FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT APRIL19, 2005 THOMAS K. KAH

N CLERK [ DO NO T P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 04- 15576 N on -A rgum entC al endar

________________________ D . C . D ocketN o. 02 -002 15 -C V -P W G -M R A Y F . R O B B I N S , I I ,
P l ai nt i ff -C ou nt er -D ef

endant C o u n te r - C la im a n t- A p p e lle e , v ersu s W I L L I A M J . S H E P P A R D , J R ., D ef endant -C ou nt er -C l ai m ant C o u n te r - D e f

e n d a n t- A p p e lla n t.

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e N o r th e r n D i s tr i c to f A l a b a ma

_________________________ ( A pr i l 19, 2005) B efo re B IR C H , B A R K E T T an d H U L L , C i rcu i tJu d g es.The Stevenson tract was previously acquired by

Robbins, Betts, and Kenneth Northrup. 1 Pursuant to a ver

bal agreement amongthose purcha sers, Robbins owns 50%, B etts owns 25%, and Nor thrup owns 25%. Theentire property, however, is titled in R obbins’s name alone. Ne ith e r B e tts no r N or

throp arepa

rtie s to thi s a

pp e a l. 2 P E R C U R I A M: D e f e nda ntW i l l i a m J . S he ppa r d J r . a ppe a l s the di s tr i c tc our t ’ s or de rgr a nt i ng sum m ary j ud gm entt o p l ai nt i ff R ay F . R ob bi ns II on R ob bi ns’ s bre ac h o f c on tra ct c l a i m. A f

t e rr e v i e w , w e a f

f i r m. I . B AC KG RO UN D I n A pr i l , 2001, de f

e nda ntS he ppa r d m e tw i th J on B e t t s t o l ook a tdi f f e r e nt tr a c t s of l a nd. B e t t s s how e d S he ppa r d a pa r c e l of l a nd know n a s the “ S t e ve ns on” tr a c ta nd i nf

or m e d S he ppa r d tha the ( B e t t s ) ha d be e n of f e r e d $1. 4 m i l l i on f

orthe hardw oo d al on e on t he tra ct . T he S t ephenson tra cti s t i t l ed i n t he nam e of pl ai nt i ff R ay F . R ob bi ns II . 1 S hepp ar d asked B ett s t o p rovi de hi m w i th t he nam e of a n o ut si de apprai se r, a nd B e t t s r e c om m e nde d C l i f f D r oue t . D r oue ta ppr a i s e d the pr ope r ty , a nd ba s e d on thi s app ra i sa l , S hepard bel i eved thatthe S t evenson t ra cthad an est i m at ed t i m ber v a lu e o f $ 2 .9 4 m illio n . S h e p p a r d a ls o b e lie v e d , a g a in b a s e d o n D r o u e t’s a p p r a is a l, tha tonl y 300 - 400 a c r e s ha d be e n c uta nd tha tthe S t e ve ns on tr a c ts t i l l ha d 2, 100 a c r e s o f m e r c h a n ta b le tim b e r . O n M ay 18 , 20 01 , pl ai nt i ff R ob bi ns agre ed t o a prop osed draf tof a s al esDef endant Sheppa

rd indicate s that when hetold plaintiff Robbins that Drouet had 2 appraised the timber on the Stevenson tract at $2.9 million, R obbins replied that he be lieved that therewas be tween $2.6 a nd $3 milli on worth of timber on thetrac t.

