Wheeler et al v. Carber et al

Filing 107

ORDER & REASONS that the 79 Motion for Partial Summary Judgment filed by Timothy Wheeler, Tracy Wheeler, and Wildcat Investors, LLC is GRANTED. FURTHER ORDERED that the 75 Motion to Dismiss filed by Timothy Wheeler, Tracy Wheeler, and Wildcat Investors, LLC is DENIED. Signed by Honorable Eldon E. Fallon on 8/15/12. (DNO)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA

TIMOTHY WHEELER, ET AL.

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VERSUS
BRANDY CARBER, ET AL.

CIVIL ACTION
NO. 08-34
JUDGE FALLON

ORDER & REASONS
Before the Court is a Motion to Dismiss (Rec. Doc. No. 75) and a Motion for Partial
Summary Judgment (Rec. Doc. No. 79), both filed by Timothy Wheeler, Tracy Wheeler, and
Wildcat Investors, LLC. The Court, having reviewed the submitted memoranda and the
applicable law and having heard oral arguments on the motions, is ready to rule. For the
following reasons, the Motion to Dismiss is denied, and the Motion for Partial Summary
Judgment is granted.
I.

BACKGROUND
This case arises out of a series of contracts to purchase and sell condominiums in

Baton Rouge, Louisiana, in 2007. Defendant Property Partners, Inc., d/b/a Re/Max ("Re/Max")
and one of its agents, Defendant Brandy Carber, facilitated two contracts between Plaintiffs, the
Wheelers and Wildcat Investors, LLC ("the Wheelers"), and two related entities, Juban Courts,
LLC ("Juban") and The Cottages at Blue Heron Lakes, LLC ("Cottages"), by which the
Wheelers would purchase twenty-four condominiums from Juban and Cottages. Although these
contracts fulfilled the Wheelers' objectives, they allege that the Defendants induced them to
purchase an additional thirty condominiums from Juban and Cottages by promising that the

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Wheelers would be able to "flip" the additional condominiums to a third party, Worldwide
International Investors, LLC ("Worldwide"). When Worldwide did not close on its deal to buy
the condominiums from the Wheelers, they were left unable to finance the purchase from Juban.
Juban initiated a breach of contract action against the Wheelers in another Middle District suit,
Juban Courts, LLC v. Wheeler, et al., now consolidated with this suit.
The Wheelers allege that Defendants Re/Max and Carber were negligent in that they
breached the standard of care for real estate agents by failing to fully investigate the viability and
credibility to WorldWide, inducing the Wheelers to undertake risks inconsistent with their stated
investment objectives, and failing to include appropriate contingencies in the purchase
agreements with Juban. Furthermore, the Wheelers allege that Defendants breached duties of
care, loyalty, and good faith, which constitute a breach of the contractual obligations to the
Wheelers. Finally, the Wheelers allege that they are entitled to indemnification from Defendants
in the suit filed against them by Juban.
Defendant Re/Max has answered and denied liability. Defendant Re/Max further
asserts that Defendant Brandy Carber was the only individual with whom the Wheelers dealt
regarding the condominium sales, and that, because she is an independent contractor, they are
not liable for her actions. Ms. Carber has also answered and denied liability. Since filing her
answer, Ms. Carber has filed a bankruptcy petition and has therefore been excused from this suit.
II.

PENDING MOTIONS
The Wheelers have now filed two motions. The main contentions are summarized

below.
A. Motion for Partial Summary Judgment, filed by Timothy Wheeler, Tracy Wheeler, and

