United States District Court, D. South Carolina, Columbia Division
OPINION AND ORDER ON MOTION TO DISMISS
CAMERON MCGOWAN CURRIE Senior United States District Judge
matter is before the court on Defendants' Motion to
Dismiss the First Amended Complaint. ECF No. 25 (Motion to
Dismiss); ECF No. 21 (First Amended Complaint). For the
reasons set forth below, the motion is granted in part and
denied in part.
is the third related action between the parties. The first
action was initiated by Highpoint Risk Services, LLC
(“Highpoint”), an entity owned by Defendant
Charles David Wood, Jr. (“Wood”), against
Companion Property and Casualty Insurance Company
(“Companion”) in the Northern District of Texas.
Highpoint Risk Serv., LLC, et al. v. Companion Prop.
& Casualty Ins. Co., C.A. No. 3:14-cv-3398-L
(“Companion I”). See ECF No.
25-1 at 3 (summarizing prior litigation). The claims in
Companion I focus on a line of business the courts
and parties have referred to as the “Pay-Go” line
of business. The Defendants here were later added as
third-party Defendants in Companion I. Id.
The third-party claims and counterclaims address a line of
business governed by a 2006 Coverage Agreement and various
related agreements in addition to the Pay-Go line of
business. Id. Companion I is set for trial in
February 2018. See ECF No. 25-1 at 3 n.4 (citing
Companion I, ECF No. 139).
Roughly a month after Companion I was filed,
Companion filed an action in this court against Highpoint,
Wood, and several other entities owned by Wood. Those
entities include the present Defendants AMS Staff Leasing,
Inc. (“AMS”); Breckenridge Enterprises, Inc.
(“Breckenridge”); and AMS Staff Leasing II, Inc.
(“AMS II”) (collectively “AMS
Defendants”)). Companion Prop. & Casualty Ins.
Co. v. Wood, et al., C.A. No. 3:14-cv-3719-CMC
(“Companion II”). The claims in
Companion II related to both the Pay-Go line of
business and the 2006 Coverage Agreement line of business.
However, in deference to the court in which the claims were
first raised, this court stayed and later dismissed claims
related to the Pay-Go line of business from Companion
II. The remaining claims proceeded through discovery and
are now in the final stages of litigation.
deadlines in Companion II are significant to some of
Defendants' arguments for dismissal. These include the
deadline for amendment of pleadings, which passed on August
13, 2015. See Companion II, ECF No. 71 (Second
Amended Scheduling Order). They also include the deadline for
discovery, which passed on September 14, 2016, subject to an
extension for limited purposes into October 2016. See
Companion II, ECF Nos. 164 (Sixth Amended Scheduling
Order), 185 (Order on Discovery Issues). While Companion
II is not yet closed, many claims have been resolved on
cross-motions for summary judgment, partial settlement just
prior to a scheduled jury trial, and through rulings on
non-jury issues. E.g., Companion II, ECF
Nos. 258, 409, 414.
issues will be resolved through accounting and actuarial
reviews, now in their final stages, and post-judgment
petition for attorneys' fees, costs, and interest.
Companion II, ECF No. 409 (Joint Submission); ECF
No. 425 (Order on Actuarial Report).
claims in the present action are based primarily if not
solely on the 2006 Coverage Agreement and related agreements.
See ECF No. 21 (First Amended Complaint). The
related agreements include two agreements signed by Wood: a
Guaranty and Indemnity Agreement (“Wood
Guaranty”); and a Pledge Agreement (“Wood
Pledge”). See, e.g., id.
¶¶ 8, 9, 31. The causes of action are summarized
first cause of action alleges the AMS Defendants breached the
2006 Coverage Agreement by failing to provide a $20 million
letter of credit following a November 4, 2016 demand.
Id. ¶¶ 46-54 (seeking damages and specific
second cause of action alleges Wood breached the Wood
Guaranty by failing to cause a letter of credit to be issued
(covering the AMS Defendants' obligations) following a
November 14, 2016 demand. Id. ¶¶ 55-69
(seeking damages and specific performance).
third cause of action alleges Wood breached the Wood Guaranty
by failing to provide annual financial statements despite
“several written requests” including a November
14, 2016 demand. Id. ¶¶
fourth cause of action alleges Wood breached the Wood
Guaranty and Wood Pledge by failing to provide
information relating to pledged assets (including
stock in AMS and AMS II) and to deliver certain
instruments of transfer and assets following a November
14, 2016 demand. Id. ¶¶ 79-90. It also
alleges Wood breached the Wood Pledge through his
surreptitious sale of essentially all assets of AMS and AMS
II and attempted dissolution of those entities in March
fifth cause of action alleges the breach of contract
addressed in the fourth cause of action was accomplished with
fraudulent intent and accompanied by a fraudulent act because
Wood concealed the information relating to the sale and
attempted dissolution. Id. ¶¶ 91-100.
