F ILED U.S. CO URT OF AP P EALS ELEVENTH CI RCUIT Novem ber 4, 2 008 THO MAS K . KAHN CLERK [DO NOT PUBLISH] IN THE UN ITED STATES COURT OF APPEALS FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __ No. 0 8- 11 24 2 Non -Arg um en t Ca le nd ar

__ __ __ __ __ __ __ __ __ __ __ __ D. C. Dock etNo. 0 6- 00 98 0- CV-J -2 5J RK K.C. TROW ELL, Pl ai nt iff -Ap pe ll an t-C ro ss -Ap pe ll ee, ve rs us SOUTH FINANCIAL GROUP, INC., a So ut h C aro li naco rp or at io n, Defen da nt -Ap pe ll ee-C ro ss -Ap pe ll an t.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co urt fo r th e Mi dd le Dis tri ctof F lo rid a

__ __ __ __ __ __ __ __ __ __ __ __ _ (No ve m ber 4 , 20 08 ) Befo re ANDERSON, MARCUS an d WILSON, Circu itJu dg es . PER CURI AM: Pl ai nt iff -Ap pe ll an t K.C. Tro well ap pe al s t he di stric t co urt’s p art ia l di sm is sa l o f hi s amend edco m pl ai ntforfai lu re t o s ta te a cl ai m for bre ach ofco nt ractan d t he di st ric t co urt’s d en ia l o f hi s m ot io n t o fi le a se co ndam en de d

co m pl ai ntto ad d acla im

forco nt ractrefo rm at io n. OnJu ly 16, 2 00 4, CNB Flo rid a Ban ks ha res (“ CNB”) m erg edwith Def en da nt -Ap pe ll ee Th e So ut h F in an ci al Gro up , Inc . (“ TSFG”). TSFG as su m edall of C NB’s ex is ti ng ass et s an d l iabi li ti es . Pri orto th e m erg er, Tro well serve d a s p res id en t o f CNB. As asubs ta nt ia l
co m po ne ntof h is co m

pe ns at io n p ack ag e, he rece iv edop ti on s fo r th e p ur ch as e o f CNB s to ck . Trowel l ac qu ire d b ot h In cen ti ve Sto ckOpt io ns (“ ISOs ”) an d No nIn cen ti ve Sto ckOpt io ns (“Non -ISOs ”). Und er the Int ern al Rev enue Co de , an I SO
rece iv es sp eci al tax tre atm en t i f itis ex erci se d dur in g a n e m pl oyee’s term

of
em pl oym en t o r wit hi n t hr ee m on th s o f hi s o r he r te rm in at io n. Se e 2 6 U.S.C. § § 42 1- 22
. Inco nt em

pl at io n o f th e m erg er, Tro well an d C NB en te redin to anag reem en t
ex te nd in g t he ti m e fo r Tro well to ex erci se hi s s to ckop ti on s (“ Agr eem en t” ). The rel ev an t p arag rap h s ta te s: Opt io ns : At ta ch edas Ex hi bi t A i s a s pr ead sh eetde ta il in g a ll of t he op ti on s t o a cqui re CNB c omm on st oc k h el d b y Exec ut iv e. Und er the CNB Lo ng Term

Inc en ti ve Pla n, upo n Ex ecu ti ve ’s term in at io n o f em pl oym en t, o pt io ns m

us t b e ex erci se d wi th in eit he r 90 day s o r on e y ear o f te rm in at io n. CNB ag rees th atimm ed ia te ly prio r to th e co ns umm at io n o f th e Me rg er, i t wi ll cau se th e 9 0 d ay an d o ne y ear li m it at io n p ro vi si on s i n t he Pla n t o b e m od ifi edor wa iv edwith res pe ctto th e Exe cu ti ve ’s st oc k o pt io ns an d re pl acedwith afiv e y ear te rm in at io n. Th is m od ifi cat io n o r wai ve r sh al l n otaffe ctth e 2ex pi rat io n d at e o f eac h o pt io n a s s ho wn o n the sec on d p ag e o f Exh ib it

