Court Opinion

ID: 4704811
Source: CourtListenerOpinion
Date Created: 2021-07-20 14:02:55.71411+00
Date Added: 2024-06-11T08:05:35.730142
License: Public Domain

USCA11 Case: 20-14096     Date Filed: 07/20/2021     Page: 1 of 15

                                                           [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 20-14096
                       Non-Argument Calendar
                     ________________________

                D.C. Docket No. 1:19-cv-01068-TFM-B

LARRY WIREMAN,
JUDY WIREMAN,

                                                Plaintiffs-Appellants,

                                  versus

PARK NATIONAL CORPORATION,
SE PROPERTY HOLDINGS, LLC,
SOUTHEAST PROPERTY SOLUTIONS, LLC,

                                                Defendants-Appellees.

                     ________________________

              Appeal from the United States District Court
                 for the Southern District of Alabama
                     ________________________

                              (July 20, 2021)
           USCA11 Case: 20-14096          Date Filed: 07/20/2021      Page: 2 of 15

Before NEWSOM, LUCK, and ANDERSON, Circuit Judges.

PER CURIAM:

       Larry and Judy Wireman appeal the district court’s order dismissing their

complaint against SE Property Holdings, LLC, Southeast Property Solutions, LLC,

and Park National Corporation.1 As to Judy, the district court concluded that she

lacked standing because she wasn’t a party to the contract between Larry and

SE Property Holdings. As to Larry, the district court concluded that he had failed to

plausibly allege claims for breach of contract, fraud, unjust enrichment, and civil

conspiracy against the defendants. We affirm the dismissal as to Larry but remand

as to Judy so that the district court can dismiss her claims without prejudice.

           FACTUAL BACKGROUND AND PROCEDURAL HISTORY

       From 2006 to 2011, the Wiremans borrowed tens of millions of dollars from

Vision Bank pursuant to a “mortgage, assignment of rents and leases, and security

agreement.” In 2012, Vision Bank merged into SE Property Holdings, which

acquired Vision Bank’s interest in the Wiremans’ loans. The Wiremans defaulted

on their loan payments in December 2013 and December 2014.

       In February 2018, the Wiremans were again unable to make their payment on

the loans. By this point, the loans had accrued interest and late fees in excess of

       1
         Because the Wiremans share the same last name, we use their first names when discussing
issues relevant to only one of them.
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$13,000,000. SE Property Holdings and Larry Wireman then negotiated four

promissory notes modifying the terms of the loans. SE Property Holdings agreed to

waive $13,000,000 in default interest and late fees if Larry Wireman paid by

April 30, 2018 the principal balances due on each note, the regular interest accrued

on each note, and all attorneys’ fees and collection costs.

      Two fees related to the Wiremans’ loan repayments are at issue here. In

March 2018, the Wiremans paid SE Property Holdings almost five million dollars

on the loans, which included over a million dollars in “unspecified fees.” That’s the

first fee. SE Property Holdings then notified the Wiremans that the loans weren’t

fully satisfied because the Wiremans still owed almost a million dollars in attorneys’

fees. SE Property Holdings told the Wiremans that the $13,000,000 waiver would

be inoperative unless they paid these fees. A portion of these attorneys’ fees were a

percentage-based collection fee for the “collection efforts” of Southeast Property

Solutions, an affiliate of SE Property Holdings. That’s the second fee. To avoid

having the $13,000,000 waiver revoked, the Wiremans paid the attorneys’ fees,

including the percentage-based collection fee, allegedly under “duress.”

      In November 2019, the Wiremans sued SE Property Holdings, Park National

(its parent company), and Southeast Property Solutions (its affiliate) in Alabama

state court. The Wiremans brought claims for breach of contract, fraud, unjust

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enrichment, and civil conspiracy. 2 The defendants removed the case to federal court

and then moved to dismiss the Wiremans’ complaint for failure to state a claim.

