUNTY,
FLORIDA

LAWRENCE MALYSA

Plaintiff,

CASE NO.: CACE-18-021110
vs.

TOWER HILL PRIME INS. CO., LADDER NOW;
HUMBLE INC; TRISTAN SCHWIND and
JOHN H. NOVAK, JR;

Defendants.

/

PLAINTIFF LAWRENCE MALYSA’S OPPOSITION TO DEFENDANT LADDER
W’S MOTION TO DISMISS COUNTS I, V, IX, X OF PLAINTIFF’S FIRST
AMENDED COMPLAINT

Plaintiff LAWRENCE MALYSA, by and through the undersigned counsel, hereby files
this opposition and memorandum of law to Defendant LADDER NOW’s Motion pursuant to Fla.
R. Civ. P. 1.140(b) seeking to dismiss Counts I, V, IX, and X hereby states:

COUNTER SUMMARY OF FACTS
It is well-settled law in Florida that Ja. R. Civ. P. 1.110(b) requires a claim for relief

must state a cause of action, and further provides that a minimum complaint consists of a short
and plain statement of the ultimate facts justifying relief. Foerman v. Seaboard Coast Line R.
Co., 279 So. 2d 825, 826-27 (Fla. 1973). When evaluating a Motion to Dismiss, “[t]he facts
alleged in the complaint must be accepted as true and all reasonable inferences are drawn in

favor of the pleader.” Goodall v. Whispering Woods Ctr., L.L.C., 990 So. 2d 695, 697 (Fla. 4th

*** FILED: BROWARD COUNTY, FL BRENDA D. FORMAN, CLERK 02/11/2020 04:07:34 PM.****CASE NO.: CACE-18-021110

DCA 2008). Here, when evaluating the Defendant’s Motion to Dismiss, the facts alleged in the
Complaint must be accepted as true.

It is therefore beyond reason that Defendant Ladder Now would base its argument in
support of dismissal on a fact that not only contradicts the allegations of the Complaint but
further is disproven by the Exhibits annexed to the Complaint, and here as Exhibit A, for the
Court’s reference, the report prepared by Ladder Now. In support of its motion, Defendant
claims “Ladder Now is not an insurance adjusting company, nor does Ladder Now perform any
insurance adjusting services.” Ladder Now Motion, page 2, footnote 2. However, Plaintiff's
complaint alleges, in part:

39. Upon information and belief, Defendant LADDER is not a licensed
adjusting firm in the State of Florida and nevertheless acts as an independent
adjusting firm on Florida claims including MALYSA in violation of Florida law.

40. Upon information and belief, Defendant LADDER violated Florida
law by adjusting the MALYSA claim and likely hundreds if not thousands of
more claims in the State of Florida.

41. Defendant SCHWIND is not a licensed adjuster in the State of Florida
and nevertheless adjusted the MALYSA claim and likely more claims in the State
of Florida.

42. Upon information and belief, Defendant HOLMES placed his name on
the MALYSA Xactimate damage estimate on behalf of LADDER without
inspecting the MALYSA home, without adjusting the loss, and/or without having
the appropriate active appointment in the State of Florida under LADDER to do
so.

43. Defendant HOLMES could not have been appointed by LADDER and
in fact has an appointment by Allstate Insurance Group.

44. Under Florida law, HOLMES is not permitted to hold an appointment
from two different entities at the same time and at no time was he appointed by
LADDER NOW, and as such was not properly licensed to adjust claims for
LADDER NOW for the MALYSA claim.

45. Defendant LADDER’s claims adjustment practice intentionally
underpaid and undervalued covered losses to and for the benefit of TOWER and
to the detriment of TOWER homeowners. MALYSA’s claim was denied
completely based on the illegal reports from Defendant, LADDER and Defendant,
HUMBLE.

46. According to the Florida Administrative Code (Rule 69B-220.201)
“[t]he work of adjusting insurance claims engages the public trust.” TOWERCASE NO.: CACE-18-021110

broke the public trust by using unlicensed adjusters to underpay claims and
enhance their bottom line.

47. Upon information and believe Defendants LADDER, SCHWIND and
HOLMES played a vital part of TOWER’s profit-making scheme, by acting as
bogus adjusters and authoring a damage estimate report that would allow
TOWER to underpay or deny legitimate claims such as MALYSA’s. See
LADDER report Composite Exhibit A.

48. Defendant TOWER knew or should have known that it illegally used a
report generated by unqualified and/or unlicensed Defendants LADDER;
SCHWIND & HOLMES to adjust this claim within the deductible to avoid
making any covered payments due and owing to MALYSA.

49. Pursuant to FL Stat. Sec. 626.863, TOWER as an insurer, has a duty to
ascertain whether an independent adjuster is licensed by the Department of
Financial Services.

50. On July 17, 2018, a complaint was filed against LADDER with Greg
Thomas, Director, Division of Insurance Agent & Agency Services for the Florida
Department of Financial Services for unlicensed adjusting in the State of Florida.
See letter of complaint attached as Exhibit B. Upon information and belief,
Defendant LADDER is currently being investigated by the State of Florida for
alleged violations of Florida law.

See Plaintiff’ s First Amended Complaint annexed to the Movant’s papers and
incorporated herein by reference.

In the above paragraphs, and many others, Plaintiff makes the allegation that Defendant
Ladder Now was acting as an insurance adjuster in the State of Florida. In fact, this action was
commenced because Tower Hill illegally hired Ladder Now to adjust claims in the State of
Florida, without a license, in violation of State law. In addition to Plaintiff's allegations in his
Complaint regarding the unlicensed adjusting of Plaintiff’s claim, a complaint has been filed
against Ladder to the Florida Department of Financial Services for Ladder’s unlicensed adjusting
practices in Florida.

