Inlet Beach Capital Investments LLC v. Federal Deposit Insurance Corporation , 778 F.3d 904 ( 2014 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-14486
________________________
D.C. Docket No. 5:13-cv-00021-RS-CJK
INLET BEACH CAPITAL INVESTMENTS, LLC,
US 98 CAPITAL INVESTMENTS, LLC,
DAVID R. PEARSON,
Plaintiffs - Appellants,
versus
FEDERAL DEPOSIT INSURANCE CORPORATION,
as receiver for Peoples First Community Bank
Panama City, Florida,
a.k.a. FDIC,
Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Florida
________________________
(November 12, 2014)
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Before WILSON and ROSENBAUM, Circuit Judges, and HUCK, * District
Judge.
HUCK, District Judge:
Appellants Inlet Beach Capital Investments, LLC, US 98 Capital
Investments, LLC, and David R. Pearson (collectively, Appellants) appeal
from the district court’s order entering final judgment in favor of Appellee,
the Federal Deposit Insurance Corporation as Receiver (FDIC-R), following
the district court’s dismissal of Appellants’ Amended Complaint. 1 While
Appellants raise numerous and complex issues on appeal, our determination
that the limitation of remedies provision in the parties’ purchase contract is
enforceable disposes of the case.2 Accordingly, we AFFIRM the district
court’s ruling.
I. BACKGROUND
This case arises from contracts to purchase real estate. The real estate
is approximately forty acres of land in Panama City Beach, Florida, formerly
owned by Peoples First Community Bank. This real estate consists of two
parcels, a commercial parcel and a residential parcel. The residential parcel
*
Honorable Paul C. Huck, United States District Judge for the Southern District of
Florida, sitting by designation.
1
It is not clear why US 98 and Pearson are designated as Appellants because only
Inlet Beach’s contract claims are at issue. The district court’s dismissal of the remaining
claims has not been appealed.
2
Indeed, Appellants conceded at oral argument that Inlet Beach could not prevail
if this Court finds the remedies limitation provision enforceable.
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contains fifty-three lots. After the bank failed, the FDIC-R was appointed as
its receiver, and took control of the bank’s assets.
Appellants, plaintiffs below, consist of David Pearson, a developer,
and two entities that he owns and controls as managing member: Inlet Beach
Capital Investments, LLC and US 98 Capital Investments, LLC. Appellants
contracted to purchase both parcels of land. Inlet Beach was the purchasing
party to the residential property contract (the Inlet Beach Contract). Inlet
Beach also entered into a contract for the purchase of the commercial
property, but later assigned the contract to US 98 (the US 98 Contract). The
purchase price was $1,203,000 for the residential parcel and $635,000 for
the commercial parcel.
Prior to closing on the US 98 Contract, Appellants discovered an error
in the legal description of the commercial parcel. Specifically, the
commercial parcel’s description erroneously included twenty-one of the
residential lots and a private access road, both of which were pledged in the
residential contract. The parties closed on the commercial parcel despite the
erroneous description.
In order to close on its residential contract, Inlet Beach demanded that
the FDIC-R reacquire the portion of the residential parcel that had been
mistakenly included in and conveyed with the commercial parcel.
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Ultimately, given Inlet Beach’s demand, this proposed resolution would
have resulted in a net payment from the FDIC-R to Appellants in exchange
for the two parcels. 3 Not surprisingly, the FDIC-R refused Inlet Beach’s
demand to reacquire the residential property on those terms and the parties
could not close on the Inlet Beach Contract.
In accordance with the administrative procedure set forth in the
Financial Institution Reform and Recovery Enforcement Act (“FIRREA”),
Appellants filed a joint Proof of Claim, asserting numerous claims. After
the FDIC-R denied the claims, Appellants filed a seven-count Complaint in
the district court alleging three contract claims (for damages and specific
performance) based on the Inlet Beach Contract, three tort claims, and a
claim for punitive damages and attorneys’ fees. Appellants amended their
complaint to add the FDIC in its corporate capacity as a defendant.
Thereafter, the district court granted the FDIC-R’s motion to dismiss
all of Appellants’ claims. The court held that Inlet Beach’s contract claims
were barred by the Inlet Beach Contract’s remedies limitation. The court
also held that Appellants’ tort claims and claims for punitive damages and
3
U.S. 98 paid $635,000 for the commercial property, and Inlet Beach agreed to pay
$1,203,000 for the residential property, for a total of $1,838,000. Inlet Beach demanded
the FDIC-R pay US 98 $2,625,000 for the portion of the residential parcel that was
conveyed with the commercial parcel. Thus, Pearson’s entities demanded that the FDIC-
R pay them $787,000, plus convey both parcels to the entities.
