REVISED NOVEMBER 21, 2002
UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 01-60727
CHRIS ALBRITTON CONSTRUCTION COMPANY, INC; CRUMBLEY PAPER COMPANY INC; MARCUS J. MARTIN, CPA; PEACHTREE BEND LLC,
Plaintiffs-Appellants,
VERSUS
PITNEY BOWES INC; PITNEY BOWES CREDIT CORPORATION; XYZ CORPORATION; JOHN DOES, John Does A-Z,
Defendants-Appellees.
Appeal from the United States District Court For the Southern District of Mississippi
September 18, 2002
Before DUHÉ, DeMOSS, and CLEMENT, Circuit Judges.
DUHÉ, Circuit Judge:
Plaintiffs-Appellants leased mail and metering equipment for
their offices from Defendants-Appellees Pitney Bowes Credit
Corporation and Pitney Bowes, Inc. (collectively “Pitney Bowes”).
Plaintiffs contend that Pitney Bowes and other unnamed defendants
have engaged in a scheme to defraud Plaintiffs, their customers.
Defendants allegedly misrepresented that Pitney Bowes would not
charge Plaintiffs for insurance covering the leased equipment without first requesting proof of the customer’s own insurance.
Defendants are further charged with failing to make such a request
and charging their customers a small but highly profitable
insurance premium utilizing the misleading label of “ValueMAX.”
Plaintiffs asserted claims under Mississippi law of breach of
contract, bad faith breach of contract, fraud and
misrepresentation, and under the federal civil RICO statute.
Defendants won a summary judgment dismissing each count. We
reluctantly affirm.
I.
We review dismissal on summary judgment de novo, applying the
same standard as the district court, viewing the evidence and the
justifiable inferences to be drawn therefrom in the light most
favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986).
The lease between the parties provides that Defendants may
place the equipment under their risk management program if the
customers, after request, fail to furnish proof of insurance:
You [lessee] shall, at your expense, provide and maintain protection against loss . . . to the Equipment . . . naming us as loss payee. Such protection and coverage (and written evidence thereof delivered to us at our request) shall be satisfactory to us, and may be provided under your own insurance policy. If you fail to provide such evidence, we will have the right, but no obligation to include the Equipment under our own risk management program . . . and to charge you a fee. This fee will be reflected on our Invoice or other notice to you . . . . The arrangements contemplated by this paragraph do not constitute insurance.
2 Defendants do not dispute their obligation to first request proof
of insurance before enrolling a customer in the risk management
program. Defendants’ affidavit provides that, as part of their
Lease Management System, Defendants automatically sent Plaintiffs
a computer-generated letter, requesting insurance information and
informing the lessee he would be charged a ValueMAX quarterly fee
if the information was not provided. Whenever the system generates
letters, it prints a report indicating that the computer printed
the letters, listing the addressee/lessees. The report indicates
that the computer printed ValueMAX letters for Plaintiffs. In the
regular course of business, the mail room places the ValueMAX
letters in window envelopes and mails them with correct postage.
Plaintiffs’ affidavit, however, denies that they received ValueMAX
letters or any request for insurance information, even though they
were charged a ValueMAX fee. Viewing the disputed fact favorably
to Plaintiff, we assume that Defendants did not send Plaintiffs
requests for proof of insurance before charging the fee.
II. Fraud & Misrepresentation
We first address Plaintiffs’ claims of fraud and
misrepresentation, as these claims affect other aspects of the
appeal. Plaintiffs’ principal grievance with respect to these
counts is that Defendants misrepresented that they would first
request proof of insurance before imposing the ValueMAX charge.
The district court dismissed the fraud and misrepresentation counts
upon finding no issue of material fact regarding a fraudulent
3 misrepresentation, an essential element of each of these counts.
We agree.
A breach of a promise of future action is not fraud unless it
is “made with the present intent not to perform.” Bank of Shaw v.
Posey, 573 So. 2d 1355, 1360 (Miss. 1990). Here, Defendants’
promise was to request proof of insurance before enrolling a
customer in the risk management program. Therefore, an essential
element of a misrepresentation would be that this promise was made
when Defendants had no intention of requesting proof of insurance.
Plaintiffs have shown no issue of fact regarding Defendants’
intent to send the letters at the time they entered the contract
with Plaintiffs. Without evidence of present intent not to
perform, a promise of future conduct will not, as a matter of law,
support a claim of misrepresentation. Bank of Shaw, 573 So. 2d at
1360.
Plaintiffs point out additional evidence in an attempt to
suggest an issue bearing on fraud or material misrepresentation.