A. On J ul y 16 , 20 04 , th e d ay

th e m erg er was co m

pl et ed , Trowel l’s em

pl oym en t with C NB te rm in at ed . On Sep te m be r 1, 2 00 5, a l it tl e o ve r th irt een m on th s l at er, Trowe ll so ug htto ex erci se hi s IS Os. Due to th e ex pi rat io n o f m or e th anth ree
m on th s fr om

th e d at e o f hi s t erm in at io n, TSFG i nf orm edTrowel l tha t h is st oc k op ti on s co ul d o nl y

be ex erci se d a s No n- ISOs . Sho rtl y th erea fte r, Trowe ll bro ug ht a b reac h o f co nt ractsu itag ai ns t TSFG i n F lo rid a st at e co urt. TSFG rem ov edto fed eral co urt an d fi le d am ot io n t o d is m is s fo r fai lu re t o st at e a caus e o f act io n. OnFeb ru ary 26 , 20 07 , th e d is tri ctco urt en te redanord er fin di ng th atth e co m

pl ai ntfai le d t o a ll eg e th atTSFG br each edth e Agr eem en t o r th atTrowel l s uf

fere d a ny dam ag es . Trowel l was gi ve n l eav e to am en d h is
co m pl ai ntwithi n t hi rty days. There aft er, Tro well fil edanam en de d c om pl ai nt
se tt in g fo rth hi s cl ai m s i n g reat er d et ai l. TSFG fi le d apa rti al m ot io n t o d is m is s al l cl ai m s p rem is edup on on th e as se rti on th atTrowel l s ho ul d re cei ve th e b en efi ts of fav or ab le ISO ta x t reatm en t. OnMay 18, 2 00 7, the di st ric t co urt g ran te d t he
m ot io n fi nd in g t ha t the Agre em en t ex te nd edon ly T ro well ’s abi li ty to ex erci se th e op ti on s, n othi s ab il it y

to ob ta in fav or ab le tax tre atm en t fo r th e ISO’s u nd er the In te rn al Rev enue Co de . Furt he rm or e, th e co urt d et erm in edth atth e Agr eem en t

3ne it he r ex pl ic it ly norim pl ic it ly ind em

ni fie d Tro well ag ai ns t s uc h alo ss . Trowel l
so ug htlea ve to fil e a s eco ndam en de d c om pl ai ntto ad d acla im

forrefo rm at io n o f th e Agr eem en t an d a tt orne y ’s fees . The d is tri ctco urt d et erm in edth atam en dm en t
wou ldbe fut il e, fi nd in g t ha t the Agre em en t co ul d n ev er b e ref orm edto pro vi de tax fav or ab le st atus to th e ISOs un de r th e In te rn al Rev enue Co de be cau se m or e th an th ree m on th s h adelaps edsi nc e Tro well ’s term in at io n. W e rev ie w th e g ran t o f a m ot io n t o d is m is s u nd er Ru le 12 (b )(6 ) fo r fai lu re to st at e a cl ai m

de no vo , acce pt in g t he all eg at io ns inth e co m pl ai ntas t ru e an d
co ns tru in g t he m

inth e li gh t m os t fa vo rab le to th e p la in ti ff. Hen de rs on v. W as hi ng to n Nat . Ins . Co., 4 54 F.3d12 78 , 12 81 (11 th Cir . 20 06 ). W e rev ie w th e di st ric t co urt’s d en ia l o f a m ot io n t o a m en d aco m pl ai ntforanab us e o f di sc ret io n, al th ou gh th e u nd erl y in g l eg al co nc lu si on of wh ethe r a p art ic ul ar am en dm en t t o t he
co m pl ai ntwou ldbe fut il e is rev ie wedde no vo . Cor se ll o v . Lin care , Inc ., 42 8 F .3d 10 08 , 10 12 (11 th Cir . 20 05 ), cert . den ie d, 1 27 S. Ct. 4 2 (2 00 6)
. Upo n c aref

ul rev ie w of t he reco rdan d c on si de rat io n o f th e p art ie s’ bri efs , we di sc ernno rev ers ib le erro r. The el em en ts of abre ach of c on tra ctact io n a re (1 )
a v al idco nt ract ; (2 ) a m at eri al bre ach ; an d (3 ) da m ag es . Beckv. Laza rdFrere s & Co ., LLC, 175 F.3d91 3, 9 14 (11 th Cir . 19 99 ). Trowel l h as no t as se rte d fa ct s su ffi ci en t t o a ll eg e b reac h o f th e Agr eem en t. Tro well ex pl ic it ly con ced es th athe
4is no t ch al le ng in g h is ab il it y to ex erci se th e o pt io ns inge ne ral . The Ag reem en t do es no t d is cu ss th e ta xa ti on of t he st oc k o pt io ns . There is no pro vi si on ex pl ic it ly
orim pl ic it ly agree in g t o i nd em ni fy Trowel l fo r th e lo ss of f

