Ark. Nursing Home Acquisition, LLC v. CFG Cmty. Bank

460 F.Supp.3d 621

ARKANSAS NURSING HOME ACQUISITION, LLC, et al., Plaintiffs,

v.CFG COMMUNITY BANK, et al., Defendants.

Civil Action No. RDB-19-3632

United States District Court, D. Maryland.

Signed May 19, 2020

Thomas M. Wood, IV, Neuberger Quinn Gielen Rubin and Gibber PA, Baltimore, MD, Timothy J. McEvoy, Edward Woodrow Cameron, Pro Hac Vice, Eric Scott Waldman, Cameron McEvoy PLLC, Fairfax, VA, for Plaintiffs.

Gardner M. Duvall, Michael Patrick Collins, Jr., Whiteford Taylor and Preston LLP, Baltimore, MD, for Defendants.

MEMORANDUM OPINION

Richard D. Bennett, United States District Judge

This is one of two cases arising from a failed nursing home enterprise involving Alan Zuccari ("Zuccari") and Defendant John W. "Jack" Dwyer ("Dwyer"). See Dwyer, et al. v. Zuccari (RDB-19-1272).¹ In this case, two entities controlled by Zuccari, Arkansas Nursing Home Acquisition, LLC ("ANHA") and AJZ Capital, LLC ("AJZ Capital") (collectively, "Plaintiffs") seek to recover losses from the collapse of the nursing home enterprise. Plaintiffs have sued Defendants Brian K. Reynolds ("Reynolds") and Dwyer, as well as several entities Dwyer allegedly controls: CFG Community Bank ("CFG Bank"), Capital Funding Group, Inc. ("Capital Funding Group"), CSCV Holdings, LLC ("CSCV Holdings"), CSCV Consulting, LLC ("CSCV Consulting"), Milestone Retirement Companies, LLC ("New Milestone"), and CSCV Real Estate Holdings, LLC ("CSCV Real Estate") (collectively, "Defendants").

The Complaint (ECF No. 1) contains seventeen counts, as follows:

 COUNT TITLE DEFENDANTS
I         Fraudulent Conveyance     Dwyer, Capital Funding Group, CSCV Holdings
                                      CSCV Consulting and New Milestone
  II        Fraudulent Conveyance     Dwyer, Capital Funding Group, CSCV Holdings
                                      CSCV Consulting and New Milestone
  III       Fraudulent Conveyance     Dwyer, Capital Funding Group, CSCV Holdings
                                      CSCV Consulting and New Milestone
  IV        Fraudulent Conveyance     Dwyer, Capital Funding Group, CSCV Holdings
                                      CSCV Consulting and New Milestone
  V         Fraudulent Conveyance     Dwyer, Capital Funding Group, CSCV Holdings
                                      CSCV Consulting and New Milestone
  VI        Breach of Fiduciary       Dwyer, Capital Funding Group, CSCV Holdings
            Duty                      and CSCV Consulting
  VII       Indemnification           Dwyer, Capital Funding Group, CSCV Holdings,
                                      CSCV Consulting and New Milestone
  VIII      Conversion                Dwyer, Capital Funding Group, CSCV Holdings,
                                      CSCV Consulting and New Milestone
  IX        Civil Conspiracy          Dwyer, Capital Funding Group, CSCV Holdings,
                                      CSCV Consulting and New Milestone
  X         Accounting                Dwyer, Capital Funding Group, CSCV Holdings,
                                      CSCV Consulting and New Milestone
  XI        Aiding and Abetting       New Milestone
  XII       Breach of Fiduciary       Dwyer, Capital Funding Group, CSCV Real Estate
            Duty                      and Reynolds
  XIII      Conversion                Dwyer and Reynolds
  XIV       Civil Conspiracy          Dwyer, CSCV Real Estate, and Reynolds
  XV        Unjust Enrichment         Dwyer, Capital Funding Group, CSCV Holdings,
                                      CSCV Consulting, Reynolds and New Milestone
  XVI       Aiding and Abetting       CSCV Real Estate
  XVII      Imputed Liability         CFG Bank and Capital Funding Group

Now pending is Defendants’ Motion to Dismiss Plaintiffs’ Complaint (ECF No. 16), in which Defendants seek the dismissal of New Milestone for lack of personal jurisdiction and the dismissal of all Counts for failing to state a cause of action. The parties’ submissions have been reviewed and no hearing is necessary. See Local Rule 105.6 (D. Md. 2018). For the reasons stated herein, the Motion to Dismiss (ECF No. 16) is GRANTED IN PART and DENIED IN PART. Specifically, New Milestone is DISMISSED for lack of personal jurisdiction. All Counts except Counts XII, XIII, and XVI are DISMISSED.² Count XII may proceed as to Defendant CSCV Real Estate. Count XIII may proceed as to Defendants Dwyer and Reynolds. Count XVI may proceed as to CSCV Real Estate. In summary, the following claims remain:

 COUNT TITLE DEFENDANTS
XII       Breach of Fiduciary     CSCV Real Estate
            Duty
  XIII      Conversion              Dwyer and Reynolds
  XVI       Aiding and Abetting     CSCV Real Estate

BACKGROUND

In ruling on a motion to dismiss, this Court "accept[s] as true all well-pleaded facts in a complaint and construe[s] them in the light most favorable to the plaintiff." Wikimedia Found. v. Nat'l Sec. Agency , 857 F.3d 193, 208 (4th Cir. 2017) (citing SD3, LLC v. Black & Decker (U.S.) Inc. , 801 F.3d 412, 422 (4th Cir. 2015) ). This case arises from a failed nursing home business enterprise involving Dwyer, Zuccari, and a host of business entities they allegedly controlled. The parties created this somewhat complex arrangement of business entities to insulate themselves from liability while conducting a nursing home business. (Compl. ¶ 31, ECF No. 1.) Plaintiffs allege that Defendants used their web of business entities to devise three "schemes" which ultimately deprived them of valuable business interests.

