You're viewing Docket Item 22 from the case BANK OF THE OZARKS v. CROCKETT et al. View the full docket and case details.

Download this document:

Case 3:13-cv-00023-CDL Document 22 Filed 07/31/13 Page 1 of 7
















CASE NO. 3:13-CV-23 (CDL)

Defendants Sherman Nathaniel Crockett, Jr. and Barbara
Womack Crockett (collectively, the “Crocketts”) signed a
promissory note which was subsequently assigned to the benefit
of Plaintiff Bank of the Ozarks (“Ozarks”). Ozarks filed this
action to recover on that promissory note. In response, the
Crocketts counterclaimed for breach of contract and attorneys’
fees, claiming that Ozarks breached agreements with the Federal
Deposit Insurance Corporation (“FDIC”) to which they were third-
party beneficiaries. Ozarks filed a motion to dismiss the
counterclaims, arguing that the Crocketts are not intended
third-party beneficiaries to the contract. For the reasons set
forth below, the Court grants Ozarks’s motion to dismiss (ECF
No. 13).

Case 3:13-cv-00023-CDL Document 22 Filed 07/31/13 Page 2 of 7


When considering a 12(b)(6) motion to dismiss a
counterclaim, the Court must accept as true all facts set forth
in the counterclaim and limit its consideration to the pleadings
and exhibits attached thereto. Bell Atl. Corp. v. Twombly, 550
U.S. 544, 556 (2007); Wilchombe v. TeeVee Toons, Inc., 555 F.3d
949, 959 (11th Cir. 2009). “To survive a motion to dismiss, a
[counterclaim] must contain sufficient factual matter, accepted
as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Twombly, 550 U.S. at 570). The counterclaim must include
sufficient factual allegations “to raise a right to relief above
the speculative level.” Twombly, 550 U.S. at 555. “[A]
formulaic recitation of the elements of a cause of action will
not do[.]” Id. Although the counterclaim must contain factual
allegations that “raise a reasonable expectation that discovery
will reveal evidence of” the counterclaimant’s claims, id. at
556, “Rule 12(b)(6) does not permit dismissal of a well-pleaded
[counterclaim] simply because ‘it strikes a savvy judge that
actual proof of those facts is improbable,’” Watts v. Fla. Int’l
Univ., 495 F.3d 1289, 1295 (11th Cir. 2007) (quoting Twombly,
550 U.S. at 556).

Ozarks and the Crocketts both rely on various documents
attached to the Complaint and do not challenge their


Case 3:13-cv-00023-CDL Document 22 Filed 07/31/13 Page 3 of 7

authenticity. Because the documents are central to the claims
and counterclaims in this action, the Court may consider them in
ruling on the pending motion to dismiss. Speaker v. U.S. Dep’t
of Health & Human Servs., 623 F.3d 1371, 1379-80 (11th Cir.


On August 29, 2008, the Crocketts executed a promissory
note in favor of Chestatee State Bank in exchange for a loan to
“purchase [their] primary residence.” Compl. Ex. A, Promissory
Note (Aug. 29, 2008), ECF No. 1-1 at 2.1 The Crocketts also
executed a security deed for that residence in connection with
the loan. Compl. Ex. F, Deed to Secure Debt and Security
Agreement (Aug. 29, 2008), ECF No. 1-1 at 16-19.2

On December 17, 2010, Chestatee State Bank failed, and the
FDIC became its receiver. On the same day, the FDIC, as
receiver of Chestatee State Bank and in its corporate capacity,
entered a purchase and assumption agreement (“P & A Agreement”)
with Ozarks as the “Assuming Institution” of the failed bank.
Compl. Ex. I, P & A Agreement 1, ECF No. 1-1 at 37. The P & A
Agreement incorporates and attaches as Exhibit 4.15A an

1 The Crocketts later executed modifications of the promissory note
with Ozarks. Compl. Ex. B, Modification of Promissory Note (Sept. 12,
2011), ECF No. 1-1 at 6; Compl. Ex. C, Modification of Promissory Note
(July 31, 2012), ECF No. 1-1 at 9.
2 The Crocketts likewise executed modifications of the security deed
with Ozarks. Compl. Ex. G, Modification of Deed to Secure Debt (Aug.
24, 2011), ECF No. 1-1 at 21-25; Compl. Ex. H, Modification of Deed to
Secure Debt (July 27, 2012), ECF No. 1-1 at 27-31.


Case 3:13-cv-00023-CDL Document 22 Filed 07/31/13 Page 4 of 7

agreement specifically addressing “certain single family
residential mortgage loans” known as the Single Family Shared-
Loss Agreement (“SFS Agreement”). Id. at 75, Ex. 4.15A, ECF No.
1-2 at 4. This SFS Agreement contains certain obligations to
“undertake reasonable and customary loss mitigation efforts” to
modify certain single family residential loans in accordance
with any federal modification program when that loan is in
default or when the default is reasonably foreseeable. Id. at
79, Ex. 4.15A art. 2.1(a)(i), ECF No. 1-2 at 8. The Crocketts
contend that Ozarks erroneously listed their loan as
“commercial” and “non-single family,” id. at 50 & Schedule
4.15B, ECF No. 1-1 at 86-87; and therefore, Ozarks failed to
undertake any modification efforts before seeking to collect on
the Crocketts’ single family residential loan. By doing so,
Ozarks breached its obligations under article 2.1(a)(i) of the
SFS Agreement according to the Crocketts’ counterclaim, which
alleges that they are third-party beneficiaries of the agreement
between Ozarks and the FDIC.

