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Beam Construction Co., Inc. v. Allied World Specialty Insurance, Inc.

United States District Court, W.D. North Carolina, Charlotte Division

November 7, 2017

BEAM CONSTRUCTION COMPANY, INC., Plaintiff,
v.
ALLIED WORLD SPECIALTY INSURANCE, INC. and MRL PLUMBING, INC., Defendants.

          ORDER

          Frank D. Whitney, Chief United States District Judge.

         THIS MATTER is before the Court on Defendant Allied World Specialty Insurance, Inc.'s Motion to Dismiss pursuant to Rule 12(b)(6) and Rule 9(b) of the Federal Rules of Civil Procedure (Doc. No. 16). For the reasons stated herein, the Court GRANTS the Motion to Dismiss.

         I. PROCEDURAL BACKGROUND

         Plaintiff Beam Construction Company, Inc. (“Plaintiff”) commenced this action against Defendants Allied World Specialty Insurance, Inc. (“Allied”) and MRL Plumbing, Inc. (“MRL”) on June 13, 2017 in Superior Court in Gaston County, North Carolina. Allied removed the action to this Court on July 17, 2017. Plaintiff subsequently filed an amended complaint on September 6, 2017, and Allied filed this Motion on September 20, 2017. Allied moves to dismiss claims III, IV, and V of Plaintiff's amended complaint for failure to state a claim upon which relief may be granted. Claims III and IV seek relief for fraud, and claim V seeks relief for unfair or deceptive trade practices. The Motion is now fully briefed and ripe for resolution.

         II. FACTUAL BACKGROUND

         This case arises out of Defendant MRL's failure to perform its contractual obligations as a subcontractor to Plaintiff.[1] After MRL contracted with Plaintiff to provide plumbing work, MRL, as principal, entered into a contract with Allied, as its surety, for a subcontract performance bond. (Doc. No. 15 at 2; Doc. No. 15-1 at 2). The performance bond held Allied, as surety, bound to Plaintiff, as obligee, in the amount of $1, 282, 000.00. (Doc. No. 15 at 2; Doc. No. 15-1 at 2). The Performance Bond stated:

Whenever the principal shall be, and is declared by the Obligee to be in default under the Subcontract, with the Obligee having performed its obligations in the Subcontract, the Surety after receipt of written notice of the default from the Obligee may remedy the default within fifteen (15) calendar days, or shall promptly:
. . . Complete the subcontract in accordance with its terms and conditions; or . . . Obtain a bid or bids . . . for completing the Subcontract in accordance with its terms and conditions. . . or . . . Determine the total amount for which it is liable to the Obligee . . . and pay that amount as soon as practicable

(Doc. 15-1 at 2-3).

         Plaintiff subsequently declared MRL in default and then, terminated its contract with MRL. (Doc. No. 15 at 3). Plaintiff alleges Allied has not fulfilled its contractual obligation as surety under the performance bond. (Doc. No. 15 at 3-4). Allied has only paid Plaintiff $150, 000 when Plaintiff has submitted claims exceeding this amount. (Doc. No. 15 at 3-4). Plaintiff also alleges Allied committed fraud by telling Plaintiff that it should complete MRL's work and by hiring a consultant to assess Plaintiff's claims without honoring, or intending to honor, the consultant's determinations. (Doc. No. 15 at 9-12). Plaintiff further alleges Allied's failure to pay the valid claims, along with Allied's other conduct, constitutes an unfair or deceptive trade practice. (Doc. No. 15 at 13-14).

         III. STANDARD OF REVIEW

         “The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint”-“not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999) (quoting Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992)). The court accepts all well-pleaded allegations in the complaint as true and draws all reasonable factual inferences from those facts in the plaintiff's favor. Id. at 244 (citations omitted); Mylan Labs, 7 F.3d at 1134. Well-pleaded allegations “must contain sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). To be plausible, the factual matter must “allow[] the court to draw the reasonable inference that the defendant is liable.” Id. (citing Bell Atl. Corp., 550 U.S. at 556).

         Claims of fraud, however, must also “state with particularity the circumstances constituting fraud[.]” Fed.R.Civ.P. 9(b). The purposes of Rule 9(b) include “providing notice to a defendant of its alleged misconduct, of preventing frivolous suits, of eliminating fraud actions in which all the facts are learned after discovery, and of protecting defendants from harm to their goodwill and reputation[.]” United States ex rel. Nathan v. Takeda Pharms. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013) (citations omitted) (internal quotation marks omitted). To satisfy the particularity requirement, the complaint must “at a minimum, describe the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” Takeda Pharms., 707 F.3d at 455-56 (quoting United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008)).

         IV. ...


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