av or ab le tax st atus . Und er Fl or id a la w, where th e co nt ract“ la ng ua ge is pl ai n aco urt s ho ul d n otcrea te
co nf us io n b y ad di ng hi dd enm ean in gs , term s, co nd it io ns , or une xp res se d in te nt io ns .” Key

v. Al ls ta te Ins . Co., 9 0 F .3d15 46 , 15 49 (11 th Cir . 19 96 ). Thu s, th e d is tri ctco urt d idno t err infin di ng th atTrowel l fa il edto st at e a cl ai m for br each of c on tra ctan d d is m is si ng th e am en de d c om pl ai nt . Fu rth erm or e, th e d is tri ctco urt d idno t ab us e it s d is cret io n i n d en y in g l eav e to fil e a s eco ndam en de d c om pl ai nt . Leave to am en d s ho ul d b e fre el y gi ve n wh en jus ti ce s o re qu ire s. Fed . R. Civ . P. 15 (a)( 2) . Howev er, a d is tri ctco urt n eedno t al lo w am en dm en t wh ere i t wo ul d b e fu ti le . Bry an t v . Dup ree, 2 52 F.3d11 61 , 11 63 (11 th Cir . 20 01 ). Trowel l ar gu edth atth e Agr eem en t was in te nd edto pr ov id e h im

with t he ab il it y

to ex erci se tax pre ferr edop ti on s atany ti m e wit hi n fiv e y ears of t erm in at io n. Du e to th is m is take , Trowel l s ou gh t l eav e to am en d t o ad d acla im

forrefo rm at io n. As su m in g t ha t the re was a m utua l m is ta ke , th ere a re no cir cu m st an ces un de r whi ch th e Agr eem en t co ul d b e ref orm edto pro vi de tax pr eferredst atus to th os e o pt io ns forfiv e y ears aft er Tro well ’s term in at io n. Un de r th e In te rn al Rev enue Co de , an e m pl oyee m us t ex erci se anISO wit hi n t hr ee 5m on th s af

te r te rm in at io n i n o rd er t o re cei ve pre fere nt ia l t ax tre atm en t. See 26 U.S.C. §§ 42 1- 22 . A cou rt c an no t g iv e effe ctto a pr op os edrefo rm at io n t ha t
wou ldres ul t i n a n i nv al idor i ll eg al co nt ract . See Hed ge s v . Dix on Co un ty, 15 0 U.S. 18 2, 1 92 , 14 S. Ct. 7 1, 7 4- 75 , 37 L.Ed 10 44 (18 93 ). Inanatt em

ptto av oi d thi s co nc lu si on , Trowel l ch arac te riz es hi s cl ai m as a reque stforrefo rm at io n o f th e Agr eem en t t o p ro vi de th e cas h e qu iv al en t o f th e lo ss of th es e ta x b en efi ts . Howev er, a m utua l m is ta ke reg ard in g t he tax co ns eque nc es of ex erci si ng th e o pt io ns at apa rti cu la r ti m e d oe s n otim pl y th atth e p art ie s in te nd edTSFG to be ar the bu rd enof t ha t m is ta ke . Thu s, the pro po se d a m en dm en t
was fut il e an d t he di st ric t co urt d idno t err in de nyin g l eav e to am en d. Acco rd in g, we af

firm . 1 AFFIR MED. 2

Rule 11 sanctions are war rante d when a

party “files a pleadingin bad fa ith for an 1 improper pur

pose.” D idie v. Howes, 988 F .2d 1097, 1104 (11th Cir. 1993) (interna l quotations omitted). “Improper pur

pose may be shown by

excessive per sistence in pursuinga cla im or defe nse in the fa ce of

repe ated a dverseruling s.” I ndus. Risk Insurer s v. M.A.N. Gutehoff nung shutte GmbH, 141 F.3d 1434, 1448 ( 11th Cir. 1998). “The de cision whether to impose Rule 11 sanctions is left to the district court' s sound discretion.” I d. at 1447-48. We conclude that the district court did not abuse its discre tion in determining that there w as no evidenc e that Trow ell filed his complaint in bad fa ith for an imprope r purposeand deny ing TSFG’s motions for sa

nctions. Appellant’s r equest for

oral a rgument is DENI ED. 2 6