Court Opinion

ID: 2793330
Source: CourtListenerOpinion
Date Created: 2015-04-13 21:01:18.449748+00
Date Added: 2024-06-11T11:13:58.845129
License: Public Domain

Case: 14-14822   Date Filed: 04/13/2015   Page: 1 of 8

                                                       [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 14-14822
                       Non-Argument Calendar
                     ________________________

              D.C. Docket No. 4:11-cv-00146-WTM-GRS

WARREN LOKEY,

                                                           Plaintiff-Appellant,

                                 versus

FEDERAL DEPOSIT INSURANCE CORPORATION,
as Receiver of the business and property of
Darby Bank & Trust Co.,
DARBY BANK & TRUST CO.,
DRAYPROP, LLC,
DRAYPARK, LLC,
MICHAEL BROWN, et al.,

                                                       Defendants-Appellees.

                     ________________________

                           No. 14-15079
                       Non-Argument Calendar
                     ________________________

              D.C. Docket No. 4:11-cv-00143-WTM-GRS
              Case: 14-14822     Date Filed: 04/13/2015    Page: 2 of 8

ROBERT M. OSBORNE, JR.,
DONNA OSBORNE,
DRI, LLC,

                                                                Plaintiffs-Appellants,

                                        versus

FEDERAL DEPOSIT INSURANCE CORPORATION,
as Receiver of the business and property of Darby
Bank & Trust Co., et al.,

                                                                          Defendants,

DRAYPROP, LLC,
DRAYPARK, LLC,
MICHAEL BROWN,
REUBEN CROLL,
MARLEY MANAGEMENT, INC.,

                                                               Defendants-Appellees.

                           ________________________

                   Appeals from the United States District Court
                       for the Southern District of Georgia
                          ________________________

                                  (April 13, 2015)

Before MARCUS, WILLIAM PRYOR and MARTIN, Circuit Judges.

PER CURIAM:

      Because these two appeals present identical issues, we consolidate them for

disposition. Appellants bought condominiums in the same building in Savannah,

Georgia in 2005. In deciding to buy their condos, they say they relied on a

representation, made in a letter from a local bank, stating that renovations to the

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building would be finished by a certain date. It didn’t work out that way.

Asbestos was discovered in the building, and the renovations were delayed. On

top of that, the bank failed and entered FDIC receivership. Hoping to hold

someone, anyone, responsible, Appellants sued the corporate developer of the

building (Drayprop, LLC) and two of its individual members (Reuben Croll and

Michael Brown).1 Appellants also sued the corporate owner of parking lots

adjacent to the building (Draypark, LLC), and the management company

responsible for the renovations (Marley Management, Inc.).2 Appellants insist

these Defendants knew (or should have known) that asbestos was in the building,

and, consequently, that the renovations would not be completed by the promised

date. The district court granted summary judgment for the Defendants. We affirm.

                                               I.

       We review de novo a grant of summary judgment, viewing all evidence in

the light most favorable to the nonmoving party. See Owen v. I.C. Sys., Inc., 629

F.3d 1263, 1270 (11th Cir. 2011). Summary judgment is appropriate when the

       1
         Actually, Croll and Brown are members of separate LLCs that are, in turn, members of
Drayprop, LLC. But this fact is not relevant to our analysis, so for simplicity we refer to Croll
and Brown as members of Drayprop, LLC.
       2
         Appellants also sued the local bank (Darby Bank & Trust Co.), which, after it entered
receivership, was replaced in this action by the FDIC. The district court previously granted
summary judgment for the FDIC, and we affirmed that ruling on appeal. See Lindley v. FDIC,
733 F.3d 1043 (11th Cir. 2013).
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record presents no genuine issue of material fact and “the moving party is entitled

to judgment as a matter of law.” Id.

                                          II.

      To begin, Appellants cannot state any claim against Reuben Croll or

Michael Brown individually. The district court correctly held that Appellants

cannot pierce the corporate veil (really two corporate veils, see supra note 1) to

hold Croll and Brown accountable for the acts of Drayprop, LLC. In general, “a

member of a limited liability company . . . is considered separate from the

company and ‘is not a proper party to a proceeding by or against a limited liability

company, solely by reason of being a member of the limited liability company.’”

Yukon Partners, Inc. v. Lodge Keeper Grp., 572 S.E.2d 647, 651 (Ga. Ct. App.

2002) (quoting O.C.G.A. § 14-11-1107(j)); see also O.C.G.A. § 14-11-303(a). To

hold them personally liable, Appellants must show that Croll or Brown “abused the

forms by which the LLC was maintained as a separate legal entity . . . .” Bonner v.

