LMP Ninth Street Real Estate, LLC v. U.S. Bank National Association

Filing 38

ORDER: Defendants U.S. Bank National Association and KeyBank National Association's Motion to Dismiss (Doc. # 5 ) is denied. Signed by Judge Virginia M. Hernandez Covington on 11/28/2016. (DMD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
LMP NINTH STREET REAL
ESTATE, LLC,
Plaintiff,
v.

CASE NO: 8:16-cv-2463-T-33AEP

U.S. BANK NATIONAL
ASSOCIATION, as Trustee for
the Holders of Waterfall
Commercial Mortgage Trust
2015-SBC5 Commercial
Mortgage Pass-Through,
Certificates, Series 2015SBC5, and KEYBANK NATIONAL
ASSOCIATION,
Defendants.
_______________________________/
ORDER
This
Defendants

matter
U.S.

comes
Bank

before

National

the

Court

Association

pursuant
and

to

KeyBank

National Association’s Motion to Dismiss (Doc. # 5), filed on
August 30, 2016. Plaintiff LMP Ninth Street Real Estate, LLC,
filed a response in opposition on September 30, 2016. (Doc.
# 31). For the reasons that follow, the Court denies the
Motion.
I.

Background
LMP Ninth Street owns commercial real estate in St.

Petersburg, Florida. (Doc. # 2 at ¶ 1). In 2008, LMP Ninth

1

Street refinanced and consolidated a loan secured by its real
estate, which was executed in a Note Renewal, Consolidation
and Restatement Agreement (Note). (Id. at ¶ 4). In mid-2015,
LMP Ninth Street states that U.S. Bank, as Trustee for Holders
of Waterfall Commercial Mortgage Trust 2015-SBC5, acquired
the loan from LMP Ninth Street’s refinancing lender. (Id.).
U.S. Bank contracted with KeyBank to service the loan. (Id.
at ¶ 5).
LMP Ninth Street decided to refinance the loan in late
2015, and “procured an executed loan commitment through PNC
Bank” in early 2016. (Id. at ¶ 6). However, the Note contained
a prepayment fee that would have required LMP Ninth Street to
pay a fee as high as $1,646,256 in addition to the outstanding
loan amount to U.S. Bank. (Id. at ¶ 7).
LMP Ninth Street states that it negotiated with U.S.
Bank to reduce the prepayment fee by fifty percent, so long
as the closing occurred before March 1, 2016. (Id. at ¶ 8).
This agreement was not put into a formal writing; however,
“[t]hat reduction was recognized in an email authored by Kyle
Elliott on behalf of [U.S. Bank] and sent to a representative
of [LMP Ninth Street] and copied to a representative of
KeyBank.” (Id.). The email dated January 29, 2016, reads:
Hi David,

2

Please coordinate with Daniel re: closing. He is
aware of the reduction in prepay fee (if payoff
occurs by 3/1/16).
Thanks,
Kyle
(Id. at 15).
LMP Ninth Street was ready to close on the refinance by
March 1, 2016, and able to pay the reduced prepayment fee
then. (Id. at ¶ 9). But on a payoff statement LMP Ninth Street
received

on

February

24,

2016,

the

full

amount

of

the

prepayment fee was listed. (Id.). LMP Ninth Street discussed
this with a KeyBank representative who assured LMP Ninth
Street that the “only remaining issue was whether the reduced
amount was to be paid by [LMP Ninth Street] at the closing or
[LMP Ninth Street] would pay the full prepayment fee with a
rebate to [LMP Ninth Street] following the closing.” (Id.).
Yet, during a subsequent phone conversation with a U.S.
Bank representative, LMP Ninth Street was informed that it
would

not

receive

the

fifty

percent

reduction

in

the

prepayment fee. (Id.). As a result, LMP Ninth Street was
unable to close on the refinance, and “continues to pay a
much higher interest rate on the loan than it would currently
be paying had the refinance occurred, as agreed.” (Id. at ¶
10).

