Ike Thrash v. Countrywide Cmercl Real Est

Filing

UNPUBLISHED OPINION FILED. [10-60298 Affirmed] Judge: EGJ , Judge: EMG , Judge: CES. Mandate pull date is 01/10/2011 [10-60298]

Ike Thrash v. Countrywide :Cmercl Real Est Case 10-60298 Document: 00511326579

Page: 1 Date Filed: 12/20/2010

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
December 20, 2010 N o . 10-60298 S u m m a r y Calendar Lyle W. Cayce Clerk

I K E THRASH, P la in t if f -A p p e lla n t v. C O U N T R Y W I D E COMMERCIAL REAL ESTATE FINANCE, INC. D e fe n d a n t -A p p e lle e

A p p e a l from the United States District Court for the Southern District of Mississippi U S D C No. 1:08-CV-278

B e fo r e JOLLY, GARZA, and STEWART, Circuit Judges. P E R CURIAM:* P la in tiff-A p p e llan t Ike Thrash ("Thrash") appeals the district court's entry o f summary judgment in favor of Defendant-Appellee Countrywide Commercial R e a l Estate Finance, Inc. ("Countrywide"). We AFFIRM. I . BACKGROUND T h r a s h entered into a contract to sell Bruce and Mary Cope (collectively " t h e Copes") the Gulf Grove Apartments ("Gulf Grove"), a 100-unit apartment

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 R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.

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No. 10-60298 c o m p le x in Waveland, Mississippi. On behalf of the Copes and to facilitate the t r a n s a c t io n , Thrash sought financing from Countrywide through ValueXpress, LLC. The loan application process required the Copes' signature on a

C o m m it m e n t Agreement as well as a Term Sheet. These documents were fo r w a r d e d to ValueXpress. A third document, a Rate Lock Agreement, however, w a s permissive, and its execution had no bearing on the loan's closing. Rather, t h e Rate Lock Agreement was designed to help the Copes "lock-in" a favorable in t e r e s t rate, if and when the loan closed. The Commitment Agreement and the Term Sheet outlined the terms of a t e n -y e a r loan for an amount of $6,600,000. The loan was contingent upon c e r t a in conditions precedent, namely approval by Countrywide's credit c o m m it t e e and completion of Countrywide's due diligence. The Copes signed all t h r e e contracts on November 5, 2007. At the time of signing, the Copes did not pay the deposit commensurate to t h e Rate Lock Agreement, nor did they initiate the rate-lock procedures the Rate L o c k Agreement prescribed. On December 12, 2007, the Copes locked in a 6.85% in t e r e s t rate on a $6,200,000 loan with a deposit of $124,000. A s part of Countrywide's due diligence, two of its employees, Mark DeLotto a n d Bryan Polizzotto, traveled to Mississippi to inspect Gulf Grove in December 2 0 0 7 . Thrash alleges that during this visit, on December 12, 2007, Countrywide in d ic a te d to him that they approved funding, and the only obstacle to the loan's c lo s in g was payment of the rate lock deposit. Countrywide denies its

r e p r e s e n t a t iv e s made this communication and nonetheless contend that the m e etin g between its representatives and Thrash occurred on December 17, 2007, a ft e r the Copes had paid the rate lock deposit and executed the Rate Lock C o n fi r m a tio n . Though the parties contest the meeting date and details

d is c u s s e d , the parties do not contest that the meeting occurred only between C o u n tr y w id e and Thrash. The Copes were not present. 2

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No. 10-60298 A fte r the Copes "locked-in" the rate, Countrywide declined to issue the lo a n . In light of its denial, Countrywide presented alternate options to the C o p e s , which the Copes rejected. The Copes sought financing elsewhere.

