Court Opinion

ID: 219555
Source: CourtListenerOpinion
Date Created: 2011-06-23 18:38:34+00
Date Added: 2024-06-11T15:08:19.763255
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 09-1125

MARCUS BEASLEY; DENISE BEASLEY,

                Plaintiffs – Appellants,

           v.

ARCAPITA   INCORPORATED;   CAJUN  HOLDING    COMPANY;   CAJUN
OPERATING     COMPANY;   CRESCENT    CAPITAL     INVESTMENTS,
INCORPORATED,

                Defendants – Appellees.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.    Richard D. Bennett, District Judge.
(1:08-cv-00804-RDB)

Argued:   March 25, 2011                   Decided:   June 23, 2011

Before MOTZ, GREGORY, and SHEDD, Circuit Judges.

Affirmed by unpublished opinion. Judge Shedd wrote the majority
opinion, in which Judge Motz joined.     Judge Gregory wrote a
dissenting opinion.

ARGUED: Erin M. Tanner, WAKE FOREST UNIVERSITY, School of Law,
Winston-Salem, North Carolina, for Appellants.   James Charles
Rubinger, PLAVE KOCH PLC, Reston, Virginia, for Appellees.  ON
BRIEF: Paul M. Vettori, John J. Kenny, KENNY & VETTORI, LLP,
Towson, Maryland, for Appellants. Benjamin B. Reed, PLAVE KOCH
PLC, Reston, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.

                                2
SHEDD, Circuit Judge:

       Marcus and Denise Beasley appeal the district court’s order

dismissing           their       claim     against        Arcapita        Incorporated,       Cajun

Holding Company, Cajun Operating Company, and Crescent Capital

Investments,             Incorporated          (collectively          “Arcapita”).          For    the

reasons set forth below, we affirm the judgment of the district

court.

                                                    I.

       The   Beasleys              are   the     sole     shareholders       of     Beasley       Food

Ventures, Inc. (“Ventures”).                         On December 17, 2004, Ventures

entered into a franchise agreement (“the Agreement”) with AFC

Enterprises,              Inc.      to    own     and     operate       a    Church’s       Chicken

restaurant           at    the     Baltimore/Washington               International        Airport.

       The Agreement states that it is “between AFC Enterprises

Inc.     .   .       .     and      Beasley       Food    Ventures,         Inc.,     a    Maryland

corporation          .     .   .    (“Franchisee”).”              Supp.     J.A.     6.      In    two

internal      sections             of    the     Agreement,       the     Beasleys        signed    or

initialed        above           the      printed        term     “franchisee”        without        a

corporate designation.                    However, on the signature page, Denise

Beasley      executed            the     Agreement       in     her   corporate      capacity       as

President        of       Ventures,        and    Marcus        Beasley     signed    only     as    a

witness.         Additionally, Marcus and Denise Beasley individually

executed         a        separate        Guaranty        and     Subordination           Agreement

                                                    3
personally      obligating    themselves        for    Ventures’     debts    arising

under the Agreement.

       In December 2004, Arcapita acquired the Church’s Chicken

business      from   AFC.    Subsequently,          although   the    menu   AFC   had

provided to Ventures included pork products, Arcapita banned the

sale     of   pork    in    Church’s      Chicken      restaurants.          Arcapita

permitted Church’s Chicken restaurants that had previously sold

pork products to continue doing so.                   However, Arcapita refused

to    allow   new    restaurants    that      had     not   previously     sold    pork

products to do so in the future.

       The Beasleys, who are African-American, brought this action

asserting a single count of racial discrimination in violation

of 42 U.S.C. § 1981.           The Beasleys allege that they were the

only existing franchise that was forbidden to sell pork products

and that Arcapita forbade them from doing so because of their

race.      Consequently, they assert that their franchise failed

because of their inability to sell pork products.                          Relying on

the Supreme Court’s holding in Domino’s Pizza, Inc. v. McDonald,

546 U.S. 470 (2006), the district court found that the Beasleys

could not bring a § 1981 claim because they were not parties to

the    Agreement     and,   thus,   had    no   rights      under    the   Agreement.

Therefore, the court dismissed their case for failure to state a

claim.