Companion alleges Wood acted with an intent to (1) avoid
providing Companion protections contemplated by their
agreements, (2) “limit or escape liability under the
agreements”; and (3) “misappropriate the assets
of [AMS and AMS II] for his own benefit and to
Companion's detriment.” Id. ¶ 89.
sixth cause of action alleges Wood's sale of AMS and AMS
II assets constitutes a fraudulent conveyance. Id.
¶¶ 101-06. Companion alleges Wood was “a
debtor who . . . owed Companion a first priority lien and
security interest in AMS's assets” and, in
contravention of Companion's interest as a creditor,
“secretly transferred all of AMS's assets” to
a third party “for the purpose of making Wood and AMS
judgment proof[.]” Id. ¶¶ 102, 103.
seventh cause of action alleges Wood's sale of AMS and
AMS II assets breached a fiduciary duty Wood owed to
Companion. Id. ¶¶ 107-13.
eighth cause of action alleges Wood and the AMS Defendants
are obligated to reimburse Companion for the portion of
Companion's settlement with the North Carolina Insurance
Guaranty Association (“NCIGA”) attributable to
the below-deductible portion of insurance claims covered by
that settlement. Id. ¶¶ 114-120. It also
alleges Defendants are obligated to contribute the same share
of “any future liability associated with the alleged
‘dual' or ‘overlapping' Policies”
that have caused various state's insurance guaranty
associations to pursue claims against Companion. Id.
ninth cause of action alleges Wood is obligated under the
Wood Guaranty to “pay all legal fees, costs, losses,
and expenses incurred by Companion related to the claims of
state guaranty funds.” Id. ¶ 125. This
claim does not specifically mention and is not limited to the
settlement with NCIGA.
tenth cause of action alleges Wood is obligated under the
Wood Guaranty to “satisfy the demands or claims made by
Companion in the First Amended Complaint in this action and
‘indemnify and hold Companion harmless from and against
any and all claims, suits, hearings, proceedings, actions,
damages, liabilities, fines, penalties, losses, costs, or
expenses, including without limitation attorneys' fees,
at any time arising out of or otherwise related to, directly
or indirectly, ' the 2006 Coverage Agreement and/or the
Policies.” Id. ¶ 133.
motion under Federal Rule of Civil Procedure 12(b)(6) should
be granted only if, after accepting all well-pleaded
allegations in the complaint as true, it appears certain the
plaintiff cannot prove any set of facts in support of its
claims that entitles it to relief. See Edwards v. City of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). Although
the court must take the facts in the light most favorable to
the plaintiff, it “need not accept the legal
conclusions [the plaintiff would draw] from the facts.”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.
2008) (quoting Eastern Shore Mkts., Inc. v. J.D. Assocs.
Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000)). The
court may also disregard any “unwarranted inferences,
unreasonable conclusions, or arguments.” Id.
Rule 12(b)(6) standard has often been expressed as precluding
dismissal unless it is certain the plaintiff is not entitled
to relief under any legal theory that plausibly could be
suggested by the facts alleged. See Mylan Labs., Inc. v.
Markari, 7 F.3d 1130, 1134 (4th Cir. 1993). Nonetheless,
the plaintiff must allege “enough facts to state a
claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)
(quoted in Giarratano, 521 F.3d at 302).
in applying Rule 12(b)(6), the court also applies the
relevant pleading standard. Despite the liberal pleading
standard of Rule 8, a plaintiff in any civil action must
include more than mere conclusory statements in support of a
claim. See Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (court need only accept as true the complaint's
factual allegations, not its legal conclusions); see also
McCleary-Evans v. Maryland Dept. of Trans., 780 F.3d
582, 587 (4th Cir. 2015) (noting Iqbal and
Twombly articulated a new requirement that a
complaint must allege a plausible claim for relief, thus
rejecting a standard that would allow a complaint to survive
a motion to dismiss whenever the pleadings left open the
possibility that a plaintiff might later establish some set
of [undisclosed] facts to support recovery.” (emphasis
and alteration in original, internal quotation marks
omitted)); Walters v. McMahen, 684 F.3d 435, 439
(4th Cir. 2012) (citing Robertson v. Sea Pines Real
Estate Companies, Inc., 679 F.3d 278 (4th Cir. 2012) for
proposition plaintiff need not forecast evidence sufficient
to prove the elements of a claim, but must allege sufficient
facts to establish those elements).
argue Companion's contract-based claims (first through
fifth and eighth through tenth causes of actions) should be
dismissed for the following five reasons: (1) they improperly
split claims that were or could have been raised in prior
litigation; (2) they are barred by the statute of
limitations; (3) damages are not adequately pleaded; (4) the
allegations of a contractual duty are deficient to the extent
Companion alleges breach based on sale of assets or attempted