Gunapt Dev., L.L.C. v. Peine Lakes, L.P.

GUNAPT DEVELOPMENT, L.L.C., et al., Plaintiffs, v. PEINE LAKES, L.P., et al., Defendants.

No. 4:20-cv-1778-MTS

United States District Court, E.D. Missouri, Eastern Division

April 29, 2022

MEMORANDUM AND ORDER

MATTHEW T. SCHELP UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendants' Motion to Dismiss, Doc. [52], Plaintiffs' Second Amended Complaint Doc. [48], pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the Court denies Defendants' Motion.

I. Background^[1]

Plaintiffs Gunapt Development, LLC (“Gunapt”) and Gunapt I, LLC (“Gunapt I”) (collectively, Plaintiffs) filed this lawsuit asserting claims against Defendants relating to the development of a construction project and the subsequent sale of that project.

In January 2006, Defendant Peine Lakes, L.P. (the “Partnership”) was formed for the purpose of constructing and developing a multifamily apartment complex called the Estates of Peine Lakes in St. Charles County (the “Project”). The Partnership was governed by-among other documents-the Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”). Doc. [48-1]. The Partnership Agreement named Plaintiff Gunapt as Developer of the Project, as defined in the Partnership Agreement, responsible for overseeing all aspects of the Project's construction and development. Gunapt would receive a Development Fee for its services. Gunapt's rights and obligations as Developer were set forth in the Amended and Restated Development Agreement (the “Development Agreement”). Doc. [48-2]. Gunapt's affiliate, Gunapt I, lent the Project $1, 000, 000 for the purpose of financing a portion of the development costs (the “Loan”) pursuant to a Partnership Loan Agreement and Partnership Loan Promissory Note (collectively, the “Loan Agreements”). Docs. [48-3], [48-4]. When the Partnership was formed, Defendant Gunapt Peine GP, L.L.C. (“Gunapt Peine”)-an affiliate of Plaintiffs-was the General Partner of the Partnership. Under certain circumstances, as set forth in the Partnership Agreement, Loan Agreements, and Collateral Assignment of General Partner Interest and Deferred Development Fee (the “Collateral Agreement”), Doc. [56], the Special Limited Partner of the Partnership (here, Defendant Related Corporate XXVI SLP, LLC (“Related”)) could remove the General Partner. On January 13, 2006, the Partnership Agreement, Development Agreement, Loan Agreements, and Collateral Agreement were all executed.

In 2010, Plaintiffs allege they entered into an agreement whereby Gunapt Peine would agree to transfer its General Partnership interest in the Project to an affiliate of Related (the “2010 Agreement”). As a condition of the transfer of the General Partnership interest, the 2010 Agreement specifically stated that Gunapt's right to the Development Fee would not be assumed or transferred and that the Loan would remain in place and payable to Gunapt I by the Partnership according to the Loan Agreements.^[2] Doc. [48] ¶ 15. Defendant 2010 Peine Road LLC (“2010 Peine”) was formed to assume their role as the General Partner. On September 22, 2010, Related removed Gunapt Peine as General Partner of the Partnership and made 2010 Peine General Partner, pursuant to the Amendment to Second Amended and Restated Agreement of Limited Partnership (“2010 Amendment”). Doc. [48-6]. Gunapt continued to perform and ultimately performed all of its obligations as Developer of the Project, at which point Gunapt earned the Development Fee. Doc. [48] ¶ 18.

Approximately four years later, in March 2018, Defendants served “notice” on Plaintiffs to forfeit the Development Fee and right to repayment of the Loan. Doc. [48-7]. Six months later, Defendants announced the sale of the Project for $19, 360, 000. At the time of the sale, in addition to proceeds from the sale, the Partnership had $739, 099.00 in unrestricted cash on hand.^[3] To date, Gunapt has not been paid its Development Fee and accrued interest, and Gunapt I has not been paid the principal and interest on the Loan. Plaintiffs assert the sale of the Project was in the works before the 2018 “notice” to Plaintiffs, in an effort to prevent Fee and Loan payment to Plaintiffs so that Defendants could steal the monies for themselves.^[4] Doc. [48] ¶¶ 20, 23-25, 72-76.

Plaintiffs filed this action asserting seven Counts against five Defendants for: breach of contract-the Development Fee (Count I); breach of contract-the Loan (Count II); accounting (Count III); unjust enrichment (Count IV); constructive trust (Count V); tortious interference (Count VI); and civil conspiracy (Count VII). Doc. [48]. Defendants now move to dismiss the Complaint in its entirety under Fed.R.Civ.P. 12(b)(6), arguing Plaintiffs failed to state a claim. Doc. [52].

