Lokey v. Federal Deposit Insurance

608 F. App'x 736
CourtCourt of Appeals for the Eleventh Circuit
DecidedApril 13, 2015
Docket14-14822, 14-15079
StatusUnpublished
Cited by1 cases

This text of 608 F. App'x 736 (Lokey v. Federal Deposit Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lokey v. Federal Deposit Insurance, 608 F. App'x 736 (11th Cir. 2015).

Opinion

PER CURIAM:

Because these two appeals present identical issues, we consolidate them for disposition. Appellants bought condominiums in the same building in Savannah, Georgia in 2005. In deciding to buy their condos, they say they relied on a representation, made in a letter from a local bank, stating that renovations to the building would be finished by a certain date. It didn’t work out that way. Asbestos was discovered in the building, and the renovations were delayed. On top of that, the bank failed and *738 entered FDIC receivership. Hoping to hold someone, anyone, responsible, Appellants sued the corporate developer of the building (Drayprop, LLC) and two of its individual members (Reuben Croll and Michael Brown). 1 Appellants also sued the corporate owner of parking lots adjacent to the building (Draypark, LLC), and the management company responsible for the renovations (Marley Management, Inc.). 2 Appellants insist these Defendants knew (or should have known) that asbestos was in the building, and, consequently, that the renovations would not be completed by the promised date. The district court granted summary judgment for the Defendants. We affirm.

I.

We review de novo a grant of summary judgment, viewing all evidence in the light most favorable to the nonmoving party. See Owen v. I.C. Sys., Inc., 629 F.3d 1263, 1270 (11th Cir.2011). Summary judgment is appropriate when the record presents no genuine issue of material fact and “the moving party is entitled to judgment as a matter of law.” Id.

II.

To begin, Appellants cannot state any claim against Reuben Croll or Michael Brown individually. The district court correctly held that Appellants cannot pierce the corporate veil (really two corporate veils, see supra note 1) to hold Croll and Brown acc'ountable for the acts of Drayprop, LLC. In general, “a member of a limited liability company ... is considered separate from the company and ‘is not a proper party to a proceeding by or against a limited liability company, solely by reason of being a member of the limited liability company.’ ” Yukon Partners, Inc. v. Lodge Keeper Grp., 258 Ga.App. 1, 572 S.E.2d 647, 651 (2002) (quoting O.C.G.A. § 14-11-1107(j)); see also O.C.G.A. § 14-11-303(a). To hold them personally liable, Appellants must show that Croll or Brown “abused the forms by which the LLC was maintained as a separate legal entity....” Bonner v. Brunson, 262 Ga.App. 521, 585 S.E.2d 917, 918 (2003). LLC members abuse the corporation’s form if they “conduct[] [their] personal and LLC business as if they were one by commingling the two on an interchangeable or joint basis or confusing otherwise separate properties, records, or control,” with the purpose of “defeating] justice or perpetrating] fraud.” Id.

Appellants adduce no evidence of abuse. They say Croll and Brown participated, solely through their membership in Dray-prop, LLC, in crafting the bank letter representing that the renovations would be completed by a certain date. Appellants insist Croll and Brown perpetrated a fraud by making that representation. Even if that were true, Appellants fail to explain how Croll’s and Brown’s actions — helping write the letter — abused the LLC form. Appellants suggest no commingling of personal and LLC business or similar abusive conduct. The district court did not err by refusing to pierce the corporate veil(s).

III.

The district court also held that Appellants have not created a genuine dispute of *739 material fact on any of their three causes of action against the corporate Defendants: breach of contract, negligent misrepresentation, and fraudulent misrepresentation. These three causes of action are based on the same alleged misrepresentation: the purported promise in the bank letter that the renovations would be completed by March 1, 2006.. Appellants say that was a misrepresentation because the Defendants knew (or should have known) that asbestos was present in the building and would delay the renovations.

First, Appellants cannot state a breach-of-contract claim. A breach-of-contract claim depends, a priori, on the existence of a contract. Cf. Norton v. Budget Rent A Car Sys., Inc., 307 Ga.App. 501, 705 S.E.2d 305, 306 (2010) (elements of a breach-of-contract claim are breach of a contract, damages, and the right to recover). This is where Appellants’ claim fails. A contract exists only if parties “assent ... to the terms of [a] contract.” O.C.G.A. § 13-3-1. Appellants purchased their condos from sellers who are not parties to this case, and they admit they had no contract with any of the Defendants. Nevertheless, Appellants maintain they can state a breach-of-contract claim because the Defendants “had an indirect interest in the sale of every unit in the building, even if they were not parties” to any contract. (Appellants seem to reason that the Defendants had an interest in seeing the condo units sold because they were involved in developing and renovating the building.) In the absence of a contract — express or even implied — with the Defendants, Appellants’ nebulous allegation of an “indirect interest” is insufficient to bind the Defendants or impose contractual obligations. After all, without a whiff of a contract setting out an agreement, how would the Defendants (or a reviewing court) determine their obligations, or whether they complied?

Second and third, Appellants’ negligent and fraudulent misrepresentation claims fail for a similar reason: they have provided no evidence that anyone, let alone the Defendants, made any representation at all about the date the renovations would be completed. ■ Claims of negligent and fraudulent misrepresentation share one irreducible requirement: a false representation. See Hendon Props., LLC v. Cinema Dev., LLC, 275 Ga.App. 434, 620 S.E.2d 644, 649 (2005) (first element of negligent misrepresentation is that “the defendant[ ] negligently] supplied] ... false information to foreseeable persons, known or unknown”); Grand Master Contracting, LLC v. Lincoln Apartment Mgmt. Ltd. P’ship, 314 Ga.App. 449, 724 S.E.2d 456, 458 (2012) (first element of fraudulent misrepresentation is that the defendant “made false representations”).

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Bluebook (online)
608 F. App'x 736, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lokey-v-federal-deposit-insurance-ca11-2015.