Penmont, LLC v. Blue Ridge Piedmont, LLC

Decision Date08 April 2009
Docket NumberCivil Action No. 2:08cv93-MHT.
Citation607 F.Supp.2d 1266
PartiesPENMONT, LLC and Penman Group, LLC, Plaintiffs, v. BLUE RIDGE PIEDMONT, LLC, Blue Ridge Capital, LLC, Fritz McPhail, and Eric Wilenksy, Defendants.
CourtU.S. District Court — Middle District of Alabama

John Michael Bowling, Joseph Lofton Kerr, Jr., Friedman, Leak, Dazzio, Zulanas & Bowling, P.C., Birmingham, AL, for Plaintiff.

George Robert Parker, Bradley Arant Rose & White LLP, Montgomery, AL, Halsey G. Knapp, Jr., Jonathan E. Hawkins, Foltz Martin, LLC, Atlanta, GA, for Defendant.


MYRON H. THOMPSON, District Judge.

Plaintiffs Penmont, LLC and Penman Group, LLC bring this lawsuit against defendants Blue Ridge Piedmont, LLC, Blue Ridge Capital, LLC, Fritz McPhail, and Eric Wilensky, claiming state-law fraud, breach of contract, and unlawful practice of real-estate brokerage, all arising out of a single aborted commercial real-estate transaction.1 Blue Ridge Piedmont has filed a breach-of-contract counterclaim against Penman Group for fees it paid to third parties on plaintiffs' behalf. The court's diversity-of-citizenship jurisdiction has been invoked. 28 U.S.C. § 1332.

The case is before the court on defendants' motion for summary judgment on all claims, including the counterclaim, in their favor. The motion is granted in part and denied in part for the reasons that follow.


Summary judgment is appropriate "if 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 that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The court's role at the summary-judgment stage is to view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in favor of that party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).


In the spring of 2007, defendants approached Penman Group with a prospective real-estate deal in which Blue Ridge Piedmont would sell Penman Group a portion of the Montgomery Mall in Montgomery, Alabama. The tenant of the property was a franchise known as Steve & Barry's.

Defendants did not own the property, but had an option to purchase the property from the owner, Haywood Whichard, with whom defendants had a longstanding relationship. Whichard offered to sell defendants the property at a reduced price if they would put up $50,000 non-refundable earnest-purchase money. After negotiating the price, defendants agreed to purchase the property, on the condition they could, in turn, find a buyer willing to purchase the property. Defendants paid Whichard the $50,000 after they had contacted potential buyers and plaintiffs had expressed interest in the property.

Defendants, who had done prior business with plaintiffs' managers, sent plaintiffs materials about the property and the Steve & Barry's franchise. The materials were issued under the name of Blue Ridge Capital, LLC, which employed Wilensky and McPhail.

During a conference call shortly thereafter, defendants indicated they would assist plaintiffs in conducting "due diligence" and further indicated that any fees for these services would be included in the agreed-upon transaction price. Around this time, defendants also informed plaintiffs that they had lined up a lender who could provide financing and that this lender was familiar and comfortable with the franchise. Plaintiffs indicated a desire to find their own financing.

On April 6, 2007, Penman Group and Blue Ridge Piedmont executed a "Purchase Agreement," which outlined how the transaction would proceed. First, Blue Ridge Piedmont would acquire the property from its current owner. It would then immediately sell the property to Penman Group. The agreement also provided that Penman Group would pay $50,000 in earnest money to Blue Ridge Piedmont and that this money would be retained by Blue Ridge Piedmont as liquidated damages if the transaction were not completed. A merger clause provided that the written agreement was the complete and final agreement of the parties, and another clause stated that the property was being purchased "as-is."

Also around this time, defendants told plaintiffs that, regardless of the language in the purchase agreement, defendants would return the earnest money if the deal fell through. The parties dispute the exact terms of this agreement.

After the purchase agreement was signed, the parties continued to work to complete the transaction. At some point, defendants agreed to obtain certain reports for plaintiffs with the understanding that they would be reimbursed; the precise terms of this agreement are disputed.

Meanwhile, plaintiffs applied for a loan from Bank Independent, and were refused. When it became apparent that Bank Independent would not issue a loan, defendants put plaintiffs in touch with a mortgage broker and sent plaintiffs a proposed agreement to compensate defendants for their assistance in securing financing. Plaintiffs never signed the agreement, but maintain that the parties agreed that they would work out compensation at a later time if the financing came through.

Plaintiffs claim that they were not able to obtain financing from defendants' lender because, during a conference call regarding the loan application, Wilensky stated that the Steve & Barry's franchise was in a "hostile tenant relationship" with the landlord, and this statement caused the bank to refuse to finance the transaction on favorable terms. Wilensky denies making any such statement. Plaintiffs contend that defendants misled them regarding the quality of the franchise as a tenant.

A short time later, Penman Group indicated that it was not willing to move forward with the transaction. The deal fell apart, and Blue Ridge Piedmont retained the purchase money. Plaintiffs then filed this lawsuit to recover the money and other expenses associated with the transaction. Blue Ridge Piedmont filed a counterclaim for $ 19,428.75 against Penman Group for breach of an oral contract providing, according to Blue Ridge Piedmont, that Penman Group would reimburse it for certain third-party reports.

