Andres Holding Corp. v. Rio
| Decision Date | 08 March 2011 |
| Docket Number | Civil Action No. SA-09-CV-268-XR,Civil Action No. SA-09-CV-127-XR |
| Parties | ANDRES HOLDING CORPORATION, Plaintiff, v. VILLAJE DEL RIO, LTD., ET AL., Defendants. GEORGE GEIS, Plaintiff, v. ANDRES HOLDING CORPORATION, Defendant. |
| Court | United States District Courts. 5th Circuit. Western District of Texas |
On this date, the Court considered George Geis' Motion for Summary Judgment (Docket Entry No. 54), Villaje del Rio, Ltd.'s Motion for Partial Summary Judgment (Docket Entry No. 55), and Andres Holding Corporation's Motion for Summary Judgment (Docket Entry No. 56). For the following reasons, Geis' motion and Villaje del Rio's motion (Docket Entry Nos. 54 and 55) are GRANTED IN PART and DENIED IN PART. Andres Holding Corporation's motion (Docket Entry No. 56) is DENIED.
Defendant George Geis is the owner of the Rio Architects company, the design architect on a multi-million dollar residential, commercial, and retail development construction project known as the Villaje Del Rio Project ("the Project"). Geis later founded Defendant Villaje Management, L.L.C. (VM), the general partner of Defendant Villaje Del Rio, Ltd. (VDR), which was created to develop and construct the Project. Geis financed the Project through a Deed of Trust Note ("the Note") provided by DB Berkshire Mortgage (DBBM). VDR entered into a Construction Contract-Cost Plus ("the Contract") on February 13, 2003 with Plaintiff Andres Holding, designating Andres Holding as the general contractor for the project.
The Contract and incorporated Project Manual provided that Andres was to submit monthly "Contractors Requisition" forms ("Pay Requisitions") in order to obtain payment. The amount of payment under each Pay Requisition was dependent on the percentage of completion of the project, calculated by Andres and based on the amounts provided in the Schedule of Values. Andres began submitting Pay Requisitions in April 2003.
After receiving a Pay Requisition, Geis would submit an Application for Insurance for Advance of Proceeds in order to receive funding from DBBM. DBBM would advance the proceeds and increase the amount owed by Geis on the Note. At times, advances were made directly to Andres. As of Pay Requisition number 11 on February 2, 2004, the advances were made to Alamo Title Company as Title Agent, and disbursed pursuant to the February 13, 2003 "Construction Loan Disbursement Agreement."
VDR terminated the Contract with Andres Holding in late October 2004. Disputes over performance, payment, and termination of the Contract give rise to these consolidated lawsuits.
The VDR project has resulted in numerous lawsuits in both state and federal court. On October 29, 2004, VDR filed a demand for arbitration against Andres before the American Arbitration Association ("AAA"), and shortly thereafter, Andres filed counterclaims against VDR, VM, and Geis. Due to a number of factors, the arbitration was delayed for several years.
In October 25, 2005, Andres filed an action in the 45th District Court of Bexar County, Texas against VDR ("the state lawsuit"), and added Geis by filing its First Amended Petition on November 1, 2007. While Andres' state court lawsuit was pending, DBBM declared its loan to VDR in default. Colina del Rio, LP ("Colina") purchased the loan. Colina filed suit in the 408th Judicial District Court for Bexar County, Texas, asserting fraud and breach of contract claims against Geis ("the Colina lawsuit").1
On May 1, 2006, VDR filed a voluntary Chapter 11 petition, and the matter was later converted to a Chapter 7 liquidation. On May 2, 2007, Andres purchased all tort and non-tort claims that could have been asserted by VDR against Andres. Colina purchased all of VDR's claims "not sounding in tort" against Geis. On April 29, 2008, the bankruptcy court authorized an assignment of Chapter 5 bankruptcy claims against Andres, with 90% of the recovery from any lawsuit to go to Geis and the remaining 10% to the VDR bankruptcy estate. Geis then filed his Original Complaint and Incorporated Objection to Claim asserting claims of fraudulent transfer and conveyances against Andres under § 548 of the Bankruptcy Code and Chapter 24 of the Texas Business & Commercial Code.