Thrash and the Copes, through counsel, made a demand for the return of the r a t e lock deposit on the grounds that Countrywide refused to close the loan. Countrywide declined to refund the deposit. On June 16, 2008, the Copes assigned to Thrash all rights, title, and in t e r e s t to the cause of action resulting from Countrywide's relationship with t h e Copes. Accordingly, Thrash filed the instant suit on June 30, 2008, alleging b r e a c h of contract, fraudulent misrepresentation, negligent misrepresentation, a n d rescission. On March 15, 2010, the district court entered summary

ju d g m e n t for Countrywide. Thrash timely appealed. I I . ANALYSIS A. S t a n d a r d of Review T h is court reviews the grant of summary judgment de novo. Floyd v. A m ite Cnty. Sch. Dist., 581 F.3d 244, 247 (5th Cir. 2009). Summary judgment is appropriate where, considering all the allegations in the pleadings, d e p o s it io n s , admissions, answers to interrogatories, and affidavits, and drawing in f e r e n c e s in the light most favorable to the nonmoving party, there is no g e n u in e issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56. B. D is c u s s io n 1. B r e a c h of Contract

T h r a s h contends that the statements made by DeLotto and Polizzotto and t h e Copes' subsequent performance--payment of the $124,000--created a new, o r a l agreement between the parties, binding Countrywide to close the loan. He a r g u e s that the rate-lock deposit was consideration for closing the loan. Thrash's argument fails because, principally, the Statute of Frauds bars relief 3

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No. 10-60298 a n d , alternatively, the Rate Lock Agreement was a separate agreement, the t e r m s of which required any modification to be in writing. Mississippi's Statute of Frauds provides that contracts "not to be p e r fo r m e d within fifteen months from the making thereof" are governed by the S t a tu t e of Frauds, premising their validity on a writing. See MISS CODE ANN. § 15-3-1(d). The loan at issue here was of a ten-year duration, thereby making p e r fo r m a n c e within fifteen months impossible. As such, any modification to the a g r e e m e n t needed to be in writing. Favre Prop. Mgmt., LLC v. Cinque Bambini, 8 6 3 So. 2d 1037, 1045 (Miss Ct. App. 2004) (citing Canziaro v. Mobile Commc'ns C o r p . of Am., 655 So. 2d 25, 29 (Miss. 1995)). Because the alleged oral

a g r e e m e n t was not in writing, it is unenforceable pursuant to the Statute of F r a u d s . Id. M o r e o v e r , the terms of the Rate Lock Agreement provide that any m o d ific a t io n was to be done in writing. The Rate Lock Agreement explicitly s t a t e s "[n]o modification . . . of this Agreement shall be effective unless the same s h a ll be done in a writing signed by the party against whom enforcement is s o u g h t ." This clause is unambiguous and thus enforceable. HeartSouth, PLLC v . Boyd, 865 So. 2d 1095, 1106­07 (Miss. 2003) T h ra sh 's position that the deposit and fully executed Rate Lock Agreement b o u n d Countrywide to fund the loan is undermined by the terms of the Rate L o c k Agreement which explicitly states that the agreement is permissive. Thus, T h r a s h 's contention that the deposit was consideration and a condition p r e c e d e n t to funding the loan--essentially the argument at the heart of his p o s it io n -- is unavailing. The Rate Lock Agreement was designed merely to p r o t e c t the Copes from the severity of a future, greater interest rate; it by no m e a n s bound Countrywide to fund the loan. Lastly, Thrash's argument that an oral modification is permissible, despite e x p lic it terms that a modification of a contract only be made in writing, is 4

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No. 10-60298 in c o m p le t e . While it is true that a written contract can be orally modified, any s u c h modification "must be determined upon the facts and upon the parties' p a t t e r n of conduct." Eastline Corp. v. Marion Apartment, Ltd., 524 So. 2d 582, 5 8 4 (Miss. 1988). Here, the court is convinced that the parties' pattern of c o n d u c t does not merit disturbing the written terms of a contract due to one p a r ty 's eagerness to close the loan. Thus, Thrash's breach of contract claim p r o p e r ly did not withstand summary judgment. 2. F r a u d u le n t and Negligent Misrepresentation