Not only does Ladder Now argue against factual allegations made in the Complaint, they
counter those allegations with statements that are directly contradicted by documentary evidence.
In arguing it is not an adjusting firm, Ladder Now claims its “services include an initial meeting

with the insurance adjuster or engineer onsite, providing access to the subject roof, andCASE NO.: CACE-18-021110

conducting a roof inspection, intended to allow the adjuster to make an accurate and complete
settlement decision from relative safety, so the adjuster’s focus remains on customer service and
retention of the insured customer.” Ladder Now Motion, page 2, footnote 2. While discovery in
this matter will determine the extent of this false characterization of services, at this time the
Court need look no further than Exhibit A to Plaintiff's Amended Complaint, the report prepared
by Ladder Now regarding Plaintiff’s home.

The report is 30 pages prepared by Defendant Tristan Schwind on behalf of Ladder Now,
is titled “Solo Inspection Report” (emphasis added), and includes the claim number assigned by
Tower Hill. On page 1, the report notes Schwind as the “Inspector” assigned to the claim and
does not list a specific adjuster, only stating “Tower Hill” as the adjuster. The only area that
Ladder Now assesses damage in is the Living Room, not even the roof. The report goes on to
state that Schwind arrived onsite and met the homeowner only. There is no mention of any
initial meeting with anyone else and specifically states that a contractor was not present at the
time of the inspection. Upon information and belief, no representative of Tower Hill was ever
present at the Plaintiff's home. Ladder Now repeatedly argues it provided “access to the roof”
without stating to whom it provided access. In fact, Ladder Now provided access to no one
except its own employee. Moreover, this entire issue is irrelevant in a Motion to Dismiss on the
pleadings as the Plaintiff’s allegations must be accepted as true. In addition to improperly
contradicting an allegation in the Complaint in a Motion to Dismiss, Ladder Now offers no
explanation or argument in support of its conclusory statements that it did not adjust claims.
Respectfully, the Court should disregard this entire argument.

Ladder Now prepared a report, took photographs and measurements, and made the sole

visual determination of whether there was wind damage to the roof prior to the denial of theCASE NO.: CACE-18-021110

claim. They also prepared an Xactimate estimate of the loss, the only monetary estimate of the
loss, and it was relied upon in whole by Tower Hill. Ladder Now’s Motion is correct in stating
“Ladder Now is not an adjusting company” but absolutely wrong that Ladder Now is not
adjusting claims in Florida. It is beyond reason for Defendant to now claim that it did not
“perform adjusting services” when every act it performed was an adjusting service. Defendant
readily admits Ladder Now is not an adjusting company, which only begs the questions why was
it adjusting claims in Florida and why did Tower Hill hire them when there are plenty of licensed
adjusters in Florida.

Defendant Ladder Now’s argument in support of its motion is premised on the false
assertion that it did not adjust claims in Florida and did not act as an adjuster in Florida. This
Court will plainly see that the services Ladder Now provided are textbook “adjusting services,”
however, at the very least, this Court must accept the allegations in the Complaint as true.

Additionally, Defendant Ladder Now questions Plaintiff's motive for filing suit against it.
However, based on the previously described illegal conduct Defendant was engaging in
knowingly, Plaintiffs “motive” should be clear to Defendant: to hold Defendant accountable for
its bad acts and pay damages to Plaintiff for the injuries he suffered as a result of Ladder Now’s
unlicensed and negligent conduct.

SUMMARY OF ARGUMENT

As Plaintiff's Memorandum of Law and supporting documentation will show, the
Complaint in this matter sets forth each and every element of the Counts brought against Ladder
Now. Ladder Now attempts to make the argument that the claims against it are premised solely
upon the breach of contract by Tower Hill. That argument is simply false. As the allegations of
Plaintiff’s Count 1 (Florida’s RICO) show, each of the defendants together violated “at least two
incidents of criminal activity that have the same or similar intents, results, accomplices, victims,

5CASE NO.: CACE-18-021110

or methods of commission or that otherwise are interrelated by distinguishing characteristics and
are not isolated incidents.” Fla. Stat. § 772.102(4). Once again, without Ladder Now adjusting
claims in violation of the law, and mailing and/or transmitting those reports, invoices, notes and
materials via mail and/or wire, there would be no RICO action. Ladder Now cannot absolve
itself of liability for its actions by claiming it is Tower Hill’s fault. Following Hurricane Irma,
Ladder Now brought its business and employees/independent contractors to the State of Florida
to work in concert with insurance carriers, including Tower Hill, to defraud homeowners out of
the monies they are entitled to under their policy of insurance.

There are reasons the State of Florida sets certain requirements for independent adjusters,
including that they must be licensed and appointed by an appointing entity, which Ladder Now is
not. See Fla. Stat. § 626.112. Homeowners deserve to have their damage inspected by a
licensed and knowledgeable independent adjuster. Each and every home that Ladder Now
inspected was deprived of that right. By using unlicensed adjusters unfamiliar with Florida
insurance law, the inspection and adjustment by Ladder Now deprived homeowners of money
owed to them under the policy as the “adjuster” sent by Ladder Now had no knowledge of
Florida law and duties owed to the homeowner. The Ladder Now “adjusters” were not bound by
the adjuster Code of Ethics nor do they meet any other requirements under Florida insurance law.
Ladder Now cannot perform all the duties of an insurance adjuster and simply claim they are not
an adjuster.

Florida Statute § 626.855 defines an independent adjuster as “a person licensed... who
undertakes on behalf of an insurer to ascertain and determine the amount of any claim,
loss, or damage payable under an insurance contract or undertakes to effect settlement of

such claim, loss, or damage.” (emphasis added). Ladder Now was very clear in its Motion toCASE NO.: CACE-18-021110

Dismiss that Ladder Now did not perform any “insurance adjusting services.” Ladder Now
Motion page 2, footnote 2. However, the evidence attached to the Complaint shows that Ladder
Now prepared an estimate of the damage (“ascertain and determine the amount of any claim”
Fla. Stat. § 626.855). Even if Ladder Now did not prepare the estimate, which it did, the
photographs, inspection and measurements all “effect settlement of such claim, loss, or damage,”
the State’s definition of adjusting.

