Court Opinion

ID: 6800790
Source: CourtListenerOpinion
Date Created: 2022-07-22 16:00:34.608523+00
Date Added: 2024-06-11T16:03:13.449423
License: Public Domain

USCA11 Case: 20-13991    Date Filed: 07/22/2022   Page: 1 of 15

                                         [DO NOT PUBLISH]
                          In the
         United States Court of Appeals
               For the Eleventh Circuit

                 ____________________

                        No. 20-13991
                 Non-Argument Calendar
                 ____________________

GARY HENDERSHOTT,
                        Plaintiff-Counter Defendant-Appellant,
versus
JOEL OSTUW,

                        Defendant-Counter Claimant-Appellee,

ECHOTA FABRICS, INC.,

                                                   Defendant.
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2                   Opinion of the Court                20-13991

                  ____________________

         Appeal from the United States District Court
             for the Southern District of Florida
            D.C. Docket No. 9:20-cv-80006-RLR
                  ____________________

                  ____________________

                        No. 21-10358
                  Non-Argument Calendar
                  ____________________

GARY HENDERSHOTT,
                         Plaintiff-Counter Defendant-Appellant,
versus
JOEL OSTUW,

                        Defendant-Counter Claimant-Appellee,

ECHOTA FABRICS, INC.,

                                                    Defendant.
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20-13991               Opinion of the Court                        3

                     ____________________

           Appeal from the United States District Court
               for the Southern District of Florida
              D.C. Docket No. 9:20-cv-80006-RLR
                    ____________________

Before WILSON, NEWSOM, and ANDERSON, Circuit Judges.
PER CURIAM:
        Gary Hendershott, pro se, appeals the district court’s orders
granting Joel Ostuw’s motion for judgment on the pleadings on
Hendershott’s third amended complaint, Echota Fabric’s motion
to dismiss the third amended complaint, and Ostuw’s motions for
summary judgment on Hendershott’s counterclaim and amended
counterclaim. Hendershott asserts five main arguments on appeal:
First, he argues that the district court erred by granting Ostuw’s
motion for judgment on the pleadings. Second, he argues that the
district court erred by granting Echota’s motion to dismiss with
prejudice and abused its discretion by denying him leave to file a
fourth amended complaint. Third, he argues that the district court
erred by granting summary judgment in part in favor of Ostuw on
his breach-of-contract counterclaim. Fourth, he argues that the dis-
trict court abused its discretion by treating Ostuw’s second
amended counterclaim as a technical amendment and sua sponte
terminating the motion for summary judgment based on that
amendment. Finally, he argues that the district court erred by or-
dering specific performance of the settlement agreement because
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4                       Opinion of the Court                  20-13991

it violated his First Amendment rights. After careful review, we
affirm.
                                   I
        This case arises from a business relationship and series of dis-
putes between Gary Hendershott, a dealer of art and historic arti-
facts, and Joel Ostuw, a man whom Hendershott assisted in selling
various items. The relationship soured in late 2017, and on January
8, 2018, Ostuw made a report to Georgia police after Hendershott
failed to return his property. These events led to Hendershott’s
first lawsuit against Ostuw, Hendershott v. Ostuw, 9:18-cv-80104
(S.D. Fla.), which alleged that Ostuw had wrongfully terminated a
consignment agreement for the sale of Ostuw’s collection of Civil-
War-era swords and then reported to law enforcement that Hen-
dershott stole the swords. That lawsuit ended in a settlement
agreement that the parties signed on September 18, 2018. This ap-
peal arises out of Hendershott’s second lawsuit against Ostuw,
which alleged that Ostuw breached the settlement agreement by
reporting to the police that Hendershott stole items covered by the
settlement agreement.
                                   II
                                   A
        Hendershott’s first argument on appeal is that the district
court erred by granting Ostuw’s motion for judgment on the plead-
ings with respect to Hendershott’s third amended complaint. The
district court rejected Hendershott’s claim in Count I of his
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20-13991                   Opinion of the Court                               5

