Case: 13-12039   Date Filed: 10/21/2013   Page: 1 of 14


                                                         [DO NOT PUBLISH]


            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                             No. 13-12039
                         Non-Argument Calendar
                       ________________________

                D.C. Docket No. 8:12-cv-1124-JDW-TBM


SEAN BARBER, an Individual,
KRISTINA BARBER, an Individual,
                                                         Plaintiffs - Appellants,

LISA CANTRELL-BOLLWECK,
an Individual, et al.,                                  Plaintiffs,

                                  versus

AMERICA'S WHOLESALE LENDER,
a New York Corporation,
BANK OF AMERICA N.A.,
a National Banking Association,
JOHN DOES,
1-X,
ABC CORPORATIONS,
1-X,
XYZ PARTNERSHIPS,
1-X, et al,
                                                       Defendants – Appellees,

CENTRAL PACIFIC MORTGAGE COMPANY, etc., et al.,

                                                         Defendants.
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                            ________________________

                    Appeal from the United States District Court
                        for the Middle District of Florida
                          ________________________

                                  (October 21, 2013)

Before MARCUS, PRYOR and MARTIN, Circuit Judges.

PER CURIAM:

      Sean Barber and Kristina Barber (“the Barbers”) appeal the district court’s

dismissal of their complaint seeking rescission or reformation of their loan with

Defendant America’s Wholesale Lender (“AWL”). On appeal, the Barbers argue

that the district court erred when it found that their complaint (1) alleged no injury-

in-fact sufficient to establish standing and (2) otherwise failed to state a plausible

cause of action. After a careful review of the record, we affirm.

                                           I.

      This case began on May 18, 2012, when a group of individual borrowers,

including the Barbers, sued their lenders, seeking rescission or reformation of their

respective loans. The First Amended Complaint alleged that at the time the

borrowers got their loans, they expected they were entering into a “traditional

borrower-lender relationship.” According to the borrowers, this relationship

requires the presence of a lender with an economic interest in the loan and full

authority to amend the terms of the loan at all times.


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      The borrowers alleged that instead, their loans were securitized, which

destroyed this traditional borrower-lender relationship because their loans were

now being serviced by loan servicing companies instead of lenders. The borrowers

stated that loan servicing companies lack the same authority possessed by the

original lender to modify the terms of their loans. Beyond that, the borrowers also

alleged that loan servicing companies operate under different economic incentives

than lenders because loan servicing companies are paid to provide services rather

than maximize the total value of the loan. Given these facts, the borrowers alleged

that their loans were invalid under a theory of unilateral mistake and asked for the

district court to rescind their loans completely or to reform their loans to disallow

securitization.

      The district court severed and dismissed all of the claims except for the one

brought by the Barbers against AWL. On December 31, 2012, AWL moved to

dismiss this last claim. In its motion to dismiss, AWL attached the promissory

note and mortgage that the Barbers executed with AWL. In two separate places,

these documents advised the Barbers that the promissory note could be sold or

transferred to a third party. The first paragraph of the promissory note states:

      I understand that Lender may transfer this Note. Lender or anyone
      who takes this Note by transfer and who is entitled to receive
      payments under this Note is called the “Note Holder.”




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Similarly, paragraph 20 of the mortgage, titled “Sale of Note; Change of Loan

Servicer; Notice of Grievance” states:

      The Note or a partial interest in the Note (together with this Security
      Instrument) can be sold one or more times without prior notice to
      Borrower. A sale might result in a change in the entity (known as the
      “Loan Servicer”) that collects Periodic Payments due under the Note
      and this Security Instrument . . . .

The district court granted AWL’s motion and dismissed the complaint without

prejudice, giving the Barbers an opportunity to file a second amended complaint

within ten days. The Barbers did not file a second amended complaint, and this

appeal followed.

                                          II.

      The Barbers first contest the district court’s finding that the First Amended

Complaint failed to establish an actual or imminent injury sufficient to confer

standing. Specifically, they point to their First Amended Complaint, where they

alleged that they “would like to modify the terms of their Loan” but they “have

learned that they have no lender with whom to negotiate.” The Barbers argue that

these allegations are sufficient to establish standing.

      “We review issues of standing de novo.” Hollywood Mobile Estates Ltd. v.

