Judy Land v. Credit Suisse Group Securities ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS APR 26 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
JUDY LAND; et al., No. 16-35694
Plaintiffs-Appellants, D.C. No. 1:10-cv-00001-JLQ
v.
MEMORANDUM*
CREDIT SUISSE GROUP SECURITIES
(USA) LLC, FKA Credit Suisse First Boston
Corp., a Delaware limited liability company;
et al.,
Defendants-Appellees.
L. J. GIBSON; et al., No. 16-35705
Plaintiffs-Appellants, D.C. No. 1:10-cv-00001-JLQ
v.
CREDIT SUISSE GROUP SECURITIES
(USA) LLC, FKA Credit Suisse First Boston
Corp., a Delaware limited liability company;
et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Idaho
Justin L. Quackenbush, District Judge, Presiding
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Argued and Submitted February 9, 2018
Seattle, Washington
Before: GOULD, PAEZ, and CHRISTEN, Circuit Judges.
Plaintiffs are purchasers of properties at four different planned developments
in Nevada, Idaho, Montana, and the Bahamas. They appeal the district court’s
grant of summary judgment in favor of the defendants on their claims for
negligence, fraud, tortious interference with contract, and negligent
misrepresentation. For the reasons stated below, we affirm the district court’s
grant of summary judgment.
In broad terms, the plaintiffs’ theory is that Cushman & Wakefield, Inc., an
appraiser, used a non-standard appraisal method that overvalued the properties at
the planned developments. The appraisal resulted in Credit Suisse, a lender,
making unsound loans to the developers of the planned communities.1 Those loans
and the attendant loan payments, in turn, caused the developers to go bankrupt, and
the bankruptcies resulted in the loss of various luxury amenities and other harms to
the plaintiffs.
1. The district court properly granted summary judgment to the defendants on
the plaintiff’s negligence claim. The elements of negligence are similar in all
1
On the plaintiffs’ theory, the loans were unsound both because they were too big,
and because in some instances they let the developers make large dividend
payments out of the loan proceeds.
2
relevant jurisdictions. In each jurisdiction a negligence claim requires establishing
that the defendant owes the plaintiff a duty to conform to a particular standard of
conduct. Jones v. Starnes, 245 P.3d 1009, 1012 (Idaho 2011); Peterson v.
Eichhorn, 189 P.3d 615, 620–21 (Mont. 2008); Turner v. Mandalay Sports Entm’t,
LLC, 180 P.3d 1172, 1175 (Nev. 2008); Williams v. Davis, 974 So. 2d 1052, 1056
(Fla. 2007). Here, the district court correctly held that Cushman, in its role as an
appraiser, and Credit Suisse, in its role as a lender, owed no legal duty to third
parties who purchased property from the developers. Plaintiffs have pointed to no
authority that would hold a lender or appraiser liable to third parties who were
indirectly affected by the inability of a borrower to make loan payments.
2. The district court also properly granted summary judgment to the defendants
on the tortious interference with contract claims. Here, the plaintiffs point to no
contractual right that was lost because of the bankruptcy. With respect to the
Nevada resort agreement, the contract promised no luxury amenities. On the
Montana resort agreement, the contract explicitly noted that no recreational
amenities would be provided. In the Bahamas resort agreement, the contract called
for basic infrastructure, but the property report disclaimed any right to recreational
facilities. At the Idaho resort, certain amenities were promised, and were built, but
purchase and sale agreements incorporated a disclaimer of any obligation to
maintain recreational facilities in perpetuity.
3
3. The district court also properly granted summary judgment to the defendants
on the plaintiffs’ fraudulent misrepresentation and negligent misrepresentation
claims. These claims fail because the plaintiffs have not shown that Credit Suisse
or Cushman ever made a false or misleading representation upon which the
plaintiffs relied. Such a showing is an essential element of a fraudulent or
negligent misrepresentation claim in each jurisdiction.2 See Butler v. Yusem, 44
So. 3d 102, 105 (Fla. 2010); Country Cove Dev., Inc. v. May, 150 P.3d 288, 293
(Idaho 2006); Barmettler v. Reno Air, Inc., 956 P.2d 1382, 1386 (Nev. 1998);
Batten v. Watts Cycle & Marine, Inc., 783 P.2d 378, 380–81 (Mont. 1989). Here,
the plaintiffs admit that they never saw the appraisals prepared by Cushman for
Credit Suisse. Plaintiffs instead claim that they were misled when the Credit
Suisse loans were publicized without also publicizing the appraisal method used to
justify the loans or the lending scheme that allowed the developers to pay
dividends from the loan proceeds. However, the plaintiffs have provided no
evidence that Credit Suisse or Cushman communicated to them anything about the
loans. All communications about the loans came from the bankrupt developers,
and not Cushman or Credit Suisse. We therefore reject the fraudulent
misrepresentation and negligent misrepresentation claims.
2
Idaho does not recognize negligent misrepresentation, except as between an
accountant and a client. See Duffin v. Idaho Crop Improvement Ass’n, 895 P.2d
1195, 1203 (Idaho 1995).
4
4. The plaintiffs attempt to revitalize their claims by asserting that Cushman,
Credit Suisse, and the developers were all engaged in a conspiracy. In this way,
actions of the developer could be attributed to Cushman and Credit Suisse.3
Plaintiffs’ conspiracy claim fails because they have presented no evidence of an
agreement between the developers, Credit Suisse, and Cushman to defraud them.
AFFIRMED.
3
As a conceptual matter, conspiracy requires an agreement to perform some
unlawful act. As such, one cannot conspire to commit a negligent act. “Logic and
case law dictate that a conspiracy to commit negligence is a non sequitur.”
Sonnenreich v. Philip Morris Inc., 929 F. Supp. 416, 419 (S.D. Fla. 1996).
Conspiracy also will not revitalize the plaintiffs’ tortious interference claim
because the plaintiffs had no contractual rights that were violated.
5