     Case: 11-30709   Document: 00511781753   Page: 1   Date Filed: 03/08/2012




          IN THE UNITED STATES COURT OF APPEALS
                   FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                   Fifth Circuit

                                                                   FILED
                                                                  March 8, 2012

                                 No. 11-30709                     Lyle W. Cayce
                                                                       Clerk

ANTHONY MOSE, JR.; TRACEY F. MOSE; MERLIE FUSELIER; DONALD
R. WATTS; DELLA WATTS; ET AL,

                                          Plaintiffs - Appellants
v.

KEYBANK NATIONAL ASSOCIATION,

                                          Defendant - Appellee



GABRIEL HAUSMANN, JR.; ET AL,

                                          Plaintiffs - Appellants

v.

KEYBANK NATIONAL ASSOCIATION,

                                          Defendant - Appellee




TERRI T. MCGOVERN,

                                          Plaintiff - Appellant

v.

KEYBANK NATIONAL ASSOCIATION,

                                          Defendant - Appellee
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                                       No. 11-30709



                     Appeal from the United States District Court
                         for the Middle District of Louisiana
                               USDC No. 3:11-CV-162


Before KING, BENAVIDES, and DENNIS, Circuit Judges.
PER CURIAM:*
               I. FACTUAL AND PROCEDURAL BACKGROUND
       Plaintiffs–Appellants        purchased      condominiums       in   Baton     Rouge,
Louisiana, from Perkins Rowe I, LLC and Perkins Rowe Associates II, LLP
(collectively, “Perkins Rowe”) between July 1, 2008, and November 1, 2008. The
condominiums were part of a large, multi-use development project undertaken
by Perkins Rowe. However, in 2009, financial problems caused Perkins Rowe
to cease all construction, and ultimately, Plaintiffs’ condominiums were worth
far less than Plaintiffs had paid. On March 18, 2011, Plaintiffs filed suit against
Defendant–Appellee KeyBank National Association (“KeyBank”) seeking the
repurchase of their condominium units, as well as additional damages. Plaintiffs
asserted claims of fraud, negligent representation, unjust enrichment, and
detrimental reliance under Louisiana state law. KeyBank was Perkins Rowe’s
lender with regard to the development project and had entered into an
agreement to lend Perkins Rowe $170,000,000. Plaintiffs alleged that KeyBank
had control over the sales of condominiums and allowed the sales to occur
despite its knowledge that the project was underfunded and was likely headed
toward foreclosure.1


       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
       1
           KeyBank ultimately did initiate foreclosure proceedings against Perkins Rowe.

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                                  No. 11-30709

      Plaintiffs’ claims of fraud and negligent representation were predicated on
their assertion that KeyBank had a duty to disclose details to them about the
financial health of its customer, Perkins Rowe. Plaintiffs did not allege that they
had a contractual relationship with KeyBank or that they had any contact at all
with KeyBank in connection with their condominium purchases. However, they
argued that KeyBank’s awareness of Perkins Rowe’s financial problems, as well
as KeyBank’s control over various aspects of the condominium sales, created
disclosure obligations and made KeyBank’s failure to disclose actionable.
      The United States District Court for the Middle District of Louisiana
granted KeyBank’s motion to dismiss Plaintiffs’ claims under Federal Rule of
Civil Procedure 12(b)(6), concluding, inter alia, that KeyBank did not owe a duty
of disclosure to Plaintiffs.   Plaintiffs timely appealed the district court’s
judgment dismissing their fraud and negligent representation claims.
                               II. DISCUSSION
      “We review a district court’s decision on a 12(b)(6) motion de novo,
accepting all well-pleaded facts as true and viewing those facts in the light most
favorable to the plaintiff.” Stokes v. Gann, 498 F.3d 483, 484 (5th Cir. 2007)
(citation omitted). “To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
      On appeal, Plaintiffs contend that the district court erred by concluding
that KeyBank did not owe a duty to disclose Perkins Rowe’s financial condition
to them.    Plaintiffs had predicated their claims of fraud and negligent
representation on KeyBank’s failure to disclose this information, and both claims
required the existence of disclosure obligations running from KeyBank to
Plaintiffs. See Kadlec Med. Ctr. v. Lakeview Anesthesia Assocs., 527 F.3d 412,



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                                  No. 11-30709