For example, Defendants’ sales personnel do not mention insurance
or ValueMAX in their sales pitch or at the time a lease is
executed. The lease does not use the term “ValueMAX” or call the
program “insurance.” The name ValueMAX appears on the invoice and
does not indicate that it is insurance. The ValueMAX charges are
small enough to avoid detection. A ValueMAX charge does not appear
on the first invoice which is the one most likely to be checked by
the customer.
4 Acknowledging these facts as true suggests no omission,
affirmative concealment, or misrepresentation of fact which later
turned out to be true. The word ValueMAX on the invoice is not a
representation of fact at all. We find no fraud or fraudulent
concealment in use of the label “ValueMAX” or “ValueMAX Advantage,”
in view of the disclosures made.1 The quarterly charges ranged
from $14 to $30 for these Plaintiffs. A customer is generally
billed after Pitney Bowes allows time for a response to the
ValueMAX program letter. The size and timing of the charges do not
suggest any fraud.
Plaintiffs also contend that Defendants’ failure to request
the proof of insurance was a material omission. The Defendants’
evidence of their Lease Management System demonstrating their
intention to send the letters to every new lessee remains
unrefuted. Without evidence suggesting intention to mislead,
Plaintiffs lack a key element of their burden of proof, even for
1 On the back of the invoices, ValueMAX is defined as “equipment damage/loss coverage fee.” Each invoice provides a separate toll free number for ValueMAX. The lease language calls the program a “risk management program” for which the lessee will be charged a fee if no proof of insurance is forthcoming upon request.
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REVISED NOVEMBER 21, 2002
UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
No. 01-60727
CHRIS ALBRITTON CONSTRUCTION COMPANY, INC; CRUMBLEY PAPER COMPANY INC; MARCUS J. MARTIN, CPA; PEACHTREE BEND LLC,
Plaintiffs-Appellants,
VERSUS
PITNEY BOWES INC; PITNEY BOWES CREDIT CORPORATION; XYZ CORPORATION; JOHN DOES, John Does A-Z,
Defendants-Appellees.
Appeal from the United States District Court For the Southern District of Mississippi
September 18, 2002
Before DUHÉ, DeMOSS, and CLEMENT, Circuit Judges.
DUHÉ, Circuit Judge:
Plaintiffs-Appellants leased mail and metering equipment for
their offices from Defendants-Appellees Pitney Bowes Credit
Corporation and Pitney Bowes, Inc. (collectively “Pitney Bowes”).
Plaintiffs contend that Pitney Bowes and other unnamed defendants
have engaged in a scheme to defraud Plaintiffs, their customers.
Defendants allegedly misrepresented that Pitney Bowes would not
charge Plaintiffs for insurance covering the leased equipment without first requesting proof of the customer’s own insurance.
Defendants are further charged with failing to make such a request
and charging their customers a small but highly profitable
insurance premium utilizing the misleading label of “ValueMAX.”
Plaintiffs asserted claims under Mississippi law of breach of
contract, bad faith breach of contract, fraud and
misrepresentation, and under the federal civil RICO statute.
Defendants won a summary judgment dismissing each count. We
reluctantly affirm.
I.
We review dismissal on summary judgment de novo, applying the
same standard as the district court, viewing the evidence and the
justifiable inferences to be drawn therefrom in the light most
favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255, 106 S.Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986).
The lease between the parties provides that Defendants may
place the equipment under their risk management program if the
customers, after request, fail to furnish proof of insurance:
You [lessee] shall, at your expense, provide and maintain protection against loss . . . to the Equipment . . . naming us as loss payee. Such protection and coverage (and written evidence thereof delivered to us at our request) shall be satisfactory to us, and may be provided under your own insurance policy. If you fail to provide such evidence, we will have the right, but no obligation to include the Equipment under our own risk management program . . . and to charge you a fee. This fee will be reflected on our Invoice or other notice to you . . . . The arrangements contemplated by this paragraph do not constitute insurance.
2 Defendants do not dispute their obligation to first request proof
of insurance before enrolling a customer in the risk management
program. Defendants’ affidavit provides that, as part of their
Lease Management System, Defendants automatically sent Plaintiffs
a computer-generated letter, requesting insurance information and
informing the lessee he would be charged a ValueMAX quarterly fee
if the information was not provided. Whenever the system generates
letters, it prints a report indicating that the computer printed
the letters, listing the addressee/lessees. The report indicates
that the computer printed ValueMAX letters for Plaintiffs. In the
regular course of business, the mail room places the ValueMAX
letters in window envelopes and mails them with correct postage.
Plaintiffs’ affidavit, however, denies that they received ValueMAX
letters or any request for insurance information, even though they
were charged a ValueMAX fee. Viewing the disputed fact favorably
to Plaintiff, we assume that Defendants did not send Plaintiffs
requests for proof of insurance before charging the fee.
