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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 19-14164
Non-Argument Calendar
________________________
D.C. Docket No. 4:10-cv-00191-AT
E. JOHN HOSCH,
Plaintiff-
Counter Defendant-
Appellant,
versus
WACHOVIA BANK, N.A., et al.,
Defendants,
MICHAEL ANTHONY PROZER, III,
Defendant-
Counter Claimant-
Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(May 18, 2020)
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Before WILSON, WILLIAM PRYOR, and JILL PRYOR, Circuit Judges.
PER CURIAM:
E. John Hosch appeals the district court’s order dismissing his Georgia
fraud, Georgia conspiracy to commit fraud, Georgia Racketeer Influenced and
Corrupt Organizations Act (RICO), and federal RICO claims against Wachovia
and Wells Fargo (collectively, the Banks) under Federal Rule of Civil
Procedure 12(b)(6). He also appeals the court’s order denying his motion for
summary judgment and dismissing his amended complaint, which contained
claims against Michael Prozer, due to his failure to comply with a prior court
order. For the following reasons, we affirm in part, reverse in part, and remand for
further proceedings.
I.
First, the district court’s decision to dismiss Hosch’s fraud, conspiracy to
commit fraud, and RICO claims against the Banks under Rule 12(b)(6). We
review de novo the district court’s grant of a motion to dismiss under
Rule 12(b)(6), accepting the factual allegations in the complaint as true and
construing them in the light most favorable to the plaintiff. Edwards v. Prime,
Inc.,
602 F.3d 1276, 1291 (11th Cir. 2010). However, we are not required to
accept as true the labels and legal conclusions in the complaint.
Id. Dismissal for
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failure to state a claim is appropriate if the factual allegations in the complaint do
not raise more than a speculative right to relief.
Id.
Hosch argues that he adequately pled facts as to his fraud and fraud-based
RICO claims for the purposes of Federal Rule of Civil Procedure 9(b), and that his
allegations were sufficient to establish vicarious liability on the Banks’ part based
on apparent authority, respondeat superior, negligence, and gross negligence. We
disagree.
As an initial matter, Hosch has waived several arguments by failing to
adequately raise and brief issues. An appellant’s “passing reference to an issue in a
brief” is insufficient to raise that issue, “and the failure to make arguments and cite
authorities in support of an issue waives it.” Hamilton v. Southland Christian Sch.,
Inc.,
680 F.3d 1316, 1319 (11th Cir. 2012). Regarding his RICO claims, Hosch
makes no more than a passing reference to his disagreement with the district
court’s dismissal of his federal RICO claim, and he does not even suggest that the
district court erred in dismissing his Georgia RICO claim. We conclude that he
waived those arguments. As for his fraud and conspiracy-to-commit-fraud claims,
Hosch did not raise an issue as to ratification, so to the extent those claims were
premised on a ratification theory of liability, he also waived those arguments.
Further, we generally will not consider issues raised for the first time on
appeal. Access Now, Inc. v. Sw. Airlines, Co.,
385 F.3d 1324, 1332 (11th Cir.
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2004). Hosch did not assert a claim for negligence or gross negligence against the
Banks in his amended complaint, nor does it appear that he otherwise raised that
issue in the district court. Though we have permitted exceptions to the general rule
under five circumstances, those circumstances do not exist here. See
id.
Therefore, we will not consider these claims.
As a result, the only remaining issues regarding the order granting the
motion to dismiss are whether the district court properly concluded that the Banks
could not be held liable for fraud or conspiracy to commit fraud under the theories
of respondeat superior 1 or apparent authority. It did.
Where a plaintiff alleges fraud, he “must state with particularity the
circumstances constituting fraud,” though he may allege generally “[m]alice,
intent, knowledge, and other conditions of a person’s mind.” Fed. R. Civ. P. 9(b).
A plaintiff may satisfy Rule 9(b)’s heightened pleading requirements if the
complaint sets forth:
(1) precisely what statements were made in what documents or oral
representations or what omissions were made, and
(2) the time and place of each such statement and the person
responsible for making (or, in the case of omissions, not making)
same, and
(3) the content of such statements and the manner in which they
misled the plaintiff, and
1
The Banks argue that Hosch abandoned this issue, but we disagree. Hosch made a distinct
argument and cited caselaw specific to the theory of respondeat superior.
