Williams Properties, LLC v. Paradise Operations, LLC

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[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
Nos. 21-11275 & 21-12081
Non-Argument Calendar
____________________
WILLIAMS PROPERTIES, LLC,
Plaintiff-Appellant,
versus
PARADISE OPERATIONS, LLC,
JUSTIN W. MASSEY,
Defendants-Appellees.
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2 Opinion of the Court 21-11275
____________________
Appeals from the United States District Court
for the Southern District of Alabama
D.C. Docket No. 1:20-cv-00615-WS-B
____________________
Before JORDAN, GRANT, and ANDERSON, Circuit Judges.
PER CURIAM:
Williams Properties, LLC appeals the district court’s dis-
missal with prejudice of two counts in the amended complaint.
Williams alleged in its amended complaint that Paradise Opera-
tions, LLC, and Justin W. Massey were negligent and breached
fiduciary duties owed to Williams in connection with a real estate
transaction in Alabama. The district court dismissed these claims
for four independent reasons. First, no agency relationship exist-
ed between Paradise / Massey and Williams, so they owed no du-
ties to Williams. Second, even if a duty existed, no breach oc-
curred. Third, Williams could not show any damages caused by
Paradise and Massey. And fourth, an exculpatory clause in the
underlying real estate purchase agreement released Paradise and
Massey from any liability. The basis for the district court’s first
reason for dismissal is the Alabama Real Estate Consumer’s Agen-
cy and Disclosure Act (“RECAD”). Ala. Code §§ 34-27-80 to -88.
Williams argues on appeal that the district court erred in conclud-
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20-14018 Opinion of the Court 3
ing that RECAD precluded its claims of negligence and breach of
fiduciary duties.
We review an order granting a motion to dismiss with
prejudice de novo. Young Apartments, Inc. v. Town of Jupiter,
529 F.3d 1027, 1037 (11th Cir. 2008). We accept all the factual al-
legations in the amended complaint as true and construe them in
the light most favorable to the plaintiff. Id.; Keating v. City of
Miami, 598 F.3d 753, 762 (11th Cir. 2010). We review the district
court’s interpretation of state law in a diversity case de novo, and
we must apply the substantive law of Alabama, the forum state.
Fioretti v. Mass. Gen. Life Ins. Co., 53 F.3d 1228, 1234–35 (11th
Cir. 1995). Because this case requires us to interpret a state stat-
ute, “we are bound by the decisions of the state supreme court.”
World Harvest Church, Inc. v. Guideone Mut. Ins. Co., 586 F.3d
950, 957 (11th Cir. 2009); see also Blue Cross & Blue Shield of
Ala., Inc. v. Nielsen, 116 F.3d 1406, 1413 (11th Cir. 1997) (“The
final arbiter of state law is the state supreme court, which is an-
other way of saying that Alabama law is what the Alabama Su-
preme Court says it is.”).
The Alabama legislature enacted RECAD “to clarify the
duties of brokerage services and real-estate licensees toward con-
sumers in the context of real-estate transactions.” Rosenthal v.
JRHBW Realty, Inc., 303 So. 3d 1172, 1186 (Ala. 2020) (citing J.
Clark Pendergrass, The Real Estate Consumer’s Agency and Dis-
closure Act: The Case Against Dual Agency, 48 Ala. L. Rev. 277,
278–79 (1996)). Prior to RECAD, Alabama common law of agen-
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4 Opinion of the Court 21-11275
cy defined the roles and duties of real estate brokers. Pendergrass,
supra, at 280. Under common law, real estate brokers were fidu-
ciaries. Id. at 281.
Williams points to one provision of RECAD to argue that
the statute did not abolish real estate brokers’ common law fidu-
ciary duties. See Ala. Code § 34-27-87 (“The duties of licensees as
specified in this article . . . shall supersede any duties of a licensee
to a party to a real estate transaction which are based upon com-
mon law principles of agency to the extent that those common
law duties are inconsistent with the duties of licensees as specified
in this article.”). Williams argues that RECAD does not absolve
Paradise and Massey from owing fiduciary duties because fiduci-
ary duties are consistent with the other duties RECAD imposes
on licensees. See id. §§ 34-27-84 to -85 (outlining the obligations
of licensees and the services they are required to provide).
However, as noted by the district court, RECAD narrowed
the scope of when licensees were agents of consumers:
At the initial contact between a licensee and the con-
sumer and until such time a broker enters into a spe-
cific written agreement to establish an agency rela-
tionship with one or more of the parties to a transac-
tion, the licensee shall not be considered an agent of
that consumer. An agency relationship shall not be
assumed, implied, or created without a written bi-
lateral agreement establishing the terms of the agen-
cy relationship.
