IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-60877

Summary Calendar

KLLM TRANSPORT SERVICES, LIMITED LIABILITY COMPANY,

Plaintiff

v.

MARSH USA, INCORPORATED, ET AL,

Defendants

KLLM TRANSPORT SERVICES, LIMITED LIABILITY COMPANY, 

Plaintiff–Appellant

v.

INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA; C.V.

STARR & COMPANY,

Defendants–Appellees

Appeal from the United States District Court 

for the Southern District of Mississippi

USDC Nos. 3:09-CV-93; 3:09-CV-94

Before REAVLEY, SMITH, and PRADO, Circuit Judges.

PER CURIAM:*

United States Court of Appeals

Fifth Circuit

F I L E D

November 18, 2011

Lyle W. Cayce

Clerk

 Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not *

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

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Plaintiff–Appellant KLLM Transport Services, LLC (“KLLM”), brought

suit against Defendants–Appellees C.V. Starr & Company and the Insurance

Company of the State of Pennsylvania (collectively, “Insurer Defendants”),

alleging a breach of an insurance policy (the “Policy”) that it had purchased from

the Insurer Defendants. The district court dismissed KLLM’s complaint for

failure to state a claim after determining that the contract’s terms were

unambiguous and that the Insurer Defendants had not breached any of its

terms. We affirm.

I. BACKGROUND

KLLM, a commercial trucking company, acquired the Policy from the

Insurer Defendants for a three-year period beginning January 1, 2000 and

ending January 1, 2003 (the “Policy Period”). The Policy provided commercial

umbrella coverage beyond the insurance KLLM had otherwise purchased. On

December 31, 1999, the Insurer Defendants sent a “binder” to KLLM’s insurance

broker. This binder stated the Policy Period, the premium rate, and that “[t]his

Binder may be canceled at any time by the Insured or the undersigned giving the

other notice in writing.” 

In March 2000, KLLM received the Policy. It contained an endorsement

titled “Mississippi Amendatory Endorsement” (the “Cancellation Provision”)

which stated that: 

This policy may be cancelled by the Insured by mailing to the

Insurer written notice stating when such cancellation shall be

effective. 

This policy may be cancelled or nonrenewed by the Insurer by

mailing or delivering a notice of cancellation or nonrenewal to the

named Insured at least thirty (30) days prior to the effective date of

cancellation or nonrenewal.

After twenty-two months, on October 30, 2001, the Insurer Defendants notified

KLLM that, pursuant to the Policy’s cancellation provision, they were cancelling

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the policy effective January 1, 2002. Thus, the Insurer Defendants provided

KLLM with sixty days notice of cancellation. 

KLLM alleged that this cancellation amounted to: breach of contract,

tortious breach of contract, and breach of the duty of good faith and fair dealing. 

In addition, KLLM alleged that the Insurer Defendants made oral

representations amounting to a promise for a guaranteed three-year, level-rate

agreement. KLLM alleged that it relied on these representations to its

detriment and were injured when the Insurer Defendants cancelled the Policy

before the end of the Policy Period. Accordingly, KLLM alleged a claim of fraud

and intentional misrepresentation. 

The district court dismissed KLLM’s claims with prejudice after

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determining that:

(1) the [Policy] was subject to a cancellation provision . . . ; (2) the

Cancellation Provision could be exercised by either Plaintiff or the

Insurer Defendants at anytime for any reason and, was not

restrictive in scope; (3) the Policy was unambiguous and did not

contain a three year “guaranteed” level premium as alleged in the

Complaint; and (4) any alleged promise that the Policy was

“guaranteed” for a three year period could not be relied on by the

Plaintiff, since this alleged promise contradicted the Cancellation

Provision.

KLLM now appeals these determinations by the district court. 

KLLM asserts that due to the complex procedural history of these consolidated cases,

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which were both transferred to a multi-district litigation in New Jersey for several years and

then returned to the Southern District of Mississippi, the Insurer Defendants’ motion to

dismiss was no longer pending when the district court called for a hearing to dispose of it.

Regardless, the district court gave counsel nine days advance notice prior to the hearing to

prepare, which we determine was sufficient notice for a sua sponte dismissal with prejudice.

See Carroll v. Fort James Corp., 470 F.3d 1171, 1177 (5th Cir. 2006) (“[A] district court may

dismiss a complaint on its own for failure to state a claim,” “as long as the procedure employed

is fair,”and such fairness requires “both notice of the court’s intention and an opportunity to

respond.”) (internal quotation marks and citations omitted). 

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II. STANDARD OF REVIEW AND APPLICABLE LAW

We review de novo a district court’s decision to dismiss a claim pursuant

to Rule 12(b)(6). Herrman Holdings Ltd. v. Lucent Tech., Inc., 302 F.3d 552,

557 (5th Cir. 2002). In doing so, we liberally construe the complaint and draw

all reasonable inferences in the light most favorable to the plaintiff. Woodard

v. Andrus, 419 F.3d 348, 351 (5th Cir. 2005). 

When reviewing a motion to dismiss under Rule 12(b)(6) we generally

limit our inquiry to the content of the pleadings, but where, as here, the

complaint incorporates a contract by reference, we may consider it as well. See

United States ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375,

379 (5th Cir. 2003). 

The district court exercised diversity jurisdiction under 28 U.S.C.

§ 1332(a). Accordingly, we apply the substantive law of the forum state,

Mississippi. Wiley v. State Farm Fire & Cas. Co., 585 F.3d 206, 210 (5th Cir. 