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(4) what the defendants obtained as a consequence of the fraud.
Brooks v. Blue Cross and Blue Shield of Fla., Inc.,
116 F.3d 1364, 1371 (11th
Cir. 1997) (per curiam) (internal quotations mark omitted). Rule 9(b)’s
requirements apply to state-law fraud and fraud-based RICO claims. See Am.
United Life Ins. Co. v. Martinez,
480 F.3d 1043, 1066–68 (11th Cir. 2007)
(analyzing a plaintiff’s state-law fraud and fraud-based RICO claims under
Rule 9(b) and affirming the dismissal of those claims for failing to meet that rule’s
heightened pleading requirements).
We need not get into the elements of fraud or conspiracy to commit fraud to
decide this case; analyzing the alleged agency relationship between the Banks and
its employee, Stan Salinas, 2 suffices here. Under Georgia law, “[t]he principal
shall be bound by all the acts of his agent within the scope of his authority.”
O.C.G.A. § 10-6-51. “A bare assertion of the existence of an agency relationship,
when made by an outsider to the alleged relationship, is not a statement of fact, but
merely an unsupported conclusion of law.” Thornton v. Carpenter,
476 S.E.2d 92,
94 (Ga. Ct. App. 1996) (alteration omitted).
Under Georgia’s theory of respondeat superior, a principal is liable for the
acts of its agent where the agent is acting “in furtherance of the [principal’s]
2
Hosch focuses exclusively on Salinas’s actions as they relate to this issue, so we will too. It
appears that Salinas was the only actor from the Banks with whom Hosch interacted.
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business . . . and . . . acting within the scope of [the principal’s] business.”
Piedmont Hosp., Inc. v. Palladino,
580 S.E.2d 215, 217 (Ga. 2003). If the agent
commits a tort for reasons unconnected to his employment, the principal is not
liable for that conduct.
Id. The principal also is not liable for its agent’s tortious
acts when they are “committed not in furtherance of the [principal’s] business, but
rather for purely personal reasons disconnected from the authorized business of
the [principal].”
Id. (internal quotation mark omitted); see also Wittig v. Spa Lady,
Inc. of Marietta,
356 S.E.2d 665, 666 (Ga. Ct. App. 1987) (holding that
employee’s act of forging purported customer’s signature to a company contract
was not within the scope of employee’s employment and, thus, employer could not
be held liable).
“Apparent authority is that which the principal’s conduct leads a third party
reasonably to believe the agent has; it creates an estoppel allowing third parties to
bind a principal to the agent’s acts on account of the principal’s conduct,
reasonably construed by third parties acting in innocent reliance thereon.” Morris
v. Williams,
448 S.E.2d 267, 269 (Ga. Ct. App. 1994). Where the principal made
no manifestations of authority to a third party, “apparent authority is not in issue.”
Id. “Apparent authority is not predicated on whatever a third party chooses to
think an agent has the right to do, or even upon what the agent says he can do, but
[rather] must be based on acts of the principal which have led the third party to
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believe reasonably the agent had such authority.” Thompson v. Gen. Motors
Acceptance Corp.,
389 S.E.2d 20, 21–22 (Ga. Ct. App. 1989) (internal quotation
mark omitted).
Here, the district court did not err in dismissing Hosch’s fraud or conspiracy-
to-commit-fraud claims based on a theory of respondeat superior or apparent
authority against the Banks. Starting with respondeat superior, Hosch failed to
allege enough facts establishing that Salinas’s actions were within the scope of his
employment, notwithstanding the fact that he was the Banks’ employee during the
relevant time. Hosch’s allegations indicate that Salinas converted the fraud
proceeds for his personal use. Hosch did not allege that the Banks received any
proceeds from or otherwise benefited from the fraudulent scheme, which indicates
that the fraudulent scheme did not further their business. Rather, Hosch’s
allegations established that Salinas used his position with the Banks to obtain a
purely personal benefit that did nothing to further the Banks’ interests. If anything,
Hosch’s allegations, taken as true, indicate that Salinas was acting outside of the
scope of his employment when he made fraudulent representations to Hosch.