complaint that Ostuw breached the mutual-release provision of the
parties’ prior settlement agreement by reporting to the police that
Hendershott had stolen certain items from him. The court rejected
Count VIII for breach of the implied covenant of good faith and fair
dealing because such a claim can’t be maintained under Florida law
unless there’s a breach of an express term of a contract. We con-
clude that the district court didn’t err because Hendershott didn’t
plausibly allege a breach of the settlement agreement, and Hender-
shott’s breach-of-good-faith-and-fair-dealing claim fails without a
valid breach-of-contract claim. 1
       Hendershott’s breach-of-contract claim fails because he
didn’t plausibly allege 2 any conduct that Ostuw undertook that
could have violated the terms of the settlement agreement.

1 This Court reviews de novo a district court’s grant of a motion for judgment
on the pleadings. Cannon v. City of W. Palm Beach, 250 F.3d 1299, 1301 (11th
Cir. 2001).
         While Hendershott also asserts that the district court erred with re-
spect to Count II of his third amended complaint, he has failed to contest one
of the district court’s independent grounds for its decision on that claim—
namely, that default judgment should be entered against Hendershott because
he failed to present an opposing memorandum of law and instead expressed
his desire to voluntarily dismiss this count. See Doc. 125 at 9–10; Sapuppo v.
Allstate Floridian Ins. Co., 739 F.3d 678, 680 (11th Cir. 2014) (“When an appel-
lant fails to challenge properly on appeal one of the grounds on which the
district court based its judgment, he is deemed to have abandoned any chal-
lenge of that ground, and it follows that the judgment is due to be affirmed.”).
2A motion for judgment on the pleadings is governed by the same standard as
a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Carbone
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6                           Opinion of the Court                         20-13991

        To begin, Hendershott didn’t plausibly allege that Ostuw’s
conduct occurred after the settlement agreement was executed on
September 18, 2018. See Doc. 125 at 2. While Hendershott’s com-
plaint makes the bare allegation that Ostuw reported his property
stolen “in May 2019,” Doc. 60 at 5, the exhibit that Hendershott
cites for that proposition—a prosecutor’s affidavit in support of an
arrest warrant that Hendershott attached to his complaint as Ex-
hibit F—is dated February 5, 2018, Id. at 48. See Gill ex rel. K.C.R.
v. Judd, 941 F.3d 504, 511–12 (11th Cir. 2019) (noting that because
“the plaintiff is the master of the complaint,” we will consider “all
documents that are attached to the complaint or incorporated into
it by reference” (cleaned up)). Hendershott’s Exhibit H is a prop-
erty receipt dated February 23, 2018 that the police created when
they recovered the property that Ostuw alleged Hendershott stole.
Doc. 60 at 55–56. Hendershott’s Exhibit C is the amended com-
plaint from his first lawsuit against Ostuw, which was filed on Au-
gust 24, 2018 and alleges that Ostuw had “Plaintiff arrested for
theft.” Id. at 36, 38. Thus, Hendershott’s own complaint and ex-
hibits make clear that Ostuw’s challenged police report most likely
was made prior to the signing of the settlement agreement: The
plausibility of Hendershott’s allegation that Ostuw made his police

v. Cable News Network, Inc., 910 F.3d 1345, 1350 (11th Cir. 2018). The com-
plaint must state a claim to relief that is plausible on its face to avoid dismissal.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
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20-13991                      Opinion of the Court                            7

