Whitney Bank v. Murphy

WHITNEY BANK, Plaintiff/Counterclaim Defendant,

v.DANIEL J. MURPHY, Defendant/Counterclaim Plaintiff/Third Party Plaintiff,

v.CECELIA PFEIFFER, Third Party Defendant.

CIVIL ACTION NO. 11-00614-KD-M

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

DONE and ORDERED: March 22, 2013

ORDER

This action is before the Court on the Motion for Summary Judgment (Doc. 49) and supporting brief and exhibits (Docs. 50 & 51) filed pursuant to Rule 56 of the Federal Rules of Civil Procedure by Plaintiff/Counterclaim Defendant Whitney Bank ("Whitney") and Third Party Defendant Cecelia Pfeiffer ("Pfeiffer"). Defendant/Counterclaim Plaintiff/Third Party Plaintiff Daniel J. Murphy ("Murphy") has filed a responding brief and supporting exhibits (Docs. 54-56) in opposition to the motion, and Whitney and Pfeiffer have filed a reply (Doc. 58) to Murphy's response, as well as a Motion to Strike (Doc. 57) regarding certain evidence submitted by Murphy. Murphy has filed a response (Doc. 60) to the Motion to Strike. Upon consideration of the evidence and arguments submitted, the Court finds that the Motion for Summary Judgment is due to be GRANTED.¹

I. Procedural History

On October 27, 2011, Whitney commenced this action by filing a Complaint (Doc. 1) alleging breach of contract by Murphy arising from his default on a Balloon Note and Mortgage executed by him in favor of Whitney. On February 23, 2012, Murphy filed an Answer denying breach, along with Counterclaims against Whitney and a Third Party Complaint against Pfeiffer (Doc. 6). In eight Counts, Murphy alleges the following causes of action against Whitney and Pfeiffer: negligence, wantonness, misrepresentation, suppression, fraudulent inducement, constructive fraud, civil conspiracy, and breach of covenant of good faith and fair dealing. Whitney and Pfeiffer denied liability on all of Murphy's clams. (Doc. 8). ² On January 10, 2013, Whitney and Pfeiffer filed the present motion (Doc. 49) requesting summary judgment in their respective favor on all claims, counterclaims, and third-party claims. The motion is now ripe for the Court's consideration.

II. Standard of Review

"The court shall grant summary judgment if 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). Rule 56(c) governs procedures and provides as follows:

(1) Supporting Factual Positions. A party asserting that a fact cannot be or is genuinely disputed must support the assertion by:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made forpurposes of the motion only), admissions, interrogatory answers, or other materials; or

(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

(2) Objection That a Fact Is Not Supported by Admissible Evidence. A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.

(3) Materials Not Cited. The court need consider only the cited materials, but it may consider other materials in the record.

(4) Affidavits or Declarations. An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.

Whitney and Pfeiffer, as the parties seeking summary judgment, bear the initial responsibility of informing the district court of the basis for their motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which they believe demonstrate the absence of a genuine issue of material fact. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The mere existence of a factual dispute will not automatically necessitate denial; rather, only factual disputes that are material preclude entry of summary judgment. Lofton v. Sec'y of Dep't of Children & Family Servs., 358 F.3d 804, 809 (11th Cir. 2004).

If the non-moving party fails to make a sufficient showing on an essential element of his case with respect to which he has the burden of proof, the moving parties are entitled to summary judgment. Celotex, 477 U.S. at 323. In reviewing whether the non-moving party has met his burden, the Court must stop short of weighing the evidence and makingcredibility determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor. Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 998-99 (11th Cir. 1992) (internal citations and quotations omitted).

