United States District Court, S.D. Mississippi, Northern Division
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO DISMISS
GUIROLA, JR., UNITED STATES DISTRICT JUDGE.
THE COURT is the  Motion to Dismiss filed by Defendants
Dirtworks, Inc. of Vicksburg (“Dirtworks”); HHG,
LLC; and Harry H. Gilliland, Jr. Defendants' Motion seeks
dismissal of all claims against HHG, dismissal of the fraud
claim against Gilliland, and dismissal of the request for
specific performance of the collateral demand by Plaintiff
Travelers Casualty and Surety Company of America
(“Travelers”). The motion is fully briefed.
Having considered the submissions of the parties, the record,
and relevant law, the Court determines that Defendants'
Motion to Dismiss should be granted in part and denied in
part. The Motion will be granted insofar as it seeks
dismissal of Plaintiff's fraud claim against Gilliland
and will otherwise be denied.
case arises out of a series of performance bonds and related
indemnity agreements involving Dirtworks, HHG, Gilliland, and
Travelers. Dirtworks is a general contractor in the business
of construction work. Gilliland is the CEO of Dirtworks and
the sole member of HHG, a Mississippi limited liability
company. Travelers is a surety company that issues payment
and performance bonds.
October 5, 2004, Travelers, Dirtworks, and Gilliland executed
a General Agreement of Indemnity (“GAI”), by
which Dirtworks and Gilliland agreed to indemnify Travelers
against all anticipated and real losses and expenses incurred
in connection with Travelers' issuance of surety bonds
related to construction projects undertaken by Dirtworks. An
Additional Indemnitor Rider (“the Rider”), which
purported to add HHG as an indemnitor under the GAI, was
signed by Gilliland on behalf of HHG on August 17, 2015.
Travelers contends that the Rider was properly executed even
though Travelers never signed it. HHG says the absence of
Travelers' signature renders the Rider void.
October 2, 2017, Gilliland contacted Travelers to request
financial assistance because Dirtworks had insufficient funds
to continue its operations, including the completion of
outstanding bonded projects. Dirtworks refused Travelers'
demand to review Dirtworks' books, which Travelers
required before it would consider advancing additional funds
to Dirtworks, and which the GAI provided Dirtworks must do
upon Travelers' demand. Travelers has received payment
claims totaling at least $1, 926, 972.26 from unpaid
subcontractors and suppliers on the various bonded projects
headed by Dirtworks. Travelers anticipates that it faces
exposure to claims and losses that will total $3, 397, 751.70
and has demanded the same from Defendants as posted
collateral under the GAI.To date, Defendants have failed to
satisfy this collateral demand in whole or in part.
filed its initial Complaint on November 8, 2017. The
operative complaint, and the subject of the instant Motion to
Dismiss, is Travelers'  Third Amended Complaint.
Travelers asserts claims against all defendants for breach of
contract, quia timet, and contractual indemnity, and
a fraud claim against Gilliland. Travelers seeks specific
performance of the GAI's collateral security obligations,
damages, and indemnification.
January 28, 2019, Defendants filed the instant Motion to
Dismiss. The Motion argues that HHG should be dismissed as a
defendant because (1) the Rider is not signed by Travelers
and (2) no valid consideration is alleged to have existed for
the execution of the Rider. The Motion also argues that
Travelers has failed to state a claim for fraud against
Gilliland and that Travelers is not entitled to the specific
performance or injunctive relief it seeks.
Motion to Dismiss Standard
survive a motion to dismiss pursuant to Rule 12(b)(6),
“a complaint must contain sufficient factual matter,
accepted as true, 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)). 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
deciding a Rule 12(b)(6) motion to dismiss, the Court accepts
all well pleaded facts as true and views them in the light
most favorable to Plaintiff. New Orleans City v.
Ambac Assur. Corp., 815 F.3d 196, 199 (5th Cir. 2016).
But “the complaint must allege more than labels and
conclusions, a formulaic recitation of the elements of a
cause of action will not do, and factual allegations must be
enough to raise a right to relief above the speculative
level.” Jabaco, Inc. v. Harrah's
Operating Co., Inc., 587 F.3d 314, 318 (5th Cir.
2009). “While legal conclusions can provide the
complaint's framework, they must be supported by factual
allegations.” Iqbal, 556 U.S. at 664.
“Threadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not
suffice.” Id. at 678.
The Rider is Not a Binding Contract Because Travelers Did
Not Sign It, But Claims Against HHG Will Not Be
16 of the GAI states that “[t]he rights and remedies
afforded to [Travelers] by the terms of this Agreement can
only be modified by a written rider to this Agreement signed
by an authorized representative of [Travelers].”
(Compl. Ex. 1, at 3, ECF No. 1-3.) Because Travelers never
signed the Rider, Defendants maintain that HHG was never an
indemnitor under the GAI and therefore must be dismissed.
Travelers makes several arguments against dismissal of HHG:
(1) no signature by Travelers was required because the Rider
did not modify Travelers' right or remedies under the
GAI, (2) the Rider is valid because Travelers manifested its
acceptance by ...