report in May 2019 is belied by Hendershott’s own exhibits. 3
Ostuw couldn’t have breached the agreement before the agree-
ment existed.
       Moreover, nothing in the settlement agreement prohibited
Ostuw from cooperating with police or prosecutors. That agree-
ment provided that each party would dismiss his pending civil law-
suit against the other, and contained a mutual-release provision.
Doc. 11-1 at 2. But a release provision—which typically functions
as an affirmative defense to future, civil breach-of-contract claims
that a party might bring, see Perry v. Merit Sys. Prot. Bd., 137 S. Ct.
1975, 1986 n.9 (2017); Pontier v. Wolfson, 637 So. 2d 39, 40 (Fla.
Dist. Ct. App. 1994) (per curiam) 4—doesn’t impose obligations on
parties with respect to criminal prosecutions controlled by state
prosecutors. See State v. Brosky, 79 So. 3d 134, 135 (Fla. Dist. Ct.
App. 2012) (noting that under Florida law, the decision whether to
prosecute or dismiss charges “is a determination to be made by
solely the State”). Even if Ostuw continued to cooperate with the
State of Florida’s criminal prosecution after the settlement agree-
ment was signed, doing so wouldn’t have breached the agreement.

3 Hendershott’s exhibits demonstrate that he was indicted in May 2019—
which, of course, doesn’t mean that Ostuw made a police report in May 2019.
See Doc. 60 at 50. The district court subsequently found that the only criminal
report that Ostuw made to the police was on January 8, 2018—nine months
before he signed the settlement agreement. Doc. 126 at 5.
4 The parties don’t dispute   that Florida law governs the settlement agreement.
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8                         Opinion of the Court                     20-13991

       Our conclusion with respect to Hendershott’s breach-of-
contract claim in Count I dictates our conclusion with respect to
Count VIII: Under Florida law, the implied covenant of good faith
and fair dealing is not an independent cause of action and can’t be
maintained absent the breach of an express contract term. Centu-
rion Air Cargo, Inc. v. United Parcel Serv. Co., 420 F.3d 1146, 1151–
52 (11th Cir. 2005). Because the district court didn’t err when it
dismissed Hendershott’s breach-of-contract claim, it also didn’t err
when it dismissed his good-faith-and-fair-dealing claim.
                                      B
       Second, Hendershott argues that the district court erred by
granting Echota’s motion to dismiss with prejudice and that the
court abused its discretion by denying him leave to file a fourth
amended complaint. He asserts that the court should have found
that Echota was the alter ego of Ostuw and that all allegations
against one were effective against the other. He also asserts that it
wouldn’t have been futile for the court to allow him to file a fourth
amended complaint and that the appellees wouldn’t have been
prejudiced by it. 5
        To begin, Hendershott has abandoned any challenge to the
district court’s order granting Echota’s motion to dismiss by failing
to address each independent ground upon which that order was

5 We  review for abuse of discretion a district court’s decision on whether to
grant leave to amend. Garfield v. NDC Health Corp., 466 F.3d 1255, 1270
(11th Cir. 2006).
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20-13991                Opinion of the Court                         9

based. See Sapuppo, 739 F.3d at 680. The district court granted
Echota’s motion to dismiss on three grounds: “[1] for failure to pro-
vide Echota with proper notice of the claims against it, [2] by de-
fault for failure to address . . . the arguments raised in the motion,
and [3] by default for the lack of a legal basis to refute Echota’s ar-
guments. Doc. 125 at 11. But on appeal, Hendershott argues only
that Echota is the alter ego of Ostuw. Because Hendershott failed
to challenge each independent ground of the court’s decision, he
“is deemed to have abandoned any challenge” to the unaddressed
grounds, and “the judgment is due to be affirmed.” Sapuppo, 739
F.3d at 680.
        With respect to the district court’s denial of leave to file a
fourth amended complaint, the court didn’t abuse its discretion be-
cause Hendershott had “repeatedly failed to cure deficiencies in his
pleadings.” Doc. 125 at 12. After a court gives the plaintiff fair no-
tice of the specific defects in his complaint and a meaningful chance
to fix them—as the district court did here, see, e.g., Doc. 49 at 5,
Docs. 53, 60, Dkt. Entry 50—dismissal with prejudice is proper if
the plaintiff files an amended complaint with the same defects, see
Jackson v. Bank of Am., N.A., 898 F.3d 1348, 1358–59 (11th Cir.
2018). Moreover, granting Hendershott further leave to amend
would have been futile because he had no plausible breach-of-con-
tract claim against Echota: As explained above, Hendershott had
no plausible breach-of-contract claim resulting from Ostuw’s filing
of a police report, and hence, no plausible breach-of-contract claim
against Echota based on that conduct.
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10                        Opinion of the Court                      20-13991