Seminole Tribe of Fla., 

, 1264 (11th Cir. 2011). Standing has three

components, and we have held that it is the plaintiff’s burden to plead and prove

each of these components with a “fair degree of specificity.” Steele v. Nat’l


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Firearms Act Branch, 

, 1414 (11th Cir. 1985). First, the plaintiff

must show that he has suffered an “injury-in-fact.” Lujan v. Defenders of Wildlife,

, 560, 

, 2136 (1992). Second, the plaintiff must

demonstrate a causal connection between the asserted injury-in-fact and the

challenged action of the defendant. Id. Finally, the plaintiff must show that “the

injury will be redressed by a favorable decision.” Id. at 561, 112 S. Ct. at 2136

(quotation marks omitted). These requirements are the “irreducible minimum

required by the Constitution” for a plaintiff to proceed to federal court. Ne. Fla.

Chapter Assoc. Gen. Contractors of Am. v. City of Jacksonville, 

,

664, 

, 2302 (1993).

      The first requirement of standing—injury-in-fact—consists of an “invasion

of a legally protected interest which is (a) concrete and particularized, as opposed

to merely abstract, and (b) actual or imminent, not conjectural or hypothetical.”

Lujan, 504 U.S. at 560, 112 S. Ct. at 2136 (quotation marks and internal citations

omitted); see E.F. Hutton & Co. v. Hadley, 

, 984 (11th Cir. 1990)

(“Plaintiffs in the federal courts must have a personal stake in the outcome of the

case, and must allege some threatened or actual injury resulting from the putatively

illegal action. Abstract injury is not enough.”) (quotation marks and internal

citations omitted).




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      The district court properly granted AWL’s motion to dismiss because the

First Amended Complaint fails to allege any legally protected interest that has been

invaded by AWL. The plaintiffs cite to no authority suggesting that they have a

legally protected interest in negotiating with a lender rather than a loan servicing

company. Neither can they point to any legally protected interest in having a

lender who is inclined to agree to a modification. See Cox Cable Commc’ns, Inc.

v. United States, 

, 1182 (11th Cir. 1993) (“No legally cognizable

injury arises unless an interest is protected by statute or otherwise.”). In fact, the

plain language of the loan specifically contemplates that AWL could sell or

transfer the loan to any third party, not just to other lenders. Given that parties to a

contract are generally bound to its written terms, it is hard to see how the Barbers

suffered any particularized injury when AWL exercised a right explicitly granted

to it in the agreement. See Murphy v. Courtesy Ford, L.L.C., 

,

1134 (Fla. 3d DCA 2006) (“[A] party to a contract is not permitted to avoid the

consequences of a contract freely entered into simply because he or she elected not

to read and understand its terms before executing it or because in retrospect, the

bargain turns out to be disadvantageous.”) (quotation marks omitted).

      Even assuming the Barbers have a legally protected interest, the First

Amended Complaint does not show that this interest is actually or imminently

threatened. The Complaint states that the Barbers “have been and continue to be


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significantly harmed” because they would like to modify the terms of their loan. It

does not allege, however, that the Barbers have tried but failed to modify their

loan. Nor does it allege that the Barbers’s loan servicing company lacks the

authority to modify their loan. Rather, the Barbers merely speculate that their loan

servicing company will refuse to negotiate with them, relying on a document

published by Wells Fargo which states that loan servicing companies “typically”

do not have the power to make any alterations to the existing loan. Without any

allegations that their injuries are actual and imminent rather than conjectural and

hypothetical, the Barbers lack standing to bring this cause of action. See

Miccosukee Tribe of Indians of Fla. v. Fla. State Athletic Comm’n, 

,

1229 (11th Cir. 2000) (complaint failed to set forth a particularized injury because

it failed to allege how the defendant’s actions have burdened them or operated to

their detriment); Lujan, 504 U.S. at 564, 112 S. Ct. at 2138 (“Such ‘some day’

intentions—without any description of concrete plans, or indeed even any

specification of when the some day will be—do not support a finding of the ‘actual

or imminent’ injury that our cases require.”).

      The Barbers argue that it is reasonable to conclude from the Amended

Complaint that they have attempted and failed to modify their loan. This Court,

however, cannot “speculate concerning the existence of standing, nor should we

imagine or piece together an injury sufficient to give plaintiff standing when it has


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demonstrated none.” Miccosukee, 226 F.3d at 1229–30. It is the responsibility of

the plaintiff to clearly and specifically set forth facts sufficient to establish

standing. Whitmore v. Arkansas, 495 U.S. 149,155, 

, 1723 (1990).

“A federal court is powerless to create its own jurisdiction by embellishing

otherwise deficient allegations of standing.” Id. at 155–56, 110 S. Ct. at 1723.

Because the First Amended Complaint did not sufficiently allege that the Barbers

had suffered an injury-in-fact, we agree that the complaint should have been

dismissed without prejudice for lack of standing.