3 c ontr a c tf

orthe S t e ve ns on tr a c tf

or$2. 9 m i l l i on w i th $30, 000 e a r ne s tm one y t o be pa i d by S he ppa r d. D ur i ng a s ubs e que ntm e e t i ng, de f e nda ntS he ppa r d ne got i a t e d a r e duc t i on i n the pr opos e d pur c ha s e pr i c e f r om $2. 9 m i l l i on t o $2. 7 m i l l i on a nd p la in tif f R o b b in s n e g o tia te d a n in c r e a s e in th e e a r n e s t m o n e y f r o m $ 3 0 ,0 0 0 to $60, 000. 2 O n Jun e 20, 20 01 , defe nd antS hepp ar d ent er ed i nt o a cont ra ctw i th p l ai nt i ff R o b b in s a n d J o n B e tts to p u r c h a s e th e S te v e n s o n tr a c t, to g e th e rw ith m in e r a l r ig h ts a n d a o n e - h a lf

in te r e s t in th e p r o p e r ty ’s c o a l d e p o s its , f o ra s u m o f

$ 2 .7 m illio n . P a r a g r a p h 7 o f

th e c o n tr a c t c le a r ly p r o v id e s th a t th e s e lle rR o b b in s s h a ll re t ai n t he ea rnes tm on ey of $6 0, 00 0 i f the pu rc hase r S hepp ar d d oes notproceed w ith c lo s in g , a s f

o llo w s : 7. P ur c ha s e rs ha l l ha ve the r i ghtt o m a r ke tthe t i m ber on sai d p roperty f or 30 days fr om thi s dat e; h o w e v e r , n o tim b e rs h a ll b e c u t o rr e m o v e d f r o m s a id p ro p erty, u n t i l S el l er h as b een p ai d th e fu l l p u rch ase pri ce . B ef

ore the end o f the 30 th d ay fr om thi s dat e, P urchas ershal l no t i fy S el l eri n w ri t i ng w hether P urchas er shal l proceed w i th cl osi ng . In the eventP urchas erdo es n o t w a n t to p r o c e e d w ith c lo s in g th e n S e lle rs h a ll r e ta in the ea rnes tm on ey i n t he sum of $6 0, 00 0. 00 and S el l er s ha l l ha ve no r i ghtt o s pe c i f i c pe r f or m a nc e . I n the e ve nt P ur c ha s e rgi ve s not i c e t o pr oc e e d w i th c l os i ng, the n the s a le s h a ll b e c lo s e d a n d th e d e e d d e liv e r e d w ith in s ix ty4 ( 6 0 ) d a y s f

r o m th e d a te o f

e x e c u tio n o f

th is c o n tr a c t. P ar agraph 11 of the cont ra ctsi m i l ar l y provi des thatthe ea rnes tm on ey w ou l d b e f

orfe i t ed i f the pu rc hase r S hepp ar d fai l ed t o carry ou tthe cont ra ct , as fo l l o w s: 1 1 . S h o u ld th e P u r c h a s e rf a il to c a r r y o u t th is co n tract , i n acco rd an ce w i th i t s p ro v i si o n s, th e earn est m on ey pai d b y P urchas ershal l be forf ei t ed as l i qu i dat ed dam ages and shal l becom e the prop er ty of the S el l er . T h a t s a m e d a y , d e f

e n d a n t S h e p p a r d d e liv e r e d a c h e c k , p o s t- d a te d J u ly 2 5 , 2 0 0 1 , to p la in tif f R o b b in s in th e a m o u n t o f $ 6 0 ,0 0 0 . S h e p p a r d th e n a p p lie d f o ra lo a n a t a b a n k in C u llm a n , A la b a m a , to o b ta in th e n e c e s s a r y f

u n d s to c o m p le te th e p u r c h a s e . D r o u e t a c c o m p a n ie d S h e p p a r d to the ba nk a nd s poke w i th the ba nke r s , butthe ba nke r s i ndi c a t e d tha tthe y w oul d not m a ke a l oa n t o c ove rthe tr a ns a c t i on. O n J ul y 20, 2001, D r oue tt ook bi ds f r om t i m ber bi dd er s. W hen t he bi dd i ng w as com pl et ed, S hepp ar d asked John N ey m an of C oos a R i ve rT i m be rC om pa ny hi s opi ni on of the va l ue of

a l l of the m e r c h a n ta b le tim b e ro n th e S te v e n s o n tr a c t. N e y m a n r e p lie d th a t S h e p p a r d s h o u ld note xpe c tm or e tha n $750, 000 f orthe t i m be rtha tc oul d be ha r ve s t e d on the p r o p e r ty . O n Jul y 23, defe nd antS hepp ar d cal l ed pl ai nt i ff R ob bi ns and t ol d h i m that he w ou l d b e borrow i ng m on ey t o cl ose the tra nsac t i on . S hepp ar d asked for anShepp ard a lso inc lude d c laims a g ains t D ro ue t, B e tts , N or thr up , a nd No rt h A la bama 3 Forest Products, Inc., a c ompany owned by