       The district court granted the motion to dismiss. The district court first

considered whether Judy had standing. She didn’t, the district court concluded,

because she wasn’t a party to the promissory notes, and she wasn’t an intended third-

party beneficiary. The district court dismissed her claims with prejudice.

       On the merits, the district court concluded that Larry failed to state a breach

of contract claim against Park National and Southeast Property Solutions because

they weren’t parties to the promissory notes. Larry also failed to state a breach of

contract claim against SE Property Holdings, the district court concluded, because

the promissory notes authorized SE Property Holdings to collect the two fees at

issue. As to the fraud claim, the district court concluded that Larry had failed to

satisfy Federal Rule of Civil Procedure 9(b)’s particularity requirement because he

pleaded only general facts. The district court also found that the circumstances

didn’t compel relaxing the heightened pleading requirement. As to the unjust

enrichment claim, the district court concluded that because the existence of a valid

contract wasn’t in dispute, Larry couldn’t plead an unjust enrichment claim as a

matter of Alabama law. Finally, as to the civil conspiracy claim, the district court

       2
         The Wiremans also brought a breach of fiduciary duty claim against SE Property
Holdings. The district court dismissed the breach of fiduciary duty count for failure to state a
claim. The Wiremans do not appeal the dismissal of this count.
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concluded that because the breach of contract, fraud, and unjust enrichment claims

failed, there was no underlying tort that could support a civil conspiracy.

                             STANDARD OF REVIEW

      We review de novo the district court’s dismissal of a complaint for failure to

state a claim. Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1288 (11th Cir.

2010). A “complaint must contain sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,

678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This

“requires more than labels and conclusions, and a formulaic recitation of the

elements of a cause of action will not do.” Twombly, 550 U.S. at 555. A plaintiff

must plead “factual content that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. Our

review is “two pronged”: we (1) “eliminate any allegations in the complaint that are

merely legal conclusions”; and (2) for any “well-pleaded factual allegations, we

assume their veracity and then determine whether they plausibly give rise to an

entitlement to relief.” Am. Dental, 605 F.3d at 1290 (cleaned up).

                                    DISCUSSION

      Larry argues that the district court erred when it concluded that he failed to

state a claim for breach of contract, fraud, unjust enrichment, and civil conspiracy.

We address each issue in turn.

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                                Breach of Contract

      A claim for breach of contract requires: (1) a valid contract between the

parties; (2) the plaintiff’s performance under the contract; (3) the defendant’s

nonperformance; and (4) damages. Shaffer v. Regions Fin. Corp., 29 So. 3d 872,

880 (Ala. 2009). Larry argues that the district court erred by concluding that his

breach of contract claim against Park National Corporation and Southeast Property

Solutions failed because they weren’t parties to the promissory notes. Larry also

argues that he plausibly alleged a breach of contract claim against SE Property

Holdings. We disagree.

                  Park National and Southeast Property Solutions

      Park National and Southeast Property Solutions weren’t parties to the contract

between Larry and SE Property Holdings. These entities weren’t mentioned by

name anywhere in the promissory notes. The only parties to the promissory notes,

identified in the first paragraph of each agreement, were “Larry Wireman” and

“SE Property Holdings.” Park National and Southeast Property Solutions couldn’t

have breached a contract that they weren’t parties to or bound by. See Ligon

Furniture Co., Inc., v. O.M. Hughes Ins. Co., 551 So. 2d 283, 285 (Ala. 1989) (“The

undisputed evidence reveals that [the defendant] was not a party to [the] insurance

contract . . . . Thus, the trial court properly entered summary judgment [in the

defendant’s favor] on the claim alleging a breach of the insurance contract.”).

