govinfo:USCOURTS-mdd-1_25-cv-00044-0

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND WILFREDO CRUZ, et al.,1 Plaintiffs, v. BAY POINT INSURANCE LLC, et al., Defendants. * * * * * Civil Action No. GLR-25-44 *** MEMORANDUM OPINION THIS MATTER is before the Court on Defendants Karl Smith and Bay Point Insurance LLC InsuranceMotion to Dismiss (ECF No. 43) Motion for Entry of Partial Default (ECF No. 53). The Motions are ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2025). For the reasons set forth below, the Court will grant the Motion to Dismiss in part and deny it in part and will deny the Motion for Entry of Partial Default. I. BACKGROUND A. Factual Background2 Plaintiff Wilfredo Cruz alleges that Defendants Bay Point Insurance, Karl Smith, and David Small committed insurance fraud. (Am. Cross-cl. ¶ 11, ECF No. 26). Smith and 1 The Clerk will be directed to change the caption of this case from M&T Equipment Finance Corporation v. Bay Point Insurance LLC et al. to Wilfredo Cruz, et al. v. Bay Point Insurance LLC, et al. on the docket. 2 Unless otherwise noted, the Court takes the following facts from the Amended Crossclaim (ECF No. 26) and accepts them as true. See Erickson v. Pardus, 551 U.S. 89, 94 (2007). 

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Small are insurance brokers. (Id. ¶¶ 1216). Smith organized Bay Point Insurance on August 17, 2015. (Id. ¶ 16). Bay Point Insurance hired Small to work as an insurance broker and producer. (Id. ¶ 19). Cruz was an employee of Lucky Dog, LLC, which was organized on August 7, 1998. (Id. ¶¶ 26, 32). Cruz formed a trucking company to haul waste for Lucky Dog, LLC named W&DC General Contractor, LLC W&DC General Contractorin Virginia on August 31, 2021. (Id. ¶¶ 33, 39). W&DC General Contractor, in turn, acquired a 2022 Westar tractor in February 2022 and a 2013 Kenilworth tractor in October 2023. (Id. ¶¶ 4043). Bay Point Insurance brokered and produced W&DC General Contractors purchase of commercial general liability, and motor cargo policy. (Id. ¶¶ 4647). tractors were involved in an incident in Baltimore, Maryland. (Id. ¶ 61). Cruz promptly reported the incident to Bay Point Insurance. (Id. ¶ 65). Cruz contacted Small to ensure that a claim arising from the incident was promptly filed with the physical damage insurance carrier, Trisura Specialty Insurance Company. (Id. ¶ 66). W&DC General Contractor arranged and paid out-of-pocket for a towing company to tow the tractors from the scene of the incident. (Id. ¶¶ 68, 71). W&DC General Contractor also paid out-of-pocket for the repairs of the trailers attached to the tractors. (Id. ¶ 72). Cruz alleges that at the time Bay Point Insurance and Small brokered the insurance policy for his business, Bay Point Insurance and Small were not actually qualified to do business nor were they licensed to practice insurance in the Commonwealth of Virginia 

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and failed to disclose this to Cruz. (Id. ¶¶ 50, 52). Indeed, Cruz alleges that Bay Point Insurance and Small did not obtain their license to practice insurance as producers and brokers under Virginia law until March 12, 2024 and May 24, 2024 respectivelymonths after the incident. (Id. ¶¶ 73, 78). W&DC General Contractor and Cruz reiterated their request that Bay Point Insurance provide copies of their insurance policies and handle the claim associated with the incident through counsel on March 22, 2024. (Id. ¶ 75). After failing to receive copies of the insurance policies or any payment of benefits, Cruz shut down W&DC General Contractor on November 18, 2024, and Lucky Dog LLC also wound down its business. (See id. ¶¶ 81, 8384). Cruz alleges that he has sustained financial hardship, emotional distress, and pain and suffering as a consequence of fraud. (Id. ¶ 86). Cruz alleges that W&DC General Contractor would have sought and obtained other customers and continued to do business if they had not been defrauded, and the tractors remain idle at the repair shop to this day. (Id. ¶¶ 8788). Cruz reported these allegations through a complaint against Bay Point Insurance to the Maryland Insurance Administration, which then referred his complaint to the Virginia State Corporation , which continues to investigate this matter. (Id. ¶¶ 8991). 