II. Fraud & Misrepresentation
We first address Plaintiffs’ claims of fraud and
misrepresentation, as these claims affect other aspects of the
appeal. Plaintiffs’ principal grievance with respect to these
counts is that Defendants misrepresented that they would first
request proof of insurance before imposing the ValueMAX charge.
The district court dismissed the fraud and misrepresentation counts
upon finding no issue of material fact regarding a fraudulent
3 misrepresentation, an essential element of each of these counts.
We agree.
A breach of a promise of future action is not fraud unless it
is “made with the present intent not to perform.” Bank of Shaw v.
Posey, 573 So. 2d 1355, 1360 (Miss. 1990). Here, Defendants’
promise was to request proof of insurance before enrolling a
customer in the risk management program. Therefore, an essential
element of a misrepresentation would be that this promise was made
when Defendants had no intention of requesting proof of insurance.
Plaintiffs have shown no issue of fact regarding Defendants’
intent to send the letters at the time they entered the contract
with Plaintiffs. Without evidence of present intent not to
perform, a promise of future conduct will not, as a matter of law,
support a claim of misrepresentation. Bank of Shaw, 573 So. 2d at
1360.
Plaintiffs point out additional evidence in an attempt to
suggest an issue bearing on fraud or material misrepresentation.
For example, Defendants’ sales personnel do not mention insurance
or ValueMAX in their sales pitch or at the time a lease is
executed. The lease does not use the term “ValueMAX” or call the
program “insurance.” The name ValueMAX appears on the invoice and
does not indicate that it is insurance. The ValueMAX charges are
small enough to avoid detection. A ValueMAX charge does not appear
on the first invoice which is the one most likely to be checked by
the customer.
4 Acknowledging these facts as true suggests no omission,
affirmative concealment, or misrepresentation of fact which later
turned out to be true. The word ValueMAX on the invoice is not a
representation of fact at all. We find no fraud or fraudulent
concealment in use of the label “ValueMAX” or “ValueMAX Advantage,”
in view of the disclosures made.1 The quarterly charges ranged
from $14 to $30 for these Plaintiffs. A customer is generally
billed after Pitney Bowes allows time for a response to the
ValueMAX program letter. The size and timing of the charges do not
suggest any fraud.
Plaintiffs also contend that Defendants’ failure to request
the proof of insurance was a material omission. The Defendants’
evidence of their Lease Management System demonstrating their
intention to send the letters to every new lessee remains
unrefuted. Without evidence suggesting intention to mislead,
Plaintiffs lack a key element of their burden of proof, even for
1 On the back of the invoices, ValueMAX is defined as “equipment damage/loss coverage fee.” Each invoice provides a separate toll free number for ValueMAX. The lease language calls the program a “risk management program” for which the lessee will be charged a fee if no proof of insurance is forthcoming upon request. Plaintiffs also complain that the introductory letter to lessees is misleading in failing to call the ValueMAX program “insurance.” The letter introduces ValueMAX as a “program that satisfies your lease obligation to provide us with evidence of insurance coverage against loss, damage, theft or destruction to our equipment.” The letter repeatedly makes clear that ValueMAX is an alternative to providing proof of insurance coverage for the leased equipment under the lessee’s own policy. Assuming for the moment that Plaintiffs received such a letter, we find no misleading omission in the letter’s failure to denominate ValueMAX “insurance.”
5 fraudulent omission. Davidson v. Rogers, 431 So. 2d 483, 484-85
(Miss. 1988) (omission or concealment can constitute a
misrepresentation if defendant took some affirmative action with
design or intent to prevent discovery of facts giving rise to fraud
claim). The claims for fraud and misrepresentation were properly
dismissed on this summary judgment evidence.
III. Breach of contract
The district court held that Plaintiffs’ breach of contract
claim is defeated by the voluntary payment doctrine. Applying this
doctrine assumes, in Plaintiffs’ favor, that they do not owe the
ValueMAX fee because they never received a request for proof of
insurance.
A voluntary payment is
a payment made, without compulsion or fraud, and without any mistake of fact, of a demand which the payor does not owe, and which is not enforceable against him, instead of invoking the remedy or defense which the law affords against such demand, and when there has been no agreement between the parties at the time of payment, that any excess will be repaid.
McLean v. Love, 172 Miss. 168, 157 So. 361, 362 (1934) (citation
omitted). The payment histories for the Plaintiffs’ leases show
they were current with their Pitney Bowes’ accounts, including all
amounts charged in connection with the ValueMAX program.
If the Plaintiffs voluntarily paid for something they did not
owe, the voluntary payments cannot be recovered. Id. “The general
principle is that, where the party with full knowledge, actual or
6 imputed, of the facts, there being no duress, fraud or extortion,
voluntarily pays money on a demand, although not enforceable
against him, he cannot recover it back.” Graham McNeil Co. v.
