United States District Court, E.D. Louisiana
ORDER & REASONS
the Court is Defendant Bank of New York Mellon's Motion
for Judgment on the Pleadings. R. Doc. 40. Plaintiffs oppose
the motion, R. Doc. 46. Defendant timely replies. R. Doc. 54.
Having reviewed the parties' arguments and applicable
law, the Court now issues this Order and Reasons.
case arises out of Plaintiffs Edward Mendy's
(“Mendy”) and Mendy Brothers LLC's
(“Mendy Brothers”) alleged agreement to purchase
immovable property from Defendant Bank of New York Mellon
(“BNYM”). Plaintiffs maintain this Court has
diversity jurisdiction under 28 U.S.C. § 1332. R. Doc.
18 at 1.
Mendy Brothers and Plaintiff Mendy, an owner of Mendy
Brothers, bring this breach of contract claim seeking
specific performance. Id. at 17. In October 2015,
Mendy discussed the purchase of a home located at 7833
Primrose Street, New Orleans, LA, 70126 (the
“Property”) with BNYM's agent, who informed
Mendy that the purchase price was negotiable. Id. at
4-5. Mendy and Mendy Brothers made a series of offers on the
property, which BNYM rejected. Id. at 6. On April
11, 2016, BNYM countered Plaintiffs' offer with a
counteroffer price of $95, 000. Id. On April 12,
2016, BNYM's agent informed Plaintiffs that multiple
purchasers had expressed interest in the property and
encouraged Plaintiffs to increase their offer; however,
Plaintiffs allege that this communication did not indicate a
withdrawal of the counteroffer. Id. Plaintiffs
responded to BNYM that they did not wish to participate in a
bidding war but would consider the outstanding counteroffer,
which they accepted via the online management system BNYM
used in its real estate transactions. Id. at 7.
Plaintiffs contend that this acceptance created a binding
contract for the sale and purchase of the Property.
Id. However, BNYM accepted a different offer that
was higher than the price offered by Plaintiffs. Id.
at 8. Plaintiffs seek specific performance and monetary
damages for this alleged breach of contract. Id. at
also allege unjust enrichment and seek the profits Defendants
made on the sale of the property and damages for the
difference between the agreed-upon price and the increase in
property values in the neighborhood. Id. at 14.
Plaintiffs also allege they were the victims of a civil
conspiracy between BNYM and their unnamed associates, and
seek compensatory and punitive damages. Id. at 15.
BNYM responded, denying it had a contract with Plaintiffs. R.
Doc. 19 at 7. BNYM raised a number of affirmative defenses,
including Plaintiffs' failure to mitigate damages,
failure to state a claim, res judiciata, waiver,
issue preclusion, prescription, preemption and statute of
limitations. Id. at 15-16.
BNYM asserts a Counterclaim against Plaintiffs, alleging that
they wrongfully caused a notice of lis pendens to be
filed in the mortgage and conveyance records of Orleans
Parish. Id. at 20, 21. BNYM alleges that Plaintiffs
did not timely respond to their call for highest and best
offers for the Property, and when Plaintiffs' belated
offer did arrive, it was lower than other offers.
Id. at 23. BNYM contends that the call for highest
and best offers effectively rejected offers previously
presented, and revoked any counteroffers previously made.
Id. Plaintiffs filed a notice of lis
pendens at the advent of this court action, which
impacted BNYM's ability to sell the Property to the
highest bidder. Id. at 21. BNYM alleges that this
current court action does not affect title or assert a
mortgage or privilege, as required under La. C.C. 3751,
because Plaintiffs have no rights to the Property.
Id. BNYM seeks damages, the amount of which will be
proven at trial. Id.
Defendant BNYM's Motion for Judgment on the Pleadings (R.
explains this is a breach of contract dispute, where
Plaintiffs' contend they entered into a contract to
purchase residential property with BNYM, and then BNYM
refused to sell the property at the agreed upon price. R.