On October 13, 2008, Geis removed Andres' state lawsuit to federal bankruptcy court, thebankruptcy reference was withdrawn, and Case No. 09-CV-127 was filed in this Court.2 Andres asserts fraud claims against VDR arising out of the construction contract, and breach of contract claims against Geis and VM under an alter ego theory. Geis then filed a separate action in this Court against Andres, Case No. 09-CV-268, asserting claims that Andres received fraudulent transfers violating the Texas Uniform Fraudulent Transfer Act ("TUFTA"), and received payments for over-billing, double billing, and work that was not performed.3
VDR filed a motion to consolidate the two cases as well as a separate case filed by VDR against Colina and DBBM.4 Andres filed a motion to compel Geis and VDR to the pending arbitration before the AAA.5 On July 24, 2009, this Court denied Andres' motion to compel arbitration, consolidated cases No. 09-CV-127 and No. 09-CV-268, and denied VDR's motion to include its separate lawsuit against VDR and DBBM in the consolidation.6
On September 30, 2010, this Court denied a motion by Andres for leave to amend itscomplaint based on the factual findings of the state court in the Colina lawsuit against Geis and VDR.7
Summary judgment is appropriate 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. Fed. R. Civ. P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is "genuine" if the evidence is sufficient for a reasonable jury to return a verdict in favor of the nonmoving party. Anderson, 477 U.S. at 248; Hamilton v. Segue Software Inc., 232 F.3d 473, 477 (5th Cir. 2000). A fact is "material" if its resolution in favor of one party might affect the outcome of the case. Anderson, 477 U.S. at 248; Wyatt v. Hunt Plywood Co., Inc., 297 F.3d 405, 409 (5th Cir. 2002).
The burden is on the moving party to show that "there is an absence of evidence to support the nonmoving party's case." Freeman v. Tex. Dep't of Criminal Justice, 369 F.3d 854, 860 (5th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Once the moving party meets its initial burden, the nonmoving party "must... set out specific facts showing a genuine issue for trial." Fed. R. Civ. P. 56(e); Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994). To avoid summary judgment, the nonmoving party must adduce admissible evidence that creates a fact issue concerning the existence of every essential component of that party's case and unsubstantiated assertions of actual dispute will not suffice. Thomas v. Price, 975 F.2d 231, 235 (5th Cir. 1992). The opposing party cannot establish a genuine issue of material fact by resting on the mere allegations of the pleadings. Hulsey v. State of Texas, 929 F.2d 168, 170 (5th Cir. 1991).The Court reviews all facts in the light most favorable to the nonmoving party. First Colony Life Ins. Co. v. Sanford, 555 F.3d 177, 181 (5th Cir. 2009).
Andres alleges that Geis "implemented a scheme to reengineer, redesign, and redistribute the work and loan proceeds" in order to make the VDR project financially feasible.8 It argues that Geis consistently attempted to reduce the payments due to both Andres and its subcontractors, and failed to pay millions of dollars to Andres and its subcontractors.9 It further alleges that Geis withheld retainage from Andres and its subcontractors, and that Andres furnished materials and equipment for the Project. Andres also alleges that Geis failed to pay its management fee. Based upon those allegations, Andres asserts the following claims against VDR, VM, and Geis:
1. Piercing the corporate veil to hold Geis accountable for the actions of VDR and VM;
2. Breach of contract by failure to remit payments due, failure to pay Andres a construction fee, systematically delaying Andres' and its subcontractors' ability to satisfy their contractual obligations, and wrongful termination of the contract;
3. Tortious interference with Andres' existing contractual relations with subcontractors;
4. Tortious interference with Andres' prospective contractual relations with subcontractors;
5. Fraud and fraudulent inducement by misrepresenting before entering the contract that VDR would rely on an amended schedule of values for the contract and misrepresenting that VDR would sign a side agreement to cover Andres' contractor fee; 6. Attorneys' fees;
7. Pre-and post-judgment interest.
Geis and VM allege that the amount of work that Andres stated was completed was inaccurate on a line item level and in total on each pay requisition submitted between January 2004 and October 2004.10 They also allege that Andres received double payment for certain items, and received payment for several items which were improperly categorized as "extras."11They allege that these payments rendered VDR insolvent and without sufficient funds to complete the Project and make payments to its creditors. Accordingly, Geis and VM assert the following claims against VDR:
1. Fraudulent conveyance in violation of 11 U.S.C. § 548, by causing VDR to transfer amounts for which Andres did not provide reasonably equivalent value;
2. Fraudulent transfer in violation of Chapter 24 of the Texas Business and Commercial Code by causing VDR to transfer amounts for which Andres did not provide reasonably equivalent value;
3. Objection to Andres' Proof of Claim No. 7 in the VDR bankruptcy proceeding; and
4. Attorneys' fees and costs.
Andres seeks...
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