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20-14018 Opinion of the Court 5
Ala. Code § 34-27-82(b) (emphasis added). Paradise and Massey
are both licensees, which are defined by RECAD as “[a]ny broker,
salesperson, or company,” with broker being defined as “[a]ny
person licensed as a real estate broker.” Id. § 34-27-81(2), (10).
Williams was their consumer. Id. § 34-27-81(5) (defining a con-
sumer as a “person who obtains information, advice, or services
concerning real estate from a real estate licensee”). RECAD pro-
vides that no agency relationship existed between Paradise and
Massey (the licensees) and Williams (the consumer) absent a writ-
ten bilateral agreement. Id. § 34-27-82(b); see also Rosenthal, 303
So. 3d at 1188 (“In short, as § 34-27-82(b) makes clear, there can-
not be an implied contract of agency between a broker and/or
licensee and a consumer.”).
Williams entered a listing agreement with Paradise that
was effective from September 13, 2018 through March 13, 2019.
For that six-month period, an agency relationship existed between
Williams and Paradise as codified in their written bilateral agree-
ment. But after March 13, 2019, Paradise was not Williams’s
agent in relation to the underlying real estate transaction. Wil-
liams, however, is basing its claims on alleged wrongdoing that
occurred—per the amended complaint—on April 10–11, 2019.
Even taking the allegations of wrongdoing as true, at that time,
no written bilateral agreement existed between Williams and Par-
adise. Therefore, it would be inconsistent with RECAD to im-
pose any duties grounded in agency law on Paradise and Massey
outside of those contained in an operative, written, bilateral
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6 Opinion of the Court 21-11275
agreement. See Ala. Code § 34-27-82(b) (“An agency relationship
shall not be assumed, implied, or created without a written bilat-
eral agreement establishing the terms of the agency relation-
ship.”).
Williams never responds to this reasoning of the district
court in either of its briefs. Williams cites numerous cases from
the Alabama Supreme Court concerning the role and duties of re-
al estate brokers under common law, but none were decided after
RECAD became effective. 1 Williams cites RECAD Sections 34-
27-84 and 34-27-85 to demonstrate that, in theory, fiduciary duties
are similar to the duties that RECAD imposes on licensees. How-
ever, Williams does not mention RECAD Section 34-27-82(b)—
the provision that defines when an agency relationship exists be-
tween licensees and consumers. The district court correctly de-
cided, though, that Section 34-27-82(b) prevents us from imposing
the duties articulated in Williams’s amended complaint onto Par-
adise and Massey in the absence of an operative, written, bilateral
agreement. To do so would be inconsistent with RECAD’s ex-
press limitation on when and how an agency relationship can
come into existence between a licensee and consumer.
1
Notably, Williams does not discuss in either of its briefs the Alabama Su-
preme Court’s recent opinion in Rosenthal, which was the first case in which
the state supreme court interpreted RECAD. See 303 So. 3d at 1183 (describ-
ing RECAD as “an Act our courts have not previously had an occasion to
interpret”).
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20-14018 Opinion of the Court 7
As the district court noted, and as Williams acknowledges
in its opening brief, both the negligence and breach of fiduciary
duties claims must fail if Paradise and Massey did not owe a duty
to Williams. See Aliant Bank, a Div. of USAmeribank v. Four Star
Invs., Inc., 244 So. 3d 896, 907 (Ala. 2017) (“The elements of a neg-
ligence claim are a duty, a breach of that duty, causation, and
damage. Similarly, the elements of a breach-of-fiduciary-duty
claim are the existence of a fiduciary duty, a breach of that duty,
and damage suffered as a result of that breach.”) (citations omit-
ted) (internal quotation marks omitted)). Because no agency rela-
tionship existed between Paradise / Massey and Williams on April
10–11, 2019, the alleged wrongdoing at that time did not violate
any duty owed by appellees to Williams.
Because we agree with the district court’s first independent
basis for dismissal of the amended complaint, that resolves the
appeal, and we need not discuss the remaining three reasons for
dismissal. Taking the allegations in the amended complaint as
true, Williams cannot maintain a claim of negligence or breach of
fiduciary duties against Paradise and Massey because, under
RECAD, no agency relationship existed between them. Accord-
ingly, we must affirm the district court’s denial of Williams
amended complaint with prejudice.
AFFIRMED.