Seguros Nuevo Mundo S.A. v. Trousdale
16-998-cv
| 2d Cir. | Nov 1, 2016Background
- Seguros Nuevo Mundo (Seguros), a Venezuelan bond underwriter, issued payment/performance bonds for a prison construction project performed by a joint venture of Grad Associates P.A. (Grad) and Eiffel.
- As a condition to underwriting, Seguros obtained a guaranty signed by B. Allen Trousdale "on behalf of" Grad, described in the attached translation as Trousdale signing "in [his] capacity of President" and "on behalf of GRAD ASSOCIATES P.A.".
- Venezuela sued Seguros after the joint venture allegedly breached the construction contract; Seguros settled for $12 million and then sued Trousdale to enforce the guaranty.
- Trousdale moved to dismiss under Rule 12(b)(6), arguing the guaranty was not a personal guaranty but executed only in his representative capacity.
- The district court dismissed for failure to plead "clear and explicit evidence" of Trousdale's intent to incur personal liability; the Second Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the guaranty binds Trousdale personally despite his signing "on behalf of" Grad | The guaranty is enforceable against Trousdale personally; he intended personal liability | Trousdale signed solely as Grad's representative; no clear, explicit intent to assume personal liability | Dismissal affirmed — complaint fails to allege clear and explicit evidence of personal intent |
| Whether the complaint pleads sufficient factual context to infer personal guaranty | Complaint alleges facts surrounding bonds, settlement, and guaranty execution suffice | Complaint lacks details about negotiations, transaction structure, or any statement showing personal assumption of liability | Held: pleadings are insufficient; plain language shows representative signing |
Key Cases Cited
- Lerner v. Amalgamated Clothing & Textile Workers Union, 938 F.2d 2 (2d Cir.) (agent not personally bound absent clear intent)
- Mencher v. Weiss, 306 N.Y. 1 (N.Y. 1953) (an agent will not be personally bound unless there is clear and explicit evidence of intent)
- Salzman Sign Co. v. Beck, 10 N.Y.2d 63 (N.Y. 1961) (clarifies proof required to impose personal liability on agent)
- Chambers v. Time Warner, Inc., 282 F.3d 147 (2d Cir. 2002) (standard of review on a Rule 12(b)(6) motion)
- Roth v. Jennings, 489 F.3d 499 (2d Cir. 2007) (incorporated documents may be considered on a motion to dismiss)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for pleading)