The entities on Zuccari's side of the equation are as follows. Zuccari, a Virginia resident, is alleged to be the sole member of ANHA, which is a Virginia limited liability company ("LLC"). (Id. ¶¶ 1, 4.) Zuccari is also alleged to have a 99% ownership interest in AJZ Capital, a Virginia LLC. (Id. ¶¶ 3-4.) The remaining 1% ownership interest belonged to a "person who is related to" Zuccari. (Id. ¶ 4.) Zuccari New Port Richey, LLC ("Zuccari New Port Richey"), a Delaware limited liability company with its principal place of business located in Fairfax County, Virginia, also falls on Zuccari's side of the aisle—though the Complaint does not specify exactly who or what owns Zuccari New Port Richey.³ (Id. ¶ 2.)

Defendant Dwyer's side is a bit more complex. Dwyer, a Florida resident, is the "sole owner" of Defendant CFG Bank, a Maryland corporation with its principal place of business in Baltimore, Maryland. (Id. ¶¶ 5-7.) Dwyer is alleged to have "used CFG Bank to facilitate the wrongful conduct" described in the Complaint, including using CFG Bank to funnel converted funds. (Id. ¶ 6.) Dwyer is also the Chairman of the Board and controlling principal of Defendant Capital Funding Group, a Maryland corporation with its principal place of business in Baltimore County, Maryland. (Id. ¶¶ 7, 9.) Dwyer allegedly used Capital Funding Group as his "alter ego," and treated its assets and liabilities as his own. (Id. ¶ 8.)

Capital Funding Group, Dwyer's alleged "alter ego," owns 90% of Defendant CSCV Holdings and is a member of Defendant CSCV Real Estate (both with their principal places of business in Maryland). (Id. ¶¶ 9, 13.) Defendant Brian Reynolds owns the remaining 10% of CSCV Holdings and is the other member of CSCV Real Estate. (Id. ) CSCV Holdings owns 100% of Defendant CSCV Consulting. (Id. ¶ 10.) Dwyer allegedly had "complete control" over CSCV Holdings and CSCV Consulting. (Id. ¶ 26.) Dwyer is also alleged to have control over a separate entity, CHG New Port Richey. (Id. ¶ 17.)

The Zuccari entities and the Dwyer entities allegedly combined ownership interests in a series of additional LLCs for the purposes of carrying out at least three separate projects, which are described in the Complaint as "Compass Pointe" (Id. ¶¶ 21-45) the "Vero Deal" (Id. ¶¶ 46-52) and "New Port Richey" (Id. ¶¶ 53-63). Each project unraveled and gave rise to three alleged "schemes" (ECF No 17 at 9) by Dwyer and his entities to deprive Plaintiffs of their business interests. (ECF No. 1 at 3-4.)

I. Compass Pointe.

Compass Pointe is a trade name used by SLC Professionals and a series of affiliated LLCs to manage assisted living facilities located predominately in Florida and Arkansas. (ECF No. 1 ¶¶ 27, 29.) SLC Professionals was formed as a Delaware limited liability company on January 21, 2009. (Id. ¶ 21.) Effective January 1, 2012, ANHA (whose sole member was Zuccari) and CSCV Consulting (over which Dwyer allegedly had "complete control") became the members of SLC Professionals. (Id. ¶¶ 4, 22, 26.) CSCV Consulting (the Dwyer entity) owned 51% of the company,⁴ and ANHA (the Zuccari entity) owned the remaining 49%. (Id. ¶ 22.) ANHA and CSCV Consulting agreed to operate SLC Professionals pursuant to the terms of an "Amended and Restated Limited Liability Company Operating Agreement of SLC Professionals Holdings, LLC, a Delaware Limited Liability Company" (the "SLC Professionals’ Operating Agreement"). (Id. ¶ 23; SLC Professionals Operating Agreement, Compl. Ex. 1, ECF No. 1-2.) The SLC Professionals’ Operating Agreement granted Dwyer complete control over SLC Professionals by appointing Daniel S. Baird ("Baird") and Defendant Reynolds, who worked for Dwyer "and/or" Capital Funding Group, as the Managers of SLC Professionals. (ECF No. 1 ¶ 24; ECF No. 1-2 § 8.1.) Additionally, the Operating Agreement provided that Dwyer, "on behalf of CSCV [Consulting]," would have the final say on any "Major Decisions," a term defined in the Agreement to include merging or consolidating the company. (ECF No. 1-2 § 8.3.)

SLC Professionals in turn owned several limited liability companies that owned and managed the Compass Pointe assisted living facilities. (ECF No. 1 ¶ 27.) These companies included, but were not limited to: Capital Health Group Management, LLC, CHG Management Newport Richey, LLC, CHG Management Woodbury, LLC, SLC Professionals, LLC, SLC Professionals Monarch, LLC, Addit, LLC, Addit-Monarch, LLC, SLC Professionals Chai, LLC, ...