Filed: May 02, 2012
Latest Update: Mar. 26, 2017
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-1520 BLAKE R. VAN LEER, II, Plaintiff – Appellant, v. DEUTSCHE BANK SECURITIES, INCORPORATED, Defendant – Appellee. Appeal from the United States District Court for the District of Maryland, at Baltimore. James K. Bredar, District Judge. (1:10-cv-01076-JKB) Argued: March 21, 2012 Decided: May 2, 2012 Before DUNCAN, KEENAN, and DIAZ, Circuit Judges. Affirmed by unpublished opinion. Judge Diaz wrote the opinion, in which Judg
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 11-1520 BLAKE R. VAN LEER, II, Plaintiff – Appellant, v. DEUTSCHE BANK SECURITIES, INCORPORATED, Defendant – Appellee. Appeal from the United States District Court for the District of Maryland, at Baltimore. James K. Bredar, District Judge. (1:10-cv-01076-JKB) Argued: March 21, 2012 Decided: May 2, 2012 Before DUNCAN, KEENAN, and DIAZ, Circuit Judges. Affirmed by unpublished opinion. Judge Diaz wrote the opinion, in which Judge..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1520
BLAKE R. VAN LEER, II,
Plaintiff – Appellant,
v.
DEUTSCHE BANK SECURITIES, INCORPORATED,
Defendant – Appellee.
Appeal from the United States District Court for the District of
Maryland, at Baltimore. James K. Bredar, District Judge.
(1:10-cv-01076-JKB)
Argued: March 21, 2012 Decided: May 2, 2012
Before DUNCAN, KEENAN, and DIAZ, Circuit Judges.
Affirmed by unpublished opinion. Judge Diaz wrote the opinion,
in which Judge Duncan and Judge Keenan joined.
ARGUED: Norman Lang Smith, Jeffrey Eric Nusinov, FISHER &
WINNER, Baltimore, Maryland, for Appellant. Sanford M.
Saunders, Jr., GREENBERG TRAURIG, LLP, Washington, D.C., for
Appellee. ON BRIEF: Laura Metcoff Klaus, GREENBERG TRAURIG,
LLP, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
DIAZ, Circuit Judge:
Blake R. Van Leer, II appeals the district court’s order
dismissing his action and denying him leave to amend his
complaint. Because Van Leer’s proposed amended complaint failed
to establish any plausible claims under Maryland law, 1 we
conclude that any amendment to his original complaint would have
been futile and the district court did not abuse its discretion
by denying him leave to amend. We accordingly affirm the
judgment of the district court.
I.
A.
We accept as true the facts alleged in Van Leer’s
complaint. See Aziz v. Alcolac, Inc., 658 F.3d 388, 390 (4th
Cir. 2011).
Van Leer worked in the waste-handling industry, developing
solid waste-disposal facilities in Maryland and Virginia and
then selling them to interested firms. One of these
developments, the King George County Landfill in Virginia,
flourished in the early 1990s. Van Leer ultimately sold the
rights to the landfill to Waste Management, Inc., which agreed
1
The parties agree that Maryland law governs adjudication
of this action.
2
to pay him royalties (“Royalty Stream”) totaling over $1.3
million per year for roughly forty years.
Not all of Van Leer’s projects rivaled the success of the
King George County Landfill. Indeed, a bad investment in his
next development caused him to default on several loan
agreements. As a result, Van Leer filed for chapter 11
bankruptcy in 1999. For the next eight years, he operated his
business as a debtor in possession and used proceeds from the
Royalty Stream to cover his expenses.
Seeking to convert the Royalty Stream into enough money to
emerge from bankruptcy, Van Leer in early 2007 decided to sell
the asset or pledge it as collateral for a loan. His broker
contacted Deutsche Bank Securities, Inc. (“Deutsche Bank”) to
gauge the firm’s interest in loaning Van Leer money secured by
the Royalty Stream or purchasing it outright. After making
progress in preliminary discussions, Van Leer and Deutsche Bank
executed a Confidentiality Agreement on April 17, 2007. Van
Leer agreed to provide Deutsche Bank “with certain written
material containing material non-public information relating to
the Transaction, the royalty payments, the waste disposal
facility and underlying transactions and participants” to permit
the firm “to evaluate the potential purchase of [the Royalty
Stream].” J.A. 17. Deutsche Bank, for its part, pledged to use
the confidential information “for the sole purpose of
3
determining [its] interest in participating in the Transaction.”
