Adr1assist, LLC v. Lima One Capital, LLC

Decision Date10 January 2022
Docket NumberCivil Action No. 1:20-cv-05184-SDG
Parties ADR1ASSIST, LLC, Plaintiff, v. LIMA ONE CAPITAL, LLC, Defendant.
CourtU.S. District Court — Northern District of Georgia

Gregory John Bosseler, Morgan & Morgan, PLLC, Atlanta, GA, Marie Noel Appel, Pro Hac Vice, Michael Francis Ram, Pro Hac Vice, Morgan & Morgan Mass Tort Dept., San Francisco, CA, for Plaintiff.

Jasmine Jean-Louis, Pro Hac Vice, Jason Wayne McElroy, Jeffrey Paul Blackwood, Pro Hac Vice, Weiner Brodsky Kider PC, Washington, DC, Matthew Robert Rosenkoff, Taylor English Duma LLP, Atlanta, GA, for Defendant.

OPINION AND ORDER

Steven D. Grimberg, United States District Court Judge

This matter is before the Court on Defendant Lima One Capital, LLC's (Lima One) motion to dismiss [ECF 21]. After careful consideration of the parties’ briefing, the Court GRANTS IN PART and DENIES IN PART Lima One's motion.

I. BACKGROUND

The Court accepts the following well-pled allegations as true for purposes of this Order.1 Plaintiff Adr1assist, LLC (Adr1assist), on behalf of itself and others similarly situated, brings claims against Lima One for delaying delivery of loan funds and charging interest on the funds prior to delivery.2 Adr1assist alleges that it entered into an Interest Only Balloon Note (the Note) with Lima One on Friday, December 23, 2016, but did not receive the loan funds until the following Tuesday, December 27, 2016.3 Despite this delay, Lima One began charging interest on the loan on December 23.4 Adr1assist claims that by delaying delivery of the funds for four days, Lima One breached the loan agreement,5 breached the implied covenant of good faith and fair dealing,6 and violated O.C.G.A. § 44-14-13.7

Lima One has moved to dismiss Adr1assist's Amended Complaint for failure to state a claim upon which relief can be granted.8 Adr1assist filed a response in opposition to Lima One's motion,9 to which Lima One replied.10 Lima One's motion is fully briefed and ripe for consideration.11

II. LEGAL STANDARD

To withstand a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must "contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Am. Dental Ass'n v. Cigna Corp. , 605 F.3d 1283, 1289 (11th Cir. 2010) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A complaint is plausible on its face when a plaintiff pleads sufficient factual content for the court to draw the reasonable inference that the defendant is liable for the conduct alleged. Id. "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

A complaint must also present sufficient facts to " ‘raise a reasonable expectation that discovery will reveal evidence’ of the claim." Am. Dental Ass'n , 605 F.3d at 1289 (quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). At the motion to dismiss stage, "all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff." FindWhat Inv'r Grp. v. FindWhat.com , 658 F.3d 1282, 1296 (11th Cir. 2011) (quoting Garfield v. NDC Health Corp. , 466 F.3d 1255, 1261 (11th Cir. 2006) ). This principle, however, does not apply to legal conclusions. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

III. DISCUSSION
A. Documents Considered on a Motion to Dismiss

The parties dispute what documents the Court can consider in ruling on Lima One's motion. Lima One's motion cites the Amended Complaint and the exhibits thereto, including the Note and the HUD-1 settlement statement.12 Adr1assist attached to its response a declaration and several documents related to the loan.13 Lima One objects to the Court's consideration of these documents, arguing that the Court is limited to the facts contained in the pleadings and attached exhibits and that Adr1assist seeks to amend its pleading through its opposition brief.14 The Court agrees with Lima One.

On a motion to dismiss, the Court is limited to the facts contained in the complaint and any exhibits attached thereto. Griffin Indus., Inc. v. Irvin , 496 F.3d 1189, 1199 (11th Cir. 2007). Generally, if the Court considers materials outside of the complaint on a motion to dismiss it must convert the motion into one for summary judgment. Fed. R. Civ. P. 12(d) ; Day v. Taylor , 400 F.3d 1272, 1275–76 (11th Cir. 2005). The Court can consider documents attached to a motion to dismiss without conversion if the documents are (1) central to the plaintiff's claim; and (2) undisputed. Horsley v. Feldt , 304 F.3d 1125, 1134 (11th Cir. 2002) ; Hi-Tech Pharm., Inc. v. HBS Int'l Corp. , 910 F.3d 1186, 1189 (11th Cir. 2018) ("Under the doctrine of incorporation by reference, we may also consider documents attached to the motion to dismiss if they are referred to in the complaint, central to the plaintiff's claim, and of undisputed authenticity.").