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        Larry maintains that Park National and Southeast Property Solutions were

parties to the promissory notes because he agreed to release SE Property Holdings’s

parent company and affiliates from all claims related to the loans. But the mere

reference to an entity in a release clause doesn’t transform a releasee into a party

bound by all the terms of the contract. As the district court explained, “parties to a

contract are traditionally defined in the opening paragraph” and not “hidden” inside

release clauses.   Because the first paragraph of each promissory note plainly

identified the parties—“Larry Wireman” and “SE Property Holdings”—we agree

with the district court that Park National and Southeast Property Solutions weren’t

parties to the contract. See State ex rel. Riley v. Lorillard Tobacco Co., Inc., 1 So. 3d

1, 12 (Ala. 2008) (“In construing a contract, this Court is guided by the principle that

the intention of the parties controls and the intention of the parties is to be derived

from the contract itself, where the language is plain and unambiguous.” (cleaned

up)).

                                SE Property Holdings

        Larry argues that SE Property Holdings breached the promissory notes by

compelling him to pay two fees it wasn’t entitled to collect under the contract: first,

the “unspecified fees” exceeding one million dollars; and second, the attorneys’ fees,

including the percentage-based collection fee. Larry also argues that he sufficiently

pleaded a breach of contract claim because he only paid these fees out of duress.

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      The terms of the modified promissory notes were straightforward. Larry

agreed to pay by April 30, 2018 the principal balances due on each note, the interest

accrued on each note, and all attorneys’ fees and collection costs. In exchange,

SE Property Holdings agreed to waive $13,000,000 in default interest and late fees,

reserving the right to collect the default interest should Larry violate the agreement.

The district court concluded, and we agree, that Larry didn’t plausibly allege that

SE Property Holdings breached this agreement.

      Larry alleged in his complaint that SE Property Holdings breached the

contract by “seeking and accepting monies” not owed to it and which it “was not

entitled to collect.”   As to the “unspecified fees” Larry paid, he alleged that

SE Property Holdings charged “a fee of $1,010,538.07 which was not properly

disclosed nor [a] permitted fee under the associated loan documents,” resulting in a

breach of contract. But the loan modification agreement provided that Larry still

had to satisfy the principal amount on each loan, as well as “all accrued and unpaid

interest” and other “charges,” including “all attorneys’ fees and costs.” Larry didn’t

allege that the “unspecified fees” he paid exceeded the accrued and unpaid interest

and other charges and fees that he owed under the promissory notes. He therefore

failed to plausibly allege that SE Property Holdings wasn’t entitled to these fees.

      As to the percentage-based collection fee, Larry alleged that it had to be

“explicitly authorize[d]” by a contract and, because it wasn’t explicitly authorized

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here, SE Property Holdings breached the contract by seeking this fee. But, under

the promissory notes, Larry agreed to pay “all attorneys’ fees and costs incurred by

[SE Property Holdings] in collecting or attempting to collect [the notes], . . . as well

as in connection with [the] loan modification.” In other words, Larry was required

to pay all collection fees related to his loans. His complaint alleged no facts

suggesting that the percentage-based collection fee exceeded the costs of collection.

      Citing Bradley v. Franklin Collection Service, Inc., 739 F.3d 606, 610 (11th

Cir. 2014), Larry maintains that we have held that all percentage-based collection

fees have to be explicitly authorized by the contract. We haven’t. We held in

Bradley that a debt collector violated the Fair Debt Collection Practices Act when it

charged a debtor a collection fee based on a percentage of the principal balance of

the debt because there was no evidence that the percentage-based fee bore “any

correlation to the actual cost” of the collection effort. Id. at 609–10. Bradley is of

no help to Larry’s breach of contract claim because he didn’t plausibly allege that

the percentage-based collection fee imposed here exceeded the actual costs of

collection or the terms of the loan modification agreement, and he didn’t allege a

federal claim under the Act.

      Finally, Larry argues that he plausibly alleged a breach of contract because he

only paid the fees at issue “under duress” to avoid SE Property Holdings’s

“retaliatory threats” of charging default interest. But the waiver of Larry’s default

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interest was contingent on his compliance with the terms of the promissory notes.

