Uhlig v. Darby Bank & Trust Co. et al
Filing
77
ORDER granting 41 Motion for Summary Judgment; dismissing 47 Motion to exclude testimony; dismissing 50 Motion for Summary Judgment. Signed by Judge B. Avant Edenfield on 10/4/13. (bcw)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
THOMAS UHLIG,
Plaintiff,
4:1 1-cv-145
V.
DRAYPROP, LLC; DRAYPARK, LLC;
MICHAEL BROWN; REUBEN CROLL;
and MARLEY MANAGEMENT, INC.,
Defendants.
ORDER
I.
INTRODUCTION
Thomas Uhlig made a bad bet and lost.
But for Defendants' fraud, negligence, and
misrepresentations related to asbestos
abatement and construction timetables,
Uhlig says he never would have made the
bet. ECF No. 1-2 at 6-8. Defendants deny
all Uhlig's allegations, arguing they fail as a
matter of law. ECF No. 42. Defendants
also move for summary judgment as to any
damages they may be liable for, ECF No.
45, and to exclude the testimony of Steve
Adams, an expert Uhlig wishes to present.
ECF No. 48. Because the Court agrees with
Defendants that no genuine disputes of fact
exist as to liability, the Court GRANTS
Defendants' motion for summary judgment.
Defendants remaining motions regarding
damages and Uhlig's expert witness are
DISMISSED AS MOOT.
H. BACKGROUND
1951 saw the opening of a high-rise
condominium building in downtown
Savannah, Georgia named Drayton Tower.
ECF No. 62 at 2. Fast forward fifty four
years and Defendant Drayprop, LLC became
the owner of Drayton Tower. Id. Draypark,
LLC owned and operated the tower's
parking lots. ECF No. 61 at 3.
Drayprop's ownership consisted, at least
in part, of two companies Reuben Croll
belonged to and one of Michael Brown's.
Id. at 3-4. Neither Croll nor Brown own
stakes in Drayprop in their individual
capacities. Id. Drayprop then hired Marley
Management ("Marley") to manage the
infrastructure renovations of Drayton
Tower. Id. at 2. And at some point,
Drayprop sold the fourth floor of Drayton
Tower to Restore Savannah, LLC. ECF
No. 40-1 at 8.
Enter Uhlig. Restore Savannah sold
Uhlig two apartments on the fourth floor for
$403,000. Id. at 135. The sales contract, to
which only Restore Savannah and Uhlig
were parties, stated that the "Property is
being sold 'as is'," and that Restore
Savannah had "no obligation to make repairs
to Property." Id. at 138. The contract also
made clear that no seller's property
disclosure statement would be provided. Id
at 142.
Prior to signing the contract, Uhlig
performed a walkthrough of the two
apartments, ECF No. 62 at 2, and had access
to (1) promotional materials composed by
Croll and Drayprop, id. at 3; (2) construction
plans, Id; and (3) historical materials about
Drayton Tower. Id. At no point prior to
purchase did any defendant speak to Uhlig
about asbestos in Drayton Tower and Uhlig
himself, despite knowing asbestos might be
1-2. In his amended complaint he asserts
claims for (1) negligent misrepresentation
2) breach of
against all defendants2
contract, against Croll, Brown, and
Drayprop; (3) negligence, against Croll,
Brown, and Marley; and (4) fraudulent
misrepresentation, against Croll, Brown, and
Drayprop. Id. at 7-8.
present, made no inquiries or conducted any
testing. ECF No. 624 at 6. Nor did any
defendant represent to Uhlig prior to his
purchase that renovations on Drayton Tower
would be completed by a particular date.
ECF No. 61 at 7-8. Only the construction
plans, by reference to a letter from Darby
Bank promising $1,500,000.00 in funds for
renovations, contained an estimate of when
renovation work would be complete. ECF
No. 40-1 at 153.
;
(
After this Order sets forth the standard
of review, the Court's discussion proceeds
in two parts. First, the Court evaluates the
claims against Croll and Brown. And
second, the Court evaluates the claims
against Drayprop and Marley.
That estimated deadline—March 1,
2006—came and went with much work on
Drayton Tower unfinished. ECF No. 62 at
5. The discovery and abatement of asbestos
further delayed renovations. Id. at 6. By the
time Uhlig finished renovation work on his
apartments and was ready to sell, the real
estate market had soured. Id. at 7. Unable
to sell, Uhlig decided to rent the apartments.
ECF No. 62-4 at 10. Unfortunately for
Uhlig, the rental income covered his
mortgage payment, but not other costs
associated with the apartments. Id He later
defaulted on his loan obligations as a result.