Further, Florida Statute § 626.112(1)(a) states “No person may be, act as, or advertise or
hold himself or herself out to be an insurance agent, insurance adjuster, or customer
representative unless he or she is currently licensed by the department and appointed by an
appropriate appointing entity or person” (emphasis added). This is not simply a guideline one
may choose to disregard, it is a third-degree felony. Section 626.112(9) goes on to state “[a]ny
person who knowingly transacts insurance or otherwise engages in insurance activities in this
state without a license in violation of this section commits a felony of the third degree.”

This crime was committed over and over and over again by Ladder Now and the
unlicensed individuals it sent out to damaged homes of Floridians. Like the Plaintiff, each and
every one of those persons or businesses lost out on the opportunity to have their property
damage inspected by a licensed individual.

Florida Administrative Code Rule 69B-220.201 states “[t]he work of adjusting insurance
claims engages the public trust.” Ladder Now, Tower Hill and Humble broke the public trust by
using unlicensed adjusters and/or engineers to underpay claims and enhance their profitability.
To dismiss this action will give them permission to continue to prey on unsuspecting

homeowners.CASE NO.: CACE-18-021110

MEMORANDUM OF LAW

I. DEFENDANT LADDER NOW FAILED TO MEET ITS BURDEN FOR GRANTING A
RULE 1.140(B) MOTION TO DISMISS

Plaintiff's Complaint sets forth multiple counts against moving defendant Ladder Now.
Each and every element is contained within the four corners of the Complaint for Counts
involving the moving Defendant, namely Count I (Florida RICO), V (Negligence) and IX (Civil
Conspiracy). It is well-settled law in Florida that Fla. R. Civ. P. 1.110(b) requires that a claim
for relief must state a cause of action and further provides that a minimum complaint consists of
a short and plain statement of the ultimate facts justifying relief. Moerman v. Seaboard Coast
Line R. Co., 279 So. 2d 825, 826-27 (Fla. 1973). When evaluating a Motion to Dismiss, “[t]he
facts alleged in the complaint must be accepted as true and all reasonable inferences are drawn in
favor of the pleader.” Goodall v. Whispering Woods Ctr., L.L.C., 990 So. 2d 695, 697 (Fla. 4th
DCA 2008). Here, when evaluating the Defendant’s Motion to Dismiss, the facts alleged in the
Complaint must be accepted as true.

Accordingly, this Court must accept the allegations of the Plaintiff's complaint as true for
the purposes of this motion. Therefore, any argument made by the Defendant that it was not in
the practice of adjusting insurance claims must be disregarded.

II. PLAINTIFF’S COMPLAINT SETS FORTH DISTINCT CAUSES OF ACTION
AGAINST DEFENDANT LADDER NOW, EACH WITH SEPARATE AND
INDEPENDANT FACTUAL BASES

In addition to a breach of contract claim against the Tower Hill defendant, on/y, Plaintiff
has alleged a violation of the Florida RICO statute (count I), Negligence (Count V) and
conspiracy to commit fraud (count IX) - all claims predicated on acts that are independent from
the breach of contract claim. There is no contractual privity between Plaintiff and Ladder Now.
The breach of contract claim against Tower Hill is based on the fact that the policy issued by

8CASE NO.: CACE-18-021110

Tower Hill provides windstorm coverage and Defendant Tower Hill failed to perform under the
contract. The RICO, negligence, and conspiracy claims are based on the conspiracy between the
defendants to use unlicensed adjusters (Ladder Now) and unlicensed engineers (Humble) in a
scheme devised and orchestrated by all the defendants to improperly and illegally deny
legitimate insurance claims by having Ladder Now and Humble issue illegal reports that were
used by Tower Hill to deny legitimate insurance claims. This ongoing scheme was allegedly
perpetrated on hundreds and probably thousands of unsuspecting insureds in the State of Florida
and have nothing to do with Count II, the breach of contract. The acts of Defendant Ladder Now,
both alone and in coordination with the other defendants, are based upon independent facts, and
are torts and statutory claims which are independent of the breach of contract.

Defendant erroneously argues that the Counts do not allege any tortious conduct outside
the breach of contract by Tower Hill. Count II addresses the breach of contract against Tower
Hill for failure to pay for damage under a policy of insurance. In Tiara Condominium Assn., Inc.
v. Marsh & McLennan Companies, Inc., 110 So. 3d 399 (Fla. 2013), Judge Pariente wrote to
clarify that the economic loss rule was always limited to products liability cases and does not
limit tort claims that are independent from a breach of contract claim. He stated:

The majority's conclusion that the economic loss rule is limited to the products
liability context does not undermine Florida's contract law or provide for an
expansion in viable tort claims. Basic common law principles already restrict the
remedies available to parties who have specifically negotiated for those remedies,
and, contrary to the assertions raised in dissent, our clarification of the economic
loss rule's applicability does nothing to alter these common law concepts. For
example, in order to bring a valid tort claim, a party still must demonstrate that all
of the required elements for the cause of action are satisfied, including that the
tort is independent of any breach of contract claim. See Lewis v. Guthartz, 428
So.2d 222, 224 (Fla.1982) (holding that there must be a tort “distinguishable from
or independent of [the] breach of contract” in order for a party to bring a valid.
claim in tort based on a breach in a contractual relationship); lec. Sec. Sys. Corp.
v. S. Bell Tel. & Tel. Co., 482 So.2d 518, 519 (Fla. 3d DCA 1986) (“[A] breach ofCASE NO.: CACE-18-021110

contract, alone, cannot constitute a cause of action in tort... It is only when the
breach of contract is attended by some additional conduct which amounts to an
independent tort that such breach can constitute negligence.” (citations omitted)).