Betts and Northrup, for

fra ud and bre ach of

contra ct 5 e xt e ns i on of

the de a dl i ne t o c l os e a nd a s ke d tha tR obbi ns notde pos i tthe $60, 000 c he c k unt i l c l os i ng. R obbi ns a gr e e d t o a n e xt e ns i on unt i l A ugus t1, 2001, a nd agre ed t o h ol d t he check unt i l thatdat e. O n Jul y 30, 20 01 , S hepp ar d cal l ed R ob bi ns and asked t o m ee tw i th h i m on A ug ust1, 20 01 . S hepp ar d al so confi rm ed th a t h e w o u ld b e p r e p a r e d to c lo s e w ith in a w e e k . H ow ever , atthe A ug ust1, 20 01 m ee t i ng S hepp ar d g ave R ob bi ns a l ett er , i nd i ca t i ng for the fi rs tt i m e thathe di d n oti nt end t o p roce ed w i th t he sa l e. T hat s a m e d a y , R o b b in s a tte m p te d to d e p o s it S h e p p a r d ’s c h e c k , b u t it w a s r e tu r n e d w ith a “ s t op pa y m e ntor de r . ” S he ppa r d t ol d R obbi ns tha tthe c he c k w a s “ no good” a nd tha ti t“ ha d ne ve rbe e n good a tthe t i m e he w r ot e i t . ” S he ppa r d c l a i m s tha the c oul d notpe r f

or m on the c ontr a c tbe c a us e he w oul d be una bl e t o r e a l i z e e nough proceeds f

rom t i m ber s al es t o cov erthe pu rc hase pri ce . O n January 28 , 20 02 , R ob bi ns fi l ed a c om pl ai ntagai nstS hepp ar d for breac h of c ontr a c ta nd f

r a udul e ntm i s r e pr e s e nt a t i on a s t o the $60, 000 pa y m e nt . R obbi ns a s ke d f orthe $60, 000 i n e a r ne s tm one y , a ddi t i ona l c om pe ns a t or y da m a ge s , a nd $ 5 0 0 ,0 0 0 in p u n itiv e d a m a g e s . S he ppa r d f

i l e d c ount e r - c l a i m s a ga i ns tR obbi ns f orf r a ud a nd br e a c h of c ontr a c tr e ga r di ng both the S t e ve ns on tr a c ta nd a nothe rl a nd s a l e . O n O c t obe r14, 3in connec tion with the two land purcha ses. Sheppard’s claims ag ainst these additional par ties were re solved by

settlement and a

re not involved in this appeal. We reviewa district cour t's grant of summar

y judgment de novo, viewingthe evidenc e 4 in the light most favorable to the pa rty opposing themotion. W ilson v. B/E Aerospace , Inc., 376 F.3d 1079, 1085 ( 11th Cir. 2004). “Summary judgment is appropriateif the re cord shows no g enuine issue of

material fac t and that the movingparty is entitled to judgment as a matter of law.” Witter v. De lta Air Lines, Inc., 138 F .3d 1366, 1369 (11th Cir. 1998) (quotation marks and citation omitted). 6 2003, S he ppa r d di s m i s s e d a l l of hi s c ount e r - c l a i m s a ga i ns tR obbi ns . R obbi ns am ended h i s c om pl ai ntby di sm i ss i ng hi s f raud cl ai m and reduci ng hi s dam ages c la im to o n ly a r e q u e s t f o rth e $ 6 0 ,0 0 0 in e a r n e s t m o n e y . O n S e pt e m be r30, 2004, the di s tr i c tc our tgr a nt e d R obbi ns ’ s m ot i on f or sum m ary j ud gm ent , deni ed S hepp ar d’ s m ot i on for s um m ary j ud gm ent , and ent er ed j udgm e nti n R obbi ns ’ s f a vori n the a m ountof