                                           III.

       Next, the Barbers argue that the district court improperly found that the

Amended Complaint lacked factual allegations sufficient to state a claim. The

Barbers argue that the First Amended Complaint alleged a facially plausible claim

for both rescission and reformation under a theory of unilateral mistake.

       We review de novo a district court’s grant of a motion to dismiss the

complaint for failure to state a claim. American Dental Ass’n v. Cigna Corp., 

, 1288 (11th Cir. 2010). This Court accepts the allegations of the

complaint as true and construes them in the light most favorable to the plaintiff.

Id.

                                            A.



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      Under Florida law, a plaintiff must adequately plead six facts in order to

state a cause of action for rescission of a contract:

      (1) [t]he character or relationship of the parties; (2) [t]he making of
      the contract; (3) [t]he existence of fraud, mutual mistake, false
      representations, impossibility of performance, or other ground for
      rescission or cancellation; (4) [t]hat the party seeking rescission has
      rescinded the contract and notified the other party to the contract of
      such rescission; (5) [i]f the moving party has received benefits from
      the contract, he should further allege an offer to restore these benefits
      to the party furnishing them, if restoration is possible; [and] (6)
      [l]astly, that the moving party has no adequate remedy at law.

Billian v. Mobil Corp., 

, 991 (Fla. 4th DCA 1998). The district

court properly dismissed the First Amended Complaint because the Barbers did not

allege all of these required facts.

      First, the Barbers failed to allege that they promptly rescinded the contract

and notified AWL of their rescission after discovering their mistake. See Rosique

v. Windley Cove, Ltd., 

, 1016 (Fla. 3d DCA 1989) (rescission

improper where testimony at trial revealed that plaintiff was aware of mistake but

elected to proceed on the contract); Rood Co. v. Bd. of Public Instruction of Dade

Cty., 

, 141 (Fla. 1958) (“[Plaintiff] must allege facts which show

that upon discovery of the mistake he, with reasonable promptness, denied the

contract as binding upon him and that thereafter he was consistent in his course of

disavowal of it.”).




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      The Barbers argue that there was no need to allege this fact because they

retained attorneys and filed a complaint against AWL. They provide no authority,

however, to support this argument, which fails logically, in any event. If the mere

filing of a complaint was sufficient to constitute reasonably prompt notice, this

requirement would be met every time a plaintiff filed suit, functionally eviscerating

the notice requirement. The better view of Florida law is that plaintiffs must

affirmatively allege in their complaint that they rejected the contract in a

“reasonably prompt fashion” after discovering a mistake. See Rosique, 542 So. 2d

at 1016. The First Amended Complaint fails because it does not allege this fact.

      Second, nowhere does the First Amended Complaint allege that the Barbers

offered to restore any benefits from the loan to AWL. See Mazzoni Farms, Inc. v.

E.I. DuPont de Nemours & Co., 

, 313 (Fla. 2000) (“A prerequisite

to rescission is placing the other party in status quo.”). The Barbers argue that this

allegation is not necessary because they are not required at the pleadings stage to

tender the proceeds of their loans back to AWL. But this is too simplistic a view.

Even though the Barbers may not be obligated to return the proceeds of their loan

back to AWL when they file suit, Florida law requires plaintiffs to plead that they

actually did or are willing to return the defendant to the status quo. See Bank of

N.Y. Mellon v. Reyes, ___ So. 3d ___, ___, 

 at *3 n.3 (Fla. 3d.

DCA March 20, 2013) (rescission not possible where there is no allegation that


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plaintiffs agreed to, or actually did, return the defendant to the status quo ante by

returning proceeds of loan and benefits received therefrom to the defendant bank).

Without any statement alleging that they are willing to return AWL back to the

status quo, the Barbers’ complaint fails to state a claim for rescission.

       Finally, the Barbers did not allege that they have no adequate remedy at law.

See Punie v. Achong, 

, 824 (Fla. 4th DCA 2000) (affirming directed

verdict for defendant where plaintiff failed to meet burden of pleading and proving

that she had no adequate remedy at law). Because the First Amended Complaint

fails to show why the Barbers’s injuries could not be remedied through an action at

law, their equitable action for rescission was properly dismissed. See Collier v.

Boney, 

, 972 (Fla. 1st DCA 1988) (“[A] fundamental requirement

necessary for rescission of a contract is that the moving party has no adequate

remedy at law. . . . [W]ith an adequate remedy at law available to appellee, the

grant of his prayer for rescission of the agreement in this case was improper

relief.”).

