Alpart v. General Land Partners, Inc.
| Decision Date | 19 August 2008 |
| Docket Number | No. 07-cv-4457.,07-cv-4457. |
| Citation | 574 F.Supp.2d 491 |
| Parties | Kenneth D. ALPART, et al., Plaintiffs, v. GENERAL LAND PARTNERS, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Jeffrey S. Rosenblum, Stephen J. Kastenberg, Amy Shellhammer, Jessica Moltisanti Anthony, Ballard Spahr Andrews & Ingersoll LLP, Philadelphia, PA, for Plaintiffs.
Maryellen O'Laughlin, Klehr Harrison Harvey Branzburg & Ellers LLP, Philadelphia, PA, for Defendants.
This is a dispute between business partners over the proceeds from a real estate investment venture. Plaintiffs Kenneth Alpart, Lynette Kerrane, and Eric Wojcikiewicz,1 have sued defendants General Land Partners, Inc., Creek Road Development Group, L.P., Creek Road Development Group, Inc., Tracy Mignatti,2 Ted Mignatti, Jr., and Steve McKenna for breach of fiduciary duty, breach of contract, tortious interference with contract, civil conspiracy, and unjust enrichment. The plaintiffs also request a declaratory judgment and an accounting. The defendants filed a motion to dismiss the plaintiffs' Amended Complaint under Fed. R.Civ.P. Rules 12(b)(1) and (6). Jurisdiction is proper under 28 U.S.C. § 1332.3
In 1994, three friends, Kenneth Alpart, Dan Kerrane, and Ted Mignatti, III, entered into an oral partnership agreement to acquire and develop land in Bucks County, Pennsylvania (the "Bucks County Agreement").5 Kenneth Alpart and Dan Kerrane agreed to provide the capital and Ted Mignatti, III agreed to provide real estate connections because his family is involved in real estate. In a letter to Kenneth Alpart and Dan Kerrane dated August 9, 1994, Ted Mignatti, III confirmed the terms of the Bucks County Agreement. In return for their capital investment, Alpart and Kerrane were each entitled to the return of their capital investment, 25% of the profits from the resale of the land ("land profits"), also if the land were resold to a company connected to the Mignatti family (a "Mignatti related company"),6 Alpart and Kerrane would be entitled to 12.5% of any profits from development ("building profits"). In addition,
[I]f any land is sold to a [Mignatti related company], a fair market value for the ground will be established to determine both a transfer price and the basis for the [] split on the "land profits." No money will be transferred at this time.
The Bucks County Agreement set up a limited partnership, the LC Associates, L.P., ("LC Partnership") to purchase real estate. Four limited partners, Kenneth Alpart, Dan Kerrane, Ted Mignatti III, and Ted Mignatti, Jr., and one general partner, General Land Partners, Inc. ("GLP") comprised the LC Partnership. In August 1994, the LC Partnership purchased 276 acres of land in Bucks County, Pennsylvania (the "Bucks County land").7
In 2006, GLP, acting as the general partner of the LC Partnership, transferred the Bucks County land to defendants Creek Road Development Group, L.P. and Creek Road Development Group, Inc. (collectively the "Creek Road defendants"). The Creek Road defendants are operated and controlled by the Mignatti family and Steve McKenna, president of the Mignatti companies. GLP transferred the land to the Creek Road defendants without first notifying the plaintiffs or establishing the fair market value of the land.
After the transfer of the Bucks County land, other Mignatti related companies began developing "Heritage Creek," a different nearby tract of land. The development of the Bucks County land was postponed because of the Heritage Creek development. Although the LC Partnership had no interest in the Heritage Creek land or development, the Mignatti related companies profited from this development.
Also after the transfer of the Bucks County land, Steve McKenna, president of the Mignatti companies, told Kenneth Alpart and Dan Kerrane that they would each receive 6.25% of the building profits, rather than the 12.5% provided in the Bucks County Agreement.
The plaintiffs, Kenneth Alpart and representatives for Dan Kerrane, sued GLP, the Creek Road defendants, Ted Mignatti, Jr., Tracy Mignatti,8 and Steve McKenna because:
• the Bucks County land was transferred to a Mignatti related company at below market value without notice and without establishing the fair market value;
• McKenna said that the building profits would not be distributed as agreed; and
• the development of the Bucks County land was delayed.
