Regions Bank v. Legal Outsource PA

• Decision Date: 28 August 2019
• Docket Number: No. 17-11736,17-11736
• Citation: 936 F.3d 1184
• Parties: REGIONS BANK, an Alabama state-chartered bank, Plaintiff–Counter Defendant–Appellee, v. LEGAL OUTSOURCE PA, a Florida professional association, Periwinkle Partners, LLC, a Florida limited liability company, Charles Paul-Thomas Phoenix, individually, a.k.a. Charles PT Phoenix, Lisa M. Phoenix, individually, Defendants–Counter Claimants–Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

936 F.3d 1184

REGIONS BANK, an Alabama state-chartered bank, Plaintiff–Counter Defendant–Appellee,

v.LEGAL OUTSOURCE PA, a Florida professional association, Periwinkle Partners, LLC, a Florida limited liability company, Charles Paul-Thomas Phoenix, individually, a.k.a. Charles PT Phoenix, Lisa M. Phoenix, individually, Defendants–Counter Claimants–Appellants.

No. 17-11736

United States Court of Appeals, Eleventh Circuit.

August 28, 2019

John Albert Anthony, Stephenie Biernacki Anthony, Andrew James Ghekas, Dominic A. Isgro, Anthony & Partners, LLC, Tampa, FL, for Plaintiff-Appellee.

Jason Wayne Graham, Graham Legal, LLC, Sandy Springs, GA, Charles PT Phoenix, Rhodes Tucker, Sanibel, FL, for Defendants-Appellants.

Steven Y. Bressler, Assistant General Counsel for Litigation and Oversight, Consumer Financial Protection Bureau, Office of the General Counsel, Washington, DC, for Amicus Curiae CONSUMER FINANCIAL PROTECTION BUREAU.

Andrew W. Muller, Stinson Morrison & Hecker, LLP, Kansas City, MO, for AMERICAN BANKERS ASSOCIATION, INDEPENDENT COMMUNITY BANKERS OF AMERICA, FLORIDA BANKERS ASSOCIATION, ALABAMA BANKERS ASSOCIATION, MISSOURI BANKERS ASSOCIATION.

Before WILLIAM PRYOR, and ROSENBAUM, Circuit Judges, and MOORE,^* District Judge.

WILLIAM PRYOR, Circuit Judge:

The main issue presented by this appeal has divided our sister circuits: whether a guarantor constitutes an "applicant" under the Equal Credit Opportunity Act. See 15 U.S.C. §§ 1691(a), 1691a(b). Compare Hawkins v. Cmty. Bank of Raymore , 761 F.3d 937 (8th Cir. 2014), aff’d by an equally divided Court , ––– U.S. ––––, 136 S. Ct. 1072, 194 L.Ed.2d 163 (2016) (holding that a guarantor unambiguously is not an "applicant" under the Act), and Moran Foods, Inc. v. Mid-Atl. Mkt. Dev. Co. , 476 F.3d 436 (7th Cir. 2007) (opining the same), with RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp. , 754 F.3d 380 (6th Cir. 2014) (holding that the term "applicant" is ambiguous and applying Chevron deference to an agency interpretation that a guarantor is an "applicant"). Legal Outsource PA, a law firm wholly owned by Charles Phoenix, defaulted on a loan from Regions Bank, which triggered the default of a loan and mortgage that Regions issued to Periwinkle Partners, LLC, an entity wholly owned by Charles’s wife, Lisa Phoenix. After the obligors refused to cure the defaults, Regions sued to enforce its rights under the loans and mortgage. The obligors filed several counterclaims asserting that Regions violated the Equal Credit Opportunity Act by discriminating against Lisa and Charles based on their marital status when it demanded that they and Legal Outsource guarantee the Periwinkle loan. The district court granted summary judgment in favor of Regions. The district court ruled that Lisa Phoenix’s counterclaims failed because she lacked standing as an "applicant" when she was instead a guarantor. Because we conclude that a guarantor is not an "applicant" under the Equal Credit Opportunity Act, we affirm the summary judgment in favor of Regions. But the parties agree that we must remand to correct an error in the judgment.

I. BACKGROUND

Beginning in 2005, Regions Bank extended a $450,000 line of credit to Legal Outsource PA, a law firm owned by Charles Phoenix. Legal Outsource renewed the loan on a yearly or semi-yearly basis, and it was last renewed in May 2013 with a maturity date in February 2014. Charles Phoenix also guaranteed the 2013 Outsource loan.

In 2011, Regions lent nearly $1.7 million to Periwinkle Partners, LLC, for the purchase of a shopping center on Sanibel Island, Florida. At that time, the sole member of Periwinkle Partners was a company owned by Charles Phoenix’s wife, Lisa Phoenix. Charles Phoenix, Lisa Phoenix, and Legal Outsource all guaranteed the Periwinkle loan. Under the Periwinkle loan, a default by any of the parties, including the guarantors, on any other loans that they had with Regions constitutes a default under the Periwinkle loan.