$60, 000. S he ppa r d a ppe a l e d. 4 I I . DI S CUS S I ON A ft erre vi ew , w e c on cl ud e thatthe di stri ctcourtprop er l y gra nt ed sum m ary ju d g m e n t to p la in tif

f R o b b in s f

o rs e v e r a l r e a s o n s . A . P l ai n M ean i n g o f t h e C on tr act F i r s t , the c ontr a c ti n que s t i on c l e a r l y pr ovi de d tha tthe s e l l e rw oul d r e t a i n the $60, 000 i f

the pur c ha s e rdi d notw a ntt o pr oc e e d w i th c l os i ng. S he ppa r d, the pu rc hase r, di d n otproceed w i th cl osi ng and R ob bi ns, the se l l er , w as there fore e nt i t l e d t o r e t a i n the $60, 000. G i ve n the c l e a rl a ngua ge i n the c ontr a c ttha tthe se l l erw ou l d ret ai n t he $6 0, 00 0 i f the pu rc hase r di d n otcl ose, the di stri ctcourt7

s im p ly e f f e c tu a te d th e u n a m b ig u o u s te r m s o f th e c o n tr a c t. T h e p a r tie s d is p u te a t le n g th w h e th e rth e c o n tr a c t in is s u e w a s a n o p tio n to p u r c h a s e . H o w e v e r , w e n e e d n o t r e s o lv e th a t is s u e b e c a u s e u n d e rth e p la in l angu age of the cont ra ctR ob bi ns, as se l l er , w as ent i t l ed t o ret ai n t he m on ey w he the ri tw a s e a r ne s tm one y orc ons i de r a t i on f ora n opt i on. S e e S t e w a r tv. R o b e r ts o n , 4 9 0 S o .2 d 1 3 , 1 4 ( A la . C iv . A p p . 1 9 8 6 ) ( “A s a g e n e r a l ru le , [ e a r n e s t] m on ey i s s ubj ec tt o forfe i ture i f the pu rc hase r def aul t s on t he cont ra ct . ”) . B . L i q u i d ated D am ag es or P en al ty W e a ls o a g r e e w ith th e d is tr ic t c o u r t th a t th e $ 6 0 ,0 0 0 is e n f o r c e a b le l i qu i dat ed dam ages and d oes notam ou ntt o an u nenforceabl e penal ty. A l i qu i dat ed dam ages prov i si on i s a n am ou ntt o b e pai d for breac h o f c on tra ct , w hi ch the part i es a g r e e is a n a d e q u a te a s s e s s m e n t o f d a m a g e s w h ic h w o u ld r e s u lt f r o m th e b r e a c h . C ook v. B r ow n, 408 S o. 2d 143, 144 ( A l a . C i v. A pp. 1981) . I n de t e r m i ni ng w he the ra l i qui da t e d da m a ge s pr ovi s i on i s e nf or c e a bl e , c our t s i n A l a ba m a di s c e r n: ( 1) w he the rthe i nj ur y c a us e d by the br e a c h i s di f f i c ul tori m pos s i bl e t o di s c e r n; ( 2) w he the rthe pa r t i e s i nt e nde d t o pr ovi de f orda m a ge s r a the rtha n a pe na l ty , a nd ( 3) w h e th e rth e s tip u la te d s u m is a r e a s o n a b le p r e - b r e a c h e s tim a te o f p r o b a b le lo s s . S u tto n v . E p p e r s o n , 6 3 1 S o .2 d 8 3 2 , 8 3 5 ( A la . 1 9 9 3 ) . “I f o n e o f th e s e th r e e c r ite r ia i s notm et , the cl ause m ustfa i l as a penal ty. ” M i l t on C on str. C o. v. S t at e H i gh w ayThe c ases that Sheppa rd re lies upon involved liquidated damag es which w erea fa r 5 greater propor