We do not find Hosch’s insistence to the contrary persuasive. Hosch’s
allegation that Salinas was working for the primary purpose of benefiting the
Banks amounted to a legal conclusion that neither we nor the district court are
bound to accept as true. To the extent that Hosch alleged that the Banks had an
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interest in facilitating a banking relationship with Xchangeagent and Prozer, he
failed to plead facts showing that the Banks’ interest motivated Salinas’s actions.
And nothing suggests that the Banks obtained the relationship with Xchangeagent
and Prozer that they allegedly desired. Therefore, the district court correctly
concluded that the Banks could not be held liable under a theory of respondeat
superior, given the allegations Hosch made.
As for apparent authority, Hosch failed to plead facts showing that the Banks
engaged in conduct that would have cloaked Salinas with the apparent authority to
make the fraudulent misrepresentations that induced Hosch to execute the
Guaranty and provide the personal loan. Hosch says that Salinas was conducting
the type of business that the Banks held him out to perform. But Hosch’s
subjective impressions and beliefs are not enough. Apparent authority could only
have arisen based on representations that the Banks made to Hosch, but Hosch fails
to allege, at least with enough specificity to survive dismissal, that the Banks made
any such representations.3 Finally, any awareness that the Banks had about the
fraud is irrelevant because Hosch did not allege that the Banks made any
3
Hosch relies on Arrington & Blount Ford, Inc. v. Jinks,
270 S.E.2d 27 (Ga. Ct. App. 1980), but
that case is unhelpful because of its dissimilar procedural posture: appeal followed from denial of
a motion for new trial,
id. at 28. And, in any event, here Hosch rested on conclusory allegations
and failed to allege facts about the Banks’ representations to Hosch about Salinas and his
employment responsibilities and authority to compare the two cases properly.
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representation to him concerning any internal investigation. Thus, the district court
correctly concluded that the Banks could not be held liable under this theory.
In sum, the district court did not err in dismissing Hosch’s claims against the
Banks because he failed to plead facts that could have established their vicarious
liability.4 We affirm the court’s dismissal of those claims under Rule 12(b)(6).
II.
Next, the district court’s dismissal of Hosch’s claims against Prozer for
Hosch’s failure to comply with its order and the local rule. As an initial matter, we
have jurisdiction to review this issue. Prozer incorrectly argues that the Guaranty
bars Hosch’s claims and, therefore, our jurisdiction. We see no support for this
assertion. At most, the Guaranty would function as a defense to those claims and
would have no bearing on our authority to adjudicate them.
We normally review for an abuse of discretion a district court’s dismissal for
failure to comply with the rules of the court. Betty K Agencies, Ltd. v. M/V
MONADA,
432 F.3d 1333, 1337 (11th Cir. 2005). Under the Northern District of
Georgia’s local rules, “[t]he court may, with or without notice to the parties,
dismiss a civil case for want of prosecution if . . . [a] plaintiff or [his] attorney . . .
4
We need not address punitive damages; we have recognized that, under Georgia law, “[a]
punitive damages claim is derivative of a plaintiff’s tort claim, and where a court has dismissed a
plaintiff’s underlying tort claim, dismissal of a plaintiff’s punitive damages claim is also
required.” Mann v. Taser Int’l, Inc.,
588 F.3d 1291, 1304 (11th Cir. 2009).
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after notice . . . fail[s] or refuse[s] to obey a lawful order of the Court in the case.”
N.D. Ga. Civ. R. 41.3(A)(2). “We give great deference to a district court’s
interpretation of its local rules.” United States v. Padgett,
917 F.3d 1312, 1317–18
(11th Cir. 2019) (internal quotation mark omitted).
However, a dismissal with prejudice “is an extreme sanction that may be
properly imposed only when: (1) a party engages in a clear pattern of delay or
willful contempt (contumacious conduct); and (2) the district court specifically
finds that lesser sanctions would not suffice.” Betty K Agencies, Ltd.,
432 F.3d at 1337–38 (internal quotation mark omitted). “Moreover, the harsh
sanction of dismissal with prejudice is thought to be more appropriate in a case
where a party, as distinct from counsel, is culpable.”
