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U.S. Specialty Insurance Co. v. Caasti Professional Contracting Service, Inc.

United States District Court, E.D. Michigan, Southern Division

May 1, 2017

U.S. SPECIALTY INSURANCE CO., Plaintiff,
v.
CAASTI PROFESSIONAL CONTRACTING SERVICE, INC., and CANDICE TAYLOR, Defendants.

          MEMORANDUM AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS COUNTS II AND IV OF THE COMPLAINT(Doc. 10) [1]

          AVERN COHN UNITED STATES DISTRICT JUDGE

         I. Introduction

         This is a business dispute. Defendant CAASTI Professional Contracting Service, Inc. (CAASTI) was a contractor on various construction projects in Michigan. In connection with its work, CAASTI was occasionally required to obtain payment and performance bonds. CAASTI, as principal, and Candice Taylor, as indemnitor, entered into an Indemnity Agreement in favor of plaintiff U.S. Specialty Insurance Company (USSIC) and affiliated surety companies. Under the Indemnity Agreement, USSIC issued bonds as surety on behalf of defendants for construction projects. USSIC is suing defendants alleging that it paid out costs on their behalf in the amount of $66, 969.84 but has not been indemnified.

         The complaint makes the following claims:

Count I - Breach of Indemnity Agreement
Count II - Common Law Indemnification
Count III - Specific Performance of Collateral Security Provision
Count IV - Quia Timet

         Before the Court is defendants' motion to dismiss Counts II and IV on the grounds that because the dispute is governed by an express contract, i.e. the Indemnity Agreement, plaintiff's quasi-contract claims fail to state plausible claims for relief. For the reasons that follow, the motion is DENIED.

         II. Background

         Under Indemnity Agreement, USSIC issued Payment and Performance Bonds naming Buildtech Ltd. Construction Development (Buildtech) as obligee with respect to a project on which CAASTI entered into a Subcontract (the Buildtech Project). CAASTI was later terminated from the Buildtech Project. Buildtech sued CAASTI, USSIC and others in state court, seeking damages under the Performance Bond (the Buildtech Litigation). While the Buildtech Litigation continues, USSIC filed the instant action.

         III. Legal Standard

         As to Rule 12(b)(6) a complaint must be dismissed if it does not “contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009). The plausibility standard demands more than a “sheer possibility that a defendant has acted unlawfully.” Id. Rather, for a claim to be facially plausible, a plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 1949. Rule 12(b)(6) motion tests the sufficiency of a plaintiff's pleading. Fed.R.Civ.P. 12(b)(6). The Court need not accept as true “legal conclusions or unwarranted factual inferences.” In Re Packaged Ice Antitrust Litig., 723 F.Supp.2d 987, 1002 (E.D. Mich. 2010) (quoting Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007)).

         In considering a Rule 12(b)(6) motion, a court may consider “matters of public record, ” such as documents recorded with the Register of Deeds, orders, and items appearing in the record of the case, as well as documents that are referred to in the complaint and are central to a plaintiff's claims. Commercial Money Ctr. Inc. v. Illinois Union Ins. ...


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