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attorneys’ fees were barred by the Federal Tort Claims Act. 4 After
dismissing all claims against the FDIC-R, the district court entered final
judgment in favor of the FDIC-R.
II. STANDARD OF REVIEW
This Court reviews de novo a district court’s entry of final judgment.
Maytronics, Ltd. v. Aqua Vac Sys., Inc., 277 F.3d 1317, 1320 (11th Cir.
2002). The district court dismissed all of Appellants’ claims and entered a
final judgment in favor of the FDIC-R. The court dismissed the Inlet Beach
contract counts for failure to state a claim. We review de novo a district
court’s grant of a motion to dismiss for failure to state a claim. Hill v. White,
321 F.3d 1334, 1335 (11th Cir. 2003) (per curiam). “[W]e may affirm a
decision of the district court on any adequate ground, even if it is other than
the one on which the court actually relied.” Armstrong v. Friduss, 138 F.
App’x 189, 194 (11th Cir. 2005) (per curiam) (internal quotation marks
omitted).
III. ANALYSIS
Inlet Beach’s contract claims are barred by the Inlet Beach Contract’s
remedies limitation provision. 5 Despite Inlet Beach’s argument to the
4
As indicated in footnote 1, Appellants did not address dismissal of their tort
claims and have acknowledged that they have waived those claims. See Access Now, Inc.
v. Sw. Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004).
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contrary, the remedies limitation provision does not lack mutuality and is
therefore enforceable.
“Parties may contractually limit damages for breach.” Ament v. One
Las Olas, Ltd., 898 So. 2d 147, 151 (Fla. Dist. Ct. App. 2005). A remedies
limiting provision is enforceable, unless it contains “an unreasonable
disparity in remedy alternatives available to” the parties. Terraces of Boca
Assocs. v. Gladstein, 543 So. 2d 1303, 1304 (Fla. Dist. Ct. App. 1989).
Here, the remedies limiting provision does not contain such an unreasonable
disparity.
Section 11 of the Inlet Beach Contract limits the FDIC-R’s remedies
by providing that if the “Purchaser defaults in the performance of its
obligations hereunder or refuses or fails to consummate the purchase of the
[p]roperty,” the FDIC-R, “as its sole and exclusive remedy,” may terminate
the Contract and “shall be entitled to retain the Earnest Money as liquidated
damages.” The provision further provides, “[n]otwithstanding the foregoing,
5
In addition to the remedies limitation provision, Inlet Beach’s claim for specific
performance is barred by 12 U.S.C. § 1821(j), which provides: “Except as provided in
this section, no court may take any action . . . to restrain or affect the exercise of powers
or functions of the [FDIC] as a conservator or a receiver.” We have previously ruled an
award of specific performance “would ‘restrain or affect’ the [FDIC-R] in the exercise of
its statutory powers.” RPM Invs., Inc. v. Resolution Trust Corp., 75 F.3d 618, 621 (11th
Cir. 1996) (per curiam). Further, Inlet Beach’s claim for specific performance is barred
because it was not included in Inlet Beach’s proof of claim. See Stamm v. Paul, 121 F.3d
635, 642 (11th Cir. 1997) (holding that claimants must exhaust their administrative
remedies before they seek relief in court).
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in the event of any other default by Purchaser under this Agreement, Seller
shall have any and all rights and remedies available at law or in equity by
reason of such default.” (Inlet Beach Contract § 11(a) (emphasis added).)
Section 11 also limits Inlet Beach’s remedies, providing that if the
“Seller fails to perform its obligations hereunder or refuses or fails to
consummate the sale of the Property . . . then Purchaser, as its sole and
exclusive remedy, shall have the right to terminate this Agreement.” In that
case, Inlet Beach is entitled to the return of its earnest money and “Seller
shall reimburse Purchaser for its reasonable out-of-pocket expenses incurred
in connection with this transaction prior to such default up to the maximum
amount of ONE THOUSAND AND NO/100 DOLLARS ($1,000).” Section
11 further provides that “[i]n no event shall Seller be liable to Purchaser for
any other actual, punitive, speculative, or consequential damages, nor shall
Purchaser be entitled to bring a claim to enforce specific performance of this
Agreement.”
Inlet Beach contends that the remedies limitation in Section 11 is
unenforceable due to lack of mutuality. Inlet Beach posits that Section 11
limits its remedies for the FDIC-R’s failure to consummate the Inlet Beach
Contract to the return of its earnest money and up to $1,000 in out-of-pocket
costs while allowing the FDIC-R all “rights and remedies available at law or
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in equity by reason” of Inlet Beach’s failure to consummate the Contract,
presumably including actual damages or specific performance. Inlet Beach
misconstrues the effect of Section 11 by concluding that the FDIC-R still
retains all potential remedies arising out of Inlet Beach’s breach of its
obligation to purchase the residential parcel. Apparently, Inlet Beach
interprets the “all rights and remedies available” provision as applying to its
obligation to consummate the purchase. We disagree.