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B. Procedural History2 Cruz filed an Amended Crossclaim against Bay Point Insurance, David Small, and Karl Smith on September 3, 2025. (ECF No. 26). The seventeen-count Amended Crossclaim includes the following causes of action: Conspiracy to Commit Racketeering (Count 1); Violations of the Virginia Consumer Protection Act of 1977 (Count 2); Common Law Civil Conspiracy (Count 3); Common Law Civil Actual Fraud (Count 4); Common Law Civil Constructive Fraud (Count 5); Common Law Civil Fraud by Omission (Count 6); Common Law Conversion (Count 7); Common Law Tortious Interference (Count 8); Common Law Negligence (Count 9); Negligence Per Se (Count 10); Common Law Vicarious Liability (Count 11); Common Law Breach of Fiduciary Duty (Count 12); Common Law Breach of Contract (Count 13); Common Law Restitution Unjust Enrichment (Count 14); Contractual Indemnification (Count 15); Equitable, Implied, and Tort Indemnification (Count 16); and Contribution (Count 17). (Am. Cross-cl. ¶¶ 92171). Defendants filed a Motion to Dismiss on October 3, 2025. (ECF No. 43). Cruz filed an Opposition on October 17, 2023, (ECF No. 51), and Defendants filed a Reply on October 31, 2025, (ECF No. 57). 2 necessary to resolve the instant Motions. 

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II. DISCUSSION A. Standard of Review The purpose of a Rule 12(b)(6) motion is to test[] the sufficiency of a complaint, not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses. King v. Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016) (quoting Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999)). A complaint fails to state a claim if it does not contain a short and plain statement of the claim showing that the pleader is entitled to relief, Fed.R.Civ.P. 8(a)(2), or does not 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)). A claim is facially plausible when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. Though the plaintiff is not required to forecast evidence to prove the elements of the claim, the complaint must allege sufficient facts to establish each element. Goss v. Bank of Am., N.A., 917 F.Supp.2d 445, 449 (D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012)), affd, 546 F.Appx 165 (4th Cir. 2013). In considering a Rule 12(b)(6) motion, a court must examine the complaint as a whole, accept the factual allegations in the complaint as true, and construe the factual allegations in the light most favorable to the plaintiff. See Albright v. Oliver, 510 U.S. 266, 268 (1994); Lambeth v. Bd. of Commrs of Davidson Cnty., 407 F.3d 266, 268 (4th Cir. 2005). But the court need not accept unsupported or conclusory factual allegations devoid 

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of any reference to actual events, see United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979), or legal conclusions couched as factual allegations, Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). B. Analysis 1. Motion for Entry of Partial Default Entry of Partial Default against Bay Point Insurance and Smith (ECF No. 53), which he asserts is proper because Defendants do not challenge Counts 7, 9, 10, 11, 14, 16, and 17 in their Motion to Dismiss. (Mot. Entry Partial Default ¶ 9, ECF No. 53). Defendants counter that its Motion to Dismiss forecloses such a result, 7, ECF No. 59), and the Court agrees. (ECF No. 43) precludes the entry of default because under Federal Rule of Civil Procedure 55, entry of default and default judgment may be entered only [w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defendFed.R.Civ.P. 55(a); see also Jaffe v. Accredited Sur. and Cas. Co., Inc., 294 F.3d 584, 589 (4th Cir. 2002) (noting that filing motion to dismiss constitutes defend[ing] for the purposes of avoiding default judgment). This remains true even where a motion to dismiss does not address every count. See Dekom v. New York, No. 12-CV-1318(JS)(ARL), 2013 WL 3095010, at *5 (E.D.N.Y. June 18, 2013) (That the motions to dismiss may not have addressed every single claim purportedly raised by Plaintiffs in their Amended Complaint is irrelevant. A party may file a motion to dismiss only certain claimsi.e., a partial motion to dismissand the filing of any motion under 

