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No. 13-1166
Appeal from the United States District Court for the District of
Maryland, at Baltimore.
Catherine C. Blake, District Judge.
(1:12-cv-00297-CCB)
Argued:
Decided:
EVELIUS
&
JONES
LLP,
I.
A.
In 2001, Stanley Keyser and Wendy Blair formed a Maryland
limited
liability
company
called
1899
LLC
(the
Company).
Northern
District
Police
Station
and
project
quickly
ran
into
obstacles.
Environmental
what
Keyser
and
Blair
had
anticipated.
To
ensure
with
several
entities
controlled
by
or
affiliated
with
him
2005,
to
secure
still
additional
financing
for
the
L.P.--an
entity
affiliated
with
Bowman--would
invest
$1.9
number
relevant
Managing
to
of
this
Member
the
appeal.
and
Small
First,
Deal
Agreements
it
as
provisions
designated
Investor
Holdings
Member.
are
as
In
These
entities
included
Plaintiffs-Appellants
1899
Holdings, LLC; Keyser Development Corp.; Keysco Realty Corp.;
Queen Anne Belvedere Revitalization L.P.; and Nineteen/TwentyOne West Preston, LLC.
however,
[i]f
the
available
debt,
Per the
equity,
rental
Holdings
warranted
that
it
would
J.A. 152.
cause
the
plans
and
specifications
. . . free
and
Id.
clear
of
all
See id.
the
Operating
Id. at 152-53.
Agreement,
Holdings
and
Small
Deal
Member
or
its
Affiliates
to
the
Company
. . .
as
Managing
Member
under
certain
circumstances.
if
it
violated
(and
failed
to
cure
within
thirty
days)
any
Id. at 162.
to
standard
merger
clause,
in
connection
with
the
Companys
the
Operating
For services
development,
Id.
Id.
at
160.
The
fee
was
to
be
paid
from
Holdings
and
Small
Deal
Id.
executed
the
Operating
additional
duty
to
funding
cover
to
any
the
project,
shortfalls.
consistent
with
Nevertheless,
Holdings
the
project
Id. at 30.
Id.
According to Holdings,
project.
repeatedly
Id.
Specifically,
requested
access
to
Holdings
financial
alleges
records
that
and
it
other
Id.
September
2008,
difficulties,
to
address
Holdings
and
provided
Historic
that
Tax
Small
Deal
Credit
projects
Small
Deal
ongoing
executed
an
Fund,
the
another
L.P.,
entity,
would
the
contribute
after
Holdings
Id. at 203.
and
Small
Deal
executed
the
obligation
Holdings,
under
dated
the
Operating
November
13,
Agreement.
2008,
Small
In
Deal
letter
to
threatened
to
than
Company.
17
liens
Id. at 206.
and
lawsuits
directly
affecting
the
Id. at 55.
But,
Id. at
Id.
IMDBOSS
sued
1899
LLC,
Small
8
Deal,
Special
Member,
and
Court
the
for
District
of
Maryland,
invoking
diversity
jurisdiction.
In their amended complaint, Plaintiffs first alleged that,
prior to Holdings removal as Managing Member, Bowman--on behalf
of
Small
Deal--orally
agreed
with
Stanley
Keyser
that
the
outlays that had been made and would be made by [Keyser and the
Keyser entities] . . . would be considered loans to 1899 LLC and
not
capital
contributions.
complaint
explained,
completion
of
the
the
J.A.
funds
project.
The
32-33.
were
due
complaint
As
loans,
immediately
alleged
the
upon
that,
by
failing to repay the loans, 1899 LLC breached the terms of the
oral agreement.
to
Holding,
the
removal
was
not
authorized
by
the
the
Agreement
by
wrongfully
withholding
Id. at 39.
The court
first held that the parol evidence rule barred Plaintiffs loan
claims.