The Court may not, however, consider new documents that are attached to a response in opposition to a motion to dismiss, particularly when the documents or their substance are not referenced in the complaint. Pulmonary Assocs. of Charleston PLLC v. Greenway Health, LLC , 508 F. Supp. 3d 1268, 1274 (N.D. Ga. 2020) (declining to consider documents attached to a response to a motion to dismiss). Doing so would effectively allow the party to amend its pleading through its response, which is improper. Jallali v. Nova Se. Univ., Inc. , 486 F. Appx 765, 767 (11th Cir. 2012). Accordingly, the Court will limit its consideration to the Amended Complaint and the two attachments to the Amended Complaint.

B. Breach of Contract

Adr1assist alleges that Lima One breached the loan agreement by failing to fund the loan on December 23, 2016 and by charging interest on the loan starting on December 23.15 Lima One moved to dismiss Adr1assist's claim for breach of contract because no provision in the Note required it to deliver funds on the closing date and because Adr1assist agreed to the interest accruing on December 23.16 Adr1assist responds that the HUD-1 settlement statement of the loan listed the disbursement date as December 23, and that Lima One breached the "time is of the essence" provision in the Note.17 With regard to the interest accrual date, Adr1assist argues that the Note clearly states that interest is paid in return for "a loan received," and so interest must only accrue after delivery, and that Lima One's interpretation of the Note violates Georgia public policy.18

1. The Settlement Statement (HUD-1)

Lima One is correct that the Amended Complaint fails to allege what contract provision required Lima One to deliver the funds on December 23, 2016. This alone is grounds for dismissal. Est. of Bass v. Regions Bank, Inc. , 947 F.3d 1352, 1358 (11th Cir. 2020) (plaintiff failed to state a claim because it failed to "allege[ ] any general or specific provision of any contract that [the defendant] might have breached"). Adr1assist now argues that the HUD-1 settlement statement, a government required disclosure form reflecting details of the loan, states that the disbursement date was December 23, 2016, and that this is enforceable.19

The Court is not persuaded that Lima One is contractually bound by the disbursement date listed on the HUD-1 settlement statement, which appears to be for informational purposes, is not referenced in the Note, contains no promises, and does not appear to be assented to by either party. O.C.G.A. § 13-3-1 (describing the essentials of a contract under Georgia law); see Villanueva v. First Am. Title Ins. Co. , 313 Ga. App. 164, 166, 721 S.E.2d 150 (2011) (declining to decide whether HUD-1 settlement statements were part of the contract but citing authority questioning or rejecting this proposition). In fact, in arguing that blanks on the HUD-1 form cannot evidence the nature of the loan, Adr1assist recognizes that the form is not part of and cannot contradict the loan agreement.20 At most, the HUD-1 settlement statement constitutes parol evidence of the parties’ intent, which the Court cannot consider unless the written agreement is ambiguous. Moore v. Lovein Funeral Home, Inc. , 358 Ga. App. 10, 13, 852 S.E.2d 876 (2020).

The cases cited by Adr1assist in support of its position are distinguishable. In Primary Capital Advisors, LC v. My Title Professionals, Inc. , the parties did not dispute whether distributing the loan proceeds "in the manner set forth on the final HUD-1 Settlement Agreement" was a breach of contract, and so the court did not address the issue. No. 1:10-CV-02745-JOF, 2012 WL 13001930, at *5 (N.D. Ga. May 8, 2012). Similarly, in Golden v. Ameriquest Mortgage Co. , the defendant did not dispute that it entered into a contract with the plaintiff that contained the same disbursement terms as the HUD-1 form. No. 406CV036, 2006 WL 8434067, at *4–5 (S.D. Ga. July 19, 2006). Thus, the court did not decide whether the HUD-1 form itself was a contract. Id.

As the disbursement date listed on the HUD-1 form is neither an enforceable agreement on its own nor a term of the loan agreement, Adr1assist has failed to state a claim that Lima One breached an express provision of its contract with Adr1assist by delivering the funds on December 27 as opposed to December 23.

2. The "Time is of the Essence" Provision

Adr1assist also argues that Lima One breached the "time is of the essence" provision of the contract by delaying delivery of the loan proceeds for four days after the Note was executed.21 Lima One claims that delivering the funds on Tuesday, December 27 was reasonable because the funds were delivered the first business day after the closing.22

"When a contract is missing a term indicating the time for performance, a reasonable time for performance will be implied. This is so even if the...

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