Gottlieb & Gottlieb, P.A. v. Doctor R. Crants

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 16-10581
Non-Argument Calendar
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D.C. Docket No. 8:14-cv-00895-VMC-MAP
GOTTLIEB & GOTTLIEB, P.A.,
Plaintiff-Appellee,
versus
DOCTOR R. CRANTS,
Defendant-Appellant.
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Appeal from the United States District Court
for the Middle District of Florida
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(August 16, 2016)
Before WILSON, WILLIAM PRYOR and ROSENBAUM, Circuit Judges.
PER CURIAM:
Doctor R. Crants appeals the summary judgment in favor of Gottlieb &
Gottlieb, P.A. After Gottlieb sued Crants in a Florida court to collect more than
$1.5 million that Crants owed on several promissory notes, Crants removed the
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action to the district court based on diversity of citizenship, 28 U.S.C. §§ 1441(b),
1332(a). The district court ruled that no genuine factual dispute existed about the
enforceability of the promissory notes because Crants failed to identify in his
answer what specific condition precedent to payment was unfulfilled, see Fed. R.
Civ. P. 9(c), or, alternatively, to allege that an affirmative defense barred
enforcement of the notes, Fed. R. Civ. P. 8(c). After careful review, we affirm.
I. BACKGROUND
Crants executed 20 promissory notes made payable to Gottlieb. Crants
admitted that he had signed “the document[s] attached to [Gottlieb’s] Complaint”;
that they were true and genuine copies of the “promissory note[s], the terms of
which speak for themselves”; that he had received the value stated on the notes in
exchange for their delivery to Gottlieb; and that Gottlieb had demanded payment.
Each note stated that the “[p]ayment of principle and interest is to be made . . . to
[Gottlieb], or their order, ON DEMAND.”
The parties disputed whether payment was overdue. Paragraph six of
Gottlieb’s complaint alleged that “[a]ll conditions precedent to the institution and
maintenance of this action have been performed or have occurred.” Crants’s
answer “denied the allegations contained in Paragraph 6 of the Complaint.” Crants
also alleged generally in his Third Defense that Gottlieb’s “claims are barred by
the nonperformance of a condition precedent.”
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In his answers to interrogatories and his deposition, Crants asserted that
payment of the promissory notes was conditioned on an oral agreement that he had
with Jerry Gottlieb, one of the two shareholders of Gottlieb. Crants stated that he
was hired by LCS Corrections to improve its fiscal health and to sell the company,
which was owned in part by Gottlieb. Before Crants joined LCS, he and Jerry
Gottlieb agreed, “as consideration for [Crants’s] work,” that he would receive half
of “any net proceeds from the sale of LCS”; that LCS “would assist” and equally
share in the profits from Crants’s “two private prison projects”; and Jerry Gottlieb
“would lend . . . Crants $250,000 to support his team’s efforts to fix LCS . . . and
to develop” his private projects. A couple of days later, Crants “received a check
from Gottlieb . . . for $250,000, and [Crants] executed a Note payable in that
amount.” During the “next two years,” Gottlieb “continued to lend Mr. Crants
money—always on the condition that such loans would not be payable until the
sale of [LCS]” or the private projects and that “Crants would not have to pay the
demand notes . . . except out of the proceeds of the sale of one of those projects.”
After expiration of the initial and extended periods for discovery, Crants
moved to compel Gottlieb to produce documents to prove there was an “oral
agreement precedent” that the “Notes would not become due and payable until
LCS was sold.” Gottlieb responded that, under Florida law, Crants’s “evidence and
defense violate[d] the parol evidence rule” because it “contradict[ed] the
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unambiguous terms of each of the promissory notes with respect to the date when
payment is due, i.e., on demand, and the manner in which the notes are payable,
i.e., in lawful money of the United States.” Crants moved for leave to reply, but a
magistrate judge denied the motion. In the motion, Crants asserted, for the first
time, the affirmative defense of conditional delivery.
Gottlieb filed a motion for summary judgment, which the district court
granted. The district court ruled that Crants had failed to “specifically and
particularly plead his denial” of a condition precedent, Fed. R. Civ. P. 9(c), and his
“Third Defense [was] also too general to excuse his noncompliance with Rule
9(c).” In the alternative, the district court ruled that Crants had waived the
affirmative defense of conditional delivery by failing to plead it in his answer, see
Fed. R. Civ. P. 8(c), to raise the affirmative defense in an amended answer, or to
move for summary judgment based on the affirmative defense. Later, the district
court overruled Crants’s motion to alter or amend the judgment.
II. STANDARDS OF REVIEW
We review de novo a summary judgment and view the evidence in the light
most favorable to the nonmoving party. Latimer v. Roaring Toyz, Inc., 601 F.3d
1224, 1232 (11th Cir. 2010). We review the determination that a party has waived
an affirmative defense for abuse of discretion. EEOC v. White & Son Enters., 881
F.2d 1006, 1009 (11th Cir. 1989).
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III. DISCUSSION
This appeal turns on whether Crants satisfied the pleading requirements in
Federal Rules of Civil Procedure 8 and 9. Those rules outline how litigants in civil
actions should identify their respective legal positions to ensure that the parties and
the district court can discern what issues must be adjudicated. To that end, Rules 8
and 9 contain specific instructions about alleging affirmative defenses and
conditions precedent. A defendant “responding to a pleading . . . must state
affirmatively . . . any avoidance or affirmative defense.” Fed. R. Civ. P. 8(c). When
“denying that a condition precedent has occurred or been performed, a party must
do so with particularity.” Fed. R. Civ. P. 9(c).
