[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 10-10692 ELEVENTH CIRCUIT
Non-Argument Calendar MARCH 8, 2012
________________________ JOHN LEY
CLERK
D.C. Docket No. 1:09-cv-21586-ASG
PEDRO INFANTE,
lllllllllllllllllllll Plaintiff - Appellant,
versus
BANK OF AMERICA CORPORATION,
a Delaware corporation,
lllllllllllllllllllll Defendant - Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(March 8, 2012)
Before TJOFLAT, EDMONDSON and MARCUS, Circuit Judges.
PER CURIAM:
Plaintiff Pedro Infante appeals from the district court’s dismissal of his action
alleging fraud and rescission under the Truth in Lending Act (“TILA”), 15 U.S.C. §
1635, against defendant Bank of America Corporation (“BOA”). On appeal, Infante
argues that the district court erred in granting BOA’s motion to dismiss because: (1)
his complaint pled fraud with sufficient particularity to satisfy the pleading
requirements of federal law by alleging that BOA’s agents misrepresented Infante’s
income on his loan application and concealed this fact by not giving Infante an
opportunity to review the application; and (2) his complaint properly presented a
present need for a declaration of his right to recision under the TILA. After thorough
review, we affirm.
We review de novo a district court’s decision to dismiss a complaint for failure
to state a claim under Fed.R.Civ.P. 12(b)(6). Am. United Life Ins. Co. v. Martinez,
480 F.3d 1043, 1056-57 (11th Cir. 2007). The complaint is viewed in the light most
favorable to the plaintiff, and all of the plaintiff’s well-pleaded facts are accepted as
true. Id. at 1057. Dismissal is not appropriate unless it is plain that the plaintiff can
prove no set of facts that would support the claims in the complaint. Davila v. Delta
Air Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003). However, a district court may
properly dismiss a complaint if it rests only on conclusory allegations, unwarranted
factual deductions, or legal conclusions masquerading as facts. Id.
2
The relevant background is this. Infante is the current owner of a parcel of
property located in Coconut Grove, Florida (“the property”). In October of 2007,
Infante closed on two mortgage loans whereby Countrywide Bank, FSB
(“Countrywide”), a corporate entity that has since been purchased by BOA, agreed
to finance the “construction of a residence and related improvement on the property”
and to refinance the property. The first mortgage loan was for $1,462,500 (“first
mortgage loan”) and the second mortgage loan was for $195,000 (“second mortgage
loan”). In order to obtain these loans, Infante submitted a loan application --
commonly referred to as a Uniform Residential Loan Application (“URLA”) -- that
required Infante to provide a variety of detailed information regarding his financial
standing, such as net assets, income, and expenses. This application, which Infante
swore contained true and correct information, reflected a monthly income of
$35,416.00. However, Infante claims that his income at the time was only $15,522.28
and that BOA “inflated the true income figures to justify the loan and prepare the loan
for future assignment or sale” and to induce Infante to “incur a loan obligation that
the Defendant was fully aware that Plaintiff would ultimately be unable to pay.”
Infante also asserts that BOA neglected to make certain disclosures required by the
TILA and that Infante is thus entitled to rescind the transactions at issue pursuant to
the statute.
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First, we are unpersuaded by Infante’s claim that the district court erred in
dismissing his fraud claim. Federal Rules of Civil Procedure 9(b) provides that in
“alleging fraud . . . a party must state with particularity the circumstances constituting
fraud.” In order to do so, a plaintiff must set forth “(1) precisely what statements
were made in what documents or oral representations or what omissions were made,
(2) the time and place of each such statement and the person responsible for making
(or, in the case of omissions, not making) same, (3) the content of such statements and
the manner in which they misled the plaintiff, and (4) what the defendants obtained
as a consequence of the fraud.” Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194, 1202
(11th Cir. 2001) (quoting Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d
1364, 1371 (11th Cir. 1997)).
The crux of Infante’s fraud claim is that “Defendant made misrepresentations
in the [URLA] when it specifically knew that the representations as [they] pertain to
the Plaintiff’s income [were] false.” In order to state a cause of action for fraudulent
misrepresentation under Florida law, the relevant state law in this case, a plaintiff
must adequately allege: (1) a false statement by the defendant concerning a material
fact; (2) the defendant’s knowledge that the representation was false; (3) that the
representation was made by the defendant with the intent to induce another to act on
it; and (4) that the plaintiff suffered a consequent injury in reliance on the
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representation. Johnson v. Davis, 480 So. 2d 625, 627 (Fla. 1985). A plaintiff’s
“[f]ailure to allege a specific element of fraud in a complaint is fatal when challenged
by a motion to dismiss.” Strack v. Fred Rawn Constr., Inc., 908 So. 2d 563, 565 (Fla.
4th DCA 2005) (affirming dismissal of fraud count with prejudice where plaintiff
failed to allege all elements despite having been given multiple opportunities to do
so).