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Rule 12 postpones a defendants time to answer until fourteen days after the motion is (citing Fed.R.Civ.P. 12)), affd, 583 F.Appx 15 (2d Cir. 2014). As a result, the Partial Default (ECF No. 53). 2. Motion to Dismiss3 a. Count 1: Conspiracy to Commit Racketeering . Defendants first argue that Cruz fails to state a RICO Conspiracy claim under § 1962(c). (Mot. Dismiss -cl. at 3, ECF No. 43-1). The RICO statute prohibits 8 U.S.C. § 1962(c). Hardwire, LLC v. Ebaugh, No. JKB-20-0304, 2021 WL 3809078, at *5 (D.Md. Aug. 26, 2021) (quoting ESAB Grp., Inc. v. Centricut, Inc., 126 F.3d 617, 626 (4th Cir. 1997)). Ekstrom v. Cong. Bank, No. ELH-20-1501, 2020 WL 6565251, at *16 (D.Md. Nov. 9, 2020) (quoting U.S. Airline Pilots Assn v. Awappa, LLC, 615 F.3d 312, 317 (4th Cir. 2010)). injury to business or property] 2) of an enterprise 3) through a pattern 4) of racketeering 3 As a reminder, Defendants only move to dismiss Counts 13, 46, 8, 12, 13 and 15 (see generally Mot. Dismiss -cl, ECF No. 43-1), so the Court only reaches these claims in its analysis of the Motion to Dismiss. 

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activityId. at *17 (alteration in original) (quoting Morley v. Cohen, 888 F.2d 1006, 1009 (4th Cir. 1989)). allege and later prove that the defendants knew of the RICO violations of the enterprise Chambers v. King Buick GMC, LLC, 43 F.Supp.3d 575, 607 (D.Md. 2014) (quoting Proctor v. Metro Money Corp., 645 F.Supp.2d 464, 483 (D.Md. 2009)). As various fraud claims are asserted as the predicate acts for this Ekstrom, 2020 WL 6565251 at *19. In evaluating the viability of a RICO claim, the United States Court of Appeals for -pe of See Al-Abood ex rel. Al-Abood v. El-Shamari, 217 F.3d 225, 238 (4th Cir. 2000). s] severe penalties to offenders engaged in ongoing criminal activity, rather than isolated wrongdoersEkstrom, 2020 WL 6565251, at *17 (quoting Friedler v. Cole, No. CCB-04-1983, 2005 WL 465089, at *7 (D.Md. Feb. 28, 2005) (second alteration in original)). pose a special threat to social well-Id. (quoting Biggs v. Eaglewood Mortg., LLC, 582 F.Supp.2d 707, 714 (D.Md. 2008), ). Thus, the Flip Mortg. Corp. v. McElhone, 841 F.2d 531, 538 (4th Cir. 1988). 

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Here, RICO claim fails because he has not established that Defendants were corporation, association, or other legal entity, and any union or group of individuals 1961(4). A plaintiff must continuing unit for a common purpose; and (3) the enterprise is an entity separate and apart from the pattern of activity in which it engages.Rojas v. Delta Airlines, Inc., 425 F.Supp.3d 524, 537 (D.Md. 2019). of collaboration or agreement between the members of the enterpriseId. Further, a RICO civil conspiracy complaint, at the very least, must allege specifically such an Chambers, 43 F.Supp.3d at 607 (quoting Hecht v. Com. Clearing House, Inc., 897 F.2d 21, 25 (2d Cir. 1990)). Although Cruz alleges that Baypoint Insurance, Smith, and Small conspired and agreed to conduct and participate, directly or indirectly, in RICO enterprise through a pattern of racketeering activity involving fraudulent representations regarding insurance services, policies, coverages, and benefits, he has not pleaded that they formed any type of agreement to engage in that conduct. (Am. Cross-cl. ¶ 93). At most, Cruz argues that Defendants generally knew that their predicate acts, including common law fraud, statutory fraud, common law theft, statutory theft, and other unfair and deceptive trade practices, comprised a pattern [of] racketeering activity(Id. ¶ 94). That is not enoughconclusory allegations regarding an agreement are insufficient to state a RICO claim. See 