                                      C
       Third, Hendershott argues that the district court erred by
granting partial summary judgment to Ostuw on his breach-of-
contract counterclaim. The district court found that Hendershott
had breached the settlement agreement because it was undisputed
that Hendershott had placed references to Ostuw on his website in
violation of the agreement’s terms. Doc. 126 at 5. After allowing
Ostuw to seek specific performance as a remedy in an amended
complaint and motion for summary judgment, the court granted
that remedy. Doc. 180 at 4. Hendershott continues not to dispute
that he breached the contract, see Br. of Appellant at 27, but argues
that the court erred because it didn’t accept his affirmative defense
that Ostuw breached the contract first by pursuing the criminal
case against him. We disagree. 6
       Under Florida law, a material breach of an agreement gen-
erally “allows the non-breaching party to treat the breach as a dis-
charge of his contract liability.” Bradley v. Health Coal., Inc.,
687 So. 2d 329, 333 (Fla. Dist. Ct. App. 1997) (quotation omitted).
But as explained above, Ostuw didn’t breach the settlement agree-
ment because he filed his only police report nine months before the
agreement was signed—a fact that the district court explicitly
found at summary judgment. See Doc. 126 at 5. And even if Ostuw
continued to cooperate with the criminal investigation after the

6 We review de novo a district court’s grant of summary judgment.   Holloman
v. Mail-Well Corp., 443 F.3d 832, 836 (11th Cir. 2006).
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20-13991                   Opinion of the Court                                11

agreement was signed, doing so wouldn’t have violated any of the
agreement’s terms. Because Ostuw didn’t breach the contract first
and it’s undisputed that Hendershott breached by placing refer-
ences to Ostuw on his website, the district court properly granted
Ostuw summary judgment with respect to this counterclaim.7
                                       D
        Fourth, construing his brief liberally, Hendershott seems to
argue that the district court abused its discretion by terminating
Ostuw’s motion for summary judgment on his second amended
counterclaim and instead ruling on Ostuw’s motion for summary
judgment on his first amended counterclaim. See Dkt. Entry 179,
Doc. 180. The court treated Ostuw’s second amended counter-
claim “as filed November 18, 2020, nunc pro tunc”—effectively
substituting the second amended counterclaim for the first—be-
cause it was “merely an amendment to clarify citizenship” for ju-
risdictional purposes. Dkt. Entry 179. Hendershott suggests that

7 Hendershott also seems to argue that the district court erred in granting sum-

mary judgment to Ostuw based on its finding that Hendershott failed to
properly dispute Ostuw’s statement of material facts. But even if Hender-
shott’s various filings could be construed as responsive to Ostuw’s statement,
see Doc. 180 at 5 (citing Docs. 159, 161), none of these filings dispute that Hen-
dershott placed references to Ostuw on his website in violation of the settle-
ment agreement or establish that Ostuw violated the settlement agreement
first.
        Moreover, we decline to consider Hendershott’s challenge to the set-
tlement agreement as void because he raised it for the first time in his reply
brief. See Reply Br. of Appellant at 17; Sapuppo, 739 F.3d at 683.
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12                         Opinion of the Court                      20-13991

