[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

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No. 18-14999

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D.C. Docket No. 1:17-cv-23696-KMW

CUTLER BAY APARTMENTS, LLC, 

FIRST CUTLER GARDENS, LLC, 

 Plaintiffs - Appellants,

versus

BANK OF AMERICA, N.A., 

 Defendant - Appellee.

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Appeal from the United States District Court

for the Southern District of Florida

________________________

(March 19, 2020)

Before MARTIN, GRANT, and LAGOA, Circuit Judges.

LAGOA, Circuit Judge:

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Cutler Bay Apartments, LLC, and First Cutler Gardens, LLC (collectively, 

“Appellants”), two Florida limited liability companies, appeal the district court’s 

order granting summary judgment in favor of Bank of America, N.A. (“BANA”) on 

Appellants’ claims of breach of contract and breach of the covenant of good faith 

and fair dealing. For the reasons discussed below, we affirm the district court’s grant 

of summary judgment.

I. FACTUAL AND PROCEDURAL HISTORY

Appellants wanted to refinance loans tied to two apartment complexes located 

in Miami-Dade County. To that end, on March 27, 2014, Appellants signed two 

exclusive brokerage agreements with CLD Capital, Inc. (“CLD”), under which CLD 

would negotiate the refinancing on Appellants’ behalf (the “CLD Agreements”). 

The CLD Agreements provided that that CLD would have the exclusive right to 

negotiate loans on behalf of Appellants for ninety days following the execution of 

the CLD Agreements, that Appellants would pay CLD an origination fee of 0.5

percent of the refinanced loan amounts, that CLD would be entitled to any income 

losses if Appellants breached the exclusivity provisions, and that arbitration of 

disputes arising from a breach of the agreements would occur in Georgia.

On April 7, 2014, Appellants entered into two identical loan application 

agreements (the “Loan Applications”) with BANA. The Loan Applications set forth 

the terms under which BANA agreed to consider providing refinancing to 

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Appellants. The Loan Applications also addressed potential brokerage agreements 

that either party might enter, stating:

Brokerage and Referral Fees: By execution of this Application, the 

Borrower agrees to pay any and all fees imposed or charged by all 

brokers, mortgage bankers and advisors hired or contracted by the

Borrower who brought about the issuance of this Application or the 

consideration of or making of the Proposed Loan pursuant hereto, and 

agrees to indemnify and hold Lender harmless from and against any 

and all claims, demands and liability for brokerage commissions,

assignment fees, finder’s fees or other compensation whatsoever 

arising from this Application or Lender’s making of the Proposed Loan 

which may be asserted against Lender by any person. Lender hereby 

agrees to pay any and all fees imposed or charged by all brokers hired

solely by the Lender. In addition, Borrower acknowledges that Lender 

may from time to time enter into an agreement under which Lender 

provides compensation to a broker, mortgage banker, advisor, 

correspondent or finder (which may be affiliated with Lender) who 

brought about the issuance of this Application or the consideration of 

or making of the Proposed Loan, whether in the form of referral, 

incentive, profit sharing or servicing related fees, provided, however, 

such parties shall have no authority to act on behalf of, or bind, Lender 

in any manner. Lender agrees to indemnify and hold Borrower 

harmless from and against any and all claims, demands and liability 

arising under such agreement.

The parties further agreed that the Loan Applications would be governed by New 

York law. Finally, the Loan Applications included Appellants’ requested carveout 

to the “Exclusivity” provisions so that Appellants could continue separate

refinancing negotiations with BankUnited, NA (“BankUnited”). Significantly, CLD 

was not involved in Appellants’ negotiations with BankUnited.

During the refinancing process, CLD’s Vice President, Leanne Eicoff, 

discussed with James Angoff, an employee of BANA, the prospect of securing a 

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referral or finder’s fee of 0.5 percent for CLD if CLD was able to successfully 

convince Appellants to refinance their loans with BANA. At the time, Appellants 

were unaware of any discussion about a potential referral or finder’s fee for CLD. 