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Rojas, 425 F.Supp.3d at 538 SD3, LLC v. Black & Decker (U.S.) Inc., 801 F.3d 412, 437 (4th Cir. 2015) (finding no agreement where plaintiffs alleged only As Cruz agreement took place, he has not stated a RICO or RICO conspiracy claim. See Rojas, 425 F.Supp.3d at 538; Twombly, 550 U.S. at 555 (stating that courts must ignore conclusory allegations or formulaic recitations of the elements of a claim); Grant v. Shapiro & Burson, LLP, 871 F.Supp.2d 462, 473 (D.Md. 2012) Chambers, 43 F.Supp.3d at 60708 (dismissing civil RICO conspiracy complaint where it contained conclusory statement that ; Compass Mktg., Inc. v. Flywheel Digit., LLC, No. GLR-22-379, 2023 WL 2213687 at *10 (D.Md. Feb. 24, 2023), No. 23-1324, 2024 WL 3292676 (4th Cir. July 3, 2024) (same). In other Cruz offers naked assertions that Small, Smith, and Bay Point conspired, but does not identify who reached an agreement, when it occurred, nor what each Defendant allegedly knew(Mot. at 8). As a result, the Court will b. Count 2: Virginia Consumer Protection Act Defendants next argue that Cruz fails to state a claim under the Virginia Consumer Protection Act because the transactions at issue did not involve consumer (Mot. at 911). The VCPA defines a 

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advertisement, sale, lease, license, or offering for sale, lease, or license, of goods or services to be used primarily for personal, family, or household purposes.Va. Code Ann. § 59.1-198 (West 2025). Here, the Amended Crossclaim implicates an insurance fraud dispute involving tractors used in the course of , companies that rely on them, and insurance brokers. (See Am. Cross-cl. ¶¶ 1191). Accordingly, as to claim. c. Count 3: Common Law Civil Conspiracy Defendants next argue that Cruz fails to state a claim for civil conspiracy because there are no separate entities to support a conspiracy claim. (Mot. at 1213). For the reasons set forth below, the Court agrees. Under Virginia law, to state a claim for common law participate in an unlawful act, or a lawful act in an unlawful manner; 3) an injury caused by an unlawful overt act performed by one of the parties to the agreement; and 4) that the Skillstorm, Inc. v. Elec. Data Sys., LLC, 666 F.Supp.2d 610, 618 (E.D.Va. 2009) (quoting Flexible Benefits Council v. Feltman, No. 1:08CV371, 2008 WL 2465457, at *9 (E.D.Va. June 16, 2008)) relationship exists between the parties, the parties are not Rogers v. Deane, 992 F.Supp. 621, 633 (E.D.Va. 2014) (emphasis added). Here, bBay Point Insurancein which Bay Point Insurance is owned by Smith and employs 

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Small, (Am. Cross-cl. ¶¶ 24), is legally untenable. Perk v. Vector Res. Grp., 485 S.E.2d 140, 144 (Va. 1997). Accordingly, the Court will common law conspiracy claim. d. Counts 46: Common Law Fraud Defendants next argue that Cruz fails to state a claim for fraud because he fails to plead fraud with any particularity. (Mot. at 1314). To state a claim for common law actual fraud, a plaintiff must show: intentionally and knowingly, (4) with intent to mislead, (5) reliance by the party misled, Prospect Dev. Co. v. Bershader, 515 S.E.2d 291, 297 (Va. 1999) (quoting Bryant v. Peckingpaugh 400 S.E.2d 201, 203 (Va. 1991)). Here, Cruz sufficiently alleges that Defendants falsely represented that they would insure his tractors, that he relied on these policies, and has suffered damages as a result. (Am. Crossclaim ¶¶ 4454, 7173). Cruz asked for proof of the insurance policies but Defendants refused to provide any copies. (Id. ¶¶ 7476). Additionally, Cruz includes specific dates upon which Defendants earned their license, months after the incident, despite allegedly entering earlier agreements to insure his property. (Id. ¶¶ 73, 78). While questions of intent and motivation may be explored at the discovery stage, for now, Cruz sufficiently alleges fraud as to common law fraud claims. 