                                          4
                                                   II.

       We review de novo a district court's order dismissing a

claim       under    Federal          Rule    of     Civil         Procedure      12(b)(6).       See

Duckworth v. State Admin. Bd. of Election Laws, 332 F.3d 769,

772    (4th       Cir.    2003).       To    survive         a    Rule    12(b)(6)       motion,    a

plaintiff must allege enough facts “to raise a right to relief

above the speculative level” and must provide “enough facts to

state a claim to relief that is plausible on its face.” Bell

Atl.     Corp.       v.    Twombly,          550    U.S.         544,     555    (2007).        When

considering an order dismissing a claim under Rule 12(b)(6), we

assume      all     factual      allegations            in   the     pleadings     to     be   true.

Erickson v. Pardus, 551 U.S. 89, 94 (2007).                                “[W]hen a defendant

attaches a document [such as the Agreement] to its motion to

dismiss,      a     court       may    consider         it    in    determining        whether     to

dismiss      the     compliant         if    it     was      integral      to    and    explicitly

relied       on     in    the    complaint          and      if     the    plaintiffs      do     not

challenge its authenticity.”                       Am. Chiropractic Ass’n v. Trigon

Healthcare         Inc.,    367       F.3d    212,        234     (4th    Cir.    2004)(internal

citations omitted).

                                                   III.

       In     Domino’s          Pizza,        the       Supreme         Court     held     that     a

corporation’s sole shareholder could not bring a § 1981 action

pursuant to a franchise agreement because he was not a party to,

                                                    5
and   did    not     have       rights    under,          the    contract.         The     Court

expressly limited relief under § 1981 to parties with rights

under a contract, stating:

      [A] plaintiff cannot state a claim under § 1981 unless
      he has (or would have) rights under the existing (or
      proposed) contract that he wishes “to make and
      enforce.”    Section 1981 plaintiffs must identify
      injuries flowing from a racially motivated breach of
      their own contractual relationship, not of someone
      else’s.

Domino’s     Pizza,       546    U.S.     at    479-80.           The    Court     based     this

ruling, in part, on basic precepts of corporate law.                                  “[I]t is

fundamental corporation and agency law — indeed, it can be said

to be the whole purpose of corporation and agency law — that the

shareholder        and    contracting          officer     of     a     corporation      has   no

rights and is exposed to no liability under the corporation’s

contracts.”        Id. at 477.

      The    Beasleys       argue        that       the    district        court     erred     in

dismissing        their    claim    because         they    are        parties   with    rights

under       the     Agreement            consistent             with      Domino’s       Pizza.

Specifically, they assert that by virtue of the Guarantee of

Franchisee Agreement, they have taken on significant financial

obligations under the Agreement that entitle them to bring a §

1981 claim.         Additionally, the Beasleys contend that they are

individually parties to the Agreement pursuant to Section XXV.

In particular, they point to language stating that they have

                                                6
“individually,      and     jointly     and       severally,        executed      this

Agreement.”     Supp. J.A. 43.

       We find both arguments to be without merit.                         First, any

obligations the Beasleys have under the Guarantee of Franchise

Agreement do not create any rights for them under the Agreement,

which the Supreme Court has explicitly required for a claim of

relief under § 1981.          Second, Section XXV does not establish

that the Beasleys are individually parties to the Agreement.

This section only applies when the franchisee is a corporation,

thus defeating the Beasleys’ claims that they are individual

franchisees or parties to the Agreement.

       Moreover, the specific language referenced by the Beasleys

stating that they “individually . . . executed this Agreement”

does    not   establish   that   they       are    parties     to    the    Agreement

because, factually, the Beasleys did not individually execute

the    Agreement.     First,     Marcus      Beasley     did    not    execute     the

Agreement in any manner.          Second, Denise Beasley signed above

the notation “President.”        Thus, she executed the Agreement only

in her corporate – not individual – capacity.                       Signing in this

representative capacity does not make her an individual party to

the    Agreement,    and,    therefore,           no   representation        in    the

Agreement applies to her as an individual.                 See Ga. Code Ann. §

11-3-402(b) (if an authorized representative signs on behalf of

another person or entity, the representative is not personally

                                        7
liable);    Dewberry       Painting   Centers,   Inc.      v.    Duron    Inc.,    508

S.E.2d     438     (Ga.    App.   1998)   (holding     that      where    corporate

president        “signed   the    document    only    in     his      representative

capacity,” the president was not personally liable under the

document). 1

     In    short,     we   hold   that,   according     to      the   terms   of   the

Agreement, Ventures is the franchisee. 2              Therefore, Ventures is

the named party with rights under the Agreement.                       In contrast,

the Beasleys, as sole shareholders of Ventures, are neither the

franchisee nor a named party with rights under the Agreement.