3

LMP Ninth Street filed this action in the Circuit Court
of the Sixth Judicial Circuit in and for Pinellas County,
Florida, on July 27, 2016, seeking a declaration that the
agreement regarding the prepayment fee is enforceable under
Florida law, as well as seeking damages under a promissory
estoppel theory for the higher interest rate it is currently
paying. (Doc. # 2).
Subsequently, U.S. Bank and KeyBank timely removed the
action to this Court on August 26, 2016. (Doc. # 1). They
then filed a Motion to Dismiss on August 30, 2016, arguing
that the alleged agreement to reduce the prepayment fee was
not binding under Florida’s banking statute of frauds, and
that LMP Ninth Street cannot use a promissory estoppel claim
to circumvent the requirements of the statute of frauds. (Doc.
# 5). LMP Ninth Street filed a response in opposition on
September 30, 2016. (Doc. # 31). The Motion is now ripe for
the Court’s review.
II.

Legal Standard
On a motion to dismiss, this Court accepts as true all

the allegations in the complaint and construes them in the
light most favorable to the plaintiff. Jackson v. Bellsouth
Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004). Further,
this

Court

favors

the

plaintiff

4

with

all

reasonable

inferences from the allegations in the complaint. Stephens v.
Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th
Cir. 1990)(“On a motion to dismiss, the facts stated in [the]
complaint and all reasonable inferences therefrom are taken
as true.”). However,
[w]hile a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual
allegations, a plaintiff’s obligation to provide
the grounds of his entitlement to relief requires
more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action
will not do. Factual allegations must be enough to
raise a right to relief above the speculative
level.
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
citations omitted). Courts are not “bound to accept as true
a legal conclusion couched as a factual allegation.” Papasan
v. Allain, 478 U.S. 265, 286 (1986). Furthermore, “[t]he scope
of

review

must

be

limited

to

the

four

corners

of

the

complaint.” St. George v. Pinellas Cty., 285 F.3d 1334, 1337
(11th Cir. 2002).
III. Analysis
U.S. Bank and KeyBank argue that LMP Ninth Street has
not sufficiently pled the existence of a valid agreement to
modify the Note and reduce the prepayment fee. (Doc. # 5 at
2). Additionally, they argue that LMP Ninth Street cannot
proceed on a promissory estoppel theory in order to circumvent

5

the requirements of the statute of frauds. (Id.). The Court
addresses each issue in turn.
A.

Oral Agreement

“In

order

to

contract

under

Florida

properly

plead

law,

a

a

claim

plaintiff

for

breach

must

prove

of
the

existence of a valid contract, a breach of such contract, and
damages resulting from such breach.” Senter v. JPMorgan Chase
Bank, N.A., 810 F. Supp. 2d 1339, 1345 (S.D. Fla. 2011)(citing
Knowles v. C.I.T. Corp., 346 So. 2d 1042, 1043 (Fla. 1st DCA
1977)).

A

plaintiff

must

show

the

existence

of

a

valid

contract by alleging: “(1) an offer; (2) acceptance of the
offer; (3) consideration; and (4) sufficient consideration of
the essential terms of the agreement.” Id. (citing St. Joe
Corp. v. McIver, 875 So. 2d 375, 381 (Fla. 2004)).
U.S. Bank and KeyBank argue that LMP Ninth Street has
failed to show the existence of a writing, as required by the
Florida

statute

of

frauds

for

credit

agreements.

Under

Florida Statute Section 687.0304, “A debtor may not maintain
an action on a credit agreement unless the agreement is in
writing, expresses consideration, sets forth the relevant
terms and conditions, and is signed by the creditor and
debtor.” Fla. Stat. § 687.0304(2). Thus, Section 687.0304
“restricts the ability of the borrower to bring suit upon

6

oral

credit

additional

agreements”
element

of

and

“is

intended

certainty

and

to

provide

stability

in

an
a

transaction for both the lender and the borrower.” Collins v.
Citrus

Nat’l

Bank,

641

So.

2d

458,

459

(Fla.

