Marcus Beasley v. Arcapita Incorporated

Filing

UNPUBLISHED AUTHORED OPINION filed. Motion disposition in opinion--denying Motion to dismiss appeal [998236076-2] Originating case number: 1:08-cv-00804-RDB Copies to all parties and the district court/agency. [998617813].. [09-1125]

Appeal: 09-1125

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Date Filed: 06/23/2011

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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 09-1125

MARCUS BEASLEY; DENISE BEASLEY,
Plaintiffs – Appellants,
v.
ARCAPITA
INCORPORATED;
CAJUN
HOLDING
COMPANY;
CAJUN
OPERATING
COMPANY;
CRESCENT
CAPITAL
INVESTMENTS,
INCORPORATED,
Defendants – Appellees.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.
Richard D. Bennett, District Judge.
(1:08-cv-00804-RDB)

Argued:

March 25, 2011

Decided:

June 23, 2011

Before MOTZ, GREGORY, and SHEDD, Circuit Judges.

Affirmed by unpublished opinion. Judge Shedd wrote the majority
opinion, in which Judge Motz joined.
Judge Gregory wrote a
dissenting opinion.

ARGUED: Erin M. Tanner, WAKE FOREST UNIVERSITY, School of Law,
Winston-Salem, North Carolina, for Appellants.
James Charles
Rubinger, PLAVE KOCH PLC, Reston, Virginia, for Appellees.
ON
BRIEF: Paul M. Vettori, John J. Kenny, KENNY & VETTORI, LLP,
Towson, Maryland, for Appellants. Benjamin B. Reed, PLAVE KOCH
PLC, Reston, Virginia, for Appellees.

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Unpublished opinions are not binding precedent in this circuit.

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SHEDD, Circuit Judge:
Marcus and Denise Beasley appeal the district court’s order
dismissing

their

claim

against

Arcapita

Incorporated,

Cajun

Holding Company, Cajun Operating Company, and Crescent Capital
Investments,

Incorporated

(collectively

“Arcapita”).

For

the

reasons set forth below, we affirm the judgment of the district
court.

I.
The

Beasleys

are

the

sole

Ventures, Inc. (“Ventures”).

shareholders

of

Beasley

Food

On December 17, 2004, Ventures

entered into a franchise agreement (“the Agreement”) with AFC
Enterprises,
restaurant

Inc.

at

to

the

own

and

operate

Church’s

Chicken

International

Baltimore/Washington

a

Airport.

The Agreement states that it is “between AFC Enterprises
Inc.

.

.

.

Beasley

.

corporation

and
.

(“Franchisee”).”

.

internal

sections

of

initialed

above

the

the

executed

the

Ventures,

Inc.,

Supp.

Agreement,

printed

corporate designation.
Beasley

Food

term

the

J.A.

a
6.

Beasleys

Maryland
In

two
or

without

“franchisee”

signed

a

However, on the signature page, Denise
Agreement

Ventures,

Marcus

her

corporate

witness.

Additionally, Marcus and Denise Beasley individually

executed

a

3

and

signed

Subordination

only

as

as

of

Guaranty

Beasley

capacity

President

separate

and

in

a

Agreement

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personally

Date Filed: 06/23/2011

obligating

themselves

for

Page: 4 of 15

Ventures’

debts

arising

under the Agreement.
In December 2004, Arcapita acquired the Church’s Chicken
business

from

AFC.

Subsequently,

although

the

menu

AFC

had

provided to Ventures included pork products, Arcapita banned the
sale

of

pork

in

Church’s

Chicken

restaurants.

Arcapita

permitted Church’s Chicken restaurants that had previously sold
pork products to continue doing so.
to

allow

new

restaurants

that

had

However, Arcapita refused
not

previously

sold

pork

products to do so in the future.
The Beasleys, who are African-American, brought this action
asserting a single count of racial discrimination in violation
of 42 U.S.C. § 1981.

The Beasleys allege that they were the

only existing franchise that was forbidden to sell pork products
and that Arcapita forbade them from doing so because of their
race.

Consequently, they assert that their franchise failed

because of their inability to sell pork products.

Relying on

the Supreme Court’s holding in Domino’s Pizza, Inc. v. McDonald,
546 U.S. 470 (2006), the district court found that the Beasleys
could not bring a § 1981 claim because they were not parties to
the

Agreement

and,

thus,

had

no

rights

under

the

Agreement.

Therefore, the court dismissed their case for failure to state a
claim.

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II.
We review de novo a district court's order dismissing a
claim

under

Federal

Rule

of

Civil

Procedure

12(b)(6).