       Given that the Barbers failed to allege several key elements of a claim for

rescission in the First Amended Complaint, the district court properly dismissed

the complaint without prejudice and gave the Barbers an opportunity to cure the

defects by amending their complaint.

                                          B.


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      The Barbers similarly failed to plead a claim for reformation. To state a

cause of action for reformation under Florida law, the complaint must allege that a

contract fails to express the agreement of the parties as a result of (1) a mutual

mistake or (2) a unilateral mistake by one party coupled with the inequitable

conduct of the other party. Romo v. Amedex Ins. Co., 

, 649 (Fla.

3d. DCA 2006). “The rationale for reformation is that a court sitting in equity does

not alter the parties’ agreement, but allows the defective instrument to be corrected

to reflect the true terms of the agreement the parties actually reached.” Circle

Mortg. Corp. v. Kline, 

, 78 (Fla. 4th DCA 1994). As a result, a

unilateral mistake is generally not a basis for reformation. Kartzmark v.

Kartzmark, 

, 585 (Fla. 4th DCA 1998). A written contract will not

be reformed due to unilateral mistake unless there is clear and convincing proof of

fraud or inequitable conduct by the other side. Robinson v. Wright, 

, 589 (Fla. 3d. DCA 1982); see Nordberg v. Green, 

, 93 (Fla. 3d.

DCA 1994) (“If one’s mistake is due to his own negligence and lack of foresight

and there is absence of fraud or imposition, equity will not relieve him.”)

(parenthetically quoting Graham v. Clyde, 

, 657 (Fla. 1952)).

      Beyond that, allegations of mistake are subject to the heightened pleading

requirements of Federal Rule of Civil Procedure 9(b). This rule states that “[i]n

alleging fraud or mistake, a party must state with particularity the circumstances


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constituting fraud or mistake.” Fed. R. Civ. P. 9(b). In the fraud context, for

example, we have stated that:

      While Rule 9(b) does not abrogate the concept of notice pleading, it
      plainly requires a complaint to set forth (1) precisely what statements
      or omissions were made in which documents or oral representations;
      (2) the time and place of each such statement and the person
      responsible for making (or, in the case of omissions, not making)
      them; (3) the content of such statements and the manner in which they
      misled the plaintiff; and (4) what the defendant obtained as a
      consequence of the fraud.

FindWhat Investor Grp. v. FindWhat.com, 

, 1296 (11th Cir. 2011).

       The First Amended Complaint fails to meet the requirements of Rule 9(b)

because it does not allege with particularity the circumstances constituting the

Barbers’s alleged mistake. The Barbers do not precisely point to the time, place, or

person who made the statements or omissions that led to their mistake. Also

problematic is that because the First Amended Complaint originally asserted

claims against a number of lenders, the Barbers do not even have any specific

factual allegations relating to AWL’s conduct. See Brooks v. Blue Cross & Blue

Shield of Fla., Inc., 

, 1381 (11th Cir. 1997) (“[I]n a case involving

multiple defendants . . . the complaint should inform each defendant of the nature

of his alleged participation in the fraud.”) (quotation marks omitted); Am. United

Life Ins. Co. v. Martinez, 

, 1069 (11th Cir. 2007) (characterizing

complaint as an extreme example of a “shotgun pleading” because district court

had to “wade through a great deal of extraneous material that addressed fraud in
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the . . . industry as a whole”). Given the lack of specificity in the First Amended

Complaint, the district court properly dismissed the complaint without prejudice.

      Finally, the Barbers did not allege inequitable conduct on the part of AWL.

The Barbers argue that AWL made no efforts of any kind to educate the Barbers

that their loan would be securitized and serviced by a loan servicing company.

Again, however, the text of the agreement specifically contemplated that the loan

might be transferred or sold to a third party, including a “Loan Servicer.” Under

these circumstances, the Barbers cannot argue that their unilateral mistake was

caused or encouraged by AWL’s fraud or inequitable conduct. See Feldman v.

Kritch, 

, 277 (Fla. 4th DCA 2002) (no unilateral mistake where

plain meaning of the agreement was unambiguous and not subject to any other

construction or interpretation); Ayr v. Chance, 

, 1001 (Fla. 4th

DCA 1979) (“[C]lear and unambiguous terms of a release . . . may not be avoided

upon a claim of unilateral mistake.”).

                                         IV.

      Because we agree with the district court that the Barbers’ First Amended

Complaint (1) alleged no injury-in-fact sufficient to establish standing and (2)

failed to state a plausible cause of action for rescission or reformation, we affirm

the district court’s dismissal of the Barbers’ complaint without prejudice.

      AFFIRMED


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