Id. The Confidentiality Agreement provided that, among other
categories, any information “that is or becomes publicly
available” or “is known by [Deutsche Bank] prior to its
disclosure by [Van Leer]” is not considered confidential
information and is therefore not subject to the terms of the
agreement. Id.
Discussions continued between the parties, culminating in a
May 14 letter from Deutsche Bank to Van Leer. Deutsche Bank
stated in the letter that, “based on [its] preliminary review of
information provided to [it] by [Van Leer], [its] understanding
of the Financing Transaction . . . and subject to satisfaction
of all conditions outlined below,” it was “interested” in
purchasing the Royalty Stream for approximately $23 million.
Id. 19. Deutsche Bank included a number of qualifications.
First, it provided that the letter did not constitute a binding
commitment and any subsequent binding commitment would be
memorialized in a separate written agreement. Second, Deutsche
Bank subjected any future commitment to five distinct
conditions, including the bank’s “completion of, and
satisfaction with the results of, [its] business, legal, tax,
financial, accounting, environmental and other due diligence.”
Id.
4
After sending the letter, Deutsche Bank ceased all
communication with Van Leer and did not respond to any of his
further inquiries. Over a month later, on June 26, the
Creditors’ Committee overseeing Van Leer’s bankruptcy announced
that it would auction the Royalty Stream. With no commitment
from Deutsche Bank, Van Leer was unable to complete a
transaction with a buyer to forestall the auction. Deutsche
Bank submitted the high bid of $16.9 million at the auction,
obtaining the rights to the Royalty Stream. The bankruptcy
court confirmed the sale and closed Van Leer’s bankruptcy
proceedings.
B.
Almost three years after the auction of the Royalty Stream,
Van Leer filed suit against Deutsche Bank. His original
complaint asserted five claims: breach of contract, negligence,
tortious interference with prospective business opportunity,
negligent misrepresentation, and fraud. The thrust of Van
Leer’s complaint was that Deutsche Bank shirked its obligations
to him by failing to seriously consider his application for a
loan or sale, leading him to believe that it was processing his
application in good faith, and using his confidential
information to purchase the Royalty Stream at auction for a
lower price than the parties had negotiated.
5
Deutsche Bank responded by moving to dismiss Van Leer’s
complaint. Finding that Van Leer’s complaint included nothing
more than conclusory allegations and baseless legal conclusions,
the district court granted Deutsche Bank’s motion and dismissed
the action.
Van Leer then filed a Rule 59(e) motion to alter or amend
the judgment, seeking leave to file an amended complaint. As
part of this motion, Van Leer attached a proposed amended
complaint further detailing his allegations and striking his
tortious-interference claim.
Van Leer alleged that Deutsche Bank breached its contract
with him by failing to “consider and process” his loan or sale
application in good faith and by neglecting to “conduct due
diligence in consideration” of the application. J.A. 199. Van
Leer stated that he relied on Deutsche Bank’s promise that it
would evaluate his application and refrained from pursuing
transactions with other parties. He further alleged that
Deutsche Bank “breached its contractual obligations by using the
[confidential] information that it received” from him for “its
own purchase from the bankruptcy auction.” Id. 200. Finally,
Van Leer claimed that Deutsche Bank breached the covenant of
good faith and fair dealing.
On the negligence count, Van Leer alleged that Deutsche
Bank, “as the holder of a public trust . . . , had a duty to
6
consider and process [his] . . . application in good faith and
with reasonable diligence” and “a duty not to compete with its
customer, and not to use its favored position to his detriment.”
Id. 201. It breached that duty, according to Van Leer, by
failing to process his application, using confidential
information for its own benefit in competition with him, and
failing to act “reasonably and honestly” in purchasing the
Royalty Stream. Id. Van Leer alleged that Deutsche Bank’s
actions prevented him from lining up another buyer.