T o successfully establish a claim for fraudulent misrepresentation, a p la in t iff must prove by clear and convincing evidence: (1) a representation; (2) its fa ls it y ; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance o f its truth; (5) the speaker's intent that it should be acted upon by the hearer a n d in the manner reasonably contemplated; (6) the hearer's ignorance of the fa ls it y ; (7) his reliance on the truth; (8) his right to rely thereon; and (9) his c o n s e q u e n t and proximate injury. Levens v. Campbell, 733 So. 2d 753, 761­62 (M is s . 1999). T o prove negligent misrepresentation, a claimant must prove, by a p r e p o n d e r a n c e of the evidence: (1) the misrepresentation or omission of a fact; (2 ) that the misrepresentation or omission was material or significant; (3) failure t o exercise reasonable care on the part of the defendant; (4) reasonable reliance o n the misrepresentation or omission; and (5) damages as a direct result of such r e lia n c e . Id. T h e documents at the heart of this transaction--the Commitment, the T e r m Sheet, and the Rate Lock Agreement--all required any modification to be m a d e in writing. In light of this, the district court found that Thrash's reliance o n any purported oral statements by DeLotto and Polizzotto consummating an a g r e e m e n t was objectively unreasonable as a matter of law. We agree. This r e s u lt is even more evident when considering Thrash, by his own admission, is 5

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No. 10-60298 a n experienced businessman in such transactions, amplifying the objective u n r e a s o n a b le n e s s of his reliance on any purported statements, without written c o n fir m a t io n . Thus, Thrash fails to meet his burden of proof with respect to his a lt e r n a t in g misrepresentation claims. In light of Thrash's inability to establish a prima case on the elements of e it h e r one of his misrepresentation claims, we need not visit Thrash's arguments t h a t he presented facts that preclude summary judgment because they are im m a t e r ia l. As this court has explained before, when considering "materiality, o n ly those disputes over facts that might affect the outcome of the lawsuit under t h e governing substantive law will preclude summary judgment." Phillips Oil C o . v. OKC Corp., 812 F.2d 265, 272 (5th Cir. 1987). Put differently, when " s u m m a r y judgment evidence establishes that one of the essential elements of t h e plaintiff's cause of action does not exist as a matter of law, . . . all other c o n t e s t e d issues of fact are rendered immaterial." Topalian v. Ehrman, 954 F.2d 1 1 2 5 , 1138 (5th Cir. 1987)(citations omitted). Thus, Thrash's protests about m e e t in g his burden of persuasion, too, are immaterial, and summary judgment o n these claims was appropriate. 3. R e s c is s io n

A s Thrash avers, "rescission is a retroactive remedy and renders the c o n t r a c t unenforceable from the outset." Cenac v. Murry, 609 So. 2d 1257, 1273 (M is s . 1992). Yet, rescission presupposes the existence of a valid contract. Here, g iv e n the fact that we find Thrash's alleged oral modification was invalid, there e x is t e d no contract. Thus, the remedy of rescission is unavailable to him. T h r a s h avers that rescission is appropriate under the circumstances. We c o n s t r u e Thrash's position as an equitable argument entitling him to the refund o f the rate lock deposit. Yet, the plain terms of the agreement make clear that T h r a s h , as Copes' assignee, bore the risk in the event that the deposit was lost, a n d any other attendant costs if the loan did not close. Accordingly, Thrash's 6

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No. 10-60298 r e s c is s io n claim fails, and the district court's entry of summary judgment for C o u n t r y w id e on this claim was proper. See generally Capitol Justice, LLC v. W a c h o v ia Corp., 605 F. Supp. 2d 187, 189­90 (D.D.C. 2009). I I I . CONCLUSION F o r the reasons stated above, the judgment of the district court is A F F IR M E D .

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