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Wildcat Investors, LLC (Rec. Doc. No. 79)
The Wheelers have filed a Motion for Partial Summary Judgment against Juban. The
Wheelers argue that eight of the twenty-six agreements at issue, signed on February 9, 2007, are
unenforceable. The Wheelers argue that these eight contracts suffer from the same defect that
caused the Court to find six contracts unenforceable on March 27, 2012.1 By the same reasoning
the Court used in that Order and Reasons, the Wheelers assert, the Court should hold these eight
contracts unenforceable as well. Echoing their previous argument for partial summary judgment,
the Wheelers assert that the signature pages of the eight contracts are photocopies attached to
purchase agreements that detail the eight different condominium units to be purchased. As a
result, he Wheelers contend, the contracts should be found unenforceable.
Juban has filed an opposition to the Wheelers's motion in which it argues that there
remain disputed factual issues concerning the eight purchase agreements. Juban offers two
arguments substantially similar to those it made in response to the Wheelers’s previous Motion
for Partial Summary Judgment. First, Juban contends that the contracts are enforceable because
both offer and acceptance were present. Juban argues that the Wheelers made a valid offer.
According to Juban, Dr. Wheeler revealed in his deposition testimony that he did not care how
many units he was going to purchase, and that the Wheelers relied on their real estate agent,
Brandy Carber, to select the units to be purchased before she faxed the signed contracts back to
Juban. Juban asserts that the unit details were added after signature not by Juban's

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The Wheelers explain that they failed to bring these eight contracts to the Court’s
attention in the previous Motion for Partial Summary Judgment because Defendant Re/Max only
produced color copies of the February 9, 2007, agreements after the Court’s ruling on the
Motion. It is these color copies, the Wheelers contend, that are the evidence that supports this
Motion.
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representative, but by the Wheelers' representative. As a result, Juban argues, it is irrelevant that
the units were not specified at the time Dr. Wheeler signed the contracts on behalf of the
Wheelers. In the alternative, Juban argues that even if the Court finds that the Wheelers’ offer
was not valid, the contracts are still enforceable because Juban’s execution of the fully
completed contracts constituted a counter-offer that was accepted by the Wheelers. Citing
Louisiana Civil Code article 1837, Juban argues that this Court should find an enforceable
contract created by the agreement, signed by Juban, and the Wheelers’ “outward manifestation of
assent.” Juban argues that two pieces of evidence show the Wheelers’ intent to bind itself to the
contracts: (1) Dr. Wheeler's attempt to cancel the purchase agreements after signing them, and
(2) Dr. Wheeler's attempt to procure financing even after notice that the cancellation was
rejected by Juban.
B. Motion to Dismiss, filed by Timothy Wheeler, Tracy Wheeler, and Wildcat Investors,
LLC (Rec. Doc. No. 75)
The Wheelers have also filed a Motion to Dismiss all detrimental reliance claims
filed by Juban. The Wheelers contend that Juban has attempted to refashion its breach of contract
claims, including those subject to the Court’s summary judgment order on March 27, 2007, as
detrimental reliance claims. According to the Wheelers, because Louisiana requires that
contracts for immovable property be in writing, Juban’s reliance on the agreements was
unreasonable as a matter of law. Therefore, the Wheelers argue, Juban has not presented a
plausible claim for detrimental reliance.
Juban has filed an opposition to this motion. Juban argues that its claims should not
be dismissed because detrimental reliance does not require a formal, valid, and enforceable

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contract. Juban asserts that, although some of the relevant contracts have been held
unenforceable since the litigation began, at the time the contracts were signed, Juban believed
that it had a written contract for property purchase. Accordingly, Juban argues that its reliance on
the agreements was reasonable, and that it has presented plausible detrimental reliance claims.
III.

LAW & ANALYSIS

A. Motion for Partial Summary Judgment, filed by Timothy Wheeler, Tracy Wheeler, and
Wildcat Investors, LLC (Rec. Doc. No. 79)
1. Standard of Review
A district court can grant a motion for summary judgment only when the “the
movant shows that there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed.R.Civ.P. 56(a). When considering a motion for summary
judgment, the district court “will review the facts drawing all inferences most favorable to the
party opposing the motion.” Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th
Cir.1986). The court must find “[a] factual dispute [to be] ‘genuine’ if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party [and a] fact [to be] ‘material’ if it
might affect the outcome of the suit under the governing substantive law.” Beck v. Somerset
Techs., Inc., 882 F.2d 993, 996 (5th Cir.1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).
“If the moving party meets the initial burden of showing that there is no genuine
issue of material fact, the burden shifts to the non-moving party to produce evidence or designate
specific facts showing the existence of a genuine issue for trial.” Engstrom v. First Nat'l Bank of
Eagle Lake, 47 F.3d 1459, 1462 (5th Cir.1995) (citing Fed.R.Civ.P. 56(e); Celotex Corp. v.

