Ariel Preferred Retail Grp., LLC v. Cwcapital Asset Mgmt.

• Decision Date: 01 August 2012
• Docket Number: Case No. 4:10CV623SNLJ.
• Citation: 883 F.Supp.2d 797
• Parties: ARIEL PREFERRED RETAIL GROUP, LLC, et al., Plaintiffs, v. CWCAPITAL ASSET MANAGEMENT, et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

883 F.Supp.2d 797

ARIEL PREFERRED RETAIL GROUP, LLC, et al., Plaintiffs,

v.CWCAPITAL ASSET MANAGEMENT, et al., Defendants.

Case No. 4:10CV623SNLJ.

United States District Court,

E.D. Missouri,

Eastern Division.

Aug. 1, 2012.

Glenn E. Davis, Hepler Broom, St. Louis, MO, for Plaintiffs.

Sandra Jane Wunderlich, Stinson and Morrison, St. Louis, MO, Jeremy L. Buxbaum, William C. Rava, Perkins Coie, Seattle, WA, for Defendants.

MEMORANDUM

STEPHEN N. LIMBAUGH, JR., District Judge.

Plaintiffs have filed this multicount lawsuit against the defendants arising out of the alleged termination of the plaintiffs as manager(s) of certain financially distressed premium retail outlet malls. Upon the Court's order, seven (7) claims against the defendants remain pending: Count I—Trademark Infringement (15 U.S.C. § 1114); Count II—False Designation of Origin and Unfair Competition under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); Count III—Common Law Trademark Infringement; Count IV—Trademark Infringement (§§ 417.061, 417.066 R.S.Mo.); Count V—Breach of Contract; Count VI—Unjust Enrichment; and Count VIII—Unfair Competition. ¹ This matter is before the Court on the defendants' motion for summary judgment [59 and 60], filed October 28, 2011. Extensive responsive pleadings have now all been filed and this matte is ripe for disposition. This cause of action is set for jury trial on the Court's docket of September 24, 2012.

The appropriate standard for consideration of all motions for summary judgment is as follows:

Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. The movant bears the initial responsibility of informing the district court of the basis for its motion, and must identify those portions of the record which it believes demonstrate the absence of a genuine issue of material fact. If the movant does so, the nonmovant must respond by submitting evidentiary materials that set out specific facts showing that there is a genuine issue for trial. On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. The nonmovant must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial. Where the record taken as a whole could not lead a rationaltrier of fact to find for the nonmoving party, there is no genuine issue for trial.

Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.2011) (internal citations and quotations omitted); see also, Jackson v. United Parcel Service, Inc., 643 F.3d 1081, 1085 (8th Cir.2011) ( citing Torgerson, supra.).

The Court has carefully reviewed this lawsuit, including but not limited to, the defendants' statement of uncontroverted material facts [61], the plaintiffs' objections thereto [72], and the defendants' reply to the plaintiffs' objections [81], and finds that most, if not all, of the material facts have been admitted or plaintiffs have failed to properly deny the noted fact.² In numerous instances, the plaintiffs have circumvented the noted fact with irrelevant narrative, a legal conclusion, no citation to the record to support the denial, and/or the citation to the record fails to controvert the fact as stated.³ The following recitation is the Court's findings of fact based on the record before it.⁴

Plaintiff Prescott Group, LLC (Prescott) is a Delaware limited liability company with its principal place of business in New York, New York. It operates as a real estate investment and asset management firm active in structuring commercial real estate investments on behalf of both institutional and private client investors. Prescott undertakes investment banking and advising in real estate ventures. Prescott's clients consist of institutional investors and high net worth investors.

Prescott is the parent of several affiliates owned by Prescott, including Prescott Capital Management, Prescott Capital Advisors, Prescott Administrative Services, and Ariel Preferred Retail Group.

Prescott is the registered owner of the trademarks (Ariel Trademarks) at issue in this cause of action.

Plaintiff Ariel Preferred Retail Group, LLC (Ariel) was formed in 2005 and is a wholly-owned subsidiary of Prescott Capital Management, LLC. It is headquartered in Williamsburg, Virginia with its own management staff and employees.

Ms. Susan Stupin is a co-founder and Managing Director of plaintiff Prescott, with offices in New York, New York. She also sits on the Board of Directors of plaintiff Ariel. Ms. Stupin is a graduate of Princeton University and the Harvard Business School. Prior to co-founding Prescott, Ms. Stupin had substantial experience in real estate, investment banking, and capital markets.

