Court Opinion

ID: 66182
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:07:27+00
Date Added: 2024-06-11T17:20:44.916982
License: Public Domain

[DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT            FILED
                         ________________________ U.S. COURT OF APPEALS
                                                           ELEVENTH CIRCUIT
                               No. 08-10915                   OCT 27, 2008
                           Non-Argument Calendar            THOMAS K. KAHN
                         ________________________               CLERK

                    D. C. Docket No. 06-02029-CV-LSC-W

VIRGIL E. COOK,
individually,
VIRGIL E. COOK,
d.b.a. Worm Shack Sporting Goods, Incorporated,

                                         Plaintiff-Counter-Defendant-Appellant,

WORM SHACK SPORTING GOODS, INCORPORATED,

                                                    Plaintiff-Counter-Defendant,

                                    versus

TRINITY UNIVERSAL INSURANCE COMPANY OF KANSAS,

                                         Defendant-Counter Claimant-Appellee.

                         ________________________

                  Appeal from the United States District Court
                     for the Northern District of Alabama
                        _________________________

                              (October 27, 2008)

Before HULL, MARCUS and PRYOR, Circuit Judges.
PER CURIAM:

       Virgil E. Cook, pro se, appeals the district court’s entry of summary

judgment in favor of Trinity Universal Insurance Co. (“Trinity”), on Cook’s breach

of contract and bad faith claims arising from Trinity’s denial of insurance coverage

following a fire at Cook’s business (the “Worm Shack”).1 Because we conclude

that Cook does not have appellate standing to challenge the entry of summary

judgment against the Worm Shack, and that Cook did not individually have

standing to pursue his claim before the district court, we do not reach the merits of

Cook’s appeal.2 Accordingly, we dismiss the appeal in part, and affirm it in part.

       “[W]e are obliged to consider standing sua sponte even if the parties have

not raised the issue because an appellate court must satisfy itself not only of its

       1
          Although both Cook and Worm Shack appealed, we have already held that the notice of
appeal was ineffective as to Worm Shack, since it was a corporate entity not represented by
counsel, and we have dismissed it from this appeal. See Palazzo v. Gulf Oil Corp., 764 F.2d
1381, 1385 (11th Cir. 1985) (holding that a corporation cannot appear pro se even when the
person seeking to represent it is the president and major stockholder). Trinity also filed
counterclaims against Cook and Worm Shack, and one of these remained unresolved before the
district court, but Trinity later renounced this counterclaim and, therefore, “finalized the district
court proceedings.” Consistent with this, we conclude that Cook’s notice of appeal was
sufficient to vest us with appellate jurisdiction. Robinson v. Tanner, 798 F.2d 1378, 1382 (11th
Cir. 1986) (noting that a premature appeal is reviewable where a subsequent judgment of the
district court effectively terminated the litigation, even though no new notice of appeal was filed
after the subsequent judgment).
       2
         In other words, in light of the disposition based on standing, we find it unnecessary to
consider: (i) whether Cook, in his pro se brief, adequately preserved a challenge to the district
court’s analysis of his contract and bad faith claims; or (ii) whether the grant of summary
judgment on those claims was proper.

                                                  2
own jurisdiction, but also of that of the lower courts in a cause under review.”

AT&T Mobility, LLC v. Nat’l Ass’n for Stock Car Auto Racing, Inc., 494 F.3d

1356, 1360 (11th Cir. 2007) (internal quotation marks omitted).           “As with all

jurisdictional issues, [we] review[] standing de novo.”       Id. We may affirm the

district court on any basis supported by the record. Watkins v. Bowden, 105 F.3d

1344, 1353 n.17 (11th Cir. 1997).

         Litigants must establish their standing not only to bring claims, but also to

appeal judgments. Arizonans for Official English v. Arizona, 520 U.S. 43, 64

(1997) (“The standing Article III requires must be met by persons seeking

appellate review, just as it must be met by persons appearing in courts of first

instance.”). Though similar and overlapping, the doctrines of appellate standing

and trial standing are not identical. See Knight v. Alabama, 14 F.3d 1534, 1555

(11th Cir. 1994). “The primary limitation on [a litigant’s] appellate standing is the

adverseness requirement which is one of the rules of standing peculiar to the

appellate setting. Only a litigant ‘who is aggrieved by the judgment or order may

appeal.’” Id. at 1556 (citations omitted). Standing must exist with respect to each

claim. See Jackson v. Okaloosa County, Fla., 21 F.3d 1531, 1536-37 (11th Cir.

1994).     Moreover, a “plaintiff generally must assert his own legal rights and

interests, and cannot rest his claim to relief on the legal rights or interests of third

                                           3
parties.” Warth v. Seldin, 422 U.S. 490, 499 (1975); see also Miccosukee Tribe of

Indians of Fla. v. Fla. State Athletic Comm’n, 226 F.3d 1226, 1230 (11th Cir.

2000) (“Absent exceptional circumstances, a third party does not have standing to

challenge injury to another party.”). Thus, as we noted when we dismissed Worm

Shack, an officer or owner of a corporation cannot pursue an appeal for the

corporation. Palazzo, 764 F.2d at 1385.