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Catrett, 477 U.S. 317, 322–24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The mere argued
existence of a factual dispute will not defeat an otherwise properly supported motion. See
Anderson, 477 U.S. at 248. “If the evidence is merely colorable, or is not significantly
probative,” summary judgment is appropriate. Id. at 249–50 (internal citations omitted).
2. Analysis
W&W has moved for summary judgment on the issue of the enforceability of the
eight contracts signed on February 9, 2007. Both parties offer the same arguments presented
regarding the enforceability of the six contracts signed on March 28, 2007. The Court held that
those contracts were unenforceable in its Order and Reasons dated March 27, 2012.
Regarding the instant motion, the only possible difference between the contracts
signed February 9, 2007 and the contracts signed March 28, 2007, is that it is unclear whether
the February contracts are eight photocopies of one signed original purchase agreement, or eight
signed original purchase agreements. In either case, the agreements were blank with respect to
the information necessary -- namely, the specific condominiums and the prices to be paid -- for
valid contracts to purchase real property. Therefore, the potential difference between the
February 9, 2007, and the March 28, 2007, contracts does not affect the Court's analysis.
Accordingly, the Court holds that the eight contracts at issue in the instant motion are
unenforceable for the reasons articulated in its Order and Reasons dated March 27, 2012 (Rec.
Doc. No. 54).
B. Motion to Dismiss, filed by Timothy Wheeler, Tracy Wheeler, and Wildcat Investors,
LLC (Rec. Doc. No. 79)
1. Standard of Review

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In considering a motion to dismiss under Rule 12(b)(6), the Court accepts all
well-pleaded facts as true, viewing them in the light most favorable to the plaintiff. In re Katrina
Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). However, a pleading that offers
“labels and conclusions” or “a formulaic recitation of the elements of a cause of action will not
do.” Ashcroft v. Iqbal, 556 U.S. 662 (2009). Therefore, to survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that
is plausible on its face. Id. “The plausibility standard is not akin to a ‘probability requirement,’
but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “This
requirement holds true even for pro se litigants.” Roque v. Jazz Casino Co. LLC, 2010 WL
2930876, at *3 (5th Cir. July 22, 2010).
2. Analysis
Louisiana Civil Code article 1967 creates a claim for detrimental reliance. It states
that “[a] party may be obligated by a promise when he knew or should have known that the
promise would induce the other party to rely on it to his detriment and the other party was
reasonable in so relying.” La. Civ. Code art. 1967. The Louisiana Supreme Court has explained
that in order to prevail on a detrimental reliance claim, a claimant needs to establish (1) a
representation by conduct or word, (2) justifiable reliance, and (3) a change in position to one’s
detriment because of the reliance. See Suire v. Lafayette City-Parish Consolidated Gov’t, 907
So.2d 37, 59 (La. 2005).
In the instant case, the Wheelers argue that Juban has not satisfied the second
element of detrimental reliance. The Wheelers assert that Juban’s alleged reliance cannot, as a
matter of law, be reasonable, due to Louisiana’s requirement that contracts for property be in