Ultimately, Appellants did not refinance with BANA. Instead, Appellants 

refinanced with BankUnited. 

On October 8, 2014, CLD made a demand for arbitration and presented a 

statement of claims against Appellants. In its demand, CLD claimed that Appellants 

breached the exclusivity provisions in the CLD Agreements and sought damages and 

its attorney’s fees “pursuant to the [CLD] Agreements.” As damages, CLD sought 

0.5 percent of each proposed loan amount for Appellants’ breach of the CLD 

Agreements’ exclusivity provisions, as well as the additional 0.5 percent of each 

proposed loan CLD claimed it would have received from BANA as a finder’s fee. 

Appellants and CLD proceeded to arbitration (the “CLD Arbitration”). On February 

6, 2016, the arbitrator denied CLD’s claims under the CLD Agreements against 

Appellants but did not award Appellants their attorney’s fees for defending 

themselves against CLD’s claims.

Subsequently, on October 10, 2017, Appellants sued BANA for (1) breach of 

contract and (2) breach of the covenant of good faith and fair dealing. In their 

Complaint, Appellants alleged that BANA failed to indemnify Appellants against 

CLD’s claims in the CLD Arbitration, as required by the Loan Applications, and that 

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as a result, Appellants suffered damages of over $200,000 in legal fees and costs 

defending themselves. In its Answer, BANA denied all of Appellants’ allegations 

and raised several affirmative defenses. After various motions were filed by the 

parties, BANA moved for summary judgment. In its motion, BANA argued that, as 

a matter of law, BANA owed no duty to indemnify Appellants, as the indemnity 

provisions in the Loan Applications did not apply to the contractual dispute between 

CLD and Appellants that arose from the CLD Agreements and that was the subject 

of the CLD Arbitration. BANA further argued that Appellants’ claim for breach of 

the covenant of good faith and fair dealing failed as a matter of law, as Appellants 

were unable to alter BANA’s obligations under the unambiguous terms of the Loan 

Applications’ indemnity provisions. 

The district court referred BANA’s motion for summary judgment to a 

magistrate judge for a report and recommendation. On September 24, 2018, the 

magistrate judge issued an Amended Report and Recommendation (the “Report and 

Recommendation”). In his Report and Recommendation, the magistrate judge 

determined that no binding terms of the Loan Applications ever materialized because 

certain conditions precedent were not met and, thus, no indemnity agreement was 

ever perfected between the parties. The magistrate judge therefore concluded that

BANA had no duty to indemnify Appellants and recommended granting summary 

judgment in favor of BANA on the breach of contract claim. As an alternate ground 

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for summary judgment, the magistrate judge also considered whether BANA’s duty 

to indemnify, assuming one did arise, extended to CLD’s claims in the CLD 

Arbitration. Applying New York law, the magistrate judge determined that the CLD 

Agreements and the Loan Applications were two separate sets of documents 

governed by different law and prepared by independent entities and that BANA was 

not even referenced in the CLD Agreements. The magistrate judge further noted 

that CLD’s claims in arbitration were based solely on Appellants’ breach of the CLD 

Agreements. The magistrate judge rejected Appellants’ argument that BANA had a 

duty to indemnify them against CLD because BANA offered to pay CLD a 

commission if CLD successfully convinced Appellants to close their refinancing 

with BANA, concluding that such a claim lay outside the scope of indemnity liability 

under New York law. The magistrate judge therefore recommended that summary 

judgment be entered in favor of BANA on Appellants’ breach of contract claim on

this ground as well.

