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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-13036
Non-Argument Calendar
________________________
D.C. Docket No. 1:15-cv-00152-LJA
CHRIS PAYNE,
individually and on behalf of the members of
Doco Federal Credit Union,
Plaintiff - Appellant,
versus
DOCO CREDIT UNION,
and its Officers, Directors, Executives, Attorneys,
Successors and Assigns,
BARRY O. HEAPE,
individually and in his capacity as
President / CEO of DOCO Federal Credit Union,
TOM POLLOCK,
in his capacity as Board Chairman of DOCO Credit Union,
Defendants - Appellees.
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________________________
Appeal from the United States District Court
for the Middle District of Georgia
________________________
(May 8, 2018)
Before MARCUS, ROSENBAUM and BLACK, Circuit Judges.
PER CURIAM:
Chris Payne sued DOCO Federal Credit Union, his former employer,
alleging he was fired in retaliation for raising concerns about the unlawful conduct
of DOCO’s President and CEO, Barry Heape. Christopher Farr, another DOCO
employee, had revealed Heape’s misconduct to Payne. But when the time came
for his deposition, Farr fully supported Heape’s version of events. In light of
Farr’s testimony, Payne agreed to settle the case.
Over two years after the settlement, Farr contacted Payne and admitted he
had testified falsely. Payne then sued DOCO, Heape, and DOCO’s Board
Chairman Tom Pollock (collectively, Defendants), seeking rescission. The suit
was dismissed without prejudice citing Payne’s failure to restore the funds he had
received in the settlement. Payne returned the funds and sued again. The district
court granted judgment on the pleadings for Defendants, holding Payne’s claim for
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rescission was not prompt as a matter of law. Payne appeals that order and the
subsequent denial of leave to amend his complaint. After review, we affirm. 1
I. BACKGROUND
Chris Payne began working for DOCO Federal Credit Union on January 3,
2006. In October of 2008, a DOCO-owned ATM machine was vandalized.
Christopher Farr, another DOCO employee, confided in Payne that Barry Heape,
DOCO’s President and CEO, had instructed Farr to further damage the vandalized
machine in hopes the insurance company would declare it a total loss. Payne told
members of DOCO’s Board of Directors, including Tom Pollock, about Heape’s
unlawful conduct. 2 Days later, Payne was fired.
On December 19, 2009, Payne sued alleging he was terminated in retaliation
for reporting Heape. Although Payne had anticipated Farr’s testimony would
“form[] the majority of the factual basis for [the] claims,” Farr’s deposition did not
corroborate Payne’s account. Instead, Farr testified in full support of Heape.
Payne “felt compelled to compromise and settle” in light of Farr’s testimony. On
1
“We review de novo an order granting judgment on the pleadings.” Perez v. Wells
Fargo, N.A.,
774 F.3d 1329, 1335 (11th Cir. 2014) (citation omitted). “Judgment on the
pleadings is appropriate where there are no material facts in dispute and the moving party is
entitled to judgment as a matter of law.”
Id. (quotations omitted) Although we typically review
the denial of a motion to amend a complaint for an abuse of discretion, “when the district court
denies the plaintiff leave to amend due to futility, we review the denial de novo because [the
district court] is concluding that as a matter of law an amended complaint ‘would necessarily
fail.’” Freeman v. First Union Nat’l,
329 F.3d 1231, 1234 (11th Cir. 2003) (citation omitted).
2
At the time of these events, Pollock was a member of DOCO’s Board of Directors.
Pollock is now Board Chairman.
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November 19, 2010, the parties executed a Settlement Agreement and Release.
Payne voluntarily dismissed his suit in compliance with the parties’ agreement.
In August or September of 2013, Payne received a series of calls and e-mails
in which Farr acknowledged his deposition testimony had been false. Farr also
informed Payne that Heape had perjured himself and destroyed key evidence.
Heape had allegedly threatened to fire Farr unless his deposition testimony
supported Heape’s version of events. “Shocked and astonished to learn of these
revelations,” Payne “immediately felt as though he had been tricked . . . into
settling” for less than the true value of his case.
Farr was not, however, consistently forthright about Heape’s misconduct.
On September 24, 2013, while voluntarily giving Payne a sworn statement, Farr
invoked his Fifth Amendment right against self-incrimination “and refused to
answer the majority of the questions asked him . . . .” Farr again invoked his Fifth
Amendment right on March 3, 2014 while testifying in a separate case related to
these events. Finally, on June 27, 2014, Farr was granted immunity by the State of
Georgia so that he could testify without fear of criminal prosecution.