In August 2013, Regions concluded that the Outsource and Periwinkle loans were in default based on the obligors’ failure to provide requested financial information and based on Periwinkle’s failure to pay its property taxes. Regions then warned the obligors several times that it would accelerate the loans if the obligors failed to cure the default. In February 2014, the Outsource loan matured and Legal Outsource, which was no longer in operation, failed to pay it. Two months later, Regions declared the Outsource loan in default and demanded its full and immediate payment. According to the obligors, this declaration was a bad-faith attempt by Regions to coerce Lisa Phoenix into securing the Outsource loan with Periwinkle as collateral, but she refused to do so. After the Outsource loan default, Regions also declared the Periwinkle loan in default and demanded its full and immediate payment. The obligors never cured any of the defaults.

In August 2014, Regions filed a complaint against Charles and Lisa Phoenix, Legal Outsource, and Periwinkle Partners for breach of the Legal Outsource promissory note and guaranty, breach of the Periwinkle promissory note and guaranties, foreclosure of the Periwinkle mortgage, and receivership. The obligors answered the complaint and interposed 73 affirmative defenses and eight counterclaims.

The obligors twice amended the answer and added four new counterclaims that each asserted a violation of the Equal Credit Opportunity Act. The counterclaims—three of which were individually brought by Charles Phoenix, Lisa Phoenix, and Legal Outsource respectively, and one of which was brought by Lisa Phoenix and Periwinkle Partners—alleged that Regions discriminated on the basis of marital status when it required the Phoenixes and Legal Outsource to guarantee the Periwinkle loan. Regions then moved to dismiss the newly added counterclaims, and the district count granted that motion in part. The district court ruled that the guarantors of the Periwinkle loan all lacked statutory standing because they were not "applicant[s]" under the Equal Credit Opportunity Act. But the court also ruled that one of the counterclaims, which was brought on behalf of Lisa Phoenix and Periwinkle Partners, had sufficiently alleged that Lisa Phoenix and Periwinkle Partners were "applicants" under the Act, so it denied the motion as to that count.

After Regions moved for summary judgment, the district court granted summary judgment in favor of Regions both for its claims for breach of the promissory notes and guaranties and against the obligors’ counterclaims. The district court ruled that the obligors "do not dispute that they were in default under the relevant notes and guaranties," and it ruled that the counterclaims had "no merit." With respect to the remaining counterclaim under the Equal Credit Opportunity Act—the joint claim by Lisa Phoenix and Periwinkle—the district court ruled that Periwinkle’s claim of discrimination was "frivolous" because, as an entity, it had no marital status. And the district court ruled that "[t]he claim fails as to Lisa Phoenix as well because, aside from the lack of any evidence to establish any alleged discrimination on the basis of marital status, she was not an ‘applicant’ for the Periwinkle loan[;] she was a guarantor." The district court referred to its earlier order ruling that guarantors were not "applicants."

The district court later issued a second summary judgment order granting foreclosure on the Periwinkle mortgage. The court then dismissed the matter with prejudice and directed the clerk to enter the judgment. The clerk entered the judgment, and the obligors filed their notice of appeal.

Regions moved to amend the judgment to state, among other things, the amounts due to Regions from the obligors. The district court granted Regions’ motion in part, instructing the clerk to enter an amended judgment providing for the following relief:

[T]he Court will order the Clerk to amend the Judgment to provide that Regions Bank prevails on its claims against Defendants. The Judgment will further provide that Regions Bank is entitled to recover $540,054.24 from Defendants for the Legal Outsource loan ....

The clerk then entered the amended judgment, and the obligors amended their notice of appeal to include the order granting Regions’ motion to clarify and the amended judgment among the items subject to their appeal.

II. STANDARD OF REVIEW

We review a grant of summary judgment de novo . Moore ex rel. Moore v. Reese , 637 F.3d 1220, 1231 (11th Cir. 2011).

III. DISCUSSION

This appeal presents several issues about whether the obligors are liable for the default of the Legal Outsource loan and the Periwinkle loan and mortgage. Although the obligors raise a host of issues that seek to obscure the nature of their defaults, all but one of them lack any merit, and some border on being frivolous. We decline to address them any further.

We divide our discussion of the remaining issues in two parts. First, we explain that Lisa Phoenix’s counterclaims under the Equal Credit Opportunity Act fail because a guarantor does not qualify as an "applicant" under the Act. Second, we explain that a limited remand to correct erroneous language from the amended judgment is warranted.

A. The District Court Correctly Granted Summary Judgment Against the Equal Credit Opportunity Act Counterclaims by Lisa Phoenix.

The district court did not err when it granted summary judgment against the counterclaims by Lisa Phoenix under the Equal Credit Opportunity Act. As an initial matter, although the obligors briefly mention Periwinkle’s counterclaim in their argument about the Equal Credit Opportunity Act, they have failed to argue or cite caselaw in either the district court or on appeal to rebut the conclusion that its status as an entity defeats its claim, as the district court ruled, so we consider that issue abandoned. See Sapuppo v. Allstate Floridian Ins. Co. , 739 F.3d 678, 680 (11th Cir. 2014) ("[A]n appellant...