Mr. Theodore R. Gamble, Jr. is also a co-founder and Managing Partner of plaintiff Prescott, with offices in New York, New York. Gamble also sits on the Board of Directors of plaintiff Ariel. Gamble is a graduate of Princeton University and the Harvard Business School. Gamble has been working on complex business transactions for the past twenty-five (25) to thirty (30) years.

Mr. Don Chapman, during the relevant time-period, was a managing director and board member of Ariel.

Defendant CWCapital Asset Management (CW) is a limited liability company with its principal place of business in Needham, Massachusetts. CW, is in part, in the special servicing industry, and was the Special Servicer for the defaulted loans at issue in this case.

Mr. Jim DeAngelo is an asset manager for CW. DeAngelo was the asset manager in charge of the subject outlet malls from approximately April 2009, when Borrowers defaulted on its loan, to approximately December 2009, when a Receiver was appointed by a state court in Georgia.

Mr. Alex Rivero was, until approximately March 2011, as associate asset manager at CW.

Mr. Burr Ault is an asset manager for CW. He was responsible for the Ariel properties from approximately December 2009 to the present.

Defendant The Woodmont Co. (Woodmont) is a Texas corporation with a principal place of business in Fort Worth, Texas. Woodmont is in the business of property management and asset services for commercial real estate. This includes, but not limited to, operating and/or leasing third-party properties for third-parties.

Defendant Frederick J. Meno is the President and Chief Operating Officer of Asset Services at Woodmont. Mr. Meno is a Certified Property Manager, RPA and CSM. Prior to joining Woodmont in his present capacity, Mr. Meno was a Senior Vice–President of Operations, Management, and Construction Management at Prime Retail LP, one of the largest developers and operators of outlet shopping centers in the country.

On December 11, 2009 Mr. Meno was appointed Receiver of the six subject Ariel properties (a/k/a as the Properties or the Assets) by the Gwinnett County Superior Court, State of Georgia. Mr. Meno had prior experience as an appointed Receiver on other properties not connected to the subject Properties.

Mr. Brian Restivo is an attorney and the Assistant General Counsel at Woodmont.

Between 2005 and 2006, in addition to forming Ariel, Prescott Capital Management LLC, an affiliate of plaintiff Prescott, joined with several other investment partners to form First Value Retail Holdings LLC ⁵ (FVRH). FVRH formed single purpose LLCs (the Borrower) to acquire outlet mall real estate. Prescott is the General Partner of FVRH and holds a minority interest position in the Borrower.

In 2006, FVRH arranged the acquisition of six (6) properties through the Borrower: 1) Tulare, CA; 2) Darien, GA; 3) Laughlin, NV; 4) Traverse City, MI; 5) Warrenton, MO; and 6) Medford, MN. Borrower financed these acquisitions and related improvements with commercial mortgage backed security (CMBS) debt structured by Greenwich Capital, with Wachovia as servicer and Wells Fargo as trustee. The debt was financed by an interest-only loan in the principal amount of ninety-four million ($94,000,000.00). The Loan Agreement covering this debt was signed by Gamble on behalf of the Borrower on July 27, 2006. Defendants' Exhibit [61–8/G].

As to each of the Properties, Borrower entered into a Management Agreement with Ariel, which provides, among other things, that Ariel would be paid by the Borrower its management fees and leasing commissions for its work managing and operating the Properties. All six (6) Management Agreements are substantially similar. Defendants' Exhibit [61–9/H]. Gamble signed all six (6) Management Agreements on behalf of Borrower and Ariel.

Besides the Borrower and Ariel, there are no other parties to the Management Agreements; defendants CW, Meno, and Woodmont are not parties to the Management Agreements.

As a condition on the loan, Borrower and Ariel entered into an agreement with the Lender ⁶ entitled Consent and Subordination of Manager (hereinafter referred to as simply the Subordination Agreement), which provides, among other things, that the Management Agreements and all fees and commissions payable to Ariel as manager of the subject Properties are subordinate to the mortgage. Defendants' Exhibit [61–11/J].

Paragraph 2 of the Subordination Agreement states the following:

The Management Agreement and all fees and commissions payable to Manager thereunder are and shall be subject and subordinate in all respects in lien and payment to the lien and payment of (i) the Mortgage, (ii) the Loan Documents, and (iii) any and all modifications, amendments, renewals and/or substitutions of the Mortgage and/or any of the other Loan...