Id. at 408-09.

The defense references this holding but ignores the allegations in the complaint
establishing an independent tort and violation of the Florida civil RICO statute. It is well
established law that a breach of contract does not preclude independent tort claims. In Indemnity
Ins. Co. of North America v. American Aviation, Inc., 891 So. 2d 532 (Fla. 2004) the Court stated
“Cw]e also reaffirm that in cases involving either privity of contract or products liability, the
other exceptions to the economic loss rule that we have developed, such as for professional
malpractice, fraudulent inducement, and negligent misrepresentation, or freestanding statutory
causes of action, still apply. These exceptions remain untouched by our ruling today.”

In Comptech Intern, Inc v Milam Commerce Park, LTD., 753 So. 2d 1219 (Fla.1999), the
Court stated, “We agree with Judge Cope's dissent in Comptech, 711 So.2d at 1263 (Cope, J.,
dissenting), where he opines that the economic loss rule cannot be used to eliminate a statutory
cause of action.” See also, Pershing Industries, Inc. v Estate of Sanz, 740 So. 2d 1246 (Fla. 3d
DCA 1999) (holding as with the claim of fraudulent inducement, the conversion and civil theft
claims alleged in Counts II and IV of the amended complaint are independent torts, and
summary judgment was improper).

This Court has consistently held that the economic loss rule does not preclude
independent tort claims that fall outside the scope of a breach of contract. See Alex Hofrichter,
P.A. v. Zuckerman & Venditti, PA., 710 So. 2d 127 (Fla. 3d DCA) (where defendant, by
intentional misconduct, converted plaintiff's property to his own use, this was more than a claim

for a simple breach of contract and actions for conversion and civil theft were not barred by

10CASE NO.: CACE-18-021110

economic loss rule), review denied, 728 So. 2d 206 (Fla.1998). In a 1996 decision, the First
District Court of Appeals similarly held that where the defendant's acts were “not merely a
failure to perform, but an affirmative and intentional act of converting the funds to his own use
by allegedly stealing the monies to which he was entrusted, there is not merely a breach of
contract but a separate and independent tort.” Burke v. Napieracz, 674 So. 2d 756, 758 (Fla. Ist
DCA 1996).

In our case, as described above, Plaintiff has alleged separate and independent torts based
on affirmative and distinct actions separate from Tower Hill’s failure to perform under the
insurance policy. First, the claim of breach of contract is against a completely separate entity
from Ladder Now as Ladder Now is not a party to the contract. Second, the claims against
Ladder Now in Plaintiff's Count I, V, and [X stem from Ladder Now’s affirmative and separate
acts of using unlicensed adjusters to adjust Plaintiff's claim and not from a breach of the contract
between Plaintiff and Tower Hill. Ladder Now’s actions do not even fall under the purview of
the terms of the insurance policy (to which it is not a party) and therefore must be independent
torts from a breach of a contract that does not even mention the use of licensed adjusters — the
crux of Plaintiff's claims against Ladder Now.

Additionally, Ladder Now argues that Plaintiff “readily indicated that Ladder Now’s
conduct was related to the insurance policy.” Ladder Now’s Motion, page 10-11. However, this
is blatantly false. Plaintiff has made a valid and separate claim for negligence based on Ladder
Now’s common law duty to exercise ordinary care to prevent a foreseeable risk of harm and to
comply with Florida law and regulations. Pursuant to the undertaker’s doctrine, “a duty may
arise ‘whenever one undertakes to provide a service to others, whether one does so gratuitously

or by contract, [and] the individual who undertakes to provide the service thereby assumes a duty

llCASE NO.: CACE-18-021110

to act carefully and to not put others at undue risk of harm.’” Diaz v. Nationstar Mortgage, LLC,
19-22148-CIV, 2019 WL 7371840, at *5 (S.D. Fla. Nov. 1, 2019), report and recommendation
adopted, 19-22148-CIV, 2019 WL 7371034 (S.D. Fla. Nov. 22, 2019). Among Ladder Now’s
breaches of its duties that Plaintiff alleges in his Amended Complaint are: 1) conducting a
damage assessment without Schwind having a Florida adjuster’s license and valid appointment;
2) hiring and retaining employees, including but not limited to Defendant Schwind who were
unlicensed to inspect homes of Floridians in violation of state law; 3) failing to obtain proper
licensing from the State to become an appointing entity so that it may act as an adjusting firm to
Holmes; 4) hiring and/or retaining employees including but not limited to Defendant HOLMES
who did not have a proper appointment with Ladder Now to prepare Xactimate and adjust this
loss; as well as additional breaches of its duties that ultimately caused harm to Plaintiff. By
intentionally hiring and utilizing unlicensed adjusters to improperly adjust claims, Defendant
Ladder Now puts Plaintiff at undue risk of harm and failed to enact its duty to act carefully, a
harm committed completely separately from Tower Hill’s breach of the contract with Plaintiff.
Moreover, public policy favors putting the rights of hundreds or thousands of
policyholders who have been wronged by this pattern of criminal activity orchestrated by the
Defendants to defraud insureds of legitimate claims by using illegal reports generated by
unlicensed persons acting as legitimate licensed insurance adjusters and licensed engineers, when
in fact they are not. An unfair practice is “one that ‘offends established public policy and one
that is ‘immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers.”
Samuels v. King Motor Co. of Fort Lauderdale, 782 So.2d 489, 499 (Fla. 4th DCA 2001)
(quoting Spiegel, Inc. v. Fed. Trade Comm'n, 540 F.2d 287, 293 (7th Cir.1976)). Clearly, the

facts as alleged state actions that are immoral, unethical, unscrupulous and substantially injurious

12CASE NO.: CACE-18-021110

to consumers. Public policy supports protecting insureds injured by the criminal enterprise
alleged by Plaintiff in the complaint.