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a claim for “failure to state a claim upon which relief can be granted.” The purpose of such a motion is to test the legal sufficiency of a complaint. When considering a Rule 12(b)(6) motion, the Court “must liberally construe a complaint in favor of the plaintiff, ” Huggins v. FedEx Ground Package System, Inc., 592 F.3d 853, 862 (8th Cir. 2010), and must grant all reasonable inferences in favor of the nonmoving party, Lustgraaf v. Behrens, 619 F.3d 867, 872-73 (8th Cir. 2010). “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, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Fed.R.Civ.P. 8(a)(2) (requiring “a short and plain statement of the claim showing that the pleader is entitled to relief”). The Court “need not accept as true plaintiff's conclusory allegations or legal conclusions drawn from the facts.” Glick v. W. Power Sports, Inc., 944 F.3d 714, 717 (8th Cir. 2019). “Where, as here, the claims relate to a written contract that is part of the record in the case, [the Court] considers the language of the contract when reviewing the sufficiency of the complaint.” Gorog v. Best Buy Co., 760 F.3d 787, 792 (8th Cir. 2014) (quoting M.M. Silta, Inc. v. Cleveland Cliffs, Inc., 616 F.3d 872, 876 (8th Cir. 2010)). The Court does not decide whether the plaintiff will ultimately prevail, but rather whether the plaintiff is entitled to present evidence in support of the claim. See Twombly, 550 U.S. at 556.

III. Discussion

A. Breach of Contract (Counts I-II)

Plaintiff Gunapt asserts a breach of contract claim (Count I) against Peine Lakes and 2010 Peine for failure to pay the Development Fee and accrued interest. Plaintiff Gunapt I asserts a breach of contract claim (Count II) against Peine Lakes and 2010 Peine for failure to pay the Loan and accrued interest. While the Court has several extensive agreements before it, the Court does not have all necessary agreements. Stahl v. U.S. Dep't of Agric., 327 F.3d 697, 700 (8th Cir. 2003) (“In a case involving a contract, the court may examine the contract documents in deciding a motion to dismiss.”); Zean v. Fairview Health Servs., 858 F.3d 520, 526 (8th Cir. 2017) (explaining the court may examine documents when “contract documents not attached to the complaint refute a breach-of-contract claim”). Further, the surrounding circumstances of the alleged breach present fact-intensive questions inappropriate for resolution at this early stage of litigation. Based on the pleadings, exhibits, and briefings, the Court finds Plaintiff plausibly stated a claim that Gunapt has a right or interest in the Development Fee and that Gunapt I has a right to repayment of the Loan.^[5]

B. Accounting (Count III)

Plaintiffs assert a claim for accounting against all Defendants, which rests on the 2018 sale of the Project and subsequent distribution of the proceeds. Under Missouri law, a claim for accounting requires “a fiduciary or trust relationship between the parties.” Eckel v. Eckel, 540 S.W.3d 476, 488 (Mo.Ct.App. 2018); Shaner v. Sys. Integrators, Inc., 63 S.W.3d 674, 677 (Mo.Ct.App. 2001) (explaining “the existence of a fiduciary relationship is the most critical element” in an equitable accounting claim). Plaintiffs properly alleged a fiduciary or trust relationship that the Court can infer from the pleadings and the parties' agreements.

According to Plaintiffs, Defendants had control of unrestricted cash and sale proceeds and were entrusted with the duty to distribute the cash and proceeds to Gunapt and Gunapt I as agreed to by the parties (e.g.: that Plaintiffs were given superiority in the distribution process).^[6] Whether the sale proceeds provision in the Partnership Agreement created a debt owed to Plaintiffs or whether it established that the sale proceeds automatically became the property of Plaintiffs is a close call, which must be resolved in favor of Plaintiffs. Overall, important unanswered questions remain as to the nature of the relationship of Plaintiffs and Defendants, including whether the parties were more than an ordinary lender-borrower relationship. See Shaner, 63 S.W.3d at 67779 (finding creditor-debtor relationship insufficient to establish requisite fiduciary relationship to support an equitable action for an accounting). Even if Gunapt will not ultimately prevail, the Court finds Plaintiffs are entitled to discover evidence in support of their claims. See Twombly, 550 U.S. at 556.

C. Unjust Enrichment (Count IV)

Gunapt filed an unjust enrichment claim against all Defendants on the basis that Gunapt provided services to Defendants as Developer of the Project with the expectation Gunapt would be paid the Development Fee. As a preliminary matter Gunapt's claim for unjust...