We interpret the provision relating to the FDIC-R’s remedies as
addressing two distinct breaches by Inlet Beach: a breach of its obligation to
consummate the purchase of the residential property, and a breach by Inlet
Beach of any other of its obligations under the Inlet Beach Contract.6 As a
result, the FDIC-R’s more expansive remedies do not apply to Inlet Beach’s
failure to purchase, but rather are limited to “any other default by Purchaser
under this Agreement.” (Inlet Beach Contract §11(a) (emphasis added).)
Indeed, a number of the Contract’s terms create Inlet Beach’s obligations,
including post-closing obligations, the breach of which would properly be
6
To the extent that Inlet Beach contends that the remedies limitation provision
appears to contain seemingly conflicting remedies available to the FDIC-R, we disagree.
We reasonably construe the provision so that its terms are not in conflict and reflect the
obvious intent of the parties. Even if Inlet Beach’s contention were correct, “it is the duty
of the court wherever possible to construe apparently conflicting provisions of a contract
so that the provisions do not conflict.” Berwick Corp. v. Kleinginna Inv. Corp., 143 So.
2d 684, 688 (Fla. Dist. Ct. App. 1962); see also Meyer v. Caribbean Interiors, Inc., 435
So. 2d 936, 938 (Fla. Dist. Ct. App. 1983).
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construed as “any other default.” (See, e.g., Inlet Beach Contract §§ 4(b),
6(b)(ii), 6(b)(iv), 6(d).)
Under the Inlet Beach Contract, if Inlet Beach breached its obligation
to consummate the purchase of the residential property, the FDIC-R’s “sole
and exclusive remedy” would be to terminate the Contract and retain Inlet
Beach’s earnest money. Thus, the FDIC-R is, as is Inlet Beach, precluded
from obtaining actual damages or specific performance. This agreed-to
tradeoff is not unreasonable under the circumstances. Therefore, the
remedies limitation provision does not lack mutuality and is enforceable.
Moreover, cases upon which Inlet Beach relies for its lack of
mutuality argument are inapplicable because, in each of those cases, the
purchaser’s remedy was limited to the return of its deposit, without recovery
of any out-of-pocket expenses. See Hackett v. J.R.L. Dev., Inc., 566 So. 2d
601 (Fla. Dist. Ct. App. 1990); Terraces of Boca, 543 So. 2d at 1303; Ocean
Dunes of Hutchinson Island Dev. Corp. v. Colangelo, 463 So. 2d 437 (Fla.
Dist. Ct. App. 1985); Blue Lakes Apartments, Ltd. v. George Gowing, Inc.,
464 So. 2d 705 (Fla. Dist. Ct. App. 1985). Here, however, the remedies
provision permits Inlet Beach to recover an additional $1,000 of out-of-
pocket expenses. Similarly, in Ament, Florida’s Fourth District Court of
Appeal held that a provision limiting a purchaser’s remedies to the refund of
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its deposit and recovery of all out-of-pocket damages was enforceable. See
Ament, 898 So. 2d at 150.
In addition, in those cases upon which Inlet Beach relies, the sellers
retained far more rights than the FDIC-R retained under the Inlet Beach
Contract. For example, in Hackett, the seller retained the option to either
cancel the contract and retain the deposit as liquidated damages, or to
enforce the agreement and seek actual damages or specific performance.
See Hackett, 566 So. 2d at 602. Likewise in Terraces of Boca and Ocean
Dunes, the sellers were not precluded from pursuing equitable or legal
remedies as opposed to retaining only the buyers’ deposit. See Terraces of
Boca, 543 So. 2d at 1303; Ocean Dunes, 463 So. 2d at 440. In this case
however, if Inlet Beach failed to consummate the purchase, the FDIC-R’s
“sole and exclusive remedy” was terminating the Inlet Beach Contract and
retaining the earnest money, thus foregoing the option of enforcing the
Contract and seeking actual damages or specific performance.
Here, as pertaining to the underlying dispute—the failure to
consummate the sale of the residential property—the parties’ respective
remedies are not unreasonably disparate, and thus, there is no lack of
mutuality. Therefore, this Court holds that the Inlet Beach Contract’s
remedies provision is enforceable and affirms the district court’s dismissal
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of Inlet Beach’s contract claims. We also affirm the district court’s
dismissal of the other claims, which were not appealed.
AFFIRMED.
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