Larry’s initial payment in March 2018 didn’t fully satisfy his contractual obligation

because there were still outstanding attorneys’ fees and collection costs. SE Property

Holdings’s “unreasonable retaliatory threats of charging default interest” were

merely its efforts to enforce its rights under the promissory notes.

                                        Fraud

      When alleging fraud, “a party must state with particularity the circumstances

constituting fraud or mistake.” Fed. R. Civ. P. 9(b). This requires a plaintiff to plead

specific facts “as to time, place, and substance of the defendant’s allegedly

fraudulent acts, when they occurred, and who engaged in them.” United States

ex rel. Clausen v. Lab Corp. of Am., 290 F.3d 1301, 1310 (11th Cir. 2002). Larry

argues that the district court erred in dismissing his fraud claim because he satisfied

rule 9(b)’s particularity requirement and, even if he didn’t satisfy the particularity

requirement, it should have been relaxed because the factual information supporting

his fraud claim was “peculiarly within the [d]efendants’ knowledge or control.”

      Under Alabama law, the elements of fraud are: “1) a false representation 2)

concerning a material existing fact, which was 3) relied upon by plaintiff 4) to his

detriment.” McGowan v. Chrysler Corp., 631 So. 2d 842, 846 (Ala. 1993) (citation

omitted). Here, Larry alleged that the “[d]efendants falsely represented the amounts

they would attempt to collect.” They did so, Larry alleged, by not telling him about

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the “unspecified fees” exceeding a million dollars, and by not telling him about the

percentage-based collection fee.

      We agree with the district court that Larry failed to satisfy rule 9(b)’s

particularity requirement of pleading the who, what, when, where, and how of the

fraud. As to the “unspecified fees,” Larry didn’t allege that the amount of fees was

incorrect, what the amount of fees should have been, who from SE Property

Holdings did or didn’t make representations about the fees, or when any

(mis)representations about these fees were allegedly made. Larry’s allegation that

the defendants failed to tell him about the percentage-based collection fee suffers

from the exact same deficiencies. Moreover, Larry sued three different entities but

only alleged that the “[d]efendants” falsely represented the amounts he owed,

without alleging which of the three defendants made the fraudulent

misrepresentations. Without these key details, Larry failed to meet his burden of

pleading specific facts as to the time, place, and the substance of the allegedly

fraudulent acts, when they occurred, and who engaged in them. See Lab Corp. of

Am., 290 F.3d at 1310.

      Larry also failed to allege sufficient facts to justify the relaxation of rule 9(b)’s

particularity requirement. A “more lenient pleading standard” is appropriate under

rule 9(b) when “evidence of fraud [i]s uniquely held by the defendant,” provided that

“the complaint . . . set[s] forth a factual basis for such belief.” See id. at 1314 n.25

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(internal quotation marks omitted). “[C]onclusory statements are insufficient to

justify relaxation.” Id. Here, Larry’s complaint doesn’t contain any allegations

whatsoever that the evidence related to the alleged fraud was uniquely held by any

of the defendants. Without these necessary factual allegations, the district court

correctly concluded that Larry wasn’t entitled to the relaxation of rule 9(b)’s

particularity requirement.

                                    Unjust Enrichment

      The district court concluded that Larry’s unjust enrichment claim failed as a

matter of Alabama law because neither the existence nor the enforceability of a valid

contract were in dispute. Larry argues, citing Federal Rule of Civil Procedure

8(d)(3), that because a “party may state as many separate claims or defenses as it

has, regardless of consistency,” his unjust enrichment claim could coexist with his

breach of contract claim.

      Under Alabama law, a claim for unjust enrichment is incompatible with a

claim for breach of contract where there is no dispute that an express contract existed

between the parties. See Univalor Tr., SA v. Columbia Petroleum, LLC, 315 F.R.D.