Furthermore, Plaintiff and others similarly situated have been injured and suffered
damages separately, independently, and apart from policy benefits due and owing under the
policy of insurance. They have also suffered diminished value of their homes and property
and/or the devaluation of their property, which is not covered under the Tower Hill policy.
Additionally, Plaintiff, as well as other policyholders affected, are unable to rent their property or
to inhabit their property due to the deteriorating condition of the property that cannot be repaired
due to Defendant’s actions. They have also been damaged in that the damaged roof creates an
uninsurable condition, since the roofs need to be replaced but have not been due to Ladder
Now’s conduct. Plaintiff and other homeowners are also damaged in that they cannot sell their
homes at market rates, if at all, because of the condition of their roofs. These are just some of
the damages that Plaintiff and other policyholders have had to endure as a result of Defendant
Ladder Now’s conduct. Clearly, Plaintiff and other injured Tower Hill insureds have damages
that are distinct from the breach of contract damages.

Defendants attempt to use the insurance policy as a shield to act without regard for the
law or requirements of the Department of Financial Services. A contract, especially one of
adhesion in which the aggrieved party had no bargaining power, cannot permit an insurance
company and its agents carte blanche claims handling without repercussions for crimes
committed.

As indicated, each and every Count against the moving Defendant would and will stand
on its own facts outside of the breach of the insurance policy. Despite the repeated, unsupported

argument Defendant makes, it is not “abundantly clear” that all of the alleged damages stem

13CASE NO.: CACE-18-021110

from the breach of contract with Tower Hill. In fact, had there not been a breach of the contract,
Counts I, V and IX would still stand on their own with their distinct, recoverable damages.

Ill. PLAINTIFF’S COMPLAINT SETS FORTH EACH AND EVERY ELEMENT
REQUIRED TO PURSUE A CLAIM UNDER FLORIDA’S CIVIL REMEDIES FOR
CRIMINAL PRACTICES ACT (“RICO”)

Plaintiff has pled each and every element of his civil RICO claim with the required
specificity in Plaintiff's Amended Complaint. The modest attempt by Defendant to have
Plaintiff's RICO claim dismissed must fail as Defendant fails to show how Plaintiff's Complaint
does not meet the standard to support a claim under the RICO statute. As discussed above,
Count I of Plaintiff's Complaint seeks redress for criminal activities by the named Defendants’
actions under Section 772.104(1), separate and distinct of the contract of insurance.
Additionally, Plaintiff properly alleges the existence of an enterprise to state a cause of action for
civil RICO.

To bring a RICO action in Florida, a plaintiff has to show “there has been some sort of
ongoing criminal behavior.” Ginsberg v. Lennar Fla. Holdings, 645 So.2d 490, 501 (Fla. 3d
DCA 1994). The purpose of the statutes “is to punish, through civil penalties, actions which are
ongoing and criminal in nature.” Jd. To maintain an action under section 772.103, a plaintiff
must plead the necessary predicate acts or continuity of endeavor. See Id.

Courts have interpreted Florida Statute § 772.103 as it being:

unlawful for any person ‘[t]hrough a pattern of criminal activity ... to acquire or

maintain, directly or indirectly, any interest in or control of any enterprise or real

property,’ or for a person ‘[e]mployed by, or associated with, any enterprise to

conduct or participate, directly or indirectly, in such enterprise through a pattern

of criminal activity,’ or to conspire to do so. § 772.103, Fla. Stat. (2000). Section

772.104(1) provides civil remedies for violations of section 772.103.

Eagletech Communications, Inc. v. Bryn Mawr Inv. Group, Inc., 79 So. 3d 855, 864 (Fla. 4th
DCA 2012).

14CASE NO.: CACE-18-021110

Plaintiff has properly alleged the necessary predicate acts in his Amended Complaint.
Plaintiff has successfully alleged an ongoing pattern of criminal activity. A “[p]attern of
criminal activity” means engaging in at least two incidents of criminal activity that have the
same or similar intents, results, accomplices, victims, or methods of commission or that
otherwise are interrelated by distinguishing characteristics and are not isolated incidents;
provided that the last of such incidents occurred within 5 years after a prior incident of criminal
activity. Fla. Stat. § 772.102(4). The section further states the pattern “shall not include two or
more incidents of fraudulent conduct arising out of a single contract or transaction against one or
more related persons.” Jd. Plaintiff has alleged repeated incidents of the same conduct meeting
the ongoing pattern of criminal activity requirement along with the requirement that the
fraudulent conduct has arisen out of multiple transactions. Additionally, Plaintiff specifically
alleged the six Defendants involved in this matter comprise an enterprise under Florida Statute §
772.102 and alleged the proper distinctness of the Defendants and their actions that combined to
cause harm to Plaintiff and others similarly situated. See Plaintiff's Complaint §§ 89-91.

Ongoing Pattern of Criminal Activity Arising Out of Multiple Transactions

Plaintiff alleged the ongoing pattern at paragraphs 118-124 of the Complaint.
Specifically, the crimes alleged under the statute are Fla. Stat. Sec. 812 (relating to theft), Fla.
Stat. Sec. 817 (relating to fraud) and under 18 U.S.C. § 1341 (relating to mail fraud) and 18
U.S.C. § 1343 (relating to wire fraud). The complaint further describes in detail how Defendant
Ladder Now, together with Schwind, Holmes, Humble, Novak and Tower Hill have and continue
to engage in conduct violating each of these laws to effectuate their scheme. Defendants make
no proffer that this was an isolated event, and Plaintiff's complaint clearly alleges it is not

isolated.