On April 2, 2014, about three months before Farr received immunity, Payne
filed a petition in Dougherty County Superior Court seeking to have the settlement
agreement set aside. Defendants removed the case to the United States District
Court for the Middle District of Georgia. After removal, Defendants moved to
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dismiss, contending Payne could not pursue rescission until he had returned the
funds paid to him under the settlement agreement. The district court agreed and
dismissed the case without prejudice on May 15, 2015.
On July 16, 2015, Payne returned the funds. Two months later, on
September 15, 2015, Plaintiff filed the instant case seeking rescission of the
settlement agreement and advancing several other claims. Defendants filed a
Partial Motion for Judgment on the Pleadings. The district court granted the
motion, concluding as a matter of law that Payne’s restoration of the funds was
untimely. This order effectively ended the case because the parties’ agreement
contained a general release and covenant not to sue that precluded Payne from
proceeding with his remaining claims. Payne moved for leave to amend his
complaint, but the district court denied Payne’s motion, concluding amendment
would be futile. Payne appealed.
II. ANALYSIS
A. Order Granting Judgment on the Pleadings for Defendants
Payne seeks rescission of a settlement agreement. “[I]n order to rescind, the
defrauded party must promptly, upon discovery of the fraud, restore or offer to
restore to the other party whatever he has received by virtue of the contract if it is
of any value.” O.C.G.A § 13-4-60. Synonyms for promptly include “at once,
quickly, readily, seasonably, timely, [and] expeditiously.” Jody v. Dunlevie, 77
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S.E. 162, 164-65 (Ga. 1913) (citation omitted). The promptness inquiry is not
mechanical. “What might be termed as prompt action in one case might in another
instance be regarded as inexcusable laches.” Id. at 165. The central question is
whether the facts reveal a reasonable excuse for delay. See id. (“If he waits
unreasonably long before making a tender, he forfeits his right to rescission. . . .
[We must determine] if there is any excuse for this long delay in tendering back the
consideration of the contract of settlement.”).
Before reaching the merits, however, we must address Payne’s threshold
argument that the district court erred by deciding whether restoration was prompt
before summary judgment. Although promptness is “ordinarily a question for the
jury,” Mitchell v. Backus Cadillac-Pontiac, Inc.,
618 S.E.2d 87, 97 (Ga. Ct. App.
2005) (citation omitted), courts have, in limited circumstances, determined
restoration was not prompt as a matter of law, see, e.g., Walker v. Johnson,
630
S.E.2d 70, 75 (Ga. Ct. App. 2006), Orion Capital Partners, L.P. v. Westinghouse
Elec. Corp.,
478 S.E.2d 382, 385-86 (Ga. Ct. App. 1996). Payne contends these
cases, which were decided at the summary judgment stage, provide no support for
deciding the matter at the pleading stage. Unlike a motion for summary judgment,
“[a] motion for judgment on the pleadings pursuant to Federal Rule of Civil
Procedure 12(c) is subject to the same standard as a Rule 12(b)(6) motion to
dismiss.” United States v. Wood,
925 F.2d 1580, 1581 (11th Cir. 1991).
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Payne’s argument is unavailing. In Jordy, the Supreme Court of Georgia
disposed of a case by demurrer, holding as a matter of law that an offer to restore
made sixteen months after discovery of the fraud was not prompt. 77 S.E. at 164-
65. Yesterday’s general demurrers are akin to today’s motions to dismiss. See
Kimbrough v. State,
799 S.E.2d 229, 233 n.12 (Ga. 2017) (“Although the [Georgia]
Civil Practice Act abolished civil demurrers, it retained their essential functions in
[] motions upon the pleadings. . . . A motion to dismiss for failure to state a claim
under O.C.G.A § 9-11-12(b)(6) performs substantially the same function as a
general demurrer.”). Jordy’s procedural posture illustrates that the district court
did not err by deciding rescission was not prompt before summary judgment.