See

Duckworth v. State Admin. Bd. of Election Laws, 332 F.3d 769,
772

(4th

Cir.

2003).

To

survive

a

Rule

12(b)(6)

motion,

a

plaintiff must allege enough facts “to raise a right to relief
above the speculative level” and must provide “enough facts to
state a claim to relief that is plausible on its face.” Bell
Atl.

Corp.

v.

Twombly,

550

U.S.

544,

555

(2007).

When

considering an order dismissing a claim under Rule 12(b)(6), we
assume

all

factual

allegations

in

the

pleadings

Erickson v. Pardus, 551 U.S. 89, 94 (2007).

to

be

true.

“[W]hen a defendant

attaches a document [such as the Agreement] to its motion to
dismiss,

a

dismiss

the

relied

on

court

may

compliant
in

the

consider
if

Inc.,

in

determining

was

integral

to

complaint

and

if

plaintiffs

367

F.3d

the

and

whether

it

challenge its authenticity.”
Healthcare

it

to

explicitly
do

not

Am. Chiropractic Ass’n v. Trigon
212,

234

(4th

Cir.

2004)(internal

citations omitted).

III.
In

Domino’s

Pizza,

the

Supreme

Court

held

that

a

corporation’s sole shareholder could not bring a § 1981 action
pursuant to a franchise agreement because he was not a party to,
5

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and

Document: 73

did

not

Date Filed: 06/23/2011

have

rights

under,

Page: 6 of 15

the

contract.

The

Court

expressly limited relief under § 1981 to parties with rights
under a contract, stating:
[A] plaintiff cannot state a claim under § 1981 unless
he has (or would have) rights under the existing (or
proposed) contract that he wishes “to make and
enforce.”
Section 1981 plaintiffs must identify
injuries flowing from a racially motivated breach of
their own contractual relationship, not of someone
else’s.
Domino’s

Pizza,

546

U.S.

at

479-80.

The

Court

based

ruling, in part, on basic precepts of corporate law.

this

“[I]t is

fundamental corporation and agency law — indeed, it can be said
to be the whole purpose of corporation and agency law — that the
shareholder

and

contracting

officer

of

a

corporation

has

no

rights and is exposed to no liability under the corporation’s
contracts.”
The

Beasleys

dismissing
under

Id. at 477.

the

their

argue
claim

Agreement

that

the

because

they

consistent

district
are
with

court

parties

erred

with

Domino’s

in

rights
Pizza.

Specifically, they assert that by virtue of the Guarantee of
Franchisee Agreement, they have taken on significant financial
obligations under the Agreement that entitle them to bring a §
1981 claim.

Additionally, the Beasleys contend that they are

individually parties to the Agreement pursuant to Section XXV.
In particular, they point to language stating that they have

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“individually,
Agreement.”

Date Filed: 06/23/2011

and

jointly

and

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severally,

executed

this

Supp. J.A. 43.

We find both arguments to be without merit.

First, any

obligations the Beasleys have under the Guarantee of Franchise
Agreement do not create any rights for them under the Agreement,
which the Supreme Court has explicitly required for a claim of
relief under § 1981.

Second, Section XXV does not establish

that the Beasleys are individually parties to the Agreement.
This section only applies when the franchisee is a corporation,
thus defeating the Beasleys’ claims that they are individual
franchisees or parties to the Agreement.
Moreover, the specific language referenced by the Beasleys
stating that they “individually . . . executed this Agreement”
does

not

establish

that

they

are

parties

to

the

Agreement

because, factually, the Beasleys did not individually execute
the

Agreement.

First,

Marcus

Beasley

did

not

execute

the

Agreement in any manner.

Second, Denise Beasley signed above

the notation “President.”

Thus, she executed the Agreement only

in her corporate – not individual – capacity.

Signing in this

representative capacity does not make her an individual party to
the

Agreement,

and,

therefore,

no

representation

Agreement applies to her as an individual.

in

the

See Ga. Code Ann. §

11-3-402(b) (if an authorized representative signs on behalf of
another person or entity, the representative is not personally
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liable);
S.E.2d

Dewberry
438

president

(Ga.
“signed

Date Filed: 06/23/2011

Painting
App.
the

Centers,

1998)

Page: 8 of 15

Inc.

(holding

document

only

v.

Duron

that

where

in

his

Inc.,

508

corporate

representative

capacity,” the president was not personally liable under the
document). 1
In

short,

we

hold

that,

according

Agreement, Ventures is the franchisee. 2

to

the

terms

of

the

Therefore, Ventures is

the named party with rights under the Agreement.