1SCASE NO.: CACE-18-021110

The specific acts committed by Defendants, including Ladder Now, are alleged in
Plaintiff's Complaint in paragraphs 99 through 117. It is alleged Defendant Ladder Now,
together with the other Defendants, committed mail fraud in violation of 18 U.S.C. § 1341 by
placing in post offices and/or in authorized repositories illegal reports, along with
correspondence from Tower Hill based on these reports denying coverage, that were then sent or
delivered by the Post Office by commercial interstate commerce and received from the Post
Office or commercial interstate carriers. Each and every report prepared by a Defendant without
a license, along with all communications and correspondence in relation to the fraud, placed in

the mail violates this statute.

The Defendants allegedly committed wire fraud in violation of 18 USC § 1343 as they
transmitted and received by wire matter and things including contracts, invoices,
correspondence, payments and fraudulent reports. The Complaint further alleges the matter and
things, and other communications in furtherance of or necessary to effectuate the scheme, sent by
the Defendants via the Postal Service, commercial carrier, wire or other interstate electronic
media include fraudulent reports prepared by unlicensed adjusters and/or engineers that were
used by Tower Hill to improperly deny coverage or underpay Plaintiff's claim. Each and every
report prepared by a Defendant without a license, along with all communications and

correspondence in relation to the fraud, transmitted by wire violates this statute.

In addition to mail and wire fraud, which alone would be sufficient to meet the two crime
requirement of the statute, Plaintiff also alleged theft by the Defendants, in both accepting
premium payments with no intention of paying claims, and in failing to pay a rightful claim
taking money that belongs to the Plaintiff. See Complaint {J 116-117. Further, it is alleged that

Defendants committed a fifth predicate act as they violated Fla. Stat. Sec. 817.034, the Florida

16CASE NO.: CACE-18-021110

Communications Fraud Act, by using wire communication to defraud Plaintiff and other

insureds. See Complaint J 109-115.

The above crimes were not an isolated incident. Defendant Ladder Now’s conduct did
not solely affect the Plaintiff but affected hundreds, if not thousands of insureds of Tower Hill
(and likely other insurance carriers in the State). The actions of Defendant Ladder Now and the
other defendants exhibited a pattern of criminal activity as defined by Fla. Stat. Sec. 772.102 in
that they committed or conspired to commit at least two incidents of criminal activity as
described above, within the past 5 years. See Complaint J 118-124. The Complaint properly
alleges each act of criminal activity was related, had a similar purpose, involved the same or
similar participants and method of commission, had similar results, and impacted similar victims,
including the Plaintiff. Defendant Ladder Now’s website boasts it has handled 100,000 claims in
2017. While Ladder Now has a presence in many states based on the widespread damage from
Hurricane Irma and the number of claims filed, it is likely a great percentage occurred in the

State of Florida.

Moreover, Plaintiff states in his Amended Complaint that on July 17, 2018, a complaint
was filed against Ladder Now with Greg Thomas, the Director of the Division of Insurance
Agent & Agency Services for the Florida Department of Financial Services for unlicensed
adjusting in the State of Florida. See Complaint {50 and Exhibit B attached to Plaintiff's
Amended Complaint. Additionally, Plaintiff states that, upon information and belief, Defendant
Ladder Now is currently being investigated by the State of Florida for alleged violations of
Florida Law. See Exhibit B attached to this Response, correspondence from Donna Graves,
Special Investigator of the Division of Insurance Agent & Agency Services of the Florida

Department of Financial Services. In fact, as evidenced by Exhibit B to this Response, the

17CASE NO.: CACE-18-021110

Florida Department of Financial Services completed their investigation and submitted their legal
report to the Office of the General Counsel for review. Plaintiff is now aware of at least five
additional complaints alleging similar conduct that have been made against the Defendants with
the Florida Department of Financial Services. Furthermore, in order to understand the full
breadth of Defendant’s actions, Plaintiffs counsel has requested any and all public records and
other information, including consumer complaints in the custody, possession, or control of the
Department of Financial Services and/or the Department of Agriculture and Consumer Services
relating to Ladder Now, from September 1, 2017 to the present. Plaintiff has not received a
response as of yet but will supplement the record and request leave to amend the pleadings once
this information is received. Plaintiff has therefore clearly shown an ongoing pattern of criminal

activity, not just in one instance.

Additionally, evidencing the pervasiveness of the adjustment of claims without the proper
license to do so, Senator Tom A. Wright has proposed legislation to help curb this behavior. SB
1492, “[a]n act relating to consumer protection...prohibiting unlicensed activity by an adjusting
firm,” proposes the following language under Fla. Stat. § 627.70131(3)(b): “If such investigation
involves a physical inspection of the property, the licensed adjuster assigned by the insurer must
provide the policyholder with his or her name, license number, and contact information.” See
attached Exhibit C to this Response, proposed SB 1492, pages 16-17. The proposed language
goes on to state, “If an insurer assigns the claim to a different licensed adjuster after receipt of a
report from the adjuster who performed the physical inspection, the insurer must, within 7 days
after changing the licensed insurance adjuster assigned to a claim, provide the name, license
number, and contact information of the new adjuster to the policyholder.” See attached Exhibit

C to this Response, page 17, proposed language for Fla. Stat. § 627.70131(3)(d). The fact that

18CASE NO.: CACE-18-021110

legislation has been filed to eliminate the unlicensed adjusting of claims shows that this is not an
isolated incident committed by Defendant but is in fact an ongoing problem affecting hundreds,

if not thousands, of Floridians.