According
conceded
that
contributions
Amendment.
the
the
as
to
the
court,
alleged
loans
took
oral
place
Plaintiffs
agreement
prior
to
counsel
had
treat
the
to
execution
of
the
loans
was
Agreement,
as
inconsistent
ratified
by
with
the
the
terms
Amendment.
of
the
Because
Operating
the
parol
enrichment claims.
where
an
express
the
Operating
Agreement
with
the
respect
district
to
court
Plaintiffs
noted
that
and
Id. at *4.
claim
demand
for
for
an
an
Id.
Having already concluded that the loan claims were not viable,
10
the
court
determined
that
the
claim
for
an
accounting
also
failed.
Third, the court held that Holdings had failed to plausibly
allege a breach of contract based on its removal as Managing
Member.
Taking
judicial
notice
of
state
court
documents
the
court
held
that
removal
of
Id. at *5.
Holdings
as
the
court
dismissed
IMDBOSSs
claim
for
the
provisions as establishing that the fee was not due until 2017,
and
thus
determined
that
IMDBOSSs
claim
for
payment
was
premature.
Plaintiffs timely noted this appeal.
II.
Plaintiffs
argue
that
the
district
court
erred
in
true,
to
state
face.
Id.
claim
(quoting
to
relief
Ashcroft
that
v.
is
Iqbal,
plausible
556
U.S.
on
its
662,
678
(2009)); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007).
In
assessing
the
sufficiency
of
plaintiffs
contract
dispute,
the
construction
of
ambiguous
Martin
first
dismissing
consider
Plaintiffs
evidence rule.
whether
loan
the
claims
district
pursuant
court
to
erred
the
in
parol
See Francis
v. Allstate Ins. Co., 709 F.3d 362, 369 (4th Cir. 2013), cert.
denied,
134
S.
Ct.
986
(2014)
(A
federal
court
sitting
in
Maryland
law,
the
parol
evidence
rule
bars
the
it
Calomiris,
legally
inoperative
communications
(internal
quotation
marks
omitted).
Id. at
Plaintiffs
argue
that the rule does not apply to their loan claims because: (1)
the alleged oral agreement to treat their contributions as loans
occurred after execution of the written Amendment; and (2) the
oral agreement is not inconsistent with the terms of either the
Operating
Agreement
or
the
Amendment.
We
reject
both
contentions.
1.
With
respect
to
the
timing
issue,
Plaintiffs
point
to
the
[Amendment].
J.A.
279.
In
response
to
this
[Amendment].
claims,
the
admission.
Id.
district
In
court
its
order
treated
dismissing
this
Plaintiffs
statement
as
an
party
if
unambiguous.
the
statements
are
deliberate,
clear,
and
Georges Cnty., 608 F.3d 183, 190 (4th Cir. 2010) (quoting Meyer
v. Berkshire Life Ins. Co., 372 F.3d 261, 265 n.2 (4th Cir.
2004)).
When
the
district
court
14
treats
statement
as
an
admission,
we
discretion.
On
review
determination
only
for
abuse
of
appeal,
statement
that
did
Plaintiffs
not
carry
attributed to it.
contend
the
that
significance
their
the
counsels
district
court
Reply Br.
plural
form,
indicating
it
had
in
mind
all
of
the
response,
counsel
neither
disputed
the
courts
of
claims,
whether
the
counsels
parol
failure
evidence
to
mention
rule
barred
the
Plaintiffs
distinction
likely
Moreover, counsel
we
clear
interpreted it.
find
and
that
both
the
that
the
district
statement
court
was
correctly
counsels
statement
discretion.
as
an
admission
was
not
an
abuse
of
we
reject
their
argument
that
the
loan
agreement
Because
with
the
terms
of
the
writings
based
on
the
Operating
Amendment.
Agreement
and
the
Ratification
Clause
in
Operating
Agreement
agreed--as
of
the
in
date
the
of
Amendment,
the
Holdings
Amendment--that
effectively
there
were
Holdings,
regarding
the
the
2013
oral
WL
142303,
loan
at
*3.
agreement,
Holdings
the
court
no
See
allegation
held,
thus
16
Id.