In contrast,

the Beasleys, as sole shareholders of Ventures, are neither the
franchisee nor a named party with rights under the Agreement.
Therefore, pursuant to Domino’s Pizza, the Beasleys cannot bring
a § 1981 claim.

1

In his dissent, our colleague suggests that the
implication of our decision is that Denise Beasley would need to
sign the Agreement twice to be bound as an individual. That is
not so. Denise Beasley could have noted she was also signing in
her individual capacity, or she could have signed without noting
that she was doing so in her corporate capacity.
2

The identity of the franchisee is unambiguous.
Despite
the fact that the Beasleys signed or initialed above the printed
term ‘franchisee,’ the Agreement when read as a whole is only
capable of being read as a contract between Arcapita and
Ventures.
See Gen. Steel, Inc. v. Delta Bldg. Sys. Inc., 676
S.E.2d 451, 453 (Ga. App. 2009)(pursuant to Georgia law, which
controls the Agreement, “no ambiguity exists where, examining
the contract as a whole . . . the contract is capable of only
one reasonable interpretation.”).

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IV.
For the foregoing reasons, we affirm the district court’s
order dismissing the Beasleys’ complaint. 3
AFFIRMED

3

Arcapita moved to dismiss this appeal on res judicata
grounds.
We deny the motion.
See Pueschel v. United States,
369 F.3d 345, 356 (4th Cir. 2004) (recognizing the claim
splitting waiver exception to res judicata).

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GREGORY, Circuit Judge, dissenting:
The majority opinion comes to the unfortunate conclusion
that contracts simply do not mean what they say.
this

motion

to

dismiss,

we

must

accept

the

In reviewing
facts

in

the

complaint as true, and draw all reasonable inferences in favor
Ashcroft v. Iqbal, --- U.S. ---, 129 S.Ct.

of the Beasleys.

1937, 1949-50 (2009).

While we need not accept as true any

legal conclusions, id., in a contract dispute, we must construe
any ambiguous provisions in the Agreement against Arcapita as
the drafter.

Department of Community Health v. Pruitt Corp.,

673 S.E.2d 36, 39 (Ga. App. 2009).

Most importantly in this

case, even if we may foresee the claim’s later failure at the
summary

judgment

underlying

stage,

merits.

we

must

Republican

refrain
Party

of

from
North

examining
Carolina

its
v.

Martin, 980 F.2d 943, 952 (4th Cir. 1992).
As drafted by Arcapita, the plain language of the Agreement
makes clear that Ms. Beasley’s signature alone was sufficient to
in fact make her “individually” a party to the Agreement.
43.

Section 25 states in part that:
In the event Franchisee named herein is a corporation
at the time of the execution of this Agreement, it is
warranted, covenanted and represented to Franchisor
that:
. . .
25.02 The above-named person or
Beasley,] has (have) individually,
10

persons[,] [Ms.
and jointly and

J.A.

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severally, executed this Agreement, and such person,
or one of such persons, [Ms. Beasley,] is and shall be
the
chief
executive
officer
of
the
Franchisee
corporation[,] [Ventures] . . . .
J.A. 43 (emphasis added).

Section 25 only applies when the

franchisee is a corporation because it creates another layer of
liability for the individual signatory, which would otherwise be
unnecessary in circumstances where the lone franchisee is an
individual person.
“above-named”

--

Section 25.02 is a guarantee that the person
Ms.

Beasley’s

name

appears

without

title

several times in the preceding parts of the Agreement, J.A. 4142 –- will execute the Agreement as an individual, and as the
chief executive of the corporation.

It therefore establishes

obligations under the Agreement for both the signatory as an
individual and as a representative of the corporation.
Thus,

through

her

single

signature,

Ms.

Beasley

bound

herself as an individual and her corporation, Ventures, to the
Agreement.
§ 289(1)

J.A. 44; see also Restatement (Second) of Contracts

(1981)

(“Where

two

or

more

parties

to

a

contract

promise the same performance to the same promisee, each is bound
for the whole performance thereof, whether his duty is joint,
several, or joint and several.”).

Ms. Beasley therefore had the

same specific rights and duties under the Agreement as Ventures,
rights which were enforceable under § 1981.

See Domino’s Pizza,

Inc. v. McDonald, 546 U.S. 470, 476-80 (2006) (“Section 1981

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offers

relief

Date Filed: 06/23/2011

when

racial

Page: 12 of 15

discrimination

. . .

impairs

an

existing contractual relationship, so long as the plaintiff has
or would have rights under the existing or proposed contractual
relationship.”).

