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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-13258
Non-Argument Calendar
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D.C. Docket No. 1:16-cv-02425-LMM
CHRYSTEN WRIGHT, et al.,
Plaintiffs,
MONIQUE SIMMS,
SAMMY DAVIS,
Plaintiffs - Appellants,
versus
SCALES 925 ATLANTA, LLC, et al.,
Defendants,
CLIFFORD JOSEPH HARRIS, JR.,
CLIFFORD JOSEPH HARRIS, JR.,
d.b.a. The Royal Group LLC,
Defendants - Appellees.
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________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(February 5, 2019)
Before TJOFLAT, JORDAN, and ROSENBAUM, Circuit Judges.
PER CURIAM:
Plaintiff-Appellants Monique Simms and Sammy Davis appeal the grant of
summary judgment to Defendant-Appellee Clifford Harris, Jr., on their claims
arising out of their employment at Harris’s now-closed restaurant, Scales 925. The
question in this appeal is whether Harris can be held personally liable for these
claims. The district court concluded that Harris was protected against personal
liability by the legal form of a limited liability company (“LLC”), so it granted
summary judgment in his favor. Simms and Davis dispute several aspects of the
court’s reasoning, but they have identified no error, so we affirm.
I.
In December 2014, defendants Harris and Charles Hughes 1 were approached
about lending celebrity and financial support to Vibe Restaurant and Bar, which
1
As we explain in more detail below, Charles Hughes was a defendant in the district-
court proceedings, but he is not implicated in this appeal. Hughes was dismissed in the district
court-proceedings after the claims against him were settled.
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was located on Ivan Allen Boulevard in Atlanta. Harris—a rapper, 2 actor, and
entrepreneur—is also a promoter for various entertainment venues.
Shortly after Harris and Hughes were approached about Vibe Restaurant and
Bar, the restaurant managers at the time—the Social Life Restaurant Group
(“Social Life”) and the Venue Restaurant Group (“Venue”)—signed a contract
concerning Vibe (“the Vibe Agreement”) with The Encore Group, LLC
(“Encore”), and The Royal Group, LLC (“Royal”). Hughes signed on behalf of
Encore as its sole member. Harris, in turn, signed on behalf of Royal as its sole
member. It is undisputed that Royal was not a validly formed LLC.
The Vibe Agreement called for the creation of a “joint venture entity” to
take over day-to-day management of restaurant operations. In exchange for taking
over these management responsibilities and making capital improvements, Royal
and Encore were entitled to 75% of all net profits generated each month. The lease
remained in the names of Venue and Social Life.
Harris and Hughes then enlisted the help of an attorney to form two LLCs—
Scales 925 Atlanta Management, LLC and Scales 925 Atlanta, LLC—and they
renamed the restaurant Scales 925 (“Restaurant”). These LLCs were validly
formed in January 2015. The attorney who organized these entities drafted
operating agreements for each of them, though the agreements were never signed.
2
Harris is known in the entertainment world as “T.I.”
3
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The operating agreement for Scales 925 Atlanta Management, LLC, stated that
Royal and Encore would each own a 45% stake, with two other individuals holding
the remaining 10%. The operating agreement for Scales 925 Atlanta, LLC,
provided that it was to be owned solely by Scales 925 Atlanta Management, LLC.
In mid-2015, Simms and Davis were hired as the Restaurant’s general
manager and executive chef, respectively. They executed employment agreements
reflecting, among other things, their salaries and bonus compensation. Simms’s
employment agreement is not in the record, but we assume, as the parties agree,
that it is identical to Davis’s in all respects relevant to this appeal. According to
Davis’s employment agreement, the contract was executed “by and between
SCALES 925 ATLANTA, LLC (the ‘Company’), . . . and Sam Davis.” The
agreement stated that Davis agreed to the supervision of “the Company’s
management, [Harris] and [Hughes].” Hughes signed the agreement on behalf of
Scales 925 Atlanta, LLC as its “managing member.” Harris was not listed as a
party to the agreement and did not sign the agreement.
Just over a year after the Restaurant opened, several servers at the Restaurant
joined Simms and Davis in a lawsuit against Harris, Hughes, Venue, and the two
Scales LLCs. They alleged claims of breach of contract, failure to pay minimum
and overtime wages, and fraud. The servers eventually settled their claims against
the defendants, and Simms and Davis dismissed their claims with prejudice against
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Hughes, Venue, and the two Scales LLCs. So Simms and Davis are the only
remaining plaintiffs, and Harris is the only remaining defendant.
Simms and Davis did not allege that Harris personally committed any of the
acts on which their claims were based. The bad actor for each of their claims—for
breach of the employment agreements, failure to pay final paychecks, and
common-law fraud and deceit 3—was identified as Hughes, who was more actively
involved in managing the Restaurant. Nevertheless, Simms and Davis alleged that
the defendants were “all business partners” operating the Restaurant and that, as a
result, Harris was “jointly and severally liable” for actions taken by Hughes “[a]s a
general partner” on behalf of the Restaurant.
