Opinion ID: 3046219
Heading Depth: 2
Heading Rank: 1

Heading: Interface’s Standing to Sue

Text: The district court granted JPMorgan’s summary judgment motion on the grounds that Interface is not an intended third-party beneficiary to the P & A Agreement under Florida law. We hold that Interface cannot enforce the P & A Agreement under federal common law because it is not an intended third-party beneficiary of that contract. Consequently, the district court lacked subject matter jurisdiction over Interface’s claim against JPMorgan, and the judgment of the district court is vacated. See Nat’l Parks Conservation Ass’n v. Norton, 324 F.3d 1229, 1240 (11th Cir. 2003) (“[A]lthough we agree with the [district] court’s conclusions regarding justiciability of these claims, . . . we vacate its order of 7 Case: 11-13579 Date Filed: 01/10/2013 Page: 8 of 15 summary judgment and remand to the district court with instructions to dismiss these claims pursuant to Fed. R. Civ. P. 12(h)(3).”).
The district court applied Florida law in determining that Interface is not an intended third-party beneficiary to the P & A Agreement because “[t]he question of whether, for standing purposes, a non-party to a contract has a legally enforceable right is a matter of state law.” AT&T Mobility, LLC v. Nat’l Ass’n for Stock Car Auto Racing, Inc., 494 F.3d 1356, 1360 (11th Cir. 2007). While this is true, the P & A Agreement includes a choice-of-law provision which provides that federal law controls: 13.4 Governing Law. This agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the federal law of the United States of America, and in the absence of controlling federal law, in accordance with the laws of the state in which the main office of the failed bank is located. [R. 37-3 at 35.] In diversity cases, the choice-of-law rules of the forum state determine what law governs, American Family Life Assurance Co. of Columbus, Georgia. v. United States Fire Co., 885 F.2d 826, 830 (11th Cir. 1989), and under Florida law, courts “enforce choice-of-law provisions unless the law of the chosen forum contravenes strong public policy.” Maxcess, Inc. v. Lucent Technologies, Inc., 433 8 Case: 11-13579 Date Filed: 01/10/2013 Page: 9 of 15 F.3d 1337, 1341 (11th Cir. 2005) (per curiam) (internal citations and quotations omitted). The parties have not offered any reason why the choice-of-law provision above contravenes strong public policy, and the court is aware of no such reason. Accordingly, federal law applies in determining whether Interface is an intended third-party beneficiary to the P & A Agreement. 2. Interface is not an intended third-party beneficiary to the P & A Agreement To assert a breach of lease claim against JPMorgan, Interface must establish the existence of a contract between itself and JPMorgan. Interface seeks to do so by enforcing its interpretation of the P & A Agreement entered between FDIC and JPMorgan. That is, Interface argues that under the P & A Agreement, JPMorgan now stands in the shoes of the FDIC who took over as lessee from WaMu when it failed. JPMorgan and the FDIC contend that Interface lacks standing to do so. “[S]tanding is a threshold jurisdictional question which must be addressed prior to and independent of the merits of a party’s claims.” Bochese, 405 F.3d at 974 (quoting Dillard v. Baldwin Cnty. Comm’rs, 225 F.3d 1271, 1275 (11th Cir. 2000)). “In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Koziara v. City of Casselberry, 392 F.3d 1302, 1304 (11th Cir. 2004) (quoting Warth v. 9 Case: 11-13579 Date Filed: 01/10/2013 Page: 10 of 15 Seldin, 422 U.S. 490, 498, 95 S. Ct. 2197, 2205 (1975)). Interface can only establish standing if it is an intended third-party beneficiary of the P & A Agreement. See Bochese, 405 F.3d at 981; see also Kremen v. Cohen, 337 F.3d 1024, 1029 (9th Cir. 2003) (applying federal common law in finding that “[a] party can enforce a third-party contract only if it reflects an express or implied intention of the parties to the contract to benefit the third party” (internal quotation marks omitted)). Under federal common law, the court looks to general contract principles in interpreting the P & A Agreement. Ellinger v. United States, 470 F.3d 1325, 1336 (11th