Scarborough, 99 So. 502, 503 (Miss. 1924).
Plaintiffs have imputed knowledge of Pitney Bowes’ risk
management program, because they are charged with the duty to read
the lease they sign, even the fine print. The purpose of the
voluntary payment doctrine is to preclude courts from “‘being
occupied in undoing the arrangements of parties, which they have
voluntarily made, and into which they have not been drawn by fraud
or accident, or by any excusable ignorance of their legal rights
and liabilities.’" Id. (quoting 2 Elliott on Contracts 645 §
1391). The exceptions for fraud, accident, or excusable ignorance
do not negate the doctrine. No fraud is suggested by the summary
judgment evidence as discussed above.
Regarding mistake or accident, “[u]ncertainty about the facts,
irrespective of the reason for such uncertainty, is not the
equivalent of a mistake of fact.” See Mobile Telecomm. Techs.
Corp. v. Aetna Cas. & Sur. Co., 962 F. Supp. 952, 956 (S.D. Miss.
1997). Plaintiffs received a bill including a ValueMAX fee,
plainly listed as a separate entry, not hidden or buried in a long
list of charges, and explained on the reverse; a toll-free number
was provided for inquiries. Plaintiffs could have easily found out
about ValueMAX before paying the fee. See Hunt v. Davis, 208 Miss
7 710, 45 So.2d 350 (1950) (mistake of fact doctrine applies only
where party could not have ascertained the real facts by reasonable
diligence).
Regarding excusable ignorance, the voluntary payment doctrine
precludes courts from extending relief to those who have neglected
to take care of their interests and are “in predicaments which
ordinary care would have avoided.” McLean, at 362. Plaintiffs are
presumed to have known under the contract that they should not be
charged for a risk management program without having been first
asked to provide proof of insurance. They could have resisted the
demand based on the contract or based on the information on the
invoice. When, as here, the party paying “knows or ought to know
the facts” and does not avail himself of the means which the law
affords him to resist the demand, he has not taken due care.
McLean, at 362. None of the exceptions to the voluntary payment
doctrine having application to this case, we hold that Plaintiffs
cannot recover their voluntary payments.
IV. Bad Faith Breach of Contract
In a count asserting bad faith breach of contract, Plaintiffs
allege that Defendants’ charging them for insurance premiums under
the misleading label ValueMAX without notice constituted bad faith
breach of contract. We agree with the district court that this
claim, too, is defeated by the voluntary payment doctrine. Nothing
in Hill v. Telecom, 2000 WL 264325 (N.D. Miss. 2000), relied upon
by Plaintiffs, persuades us to remand Plaintiffs’ claim for bad
8 faith breach of contract for trial. The voluntary payment doctrine
precludes us from extending relief to those who have neglected to
take care of their interests.
V. RICO
Plaintiffs also allege that Defendants violated the provisions
of the Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C.A. §§ 1961-1968 (West 2000 and Supp. 2002), citing mail fraud
and wire fraud as predicate acts. Plaintiffs contend that even if
we dismiss their common-law fraud claim, the RICO claim should
stand, because the fraud required as a predicate act for RICO does
not require a misrepresentation of fact. This contention is
without merit. Both mail fraud and wire fraud require a scheme or
artifice to defraud which includes false or fraudulent pretenses,
representations or promises, requiring proof of intent to defraud.
18 U.S.C.A. §§ 1341 (mail fraud), 1343 (wire fraud) (West 2000);
United States v. Keller, 14 F.3d 1051, 1056 (5th Cir. 1994) (wire
fraud); United States v. Kreimer, 609 F.2d 126, 128 (5th Cir.
1980)(mail fraud). As discussed above, Plaintiffs have presented
insufficient summary judgment evidence of Defendants’ intent to
defraud to create an issue of material fact.
Conclusion
Plaintiffs have not created any issue of material fact
regarding fraudulent intent; indeed the only evidence of intent
demonstrates that Defendants intended to mail the ValueMAX letters
9 and had in place an automatic computer program which would in the
ordinary course of business generate and mail such a letter for
each new customer. The lack of fraudulent intent defeats
Plaintiffs’ claims for fraud, misrepresentation and civil RICO.
The evidence further establishes that Plaintiffs voluntarily paid
for the ValueMAX program under circumstances where they could have
resisted the charges at the outset. Under these facts the
voluntary payment doctrine defeats Plaintiffs’ claims for breach of
contract and bad faith breach of contract. Finding no genuine
issue of material fact as to the Plaintiffs’ claims, we affirm the
summary judgment in favor of Defendants.2 Accordingly, the
judgment of the district court is
AFFIRMED.
2 Affirming the dismissal based on the summary judgment evidence, we do not reach Defendants’ argument about economic loss, presented as alternative grounds for dismissal.