Apex Bank v. Ameris Bank, Inc.

REPLY BRIEF re Second MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

N.D. Ga.February 21, 2017

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION APEX BANK (f/k/a Bank of Camden), Plaintiff, v. AMERIS BANK, Defendant. ) ) ) ) ) ) ) ) ) Civil Action No.: 1:16-cv-04019-MHC JURY TRIAL DEMANDED REPLY BRIEF IN SUPPORT OF DEFENDANT’S SECOND MOTION TO DISMISS S. Gardner Culpepper ROGERS & HARDIN LLP 2700 International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1601 404.522.4700 (telephone) 404.525.2224 (facsimile) Counsel for the Defendant Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 1 of 13 Table of Contents I. The Economic Loss Doctrine Bars Apex’s Fiduciary Duty Claims. .............. 1 II. This Court Should Exercise Its Discretion to Permit Ameris’s Second Motion to Dismiss. ........................................................................................... 4 i Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 2 of 13 Table of Authorities Cases Arriaga-Zacarias v. Lewis Taylor Farms, Inc., No. 7:08-cv-32(HL), 2008 WL 4544470 (M.D. Ga. Oct. 10, 2008) .................... 6 Carelogistics, LLC v. Catholic Health Partners, No. 1:13-CV-1929-WBH, 2014 WL 12543912 (N.D. Ga. July 30, 2014) ........4, 5 City of Cairo v. Hightower Consulting Eng’rs, Inc., 278 Ga. App. 721 (2006) ........................................................................................ 3 Gen. Elec. Co. v. Lowe’s Home Ctrs., Inc., 279 Ga. 77 (2005) ................................................................................................... 1 Georgia Operators Self-Insured Fund v. PMA Mgmt. Corp., Civil Action No. 1:12-CV-2578-ODE (Nov. 25, 2013) (ECF No. 107) ................ 1 Hanover Ins. Co. v. Hermosa Constr. Grp., LLC, 57 F. Supp. 3d 1389 (N.D. Ga. 2014) .................................................................... 3 Helpling v. Rheem Mfg. Co., No. 1:15-cv-2247-WSD, 2016 WL 1222264 (N.D. Ga. Mar. 23, 2016) ............... 3 Holloman v. D.R. Horton, Inc., 241 Ga. App. 141 (1999) ........................................................................................ 2 Home Depot U.S.A., Inc. v. Wabash Nat.’l Corp., 314 Ga. App. 360 (2012) ........................................................................................ 3 In re Atlas Roofing Corp. Chalet Shingle Prods. Liab. Litig., No. 1:13-CV-2195-TWT, 2014 WL 3360233 (N.D. Ga. July 9, 2014) ................ 2 Nam v. U.S. Xpress, Inc., No. 1:10-CV-3924-AT, 2011 WL 1136431 (N.D. Ga. Mar. 25, 2011) ................. 6 Russ v. Tift Cty. Hosp. Auth., No. 7:10-cv-31 (HL), 2010 WL 3951271 (M.D. Ga. Oct. 7, 2010) ...................... 6 ii Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 3 of 13 Walzer v. Muriel Siebert & Co., 447 F. App’x 377 (3d Cir. 2011) ............................................................................ 5 iii Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 4 of 13 Ameris respectfully submits this reply brief in support of its Second Motion to Dismiss the Complaint (the “Second Motion” or “Sec. Mot.”), and in response to Apex’s Brief in Opposition to the Second Motion (the “Opposition” or “Opp.”).1 I. THE ECONOMIC LOSS DOCTRINE BARS APEX’S FIDUCIARY DUTY CLAIMS. As Ameris explained in the Second Motion, the economic loss doctrine “provides that a contracting party who suffers purely economic losses must seek his remedy in contract and not in tort.” Gen. Elec. Co. v. Lowe’s Home Ctrs., Inc., 279 Ga. 77, 78 (2005). Moreover, fiduciary duty claims are barred by the economic loss doctrine if the alleged “fiduciary duty is derived exclusively from the [parties’] agreement.” See Order, at 15-21, Georgia Operators Self-Insured Fund v. PMA Mgmt. Corp., Civil Action No. 1:12-CV-2578-ODE (Nov. 25, 2013) (ECF No. 107) (relying on the economic loss doctrine to dismiss fiduciary duty claims), aff’d 631 F. App’x 730 (11th Cir. 2015). Here, neither the Complaint nor the Opposition identifies any non-contractual basis for the fiduciary duties Ameris allegedly owed to Apex. On the contrary, the Complaint alleges that Ameris owed fiduciary duties to Apex based only on the “prudent man” and “trustee” clauses in the LPA (Compl. ¶¶ 45-47). Thus, the economic loss rule is facially applicable to 1 Capitalized terms not otherwise defined herein shall have the meaning given to them in the Second Motion. 1 Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 5 of 13 Apex’s fiduciary duty claim, as Apex seemingly concedes. Apex, however, argues that the economic loss doctrine does not apply in this case because of the misrepresentation exception. (Opp., at 3-5.) Apex is wrong. The misrepresentation exception to the economic loss doctrine only applies to “misrepresentation claims; e.g., negligent or intentional misrepresentation”: The Plaintiffs argue that the economic loss rule is inapplicable because of the ‘misrepresentation exception.’ Under this exception, ‘[o]ne who, in the course of his business . . . supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.’ This exception, however, appears to only apply to misrepresentation claims; e.g., negligent or intentional misrepresentation. The Plaintiffs cite to no authority for their broad reading of this exception: that if a party alleges a misrepresentation, then any and all tort claims—even those for which ‘misrepresentation’ is not an element—survive the economic loss rule. Accordingly, the Plaintiffs . . . negligence and strict liability claims should be dismissed. In re Atlas Roofing Corp. Chalet Shingle Prods. Liab. Litig., No. 1:13-CV-2195- TWT, 2014 WL 3360233, at *4 (N.D. Ga. July 9, 2014) (emphasis in original) (quoting Holloman v. D.R. Horton, Inc., 241 Ga. App. 141, 148 (1999)). Here, Apex has not asserted any claims for misrepresentation or fraud. Accordingly, the misrepresentation exception to the economic loss doctrine simply does not apply and does not prevent the Court from dismissing Apex’s fiduciary 2 Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 6 of 13 duty claims. Indeed, the facts in this case are nearly identical to those in Hanover Ins. Co. v. Hermosa Constr. Grp., LLC, 57 F. Supp. 3d 1389 (N.D. Ga. 2014), where the court held that the misrepresentation exception to the economic loss doctrine only applied to plaintiff’s for “willful and wrongful conversion,” and did not apply to plaintiff’s claim for breach of fiduciary duty, which the court dismissed under the economic loss doctrine because plaintiff “has not identified—and the Court is unable to discern—any private duty breached by [defendant] which exists independently of the duties arising under” the parties’ contract. 57 F. Supp. 3d at 1396-98; see also Home Depot U.S.A., Inc. v. Wabash Nat.’l Corp., 314 Ga. App. 360, 366-67 (2012) (holding that only plaintiff’s claims for fraud and negligent misrepresentation fell within the misrepresentation exception and that “the trial court committed no error in concluding that . . . the economic loss rule barred [Plaintiff]’s tort claims (apart from its claims for fraud and negligent misrepresentation) as a matter of law.”).2 2 Moreover, the misrepresentation exception does not apply when, as here, the Plaintiff has not alleged reliance on inaccurate information supplied by the Defendant. See Helpling v. Rheem Mfg. Co., No. 1:15-cv-2247-WSD, 2016 WL 1222264, at *16 (N.D. Ga. Mar. 23, 2016) (citing City of Cairo v. Hightower Consulting Eng’rs, Inc., 278 Ga. App. 721, 729 (2006). 3 Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 7 of 13 II. THIS COURT SHOULD EXERCISE ITS DISCRETION TO PERMIT AMERIS’S SECOND MOTION TO DISMISS. Ameris acknowledges that the Second Motion is in technical violation of Rule 12(g). (Sec. Mot., at 2-3.) Nevertheless, Ameris respectfully requests that this Court consider the Second Motion because it would be more cost-effective and efficient for the Court to consider whether the economic loss doctrine bars Apex’s fiduciary duty claims at the pleadings stage and before discovery commences. Indeed, at this point, the economic loss issue (a purely legal one) has been fully and fairly briefed. And Apex does not identify any prejudice it will suffer if the Court considers this threshold issue at the pleadings stage. Moreover, it bears mention that in the First Motion, Ameris argued that the LPA did not give rise to a fiduciary duty as a matter of law. In the Second Motion, Ameris simply pointed out an additional reason – the economic loss doctrine – that this is so. While this argument is new, it is closely related to the original arguments and can easily and most logically be addressed now with no prejudice to Apex. Apex, however, argues that this Court should not consider the Second Motion because district courts in the Eleventh Circuit are “unanimous” in holding “that a second Rule 12(b) motion should not be permitted.” (Opp., at 2.) This is not entirely accurate. For example, in Carelogistics, LLC v. Catholic Health Partners, No. 1:13-CV-1929-WBH, 2014 WL 12543912 (N.D. Ga. July 30, 2014), 4 Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 8 of 13 Judge Hunt considered a second Rule 12(g) motion because “even if Defendants’ motion is brought in technical violation of Rule 12(g)(2), this Court would be inclined to relax the rule in this context” because “[s]imply stated, the objective of [Rule 12(g)(2)] is to eliminate unnecessary delay at the pleading stage, and a line of precedent exists in which district courts have been willing to overlook a 12(g) defect where doing so would better serve the purpose underlying subdivision (g).” 