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writing. According to the Wheelers, a detrimental reliance claim is trumped by the requirement
for a valid written contract, and because the Court has held that several of the contracts are
unenforceable, Juban cannot assert a detrimental reliance claim. The Wheelers contend that if the
Court allows Juban to assert detrimental reliance claims despite the lack of valid contracts, it will
create a legal loophole in which invalid contracts to purchase property can be upheld despite the
strict requirements set forth in the Louisiana Civil Code. See LA. CIV. CODE ANN. art. 1839
(1984) ("A transfer of immoveable property must be made by authentic act or by act under
private signature."); LA. CIV. CODE ANN. art. 1833 (1984) (explaining the requirements of an
authentic act, including a writing, two witnesses, and the presence of a notary public).
This reasoning, however, is not persuasive. The Court has held that fourteen of the
purchase agreements are unenforceable. At the time they were signed, however, no court had yet
found the contracts unenforceable. Viewing the facts in the light most favorable to the plaintiff,
it is plausible that Juban believed that the contracts were valid and enforceable when he incurred
costs as a result of his reliance on them.
Furthermore, allowing Juban's detrimental reliance claims will not resurrect the
unenforceable contracts. The Wheelers' argument in this respect ignores the language of Article
1967 itself. The provision creates a cause of action for detrimental reliance, and it also addresses
the potential relief: "Recovery may be limited to the expenses incurred or the damages suffered
as a result of the promisee's reliance on the promise." LA. CIV. CODE ANN. art. 1967 (1984). A
successful detrimental reliance claim need not result in specific performance; the Court may
instead award a plaintiff damages. The amount of damages may also be limited to those that a
plaintiff can prove, and an amount in excess of the contract price would be prevented by the

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"justifiable reliance" factor of the Suire test. As a result, the Court is not persuaded that allowing
Juban's detrimental reliance claims will result in the formal requirements for a contract for
immovable property being rendered moot.
The Louisiana Supreme Court has held that a successful detrimental reliance claim
does not require “proof of a formal, valid, and enforceable contract.” Id. Indeed, this conclusion
conforms to logic: if detrimental reliance could only apply to contracts that are valid and
enforceable, it would be duplicative of a breach of contract claim. Therefore, the Court does not
find that Juban’s reliance on the contracts was unreasonable because some of the agreements
have been found to be unenforceable.
The cases cited by the Wheelers, upon further inspection, are inapplicable to this
case. In John W. Stone Oil v. River Oaks Contractors & Developers, 986 So. 2d 103 (La. App. 5
Cir. May 27, 2008), the court rejected a plaintiff’s attempt to use Article 1967 to avoid the
writing requirement for a contract to purchase property. In this case, however, Juban relied not
on an oral promise to purchase property, but rather on written contracts that have since been
declared unenforceable. Similarly, in Bethea, Moustoukas and Weaver LLC v. St. Paul Guardian
Insurance Company, 376 F.3d 399, 403 (5th Cir. 2004), the Fifth Circuit held that a plaintiff’s
reliance on promises made outside of an unambiguous, fully-integrated agreement was
unreasonable as a matter of law. Juban, by contrast, is not claiming to have relied on oral
promises that would change or contradict the purchase agreements; Juban alleges reliance on the
contracts themselves.
Finally, the Wheelers cite Morris v. Friedman, 663 So. 2d 19 (La. 1995), for the
proposition that the positive legal requirement of a written contract must prevail over the

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equitable claim of detrimental reliance. Morris, 663 So.2d at 24-25. In this case, however, there
existed a written agreement between Juban and the Wheelers. Furthermore, the Wheelers neglect
to mention that the facts of Morris pre-dated the adoption of Article 1967, and the Louisiana
Supreme Court held that Article 1967 should not be applied retroactively. Id. at 24. Therefore,
the Morris opinion purposely ignores the codified detrimental reliance claim created by Article
1967. As a result, its holding is distinguishable from this case, in which the events occurred well
after the adoption of Article 1967.
Therefore, Juban’s reliance on the agreements was reasonable despite the fact that
the contracts have since been deemed unenforceable. As a result, Juban has alleged plausible
detrimental reliance claims regarding the twenty-six purchase agreements. Accordingly, the
Wheelers’ motion to dismiss is denied.
IV.

CONCLUSION
For the foregoing reasons,
IT IS ORDERED that the Motion for Partial Summary Judgment (Rec. Doc. No.

79), filed by Timothy Wheeler, Tracy Wheeler, and Wildcat Investors, LLC, is hereby
GRANTED.
IT IS FURTHER ORDERED that the Motion to Dismiss (Rec. Doc. No. 75), filed
by Timothy Wheeler, Tracy Wheeler, and Wildcat Investors, LLC, is hereby DENIED.
New Orleans, Louisiana, this 15th day of August, 2012.

_________________________________
UNITED STATES DISTRICT JUDGE

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