Plaintiffs
assert
that
the
district
court
erred
by
As
they point out, the full clause states that [t]here are no
outstanding loans or advances (excluding, for this purpose, any
loans pursuant to Section 6.11 and development advances with
respect to the Project) . . . which are outstanding for more
than 120 days.
Based on this
that
neither
the
Amendment
nor
the
Operating
Agreement
The Operating
Id. at 152.
The only
17
upon
substantial
Project).
completion
of
construction
of
the
completing
the
project.
contributions
were
not
Consequently,
the
Operating
ratified)
in
Nor
fact
unambiguously
do
they
repaid
within
Agreement
renders
dispute
even
(which
the
that
180
the
the
days.
Amendment
payments
capital
contributions. 5
In
merger
any
clause.
agreements
parties
event,
. . .
and
among them.
provision
the
That
clause
constitute
supersede
any
Id. at 176.
after
Operating
the
date
Agreement
provides
the
prior
entire
also
that
the
agreement
agreements
or
contains
written
among
the
understandings
the
alleged
oral
agreement,
it
18
evidence
rule
thus
bars
introduction
As the
of
those
has
explained,
the
contract
parties
to
their
Id. at 610
CIT Group Equip. Fin., Inc., 157 F.3d 956, 964 (2d Cir. 1998)
(per curiam) (alteration in original) (internal quotation marks
19
For this
Holdings
makes two arguments for why its removal was not authorized by
the Operating Agreement.
of
completion
Second,
Operating
liens,
did
such
not
Holdings
that
the
existence
violate
its
obligations.
argues
Agreement,
that
that
even
if
violation
arguments
misapprehend
the
existence
of
the
liens
liens
See
prior
J.A.
it
did
violate
might
not
have
of
to
152.
had
the
a
the
hook
on
that
justified
20
the
record
state
court
documents
in
the
(of
which
we
take
Holdings
deemed
to
failure
have
to
fulfill
material
its
adverse
funding
obligation
effect.
Id.
is
at
162
language
and
(emphasis added).
We
perceive
no
ambiguity
in
the
contract
terms
removal
of
of
the
Operating
Holdings
as
Agreement.
Managing
Member
See
based
id.
on
(permitting
an
uncured
for breach. 8
C.
We next consider IMDBOSSs claim for breach of contract
based on Defendants failure to pay it the development fee.
We
J.A. 200.
The terms
conclusion.
See J.A. 40.
We fail to comprehend how Small
Deals decision to exercise a right expressly provided to it by
the contract could constitute either bad faith or a breach of
fiduciary duty, especially in light of Holdings own breach.
See, e.g., Big Yank Corp. v. Liberty Mut. Fire Ins. Co., 125
F.3d 308, 313 (6th Cir. 1997) (noting that a partys acting
according to the express terms of a contract cannot be
considered a breach of the duties of good faith and fair
dealing and collecting cases to that effect).
22
Focusing
shall
be
on
deemed
Construction
provisions
earned
in
Completion,
currently due.
IMDBOSS
this
its
argues,
only
by
entirety
IMDBOSS
pronouncement
that
the
fee
of
the
date
of
that
the
fee
is
as
asserts
demonstrating
that
there
are
not
Appellants
project
was
completed,
it
does
not
follow
that
the
fee
with
J.A. 201.
discretion
decide
that
the
relevant
funds
Id. at 200.
are
While an
faith
could
perhaps
overcome
the
discretion
this
clause
See id.
23
The
we
hold
that
the
district
court
correctly
In Maryland, a
current
plaintiffs.
obligation
Although
to
Plaintiffs
pay
money
capital
to
any
of
contributions
the
will
and
for
similar
J.A. 163.
reasons,
Defendants
do
not
owe
Maryland LLC generally owe each other fiduciary duties (an issue
24
See id.
the
Interest
of
the
removed
Managing
Member
for
an
therefore
have
not
alleged
circumstances
to
contractual
fiduciary
in
relationship
nature
and
between
any
the
fiduciary
parties
was
relationship
not
that
III.
For the foregoing reasons, the judgment of the district
court is
AFFIRMED.
25