Id
III. STANDARD OF REVIEW
"Summary judgment is appropriate when
the record evidence, including depositions,
sworn declarations, and other materials,
shows 'that there is no genuine dispute as to
any material fact and the movant is entitled
to judgment as a matter of law." Feliciano
v. City of Miami Beach, 707 F.3d 1244,
1247 (11th Cir. 2013) (quoting Fed. R. Civ.
All evidence and factual
P. 56(a)).
inferences, however, must be viewed "in the
light most favorable to the non-moving
party," and "all reasonable doubts" resolved
in his favor. Id Nevertheless, should the
moving party meet its initial burden to point
out the absence of evidence supporting an
essential element on which the non-moving
party bears the burden of proof, the nonmoving party "must do more than simply
show that there is some metaphysical doubt
Frustrated with the pace of renovations
and what he felt were misrepresentations
about the presence of asbestos and need for
abatement, Uhlig filed this suit.' ECF No.
The winding procedural road that ends with the
motions now before the Court is somewhat long and
fraught with detours. Originally filed in state court,
then removed, then remanded, which remand Uhlig
successfully appealed, this case presents the Court
with a standard motion for summary judgment based
on state law claims. Although the parties are not
diverse, jurisdiction remains proper because at the
time of removal the FDIC was a party thus conferring
original jurisdiction over all claims in the case, even
those not involving the FDIC, and even after the
FDIC's dismissal from the case. See Lindley v.
, No. 12-12015, 2013 WL
FD!C, - F.3d
4269389, at *10(11th Cir. Aug. 16, 2013).
2
Although Uhlig's complaint alleges that Draypark
"failed to properly administrate Plaintiff's interest in
the parking facility," Uhlig has since abandoned all
claims against Draypark. See ECF No. 61 at 12.
2
Plaintiffs like Uhlig wishing to pierce
the LLC liability veil between a company
and a member must go a step further and
"show that the defendant disregarded the
separateness of legal entities by comingling
on an interchangeable or joint basis or
confusing the otherwise separate properties,
records or control." Christopher v. Sinyard,
313 Ga. App. 866, 867 (2012). Although
the issue of veil piercing is typically for the
jury to decide, summary judgment is
appropriate if "there is no evidence
sufficient to justify disregarding the
corporate form." Id.
as to the material facts." Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586 (1986); Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986).
IV. DISCUSSION
A. Croll and Brown
Uhlig asserts that Croll and Brown
misrepresented that (1) Drayprop would
complete renovations on Drayton Tower by
March 1, 2006; and (2) Drayton Tower "had
been tested and found to be asbestos free."
ECF No. 1-2 at 6. Uhlig also asserts that
Croll and Brown breached "the contracts
that existed between [Uhlig] and Defendants
Drayprop [and] Draypark." Id. at 7.
Much like Sisyphus, Uhlig fails, though
not because he couldn't push his rock to the
top of a hill. Instead, Uhlig presents no facts
that suggest Drayprop served as the alter ego
of Brown or Croll or that either man
disregarded the separateness of legal
entities. Id. To support his allegation that
Brown and Croll "did not treat Drayprop...
[as] a distinct legal entity separate from their
personal business," Uhlig says that Brown
and Croll (1) "were personally involved in
creating the[] marketing and construction
plan materials and having them passed along
to potential buyers, including [Uhlig];" (2)
created Drayprop "shortly before the
purchase of Drayton Tower;" and (3) used
other companies affliated with them to
guarantee Drayprop's business loan
agreement with Darby Bank. Id at 9-10.
Uhlig believes Brown misrepresented
that a "sewer line would be properly
provided to each floor" of Drayton Tower,
id at 6, and that Brown "was negligent in
the administration of the Drayton Tower
Croll, meanwhile,
renovations."
Id
allegedly was negligent in performing an
asbestos test and representing to Uhlig the
condition of the building. Id. at 7.
Uhlig's Sisyphean task is to show that
Brown and Croll acted as individuals, not as
members of Drayprop. Otherwise, liability
cannot attach to either man because "[a]
member of a limited liability company is not
a proper party to a proceeding. . . against a
limited liability company, solely by reason
of being a member of the limited liability
company." Yukon Partners, Inc. v. Lodge
Keeper Group, Inc., 258 Ga. App. 1, 6
(2002) (quoting O.C.G.A. § 14-11-11070)). 3
under Georgia law, the majority of parties are
Georgia residents, and neither federal constitutional
nor statutory law is to the contrary. Cf Horowitch v.
Diamond Aircraft Indus., Inc., 645 F.3d 1254, 1257
(11th Cir. 2011); Burger King Corp. v. E-Z Eating,
41 Corp., 572 F.3d 1306, 1313 n.9 (11th Cir. 2009).
Although not sitting in diversity jurisdiction, this
Court still must apply the law of the forum state—
here, Georgia—because the claims at issue arise
3
Marley and then Uhlig's misrepresentation
claims against Drayprop.