The district court did not abuse its discretion when it determined that Crants
failed to comply with Rule 9(c). Crants’s denial that all conditions precedent had
occurred was, as the district court stated, “‘as general as a denial can be’ and
therefore insufficient” to satisfy the particularity requirement of Rule 9(c). See
Myers v. Cent. Fla. Invs., Inc., 592 F.3d 1201, 1224 (11th Cir. 2010); see also
Jackson v. Seaboard Coast Line R.R. Co., 678 F.2d 992, 1009 (11th Cir. 1982) (“If
the party does not deny the satisfaction of the conditions precedent specifically and
with particularity, . . . the allegations are assumed admitted and cannot later be
attacked.”). And his Third Defense failed to remedy the deficiency. Crants’s
allegation that Gottlieb’s “claims are barred by the nonperformance of a condition
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precedent” was, as the district court stated, equally “generic because it did not state
the particulars of the condition precedent or even which condition precedent was at
issue.” See Myers, 592 F.3d at 1224.
The district court also did not abuse its discretion when it determined that
Crants failed to “state affirmatively” the defense of conditional delivery. See Fed.
R. Civ. P. 8(c). Florida has long recognized that conditional delivery is an
affirmative defense to the enforcement of a negotiable instrument, see Felkel v.
Abernethy, 150 So. 631, 632 (Fla. 1933); Ketchian v. Concannon, 435 So. 2d 394,
395 (Fla. Dist. Ct. App. 1983), that “must be raised in the pleadings,” Kehle v.
Modansky, 696 So. 2d 493, 494 (Fla. Dist. Ct. App. 1997). Crants was obliged to
“state in short and plain terms [his] defenses,” Fed. R. Civ. P. 8(b)(1)(A), but he
failed to mention the affirmative defense of conditional delivery in his answer or
during the initial or extended periods for discovery. The district court was entitled
to conclude that Crants waived the affirmative defense. See Am. Nat’l Bank of
Jacksonville v. FDIC, 710 F.2d 1528, 1537 (11th Cir. 1983); see also Latimer, 601
F.3d at 1239 (“Failure to plead an affirmative defense generally results in a waiver
of that defense.”).
Crants argues that he did not waive the affirmative defense of conditional
delivery, but we cannot say that the contrary decision of the district court
constituted an abuse of discretion. Until Gottlieb moved for summary judgment,
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Crants portrayed his defense as an oral agreement that modified the demand notes.
Under Florida law, “[t]here is a vast difference between the condition precedent to
the requirement of payment . . . and a conditional delivery.” Cockrell v. Taylor,
165 So. 887, 892 (Fla. 1936). A conditional delivery exists when the promissory
note becomes effective only upon the occurrence of a condition or contingency, but
a condition precedent exists when there is a parol agreement between the parties
that the note is enforceable only “under certain conditions.” Anderson v. Ax, 139
So. 798, 799 (Fla. 1932); see Cockrell, 165 So. at 892–93; Ketchian, 435 So. 2d at
395. “In deciding waiver issues under Rule 8(c), . . . [we] examine[] whether a
plaintiff had notice of the unpled defense or was prejudiced by the lack of notice.”
Proctor v. Fluor Enters., Inc., 494 F.3d 1337, 1350 (11th Cir. 2007). The plaintiff
has notice of an affirmative defense when, for example, the defendant addresses
the specific unpled defense in pretrial filings, see Hassan v. U.S. Postal Serv., 842
F.2d 260, 263 (11th Cir. 1988), raises the defense in a motion for summary
judgment, see Proctor, 494 F.3d at 1352, or litigates the defense without objection,
see Jones v. Miles, 656 F.2d 103, 107 (5th Cir. 1981).
The rulings by the district court reflect a sentiment that Crants’s filings
failed to provide Gottlieb fair notice of the “vastly differen[t]” defense of
conditional delivery. See Cockrell, 165 So. at 892. As the district court stated when
entering judgment for Gottlieb, Crants failed to “plead the affirmative defense of
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conditional delivery,” he “did not raise the defense of conditional delivery in a
motion for summary judgment, nor did he seek to amend his Answer,” and his
“response raise[d] no argument outside the context of the defense of
nonperformance of a condition precedent.” When denying Crants’s motion to alter
or amend the judgment, the district court refused to “excuse” him from the
pleading requirements “given [the] unspecified nature” of his “oral condition
precedent defense.” And Crants could not avoid waiver by asserting the affirmative
defense in his opposition to Gottlieb’s motion for summary judgment. See Gilmour
v. Gates, McDonald & Co., 382 F.3d 1312, 1315 (11th Cir. 2004) (concluding that
a party may not amend a pleading “through argument in a brief opposing summary
judgment”). The district court did not abuse its discretion when it determined that
Crants waived the affirmative defense of conditional delivery.
The district court did not err by entering summary judgment in favor of
Gottlieb. Crants admitted that he signed, delivered, and received the benefit of the
promissory notes. Crants also admitted that “the terms of . . . [the notes] speak for
themselves,” and those notes state unambiguously that they are payable on
demand. Because Gottlieb demanded payment, it was entitled to collect the
principal and interest accrued, the amount of which Crants does not contest.
We AFFIRM the summary judgment in favor of Gottlieb.
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