Indy Lube Investments, L.L.C. v. Wal-Mart Stores

199 F.Supp.2d 1114

INDY LUBE INVESTMENTS, L.L.C., Plaintiff, v. WAL-MART STORES, INC., et al., Defendants.

Case No. 01-4020-JPO.

United States District Court, D. Kansas.

April 16, 2002.

COPYRIGHT MATERIAL OMITTED

Bryan W. Smith, Fisher, Cavanaugh, Smith & Lemon, P.A., Topeka, KS, for Plaintiff.

F. James Robinson, Jr., Hite, Fanning & Honeyman L.L.P., Wichita, KS, William R. Sampson, David A. Rameden, Shook, Hardy & Bacon L.L.P., Overland Park, KS, for Defendants.

MEMORANDUM AND ORDER

O'HARA, United States Magistrate Judge.

I. Introduction.

This case arises from a failed commercial real estate transaction. It involves common law contract and tort claims. Pursuant to Fed.R.Civ.P. 12(b)(6), the case is before the court on the motion of defendants DVL, Inc. and Finney Associates, L.P.¹ (collectively, DVL), to dismiss all of the claims asserted against DVL in the first amended complaint of the plaintiff, Indy Lube Investments, L.L.C. (Indy Lube) (doc. 56). Also before the court is the Rule 12(b)(6)-motion of defendant Wal-Mart Stores, Inc. (Wal-Mart), to dismiss Indy Lube's fraud, misrepresentation, and civil conspiracy claims against Wal-Mart (doc. 59). The court has considered defendants' motions, their memoranda in support (docs. 57 & 60), Indy Lube's responses (docs. 73 & 74), and DVL's reply (doc. 78). The time for further briefing has expired. See D. Kan. Rule 6.1(e)(1).

As explained below, DVL's motion is denied with respect to Indy Lube's tortious interference with contract and civil conspiracy claims, but is granted with respect to Indy Lube's fraud and third-party beneficiary claims against DVL. Wal-Mart's motion is denied with respect to Indy Lube's civil conspiracy claim; although Wal-Mart's motion is granted with respect to Indy Lube's fraud and negligent misrepresentation claims, the court will grant Indy Lube leave to amend those two claims.

II. Facts.

According to the well-pleaded allegations in Indy Lube's first amended complaint (doc. 39),² the material facts are as follows. On October 13, 2000, Wal-Mart presented Indy Lube with a portfolio and information package describing certain real estate located in Garden City, Kansas that was being offered for sale. By way of a written contract dated November 15, 2000, and executed in full on December 12, 2000, Wal-Mart agreed to sell Indy Lube the Garden City real estate for $2.225 million (the Indy Lube/Wal-Mart contract). Also on December 12, 2000, Wal-Mart informed Indy Lube that it only had fee simple ownership to a portion of the real estate, but that it had the contractual right to purchase the remainder pursuant to Wal-Mart's agreement with DVL, the owner of all of the subject real estate. Thus, Indy Lube and Wal-Mart signed an addendum to the Indy Lube/Wal-Mart contract. This addendum provided that Wal-Mart "has the preferential right to purchase the property from [DVL] and acquire fee simple ownership of the [real estate]." Wal-Mart agreed to "exercise ... commercially reasonable efforts" to acquire fee simple ownership of the real estate owned by DVL. The Indy Lube/Wal-Mart contract provided for a closing date on or before January 31, 2001.

Wal-Mart no longer occupied the Garden City real estate, but nevertheless continued to be subject to lease obligations for that portion owned by DVL. State Street Bank and Trust Company (State Street) was the trustee for the owner of a secured note backed by a mortgage and trust indenture on the portion owned by DVL. Wal-Mart made its lease payments directly to State Street, which then applied the payments to the secured note and forwarded to DVL any amounts over and above that required to service the secured note.

On December 11, 2000, Wal-Mart executed a contract to purchase the Garden City property for $2.6 million and forwarded it to DVL. On that same day, DVL sent a letter to State Street requesting the payoff of the note. On December 19, 2000, DVL executed the contract agreeing to sell its interest in the Garden City real estate to Wal-Mart (the Wal-Mart/DVL contract).

At some point between December 19, 2000 and January 31, 2000, DVL allegedly informed Wal-Mart that DVL would not honor the Wal-Mart/DVL contract because the lender would not agree to prepayment of the note. This was untrue.

On January 2, 2001, Brian Curtis of State Street spoke with Peter Gray of DVL concerning the fact that the rent on the real estate had not been paid. They did not discuss any problems with prepayment of the note. On that same day, Curtis also spoke with Jim Cole, an attorney for Wal-Mart. Cole informed Curtis that Wal-Mart was purchasing the real estate and the sale was set to close by January 31, 2001. They did not discuss any problems with prepayment of the note. The next day, on January 3, 2001, Gray called Curtis and informed him that the rent would be paid.