The plaintiffs' Amended Complaint contains the following counts:
(I) Breach of Fiduciary Duty against GLP, Tracy Mignatti, and Ted Mignatti; Jr.;
(II) Breach of the Bucks County Agreement against Tracy Mignatti;
(III) Breach of the LC Agreement against Tracy Mignatti, Ted Mignatti, Jr., and GLP;
(IV) Tortious Interference with the Bucks County Agreement against Ted Mignatti, Jr., Steve McKenna, GLP, and the Creek Road defendants;
(V) Tortious Interference with the LC Agreement against Steve McKenna and the Creek Road defendants;
(VI) Civil Conspiracy against all defendants;
(VII) Unjust Enrichment against all defendants;
(VIII) Declaratory Judgment against all defendants; and
(IX) Accounting from GLP and the Creek Road defendants.
The defendants moved to dismiss all counts under Fed.R.Civ.P. Rules 12(b)(1) and (6).
The defendants move to dismiss the Amended Complaint under Fed. R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction because there is no case or controversy. Article III of the United States Constitution requires that this Court only address cases or controversies. U.S. CONSTITUTION, art. III, § 2, cl 1. To present a justiciable case or controversy, a case must be ripe for review. See Artway v. Attorney Gen., 81 F.3d 1235, 1246-47 (3d Cir.1996). For a case to be ripe:
(1) the plaintiff must have suffered an injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical;
(2) there must be a causal connection between the injury and the conduct complained of ...; and
(3) it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.
Storino v. Borough of Point Pleasant Beach, 322 F.3d 293, 296 (3d Cir.2003). A claim is not ripe if the adjudication "rests upon contingent future events that may not occur as anticipated or indeed may not occur at all." Pryor v. Nat'l Collegiate Athletic Ass'n, 288 F.3d 548, 561 (3d Cir. 2002). This inquiry "reflects a judgment that the disadvantages of a premature review that may prove too abstract or unnecessary ordinarily outweigh the additional costs of—even repetitive—[later] litigation." Ohio Forestry Ass'n, Inc. v. Sierra Club, 523 U.S. 726, 735, 118 S.Ct. 1665, 140 L.Ed.2d 921 (1998).
The defendants argue that this entire case is not ripe and therefore this Court lacks subject matter jurisdiction because the case is dependent on the future distribution of building profits.9 When this motion was filed, no building profits had been distributed and therefore, the breakdown of the building profit distribution was contingent on future events.
In the Amended Complaint, the plaintiffs allege the following harms:10
• causing the Bucks County land to be transferred to a Mignatti related company without advanced notice to Plaintiffs;
• causing the Bucks County land to be transferred to a Mignatti related company without having first established a fair market value price for the land;
• causing the land profits derived from the transfer price of the Bucks County land to be reduced by transferring the property to a Mignatti related company at less than fair market value;
• establishing a distribution plan that has reduced Plaintiffs' shares of the building profits;
• causing the transfer and/or development of the Bucks County land to be delayed by, inter alia, construction of the Heritage Creek project; and
• informing Plaintiffs that Defendants will distribute to Plaintiffs less than their agreed share of the building profits.
(Amended Complaint, ¶¶ 71; 75, 76, 81, 82.) The allegations that involve the building profits, "establishing a distribution plan that has reduced Plaintiffs' shares of the building profits" and "informing Plaintiffs that Defendants will distribute to Plaintiffs less than their agreed share of the building profits," are encompassed in the plaintiffs' claim for anticipatory breach, discussed later in this memorandum. Besides the anticipatory breach claim, none of the plaintiffs other factual allegations depends on the future contingent distribution of building profits. Accordingly, the defendants' motion to dismiss this action because it is unripe due to the contingent nature of the alleged harms is denied.
The defendants move to dismiss the Amended Complaint because the plaintiffs have not stated a claim upon which relief can be granted. According to Fed. R.Civ.P. 12(b)(6), a court must grant a motion to dismiss if the plaintiff fails "to state a claim upon which relief can be granted." "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiffs obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___-___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (internal quotations omitted).
The plaintiffs claim that GLP, Ted Mignatti Jr., and Ted Mignatti, III breached a fiduciary duty owed to the plaintiffs pursuant to the LC Agreement. The plaintiffs allege that they breached the duty of "total fairness" by:
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