Even taken as true, the facts Uhlig
proffers do not demonstrate a genuine
dispute at to whether Brown and Croll acted
on behalf of themselves instead of
Drayprop. Of course employees and owners
of Drayprop would be involved in producing
marketing materials. If merely doing one's
job exposed employees of corporations and
LLCs to personal liability, the benefit of the
corporate form would be ephemeral at best.
1. Breach of Contract
"The elements for a breach of contract
claim in Georgia are the (1) breach and the
(2) resultant damages (3) to the party who
has the right to complain about the contract
being broken." Norton v. Budget Rent A
Car Sys. Inc., 307 Ga. App. 501, 502 (2010).
"A breach occurs if a contracting party.
fails to perform the engagement as specified
in the contract . . . ." U Work corn, Inc. v.
Paragon Techs., Inc., 321 Ga. App. 584, 590
(2013). In other words, to assert a claim for
breach of contract, the party against whom
the claim is brought must have been a party
to the contract. Id.
The timing of Drayprop's creation
shows only that Drayprop's founding
members intended it to purchase and own
Drayton Tower. And Brown and Croll's use
of other companies they own to guarantee
the business loan from Darby Bank to
Drayprop, absent additional, more sinister,
facts, demonstrates only sophistication in
structuring business transactions. Id. at 10.
A contract, however, must exist before
someone can breach it. At a minimum, valid
contracts have four essential elements: (1)
parties able to contract; (2) consideration;
(3) agreement by the parties to the terms of
the contract, the essence of which is a
meeting of the minds; and (4) a subject
matter on which the contract can operate.
O.C.G.A. § 13-3-1.
Even taken all together, the facts Uhlig
urges as supporting individual liability for
Croll and Brown do not suggest they
disregarded the corporate form, comingled
assets, or "actively took part in producing
tortious misrepresentations to [Uhlig]." Id.
at 8. At bottom, Uhlig simply fails to put
forth sufficient facts to sweep aside the
"great caution" courts must use when
disregarding the legal distinction between an
LLC and its members. Primary Invs., LLC
v. Wee Tender Care III, Inc., 746 S.E.2d
823, 827 n.5 (Ga. Ct. App. 2013). The
Court therefore DISMISSES all claims
against Brown and Croll.
Uhlig bases his breach claims "on the
promises contained in the sales pamphlet,
the Construction Plans, and the Darby Bank
letter of May 20, 2005." ECF No. 62 at 15.
Uhlig recognizes that the sales contract for
the two units he purchased "was between
[Uhlig] and Restore Savannah," but argues
that Drayprop and Marley nevertheless "had
substantial interests" in that sale taking
place. Id. The Court reviews each set of
documents—the pamphlet, the plans, the
bank letter, and the sales contract—to
B. Drayprop and Marley
This section discusses first the breach of
contract claims against Drayprop and
4
determine whether they, alone or in tandem,
establish a contract between Uhlig and
Drayprop or Marley. None of the
documents do.
do not create a contract between Drayprop
or Marley and Uhlig. Drayprop and Marley
simply never had any agreement with Uhlig
about renovations or anything else.
The sales pamphlet, although produced
by Drayprop, does not constitute a contract.
At best, it is an invitation to bargain. See
Georgian Co. v. Bloom, 108 S.E. 813, 814
(Ga. Ct. App. 1921) (holding that
advertisements generally are invitations to
bargain and not offers). The pamphlet's first
page reinforces that conclusion by
referencing the availability of "partial or
entire floors" for sale, and inviting interested
parties to call Mopper Stapen Realtors "[f]or
pricing, appointments and complete details
of the Drayton Tower." ECF No. 40-1 at 88.
The only possible contract here existed
between Uhlig and Restore Savannah, a
non-party to this litigation. See ECF No. 40I at 141. But because a non-party to a
contract cannot breach that contract, see
UWorkcom, Inc., 321 Ga. App. at 590,
Uhlig cannot assert a breach claim against
Drayprop or Marley based on the UhligRestore Savannah purchase agreement.
None of the documents Uhlig cites as
establishing a contract between him and
Drayprop or Marley do so. Uhlig's breach
of contract claims therefore fail as a matter
of law.
The construction plans, provided to
Uhlig by a real estate agent, also do not a
contract make because Drayprop and Marley
never agreed with Uhlig to the terms in the
plans. In fact, Drayprop and Marley never
met with Uhlig to discuss the plans, much
less come to agreement about them, prior to
Uhlig's purchase of the apartments. See
ECF 62-4 at 3 (Uhlig admitting that prior to
his purchase he never spoke with any of the
defendants). If the plans constitute part of a
contract, it is not one between Drayprop or
Marley and Uhlig.
1. Misrepresentation Claims
Uhlig asserts that Drayprop made
several misrepresentations, some
negligently, others with fraudulent intent.