Van Leer’s negligent-misrepresentation count included
similar claims. He alleged that Deutsche Bank owed him a duty
of care “to ensure that its representations were truthful
concerning its intention to consider and process [his] . . .
application in good faith and with reasonable diligence.” Id.
203. According to Van Leer, Deutsche Bank falsely stated that
it would consider his application, prompting him to justifiably
forgo pursuing other sale options.
On the final count, raising a fraud claim, Van Leer alleged
that Deutsche Bank falsely stated that it intended to act with
due diligence in processing his application when it knew that it
did not plan to conduct any review. Instead, claimed Van Leer,
Deutsche Bank “had already launched a plan to purchase the
Royalty Stream from the bankruptcy, depriving Van Leer of his
opportunity to sell the Royalty Stream himself.” Id. 205.
7
The district court denied Van Leer’s motion to alter or
amend the judgment. Discerning no error in its previous ruling,
it reiterated that dismissal of Van Leer’s original complaint
was appropriate. Turning to Van Leer’s request for leave to
amend his complaint, the court found that the proposed amended
complaint contained the same fatal deficiencies as the original
complaint. Van Leer’s proposed amended complaint, determined
the court, amounted to nothing more than further conclusory
allegations and unfounded speculation. The court therefore
denied leave to amend as futile.
Van Leer appeals only the district court’s denial of his
motion for leave to amend the complaint.
II.
We review the district court’s denial of leave to amend for
abuse of discretion. US Airline Pilots Ass’n v. Awappa, LLC,
615 F.3d 312, 320 (4th Cir. 2010). “[L]eave to amend should be
denied only when the amendment would be prejudicial to the
opposing party, there has been bad faith on the part of the
moving party, or amendment would be futile.” Matrix Capital
Mgmt. Fund, LP v. BearingPoint, Inc.,
576 F.3d 172, 193 (4th
Cir. 2009). We adjudge amendment futile when the proposed
amended complaint fails to state a claim. United States ex rel.
8
Wilson v. Kellogg Brown & Root, Inc.,
525 F.3d 370, 376 (4th
Cir. 2008).
To survive dismissal for failure to state a claim, a
plaintiff must establish “facial plausibility” by pleading
“factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). A
reviewing court must “ ‘take the facts in the light most
favorable to the plaintiff,’ ” but it need not accept legal
conclusions drawn from those facts or “ ‘unwarranted inferences,
unreasonable conclusions, or arguments.’ ” Giarratano v.
Johnson,
521 F.3d 298, 302 (4th Cir. 2008) (quoting E. Shore
Mkts., Inc. v. J.D. Assocs. Ltd. P’ship,
213 F.3d 175, 180 (4th
Cir. 2000)). Indeed, a plaintiff must do more than provide
labels and conclusions--“a formulaic recitation of the elements
of a cause of action will not do.” Bell Atlantic Corp. v.
Twombly,
550 U.S. 544, 555 (2007).
A plaintiff will not successfully resist dismissal if he
provides mere “naked assertions devoid of further factual
enhancement” or his allegations establish only “a sheer
possibility that a defendant has acted unlawfully.” Iqbal, 129
S. Ct. at 1949 (internal quotations and alteration omitted).
“Where a complaint pleads facts that are ‘merely consistent
with’ a defendant’s liability, it ‘stops short of the line
9
between possibility and plausibility of entitlement to relief.’ ”
Id. (quoting Twombly, 550 U.S. at 557). In the final analysis,
a plaintiff must “nudge[] [his] claims across the line from
conceivable to plausible.” Twombly, 550 U.S. at 570.
III.
Van Leer argues that the district court abused its
discretion by denying him leave to amend his complaint. He
maintains at the outset that the court applied an
inappropriately demanding standard when determining whether his
proposed amended complaint could survive dismissal. Turning to
the specifics of his allegations, Van Leer asserts that he has
included facts sufficient to establish four claims to relief
that are facially plausible.