Brunson, 585 S.E.2d 917, 918 (Ga. Ct. App. 2003). LLC members abuse the

corporation’s form if they “conduct[] [their] personal and LLC business as if they

were one by commingling the two on an interchangeable or joint basis or confusing

otherwise separate properties, records, or control,” with the purpose of “defeat[ing]

justice or perpetrat[ing] fraud.” Id.

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      Appellants adduce no evidence of abuse. They say Croll and Brown

participated, solely through their membership in Drayprop, LLC, in crafting the

bank letter representing that the renovations would be completed by a certain date.

Appellants insist Croll and Brown perpetrated a fraud by making that

representation. Even if that were true, Appellants fail to explain how Croll’s and

Brown’s actions—helping write the letter—abused the LLC form. Appellants

suggest no commingling of personal and LLC business or similar abusive conduct.

The district court did not err by refusing to pierce the corporate veil(s).

                                          III.

      The district court also held that Appellants have not created a genuine

dispute of material fact on any of their three causes of action against the corporate

Defendants: breach of contract, negligent misrepresentation, and fraudulent

misrepresentation. These three causes of action are based on the same alleged

misrepresentation: the purported promise in the bank letter that the renovations

would be completed by March 1, 2006. Appellants say that was a

misrepresentation because the Defendants knew (or should have known) that

asbestos was present in the building and would delay the renovations.

      First, Appellants cannot state a breach-of-contract claim. A breach-of-

contract claim depends, a priori, on the existence of a contract. Cf. Norton v.

Budget Rent A Car Sys., Inc., 705 S.E.2d 305, 306 (Ga. Ct. App. 2010) (elements

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of a breach-of-contract claim are breach of a contract, damages, and the right to

recover). This is where Appellants’ claim fails. A contract exists only if parties

“assent . . . to the terms of [a] contract.” O.C.G.A. § 13-3-1. Appellants purchased

their condos from sellers who are not parties to this case, and they admit they had

no contract with any of the Defendants. Nevertheless, Appellants maintain they

can state a breach-of-contract claim because the Defendants “had an indirect

interest in the sale of every unit in the building, even if they were not parties” to

any contract. (Appellants seem to reason that the Defendants had an interest in

seeing the condo units sold because they were involved in developing and

renovating the building.) In the absence of a contract—express or even implied—

with the Defendants, Appellants’ nebulous allegation of an “indirect interest” is

insufficient to bind the Defendants or impose contractual obligations. After all,

without a whiff of a contract setting out an agreement, how would the Defendants

(or a reviewing court) determine their obligations, or whether they complied?

      Second and third, Appellants’ negligent and fraudulent misrepresentation

claims fail for a similar reason: they have provided no evidence that anyone, let

alone the Defendants, made any representation at all about the date the renovations

would be completed. Claims of negligent and fraudulent misrepresentation share

one irreducible requirement: a false representation. See Hendon Props., LLC v.

Cinema Dev., LLC, 620 S.E.2d 644, 649 (Ga. Ct. App. 2005) (first element of

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negligent misrepresentation is that “the defendant[] negligent[ly] suppl[ied] . . .

false information to foreseeable persons, known or unknown”); Grand Master

Contracting, LLC v. Lincoln Apartment Mgmt. Ltd. P’ship, 724 S.E.2d 456, 458

(Ga. Ct. App. 2012) (first element of fraudulent misrepresentation is that the

defendant “made false representations”).

      Appellants provide no evidence that the Defendants made any representation

about when the renovations would be completed. Appellants say they were

promised the renovations would be completed by March 1, 2006. But the only

evidence to that effect is a letter from the now-defunct local bank guaranteeing

funds for the renovations and stating that if the renovations were not completed by

March 1, the bank would release the funds to the condominium’s homeowners’

association. No rational trier of fact could interpret that spare letter as a

representation that the renovations would be completed by March 1. In fact, the

letter, which Appellants insist guarantees completion by March 1, explicitly

contemplates completion after that date. The letter provides that after March 1,

any remaining funds for the renovations would be released to the homeowners’

association “to complete items as required.”

      What is more, whether or not it was a representation about the date of

completion, Appellants do not explain how the Defendants (the developer, the

owner of the parking lots, and the management company—but not the bank) were

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responsible for making the representation in the bank’s letter. The district court

did not err in finding no genuine dispute of material fact.

      AFFIRMED.

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