      In light of the case law, we are compelled to conclude that Cook,

individually, lacks appellate standing to challenge the judgment against Worm

Shack, a separate corporate entity, and lacks the ability to prosecute Worm Shack’s

claims in his own name. We dismiss the appeal to the extent he seeks to do either.

      We further conclude that Cook lacked standing before the district court to

bring claims on his own behalf. Although the district court did not expressly

address this issue, Cook was, as a plaintiff, required to demonstrate “injury in fact,

causation and redressability.” Elend v. Basham, 471 F.3d 1199, 1205 (11th Cir.

2006). To establish an injury in fact, he had to demonstrate that Trinity invaded

one of Cook’s “legally protected interest[s].” AT&T Mobility, 494 F.3d at 1360.

      Generally, status as a corporate shareholder will not give an individual

standing to prosecute a claim on behalf of a corporation. Specifically, we have

noted that:

                                          4
       [a]n action to redress injuries to a corporation cannot be maintained
       by a shareholder in his own name but must be brought in the name of
       the corporation. The shareholder’s rights are merely derivative and
       can be asserted only through the corporation. Although this rule does
       not apply in a case where the shareholder shows a violation of duty
       owed directly to him, diminution in value of the corporate assets is
       insufficient direct harm to give the shareholder standing to sue in his
       own right.

Stevens v. Lowder, 643 F.2d 1078, 1080 (5th Cir. Unit B Apr. 1981) (internal

citations omitted);3 see also Fla. Seed Co. v. Monsanto Co., 105 F.3d 1372, 1376

(11th Cir. 1997) (noting that, with respect to a suit brought by a sole stockholder

on behalf of his corporation, courts have uniformly held that such a stockholder

lacks standing to bring an antitrust suit for injury to the corporation).

       While standing may be available to third-party beneficiaries of a contract,

this designation is usually limited or precluded by the contract at issue, subject to

applicable law. “Under Erie Railroad v. Tompkins, [304 U.S. 64] (1938), a federal

court in a diversity action must apply the controlling substantive law of the state.”

Provau v. State Farm Mut. Auto Ins. Co., 772 F.2d 817, 819 (11th Cir. 1985).

“The construction of insurance contracts is governed by substantive state law.” Id.

at 819-20. Thus, whether a petitioner who is a third-party beneficiary has standing

       3
         Former Fifth Circuit decisions, issued before close of business on September 30, 1981,
bind this Court. Bonner v. City of Prichard, 661 F.2d 1206, 1209-10 (11th Cir. 1981) (en banc).

                                               5
to sue is a question of state law. AT&T Mobility, LLC, 494 F.3d at 1360 (citing

Miree v. Dekalb County, Ga., 433 U.S. 25, 29-33 (1977)).

      Under Alabama law, one who is not a party to a contract or in privity with a

party cannot sue for breach of the contract.             Airlines Reporting Corp.

v. Higginbotham, 643 So.2d 952, 954 (Ala. 1994). Although “a direct third-party

beneficiary may sue on the contract . . . the party claiming to be a third-party

beneficiary of a contract must establish that the contracting parties intended, at the

time the contract was created, to bestow a direct benefit on the third party.” Id.

(internal citation omitted). An intended incidental benefit is insufficient to create

standing. Ex parte Scott Paper Co., 634 So.2d 546, 548 (Ala. 1993) (holding that

no evidence existed that at time of contract between logger and company that

company intended to confer direct benefit on logger’s employee sufficient to give

employee standing to sue to enforce contract). The intent of the parties controls in

construing a written contract and that intent is derived from the contract itself,

where the language used is plain and unambiguous. H.R.H. Metals, Inc. v. Miller

ex rel. Miller, 833 So.2d 18, 24 (Ala. 2002). “It is only where a contract provision

is found to be ambiguous that it may become necessary to consider the surrounding

circumstances and the construction the parties gave the language in order to

determine the intent of the contracting parties.” Id.

                                           6
      The insurance contract here shows that Worm Shack was the only insured

and Cook was not a loss payee.         Both parties also stipulated to the former.

Therefore, based on the plain and unambiguous language of the insurance contract,

Cook was not a direct third-party beneficiary under Alabama law, and he lacked

standing to pursue the action.       See H.R.H. Metals, 833 So.2d at 24; Airlines

Reporting, 643 So.2d at 954.      Furthermore, Cook, as a shareholder, could not

maintain an action to redress injuries to Worm Shack based on diminution of

Worm Shack’s value as a result of the fire. See Stevens, 643 F.2d at 1080.

      In sum, we conclude that Cook lacked standing, individually, to either claim

entitlement to insurance proceeds himself or challenge Trinity’s denial of Worm

Shack’s claim as a breach of contract. Moreover, because Cook could not show

that he was entitled to prevail on the underlying contract claim, he was also barred

from recovering on a bad faith refusal to pay claim, as a matter of law. See Nat’l

Sav. Life Ins. Co. v. Dutton, 419 So.2d 1357, 1361-62 (Ala. 1982) (holding that

“an insurance contract between the parties and a breach thereof by the defendant”

is an element of a “bad faith refusal” claim).

      Accordingly, we affirm the entry of summary judgment against Worm Shack

and dismiss the appeal as to Cook.

      AFFIRMED IN PART, DISMISSED IN PART.

                                           7