Id. at 1338. We have stated
that “[o]ur case law has articulated with crystalline clarity the outer boundary of
the district court’s discretion in these matters: dismissal with prejudice is plainly
improper unless and until the district court finds a clear record of delay or willful
conduct and that lesser sanctions are inadequate to correct such conduct.”
Id.
at 1339.
The district court’s consideration of alternative, lesser sanctions need not be
explicit, if the record supports the conclusion that the court implicitly found that
such sanctions would not better serve the interests of justice. Zocaras v. Castro,
465 F.3d 479, 484 (11th Cir. 2006). Yet, in Betty K Agencies, Ltd., we clarified
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that, though we had occasionally found implicit in an order the findings necessary
to support dismissal, we had never suggested that the district court need not make a
lesser-sanctions finding.
432 F.3d at 1339. There, while “we look[ed] beyond the
Dismissal Order in search of a reason to affirm,” nothing in the record suggested
that the plaintiff had “acted willfully or contumaciously,” and the plaintiff’s
violation appeared to be its first and only violation of a court rule.
Id. at 1340.
A dismissal without prejudice that “has the effect of precluding a plaintiff
from refiling his claim due to the running of the statute of limitations . . . is
tantamount to a dismissal with prejudice, a drastic remedy to be used only in those
situations where a lesser sanction would not better serve the interests of justice.”
Mickles on behalf of herself v. Country Club Inc.,
887 F.3d 1270, 1280 (11th Cir.
2018) (internal quotation mark omitted) (citing Burden v. Yates,
644 F.2d 503 (5th
Cir. Unit B 1981), which held that dismissal without prejudice was inappropriate
when it had preclusive effect because the relevant statute of limitations had run, the
plaintiff asserted his noncompliance with three pretrial orders and a prior version
of Local Rule 41.3(A)(2) was due to negligence, and the district court failed to use
lesser sanctions before dismissal).
At play here are several statutes of limitation; key to our decision is the one
for federal RICO actions. “The statute of limitations for [federal] civil RICO
actions is four years,” which “begins to run when the injury was or should have
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been discovered, regardless of whether or when the injury is discovered to be part
of a pattern of racketeering.” Lehman v. Lucom,
727 F.3d 1326, 1328, 1330 (11th
Cir. 2013) (internal quotation mark omitted). Generally, “the filing of a lawsuit
which later is dismissed without prejudice does not automatically toll the statute of
limitations” for federal claims. Justice v. United States,
6 F.3d 1474, 1478–79
(11th Cir. 1993).
Hosch argues that the court abused its discretion by dismissing his claims
against Michael Prozer based on his omission of two documents that the court
ordered him to file. We agree.
To start, the dismissal without prejudice functioned as a dismissal with
prejudice for Hosch’s federal RICO claim against Prozer. Even if we assume that
the statute of limitations started to run on the date that he filed his original
complaint, it ran in November 2014. The district court dismissed Hosch’s claims
in September 2018. Thus, the district court was required to find both that Hosch
engaged in a clear pattern of delay or willful contempt (contumacious conduct) and
that lesser sanctions would not suffice. See Betty K Agencies, Ltd.,
432 F.3d at 1337–38.
But it did not. Setting aside the willfulness finding and Hosch’s related
arguments, at minimum, the district court did not find that lesser sanctions would
not suffice. Further, nothing in the order indicates that the court implicitly
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considered lesser or alternative sanctions, and the record does not suggest that
Hosch’s conduct warranted a dismissal with prejudice. Certainly, Hosch failed to
comply with the district court’s order by omitting documents the court ordered him
to file; this he does not dispute. Rather, he insists that he meaningfully complied
with the order by filing a 25-page brief and other supporting documents and that
his noncompliance was not willful. And it appears that this failure to comply was
his first. Therefore, the district court improperly dismissed the amended
complaint.
Finally, Hosch asserts that the court erred in failing to grant his motion for
summary judgment against Prozer. But because the district court did not reach the
motion’s merits or make initial findings as to the appropriateness of lesser or
alternative sanctions, we remand so that the district court can address those issues
in the first instance.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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