5th

DCA

1994)(citations and internal quotation marks omitted). The
statute “protect[s] lenders from liability for actions or
statements a lender might make in the context of counseling
or negotiating with the borrower which the borrower construes
as

an

agreement,

the

subsequent

violation

of

which

is

actionable against the lender.” Dixon v. Countrywide Fin.
Corp., 664 F. Supp. 2d 1304, 1309 (S.D. Fla. 2009)(quoting
Brenowitz v. Cent. Nat’l Bank, 597 So. 2d 340, 342 (Fla. 2d
DCA 1992)).
“[G]enerally, an ‘agreement that is required by the
statute

of

frauds

to

be

in

writing

cannot

be

orally

modified.’” Locke v. Wells Fargo Home Mortg., No. 10-60286CIV, 2010 WL 4941456, at *3 (S.D. Fla. Nov. 30, 2010)(quoting
Wharfside at Boca Pointe, Inc. v. Superior Bank, 741 So. 2d
542, 545 (Fla. 4th DCA 1999)). An oral agreement to modify a
loan does qualify as a credit agreement under Fla. Stat. §
687.0304. See Brake v. Wells Fargo Fin. Sys. Fla., Inc., No.
8:10-cv-338-T-33TGW, 2011 WL 6719215, at *8 (M.D. Fla. Dec.
5, 2011), report and recommendation adopted, No. 8:10-cv-338-

7

T-33TGW, 2011 WL 6412430 (M.D. Fla. Dec. 21, 2011)(“[C]ourts
have

held

that

claims

based

on

oral

promises

for

loan

modifications and loan refinancing are barred by the banking
statute of frauds.”).
The statute of frauds is an affirmative defense and
should be considered on a motion to dismiss only if the
inability to state a claim is obvious on the face of the
complaint. See LeFrere v. Ouezada, 582 F.3d 1260, 1263 (11th
Cir. 2009)(“If the complaint contains a claim that is facially
subject to an affirmative defense, that claim may be dismissed
under Rule 12(b)(6).”); Evans v. Parker, 440 So. 2d 640, 641
(Fla. 1st DCA 1983)(stating that the statute of frauds is an
affirmative defense “which cannot properly be raised by a
motion to dismiss unless the complaint affirmatively and
clearly shows the conclusive applicability of such defense to
bar the action”).
LMP Ninth Street asserts that the email between it and
Kyle Elliott is a writing that confirms the existence of the
agreement regarding the reduced prepayment fee, as well as
indicating

the

consideration

for

and

some

terms

of

the

agreement. (Doc. # 31 at 7). LMP Ninth Street is correct that
a

writing

need

not

be

a

formal

contract

to

meet

the

requirements of Section 687.0304(2). See Collins, 641 So. 2d

8

at 459 (“We agree with Collins that the letter [from the Bank
president

to

Collins]

is

sufficient

to

satisfy

the

requirements of the statute that there be a writing, that it
expresses consideration, and that it set forth the relevant
terms and conditions.”).
Signed emails may meet the writing requirement of the
statute of frauds. U.S. Distribs., Inc. v. Block, No. 0921635-CIV,

2009

WL

3295099,

at

*5

(S.D.

Fla.

Oct.

13,

2009)(“The Court finds that the e-mails, several of which are
signed by the Defendant and the Plaintiff’s alleged agents,
attached to the complaint meet the writing requirement of the
statute of frauds.”). Furthermore, “[c]ourts may aggregate
several writings (at least one of which is signed by the party
to be charged) to make out the terms of the whole contract.”
Id. (citing Kolski v. Kolski, 731 So. 2d 169, 171 (Fla. 3d
DCA 1999)).
While the email presented by LMP Ninth Street does not
include LMP Ninth Street’s signature and may not establish
the terms of the agreement sufficiently to satisfy the statute
of frauds, the Complaint does not state that this email is
the

only

writing

embodying

the

agreement

to

reduce

the

prepayment fee. Rather, the Complaint states that LMP Ninth
Street

“negotiated”

with

U.S.