Turning to Appellants’ claim of breach of the covenant of good faith and fair 

dealing, the magistrate judge noted that New York law “does not recognize a 

separate cause of action for breach of the implied covenant of good faith and fair 

dealing outside the scope of a traditional breach of contract claim.” The magistrate 

judge noted that, although “deficient,” Appellants’ breach of contract claim arose 

from some contractual language in the Loan Applications. As such, the magistrate 

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judge found that the allegations in the second count were “not viable claims because 

they [were] inconsistent with the terms of the parties’ agreement,” which “simply 

required BANA to diligently evaluate [Appellants’] request for a loan and, if that 

loan resulted from or related to BANA’s broker, to indemnify [Appellants] for any 

claims arising out of an agreement between BANA and the broker.” Finding this 

claim also had no legal merit, the magistrate judge recommended summary judgment

be entered in favor of BANA. Appellants filed objections to the Report and 

Recommendation, which BANA opposed.

On October 30, 2018, the district court issued an order affirming and adopting 

the magistrate judge’s Report and Recommendation, finding that: 

[(1)] the plain language of the Loan Applications at issue provides that 

the indemnity provision was not binding unless [BANA] issued a loan, 

and it never did so; (2) even if the indemnity provision were binding, it 

would not apply to [Appellants’] indemnification claims in this case; 

and (3) no liability exists for [Appellants’] related claim for breach of 

good faith and fair deadline [sic].

In a separate order, the district court entered final judgment in favor of BANA on all 

of Appellants’ claims. This timely appeal ensued.

II. STANDARD OF REVIEW

We review de novo a district court’s order granting summary judgment, 

“view[ing] the evidence (and inferences) in the light most favorable to the . . . nonmoving parties.” Asalde v. First Class Parking Sys. LLC, 898 F.3d 1136, 1138 (11th 

Cir. 2018). “Summary judgment is appropriate only when ‘the pleadings, the 

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discovery and disclosure materials on file, and any affidavits show that there is no 

genuine issue as to any material fact and that the movant is entitled to judgment as a 

matter of law.’” Penley v. Eslinger, 605 F.3d 843, 848 (11th Cir. 2010) (quoting 

Fed. R. Civ. P. 56(c)(2)). “A dispute over an issue of material fact is genuine if the 

evidence would permit a reasonable jury to return a verdict for the party against 

whom summary judgment is sought.” Camp Creek Hosp. Inns, Inc. v. Sheraton 

Franchise Corp., 139 F.3d 1396, 1400 (11th Cir. 1998). “If, however, the evidence 

of a genuine issue of material fact is ‘merely colorable’ or of insignificant probative 

value, summary judgment is appropriate.” Id. (quoting Anderson v. Liberty Lobby, 

Inc., 477 U.S. 242, 249–50 (1986)).

III. ANALYSIS

On appeal, Appellants argue that the district court erred by granting summary 

judgment in favor of BANA on Appellants’ breach of contract and breach of the 

covenant of good faith and fair dealing claims. We first consider Appellants’ 

arguments on the breach of contract claim before turning to their arguments 

regarding the breach of covenant claim.

A. Breach of Contract Claim

In his Report and Recommendation, the magistrate judge considered two 

separate grounds for granting summary judgment in favor of BANA on Appellants’ 

breach of contract claim, both of which the district court adopted. First, the

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magistrate judge determined that any duty to indemnify Appellants was never

perfected, as no binding terms of the Loan Applications materialized because certain 

conditions precedent were not satisfied. Appellants assert that BANA waived this

argument because BANA failed to raise it as an affirmative defense, and the district 

court was unable to consider it sua sponte as a basis for granting summary judgment.

A “failure to plead an affirmative defense typically results in waiver of that 

defense,” and “[c]ourts ‘generally lack the ability to raise an affirmative defense sua 

sponte.’” Roberts v. Gordy, 877 F.3d 1024, 1028 (11th Cir. 2017) (quoting Latimer 

v. Roaring Toyz, Inc., 601 F.3d 1224, 1239 (11th Cir. 2010)). This Court has

previously reversed a district court’s grant of summary judgment where the district 

court sua sponte considered an argument never raised in a defendant’s pleadings. 

See, e.g., Latimer, 601 F.3d at 1238–41. Here, BANA never raised as an affirmative 

defense that the indemnity provisions in the Loan Applications were not perfected. 