III. Facts³

a. The Condominium Development

Sometime in 2005, Murphy learned of the planned construction of the Grander Condominium ("Grander") in Orange Beach, Alabama, from Marion Uter ("Uter") while the two were fishing. (Doc. 50-1 at 2, Murphy Depo., pp. 50-51). Uter invited Murphy to purchase a unit in the development. (Id., p. 51). On December 7, 2006, Murphy entered into a Purchase Agreement with UCO, LLC for the purchase of a condominium unit located at 4690 Grander Court, Orange Beach, Alabama ("Condo Unit"). (Id., at 7, p. 79; Doc. 50-2, Preconstruction Purchase & Escrow Agreement for the Grander). Murphy agreed to a purchase price of $650,000 for the Condo Unit (Doc. 50-2 at 2), as well as a separate price of $50,000 for a boat slip (Doc. 50-1 at 7, p. 78; Doc. 50-3, Boat Slip Purchase Agreement) and a $30,000 charge for an elevator upgrade (Doc. 50-1 at 7, p.78; Doc. 50-4, Addendum to Contract), for a total of $730,000. In entering into this agreement, Murphy relied primarily on the representations of Uter and Ross Easter ("Easter"), another person involved in the development. For example, Uter provided rough sketches of the plans for the project and a tour of the project site. The Grander was still being constructed when Murphy closed on theCondo Unit . (Doc. 50-1 at 3, 8, 11, pp. 53-55, 81-84, 93). Murphy was not shown any official condominium documents, blueprints, architectural drawings, etc., did not conduct his own appraisal, did not compare his purchase price to those of other Grander investors, and did not survey similar condominium developments in the area. (Id. at 8, 11, pp. 82-84, 93).

b. The Loan

Later that December, after executing the Purchase Agreement, Murphy was contacted by Pfeiffer, a loan originator with Whitney, about arranging a loan for the purchase of the Condo Unit.⁴ (Id. at 4, p. 57; Doc. 50-5 (Pfeiffer Depo.) at 2, 4, pp. 17-18, 58; Doc. 54-1 (Murphy Depo) at 18-19, pp. 71-73). Prior to entering into the loan agreement, Whitney obtained an appraisal of the Condo Unit from a certified appraiser, Donald Holyfield ("Holyfield"), who had performed many such appraisals for Whitney.⁵ (Doc. 50-5 at 2-3, pp. 20-22; Doc. 50-6 (Holyfield Appraisal Report); Doc. 51-1 (Holyfield Dec.) at 1, ¶¶ 2-3)). Based on his inspection of the property, training, and education, Holyfield concluded that the value of the Condo Unit was $850,000 as of December 18, 2006. (Doc. 51-1 at 1, ¶ 4). Holyfield reached this value opinion independently; neither Whitney nor Pfeiffer asked or colluded with him to misrepresent the value or deviate from his professional standards. (Id. at 2, ¶ 6).

Murphy received a copy of the appraisal report when the loan closing documents were sent to him and "just assumed it to be right." (Doc. 50-1 at 7, 9, pp. 77, 85-87). Pfeiffer "would assume" that Murphy requested a copy of the appraisal. (Doc. 54-4 at 33, pp. 129-30). Murphy received no other information from Whitney relating to the value of the Condo Unit. (Doc. 50-1 at 18, p. 144). On December 27, 2006, Murphy executed a Balloon Note in the amount of $620,000 in favor of Whitney for the purchase of the Condo Unit. (Id. at 4-5, pp. 57, 61; Doc. 51-4 (Balloon Note)). The Balloon Note was secured by a Mortgage executed the same day by Murphy, which granted Whitney a security interest in the Condo Unit. (Doc. 50-1 at 4, pp. 57-58; Doc. 51-5 (Mortgage)). Murphy ceased making payments pursuant to the terms of the Balloon Note and Mortgage (collectively, "the Loan Documents"), and Whitney accelerated the indebtedness. (Doc. 50-1 at 6, pp. 67-68; Doc. 51-8 (Buntin Dec.) at 3, ¶ 10). Whitney claims an outstanding balance on the Loan Documents in the amount of $654,150.78 as of January 10, 2013, consisting of a principal balance in the amount of $588,136.95, accrued interest in the amount of $65,079.42 ($116.82 per diem), accrued late fees in the amount of $634.41, and an appraisal fee in the amount of $300.00. (Doc. 51-8 at 3, ¶ 11). This amount does not include continuing interest or continuing costs and expenses. (Id.).

IV. Analysis

Before addressing the parties' substantive contentions, the Court must first decide what law governs the claims and counterclaims in this diversity action. "[A] federal court in a diversity case is required to apply the laws, including principles of conflict of laws, of the state in which the federal court sits." Manuel v. Convergys Corp., 430 F.3d 1132, 1139 (11thCir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). Alabama courts follow the traditional conflict-of-law principles of lex loci contractus and lex loci delicti. Lifestar Response of Ala., Inc. v. Admiral Ins. Co., 17 So. 3d 200, 213 (Ala. 2009). Accordingly, in Alabama, contract claims are governed by the laws of the state where the contract was made, unless the contracting parties chose a particular state's laws to govern their agreement, Cherry, Bekaert & Holland v. Brown,...