374, 382 (S.D. Ala. 2016) (“[T]he existence of an express contract extinguishes an

unjust enrichment claim altogether because unjust enrichment is an equitable remedy

which issues only where there is no adequate remedy at law.”), quoted approvingly

in Blackmon v. Renasant Bank, 232 So. 3d 224, 229 n.4 (Ala. 2017); Sullivan v.

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Mazak Corp., 805 So. 2d 674, 674 (Ala. 2000) (See, J., concurring in part and

dissenting in part) (“A party cannot recover on a claim of unjust enrichment where

there is an enforceable express contract between the parties concerning the same

subject matter on which the unjust-enrichment claim rests.”); Boyington v. Bryan,

174 So. 3d 347, 358 (Ala. Civ. App. 2014) (“In light of the entry of a judgment in

his favor on his breach-of-contract claim, Bryan cannot also succeed on his unjust-

enrichment claim.”). Here, there was no dispute that an express contract existed

between Larry and SE Property Holdings. Larry told the district court that “it is

undisputed a valid contract exists.” And he reiterates on appeal that a binding

contract existed. The promissory notes incorporated into the complaint confirm the

terms of this express contract. Because there was no factual dispute that an express

contract existed, Larry’s unjust enrichment claim failed as a matter of state law. See

Boyington, 174 So. 3d at 358.

      Larry maintains that because the district court concluded that Park National

and Southeast Property Solutions weren’t parties to the promissory notes, his unjust

enrichment claim against them shouldn’t be barred by the express contract between

him and SE Property Holdings. But Larry didn’t present this argument to the district

court, so he can’t raise it now for the first time on appeal. See Access Now, Inc. v.

Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004) (“This Court has repeatedly

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held that an issue not raised in the district court and raised for the first time in an

appeal will not be considered by this court.” (cleaned up)).

      In any event, this argument fails on the merits. Larry alleged that he paid SE

Property Holdings, not Park National or Southeast Property Solutions.             Park

National and Southeast Property Solutions couldn’t have been enriched by money

they didn’t receive.

                                     Civil Conspiracy

      The district court concluded that because Larry’s other claims failed as a

matter of law, there was no underlying tort that could support his civil conspiracy

claim. Larry argues that his civil conspiracy claim should have survived because he

plausibly alleged a fraud.

      Under Alabama law, “a conspiracy cannot exist in the absence of an

underlying tort. ‘[L]iability for civil conspiracy rests upon the existence of an

underlying wrong and if the underlying wrong provides no cause of action, then

neither does the conspiracy.’” Willis v. Parker, 814 So. 2d. 857, 867 (Ala. 2001)

(quoting Jones v. BP Oil Co., 632 So. 2d 435, 439 (Ala. 1993)). Because Larry

didn’t plausibly allege fraud, as we explained above, the district court correctly

concluded that he failed to establish an underlying tort that could support his claim

for civil conspiracy. Thus, we affirm the dismissal of this count too.

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                               Judy’s Lack of Standing

      The district court did make one error; it dismissed Judy’s claims with

prejudice. “Because standing is jurisdictional, a dismissal for lack of standing has

the same effect as a dismissal for lack of subject matter jurisdiction” under rule

12(b)(1). Cone Corp. v. Fla. Dep’t of Transp., 921 F.2d 1190, 1203 n.42 (11th Cir.

1991). Thus, a “dismissal for lack of subject matter jurisdiction is not a judgment

on the merits” and should be “entered without prejudice.” Stalley ex rel. U.S. v.

Orlando Reg’l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). We

remand for the district court to dismiss Judy’s claims without prejudice. See id. at

1235 (“[S]ince the district court did not have subject matter jurisdiction in this case,

Stalley’s complaint should have been dismissed without prejudice. Therefore, we

remand with instructions that the district court reenter its judgment accordingly.”).

                                   CONCLUSION

      We affirm the dismissal of Larry’s claims. We remand for the limited purpose

of having the district court dismiss Judy’s claims without prejudice.

      AFFIRMED AND REMANDED.

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