Instead, BANA alleged that the scope of the indemnity provisions did not apply to 

CLD’s claims against Appellants in the CLD Arbitration. Accordingly, it was 

improper for the magistrate judge to consider, and the district court to adopt, this 

ground as a basis for granting summary judgment on Appellants’ breach of contract 

claim.

As a separate ground for recommending summary judgment, however, the 

magistrate judge also considered BANA’s argument that the indemnity provisions

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did not extend to CLD’s claims against Appellants in the CLD Arbitration. The 

magistrate judge determined that the CLD Agreements and Loan Applications were 

two separate sets of agreements and that CLD’s claims against Appellants in the 

CLD Arbitration were based solely on Appellants’ breach of the CLD Agreements, 

not any agreement between CLD and BANA. The magistrate judge noted that the 

parties had agreed to apply New York law to the Loan Applications. As such, the 

magistrate judge found that, under New York law, the indemnity provisions did not 

apply to the CLD Arbitration claims and recommended granting summary judgment 

on this separate basis, which the district court also adopted. Appellants argue that 

the magistrate judge and district court erred by finding the indemnity provisions did 

not apply to CLD’s claims against them. We disagree.

Under New York law, an indemnity provision “should be construed so as to 

encompass only that loss and damage which reasonably appear to have been within 

the intent of the parties.” Niagara Frontier Transp. Auth. v. Tri-Delta Constr. Corp., 

487 N.Y.S.2d 428, 431 (N.Y. App. Div. 1985), aff’d, 484 N.E.2d 1047 (N.Y. 1985).

Furthermore, an indemnity provision “should not be extended to include damages 

which are neither expressly within its terms nor of such character that it is reasonable 

to infer that they were intended to be covered under the contract.” Id.; accord McKay 

v. Weeden, 50 N.Y.S.3d 684, 689–90 (N.Y. App. Div. 2017). As noted above, the 

Loan Applications’ indemnity provisions each provided the following:

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Borrower acknowledges that Lender may from time to time enter into 

an agreement under which Lender provides compensation to a broker,

mortgage banker, advisor, correspondent or finder . . . who brought 

about the . . . making of the Proposed Loan, whether in the form of

referral, incentive, profit sharing or servicing related fees, provided, 

however, such parties shall have no authority to act on behalf of, or 

bind, Lender in any manner. Lender agrees to indemnify and hold 

Borrower harmless from and against any and all claims, demands and 

liability arising under such agreement.

(emphasis added). 

Reviewing the record in the light most favorable to Appellants, we find that

BANA had no duty to indemnify Appellants against CLD’s claims in the arbitration,

as those claims did not arise under a referral or finder’s fee agreement between CLD 

and BANA. Prior to the execution of the Loan Applications between Appellants and 

BANA, Appellants and CLD entered into the CLD Agreements, which provided that

CLD had the exclusive right to negotiate loans for Appellants’ apartment complexes

on behalf of Appellants for a ninety-day period following the execution of the 

agreements. CLD’s demand and statement of claims was based solely on the CLD 

Agreements, alleging that Appellants “were bound to exclusively utilize and work 

with CLD with regard to refinancing” and “[i]nstead of complying . . . , [Appellants] 

breached the exclusivity agreement by sourcing the refinancing . . . from another 

lender.” Moreover, CLD sought damages and attorney’s fees “pursuant to the [CLD] 

Agreements.” Thus, the only contracts at issue in the CLD Arbitration were the CLD 

Agreements, which are not covered by the Loan Applications’ indemnity provisions. 

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Moreover, even if the scope of the CLD Arbitration could be considered to 

include the Loan Applications because of the potential referral fee CLD negotiated

with BANA, Appellants did not close any loan with BANA. The discussion between 

CLD and BANA about a potential finder’s fee if Appellants closed with BANA does 

not constitute an executed finder’s fee agreement between CLD and BANA that 

could fall within the Loan Applications’ indemnity provisions. The fact that 

Appellants did not close with BANA rendered the indemnity provisions

inapplicable.

