ROSLYNN R. MAUSKOPF, District Judge.
By Amended Complaint filed on January 30, 2015, plaintiff Seguros Nuevo Mundo ("Seguros") brings this action against defendant Allen B. Trousdale seeking to enforce a guaranty against Trousdale individually. (Am. Compl. (Doc. No. 10).) Trousdale has moved to dismiss the Amended Complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (Mot. Dismiss (Doc. No. 13).) Seguros opposes the motion. (Mem. in Opp (Doc. No. 14).) For the reasons set forth below, the court grants Trousdale's motion.
As alleged in the Amended Complaint, and taking those allegations as true and in the light most favorable to plaintiff, Grad Associates, P.A. ("Grad"), a New Jersey architectural firm, and Eiffel Engineering Technique, C.A. ("EET") formed a joint venture, the Consortium Grad Eiffel (the "Consortium"), that contracted with the Venezuelan government to design, plan, and build a prison in Bolivar City, Venezuela. (Am. Comp. at ¶ 1.) As alleged on information and belief, Trousdale was at all relevant times the sole shareholder and president of Grad. (Id. at ¶ 4.)
As a condition precedent to the execution and delivery of the bonds, "Trousdale as the sole shareholder and president of Grad, executed and had notarized. . . [a] Guaranty." (Id. at ¶ 10.) Annexed to the Amended Complaint is a copy of the "Guaranty."
Relying on language from the Guaranty itself, quoted below from the Blanco translation, Seguros alleges that "Trousdale personally agreed to" the following:
(Id. at ¶ 11.)
Seguros further alleges:
(Am. Compl. at ¶ 12.)
According to the Amended Complaint, Grad never deposited these monies into escrow and, the Venezuelan government claimed a breach of the construction contract. (Id. at ¶¶ 13-14.) The government sued Seguros, seeking damages under the bonds of $18.6 million. (Id. at ¶ 15.) The suit eventually settled, and Seguros paid approximately $12 million. (Id. at ¶ 16.) Seguros alleges that at some unspecified point in time, Grad terminated its business operations, and that no sums sought to be recovered from Grad or Trousdale have been paid to Seguros despite written and oral demands for such payments. (Id. at ¶ 17.)
Seguros now seeks to recover from Trousdale "all sums paid by Seguros under the bonds, as well as costs, disbursements, attorney and notary fees, and other damages pursuant to the Guaranty." (Am. Compl. at ¶ 1.) Seguros alleges that the Guaranty imposes personal liability on Trousdale, and seeks to hold Trousdale individually accountable. Trousdale maintains that the Guaranty was a corporate guarantee on which he is not individually liable, and moves to dismiss the Amended Complaint for failure to plausibly plead a claim for individual liability against Trousdale. The Court agrees with Trousdale.
A motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) requires the court to examine the legal, rather than factual, sufficiency of a complaint. As required by Rule 8(a)(2), a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." To withstand a motion to dismiss, "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) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
A court considering a 12(b)(6) motion must "take[] factual allegations [in the complaint] to be true and draw[] all reasonable inferences in the plaintiff's favor." Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009) (citation omitted). A complaint need not contain "`detailed factual allegations,'" but it must contain "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). In other words, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citing Twombly, 550 U.S. at 555). Rather, the plaintiff's complaint must include "enough facts to 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." Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 570). The determination of whether "a complaint states a plausible claim for relief will . . . be a contextspecific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679 (citing Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir. 2007)).
Each of Seguros's claims for relief are premised upon the notion that Trousdale may be held individually liable under the Guaranty. Thus, Trousdale's motion to dismiss requires this court to determine whether Seguros's Amended Complaint, together with the attached Guaranty, are legally sufficient to support a cause of action based on the Guaranty against Trousdale in his individual capacity.
Under New York law,
To determine whether there is a sufficient showing of an agent's intent to be personally bound, courts in this circuit look to the following five "Lollo factors": "[1] the length of the contract, [2] the location of the liability provision(s) in relation to the signature line, [3] the presence of the signatory's name in the agreement itself, [4] the nature of the negotiations leading to the contract, and [5] the signatory's role in the corporation." Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund & Annuity Fund v. Lollo, 35 F.3d 29, 35 (2d Cir. 1994). The Second Circuit has also suggested examining the structure and content of the signature lines to determine whether the agent intended to sign the contract in his official capacity only. Lerner, 938 F.3d at 5. The Lollo factors apply whether the clause that purportedly binds the corporate actor is a personal liability clause or a personal guarantee clause. See Jacobson v. Televida, Inc., No. 04-CV-163, 2005 WL3609101, at *4 (E.D.N.Y. Aug. 10, 2005).
Applying the Lollo factors here, and construing the Amended Complaint and the annexed Guaranty, as well as all reasonable inferences therefrom, in favor of Seguros, "clear and explicit evidence" of Trousdale's intent to be bound personally is not plausibly alleged.
Within its four corners, the Guaranty is relatively short at three pages, though it is somewhat dense as it is single spaced. However, here, the Guaranty is wholly in Spanish. The Amended Complaint (as well as its predecessor) is devoid of any allegations indicating whether a translation was provided to Trousdale, or whether Trousdale enjoyed any fluency or working knowledge of Spanish. Indeed, in its memorandum in opposition, Seguros concedes that none was ever requested or provided. (Def. Mem. in Opp. at 7 n.1.) Seguros also claims, without any support, that because Trousdale signed a number of letters written in Spanish, "he and his agent [Rafael Mendoza, Trousdale's Venezuelan business consultant] clearly understood the Spanish documents that Trousdale was signing." Id. Other than these conclusory allegations, which are not admissible on this motion,
Similar concerns permeate the fourth Lollo factor — the nature of the negotiations leading to the contract. The Amended Complaint contains no allegations regarding the negotiation process; it merely alleges that Trousdale "executed and notarized" the Guaranty. (Am. Compl. at ¶ 10.)