2014 WL 12543912, at *2 (quotations and citations omitted). Ameris respectfully submits that, just as in Carelogistics, this Court should exercise its discretion and permit the Second Motion because doing so would better serve Rule 12(g)’s purpose of avoiding unnecessary delay at the pleadings stage. Whether the economic loss doctrine bars Apex’s fiduciary duty claims is a threshold legal issue that, if not decided now, can be raised by Ameris in a motion for judgment on the pleadings after filing its Answer to the Complaint. (Opp., at 2.) And it would “serve[] no practical purpose” to proceed in that manner. Walzer v. Muriel Siebert & Co., 447 F. App’x 377, 384 (3d Cir. 2011). The Court must accept Apex’s factual allegations as true when deciding the Second Motion, and “[t]hus, it is as though defendant[] had filed [its] answer[] admitting those allegations and then filed [its] motion[] under Rule 12(c) rather than Rule 12(b)(6).” Id. 5 Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 9 of 13 Similarly, it would serve no purpose for the parties to conduct discovery while a motion for judgment on the pleadings is pending. See Russ v. Tift Cty. Hosp. Auth., No. 7:10-cv-31 (HL), 2010 WL 3951271, at *2 (M.D. Ga. Oct. 7, 2010) (“It seems that Plaintiffs believe that the resolution of the pending motion for judgment on the pleadings is somehow connected to whether the Plaintiffs have access to evidence to prove their claims. The plaintiffs are incorrect. A motion for judgment on the pleadings is decided on the pleadings alone.”). Indeed, if a ruling on the application of the economic loss doctrine is delayed until Ameris can file a motion for judgment on the pleadings, Ameris would request that discovery be stayed until the Court resolves that motion. See id. (staying discovery pending resolution of motion for judgment on the pleadings); see also Arriaga-Zacarias v. Lewis Taylor Farms, Inc., No. 7:08-cv-32(HL), 2008 WL 4544470, *2 (M.D. Ga. Oct. 10, 2008) (avoiding unnecessary costs can be a valid basis for a stay of discovery even over objection of a party asserting prejudice); Nam v. U.S. Xpress, Inc., No. 1:10-CV-3924-AT, 2011 WL 1136431, at *1 (N.D. Ga. Mar. 25, 2011) (granting a motion to stay discovery where a pending motion could “reduce the number of outstanding issues for discovery”). Accordingly, Ameris respectfully requests that, for the sake of efficiency, the Court consider the Second Motion, and decide whether the economic loss 6 Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 10 of 13 doctrine bars Apex’s fiduciary duty claims. Respectfully submitted this 21st day of February, 2017. /s/ S. Gardner Culpepper S. Gardner Culpepper Ga. Bar No. 201210 sculpepper@rh-law.com Counsel for the Defendant ROGERS & HARDIN LLP 2700 International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1601 404.522.4700 (telephone) 404.525.2224 (facsimile) 7 Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 11 of 13 CERTIFICATE OF COMPLIANCE I hereby certify that, pursuant to Local Rules 5.1C and 7.1D of the United States District Court for the Northern District of Georgia, the foregoing Reply Brief in Support of Defendant’s Second Motion to Dismiss complies with the font and point selections approved by the Court in Local Rule 5.1C. The foregoing pleading was prepared on a computer using 14-point Times New Roman font. /s/ S. Gardner Culpepper S. Gardner Culpepper Ga. Bar No. 201210 sculpepper@rh-law.com Counsel for the Defendant ROGERS & HARDIN LLP 2700 International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1601 404.522.4700 (telephone) 404.525.2224 (facsimile) Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 12 of 13 CERTIFICATE OF SERVICE I hereby certify that on February 21, 2017, I caused a copy of the foregoing Reply Brief in Support of Defendant’s Second Motion to Dismiss to be electronically filed with the Clerk of Court using the CM/ECF system which will automatically send e-mail notification to the following attorneys of record: John A. Locket, III jlockett@mmmlaw.com Hillary R. Kinsey hkinsey@mmmlaw.com Morris, Manning & Martin, LLP 1600 Atlanta Financial Center 3343 Peachtree Road NE Atlanta, GA 30326 /s/ S. Gardner Culpepper S. Gardner Culpepper Ga. Bar No. 201210 sculpepper@rh-law.com Counsel for the Defendant ROGERS & HARDIN LLP 2700 International Tower 229 Peachtree Street, N.E. Atlanta, GA 30303-1601 404.522.4700 (telephone) 404.525.2224 (facsimile) Case 1:16-cv-04019-MHC Document 21 Filed 02/21/17 Page 13 of 13