this deprived him “of his opportunity to respond and correct errors
in his prior Summary Judgment response.” Again, we disagree. 8
        The district court didn’t abuse its discretion by treating
Ostuw’s second amended counterclaim as a technical amendment
or by sua sponte terminating Ostuw’s subsequent motion for sum-
mary judgment based on that amendment because the amendment
simply addressed a jurisdictional issue. The only difference be-
tween the second amended counterclaim and the first amended
counterclaim is that the second clarifies that Ostuw is a citizen of
Georgia and Hendershott is a citizen of Florida. See Doc. 171 at 2.
Hendershott wasn’t harmed by the district court’s termination of
Ostuw’s motion for summary judgment on the second amended
counterclaim and its effective substitution of the second amended
counterclaim for the first because Hendershott already had ample
opportunity to respond to the substance of Ostuw’s counterclaim:
He had already filed three responses to Ostuw’s motion for sum-
mary judgment on the amended counterclaim. See Docs. 159, 161,
165. Because Hendershott hasn’t shown that the district court ap-
plied the wrong legal standard, followed improper procedures, or
made a clearly erroneous finding of fact, we conclude that the court
didn’t abuse its discretion. See United States v. Rigel Ships Agen-
cies, Inc., 432 F.3d 1282, 1291 (11th Cir. 2005) (per curiam).

8 We review the decisions that a district court makes while managing its
docket for abuse of discretion. Scantland v. Jeffry Knight, Inc., 721 F.3d 1308,
1320 (11th Cir. 2013).
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20-13991                 Opinion of the Court                            13

                                     E
       Finally, Hendershott argues that the district court erred in
ordering specific performance of the settlement agreement’s clause
barring him from referring to Ostuw on his website because doing
so violated his First Amendment speech rights. But the court’s en-
forcement of the parties’ settlement agreement didn’t constitute
governmental action, so Ostuw’s First Amendment rights weren’t
violated. 9
       “That Congress shall make no law . . . abridging the freedom
of speech . . . is a restraint on government action, not that of private
persons.” Columbia Broad. Sys., Inc. v. Democratic Nat’l Comm.,
412 U.S. 94, 114 (1973) (quotation marks omitted). There can be
no First Amendment violation absent governmental action.
United Egg Producers v. Standard Brands, Inc., 44 F.3d 940, 942
(11th Cir. 1995). “[I]f, for constitutional purposes, every private
right were transformed into governmental action by the mere fact
of court enforcement of it, the distinction between private and gov-
ernmental action would be obliterated.” Id. at 943 (quotation
marks omitted).
       It’s true that court enforcement of an agreement between
private parties can sometimes be considered governmental action,
such as when a state court enforces a racially restrictive covenant.

9We review de novo whether enforcing a settlement agreement violates the
First Amendment. United Egg Producers v. Standard Brands, Inc., 44 F.3d 940,
942 (11th Cir. 1995).
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14                        Opinion of the Court                     20-13991

See id. (citing Shelley v. Kraemer, 334 U.S. 1 (1948)). But given the
desirability of allowing parties to use settlement agreements to end
controversies, we have held that “where a court acts to enforce the
right of a private party which is permitted but not compelled by
law, there is no state action for constitutional purposes in the ab-
sence of a finding that constitutionally impermissible discrimina-
tion is involved.” Id. In the absence of such discrimination, enforc-
ing a settlement agreement between “parties in positions of equal
bargaining power . . . to restrict, in a limited degree, their First
Amendment rights on commercial speech” doesn’t constitute gov-
ernmental action. Id.
       Here, the district court didn’t err by ordering specific perfor-
mance of the settlement agreement because Hendershott hasn’t
shown that the agreement involved constitutionally impermissible
racial discrimination such that its enforcement would constitute
governmental action for First Amendment purposes. Moreover,
Hendershott’s argument that the parties had unequal bargaining
power because he didn’t have time to review the agreement and
didn’t have an attorney is meritless because the settlement agree-
ment that he attached to his third amended complaint stated that
the parties carefully reviewed it, and it is signed by both Hender-
shott and his attorney. 10 See Doc. 60 at 40–43. Therefore, the

10 We decline to consider Hendershott’s argument that he was under duress
when he entered the settlement agreement because he abandoned it by raising
it for the first time in his reply brief. See Reply Br. of Appellant at 22–24;
Sapuppo, 739 F.3d at 683.
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20-13991              Opinion of the Court                     15

district court’s enforcement of Hendershott and Ostuw’s settle-
ment agreement through the remedy of specific performance
didn’t constitute governmental action that could implicate Hender-
shott’s First Amendment rights.
      AFFIRMED.