We conclude that the district court did not abuse its
discretion on this issue. In contending otherwise, Van Leer
overlooks the significant changes to the dismissal landscape
wrought by Twombly and Iqbal. Applying those standards to Van
Leer’s proposed amended complaint, we find that he has failed to
“nudge[] [his] claims across the line from conceivable to
plausible,” Twombly, 550 U.S. at 570. 2
2
Deutsche Bank maintains that this court lacks jurisdiction
to adjudicate Van Leer’s action, which it characterizes as a
collateral attack on the bankruptcy court’s final order. In so
(Continued)
10
A.
Van Leer first alleges that Deutsche Bank breached its
contractual obligations to him by failing to consider his
application for a loan or sale, neglecting to perform due
diligence, and using his confidential information for its own
purposes. These allegations grossly overstate the nature of the
contractual relationship between the parties and otherwise rely
on conclusory claims, rendering dismissal appropriate.
Although Van Leer states that Deutsche Bank operated under
a contractual duty to consider his loan application in good
faith and conduct due diligence, he points to no provision
memorializing such an obligation. Nor could he. The
Confidentiality Agreement constitutes the sole binding contract
between Van Leer and Deutsche Bank. Under that agreement,
Deutsche Bank agreed only that it would use Van Leer’s
doing, Deutsche Bank misinterprets Van Leer’s claims. Van Leer
is not asking the district court to invalidate the sale of the
Royalty Stream. Rather, he is requesting money damages to
compensate him for the money that he allegedly lost when
Deutsche Bank elected not to buy the Royalty Stream directly
from him and instead purchased it for a lower price at auction.
We--and the district court--may properly resolve Van Leer’s
claims without interfering with the bankruptcy’s court’s long-
completed proceedings. Indeed, the bankruptcy court recognized
as much. Suggesting that “Van Leer ought to take his marbles
and go home,” J.A. 149, the court nevertheless recognized that
Van Leer could initiate a later proceeding to raise his claim
for damages stemming from the sale.
11
confidential information “for the sole purpose of determining
[its] interest in participating in the Transaction.” J.A. 17.
The document did not obligate Deutsche Bank to consider Van
Leer’s application or conduct due diligence. As Van Leer points
out, Deutsche Bank’s May 14 letter to him mentioned due
diligence. But it did not mandate that the firm conduct due
diligence or even consider Van Leer’s application, stating only
that any subsequent formal agreement was subject to the
completion of due diligence. And, in any event, Deutsche Bank
expressly indicated that the letter was not a binding
commitment, which comported with Maryland law on the subject.
See Paramount Brokers, Inc. v. Digital River, Inc., 126 F. Supp.
2d 939, 945 (D. Md. 2000) (reasoning that letter of intent
generally does not constitute a binding contract). Because no
contract between the parties demonstrates that Deutsche Bank
agreed to either review Van Leer’s application or conduct due
diligence, his allegations on this score are legally deficient.
Van Leer’s confidentiality allegation is, however, grounded
in the text of an operative agreement between the parties. He
alleges that Deutsche Bank used confidential information for its
own benefit, violating its duty to use the disclosures “for the
sole purpose of determining [its] interest in participating in
the Transaction,” J.A. 17. Fatal to Van Leer’s claim is his
failure to provide any gloss on these bare assertions. Indeed,
12
he does not indicate what confidential information he provided
to Deutsche Bank or how the bank could have used that
information for its own advantage. In omitting this critical
discussion, Van Leer engages in little more than “a formulaic
recitation of the elements of a cause of action,” Twombly, 550
U.S. at 555. Dismissal was therefore appropriate because the
district court was not bound to accept as true his conclusory
allegations “devoid of further factual enhancement,” Iqbal, 129
S. Ct. at 1949 (internal quotations omitted).
Blending his contractual allegations into a global claim,
Van Leer alleges finally that Deutsche Bank violated its duty of
good faith and fair dealing. Such a claim, though recognized by
Maryland law, requires a plaintiff to demonstrate that the
defendant “act[ed] in such a manner as to prevent [the
plaintiff] from performing his obligations under the contract.”
Parker v. Columbia Bank, 604 A.2d 521, 531 (Md. Ct. Spec. App.