Cir. 2006); see also Belize Telecom, Ltd. v. Gov’t of Belize, 528 F.3d 1298, 1307 n.11 (11th Cir. 2008) (“When interpreting contracts under federal law, courts look to general common law on contracts.”). One such principle is that only a party to a contract or an intended third-party beneficiary may sue to enforce the terms of a contract. GECCMC, 2005-C1 Plummer St. Office L.P. v. JPMorgan Chase Bank, N.A., 671 F.3d 1027, 1032-33 (9th Cir. 2012) (applying federal common law); RESTATEMENT (SECOND) OF CONTRACTS § 304 (1981). In contrast, a beneficiary whose benefit is merely incidental has no right to sue to enforce a contract as a non-party. GECCMC, 671 F.3d at 1033; see also RESTATEMENT 10 Case: 11-13579 Date Filed: 01/10/2013 Page: 11 of 15 (SECOND) OF CONTRACTS § 315 (noting that an incidental beneficiary acquires “no right against the promisor or the promisee”). Further, government contracts, such as the P & A Agreement, “often benefit the public, but individual members of the public are treated as incidental beneficiaries unless a different intention is manifested.” RESTATEMENT (SECOND) OF CONTRACTS § 313(2) cmt. a. Thus, third parties to government contracts “are generally assumed to be incidental beneficiaries.” Klamath Water Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1211 (9th Cir. 1999). To overcome this presumption, Interface must show that the parties “clear[ly] inten[ded]” that Interface be permitted to sue to enforce the P & A Agreement. Beckett v. Air Line Pilots Ass’n, 995 F.2d 280, 288 (D.C. Cir. 1993). Although Interface “need not be specifically or individually identified in the contract, [Interface] must fall within a class clearly intended to be benefited thereby.” Montana v. United States, 124 F.3d 1269, 1273 (Fed. Cir. 1997). Interface’s task of demonstrating “clear intent” is made significantly more difficult by the P & A Agreement’s express disclaimer to the contrary. As referenced above, section 13.5 of the P & A Agreement expressly disclaims any intent to create third-party beneficiaries. To overcome this disclaimer, Interface points out that section 13.5 also states that this disclaimer is limited “as otherwise 11 Case: 11-13579 Date Filed: 01/10/2013 Page: 12 of 15 specifically provided in this Agreement.” Interface argues that this disclaimer limitation, when read together with language from section 2.1, which provides that “[JPMorgan] agrees to pay, perform, and discharge, all of the liabilities of [WaMu] as of Bank Closing,” creates a clear intention to benefit a landlord such as Interface. In an almost identical case, GECCMC, 2005-C1 Plummer Street Office L.P. v. JPMorgan Chase Bank, N.A., the Ninth Circuit Court of Appeals rejected the same argument that Interface asserts here, concluding that the P & A Agreement did not “reflect a ‘clear intent’ to confer a benefit on [the landlord.]” 671 F.3d at 1034. More specifically, the court found that the landlord’s “reliance on section 2.1 . . . does not evince the specificity required to carve out enforceable rights as contemplated by section 13.5,” nor does section 2.1 “show the ‘clear intent’ needed to rebut the presumption that [the landlord] is merely an incidental beneficiary.” Id. at 1035; see also Wichita Falls Office Assocs. v. Banc One Corp., No. 3:90-CV1301-H, Mem. Op. at 19 (N.D. Tex. Nov. 22, 1993), aff’d without opinion, 40 F.3d 384 (5th Cir. 1994) (finding that the phrase “except as otherwise specifically provided” did not reference other sections of a P & A Agreement in a clear enough manner to overcome the presumption against intended third-party beneficiaries). We agree with this reasoning and find that the P & A Agreement does not provide 12 Case: 11-13579 Date Filed: 01/10/2013 Page: 13 of 15 a “clear intent” to benefit Interface. Thus, we conclude that Interface is not an intended third-party beneficiary to the P & A Agreement and cannot sue to enforce it. 3. Privity of Estate Interface also argues that it has standing to sue JPMorgan for breach of lease because the two are in privity of estate. This argument fails because it is dependent on Interface’s ability to enforce its interpretation of the P & A Agreement, which, as discussed above, Interface lacks standing to do.