418 (5th Cir. 2008); America’s Favorite Chicken Co. v. Cajun Enters., Inc., 130
F.3d 180, 186 (5th Cir. 1997).
      “In Louisiana, a duty to disclose does not exist absent special
circumstances, such as a fiduciary or confidential relationship between the
parties, which, under the circumstances, justifies the imposition of the duty.”
Kadlec, 527 F.3d at 420. “[T]he existence of a duty is a question of law, and we
review the duty issue here de novo.” Id. (footnote omitted). This court has
stated that “[u]nder Louisiana law, banks ordinarily owe no duty, fiduciary or
otherwise, to third persons.” Eubanks v. FDIC, 977 F.2d 166, 170 n.3 (5th Cir.
1992) (emphasis added). However, Louisiana courts examine whether there is
a duty to disclose on a case-by-case basis. See Barrie v. V.P. Exterminators, Inc.,
625 So. 2d 1007, 1016 (La. 1993).
      Plaintiffs contend that KeyBank was the primary financial beneficiary of
the condominium conversions and sales, which gave it a pecuniary interest in
the transactions. They assert that KeyBank’s pecuniary interest creates a duty
of disclosure under Greene v. Gulf Coast Bank, 593 So. 2d 630 (La. 1992), and
Kadlec Medical Center v. Lakeview Anesthesia Associates, 527 F.3d 412 (5th Cir.
2008). The Greene court stated that, while “[o]rdinarily a bank and depositor
have a debtor-creditor relationship with no independent duty of care imposed on
the bank[,] . . . certain special circumstances, such as a fiduciary relationship
between the bank and depositor, will give rise to a duty.” Greene, 593 So. 2d at
632. Plaintiffs contend that, under Kadlec, the pecuniary interest KeyBank had
in Perkins Rowe’s condominium sales constitutes a special circumstance creating
disclosure obligations, as described in Greene. However, contrary to Plaintiffs’
assertions, the Kadlec court made clear that a pecuniary interest is an additional
requirement to the special circumstances that justify imposing a duty to disclose
and, standing alone, is not a sufficient basis for imposing disclosure obligations.
527 F.3d at 421–22.

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                                      No. 11-30709

       Plaintiffs also contend that KeyBank owed a duty of disclosure because an
ordinary ethical person in like circumstances would have disclosed Perkins
Rowe’s financial condition to Plaintiffs. The Louisiana Supreme Court has noted
that “courts have tended to impose a duty [to disclose] when the circumstances
are such that the failure to disclose would violate a standard requiring
conformity to what the ordinary ethical person would have disclosed.” Bunge
Corp. v. GATX Corp., 557 So. 2d 1376, 1384 (La. 1990). However, Louisiana
Revised Statute § 6:333 provides that “no bank or its affiliate shall disclose any
financial records to any person other than the customer to whom the financial
records pertain, unless such financial records are disclosed” in limited
circumstances not applicable here. Consequently, KeyBank could be subjecting
itself to liability under § 6:333 by disclosing information about its customer,
Perkins Rowe, and disclosure under these circumstances would not be expected
of the ordinary ethical person. Thus, the imposition of disclosure obligations on
KeyBank is unsupported by Louisiana caselaw.2
       In fact, Louisiana caselaw addressing the disclosure obligations owed by
banks strongly suggests that KeyBank did not owe disclosure obligations to
Plaintiffs. For instance, in Glass v. Berkshire Development, 612 So. 2d 749 (La.
App. 5 Cir. 12/16/92), condominium owners grew dissatisfied with the quality of
the condominium renovation and sued several defendants, including Hibernia
National Bank (“Hibernia”), the entity that had provided Berkshire with a loan
to buy and renovate the complex. Id. at 750. The court, however, concluded that
Hibernia did not owe a duty to the individual condominium purchasers, noting
that “[u]nder Louisiana law a bank owes no duty to a third person with whom



       2
         Plaintiffs also contend that KeyBank owed disclosure obligations under § 552 of the
Second Restatement of Torts. However, this court has noted that “§ 552—by its own terms
requires an affirmative misstatement, not just a non-disclosure.” McLachlan v. New York Life
Ins. Co., 488 F.3d 624, 630 (5th Cir. 2007).

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                                      No. 11-30709

a bank customer (here the developers) does business.” Id. at 753 (citation
omitted). Similarly, in Guidry v. Bank of LaPlace, 661 So. 2d 1052 (La. App. 4
Cir. 9/15/95), the court concluded that “[t]he Bank of LaPlace was clearly under
no duty to disclose information about its customer (Martin) to a non-customer
(Guidry).” Id. at 1059 (citations omitted). Finally, in Priola Construction Corp.
v. Profast Development Group, Inc., 21 So. 3d 456 (La. App. 3 Cir. 10/7/09), the
court concluded that Louisiana Revised Statute § 6:1124 “foreclose[s] the
possibility of a lawsuit against a bank for negligent misrepresentation unless
there was a contract or written agreement that the financial institution had a
fiduciary obligation to the person claiming negligent misrepresentation.” Id. at
462.3 Thus, Louisiana caselaw reflects the reluctance of its courts and its
legislature to impose disclosure obligations on banks with regard to third
parties, and it further undermines Plaintiffs’ contention that KeyBank owed
disclosure obligations to them.
       In sum, imposing disclosure obligations in the instant case does not align
with Louisiana’s caselaw or its statutes. Therefore, we conclude that KeyBank
did not owe a duty to disclose information to Plaintiffs about Perkins Rowe’s
financial health. Because Plaintiffs’ claims on appeal depend on the existence
of such disclosure obligations, their claims necessarily fail.
                                 III. CONCLUSION
       For the reasons stated above, we AFFIRM the judgment of the district
court dismissing Plaintiffs’ claims. Costs shall be borne by Plaintiffs.




       3
      In the instant case, there was no contract or written agreement between Plaintiffs and
KeyBank.

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