United States District Court, N.D. Alabama, Southern Division
DAVID PROCTOR UNITED STATES DISTRICT JUDGE.
case is before the court on Defendant Aegis Security
Insurance Company's Motion to Strike or in the
Alternative, Motion to Dismiss the Bad Faith Claim. (Doc. #
4). The Motion is fully briefed and ripe for review. (Docs. #
4, 11, 15, 16, 17, 18, 19, 22). After careful consideration,
the court concludes that Defendant's Motion (Doc. #4) is
due to be granted.
Goudy Construction, Inc., (“Plaintiff” or
“Goudy”) is a construction company located in
Bessemer, Alabama. (Doc. # 1, Exh. A ¶1). In 2017,
Defendant Raks Fire Sprinkler, LLC, (“RAKS”)
submitted a bid to install a fire sprinkler system on a
project where Goudy was the General Contractor. (Id.
at ¶9). Defendant Romero Ali is the managing member and
incorporator of RAKS. (Id. at ¶3).
accepted RAKS' bid and they entered into a contractual
agreement on August 21, 2017. (Id. at ¶9). As
part of the agreement RAKS was required to provide commercial
liability insurance in the amount of $2, 000, 000 for the
duration of the project. (Id.). In addition, RAKS
was required to provide a performance bond with Goudy listed
as the owner, and a labor and material bond with Goudy listed
as the owner. (Id. at ¶10). RAKS complied with
Goudy's requirements and purchased both bonds from
Defendant Aegis Security Insurance Company (“Aegis).
(Id. at ¶11). After receiving approval on the
design specifications for the installation of the fire
sprinkler system, RAKS began the installation. (Id.
after the installation began, RAKS fell significantly behind
on the scheduled progress dates. (Id. at ¶15).
In addition, RAKS began to experience payroll changes and
failed to make timely payments to its employees.
(Id. at ¶16). Due to their failure to make
payments, RAKS was not in compliance with its union
contracts. (Id.). These financial challenges spurred
RAKS to request that Goudy make payments due to RAKS under
the contract directly into RAKS' payroll
account. (Id. at ¶17). Goudy complied
with this request and made all remaining payments due to RAKS
into their payroll account. (Id.)
order to receive their scheduled payroll draws, RAKS
employees, at the direction of Romero Ali, represented that
the agreed upon design specifications were being followed and
installation deadlines were being met. (Id. at
¶18). Meanwhile, RAKS continued to fall behind on the
established timeline for the project. (Id. at
¶19). RAKS was given a warning with a final demand for
performance on February 13, 2018. On November 6, 2018, RAKS
left the job site and did not return. (Id. at
attempted to communicate with RAKS via e-mail and phone to no
avail. (Id. at ¶21). On November 26, 2018,
Goudy sent correspondence to RAKS by certified mail,
requesting that they return and finish installing the
sprinkler system. (Id.). RAKS failed to respond.
(Id. at ¶22). After RAKS failed to respond,
Goudy informed RAKS' insurer their failure to perform the
installation as contracted. (Id.). Goudy
subsequently filed a formal claim with the insurance company
on November 13, 2019. (Id. at ¶22). Goudy later
learned that RAKS lost its liability insurance shortly after
beginning the project. (Id. at ¶24). Goudy also
filed a formal claim with Aegis. (Id.) Goudy
provided Aegis with documentation of RAKS' incomplete
installation, as well as other proof and evidence that
RAKS' work was performed in direct conflict to the
approved design specifications. (Id. at ¶23).
more than sixty (60) days elapsed, Aegis began an
investigation of RAKS' performance. (Id. at
¶25). On March 8, 2019 Aegis denied Goudy's claim
based upon RAKS' execution of a “Final Waiver and
Release of Lien.” (Id. at ¶26). According
to Aegis, the waiver and release represents Goudy's
acceptance of RAKS' performance under the contract.
9, 2019 Goudy commenced the instant case in the Circuit Court
of Jefferson County, Bessemer Division, Alabama, alleging
negligence, breach of contract, fraud/misrepresentation
against RAKS (and presumably Romero Ali), as well as breach
of contract and bad faith against Aegis. (Doc. # 1, Exh.
A). On August 14, 2019, Aegis timely removed the case to the
United States District Court for the Northern District of
Alabama, Southern Division. (Doc. # 1 at 2-3). Subsequently,
Aegis filed a Motion to Strike, or in the Alternative, Motion
to Dismiss the Bad Faith Claim. (Doc. # 4)
Standard of Review
Federal Rules of Civil Procedure require only that the
complaint provide “a short and plain statement of the
claim showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). Having said that, the complaint must
include enough facts “to raise a right to relief above
the speculative level.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). Pleadings that
contain nothing more than “a formulaic recitation of
the elements of a cause of action” do not meet Rule 8
standards, nor do pleadings suffice that are based merely
upon “labels and conclusions” or “naked
assertion[s]” without supporting factual allegations.
Twombly, 550 U.S. at 555, 557.
deciding a Rule 12(b)(6) motion to dismiss, courts view the
allegations in the complaint in the light most favorable to
the non-moving party. Watts v. Fla. Int'l Univ.,
495 F.3d 1289, 1295 (11th Cir. 2007). To survive a motion to
dismiss, a complaint must “state a claim to relief that
is plausible on its face.” Twombly, 550 U.S.
at 570. “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 677 (2009). Although “[t]he
plausibility standard is not akin to a ‘probability
requirement, '” the complaint must demonstrate
“more than a sheer possibility that a defendant has
acted unlawfully.” Id. A plausible claim for
relief requires “enough fact[s] to raise a reasonable
expectation that discovery will reveal evidence” to
support the claim. Twombly, 550 U.S. at 556.
Supreme Court has recently identified “two working
principles” for a district court to use in applying the
facial plausibility standard. First, in evaluating motions to
dismiss, the court must assume the veracity of well-pleaded
factual allegations; however, the court does not have to
accept as true legal conclusions when they are “couched
as  factual allegation[s].” Iqbal, 556 U.S.
679. Second, “only a complaint that states a plausible
claim for relief survives a motion to dismiss.”
Id. The Court has also instructed that application
of the facial plausibility standard involves two steps. Under
prong one, the court must determine the scope and nature of
the factual allegations that are well-pleaded and assume
their veracity; and under prong two, the court must proceed
to determine the claim's plausibility given the
well-pleaded facts. That task is context specific and, to
survive the motion, the allegations must permit the court
based on its ...