Therefore, pursuant to Domino’s Pizza, the Beasleys cannot bring

a § 1981 claim.

     1
        In his dissent, our colleague suggests that the
implication of our decision is that Denise Beasley would need to
sign the Agreement twice to be bound as an individual. That is
not so. Denise Beasley could have noted she was also signing in
her individual capacity, or she could have signed without noting
that she was doing so in her corporate capacity.
     2
       The identity of the franchisee is unambiguous.    Despite
the fact that the Beasleys signed or initialed above the printed
term ‘franchisee,’ the Agreement when read as a whole is only
capable of being read as a contract between Arcapita and
Ventures.   See Gen. Steel, Inc. v. Delta Bldg. Sys. Inc., 676
S.E.2d 451, 453 (Ga. App. 2009)(pursuant to Georgia law, which
controls the Agreement, “no ambiguity exists where, examining
the contract as a whole . . . the contract is capable of only
one reasonable interpretation.”).

                                          8
                               IV.

     For the foregoing reasons, we affirm the district court’s

order dismissing the Beasleys’ complaint. 3

                                                        AFFIRMED

     3
       Arcapita moved to dismiss this appeal on res judicata
grounds.   We deny the motion.    See Pueschel v. United States,
369 F.3d 345, 356 (4th Cir. 2004) (recognizing the claim
splitting waiver exception to res judicata).

                                9
GREGORY, Circuit Judge, dissenting:

       The majority opinion comes to the unfortunate conclusion

that contracts simply do not mean what they say.                    In reviewing

this   motion    to   dismiss,    we    must    accept     the     facts   in   the

complaint as true, and draw all reasonable inferences in favor

of the Beasleys.          Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct.

1937, 1949-50 (2009).          While we need not accept as true any

legal conclusions, id., in a contract dispute, we must construe

any ambiguous provisions in the Agreement against Arcapita as

the drafter.       Department of Community Health v. Pruitt Corp.,

673 S.E.2d 36, 39 (Ga. App. 2009).                Most importantly in this

case, even if we may foresee the claim’s later failure at the

summary   judgment    stage,     we    must    refrain     from    examining    its

underlying      merits.     Republican        Party   of   North    Carolina     v.

Martin, 980 F.2d 943, 952 (4th Cir. 1992).

       As drafted by Arcapita, the plain language of the Agreement

makes clear that Ms. Beasley’s signature alone was sufficient to

in fact make her “individually” a party to the Agreement.                       J.A.

43.    Section 25 states in part that:

       In the event Franchisee named herein is a corporation
       at the time of the execution of this Agreement, it is
       warranted, covenanted and represented to Franchisor
       that:

       . . .

       25.02 The above-named person or                 persons[,] [Ms.
       Beasley,] has (have) individually,              and jointly and

                                        10
     severally, executed this Agreement, and such person,
     or one of such persons, [Ms. Beasley,] is and shall be
     the   chief  executive   officer  of   the  Franchisee
     corporation[,] [Ventures] . . . .

J.A. 43 (emphasis added).             Section 25 only applies when the

franchisee is a corporation because it creates another layer of

liability for the individual signatory, which would otherwise be

unnecessary in circumstances where the lone franchisee is an

individual person.     Section 25.02 is a guarantee that the person

“above-named”   --     Ms.    Beasley’s      name    appears   without     title

several times in the preceding parts of the Agreement, J.A. 41-

42 –- will execute the Agreement as an individual, and as the

chief executive of the corporation.                 It therefore establishes

obligations under the Agreement for both the signatory as an

individual and as a representative of the corporation.

     Thus,   through    her    single       signature,   Ms.   Beasley     bound

herself as an individual and her corporation, Ventures, to the

Agreement.   J.A. 44; see also Restatement (Second) of Contracts

§ 289(1)   (1981)    (“Where    two    or    more    parties   to   a   contract

promise the same performance to the same promisee, each is bound

for the whole performance thereof, whether his duty is joint,

several, or joint and several.”).            Ms. Beasley therefore had the

same specific rights and duties under the Agreement as Ventures,

rights which were enforceable under § 1981.              See Domino’s Pizza,

Inc. v. McDonald, 546 U.S. 470, 476-80 (2006) (“Section 1981

                                       11
offers     relief      when   racial        discrimination          . . .    impairs     an

existing contractual relationship, so long as the plaintiff has

or would have rights under the existing or proposed contractual

relationship.”).          Indeed, at oral argument, no one seemed to

doubt that if Ms. Beasley had in some way failed to perform

under the Agreement, Arcapita could use section 25.02 to hold

both her and Ventures liable.

