United States District Court, W.D. North Carolina, Charlotte Division
D. Whitney, Chief United States District Judge.
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.
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
case arises out of Defendant MRL's failure to perform its
contractual obligations as a subcontractor to
Plaintiff. 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
(Doc. 15-1 at 2-3).
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).
STANDARD OF REVIEW
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).
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)).