The Southern Association of Colleges and Schools Commision on Colleges, Inc. v. Bennett College

USCA11 Case: 22-13289 Document: 22-1 Date Filed: 02/27/2023 Page: 1 of 6

[DO NOT PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

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No. 22-13289 Non-Argument Calendar ____________________

THE SOUTHERN ASSOCIATION OF COLLEGES AND SCHOOLS COMMISSION ON COLLEGES, INC., Plaintiff-Appellant, versus BENNETT COLLEGE,

Defendant-Appellee.

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Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:21-cv-03060-VMC

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Footnotes

[2] Opinion of the Court 22-13289 ____________________ Before WILLIAM PRYOR, Chief Judge, and JORDAN and BRANCH, Cir- cuit Judges. PER CURIAM: This appeal requires us to decide whether an association pol- icy that requires any member institution to pay litigation costs if it sues to challenge an accreditation decision and later “withdraws or loses its case” is triggered when the institution withdraws its mem- bership, even if it won its case. The Southern Association of Col- leges and Schools Commission on Colleges, Inc., argues that it does, and that by terminating its membership after suing the Asso- ciation and prevailing, Bennett College triggered the fee-shifting provision. Bennett College argues, and the district court agreed, that the plain language means “withdraws” a lawsuit or “loses” a lawsuit, neither of which happened. We affirm the order dismiss- ing the amended complaint for failure to state a claim for relief. I. BACKGROUND The Association’s litigation policy provides that “[a]ny insti- tution which takes legal action against the [Association] regarding an accreditation decision and withdraws or loses its case is respon- sible for assuming all costs incurred by [the Association] while de- fending its position, including attorney fees.” In February 2019, Bennett College sued the Association re- garding the removal of its accreditation. Bennett College alleged 22-13289 Opinion of the Court 3 that the Association violated due process by failing to follow its own rules and procedures during the decisionmaking process and by rendering a decision that was arbitrary, unreasonable, and un- supported by the record. The district court agreed that the Associ- ation’s “Appeals Committee applied the wrong standard” and “thereby failed to follow [the Association’s] own rules” by “usurp[ing] the role of the Board.” Bennett College v. Southern Ass’n of Colleges and Sch. Comm’n on Colleges, Inc., 474 F. Supp. 3d 1297, 1309-10 (N.D. Ga. 2020) (“Bennett I”). The dis- trict court ruled that, “[s]ince the Appeals Committee violated [the Association’s] own rules, it thereby violated Bennett’s due process rights.” Id. at 1310. The district court granted summary judgment to Bennett College and directed the Appeals Committee to recon- sider its decision. Id. at 1311. In June 2021, the Association sued Bennett College in a Georgia court, and Bennett College removed the case to the district court. The amended complaint alleged that, after Bennett I con- cluded, the Appeals Committee scheduled a hearing for reconsid- eration. But, two days before the hearing, Bennett College with- drew its membership from the Association. One month later, the Association sent Bennett College an invoice for $1,053,044.46 for all costs that it incurred while defending Bennett I. The complaint alleged that, because Bennett College “withdrew its membership after initiating litigation against [the Association]” and did not pay the invoice, Bennett College breached their express contract, which was the litigation policy. The complaint also alleged breach

[4] Opinion of the Court 22-13289 of an implied contract of membership and sought pre-judgment in- terest and litigation expenses. Bennett College moved to dismiss because, even if the liti- gation policy constituted an agreement between them, the policy did not apply because Bennett neither withdrew nor lost its case, and the plain language of the provision was triggered only by those two events. The Association responded that the term “withdraws” was unconnected with the termination of a lawsuit and that it in- terpreted “withdraws” as meaning “withdrawal from member- ship” with the Association. The district court granted the motion to dismiss and ruled that “the plain language of the litigation policy” required either a “voluntary dismissal” of a lawsuit or a “loss on the merits” of a law- suit. The district court also reasoned that “withdraw” was used transitively to refer to the legal action that triggered the policy, which comported with the parties’ clear intent to deter baseless challenges to accreditation decisions. And because Bennett College did not withdraw its lawsuit, and the Association did not contend that Bennett College lost the case, the district court ruled that the Association could not recover attorneys’ fees and costs for Ben- nett I. II. STANDARD OF REVIEW We review de novo a dismissal for failure to state a claim. Anderson v. Wilco Life Ins. Co., 17 F.4th 1339, 1344 (11th Cir. 22-13289 Opinion of the Court 5 2021). We accept “the factual allegations in the complaint as true and construe them in the light most favorable to the plaintiff[].” Id. III. DISCUSSION Under Georgia law, which the parties agree applies, the “car- dinal rule of [contract] construction is to ascertain the intention of the parties.” Tims v. LGE Cmty. Credit Union, 935 F.3d 1228, 1237 (11th Cir. 2019). If the contract language is unambiguous and capa- ble of only one reasonable interpretation, a court is required to en- force the contract according to its clear terms. City of Baldwin v. Woodard & Curran, Inc., 743 S.E.2d 381, 389 (Ga. 2013). If the con- tract is ambiguous, the court must apply the rules of construction to resolve the ambiguity, if possible. Id. The district court correctly concluded that the Association failed to allege a breach of the litigation policy. The phrase “with- draws or loses its case” is unambiguous. The only reasonable inter- pretation is that “withdraws” refers to the lawsuit, not the institu- tion’s membership. Appearing in a section titled “Litigation: Insti- tutional Obligations,” the phrase contains the two transitive verbs “withdraws” and “loses” and only one object—“its case.” Indeed, to reach the Association’s interpretation, additional words are re- quired for clarification, such as “withdraws its membership or loses its case.” But “ambiguity is not to be created by lifting a clause or a portion of the contract out of context,” or by making “hypercritical constructions,” and the “natural, obvious meaning is to be pre- ferred over any curious, hidden meaning.” Anderson, 17 F.4th at 1346. And, under the Association’s reading, it could recover legal

[6] Opinion of the Court 22-13289 fees and costs from any member institution that withdraws its membership at any time and for any reason, so long as the institu- tion previously sued the Association regarding an accreditation de- cision, even if the institution won its case and its decision to leave had nothing to do with the case. The Association’s reading is an unreasonable interpretation. The Association argues that “withdraw” could not have been intended to mean “dismiss” a case because “withdraw” is never used in the Federal Rules of Civil Procedure to describe the voluntary termination of a legal action, but we disagree. An ordi- nary legal meaning of the transitive verb “withdraw” is “to refrain from prosecuting or proceeding with (an action).” Withdraw, Black’s Law Dictionary (11th ed. 2019). The rules of Georgia appel- late courts, for example, use “withdraw” to mean dismiss a case. See O.C.G.A. § 5-3-7 (2020); State Hwy. Bd. v. Long, 6 S.E.2d 130,

[131] (Ga. App. 1939). IV. CONCLUSION We AFFIRM the dismissal of the Association’s amended complaint.