Indeed, at oral argument, no one seemed to

doubt that if Ms. Beasley had in some way failed to perform
under the Agreement, Arcapita could use section 25.02 to hold
both her and Ventures liable.
Nonetheless, the majority holds that this language did not
make Ms. Beasley a party to the Agreement because “factually,
[she] did not individually execute the agreement.”
-.

See Op. at -

The majority believes that Ms. Beasley had to either sign

the Agreement twice, once as an individual and again as the
President of Ventures, or somehow otherwise note that she was
also signing the Agreement in her individual capacity.
at

--

n.1.

And

necessitate
included

two

section

individual

yet,

terms

signatures,
25.02

liability,

superfluous. ∗

the

as
any

and,
a

of
given

means

further

of

the

Agreement

that

did

Arcapita

securing

notation

See Op.

Ms.

would

not

clearly

Beasley’s
have

been

Again, that section states that Ms. Beasley –- who

∗

The suggestion that an amendment was somehow needed in
order for Ms. Beasley to obtain standing under the Agreement is
absurd. Section 25.02 clearly means that there was no manner in
which Ms. Beasley could have signed the Agreement that would
have prevented her from being held individually liable.
Ms.
Beasley’s mere execution of the Agreement was her representation
to Arcapita that she would be held individually liable, and that
(Continued)
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is the actual signatory, and is repeatedly “above-named” without
title, J.A. 41-42 -– has “individually” executed the Agreement.
In fact, the Georgia law cited by the majority provides
still more interpretive presumptions in favor of Ms. Beasley’s
claim.

Dewberry Painting Centers, Inc. v. Duron Inc. supports

my position in so far as it holds that the act of signing above
the title “President” will not, as a matter of law, preclude
personal liability.

508 S.E.2d 438, 440-41 (Ga. App. 1998).

Similarly, my colleagues mistakenly rely on Ga. Code Ann. § 113-402(b), which applies only where a contract is “unambiguous.”
The Agreement is, at best, ambiguous, and thus we should instead
apply

Ga.

Code

Ann.

§ 11-3-402(b)(2),

which

instructs

us

to

presume that the corporate representative is individually liable
on the instrument.
Mr.
through

Beasley
his

“franchisee.”

similarly

repeated

became

initialing

See J.A. 41, 42.

a

party

of

the

to

the

contract

Agreement

as

a

Further, since the Beasleys

she was able to bind Ventures as its chief executive officer.
The presence of a title beneath her signature was therefore
unnecessary and redundant.
Thus, the Agreement would need to
have been amended so as to preclude her individual liability,
not to create it, and Ms. Beasley probably would have welcomed
such an amendment.
And yet, Arcapita likely required her to execute the
unmodified Agreement as a precondition to obtaining a franchise;
thereby making it impractical or impossible for her to have
insisted on any amendments.

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also functioned as sureties through the Guarantee of Franchise
Agreement,

they

likely

§ 1981 standing.
3:08cv494,
(noting

2009

that

have

an

alternative

ground

to

claim

See, e.g., RBA Capital, LP. v. Anonick, No.
WL

960090,

“conceptually”

at
a

*2

(E.D.

contract

Va.

April

surety

8,

could

2009)

bring

a

lawsuit on behalf of the principal (citing Smith Setzer & Sons,
Inc. v. South Carolina Procurement Review Panel, 20 F.3d 1311,
1317 (4th Cir.1994))); see also Denny v. Elizabeth Arden Salons,
Inc., 456 F.3d 427, 436 (4th Cir. 2006) (permitting third-party
beneficiaries to bring § 1981 actions).
The

Beasleys

sought

to

pursue

their

owning and operating a business franchise.

American

dream

of

However, according

to the allegations in the complaint, the discriminatory actions
of Arcapita kept their franchise from ever growing beyond its
infancy.

Given the clarity of section 25.02 and the deference

we must give to the complaint at this early juncture, I am
convinced

that

Agreement.

the

Beasleys

factually

were

parties

to

the

They are therefore entitled to the opportunity to

vindicate their rights under § 1981 in the district court.
Regrettably, however, the majority’s decision will bar any
court

from

ever

reaching

discrimination claim.

the

merits

of

the

Beasleys’

racial

While the lawsuit may ultimately prove to

be unsuccessful, at present, there is no just basis for this
Court

to

hold

that

the

Beasleys
14

lack

standing.

For

these

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reasons, I cannot join the “factual” analysis of the majority,
and must dissent.

15