Filed: Mar. 04, 2011
Latest Update: Feb. 21, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1130 CBRE REALTY FINANCE TRS, LLC; RFC TRS, LLC, f/k/a CBRE Realty Finance TRS, LLC, Plaintiffs - Appellees, v. BRIAN A. MCCORMICK; CHARLES W. MOORE, Defendants - Appellants. Appeal from the United States District Court for the District of Maryland, at Baltimore. J. Frederick Motz, District Judge. (1:08-cv-01964-JFM) Submitted: December 15, 2010 Decided: March 4, 2011 Before SHEDD, DUNCAN, and WYNN, Circuit Judges. Affirmed
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 10-1130 CBRE REALTY FINANCE TRS, LLC; RFC TRS, LLC, f/k/a CBRE Realty Finance TRS, LLC, Plaintiffs - Appellees, v. BRIAN A. MCCORMICK; CHARLES W. MOORE, Defendants - Appellants. Appeal from the United States District Court for the District of Maryland, at Baltimore. J. Frederick Motz, District Judge. (1:08-cv-01964-JFM) Submitted: December 15, 2010 Decided: March 4, 2011 Before SHEDD, DUNCAN, and WYNN, Circuit Judges. Affirmed ..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-1130
CBRE REALTY FINANCE TRS, LLC; RFC TRS, LLC, f/k/a CBRE
Realty Finance TRS, LLC,
Plaintiffs - Appellees,
v.
BRIAN A. MCCORMICK; CHARLES W. MOORE,
Defendants - Appellants.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. J. Frederick Motz, District Judge.
(1:08-cv-01964-JFM)
Submitted: December 15, 2010 Decided: March 4, 2011
Before SHEDD, DUNCAN, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Ryan D. Sullivan, BODOFF & ASSOCIATES, Boston, Massachusetts,
for Appellants. Jennifer Quinn-Barabanov, George R. Calhoun, V,
Jeffrey M. Theodore, STEPTOE & JOHNSON, LLP, Washington, D.C.,
for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Brian McCormick and Charles W. Moore (herinafter
“McCormick & Moore”) appeal the district court’s order granting
summary judgment in favor of RFC TRS, LLC (formerly known as
CBRE Realty Finance, hereinafter “RFC”), finding McCormick &
Moore liable for $23,342,188.38 in damages, plus post-judgment
interest, and denying McCormick & Moore’s motions to extend
discovery and for further discovery. We affirm.
On appeal, McCormick & Moore raise myriad issues, but
their argument can be distilled into two claims of error: the
district court erred in granting summary judgment; and the
district court erred in denying their motion to extend discovery
and for further discovery. Importantly, with respect to summary
judgment, McCormick & Moore concede that they breached their
guaranties to RFC, and only argue that the district court erred
in its damages calculation.
I. Summary Judgment
This court reviews de novo a district court’s grant of
summary judgment. Howard v. Winter, 446 F.3d 559, 565
(4th Cir. 2006). Summary judgment is appropriate when the
“pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and the
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moving party is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(c). The parties do not dispute that Maryland
substantive law applies to this diversity action.
Maryland law employs an “objective approach to
contract interpretation, according to which, unless a contract's
language is ambiguous, [Maryland courts] give effect to that
language as written without concern for the subjective intent of
the parties at the time of formation.” Ocean Petroleum Co. v.
Yanek, 5 A.3d 683, 690 (Md. 2010) (internal citations omitted).
“Thus, the true test of what is meant is not what the parties to
the contract intended it to mean, but what a reasonable person
in the position of the parties would have thought it meant.”
Id.
a. Scope of the Guaranty
McCormick & Moore argue that the district court
improperly granted summary judgment in favor of RFC because
their breach was not the cause of the damages incurred by RFC.
Specifically, McCormick & Moore argue that they are not liable
for any expenditures made by RFC after their default. They
argue that the guaranties only make them liable for the harm
suffered by RFC if they failed to cause taxes to be timely paid,
not necessarily for the amount of the taxes themselves.
Similarly, McCormick & Moore claim that “while the failure to
substantially complete the project on time and on budget would
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perhaps tend to diminish the ability of RFC to be repaid its
debt, the harm, if any, to RFC cannot be understood without
evidence to demonstrate how much worse off RFC was” because of
the failure. RFC claims that this issue is waived, but after
reviewing the record, we conclude it was raised before the
district court in McCormick & Moore’s opposition to RFC’s motion
for summary judgment.
The flaw in McCormick & Moore’s argument is that once
they have conceded that they breached the agreement, the causal
chain to RFC’s alleged damages is quite clear. As the district
court noted, McCormick & Moore’s failure to complete
construction and pay property taxes caused liens to be placed on
each property. In order to protect its security interest in
those properties, RFC (whose interests were junior to other
lenders) had to remove the encumbrances caused by McCormick &
Moore’s breach. Under McCormick & Moore’s theory, it is unclear
what damages could ever be fairly traceable to the breach if not
those incurred by actions taken in direct response to a breach
of a guaranty to protect a security interest.
b. Duty to Mitigate
McCormick & Moore next argue that they are not liable
for certain damages because RFC had a duty to mitigate and did
not do so. They argue that RFC has not explained why it made
protective interest payments when the real estate market was in
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a state of disarray caused by an economic recession. Moreover,
they claim that they could not offer evidence in favor of its
mitigation claim because they were denied further discovery.