In order to form a pattern, the criminal activity alleged must show “continuity plus
relationship” between those predicate acts. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496
n.14 (1985). "[C]riminal conduct forms a pattern if it embraces criminal acts that have the same
or similar purposes, results, participants, victims, or methods of commission, or otherwise are
interrelated by distinguishing characteristics, and are not isolated events." /d. The allegations of
Plaintiff's Complaint properly set forth the continuity plus relationship requirement. Each and
every criminal act alleged is related in design and purpose with the same intent — to deny or

underpay multiple insureds, not just Plaintiff.

Plaintiff's Complaint alleged continuity in that the use of the fraudulent reports and the
denial of claims was so numerous and involves claims that are still open (or within the statutory
time to reopen). In addition, it is clear that the Defendants have no intent to stop violating the
law in Florida.

Continuity is both a closed- and open-ended concept, referring either to a closed
period of repeated conduct, or to past conduct that by its nature projects into the
future with a threat of repetition. It is, in either case, centrally a temporal concept
— and particularly so in the RICO context, where what must be continuous,
RICO's predicate acts of offenses, and the relationship these predicates must bear
to one another, are distinct requirements.

Aldridge v. Lily-Tulip, Inc., 953 F.2d 587, 593 (11th Cir. 1992) quoting H.J. Inc. v. Northwestern
Bell Telephone Co., 492 U.S. 229, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989).

Plaintiff has alleged both open and closed ended continuity. Although there has been no
discovery in this matter, the fact that Ladder Now boasts 100,000 claims handled in 2017, as

well as the disproportionate number of reports this office has seen relative to the number of

19CASE NO.: CACE-18-021110

Tower Hill claims, establishes continuity. Additionally, Plaintiff has alleged his complaint filed
against the Defendants has been joined by at least five additional complaints against the
Defendant entities for similar behavior. Though alleged, the exact number of claims with

fraudulent “experts” will only be proven after discovery in this matter.

Moreover, the pattern in this matter is open ended as Defendant will continue to adjust
claims without a license in Florida. In fact, this is not speculative. Defendant Ladder Now’s
argument that it does not adjust claims in the State shows a clear intent to continue the behavior.
It is the position of Plaintiff that Ladder Now is adjusting claims and Tower Hill in choosing to
continue using unlicensed individuals to assess the damage of its insureds, puts countless

insureds are at risk. This lawsuit seeks to put an end to this behavior.

Existence of an Enterprise

In addition to fully pleading the other elements of a civil RICO claim, Plaintiff has also
properly alleged that the Defendants in this suit comprise an enterprise together while also
existing as separate and distinct entities and individuals from the enterprise. An “enterprise” is
defined under Fla. Stat. § 772.102(3) as “any individual, sole proprietorship, partnership,
corporation, business trust, union chartered under the laws of this state, or other legal entity, or
any unchartered union, association, or group of individuals associated in fact although not a legal
entity; and the term includes illicit as well as licit enterprises and governmental, as well as other,
entities.” A RICO enterprise exists “where a group of persons associates, formally or informally,
with the purpose of conducting illegal activity.” See Jackson v. BellSouth Telecommunications,
372 F.3d 1250, 1264 (11th Cir. 2004). To state a civil RICO claim, a plaintiff must establish a
distinction between the defendant person and the enterprise itself; thus the racketeering

enterprise and the defendant must be two separate entities. Ray v. Spirit Airlines, Inc., 836 F.3d

20CASE NO.: CACE-18-021110

1340, 1355 (11th Cir. 2016). An entity may be both a “person” and also part of an “enterprise.”
Palmas Y Bambu, S.A. v. E.I. Dupont De Nemours & Co., Inc., 881 So. 2d 565, 574 (Fla. 3d

DCA 2004).

Plaintiff pled the elements of the Tower Enterprise composed of Defendants Tower Hill,
Ladder Now, Schwind, Holmes, Humble, and Novak in paragraphs 89-97 of his Complaint.
Defendants are both an enterprise together but also exist as separate and distinct entities. Each
entity performed separate actions as part of the enterprise as distinct entities as shown in
Plaintiff's Complaint. It is alleged that Tower Hill, by hiring unlicensed “adjusters” and non-
engineers to prepare engineering reports, knowingly received baseless reports that they relied.
upon in denying and/or underpaying claims, which was profitable to all Defendants. See
Complaint 7 95. Tower Hill has a duty under Fla. Stat. Sec 626.863 to “ascertain from the
department [of Financial Services] whether the proposed independent adjuster is currently
licensed as an all-lines adjuster and appointed as an independent adjuster.” See Complaint { 96.
Ladder Now, a separate and distinct entity, then hired Schwind, an unlicensed adjuster in Florida,
to provide fraudulent adjusting reports to allow Tower Hill to deny or underpay valid insurance
claims, like Plaintiff's here. See Complaint J 97(a). Ladder Now, without a valid Florida
adjusting appointment license, hired Holmes to provide fraudulent adjusting reports to allow
Tower Hill to deny or underpay valid covered insurance claims, including Plaintiffs claim. See
Complaint { 97(b). Humble, who did not have a valid Florida appointing license, by and through
Novak, provided fraudulent “cause and origin” reports using a bogus “seal” while under the false
pretense of having a valid Florida engineering license to deceive homeowners and to allow

Tower Hill to deny or underpay valid insurance claims. See Complaint {| 97(c) and (d).

21CASE NO.: CACE-18-021110

Plaintiff's dispute thus revolves around all of the Defendants’ distinct actions in this
matter. The Defendants, including Ladder Now, as shown by Plaintiff's Complaint, are acting
distinctly as legally different entities, and not merely as Tower Hill’s agents, while at the same
time these Defendants are associated in fact with one another as defined by Fla. Stat. §
772.102(3). All of the Defendants, including Ladder Now, are thus operating an illegal
enterprise while also existing as separate and distinct entities through a pattern of racketeering
activity directed to hundreds if not thousands of Tower Hill insureds, including Plaintiff, by
preparing and issuing fraudulent and illegal adjusting and/or engineering reports to Tower Hill to
fraudulently underpay or deny claims. Thus, Plaintiff's Complaint properly alleges the existence

of an enterprise between the Defendants, including Ladder Now.