tion of the overall cost of the land itself or, in other words, damag es which w ere not rea sonable e stimates of probableloss. In Cook, the ear nest money

which wa s to be forf

eited if the buyer breached wa s $10,000 compare d to a total purcha se priceof $123,000, or 8.1%of 8 D e p ’t, 5 6 8 S o .2 d 7 8 4 , 7 9 0 ( A la . 1 9 9 0 ) . H e r e , th e p r im a r y c o s t to R o b b in s w a s th e o p p o r tu n ity c o s t in h is a b ility to p u t h is p r o p e r ty o n th e m a r k e t. T h e v a lu e o f th a t lo s t o p p o r tu n ity is n o t r e a d ily di sc erni bl e w i tho utthe as si st ance of som e pre sum abl y c ost l y a nd soph i st i ca t ed e c onom i c a na l y s i s . W i th r e s pe c tt o the s e c ond pr ong, the f a c ttha tR obbi ns bargai ned aw ay a s peci fi c- perf orm ance re m edy, i n con j un ct i on w i th t he fa ctthat the $60, 000 a m ountw a s onl y 2. 2% of the ove r a l l pur c ha s e pr i c e of $2. 7 m i l l i on, sugg es tthatthe part i es i nt ended t o com pensat e R ob bi ns for w hathe l ostra ther than sec ure S hepp ar d’ s per form ance by pu ni shi ng hi s def aul t . S ee C am el otM usi c, I n c . v . M a r x R e a lty & I m p r o v e m e n t C o ., 5 1 4 S o .2 d 9 8 7 ( A la . 1 9 8 7 ) ( “a p e n a lty is c ha r a c t e r i z e d a s a s e c ur i ty f orthe pe r f

or m a nc e of

the a gr e e m e ntora s a puni s hm e nt f o rd e f a u lt” ) . F in a lly , g iv e n th e r e la tiv e s o p h is tic a tio n o f th e p a r tie s to th is tran sact i o n , th e u n cert ai n ty i n cal cu l at i n g R o b b i n s’ s l o ss, an d th e rel at i v el y m o d est 2. 2% re l at i on shi p b etw ee n t he sum of $6 0, 00 0 t o t he $2 . 7 m i l l i on pu rc hase pri ce for the l and, w e c on cl ud e that$6 0, 00 0 w as a r ea sonabl e e st i m at e of the l oss that R ob bi ns i ncurred by prec l ud i ng hi m se l f, fr om se l l i ng the S t ephenson tra ctt o o thers dur i ng the t e r m of

hi s c ontr a c tw i th S he ppa r d. 5the purc hase price. 408 So.2d at 143-44. And in Southpace Proper ties, Inc. v. Ac quisiti on Group, this Court found that a stipulated damag es cla use g iving a

real estate broker a 6% commission of a $1.6 milli on listi ngprice(which a mounts to $96,000) in addition t o costs and expenses if the property

owner breached not only

would have overcompensated the broker, but also would haveg iven the broker more tha n it would have ea

rned had it actually

located a buyer. 5 F.3d 500, 505- 06 (11th Cir. 1993). 9 C . M is t a ke W e a l so re

j ec tS hepp ar d’ s vague as se rt i on thathi s there w as a m utual m i s t a ke w hi c h e xc us e d hi s pe r f or m a nc e unde rthe c ontr a c t . S he ppa r d c ont e nds th a t th e e v id e n c e s u g g e s tin g th a t th e la n d w a s w o r th m u c h le s s th a n h e o r ig in a lly be l i e ve d r a i s e s a s ubs t a nt i a l que s t i on a s t o w he the rhi s pe r f or m a nc e s houl d be e xc us e d a s the r e s ul tof