Doc. 40 at 1. However, BNYM avers that Plaintiffs' claims
for breach of contract, unjust enrichment, civil conspiracy,
punitive damages, unfair trade practices and attorney fees
are unsupported in fact and law and should be dismissed.
provides a factual overview of the negotiations which
Plaintiffs' contend created a contract to purchase the
residential property. Id. at 3. After some back and
forth between the parties' realtors, Plaintiffs claim
that BNYM made a counteroffer to sell the property to
Plaintiffs for $95, 000. Id. at 3. Plaintiffs
contend that they eventually accepted this counter offer
through Defendant's online offer management system.
However, Defendant explains that the alleged offer and
acceptance were not in the form of an authentic act or act
under private signature, as required by Louisiana law.
Furthermore, Defendant argues Plaintiffs have not alleged the
realtor who was involved in the negotiations had the mandate
authority to contractually bind Plaintiffs in the sale of
immovable property. Id. at 4. As such, Defendant
contends that the supposed contract is not enforceable and
Plaintiffs have failed to allege facts to support their other
Defendant argues that Plaintiffs' breach of contract
claims must be dismissed. Id. at 6. To prevail on a
breach of contract claim in Louisiana, the party must prove
the obligor undertook an obligation, failed to perform the
obligation, and the failure to perform caused damages.
Id. To create a binding obligation to buy or sell
immovable property, a contract must be memorialized in
writing as an authentic act or act under private signature.
Id. at 7 (citing La. Civ. Code art. 1839).
Furthermore, when such a contract is entered by an agent,
that agent must have an express written mandate memorialized
as an authentic act or act under private signature granting
the agent authority to enter a contract to buy or sell
immovable property. Id. at 8. Defendant argues that
Plaintiffs have not alleged any facts that the supposed
contract or mandate were written as an authentic act or act
under private signature. Thus, Defendant argues the purported
agreement did not create a binding obligation, and
Plaintiffs' breach of contract claims must be dismissed.
Id. at 8-9.
Defendant argues that Plaintiffs' unjust enrichment claim
fails as a matter of law. Id. at 10. According to
Defendant, a party may only bring suit for unjust enrichment
when the law does not provide any other remedy. Id.
(citing La. Civ. Code. art. 2298). Defendant contends that
because Plaintiffs could, in theory, recover for breach of
contract, they cannot recover under a theory of unjust
enrichment. Id. at 11. Furthermore, Defendant avers
that even if Plaintiffs were entitled to recover on these
grounds, they have failed to allege facts to support such a
claim. Id. In their Complaint, Plaintiffs claim that
Defendant would be unjustly enriched if it sold the property
to a third party at a higher price. Defendant argues that
such hypothetical speculation is an insufficient basis to
pursue an unjust enrichment claim. Id.
Defendant contends that Plaintiffs' claim for civil
conspiracy should be dismissed. Id. at 13. Under
Louisiana law, civil conspiracy is not a cause of action, but
must be accompanied by an underlying tort. Id. Here,
Plaintiffs' claim is based on an alleged breach of
contract, not a tort, and therefore Defendant contends the
civil conspiracy claim fails as a matter of law. Id.
Furthermore, Plaintiffs fail to allege any facts that
Defendant worked with any other defendants or individuals to
effectuate the alleged conspiracy in this case. Id.
at 14. Because conspiracy cannot be a solo endeavor,
Defendant argues this claim should be dismissed.
Defendant addresses Plaintiffs' claims for punitive
damages, attorney fees, and unfair trade practices. Under
Louisiana law, punitive damages are not recoverable except
for the three statutory exceptions. Id. at 15.
Plaintiffs' claims do not fall into any of these
statutory exceptions, thus, Defendant argues punitive damages
are precluded in this case. Id. Next, Defendant
avers that the American Rule applies to attorney fees unless
such fees are specifically authorized by statute.
Id. There is no statute that would entitle
Plaintiffs' to attorney fees in this case, and Plaintiffs
have not indicated any such basis for recovery. Id.
Finally, Defendant avers that as a federally chartered bank
insured by the Federal Deposit Insurance Company, it is
exempt from any claim under the Louisiana Unfair Trade
Practices Act (“LUTPA”). Id. at 16-17.
LUPTA does not apply to “any federally insured
financial institution, its subsidiaries, and
affiliates.” Id. (citing La. Rev. Stat. §
51:1406(1)). Thus, Defendant argues that these claims must
also be dismissed.