Court Opinion

ID: 221034
Source: CourtListenerOpinion
Date Created: 2011-07-15 00:02:23+00
Date Added: 2024-06-11T17:28:48.517684
License: Public Domain

[DO NOT PUBLISH]

                      IN THE UNITED STATES COURT OF APPEALS

                                   FOR THE ELEVENTH CIRCUIT
                                    ________________________               FILED
                                                                  U.S. COURT OF APPEALS
                                            No. 11-10865            ELEVENTH CIRCUIT
                                        Non-Argument Calendar           JULY 14, 2011
                                      ________________________           JOHN LEY
                                                                          CLERK
                            D.C. Docket No. 5:10-cv-00096-LGW-JEG

ARCH INSURANCE COMPANY,

llllllllllllllllllllllllllllllllllllllll                         Plaintiff - Appellant,

                                               versus

CLEMENTS, PURVIS & STEWART, P.C.,

llllllllllllllllllllllllllllllllllllllll                         Defendant - Appellee.

                                     ________________________

                           Appeal from the United States District Court
                              for the Southern District of Georgia
                                 ________________________

                                           (July 14, 2011)

Before BARKETT, MARCUS and FAY, Circuit Judges.

PER CURIAM:

         Appellant Arch Insurance Company (“Arch Insurance”) filed a complaint

against Appellee Clements, Purvis, & Stewart, P.C. (“Clements Purvis”) alleging a
claim for negligent misrepresentation relating to audits performed by Clements

Purvis. In response to Clements Purvis’ motion to dismiss, Arch Insurance filed

an opposition and a motion for leave to amend its complaint in the instance that

the district court found its initial complaint deficient. The district court denied

Arch Insurance’s motion for leave to amend, and subsequently granted Clements

Purvis’ motion to dismiss. Arch Insurance appealed. For the reasons stated

below, we find that the district court did not abuse its discretion in denying the

motion for leave to amend. Further, we find that Arch Insurance’s negligent

misrepresentation claim is not supported by a sufficient factual basis to survive a

motion to dismiss. Consequently, we affirm both the denial of the motion for

leave to amend and the dismissal of the complaint.

                                 I. BACKGROUND

      In 2005 and 2006, Arch Insurance issued performance bonds to a

construction company, Douglas Asphalt Company (“Douglas Asphalt”), after

reviewing Douglas Asphalt’s financial statements, which were audited by

Clements Purvis. Subsequently, Douglas Asphalt suffered financial difficulties

and was unable to fulfill its obligations under its construction contracts. As a

result, Arch Insurance incurred significant financial losses.

      In September 2010, Arch Insurance filed a complaint against Clements

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Purvis raising a claim for negligent misrepresentation. Arch Insurance alleged that

Clements Purvis negligently made material misrepresentations in its audits of

Douglas Asphalt upon which Arch Insurance relied to its financial detriment. On

October 19, 2010, Clements Purvis filed a motion to dismiss the complaint. Arch

Insurance filed its opposition to the motion to dismiss on November 4, 2010.

Concurrently, Arch Insurance also filed a motion for leave to amend the complaint

in the future if the court found the complaint deficient when ruling on the motion

to dismiss.

      On December 8, 2010, the Magistrate Judge denied the motion for leave to

amend the complaint, but stated that Arch Insurance could request leave to amend

the complaint immediately if it so desired. Arch Insurance did not do so.

Subsequently, on January 25, 2011, the district court granted the motion to

dismiss. Arch Insurance timely appealed, alleging that the district court erred both

by denying the motion for leave to amend and by dismissing the complaint.

                          II. STANDARD OF REVIEW

       We review a dismissal of a complaint under Fed.R.Civ.P. 12(b)(6) de novo.

Speaker v. U.S. Dep’t of Health and Human Services Centers for Disease Control

and Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010). We “accept[ ] the factual

allegations in the complaint as true and construe[ ] them in the light most

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favorable to the plaintiff.” Id. We review a denial of leave to amend a complaint

for abuse of discretion. Green Leaf Nursery v. E.I. DuPont De Nemours and Co.,

341 F.3d 1292, 1300 (11th Cir. 2003).

                                 III. DISCUSSION

      In its complaint, Arch Insurance raises a claim of negligent

misrepresentation, alleging that Clements Purvis made negligent

misrepresentations in its audits of the 2004 and 2005 financial statements of

Douglas Asphalt. A claim of negligent misrepresentation under Georgia law has

three elements: (1) a party negligently supplies false information to foreseeable

persons, known or unknown; (2) such persons’ reliance on that information was

reasonable; and (3) economic injury proximately resulted from that reliance.

Atwater v. Nat’l Football League Players Ass’n, 626 F.3d 1170, 1182 (11th Cir.

2010). Although Arch Insurance need not specifically plead every element to

survive a motion to dismiss, its complaint must “state a claim to relief that is

plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127
S. Ct. 1955, 1974, 167 L. Ed. 2d 929 (2007). “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, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). The complaint must include

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enough facts “to raise a right to relief above the speculative level.” Twombly, 550
U.S. at 555, 127 S.Ct. at 1965.

      In this case, Arch Insurance’s negligent misrepresentation claim is not

supported by a significant factual basis to raise its right to relief above the

speculative level. The complaint contains mere conclusory allegations that

Clements Purvis was negligent. For example, the complaint fails to include facts

regarding the tests Clements Purvis performed or failed to perform or facts

regarding how Clements Purvis’ actions deviated from the standard of care.

Further, the complaint fails to state what information in the audited financial

statements was inaccurate or constituted a misrepresentation. Thus, the complaint

lacked a sufficient factual basis upon which the district court could infer the

existence of an essential element of the claim and dismissal was warranted.

      In addition, the district court did not abuse its discretion by denying Arch

Insurance’s motion for leave to amend. Arch Insurance’s motion was premature as

it requested leave to amend only if the motion to dismiss was granted. Further,

Arch Insurance did not indicate what would be changed in the complaint; nor did

it attach an amended complaint. In denying Arch Insurance’s motion for leave to

amend on December 8, 2010, the district court specifically stated that Arch

Insurance could request leave to amend the complaint at that time if it so desired,

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but Arch Insurance filed no such motion. Even after the court ruled on January

25, 2011 by granting Clements Purvis’ motion to dismiss, Arch Insurance still did

not file a motion for leave to amend. Under those circumstances, the district court

did not abuse its discretion by denying Arch Insurance’s motion for leave to

amend.

                               IV. CONCLUSION

      For the reasons stated above, we affirm both the order denying Arch

Insurance’s motion for leave to amend and the order dismissing Arch Insurance’s

complaint.

      AFFIRMED.

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