2009). Under Mississippi law, courts enforce insurance policies according to

their provisions. Noxubee Cnty. Sch. Dist. v. United Nat’l Ins. Co., 883 So. 2d

1159, 1166 (Miss. 2004). We have recognized that under Mississippi law,

contract interpretation consists of

a three-tiered approach . . . that begins with the text and applies the

familiar four corners test, which focuses exclusively on an objective

reading of the words employed in the contract to the exclusion of

parol or extrinsic evidence. Only if the contract is unclear or

ambiguous is a court authorized to resort to canons of interpretation

and parol evidence.

Wiley, 585 F.3d at 211 (internal quotation marks and citations omitted). 

Under Mississippi law,fraud and intentional misrepresentation are shown

by satisfying nine elements: 

(1) a representation (2) that is false (3) and material (4) that the

speaker knew was false or was ignorant of the truth (5) combined

with the speaker's intent that the listener act on the representation

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in a manner reasonably contemplated (6) combined with the

listener’s ignorance of the statement’s falsity (7) and the listener’s

reliance on the statement as true (8) with a right to rely on the

statement, and (9) the listener’s proximate injury as a consequence.

Moore v. Bailey, 46 So. 3d 375, 384 (Miss. App. 2010). 

III. DISCUSSION

A. Breach of Contract

KLLM argues that the Policy Period established a fixed-premium contract

with a similarly fixed three-year term, and that the fixed term is inconsistent

with the Cancellation Provision. Therefore, it argues, the Policy is ambiguous,

possibly illusory, and should be construed against the Insurer Defendants who

drafted the Policy. On this interpretation of the Policy, the Insurer Defendants’

cancellation constituted a breach. KLLM, however, cites no authority to support

this argument. In response, the Insurer Defendants argue that the Cancellation

Provision and the Policy Period are consistent: the contract establishes a fixedrate premium for a three-year period, or until either party cancels the Policy. 

Moreover, they argue, policy periods and cancellation provisions are frequently

part of insurance contracts, and so long as the cancellation provision complies

with state law and public policy, it should be enforced. In support of their

interpretation of the Policy, the Insurer Defendants point to a Mississippi

statute which states: “A cancellation . . . of liability insurance coverage . . . is not

effective . . . unless notice is mailed or delivered to the insured . . . not less than

thirty (30) days prior to the effective date of such cancellation.” Miss. Code Ann.

§ 83-5-28 (West 2006). 

We agree with the Insurer Defendants that there is nothing in the Policy

indicating a guaranteed three-year term. And, “read[ing] the contract as a

whole, so as to give effect to all of its clauses,” Facilities, Inc. v. Rogers-Usry

Chevrolet, Inc., 908 So. 2d 107, 111 (Miss. 2005), the Policy Period together with

the Cancellation Provision unambiguously means that the premium rate is set

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for the duration of the Policy Period, unless the Policy is cancelled by either

party prior to the end of the Policy Period. This unambiguous meaning is

confirmed by the Mississippi Code’s acknowledgment of cancellation provisions

in insurance contracts. The Insurer Defendants gave KLLM sixty days

notice—more than the thirty days required by the Policy—prior to cancelling the

Policy. Accordingly, the Insurer Defendants did not breach the contract and did

not breach their duty of good faith and fair dealing. See Baldwin v. Laurel Ford

Lincoln-Mercury, Inc., 32 F. Supp. 2d 894, 898 (S.D. Miss. 1998) (“A party which

acts in accordance with the express terms of a contract generally cannot be found

to have violated the covenant of good faith and fair dealing.”). 

B. Fraud and Intentional Misrepresentation

KLLM maintains that it still pleaded a viable claim of fraud and

intentional misrepresentation even if the Insurer Defendants did not breach the

Policy. KLLM alleged that “[w]hen KLLM purchased the Policy from Insurer

Defendants, they promised and represented to KLLM that the premium rate

would remain unchanged for three years.” In response, the Insurer Defendants

argue that as a matter of law, KLLM could not have reasonably relied on that

oral promise because it is contrary to the Policy’s unambiguous language. See

Leonard v. Nationwide Mut. Ins. Co., 499 F.3d 419, 440 (5th Cir. 2007)

(“[I]nsured’s reliance on [insurance agent’s] statements was objectively

unreasonable in light of the policy language clearly [to the contrary.]”). The

Insurer Defendants also urge us to affirm on an alternative ground not discussed

by the district court: KLLM failed to plead fraud with the particularity required

by Federal Rule of Civil Procedure 9(b). See Sullivan v. Leor Energy, LLC, 600

F.3d 542, 550–51 (5th Cir. 2010) (“State law fraud claims are subject to the

heightened pleading requirements of Rule 9(b).”). 

We may affirm the district court’s dismissal order on different grounds

than those mentioned by the district court. Gulf Guar. Life Ins. Co. v. Conn.

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Gen. Life Ins. Co., 304 F.3d 476, 486 (5th Cir. 2002). We do so here, because

KLLM did not sufficiently plead fraud. “To plead fraud adequately, the plaintiff

must specify the statements contended to be fraudulent, identify the speaker,

state when and where the statements were made, and explain why the

statements were fraudulent.” Sullivan, 600 F.3d at 551 (citation and internal

quotation marks omitted). While it is true that KLLM alleged that “they [the

Insurer Defendants] promised and represented to KLLM that the premium rate

would remain unchanged for three years,” by not specifying “who at the company

made the statements,” they inadequately pleaded fraud under Rule 9(b). See

Sullivan, 600 F.3d at 551. Accordingly, the district court did not err by

dismissing KLLM’s fraud claim.

IV. CONCLUSION

For the foregoing reasons, the district court’s order is AFFIRMED.

 

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