A. Penmont's claims

Defendants challenge whether Penmont may bring any claims, on the ground that it was not a party to the purchase agreement or otherwise a part of the transaction. The complaint alleges that Penmont was the "putative assignee of Penman Group for the purpose of this transaction." Compl. ¶ 2. However, Penmont did not argue it was Penman Group's assignee in its opposition to defendants' motion for summary judgment.2 Because Penmont did not raise the argument in opposition to defendants' motion to dismiss, the argument is deemed abandoned. See Brasseler, U.S.A I, L.P. v. Stryker Sales Corp. 182 F.3d 888, 892 (C.A.Fed.(M.D.Ala.)1999) (district court need not consider assertions made in pleadings but not in opposition to a motion for summary judgment); Road Sprinkler Fitters Local Union No. 669 v. Indep. Sprinkler Corp., 10 F.3d 1563, 1568 (11th Cir.1994) (claim not raised in cross motions for summary judgment was properly treated as abandoned).

Penmont having abandoned any argument that it was the assignee of Penman Group, the court must conclude that there is no evidence, or even argument, that Penmont was a party to the disputed transaction. Thus, summary judgment will be granted on all of Penmont's claims.

B. Penman Group's claims
1. Unlawful-practice-of real-estate-brokerage claim

Penman Group contends that the purchase agreement is void because defendants were acting as unlicensed real-estate brokers in violation of 1975 Ala.Code § 34-27-30 when they entered into the transaction. Penman Group argues that defendants sought valuable consideration (the profit they would make on the transaction) in exchange for their work closing the sale of the Steve & Barry's property. Defendants counter that they were not acting as real-estate brokers and that, in any case, they fell within an "owner-seller" exception to the statute because the purchase agreement identified Blue Ridge Piedmont as the seller. See 1975 Ala.Code § 34-27-2(b)(1) (exempting "[a]ny owner in the managing of, or in consummating a real-estate transaction involving, his or her own real estate or the real estate of his or her spouse or child or parent" from licensing requirement).

Contrary to defendants' assertions, the evidence reflects that none of the defendants owned the property when they approached Penman Group or when the purchase agreement was signed. Defendants' plan was to purchase the property only if they could find another buyer, and defendants never did purchase the property.

However, the court need not resolve the question of ownership, for even if defendants were acting as unlicensed real-estate brokers, the purchase agreement would not be void on that basis. The law does not void every contract entered into by an unlicensed real-estate broker, but rather those providing for compensation of the unlicensed broker. See Knight v. Watson 221 Ala. 69, 127 So. 841, 842 (1930) (contracts of unlicensed real-estate brokers are "illegal, void, and unenforceable in actions for the recovery of compensation and the like"); Faulkner v. Stapleton Ins. & Realty Corp., 266 Ala. 437, 438, 96 So.2d 761, 762 (Ala.1957) (unlicensed real-estate broker may not enforce contract for commission); Dillard v. Pan-American Investments, Inc., 347 So.2d 990, 991 (Ala.1977) (same). Thus, even if Penman Group were able to show that defendants had violated the statute, it would only be able to void an agreement for compensation. Penman Group cannot plausibly contend that the purchase agreement was a contract creating a brokerage agreement or that the $ 50,000 earnest-purchase money was paid as compensation for brokerage...

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  • Glenn Constr. Co. Llc v. Bell Aerospace Serv. Inc.
    • United States
    • U.S. District Court — Middle District of Alabama
    • 19 Mayo 2011
    ...regarding a material existing fact, but rather was a promise to perform a future act. See, e.g., Penmont, LLC v. Blue Ridge Piedmont, LLC, 607 F.Supp.2d 1266, 1273 (M.D.Ala.2009) (Thompson, J.) (holding that the defendant's statement that it would return a non-refundable earnest purchase de......
  • Vascular Ventures, LLC v. Am. Vascular Access, LLC
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    • U.S. District Court — Southern District of Alabama
    • 16 Octubre 2017
    ...the Side Letter due to its alleged non-performance on this particular contractual obligation. See, e.g., Penmont v. Blue Ridge Piedmont, 607 F.Supp.2d 1266, 1272-1273 (M.D. Ala. 2009) (to establish a successful breach-of-contract claim, a plaintiff must demonstrate not only the existence of......
  • Hershewe v. Givens, CIVIL ACTION NO. 1:14cv655-MHT (WO)
    • United States
    • U.S. District Court — Middle District of Alabama
    • 29 Septiembre 2015
    ...a present material fact or on a fraudulent promise to act or not to act in the future. See Penmont, LLC v. Blue Ridge Piedmont, LLC, 607 F. Supp. 2d 1266 (M.D. Ala. 2009) (Thompson, J.) (describing the different types of fraud). Here, Hershewe contends that K. Givens, C. Givens, and J. Give......
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    • United States
    • U.S. District Court — Middle District of Florida
    • 21 Julio 2023
    ... ... See Penmont, LLC v. Blue Ridge Piedmont, LLC, 607 ... F.Supp.2d 1266, 1269 (M.D ... ...

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