Among other things, Infante’s fraud claim fails to state a claim because his
complaint fails to allege facts that, if proven, would render BOA liable for torts
committed by Countrywide prior to its acquisition by BOA. Florida follows the
traditional corporate law rule that where a corporation acquires 100% of another
corporation’s stock or assets, it “does not as a matter of law assume the liabilities of
the prior business.” Corporate Express Office Products, Inc. v. Phillips, 847 So. 2d
406, 412 (Fla. 2003). There are exceptions to the general rule, such as where: “(1)
the successor expressly or impliedly assumes obligations of the predecessor; (2) the
transaction is a de facto merger; (3) the successor is a mere continuation of the
predecessor; or (4) the transaction is a fraudulent effort to avoid liabilities of the
predecessor.” Id. (quoting Bernard v. Kee Mfg. Co., 409 So. 2d 1047, 1049 (Fla.
1982)). However, in this case, Infante failed to allege any facts giving rise to the
reasonable inference that BOA is liable for the pre-acquisition torts committed by
5
Countrywide. In fact, the only allegations in the complaint concerning the
BOA-Countrywide transaction are that “Countrywide . . . is now owned by the
Defendant” and that “Countrywide Bank, FSB was purchased by the Defendant.”
Because the burden is on Infante to make sufficient allegations of fraud, the district
court properly concluded that these bare allegations, standing alone, are inadequate
under federal pleading standards to give rise to an inference of a merger, a de facto
merger, or any other corporate law principle that might impose liability on BOA for
the fraud allegedly perpetrated by Countrywide. Accordingly, Infante’s fraud claim
fails.
Nor do we find any merit to Infante’s argument that the district court erred in
dismissing his TILA rescission claim. The TILA-based right to rescission does
not apply to a “residential mortgage transaction.” 15 U.S.C. § 1635(e)(1); see also 12
C.F.R. § 226.23(f)(1). A “residential mortgage transaction” is defined in the statute
as:
a transaction in which a mortgage, deed of trust, purchase money
security interest arising under an installment sales contract, or equivalent
consensual security interest is created or retained against the consumer’s
dwelling to finance the acquisition or initial construction of such
dwelling.
15 U.S.C. § 1602(w).
6
While the statute does not expressly address the applicability of TILA to
multipurpose loans -- for example, loans that are used to both construct a dwelling
and refinance the property upon which the dwelling is built -- the pertinent Federal
Reserve Board’s Official Staff Interpretations1 note that
[a] transaction meets the definition of this section if any part of the loan
proceeds will be used to finance the acquisition or initial construction
of the consumer’s principal dwelling. For example, a transaction to
finance the initial construction of the consumer’s principal dwelling is
a residential mortgage transaction even if a portion of the funds will be
disbursed directly to the consumer or used to satisfy a loan for the
purchase of the land on which the dwelling will be built.
12 C.F.R. pt. 226, Supp. I, Subpart A, § 226.2(a)(24)-6.
In this case, Infante’s claim for rescission of the first mortgage loan fails
because some of the loan proceeds were used to finance the cost of constructing
Infante’s residence. Although Infante conclusorily alleges that the purpose of the
mortgage loans “was a refinance and not a residential mortgage for acquisition or
initial construction of a dwelling,” the more specific contents of the controlling
signed loan documents unequivocally establish the fact that the first mortgage loan
proceeds were disbursed -- at least in part -- to finance the construction of Infante’s
1
The official staff interpretations are binding “unless demonstrably irrational.” Johnson v.
Fleet Finance, Inc., 4 F.3d 946, 949 (11th Cir. 1993) (citing Ford Motor Credit Co. v. Milhollin,
444 U.S. 555, 565 (1980)).
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principal dwelling.2 Specifically, the document provides that “Borrower, lender, and
a contractor are entering into a Construction Loan Agreement . . . under which Lender
has agreed to extend to Borrower a loan . . . to finance Borrower’s construction of a
residence and related improvements on the Property.”). As a result, the first mortgage
loan constitutes a “residential mortgage transaction” and is exempt from TILA’s
rescission provisions. Accordingly, we affirm.
AFFIRMED.
2
Because these loan documents are central to the claims and referred to and relied on
throughout the operative complaint, they were appropriately considered on BOA’s motion to
dismiss. See Brooks v. Blue Cross & Blue Shield of Fla., 116 F.3d 1364, 1369 (11th Cir. 1997)
(“where the plaintiff refers to certain documents in the complaint and those documents are
central to the plaintiff’s claim, then the Court may consider the documents part of the pleadings
for purposes of Rule 12(b)(6) dismissal”). Moreover, because these documents contradict the
general and conclusory allegations of the complaint, these documents govern. Crenshaw v.
Lister, 556 F.3d 1283, 1292 (11th Cir. 2009).
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