      Nonetheless, the majority holds that this language did not

make Ms. Beasley a party to the Agreement because “factually,

[she] did not individually execute the agreement.”                          See Op. at -

-.   The majority believes that Ms. Beasley had to either sign

the Agreement twice, once as an individual and again as the

President of Ventures, or somehow otherwise note that she was

also signing the Agreement in her individual capacity.                          See Op.

at   --   n.1.      And    yet,    the      terms    of     the   Agreement     did    not

necessitate      two    signatures,         and,    given    that    Arcapita    clearly

included    section       25.02    as   a    means    of    securing    Ms.    Beasley’s

individual       liability,       any    further      notation       would    have     been

superfluous. ∗      Again, that section states that Ms. Beasley –- who

      ∗
       The suggestion that an amendment was somehow needed in
order for Ms. Beasley to obtain standing under the Agreement is
absurd. Section 25.02 clearly means that there was no manner in
which Ms. Beasley could have signed the Agreement that would
have prevented her from being held individually liable.      Ms.
Beasley’s mere execution of the Agreement was her representation
to Arcapita that she would be held individually liable, and that
(Continued)
                                             12
is the actual signatory, and is repeatedly “above-named” without

title, J.A. 41-42 -– has “individually” executed the Agreement.

     In fact, the Georgia law cited by the majority provides

still more interpretive presumptions in favor of Ms. Beasley’s

claim.     Dewberry Painting Centers, Inc. v. Duron Inc. supports

my position in so far as it holds that the act of signing above

the title “President” will not, as a matter of law, preclude

personal liability.             508 S.E.2d 438, 440-41 (Ga. App. 1998).

Similarly, my colleagues mistakenly rely on Ga. Code Ann. § 11-

3-402(b), which applies only where a contract is “unambiguous.”

The Agreement is, at best, ambiguous, and thus we should instead

apply    Ga.    Code     Ann.   § 11-3-402(b)(2),     which   instructs    us   to

presume that the corporate representative is individually liable

on the instrument.

     Mr.       Beasley    similarly    became    a    party   to   the   contract

through    his      repeated      initialing     of    the    Agreement    as   a

“franchisee.”          See J.A. 41, 42.         Further, since the Beasleys

she was able to bind Ventures as its chief executive officer.
The presence of a title beneath her signature was therefore
unnecessary and redundant.  Thus, the Agreement would need to
have been amended so as to preclude her individual liability,
not to create it, and Ms. Beasley probably would have welcomed
such an amendment.
     And yet, Arcapita likely required her to execute the
unmodified Agreement as a precondition to obtaining a franchise;
thereby making it impractical or impossible for her to have
insisted on any amendments.

                                        13
also functioned as sureties through the Guarantee of Franchise

Agreement,     they     likely       have       an    alternative         ground     to    claim

§ 1981 standing.         See, e.g., RBA Capital, LP. v. Anonick, No.

3:08cv494,     2009     WL    960090,       at       *2    (E.D.    Va.    April     8,   2009)

(noting    that    “conceptually”           a    contract         surety    could     bring    a

lawsuit on behalf of the principal (citing Smith Setzer & Sons,

Inc. v. South Carolina Procurement Review Panel, 20 F.3d 1311,

1317 (4th Cir.1994))); see also Denny v. Elizabeth Arden Salons,

Inc., 456 F.3d 427, 436 (4th Cir. 2006) (permitting third-party

beneficiaries to bring § 1981 actions).

     The     Beasleys        sought    to       pursue      their     American       dream    of

owning and operating a business franchise.                            However, according

to the allegations in the complaint, the discriminatory actions

of Arcapita kept their franchise from ever growing beyond its

infancy.     Given the clarity of section 25.02 and the deference

we must give to the complaint at this early juncture, I am

convinced      that    the     Beasleys         factually          were    parties    to     the

Agreement.        They are therefore entitled to the opportunity to

vindicate their rights under § 1981 in the district court.

     Regrettably, however, the majority’s decision will bar any

court   from    ever    reaching       the       merits      of    the    Beasleys’       racial

discrimination claim.           While the lawsuit may ultimately prove to

be unsuccessful, at present, there is no just basis for this

Court   to   hold      that    the    Beasleys            lack    standing.        For    these

                                                14
reasons, I cannot join the “factual” analysis of the majority,

and must dissent.

                              15