See ECF No. 1-2 at 5-6, 8. Uhlig claims
Drayprop negligently represented that (I)
infrastructure renovations would be
completed by March 1, 2006; (2) window
frames would be polished; (3) the sewer line
would be properly provided to each floor;
and (4) Drayton Tower had been tested and
found free of asbestos. Id. at 6. Uhlig also
claims that Drayprop "engaged in a scheme
to misrepresent that Drayton Tower was free
from environmental hazards when in fact it
was not." Id. at 8. The Court first addresses
Uhlig's negligent misrepresentation claims.
The Darby Bank letter similarly cannot
constitute a contract between Drayprop or
Marley and Uhlig. Neither Drayprop nor
Marley ever came to an agreement with
Uhlig about the timeline for completion of
renovations in the letter, which Restore
Savannah and Mopper Stapen provided to
Uhlig. For the same reason, the pamphlet,
construction plans, and letter taken together
a. Negligent Misrepresentation
"The essential elements of negligent
misrepresentation are (1) the defendant's
5
negligent supply of false information to
foreseeable persons . . . (2) such persons'
reasonable reliance upon that false
information; and (3) economic injury
proximately resulting from such reliance."
Hendon Props., LLC v. Cinema Dev., LLC,
275 Ga. App. 434, 439 (2005) (emphasis
added). Although Uhlig makes the
conclusory allegation that Drayprop "knew
or should have known" its representations
"were false," he offers no facts, nor presents
any evidence, to support that assertion.
The failure of Uhlig's claims is best
highlighted by asking the question:
assuming falsity, why should Drayprop have
known its representations were false? After
examining the record, the Court cannot
begin to answer that question. The closest
Uhlig comes to an explanation is his
statement that the "extremely wide gap
between what was promised and what was
delivered strongly implies that [Drayprop]
knew, at the time the representations were
made, that at least some portion of the
promised work would not be performed by
the specified date." ECF No. 62 at 14.
But saying that does not make it so.
Uhlig goes to great lengths to show the
falsity of Drayprop's representations—
particularly the timeline for completion of
renovations—but it nevertheless remains the
case that Uhlig offers nothing more than
conclusory allegations to support his
assertion of negligent misrepresentation. In
fact, Uhlig admitted that none of the
information in the construction plans, sales
pamphlet, or the Drayton Tower historical
documents was "wrong," much less that
Drayprop should have known it was wrong.
ECF No. 62-4 at 5. Because Uhlig fails to
demonstrate that Drayprop should have
known its representations were false,
Uhlig's negligent misrepresentation claims
fail as a matter of law.
b. Fraudulent Mispresentation
Fraudulent misrepresentation has five
elements. Uhlig must show that (1)
Drayprop made false representations; (2)
Drayprop knew the representations were
false at the time they were made; (3)
Drayprop made the representations
intending to deceive Uhlig and induce him
to rely on the representations; (4) Uhlig
justifiably relied on the representations; and
(5) the representations resulted in damages
to Uhlig. See Grand Master Contracting.
L.L.C. v. Lincoln Apartment Mgmt. Ltd.
P'ship, 314 Ga. App. 449,451 (2012).
Uhlig fails to present any evidence on
multiple elements of a fraudulent
misrepresentation claim. First, he offers no
facts showing that Drayprop knew its
representations were false. He merely asks
the Court to infer that because so many
renovations remain unfinished Drayprop
must have known "that at least some portion
of the promised work would not be
performed by the specified date." ECF No.
62 at 14.
Second, Uhlig offers nothing to show
that Drayprop made any representation
intending to deceive Uhlig. And finally,
Uhlig fails to show justified reliance. As
with the knowledge element, Uhlig simply
offers no facts relevant to the justifiability of
his reliance on Drayprop's representations.
A failure on any of these elements would
submarine Uhlig's fraudulent
misrepresentation claim. A failure on three
elements torpedoes it beyond a shadow of a
doubt.
V. CONCLUSION
Uhlig's claims against Brown and Croll
fail because Uhlig cannot show that either
man acted as an individual, not on behalf of
one of a number of LLCs. Uhlig's claims
against Drayprop and Marley also fail, this
time because for each claim—breach of
contract, negligent misrepresentation, and
fraudulent misrepresentation—Uhlig lacks
any evidence supporting at least one
essential element.
Because all of Uhlig's claims fail as a
matter of law, the Court GRANTS
Defendants' motion for summary judgment.
Defendants' motion for summary judgment
as to damages and motion to exclude expert
testimony are DISMISSED AS MOOT.
The Clerk is DIRECTED to (1) terminate
ECF Nos. 41, 47, and 50, and (2) close this
case.
This
day of October 201 3
B.'AVANT EDENFIELD, JUDGE
UNITED STATES DISTRICT CO
SOUTHERN DISTRICT OF GEQI IA
7
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