9

Bank

and

alludes

to

“discussions”

with

a

representative

of

KeyBank,

without

indicating the form these communications took. (Doc. # 2 at
¶¶ 8-9). There is nothing on the face of the Complaint to
indicate that no other writings exist regarding the alleged
agreement to reduce the prepayment fee or that, if multiple
writings exist, they would be insufficient to form a valid
contract in the aggregate.
Nor is LMP Ninth Street obligated to attach all writings
comprising the alleged agreement to its Complaint. See Curi
v. Pershing LLC, No. 12-20566-CIV, 2012 WL 3042998, at *3
(S.D. Fla. July 25, 2012)(“[A] Plaintiff is not required to
attach a contract to its complaint in order to state a breach
of contract claim.”); Gulf Coast Produce, Inc. v. Am. Growers,
Inc., No. 07-80633-CIV, 2008 WL 660100, at *2 (S.D. Fla. Mar.
7, 2008)(“[W]hen alleging a breach of contract, a plaintiff
is

not

required

to

attach

the

subject

contract

to

the

prove

the

complaint in order to state a claim.”).
While

LMP

Ninth

Street

ultimately

must

existence of a valid agreement to modify the prepayment fee
to prevail on its claim, the Complaint sufficiently states a
claim to survive the motion to dismiss stage. See Gulf Coast
Produce, Inc., 2008 WL 660100, at *2 (“[I]n order to recover
on a claim for breach of contract the burden is upon the

10

claimant to prove by a preponderance of the evidence the
existence of a contract, a breach thereof and damages flowing
from the breach.” (quoting N. Am. Clearing, Inc. v. Brokerage
Comput. Sys., Inc., No. 07-cv-1503-Orl-19KRS, 2008 WL 341309,
at *2 (M.D. Fla. Feb. 5, 2008))).
B.

Promissory Estoppel

U.S. Bank and KeyBank next argue that LMP Ninth Street
cannot maintain its claim under a promissory estoppel theory
because allowing such a claim on the basis of an oral contract
in violation of the statute of frauds would undermine the
purpose of such statute. The Court disagrees.
Promissory estoppel is a qualified form of
equitable estoppel, based on “[a] promise which the
promisor should reasonably expect to induce action
or forbearance of a definite and substantial
character on the part of the promisee and which
does induce such action or forbearance . . . . [The
promise] is binding if injustice can be avoided
only by enforcement of the promise.”
Coral Way Props., Ltd. v. Roses, 565 So. 2d 372, 374 (Fla.
3rd DCA 1990)(internal quotations and citations omitted).
However,

“Florida

courts

consistently

hold

that

the

statute of frauds also serves to bar any claims that are
‘premised on the same conduct and representations that were
insufficient to form a contract and are merely derivative of
the unsuccessful contract claim.’” Dixon, 664 F. Supp. 2d at

11

1309 (citing Bankers Trust, 960 So. 2d at 778). Thus, the
theory of promissory estoppel should not be applied to avoid
the statute of frauds defense, the purpose of which is “to
intercept the frequency and success of actions based on
nothing more than loose verbal statements or mere innuendos.”
Tanenbaum v. Biscayne Osteopathic Hosp., Inc., 190 So. 2d
777, 779 (Fla. 1966)(quotation omitted); see also Coral Way
Props.,

Ltd.,

promissory

565

estoppel

So.
as

2d
a

at

374

judicial

(declining

“to

counteraction

adopt
to

the

legislatively created statute of frauds”).
As the statute of frauds defense is not apparent on the
face of the Complaint, the Court holds that the promissory
estoppel claim is premised on conduct sufficient to state a
breach of contract claim. Thus, LMP Ninth Street has stated
a promissory estoppel claim that may survive the motion to
dismiss stage because it is not derived from an unsuccessful
breach of contract claim.
IV.

Conclusion
The Court finds that LMP Ninth Street has sufficiently

stated a claim for breach of contract and promissory estoppel.
The applicability of the statute of frauds defense is not
apparent on the face of the Complaint and, thus, U.S. Bank
and KeyBank’s Motion to Dismiss is denied.

12

Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Defendants U.S. Bank National Association and KeyBank
National Association’s Motion to Dismiss (Doc. # 5) is DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this
28th day of November, 2016.

13