HANCOCK BANK v. BOYD BROTHERS INC et al

Filing 29

ORDER granting 20 Motion to Dismiss for Failure to State a Claim. 1. The Motion to Dismiss 20 is GRANTED. 2. Boyd Brothers' Counterclaim is dismissed with prejudice. Signed by JUDGE RICHARD SMOAK on 6/9/2011. (jcw)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF FLORIDA
PANAMA CITY DIVISION
HANCOCK BANK, a Mississippi
banking corporation,
Plaintiff/ Counter-defendant
vs.

CASE NO. 5:11-cv-95 /RS-GRJ

BOYD BROTHERS, INC., a Florida
corporation, et al.,
Defendants/ Counterclaimants
_________________________________________/
ORDER
Before me are Hancock Bank’s Motion to Dismiss Counterclaim with Prejudice
(Doc. 20) and the Counterclaimants (“Boyd Brothers”) response in Opposition (Doc. 25).
Standard of Review
To survive a motion to dismiss, a complaint must contain sufficient facts, which
accepted as true, state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 129
S. Ct. 1937, 1949 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 569, 127 S. Ct.
1955, 1974 (2007). Granting a motion to dismiss is appropriate if it is clear that no relief
could be granted under any set of facts that could be proven consistent with the
allegations of the complaint. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct.
2229, 2232 (1984). In making this determination, the court must accept all factual
allegations in the complaint as true and in the light most favorable to Plaintiff.
Christopher v. Harbury, 536 U.S. 403, 406, 122 S. Ct. 2179, 2182 (2003).

Analysis
The essence of the counterclaim is that Hancock Bank fraudulently induced Boyd
Brothers to execute several promissory notes, including the one in dispute here. “In
reliance on Hancock’s representations that Hancock would renew the Promissory Note
and the Five Renewed Promissory Notes in March 2011 when they matured, [Boyd
Brothers] agreed to execute the Promissory Note, the Guarantee, the Five Renewed
Promissory Notes, the Amended Loan Agreement and the Amended Collateral
Agreement.” (Doc. 14, p. 15). Boyd Brothers further allege that “Hancock knew at
closing that Hancock never planned to renew” those promissory notes including the one
at issue here. Id. at 16. There is no allegation that any of these “misrepresentations”
were in writing.
Florida law provides that 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 the debtor.” FLA. STAT. §
687.0304. “Credit agreement means an agreement to lend or forbear repayment of
money, goods, or things in action, to otherwise extend credit, or to make any other
financial accommodation.” Id. (punctuation altered).
Boyd Brothers claim that the oral representations made by Hancock Bank are not a
“credit agreement” and thus fall outside of the statute. They argue that the oral
representations “would renew the loans after the March 31, 2011, maturity dates” and are
thus not an “agreement between debtor and creditor to extend credit.” (Doc. 25, p. 8-9).

Instead, the oral representations are “wholly independent of all credit agreements made
by the parties and [do] not alter or contradict any of the loan terms.” Id.
Boyd Brother’s interpretation is incorrect. The plain language of section
687.0304 makes clear that the term “credit agreement” includes a representation to renew
a loan. A loan renewal is a means to “forbear repayment.” Forbearance is the “act of
refraining from enforcing a right, obligation, or debt.” Black’s Law Dictionary 537
(Abridged 8th ed. 2005). By renewing a loan, the creditor agrees to make payments due
at a later date. The creditor refrains from enforcing their right to collect debt on a certain
date and agrees to a right to collect on a future date. Further, section 687.0304 provides
that “credit agreements” include “mak[ing] any other financial accommodation.”
Certainly, this expansive definition includes any purported oral representations to renew
loans. Based on the plain language of the statute, Boyd Brothers cannot maintain an
action based upon Hancock Bank’s oral representations and its fraud claim fails.
Boyd Brothers’ remaining claims for breach of the covenant of good faith and fair
dealing and for negligent misrepresentation fail because the oral representations are
unenforceable. That is, the breach of an unenforceable agreement is not actionable and
negligence cannot be established because “a party cannot rely to his detriment on an
unenforceable promise.” Bankers Trust Co. v. Basciano, 960 So. 2d 773, 778 (Fla. 5th
DCA 2007).

IT IS ORDERED:
1. The Motion to Dismiss (Doc. 20) is GRANTED.
2. Boyd Brothers’ Counterclaim is dismissed with prejudice.
ORDERED on June 9, 2011.
/S/ Richard Smoak
RICHARD SMOAK
UNITED STATES DISTRICT JUDGE