However, Seguros does not plead any of these facts, nor does Seguros provide any support, factual or legal, for its claims. And tellingly, nowhere in its Amended Complaint (or in the original, or in its opposition papers) does Seguros allege that in the course of this "direct and significant involvement," Trousdale or his business agent agreed to, or even discussed individual liability during the negotiations culminating in the Guaranty. See EQT Infrastructure Ltd. v. Smith, 861 F.Supp.2d 220, 232 (S.D.N.Y. 2012) (lack of explicit allegation in complaint regarding discussions of individual liability weighs against imposing such liability). This factor, too, weighs against holding Trousdale liable.
The most compelling factors that weigh against imposing individual liability come from the language and structure of the Guaranty itself. First, and perhaps most important, the Guaranty does not contain a liability provision purporting to bind Trousdale individually. While the Guaranty contains Trousdale's name, and contains several references to Trousdale using "I" and "myself," Trousdale is so referenced in his representative capacity as an agent of Grad throughout the Guaranty:
(Ex. B.) Guarantees are contracts, and are governed by contract principles, including the principle that requires adherence to the plain meaning of the words chosen unless alternate definitions are provided on the face of the contract. The Merriam-Webster dictionary defines "on behalf of someone" as follows: "as a representative of someone." On Behalf of Someone, MERRIAM-WEBSTER, http://www.merriam-webster.com/dictionary/on%20behalf%20of (last visited on March 21, 2016). Similarly, Black's Law Dictionary defines the phrase as "acting in the place of someone else." On Behalf Of, BLACK'S LAW DICTIONARY, http://thelawdictionary.org/on-behalf-of/(last visited on March 21, 2016). As Trousdale notes, "the phrase recited throughout these passages — "on behalf of" — reinforces the inexorable fact that Mr. Trousdale executed [the Guaranty] as an agent for GRAD." (Mem. in Supp. at 17.)
Further support for this reading derives from the fact that the Guaranty imposes obligations solely on Grad and not on Trousdale:
(Ex. B.) Each reference is to Grad alone as the obligor, without a single reference to any obligations placed on Trousdale. Of particular note is the forum selection clause, designed to fix the locus for resolving disputes under this contract, which applies only to Grad. As Trousdale notes, "Logic alone suggests that if Seguros had intended to make Mr. Trousdale personally liable on [the Guaranty], it would have specifically mentioned him in the forum selection clause." (Mem. in Supp. at 20.) The contract's silence on this point speaks volumes.
Seguros claims that "[t]he Guaranty clearly and unambiguously states in two places that, Trousdale was agreeing and appointing himself as `[j]oint and several guarantor and primary payor' together with Grad, of the obligations arising under this agreement." (Mem. in Opp'n. at 5, 13.) But in doing so, Seguros does not keep to the actual language of the Guaranty, and wholly removes the language from its context. The Guaranty states in relevant part:
(Ex. B.) First, clause V discusses the joint and several guarantee that Grad makes. This clause hardly suggests that Trousdale is jointly liable with Grad. Second, nowhere in either clause does the Guaranty say that joint and several liability lies as between Trousdale and Grad. Indeed, in its own papers in opposition to the instant motion, Seguros claims that it "required that Trousdale, as president and principal shareholder of Grad, and Mr. Andres Simon Azpurua Rodriguez ("Azpurua"), and two other Directors of Eiffel, become joint and several guarantor(s) and primary payor(s) of the Bonds." (Mem. in Opp'n. at 2.) Again, Seguros provides no support for these assertions, nor does Seguros plead any of these facts in its Amended Complaint. Without accepting these statements for the truth of the matters asserted, Seguros's assertions suggest that any joint and several liability flows between the members of the Consortium, and cast serious doubt on Seguros's claim that such liability flows between Grad and Trousdale.
Finally, the Lollo analysis requires the court to examine the structure of the signature line. Here, Trousdale and the notary public both simply signed at the end of the agreement. Below Trousdale's signature is his printed name and the date on which he signed the Guaranty. Of significance, Trousdale only signed the agreement once. "Where individual responsibility is demanded the nearly universal practice is that the officer signs twice — once as an officer and again as an individual." Consac Indus., Inc., 2002 WL 31094855, at *4 (quoting Salzman Sign Co. v. Beck, 10 N.Y.2d 63, 67 (1961).)
It is true that in signing, Trousdale did not reference his corporate office by indicating he was signing on behalf of or as president of GRAD. Cf. id. at *6 ("Courts have construed a signature by a corporate representative following the word `by' to be indicative of an act of agency, militating against a finding of personal liability."). Additionally, the fact that a "signatory was the president and principal shareholder in the corporation" is a factor in favor of finding personal liability. Lerner, 938 F.2d at 5. However, here, those factors are clearly outweighed. The opening preamble to the document makes clear that in relation to the Guaranty as a whole, Trousdale was "acting in [his] capacity as President of a professional association." So too does the entirety of the document as noted above. Finally, "[a]lthough two signatures are not required in order to impose personal liability on the agent, the existence of only one signature weighs against imposition of personal liability." Integrated Mktg. & Promotional Sols, 2006 WL 3627753 at *3.
On balance, all of the factors here weigh against the imposition of individual liability. Thus, drawing from the Amended Complaint and the Guaranty all reasonable inferences in favor of Seguros, the non-moving party, Seguros has failed to plausibly allege "clear and explicit evidence" of Trousdale's intent to be bound by the Guaranty in his individual capacity. Accordingly, Trousdale's motion to dismiss (Doc. No. 13) is granted.
The Clerk of Court is hereby directed to enter judgment accordingly, and close the file.
SO ORDERED.