We conclude that McCormick & Moore’s argument on this
point is without merit. First, the burden of proving that
proposed damages are the result of economically wasteful
decisions “is on the party that breached the contract and that
invokes the doctrine” in an effort to limit the plaintiff’s
damages to market value. Andrulis v. Levin Constr. Corp., 628
A.2d 197, 208 (Md. 1993). We have reviewed the record and
conclude that McCormick & Moore have not carried their burden in
this regard. Even if they had been able to present more
evidence on this point, however, we agree with the district
court that the mitigation defense is, in this context, not
viable. See Restatement (Second) of Contracts § 347
(Illustration 10).
c. Assumption of Trade Payables
In their summary judgment motion, RFC claimed damages
for its assumption of trade payables when it sold, at a
discount, a property at issue in this dispute. It apparently
did not include these damages in response to McCormick & Moore’s
interrogatories. In the district court, McCormick & Moore
argued that those damages should be stricken as a sanction for
RFC’s failure to supplement their responses. We agree with the
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district court that striking the damages is not appropriate
here.
Fed. R. Civ. P. 37(c)(1) states that “If a party fails
to provide information or identify a witness as required by Rule
26(a) or (e), the party is not allowed to use that information
or witness to supply evidence on a motion, at a hearing, or at a
trial, unless the failure was substantially justified or is
harmless.” This court “gives particularly wide latitude to the
district court’s discretion to issue sanctions under Rule
37(c)(1).” S. States Rack & Fixture, Inc. v. Sherwin-Williams
Co., 318 F.3d 592, 595 (4th Cir. 2003). Citing to Roberts ex
rel. Johnson v. Galen of Va., Inc., 325, F.3d 776, 782
(6th Cir. 2003). McCormick & Moore argue that the burden is on
the party seeking to include the information in a later motion
to show harmlessness.
We have reviewed the record and conclude, after
reading RFC’s reply in support of their summary judgment motion,
that they have carried their burden. They correctly note that
McCormick & Moore can show no prejudice here, as they have
always been on notice about the nature of the damages sought.
Accordingly, we decline to conclude that the district court
abused its discretion in not striking the challenged damages.
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II. Discovery Motions
We review the district court’s handling of discovery
matters for an abuse of discretion. Wells v. Liddy, 186 F.3d
606, 618 n.12 (4th Cir. 1999). We will not reverse the denial
of a Fed. R. Civ. P. 56(f) motion absent a clear abuse of
discretion or a real possibility that the party was prejudiced
by the denial. Strag v. Bd. of Trs.,
55 F.3d 943, 954
(4th Cir. 1995).
a. Motion to Extend Discovery
Prior to the completion of discovery, McCormick &
Moore moved on an “emergency” basis for an extension of time to
complete discovery. The district court denied the motion,
noting that if, at the close of discovery, McCormick & Moore
required additional discovery, they could file a motion for
further discovery pursuant to Rule 56(f). Fed. R. Civ. P.
16(b)(4) allows for modification of a discovery schedule only
for good cause and with the court’s consent.
After reviewing the record, we conclude that the
district court did not abuse its discretion in requiring
McCormick & Moore to seek relief pursuant to Rule 56(f).
Discovery had not yet ended at the time the “emergency” motion
was made, and the court allowed McCormick & Moore to pursue
alternative avenues of relief if they thought, after a summary
judgment motion, that such relief was required. The court
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simply exercised its discretion to regulate the discovery
process, and we decline to disturb the court’s decision.
b. Rule 56(f) Motion
Finally, McCormick & Moore argue that the court abused
its discretion in denying their Rule 56(f) motion for further
discovery. According to Rule 56(f), if a party opposing a
motion for summary judgment shows by affidavit that, for
specified reasons, it cannot present facts essential to justify
its position, the court may: (1) deny the motion; (2) order a
continuance to enable affidavits to be obtained, depositions to
be taken, or other discovery to be undertaken; or (3) issue any
other just order. Fed. R. Civ. P. 56(f). We will affirm the
denial of a Rule 56(f) motion “where the additional evidence
sought for discovery would not have by itself created a genuine
issue of material fact sufficient to defeat summary judgment.”
Strag, 55 F.3d at 954. In their motion, McCormick & Moore argue
that RFC’s production was untimely, that they had no time to
test their theories of liability and a failure to mitigate
damages defense.
We have reviewed the record, and conclude that the
district court did not err in denying the Rule 56(f) motion.
First, the court properly noted that the materials that
McCormick & Moore sought in their Rule 56(f) motion could have
been sought during the discovery period. The basis for relief
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was clear on the face of the complaint, and McCormick & Moore do
not allege that they were surprised by anything in RFC’s
document production such as to require more discovery, after the
close of the discovery period.
Next, the court correctly found that McCormick & Moore
have not been diligent in pursuit of their discovery rights.
Even if, at the close of discovery, they lacked the information
they needed to defend against RFC’s claims, they certainly could
have pursued that discovery earlier in the proceedings. As the
court discussed, Rule 56(f) is not designed to protect “those
who slumber upon perceptible rights.” Ayala-Gerena v. Bristol
Myers-Squibb Co., 95 F.3d 86, 92 (1st Cir. 1996) (internal
citations omitted).
Finally, the court properly concluded that McCormick &
Moore’s claims were nonspecific, and to the extent they
articulate a defense that they could have developed with further
discovery, that defense is insufficient (as we noted above) as a
matter of law to defeat RFC’s claims.
Accordingly, we affirm the judgment of the district
court. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional
process.
AFFIRMED
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