1992); see also E. Shore Mkts., 213 F.3d at 184 (“[T]he implied
duty of good faith and fair dealing as recognized in Maryland
requires that one party to a contract not frustrate the other
party’s performance.”). Van Leer has not alleged that Deutsche
Bank prevented him from abiding by his duties under the
Confidentiality Agreement. And because he has failed to detail
how Deutsche Bank used his confidential information in
contravention of the Confidentiality Agreement, Van Leer is
13
unable to demonstrate that the bank did not perform its
contractual obligations in good faith. His proposed amended
complaint therefore fails to state a claim for a breach of the
implied covenant of good faith and fair dealing.
B.
Van Leer’s negligence claim revolves around Deutsche Bank’s
alleged breach of its duty to consider and process his loan or
sale application in good faith and with reasonable diligence.
Van Leer is unable to establish that Deutsche Bank owed him any
duty apart from its contractual obligations, and his proposed
amended complaint consequentially fails to state a claim for
negligence.
Claims of negligence under Maryland law must establish four
familiar elements: (1) a duty owed to the plaintiff; (2) a
breach of that duty; (3) a causal relationship between breach
and harm; and (4) damages. Jacques v. First Nat’l Bank of Md.,
515 A.2d 756, 758 (Md. 1986). Dealings between a bank and its
customer generally do not allow for claims sounding in
negligence. In such an instance, the relationship between the
bank and customer is contractual in nature, not giving rise to
an independent duty. Parker, 604 A.2d at 532. Some cases, to
be sure, present facts so unique that courts will impose an
independent duty on a bank in regard to its transactions with a
14
customer. See, e.g., Jacques, 515 A.2d at 759–63. Yet this is
the exception rather than the rule.
Jacques, on which Van Leer principally relies in an effort
to establish that Deutsche Bank owed him a noncontractual duty,
involved a highly irregular combination of factors that the
court found significant. In that case, the plaintiffs agreed to
purchase a house and applied to the defendant bank for a loan to
facilitate the transaction. Id. at 756–57. The bank sent them
a letter stating that the plaintiffs qualified for a $74,000
loan and that it would hold the loan’s interest rate for ninety
days. Id. at 757. Shortly thereafter, however, the bank
indicated that it had made a mistake and could loan the
plaintiffs no more than $41,400. Id. The plaintiffs,
unsatisfied with those terms, sought financing from another
bank, but interest rates had skyrocketed by that time, making
the parameters of other loans unpalatable. Id. They instead
elected to accept the bank’s offer of $41,400 and secure
personal loans to cover the remainder of the needed financing.
Id. The plaintiffs then filed suit against the bank, alleging
negligence. Id.
The court began its analysis by noting that, “[w]here the
failure to exercise due care creates a risk of economic loss
only, courts have generally required an intimate nexus between
the parties as a condition to the imposition of tort liability.”
15
Id. at 759. Referring to the “rather extraordinary financing
provisions contained in the real estate sales contract” that
“left the [plaintiffs] particularly vulnerable and dependent
upon the Bank’s exercise of due care,” the court found such an
intimate nexus present in the case before it. Id. at 762–64.
The court pointed to three elements of the relationship between
the bank and the plaintiffs that counseled imposing a tort duty
on the bank: the requirement that the plaintiffs proceed to
loan settlement with whatever amount they could obtain at the
agreed rate of interest, the choice between accepting a loan or
forfeiting their $10,000 deposit, and the dramatic increase in
interest rates during the loan processing that precluded them
from finding another bank for financing. Id. at 762–63.
The relationship between Van Leer and Deutsche Bank
includes none of the extraordinary factors that the court found
critical to the disposition in Jacques. We accordingly conclude
that the parties’ relationship is strictly contractual and the
district court properly found that Deutsche Bank owed no tort
duty to Van Leer. See G&M Oil Co. v. Glenfed Fin. Corp., 782 F.