After discovery, the district court granted summary judgment to Harris.
Citing supplemental briefing submitted at the court’s request, the court explained
that Simms and Davis based Harris’s liability for all claims on two main theories:
(1) common-law partnership or joint venture; and (2) piercing the corporate veil.
But if neither of these two theories was viable, the court stated, Harris was shielded
from personal liability under Georgia law applicable to LLCs. See O.C.G.A. § 14-
11-303(a). Then, concluding that the evidence did not support the first theory and
that the second theory was not properly raised, the court determined that Harris
3
One other claim, for deceptive business practices, was dismissed by the district court
based on a motion to dismiss. The appellants have abandoned this claim by failing to clearly
raise it on appeal. See Sapuppo v. Allstate Floridian Ins. Co.,
739 F.3d 678, 680–81 (11th Cir.
2014) (issues not plainly raised on appeal are abandoned).
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was not liable and granted his motion for summary judgment. This appeal
followed.
II.
We review a decision to grant summary judgment de novo, viewing the
evidence and drawing all reasonable inferences in favor of the non-moving party.
Haynes v. McCalla Raymer, LLC,
793 F.3d 1246, 1249 (11th Cir. 2015).
Summary judgment is appropriate if “the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). Georgia law governs our resolution of this matter.
III.
The central dispute in this case concerns the legal structure under which
Harris and Hughes managed the Restaurant. Simms and Davis maintain that the
Restaurant was operated as a partnership, which would make Harris, as a partner,
“jointly and severally liable for all debts, obligations, and liabilities of the
partnership.”4 O.C.G.A. § 14-8-15. In contrast, Harris contends, and the district
court found, that he and Hughes clearly intended to and did operate the Restaurant
4
Simms and Davis also present arguments relating to their “joint venture” theory of
liability. See Kissun v. Humana, Inc.,
479 S.E.2d 751, 752 (Ga. 1997); Boatman v. George
Hyman Constr. Co.,
276 S.E.2d 272, 274–75 (Ga. Ct. App. 1981). But as the court explained, a
joint-venture agreement, like a partnership agreement, depends on the intent of the parties
involved. See Aaron Rents, Inc. v. Fourteenth St. Venture, L.P.,
533 S.E.2d 759, 762 (Ga. Ct.
App. 2000). Because we conclude that the evidence is clear that Harris and Hughes intended to
operate the Restaurant as an LLC, the joint-venture theory fails for the same reasons as the
partnership theory.
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as an LLC, and that he is shielded from liability by that legal form. See
id. § 14-
11-303 (stating that a “member, manager, agent, or employee of a limited liability
company is not liable,” solely by reason of that status, for the obligations of the
LLC or “for the acts or omissions of any other member, manager, agent, or
employee of the limited liability company, whether arising in contract, tort, or
otherwise”). Harris also notes that he did not sign the employment agreements at
issue, and so he asserts he cannot be held liable for breach of contract.
A partnership under Georgia law is “an association of two or more persons
to carry on as co-owners a business for profit.”
Id. § 14-8-6(1). Courts generally
look to several factors to determine the existence of a partnership, including “a
common enterprise, the sharing of risk, the sharing of expenses, the sharing of
profits and losses, a joint right of control over the business, and a joint ownership
of capital.” Aaron Rents, Inc. v. Fourteenth St. Venture, L.P.,
533 S.E.2d 759,
747–48 (Ct. App. Ga. 2000). “But the intention of the parties is the true test of
whether there is partnership.”
Id.
Here, we agree with the district court that Harris and Hughes clearly
intended to and did operate the Restaurant as an LLC, not a partnership. After
entering into the Vibe Agreement, they formed two valid LLCs for the purpose of
managing restaurant functions, and these two LLCs were, as the court stated,
“consistently utilized to run the Scales 925 restaurant.” The plaintiffs’
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employment agreements clearly state that they were executed by and between
“Scales 925 Atlanta, LLC,” an existing LLC, and the plaintiffs, and Hughes signed
the contract on behalf of the LLC as its “managing member,” not in his individual
or some other capacity. In addition, Scales 925 Atlanta, LLC, was listed as the
employer on each plaintiff’s W-2 and paystubs, and the checks in the record that
were signed by Harris personally were all paid out of a “Scales 925 Atlanta, LLC”
bank account. Thus, the evidence clearly reflects that Harris and Hughes intended
for the duties of employer—and the actions out of which Simms and Davis’s
claims arise—to be undertaken, legally speaking, by Scales 925 Atlanta, LLC,
even if Hughes was the one who in fact undertook those duties on its behalf.