Alternatively, Payne asserts the case ought to have proceeded to summary
judgment to allow further development of the factual record. It is, however,
unclear what further development is needed. Payne put forward the date on which
he discovered the fraud, the date on which he restored the proceeds, and an
explanation for the intervening period. No portion of Payne’s argument indicates
what additional facts are lacking. Insofar as Payne is referring to the facts asserted
in his proposed amended complaint, any error was vitiated by the district court’s
consideration thereof, which is addressed in the next section of this opinion.3
3
Payne also contends that “[i]n deciding against [him], the trial court drew inferences
against the non-moving party, which is inappropriate when considering a 12(c) motion for
judgment on the pleadings.” But because Payne does not identify any such inferences or
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We turn, now, to the heart of the district court’s analysis. The district court
analyzed Payne’s delay as if it had been nine months. It reached this figure by
adding the seven months that elapsed between Payne’s discovery of the fraud
(which it assumed occurred early in September of 2013) and the filing of the first
rescission action on April 2, 2014, to the two months that elapsed between the
issuance of the order requiring Payne to return the funds on May 15, 2015 and the
actual restoration of the funds on July 16, 2015. Payne contended the delay was
not unreasonable because the time was spent diligently working to obtain a sworn
statement from Farr, a critical witness. The district court rejected Payne’s excuse
as insufficient and, in the absence of cause for delay, held restoration was not
prompt.
Payne urges us not to consider the two months that elapsed between the
issuance of the order requiring him to return the funds and the date on which he
actually restored them. This period purportedly reflects time spent corresponding
with Defendants about how and where to return the funds as well as the week the
funds spent in the mail. We need not assess the merits of Payne’s position.
Instead, we assume, arguendo, that Payne delayed six months and ten days. This
calculation excludes the two month period Payne objects to and gives Payne all
otherwise develop his argument, it is waived. Greenbriar, Ltd. v. City of Alabaster,
881 F.2d
1570, 1573 n.6 (11th Cir. 1989) (stating that passing references are insufficient to raise issues for
appeal and such issues are deemed abandoned).
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possible benefit by looking to the period between the filing of the first rescission
action on April 2, 2014 and September 23, 2013 (the day before Farr gave Payne
his sworn statement and, by logical implication, the last day on which Farr could
have made his informal revelations to Payne).
As noted above, “the defrauded party must promptly, upon discovery of the
fraud, restore or offer to restore to the other party whatever he has received by
virtue of the contract if it is of any value.” O.C.G.A § 13-4-60. Georgia courts
have found a delay of six months to be unreasonable. See Walker,
630 S.E.2d at
75. Here, Payne’s delay was longer. Although promptness is not a rule suited to
mechanical application, examination of the record does not reveal a “reasonable
excuse . . . for the delay in making the offer to restore the status.” Jordy, 77 S.E. at
165.4
B. Order Denying Leave to Amend
Payne also contends the district court erred by concluding that amending his
complaint would be futile. In support, Payne cites new allegations that his
4
Payne proposes a different analysis. He asserts a delay in restoring consideration is
only unreasonable if the defrauded party acted inconsistently with an intent to rescind or if the
other party was prejudiced by the delay; however, none of the three cases Payne cites support
such a requirement. See generally Walker,
630 S.E.2d at 75; Orion Capital Partners,
478 S.E.2d
at 385-86; Jordy,
77 S.E. 162 at 164-65.
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attorneys offered to return the funds on March 3, 2014.5 Assuming Payne
discovered the fraud on September 23, 2013, five months and eight days elapsed
before Payne’s attorney offered to restore the funds. This calculus nudges the
length of Payne’s delay twenty-two days below six months, a period Georgia
courts have concluded was not prompt as a matter of law. But a twenty-two day
change does not warrant a different result. Although Payne’s proposed
amendments also flesh out the specific steps he took to secure immunity for Farr,
the fact remains that procuring admissible evidence of fraud is not a reasonable
excuse for delay, regardless of the effort expended.
Alternatively, Payne asserts Defendants waived the tender requirement. The
tender of benefits can be waived if “the party entitled to payment, by declaration or
conduct . . . proclaims that, if tender of the amount due is made, an acceptance of it
will be refused.” S.R. Co. v. Lawson,
353 S.E.2d 491, 494 (Ga. 1987). This
argument was not raised before the district court, accordingly, we need not
consider it. Stewart v. Dep’t of Health and Human Servs.,
26 F.3d 115, 115 (11th
Cir. 1994) (“As a general principle, this court will not address an argument that has
not been raised in the district court.”). Even had the argument been properly
presented, the facts in the proposed amended complaint do not show Defendants
5
The parties disagree about whether Payne’s attorney’s statements constitute an offer to
restore. We need not decide the issue. Assuming the March 2014 statements did constitute an
offer to restore, the district court still did not err by determining the offer was not prompt.
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waived the tender requirement. We agree with the district court’s conclusion that
amendment would have been futile. The judgment of the district court is
AFFIRMED.
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