a m i s t a ke . S pe c i f

i c a l l y , S he ppa r d i ndi c a t e s tha the be l i e ve d tha tthe S t e phe ns on tr a c tha d a n e s t i m a t e d t i m be rva l ue of $2. 94 m i l l i on, tha tthe r e w oul d be e nough pr oc e e ds f r om t i m be rs a l e s t o m a ke the $2. 7 m i l l i on pa y m e nt , a nd tha tD r oue t ’ s a ppr a i s a l l e d hi m t o be l i e ve tha tonl y thr e e t o f our hu nd re d acr es of m er chant abl e t i m ber had been cutand t w enty- on e hun dred acr es r e m a in e d . W hi l e S hepp ar d m ay have m ade am i st ake, no thi ng i n t he re cord show s that the r e w a s a m utua l m i s t a ke . S e e C obe r n v. F os he e , 128 S o. 779, 780 ( A l a . 1930) (aparty m ustprov e thatthere w as a m utual m i st ake by the cont ra ct i ng part i es for a c our tt o r e f

or m the c ontr a c t ) ; K a ntv. A t l a nt a , B . & A . R . C o. , 66 S o. 598, 599 ( A l a . 1914) ( “ A m i s t a ke orm i s unde r s t a ndi ng of one pa r ty t o a tr a ns a c t i on,10

som et i m es styl ed a ‘ un i l at er al m i st ake, ’ w i l l no tautho ri ze [] the re form at i on of a w r i t t e n i ns trum e nt ; s i nc e , i n or de rt o r e f or m a c ontr a c t , i tm us ta ppe a rtha tthe pa r t i e s m utua l l y i nt e nde d s om e thi ng di f f e r e ntf r om tha te xpr e s s e d. ” ( c i t a t i on o m itte d ) ) . B o th p a r tie s id e n tif ie d th e s p e c if

ic tr a c t o f

la n d b e in g s o ld . W h ile S hepp ar d n ow com pl ai ns thathe bel i eved thatthere w as m ore m er chant abl e t i m ber on the l a nd tha n i n f

a c tthe r e w a s , he w a s gi ve n the oppor tuni ty t o ha ve the l a nd apprai se d, and i n fac tdi d so. T he on l y m i st ake w as S hepp ar d’ s i ni t i al det erm i nat i on , base d o n t he apprai sa l , thatthe t i m ber on t he l and w as w orth m ore th a n h e n o w b e lie v e s it to b e w o r th . D . P arti es N ot Jo i n ed S h ep p ard l ast l y arg u es th atB et t s an d N o rth ru p , as R o b b i n s’ s j o i n t -v en tu rers, ar e nec es sa ry part i es t o any cl ai m brou gh tby R ob bi ns for the $6 0, 00 0. W hether R obbi ns ha s a gr e e d t o di vi de the pr oc e e ds f r om the $60, 000 w i th B e t t s a nd N o r th ru p is ir r e le v a n t to th e r e s o lu tio n o f th is c a s e . I t is R o b b in s w h o h a s title to the S t e ve ns on tr a c t , a nd i ti s he w ho i s i de nt i f i e d i n the c ontr a c ta s the s e l l e r . T he r ig h ts th a t B e tts a n d N o r th ru p ( o ra n y lie n h o ld e rf o rth a t m a tte r ) h a v e , v is - a - v is R obbi ns , ha ve no be a r i ng on R obbi ns ’ s c ontr a c tc l a i m a ga i ns tS he ppa r d f orthe $ 6 0 ,0 0 0 . I I I . CONCL US I ON11

F or al l of the abov e r ea sons, thi s C ou rtaf fi rm s the di stri ctcourt ’ s order de ny i ng S he ppa r d’ s m ot i on f ors um m a r y j udgm e nt , gr a nt i ng R obbi ns ’ s m ot i on f or su m m ary j u d g m en t , an d en t eri n g j u d g m en ti n fav o r o f R o b b i n s, an d ag ai n st S h e p p a r d , in th e a m o u n t o f S ix ty T h o u s a n d ( $ 6 0 ,0 0 0 .0 0 ) D o lla r s . AF F I RME D.