Simms and Davis argue that a common-law partnership existed because
Harris identified Hughes as his “partner” on Instagram and in a discussion with
Davis. But “the use of the label . . . does not by itself demonstrate the existence of
a legal ‘partnership’ and all the rights and obligations engendered thereby,” Jerry
Dickerson Presents, Inc. v. Concert S. Chastain Promotions,
579 S.E.2d 761, 768
(Ga. Ct. App. 2003), particularly when that label is used colloquially, as it was
here.
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Simms and Davis next contend that Harris is not a member of either of the
Scales LLCs. 5 The district court rejected this argument based on the LLCs’
operating agreements, which the court found were binding under Georgia law even
though unsigned. See O.C.G.A. § 14-11-101(18) (“A limited liability company is
not required to execute its operating agreement, and, except as otherwise provided
in the operating agreement, is bound by its operating agreement whether or not the
limited liability company executes the operating agreement.”). According to these
agreements, Scales 925 Atlanta, LLC, was wholly owned by Scales 925
Management, LLC, which, in turn, was jointly owned by Encore, Royal, and two
individuals. The court, noting that Royal was never a valid LLC, reasoned that any
ownership interest in Royal’s name belonged to Harris, the only alleged member of
Royal. The court therefore concluded that Harris was a member of Scales 925
Atlanta, LLC, through his membership—in place of Royal—in Scales 925
Management, LLC.
Simms and Davis respond with two arguments. First, they assert that Royal
could not have passed its interest to Harris because it was never capable of owning
5
Simms and Davis do not explain how this argument helps them. They did not allege
any specific wrongdoing by Harris, and he was not listed as a party to the employment
agreements and did not sign the agreements in any capacity. So without more, he cannot be held
personally liable. Kaesemeyer v. Angiogenix,
629 S.E.2d 22, 25 (Ga. Ct. App. 2006) (“It is
axiomatic that a person who is not a party to a contract is not bound by its terms.”). In any event,
it appears that this argument is in service of their overall argument that Harris’s relationship with
the Restaurant was “either a partnership or joint venture.” We assume without deciding that it
would be helpful to them and so address the merits of the court’s ruling on this issue.
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an interest. Fair enough. But under Georgia law, “[a]n undertaking by an
individual in a fictitious or trade name is the obligation of the individual.” Nat’l
Cash Register Co. v. Sikes,
94 S.E.2d 391, 392 (Ga. Ct. App. 1956); see Hawkins
v. Turner,
303 S.E.2d 164, 166 (Ga. Ct. App. 1983). Because Royal was not a
valid LLC, we agree with the district court that this general rule, as applied here,
means that any ownership interest in Royal’s name belonged to Harris. No interest
was “passed” from Royal. Rather, Harris, as Royal’s sole alleged member,
personally held Royal’s purported interest from the outset.
Second, without disputing the validity of the operating agreements, Simms
and Davis argue that Harris never became a member because he did not sign the
operating agreements. We disagree. The operating agreement for Scales 925
Management, LLC, did not require Harris to sign the agreement to become a
member. The agreement expressly designated certain members, including Royal
(Harris) and Encore (of which Hughes was the sole member), and then included a
provision for admitting new members. Simms and Davis cite language from this
provision in support of their claim that Harris was required to sign the operating
agreement, but we agree with the district court that the cited language “applies
only to admitting new members” not already designated in the agreement.
Simms and Davis next argue that the district court should have permitted
them to proceed against Harris under a veil-piercing theory. See Christopher v.
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Sinyard,
723 S.E.2d 866, 867 (Ga. Ct. App. 2012) (“The concept of piercing the
corporate veil is applied in Georgia to remedy injustices which arise where a party
has overextended his privilege in the use of a corporate entity in order to defeat
justice, perpetrate fraud or to evade contractual or tort responsibility.”). They
contend that the defendants had fair notice of that theory because they alleged
fraud and deceit, which are legal grounds to pierce the corporate veil.
Simms and Davis have not shown that the district court erred by refusing to
consider this theory at summary judgment. The claim of “fraud and deceit”
alleged in the complaint had nothing to do with the legal structure of the
Restaurant or how it was being operated by Harris and Hughes. Rather, it was
about Hughes’s alleged false statements to employees that they would be paid for
working the Restaurant’s grand opening and a New Year’s celebration. And
Harris’s liability for the fraud claim, like his liability for the other claims, was
based solely on a partnership theory of liability. There is nothing about these
allegations that would have put the defendants on notice of a veil-piercing theory
of individual liability.
Finally, Simms and Davis argue that their employment agreements are
unenforceable and that they can prove that they had a contract with Harris
personally. Not only is this argument inconsistent with the breach-of-contract
claim in their complaint, which was based solely on the written employment
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agreements, but it was raised on appeal only in the reply brief. We decline to
consider it. See Timson v. Sampson,
518 F.3d 870, 874 (11th Cir. 2008) (“[W]e do
not address arguments raised for the first time in a . . . litigant’s reply brief.”).
IV.
For the reasons stated, we affirm the grant of summary judgment against
Simms and Davis.
AFFIRMED.
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