We also reject Appellants’ suggestion to expand the Loan Applications’ 

indemnity provisions to cover any engagement of a broker by BANA as contrary to 

New York law’s strict construction of indemnity provisions. See McKay, 50 

N.Y.S.3d at 689 (“It is axiomatic that, ‘[w]hen a party is under no legal duty to 

indemnify, a contract assuming that obligation must be strictly construed to avoid 

reading into it a duty which the parties did not intend to be assumed.’” (alteration in 

original) (quoting Hooper v. AGS Computers, Inc., 74 N.E.2d 903, 905 (N.Y. 

1989))). The indemnity provisions at issue required BANA to indemnify Appellants

only for claims arising from an agreement by BANA with a broker to pay that broker 

a finder’s fee where the broker referred a borrower to BANA who then went forward 

and closed on a loan with BANA. For example, BANA would have been required 

to indemnify Appellants in a situation where BANA had entered into a finder’s fee 

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agreement with CLD, the loans had closed, BANA refused to pay CLD a finder’s 

fee, and CLD then sought the finder’s fee from Appellants instead of BANA. That 

is not what happened here, and the fact that CLD sought the amount it would have 

earned as a finder’s fee if Appellants had closed with BANA as damages in the CLD 

Arbitration by itself does not trigger BANA’s duty to indemnify Appellants. 

Accordingly, because CLD’s claims in the CLD Arbitration arose from the 

CLD Agreements and not from the Loan Agreements, we hold that the district court 

properly granted summary judgment in favor of BANA on the breach of contract 

claim.

B. Breach of Covenant Claim

Finally, we address Appellants’ argument that the district court erred in 

granting summary judgment in favor of BANA on their breach of the covenant of 

good faith and fair dealing claim. Specifically, Appellants contend that BANA’s 

alleged “acts and omissions” during the CLD Arbitration are “distinct facts” separate 

from their claim alleging breach of the Loan Applications’ indemnity provisions. 

This argument is without merit.

“Under New York law, parties to an express contract are bound by an implied 

duty of good faith, but breach of that duty is merely a breach of the underlying 

contract.” Harris v. Provident Life & Accident Ins. Co., 310 F.3d 73, 80 (2d Cir. 

2002) (quoting Fasolino Foods Co. v. Banca Nazionale del Lavoro, 961 F.2d 1052, 

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1056 (2d Cir. 1992)). “New York law . . . does not recognize a separate cause of 

action for breach of the implied covenant of good faith and fair dealing when a 

breach of contract claim, based upon the same facts, is also pled.” Id. at 81; accord

ARI & Co., Inc. v. Regent Int’l Corp., 273 F. Supp. 2d 518, 522 (S.D.N.Y. 2003). 

“A claim for breach of the implied covenant will be dismissed as redundant where 

the conduct allegedly violating the implied covenant is also the predicate for breach 

of covenant of an express provision of the underlying contract.” Harris, 310 F.3d at 

80 (quoting ICD Holdings S.A. v. Frankel, 976 F. Supp. 234, 243–44 (S.D.N.Y. 

1997)); accord Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 125 (2d Cir. 2013); see 

also, e.g., Canstar v. J.A. Jones Constr. Co., 622 N.Y.S.2d 730, 731 (N.Y. App. Div. 

1995). Thus, “a breach of the implied covenant of good faith claim can survive a 

motion to dismiss ‘only if it is based on allegations different than those underlying 

the accompanying breach of contract claim.’” ARI, 273 F. Supp. 2d at 522 (quoting 

Siradas v. Chase Lincoln First Bank, N.A., No. 98 Civ. 4028, 1999 WL 787658, at 

*6 (S.D.N.Y. Sept. 30, 1999)). Additionally, where the plaintiff seeks relief that is 

“‘intrinsically tied to the damages allegedly resulting from the breach of contract,’ 

there is no separate and distinct wrong that would give rise to an independent claim” 

for breach of the implied covenant. Id. (citation omitted) (quoting Alter v. Bogoricin, 