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e. Count 8: Common Law Tortious Interference Defendants next argue that Cruz fails to state a claim for Common Law Tortious Interference because this claim lacks a factual basis. (Mot. at 1617). The necessary elements to establish a prima facie case [of tortious interference] are: (1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the relationship or expectancy on the part of the infereror; (3) intentional interference inducing or causing a breach or termination of the relationship or expectancy; and (4) resultant damage to the party whose relationship or expectancy has been disrupted. Dunlap v. Cottman Transmission Sys., LLC, 754 S.E.2d 313, 318 (Va. 2014) (quoting Chaves v. Johnson, 335 S.E.2d 97, 102 (Va. 1985)). Defendants only take issue with the provide any detail or additional allegations to show that the requisite knowledge and intent existed.(Mot. at 1617). Cruz is correct, claim. Chaves, 335 S.E.2d at 10203. Here, Cruz sufficiently alleges (1) the existence of valid contractual relationships or business expectancies involving W&DC General Contractor, LLC, Mr. Cruz, Lucky Dog, LLC, and other actual or prospective clients of W&DC General Contractor and Mr. Cruz, (Am. Cross-cl. ¶ 120); (2) that Defendants had knowledge of the existence of such relationships (id. ¶¶ 4954, 120); (3) that Defendants intentionally interfered with those relationships or expectancy of contractual relationships by selling Cruz and W&DC General Contractor an insurance policy despite not having a license to do so (id. ¶¶ 75

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78); and (4) that as a result, Cruz and W&DC General Contractor never received insurance coverage or benefits that would have enabled them to continue to do business (id. ¶¶ 7984, 8788, 120). Accordingly, as to the tortious interference claim. f. Count 12 : Common Law Breach of Fiduciary Duty Defendants next argue that Cruz fails to state a claim for breach of a fiduciary duty because he fails to allege the existence of a fiduciary duty in the first instance. (Mot. at 17). (Id.). Cruz counters that there is indeed a fiduciary relationship between an insured and a broker under Virginia law. ( at 2223, ECF No. 51). The Court, at this stage of the litigation, agrees with Cruz and finds Cincinnati Ins. Co. v. Ruch, 940 F.Supp.2d 338 (E.D.Va. 2013) instructive. There, the court explained that nce an agency relationship between an insured and a broker is established, a fiduciary relationship generally arises as a matter of law. . . . [Defendant], as the broker . . . owed certain fiduciary duties common to all broker-Id. at 347. Here too, Defendants plausibly owed a fiduciary duty in their role as brokers not to defraud Cruz or W&DC General Contractor as the insured. As a result, and because Defendants advance no other grounds for dismissal, on to Dismiss as to the breach of fiduciary duty claim. 

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g. Counts 13 & 15: Breach of Contract & Indemnification Defendants next argue that Cruz fails to state a claim for breach of contract and contract indemnification because while W&DC General Contractor was a party to the contracts at issue, Cruz was not. (Mot. at 1819). Cruz counters that as the former owner and sole member of W&DC General Contractor, he is entitled to sue for breach of contract. In any event, Cruz has since moved to join W&DC General Contractor in this action (ECF No. 25), which this Court granted as unopposed (ECF No. 66). As a result, and because Defendants advance no other grounds for dismissal as to these claims, the as to the breach of contract and indemnification claims. III. CONCLUSION For the foregoing reasons, the Court will grant Motion to Dismiss (ECF No. 43) in part and deny it in part. The Court will direct Defendants to answer the remaining Rules of Civil Procedure. The Court will deny (ECF No. 53). A separate Order follows. Entered this 10th day of June, 2026. /s/ George L. Russell, III Chief United States District Judge 

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