Anthony Mose, Jr. v. Keybank National Assoc , 464 F. App'x 260 ( 2012 )


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  •      Case: 11-30709   Document: 00511781753   Page: 1   Date Filed: 03/08/2012
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT  United States Court of Appeals
    Fifth Circuit
    FILED
    March 8, 2012
    No. 11-30709                     Lyle W. Cayce
    Clerk
    ANTHONY MOSE, JR.; TRACEY F. MOSE; MERLIE FUSELIER; DONALD
    R. WATTS; DELLA WATTS; ET AL,
    Plaintiffs - Appellants
    v.
    KEYBANK NATIONAL ASSOCIATION,
    Defendant - Appellee
    GABRIEL HAUSMANN, JR.; ET AL,
    Plaintiffs - Appellants
    v.
    KEYBANK NATIONAL ASSOCIATION,
    Defendant - Appellee
    TERRI T. MCGOVERN,
    Plaintiff - Appellant
    v.
    KEYBANK NATIONAL ASSOCIATION,
    Defendant - Appellee
    Case: 11-30709        Document: 00511781753        Page: 2     Date Filed: 03/08/2012
    No. 11-30709
    Appeal from the United States District Court
    for the Middle District of Louisiana
    USDC No. 3:11-CV-162
    Before KING, BENAVIDES, and DENNIS, Circuit Judges.
    PER CURIAM:*
    I. FACTUAL AND PROCEDURAL BACKGROUND
    Plaintiffs–Appellants        purchased      condominiums       in   Baton     Rouge,
    Louisiana, from Perkins Rowe I, LLC and Perkins Rowe Associates II, LLP
    (collectively, “Perkins Rowe”) between July 1, 2008, and November 1, 2008. The
    condominiums were part of a large, multi-use development project undertaken
    by Perkins Rowe. However, in 2009, financial problems caused Perkins Rowe
    to cease all construction, and ultimately, Plaintiffs’ condominiums were worth
    far less than Plaintiffs had paid. On March 18, 2011, Plaintiffs filed suit against
    Defendant–Appellee KeyBank National Association (“KeyBank”) seeking the
    repurchase of their condominium units, as well as additional damages. Plaintiffs
    asserted claims of fraud, negligent representation, unjust enrichment, and
    detrimental reliance under Louisiana state law. KeyBank was Perkins Rowe’s
    lender with regard to the development project and had entered into an
    agreement to lend Perkins Rowe $170,000,000. Plaintiffs alleged that KeyBank
    had control over the sales of condominiums and allowed the sales to occur
    despite its knowledge that the project was underfunded and was likely headed
    toward foreclosure.1
    *
    Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
    be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
    R. 47.5.4.
    1
    KeyBank ultimately did initiate foreclosure proceedings against Perkins Rowe.
    2
    Case: 11-30709    Document: 00511781753      Page: 3   Date Filed: 03/08/2012
    No. 11-30709
    Plaintiffs’ claims of fraud and negligent representation were predicated on
    their assertion that KeyBank had a duty to disclose details to them about the
    financial health of its customer, Perkins Rowe. Plaintiffs did not allege that they
    had a contractual relationship with KeyBank or that they had any contact at all
    with KeyBank in connection with their condominium purchases. However, they
    argued that KeyBank’s awareness of Perkins Rowe’s financial problems, as well
    as KeyBank’s control over various aspects of the condominium sales, created
    disclosure obligations and made KeyBank’s failure to disclose actionable.
    The United States District Court for the Middle District of Louisiana
    granted KeyBank’s motion to dismiss Plaintiffs’ claims under Federal Rule of
    Civil Procedure 12(b)(6), concluding, inter alia, that KeyBank did not owe a duty
    of disclosure to Plaintiffs.   Plaintiffs timely appealed the district court’s
    judgment dismissing their fraud and negligent representation claims.
    II. DISCUSSION
    “We review a district court’s decision on a 12(b)(6) motion de novo,
    accepting all well-pleaded facts as true and viewing those facts in the light most
    favorable to the plaintiff.” Stokes v. Gann, 
    498 F.3d 483
    , 484 (5th Cir. 2007)
    (citation omitted). “To survive a motion to dismiss, a complaint must contain
    sufficient factual matter, accepted as true, to ‘state a claim to relief that is
    plausible on its face.’” Ashcroft v. Iqbal, 
    129 S. Ct. 1937
    , 1949 (2009) (quoting
    Bell Atl. Corp. v. Twombly, 
    550 U.S. 544
    , 570 (2007)).
    On appeal, Plaintiffs contend that the district court erred by concluding
    that KeyBank did not owe a duty to disclose Perkins Rowe’s financial condition
    to them.    Plaintiffs had predicated their claims of fraud and negligent
    representation on KeyBank’s failure to disclose this information, and both claims
    required the existence of disclosure obligations running from KeyBank to
    Plaintiffs. See Kadlec Med. Ctr. v. Lakeview Anesthesia Assocs., 
    527 F.3d 412
    ,
    3
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    No. 11-30709
    418 (5th Cir. 2008); America’s Favorite Chicken Co. v. Cajun Enters., Inc., 
    130 F.3d 180
    , 186 (5th Cir. 1997).
    “In Louisiana, a duty to disclose does not exist absent special
    circumstances, such as a fiduciary or confidential relationship between the
    parties, which, under the circumstances, justifies the imposition of the duty.”
    Kadlec, 
    527 F.3d at 420
    . “[T]he existence of a duty is a question of law, and we
    review the duty issue here de novo.” 
    Id.
     (footnote omitted). This court has
    stated that “[u]nder Louisiana law, banks ordinarily owe no duty, fiduciary or
    otherwise, to third persons.” Eubanks v. FDIC, 
    977 F.2d 166
    , 170 n.3 (5th Cir.
    1992) (emphasis added). However, Louisiana courts examine whether there is
    a duty to disclose on a case-by-case basis. See Barrie v. V.P. Exterminators, Inc.,
    