On or about January 9, 2001, Vance Bates, a Wal-Mart employee, participated in a telephone conference with Gray of DVL. During this conference, Gray told Bates that prepayment of the note was not possible, and that the sale would not close. On January 11, 2001, Bates and Gray had another telephone conversation in which they discussed termination of Wal-Mart's lease of the Garden City property.

On January 31, 2001, Wal-Mart's real estate committee met in the so-called Razorback Room at Wal-Mart's headquarters. In discussing the Garden City real estate, the committee determined that it would be cheaper for Wal-Mart to breach the Indy Lube/Wal-Mart contract and, instead, negotiate a lease buyout with DVL.

By February 7, 2001, Curtis had not received word from DVL regarding the closing on the Garden City real estate. Accordingly, Curtis left a voice mail message with Gray requesting an update. Curtis also requested a closing date so that he could determine the exact payoff amount on the secured note.

Jim Tipps, a real estate broker at CB Richard Ellis, the broker for the Garden City real estate, informed Jim Caplinger, an officer with Indy Lube, that there was a problem with the mortgage relating to it being a commercial mortgage backed security. On February 9, 2001, Caplinger sent Tipps a letter offering to provide any assistance the former could with this issue.

On February 12, 2001, less than two weeks after the above-described meeting in the Razorback Room, Wal-Mart sent Indy Lube a letter terminating the Indy Lube/Wal-Mart contract. After receiving this letter, Indy Lube called Wal-Mart to find out why Wal-Mart could not acquire fee simple interest. A Wal-Mart representative told Indy Lube that Wal-Mart could not acquire fee simple interest; however, the fee simple owner (DVL), who Wal-Mart owed $2.6 million, was willing to take Wal-Mart's interest in the property in exchange for releasing the $2.6 million debt. Therefore, the Wal-Mart representative said that it would be easier for Wal-Mart to dispose of the real estate by taking the fee simple owner's offer.

On February 16, 2001, Curtis (of State Street) called Cole (attorney for Wal-Mart). Cole told Curtis that DVL would not sell the Garden City real estate to Wal-Mart and, therefore, the sale would not take place. Some time thereafter, Curtis participated in a conference call between Bates (of Wal-Mart) and Gray (of DVL), during which Bates and Gray told Curtis that the sale of the Garden City real estate would not take place. There was no discussion regarding any problems with prepayment of the note.

Indy Lube believes that the Wal-Mart employees who were involved in the transaction knew, or should have known by commercially reasonable efforts, that there was no problem with prepayment of the note. Based on these facts, Indy Lube's first amended complaint asserts the following claims: breach of contract against Wal-Mart (Count I); negligent misrepresentation against Wal-Mart (Count II); civil conspiracy against both DVL and Wal-Mart (Count III); interference with contract against DVL (Count IV); breach of contract, as third-party beneficiary, against DVL (Count V); and fraud against both DVL and Wal-Mart (Count VI).

Wal-Mart has moved to dismiss Indy Lube's negligent misrepresentation, civil conspiracy, and fraud claims (Counts II, III, and VI). DVL has moved to dismiss Indy Lube's civil conspiracy, interference with contract, third-party beneficiary, and fraud claims (Counts III, IV, V, and VI). Thus, the only claim not challenged by the instant motions is Indy Lube's breach of contract claim against Wal-Mart, as set forth in Count I of the first amended complaint.

III. Analysis.

A court may dismiss a claim for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). Dismissal should not be granted unless "it appears beyond a doubt that the plaintiff can prove no set of facts in support of its claim which would entitle him to relief," GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir.1997) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)), or unless an issue of law is dispositive, Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). "The purpose of Rule 12(b)(6) is to allow a defendant to test whether, as a matter of law, the plaintiff is entitled to legal relief even if everything alleged in the complaint is true." Mayer v. Mylod, 988 F.2d 635, 638 (6th Cir.1993). The Tenth Circuit has observed that the federal rules "`erect a powerful presumption against rejecting pleadings for failure to state a claim.'" Maez v. Mountain States Tel. & Tel., Inc., 54 F.3d 1488, 1496 (10th Cir.1995) (quoting Morgan v. City of Rawlins, 792 F.2d 975, 978 (10th Cir.1986)).

"All well-pleaded facts, as distinguished from conclusory allegations, must be taken as true." Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984) (citation omitted). The court must view all reasonable inferences in favor of the plaintiff, and the pleadings must be liberally construed. Id. The issue in reviewing...