Supp. 1078, 1084 (D. Md. 1989) (finding no duty of care and
distinguishing case before it, in which plaintiff sought “a
fairly standard business loan,” from Jacques, in which
plaintiffs were exposed to extraordinary risk if deal fell
apart). Van Leer simply alleges no facts that would convert his
16
relationship with Deutsche Bank from the standard bank–customer
variety into something so unique as to compel a court to impose
a noncontractual duty on the bank. Establishing no duty of care
on the part of Deutsche Bank, Van Leer fails to state a claim
for negligence. 3
C.
Turning to Van Leer’s claim of negligent misrepresentation,
we conclude that it fails for the same reason as his negligence
claim. Under Maryland law, a plaintiff alleging negligent
misrepresentation must show that the defendant owed a duty of
care to the plaintiff. Walpert, Smullian & Blumenthal, P.A. v.
Katz, 762 A.2d 582, 588 (Md. 2000). Van Leer is unable to
3
Van Leer also relies on an Oklahoma case, Djowharzadeh v.
City National Bank & Trust Co., 646 P.2d 616 (Okla. Civ. App.
1982). This case is inapposite, for at least two reasons.
First, we are applying Maryland law, so Oklahoma’s
pronouncements that contradict Maryland precedent are not
relevant. Second, the plaintiff in that case pled compelling
facts not at issue here--namely, that the plaintiff had
disclosed confidential information about a bargain-priced
property that was not yet on the market in conjunction with his
loan application, the bank denied the loan, and the wives of two
of the bank’s executives used the plaintiff’s confidential
information and bought the property, id. at 617–18. Here,
however, Van Leer has not described what confidential
information he provided Deutsche Bank or how the bank used that
information to its advantage. Indeed, in contrast to the
secretive deal at issue in Djowharzadeh, the public record of
the bankruptcy court revealed that the Creditors’ Committee
planned to auction the Royalty Stream.
17
establish that Deutsche Bank owed him a duty of care, see supra
Section III.B, so he has failed to state a claim for negligent
misrepresentation.
D.
Van Leer alleges finally that Deutsche Bank committed fraud
by falsely stating that it was carrying out due diligence when
it actually did not intend to perform such due diligence. Van
Leer claims that Deutsche Bank “launched a plan to purchase the
Royalty Stream from the bankruptcy, depriving [him] of his
opportunity to sell the Royalty Stream himself.” J.A. 205.
Given the heightened pleading standards governing allegations of
fraud, we find that Van Leer’s proposed amended complaint fails
to state an actionable fraud claim.
Fraud under Maryland law includes five elements: (1) the
defendant made a false representation to the plaintiff; (2) the
defendant either knew that the representation was false or made
it with reckless indifference as to its truth; (3) the defendant
made the misrepresentation for the purpose of defrauding the
plaintiff; (4) the plaintiff justifiably relied on the
misrepresentation; and (5) the plaintiff suffered damages
resulting from the misrepresentation. Gourdine v. Crews, 955
A.2d 769, 791 (Md. 2008). The Federal Rules of Civil Procedure
mandate that a plaintiff alleging fraud “state with
18
particularity the circumstances constituting fraud.” Fed. R.
Civ. P. 9(b).
Van Leer’s general allegations are insufficient to satisfy
Rule 9’s heightened pleading standard, and dismissal is
therefore proper. He eschews the injunction to “state with
particularity the circumstances constituting fraud,” id.,
instead asserting conclusorily that Deutsche Bank “launched a
plan to purchase the Royalty Stream from the bankruptcy,” J.A.
205. Van Leer’s allegations are all the more lacking when
viewed with reference to the public record of the bankruptcy
proceedings, which revealed that the Creditors’ Committee
planned to auction the Royalty Stream and that the highest bid
submitted to that point was only $11.5 million. Van Leer puts
forth labels and conclusions in an effort to convert Deutsche
Bank’s decision--based on publicly available information--to
purchase the Royalty Stream at auction into something more
nefarious. But these “naked assertions devoid of further
factual enhancement,” Iqbal, 129 S. Ct. at 1949 (internal
quotations and alteration omitted), are not enough to counter
dismissal, particularly when viewed through the prism of Rule 9.
19
IV.
For the foregoing reasons, we affirm the judgment of the
district court.
AFFIRMED
20