The Crocketts’ argument ignores significant provisions in
the P & A Agreement which make it clear that they are not
intended beneficiaries of the agreements between Ozarks and the
FDIC. The P & A Agreement includes the following language with
respect to third parties:


Case 3:13-cv-00023-CDL Document 22 Filed 07/31/13 Page 5 of 7

Except as otherwise specifically provided in this
Agreement, nothing expressed or referred to in this
Agreement is intended or shall be construed to give
any Person other than the Receiver, the Corporation
and the Assuming Institution any legal or equitable
right, remedy or claim under or with respect to this
Agreement or any provisions contained herein, it being
the intention of the parties hereto that this
responsibilities hereunder, and all other conditions
and provisions hereof are for the sole and exclusive
benefit of the Receiver, the Corporation and the
Assuming Institution and for the benefit of no other





Id. at 41 art. 13.5, ECF No. 1-1 at 77. Similarly, the SFS
Agreement disclaims liability to third parties:



No Third Party Beneficiary. This Single Family
Shared-Loss Agreement and the Exhibits hereto are for
the sole and exclusive benefit of the parties hereto
permitted assigns and there shall be no other third
party beneficiaries, and nothing in this Single Family
Shared-Loss Agreement or the Exhibits shall be
construed to grant to any other Person any right,
remedy or Claim under or in respect of this Single
Family Shared-Loss Agreement or any provision hereof.



Id. at 89, Ex. 4:15A art. 6.4, ECF No. 1-2 at 18.
It is undisputed that “only a party to a contract or an

intended third-party beneficiary may sue to enforce the terms of
a contract.” Interface Kanner, LLC v. JPMorgan Chase Bank,
N.A., 704 F.3d 927, 932 (11th Cir. 2013). A third party who
incidentally benefits from a contract has no right to sue to
enforce it. Id. at 932-33. Because government contracts often
benefit the public, third parties to a government contract must
overcome the presumption that they are merely incidental


Case 3:13-cv-00023-CDL Document 22 Filed 07/31/13 Page 6 of 7

beneficiaries by showing that the parties clearly intended to
permit that class of third parties to sue to enforce the terms
of the government contract. Id. at 933 (citing Klamath Water
Users Protective Ass’n v. Patterson, 204 F.3d 1206, 1211 (9th
Cir. 1999), Montana v. United States, 124 F.3d 1269, 1273 (Fed.
Cir. 1997), and Beckett v. Air Line Pilots Ass’n, 995 F.2d 280,
288 (D.C. Cir. 1993)). When a government contract expressly
disclaims any intent to create third-party beneficiaries except
as otherwise specifically provided, it becomes “significantly
more difficult” to demonstrate the requisite “clear intent.”

The Crocketts contend that, despite the P & A Agreement’s
express disclaimer, the Crocketts are intended third-party
beneficiaries because the SFS Agreement specifically provides
for obligations “intended to protect single-family residential
purchase money security interest borrowers [like the Crocketts]
from default and risk of losing their homes.” Defs.’ Resp. in
Opp’n to Pl.’s Mot. to Dismiss Countercl. 11, ECF No. 16.
However, the SFS Agreement clearly and unambiguously disclaims
any third-party beneficiary liability. P & A Agreement 89, Ex.
4:15A art. 6.4, ECF No. 1-2 at 18. The present record
establishes as a matter of law that the Crocketts are not
intended third-party beneficiaries of the agreements between
Ozarks and the FDIC. Therefore, they have no claim for an


Case 3:13-cv-00023-CDL Document 22 Filed 07/31/13 Page 7 of 7

alleged breach of an agreement to which they are not parties.
See Interface, 704 F.3d at 933-34 (remanding with instructions
to dismiss breach of contract claim because claimant was not
intended third-party beneficiary of purchase and assumption
agreement containing express disclaimer).

Accordingly, the Court must dismiss the Crocketts’ breach
of contract counterclaim. The Court must likewise dismiss the
Crocketts’ counterclaim for attorneys’ fees pursuant to O.C.G.A.
§ 13-6-11. See United Cos. Lending Corp. v. Peacock, 267 Ga.
145, 147, 475 S.E.2d 601, 602 (1996) (“A prerequisite to any
award of attorney fees under O.C.G.A. § 13-6-11 is the award of
damages or other relief on the underlying claim.”).


For the reasons stated above, the Court grants Ozarks’s

motion to dismiss the Crocketts’ counterclaims (ECF No. 13).

IT IS SO ORDERED, this 31st day of July, 2013.

S/Clay D. Land