IV. PLAINTIFF’S COMPLAINT SETS FORTH EACH AND EVERY ELEMENT
REQUIRED TO PURSUE A CLAIM FOR DECLARATORY RELIEF

In Hialeah Race Course, Inc. v. Gulfstream Park Racing Ass'n, 210 So.2d 750, 752-53
(Fla. 4th DCA 1968) the court stated that the essential elements of a cause of action for declaratory
relief are:

The Declaratory Judgments Act, as stated in Chapter 87, Florida Statutes 1965 (now
Chapter 86, F.S.1967, F.S.A.) is to settle and to afford relief from insecurity and
uncertainty with respect to rights, status and other equitable or legal relations; and
the Act itself is to be “liberally administered and construed.” Upon a motion to
dismiss, predicated upon insufficiency of the complaint to state a cause of action
entitling the pleader to declaratory relief, all well pleaded allegations must be taken
as true. The test of sufficiency of a complaint in such a proceeding is not *889
whether the complaint shows that the plaintiff will succeed in getting a declaration
of rights in accordance with his theory and contention, but whether he is entitled to
a declaration of rights at all. 9 Fla. Jur., Declaratory Actions, s. 47. Thus, sustaining
of the adequacy of the complaint only lays the foundation for the case to be heard
upon its merits and does not connote a determination as to who should prevail.

The test recognized in this state of whether or not a complaint will give rise to a
proceeding under the Declaratory Judgment Act inquires whether or not the party
seeking a declaration shows that he is in doubt or is uncertain as to existence or
non-existence of some right, status, immunity, power or privilege and has an actual,
practical and present need for a declaration. There must be a bona fide controversy,

22CASE NO.: CACE-18-021110

justiciable in the sense that it flows out of some definite and concrete assertion of

right, and there should be involved the legal or equitable relations of parties having

adverse interests with respect to which the declaration is sought.

Plaintiff has alleged that the policy of insurance requires Tower Hill to adjust all losses. (|
167). Plaintiff has alleged that he is in doubt as to his rights under the policy by Tower Hill hiring
Defendant, Ladder Now to act as an adjuster, when Defendant, Ladder Now and its employees are
not licensed adjusters and by hiring Defendant, Humble to issue a cause and origin engineering
report when Humble and its employees are not licensed engineers. Plaintiff has alleged doubts as
to whether Defendant, Tower Hill has met its obligations to adjust the loss under the policy. There
is a bona fide controversy involving the interpretation of the policy under these facts. Moreover,
the co-existence of Plaintiff's Complaint and the Florida Department of Financial Services
investigation into Ladder Now’s unlicensed adjusting practices does not change the fact that there
is a bona fide controversy for the purposes of a declaratory judgment act. As Plaintiff has
established the existence of a justiciable controversy cognizable under the Declaratory Judgment
Act, Plaintiff's complaint for declaratory judgment should not be dismissed.

CONCLUSION

For the reasons set forth above it is respectfully requested the Court deny Defendant
Ladder Now’s Motion to Dismiss.
Dated: February 11, 2020.

Snumticay E LITIGATION *

GROUP

PO Box 805

Naples, FL 34106

833-354-8442

Primary Email: Nicole@Hurricanelitigationgroup.com
Primary Email: Steve@Hurricanelitigationgroup.com

23CASE NO.: CACE-18-021110

Secondary Email: Paul@Hurricanelitigationgroup.com;
Secondary Email: Shawn@Hurricanelitigationgroup.com;

By_/s/Nicole Freedlander
FBN 2150

By /s Steven Simon
FBN 501808

24ee

00302100000 109787730 907401 MLDP

Exhibit A

[>.4a thine

Solo inspection Report

Claim: 3300268961

7665 Sicilia Ct
NAPLES, Florida 34114NOW
nee

Solo Inspection Report

Inspector . Tristan. Schwind
Phone : 678-360-3633
Email ; tschwind@laddernow.com

Date : December 14, 2017

‘Claim # : 3300268961

Homeowner : Malysa

Address : 7665 Sicilia Ct NAPLES, Florida 34114
Carrier : Tower Hilt

Adjuster: Tower Hill

Findings
Arrival
Arrived at house location on December 14, 2017. The homeowner was present at the time of the
inspection. A contractor was not present at the time of the inspection.

House Roof
The house is a 1 story structure with a hip style roof. The roof has 1 layer of concrete tile roofing with a

5/12 pitch. Drip edge is present on the rakes & eaves. Ice and water shield is not present.

After compieting the overview, an inspection was performed to identify any storm damages caused by
wind.

House Stor! i

All damage counts including accessory damages can be found in the tables below.

House Gutters and Downspouts,
There are 6” gutters present. There are 3x4 downspouts present.

Housel ior Dat
‘Storm related interior damage was found in the living room.RE

'73_0 907401 MLDP

01902100000 109787

oe Ladder Now

NOW 3600 Chamberiain Ln.

—= Saite E14
——— — Lowsville, KY 40241
3300268961
Dweiting
Roof
DESCRIFTION QUANTITY UNIT PRICE TAX RCV DEFREC. acy
No storm damage observed.
Totab: Root 0.0
Interior
Living Room LxWxH 13' 4.13/16" 5 67 3/16" 58"
320.00 SF Walls 88.43 SF Ceihng.
408.43 SF Walls & Ceiling 88.43 SF Floor
9.83 SY Flooring 40.00 LF Floor Penmeter
107.