No. 97 Civ. 0662, 1997 WL 691332, at *8 (S.D.N.Y. Nov. 6, 1997)). Finally, “New 

York law is clear that the implied covenant cannot be used to create independent 

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obligations beyond the contract.” Id. at 523; accord Dalton v. Educ. Testing Serv., 

663 N.E.2d 289, 291–92 (N.Y. 1995) (“The duty of good faith and fair dealing, 

however, is not without limits, and no obligation can be implied that ‘would be 

inconsistent with other terms of the contractual relationship.’” (quoting Murphy v. 

Am. Home Prods. Corp., 448 N.E.2d 86, 91 (N.Y. 1983))).

In the second count of their complaint, Appellants alleged that:

BANA breached the covenant of good faith and fair dealings under the 

Agreements by . . . allowing CLD to bring the Arbitration suit against 

[Appellants] and doing absolutely nothing in [Appellants’] defense, by 

picking sides with CLD in the Arbitration litigation, by entering into an 

oral promise with CLD that caused CLD to file an Arbitration suit 

against [Appellants], by failing to communicate in writing the existence 

of that promise to [Appellants] along with failing to memorialize the 

terms of the promise with CLD, by failing to communicate with CLD 

that the carve out to the exclusivity was a complete bar to CLD’s action, 

and by failing to indemnify [Appellants] from CLD’s Arbitration suit. 

. . . In addition, BANA refused to even attend the arbitration via skype 

. . . to assist [Appellants] in rebutting false testimony presented by CLD 

. . . . 

We agree with the magistrate judge and district court that the “violations” in this

claim were tied to the Loan Applications’ indemnity provisions. As explained 

above, however, the Loan Applications do not create a duty for BANA to indemnify 

Appellants beyond a third-party broker’s claims arising from a referral or finder’s 

fee agreement executed between that broker and BANA. BANA therefore had no 

duty to indemnify Appellants for CLD’s claims in arbitration. We decline to extend 

the implied covenant of good faith and fair dealing to the preliminary finder’s fee 

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discussions between BANA and CLD, as doing so would be inconsistent with the 

terms of the Loan Applications. See Dalton, 663 N.E.2d at 291–92. 

Moreover, the allegations in Appellants’ claim are clearly tied to their breach 

of contract claim, as those allegations relate to BANA not indemnifying or otherwise 

participating in the CLD Arbitration. See, e.g., Cruz, 720 F.3d at 125 (finding 

plaintiff’s “claim for breach of the implied covenant of good faith and fair dealing” 

redundant where “his breach of contract claim clearly rest[ed] on the same alleged 

deceptive practices”). Additionally, the damages Appellants seek for their count of

breach of covenant—attorney’s fees for defending the CLD Arbitration—are 

“intrinsically tied” to the damages resulting from the breach of contract, i.e., the 

same amount of attorney’s fees. Cf. ARI, 273 F. Supp. 2d at 522 (finding damages 

for the plaintiff’s claim of breach of the implied covenant of good faith and fair 

dealing “intrinsically tied to” the plaintiff’s breach of contract claim where the 

plaintiff sought to recover the exact amount of money for loss of commissions). The 

breach of covenant claim therefore is redundant of Appellants’ breach of contract 

claim, and the district court properly granted summary judgment for BANA on this 

claim.

IV. CONCLUSION

The magistrate judge and district court correctly determined (1) that under the 

Loan Applications’ indemnity provisions, BANA had no duty to indemnify 

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Appellants for CLD’s claims in the CLD arbitration and (2) that Appellants’ claim 

of breach of the covenant of good faith and fair dealing was inconsistent with the 

indemnity provisions, as well as redundant of the breach of contract claim. 

Accordingly, we hold that the district court properly granted summary judgment in 

favor of BANA on both counts of Appellants’ complaint, and therefore affirm the 

district court’s final judgment.

AFFIRMED.

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