    625 So. 2d 1007
    , 1016 (La. 1993).
    Plaintiffs contend that KeyBank was the primary financial beneficiary of
    the condominium conversions and sales, which gave it a pecuniary interest in
    the transactions. They assert that KeyBank’s pecuniary interest creates a duty
    of disclosure under Greene v. Gulf Coast Bank, 
    593 So. 2d 630
     (La. 1992), and
    Kadlec Medical Center v. Lakeview Anesthesia Associates, 
    527 F.3d 412
     (5th Cir.
    2008). The Greene court stated that, while “[o]rdinarily a bank and depositor
    have a debtor-creditor relationship with no independent duty of care imposed on
    the bank[,] . . . certain special circumstances, such as a fiduciary relationship
    between the bank and depositor, will give rise to a duty.” Greene, 
    593 So. 2d at 632
    . Plaintiffs contend that, under Kadlec, the pecuniary interest KeyBank had
    in Perkins Rowe’s condominium sales constitutes a special circumstance creating
    disclosure obligations, as described in Greene. However, contrary to Plaintiffs’
    assertions, the Kadlec court made clear that a pecuniary interest is an additional
    requirement to the special circumstances that justify imposing a duty to disclose
    and, standing alone, is not a sufficient basis for imposing disclosure obligations.
    
    527 F.3d at
    421–22.
    4
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    No. 11-30709
    Plaintiffs also contend that KeyBank owed a duty of disclosure because an
    ordinary ethical person in like circumstances would have disclosed Perkins
    Rowe’s financial condition to Plaintiffs. The Louisiana Supreme Court has noted
    that “courts have tended to impose a duty [to disclose] when the circumstances
    are such that the failure to disclose would violate a standard requiring
    conformity to what the ordinary ethical person would have disclosed.” Bunge
    Corp. v. GATX Corp., 
    557 So. 2d 1376
    , 1384 (La. 1990). However, Louisiana
    Revised Statute § 6:333 provides that “no bank or its affiliate shall disclose any
    financial records to any person other than the customer to whom the financial
    records pertain, unless such financial records are disclosed” in limited
    circumstances not applicable here. Consequently, KeyBank could be subjecting
    itself to liability under § 6:333 by disclosing information about its customer,
    Perkins Rowe, and disclosure under these circumstances would not be expected
    of the ordinary ethical person. Thus, the imposition of disclosure obligations on
    KeyBank is unsupported by Louisiana caselaw.2
    In fact, Louisiana caselaw addressing the disclosure obligations owed by
    banks strongly suggests that KeyBank did not owe disclosure obligations to
    Plaintiffs. For instance, in Glass v. Berkshire Development, 
    612 So. 2d 749
     (La.
    App. 5 Cir. 12/16/92), condominium owners grew dissatisfied with the quality of
    the condominium renovation and sued several defendants, including Hibernia
    National Bank (“Hibernia”), the entity that had provided Berkshire with a loan
    to buy and renovate the complex. Id. at 750. The court, however, concluded that
    Hibernia did not owe a duty to the individual condominium purchasers, noting
    that “[u]nder Louisiana law a bank owes no duty to a third person with whom
    2
    Plaintiffs also contend that KeyBank owed disclosure obligations under § 552 of the
    Second Restatement of Torts. However, this court has noted that “§ 552—by its own terms
    requires an affirmative misstatement, not just a non-disclosure.” McLachlan v. New York Life
    Ins. Co., 
    488 F.3d 624
    , 630 (5th Cir. 2007).
    5
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    No. 11-30709
    a bank customer (here the developers) does business.” 
    Id. at 753
     (citation
    omitted). Similarly, in Guidry v. Bank of LaPlace, 
    661 So. 2d 1052
     (La. App. 4
    Cir. 9/15/95), the court concluded that “[t]he Bank of LaPlace was clearly under
    no duty to disclose information about its customer (Martin) to a non-customer
    (Guidry).” Id. at 1059 (citations omitted). Finally, in Priola Construction Corp.
    v. Profast Development Group, Inc., 
    21 So. 3d 456
     (La. App. 3 Cir. 10/7/09), the
    court concluded that Louisiana Revised Statute § 6:1124 “foreclose[s] the
    possibility of a lawsuit against a bank for negligent misrepresentation unless
    there was a contract or written agreement that the financial institution had a
    fiduciary obligation to the person claiming negligent misrepresentation.” Id. at
    462.3 Thus, Louisiana caselaw reflects the reluctance of its courts and its
    legislature to impose disclosure obligations on banks with regard to third
    parties, and it further undermines Plaintiffs’ contention that KeyBank owed
    disclosure obligations to them.
    In sum, imposing disclosure obligations in the instant case does not align
    with Louisiana’s caselaw or its statutes. Therefore, we conclude that KeyBank
    did not owe a duty to disclose information to Plaintiffs about Perkins Rowe’s
    financial health. Because Plaintiffs’ claims on appeal depend on the existence
    of such disclosure obligations, their claims necessarily fail.
    III. CONCLUSION
    For the reasons stated above, we AFFIRM the judgment of the district
    court dismissing Plaintiffs’ claims. Costs shall be borne by Plaintiffs.
    3
    In the instant case, there was no contract or written agreement between Plaintiffs and
    KeyBank.
    6