Gonzales v. Liberman (In re Brutsche), 11-13326-j7
| Decision Date | 11 February 2013 |
| Docket Number | No. 11-13326-j7,Adversary No. 11-01189-j,11-13326-j7 |
| Parties | In re: RALPH LEO BRUTSCHE, Debtor. YVETTE GONZALES, Chapter 7 Trustee, Plaintiff, v. MARC LOIS LIBERMAN, et al, Defendants. |
| Court | U.S. Bankruptcy Court — District of New Mexico |
THIS MATTER is before the Court on Defendants Grevey-Libermans'1 Motion to Dismiss Counts II and III of Complaint (the "Motion to Dismiss") filed by and through their attorneys of record, Modrall Sperling, Roehl, Harris, & Sisk PA (Paul Fish). See Docket No. 4. Plaintiff Ralph Leo Brutsche2 filed a response, and Grevey-Liberman filed a reply (Docket Nos. 11 and 14). Grevey-Liberman seek dismissal of Mr. Brutsche's claims for unjust enrichment and to recover fraudulent transfers on the grounds that: (1) equitable remedies are only available inthe absence of an enforceable contract; (2) Grevey-Liberman was not unjustly enriched because Mr. Brutsche failed to perform under the contract; and (3) Mr. Brutsche received reasonably equivalent value in exchange for the payments to Grevey-Liberman.
After consideration of the Motion to Dismiss, the Response, and Grevey-Liberman's Reply, and the applicable statutes and relevant case law, and being otherwise sufficiently informed, the Court finds that the Complaint fails to allege sufficient facts to state a claim for unjust enrichment and fraudulent transfer. The Court will therefore grant the Motion to Dismiss.
A motion to dismiss for failure to state a claim is governed by Rule 12(b)(6), Fed.R.Civ.P, made applicable to adversary proceedings by Rule 7012, Fed.R.Bankr.P. The purpose of a motion to dismiss under Rule 12(b)(6), Fed.R.Civ.P is to test "the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true." Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir.1994). In evaluating a motion to dismiss under Rule 12(b)(6), the Court accepts as true all well pleaded facts and evaluates those facts in the light most favorable to the plaintiff. Rosenfield v. HSBC Bank, USA, 681 F.3d 1172, 1178 (10th Cir. 2012). "[C]ourts may consider not only the complaint itself, but also attached exhibits, and documents incorporated into the complaint by reference." Smith v. United States, 561 F.3d 1090, 1098 (10th Cir.2009) (citation and internal quotation marks omitted). To survive a motion to dismiss under Rule 12(b)(6), Fed.R.Civ.P., the complaint must contain enough facts to state a cause of action that is "plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007). In other words, the plaintiff must "nudge [his] claims across the line from conceivable to plausible." Id.
In applying this standard, the Court should look "to the specific allegations in the complaint to determine whether they plausibly support a legal claim for relief." Pace v. Swerdlow, 519 F.3d 1067, 1073 (10th Cir.2008) (internal quotations omitted). The Court must not "weigh the potential evidence that the parties might present at trial" in order to test the sufficiency of the complaint for purposes of Rule 12(b)(6). Sutton v. Utah State Sch. For the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir.1999) (internal citations omitted). Nevertheless, to withstand dismissal, the plaintiff must sufficiently allege all facts necessary to support the required elements under the legal theory proposed. Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir.2007).
The Tenth Circuit has observed that there is some disagreement among Circuit Courts as to whether the new standard enunciated by Twombly results in a minimal change, or whether the new standard, in fact, requires a significantly higher standard of pleading. Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012) (). The Tenth Circuit instructs that the Twombly standard is "a middle ground between heightened fact pleading, which is expressly rejected, and allowing complaints that are no more than labels and conclusions or a formulaic recitation of the elements of a cause of action, which the Court stated will not do." Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (internal quotation marks and citations omitted). In short, within the Tenth Circuit, the notice pleading requirement under "Rule 8(a)(2) still lives." Khalik, 671 F.3d at 1191. With theseprinciples in mind, the Court will evaluate the sufficiency of the Complaint in light of the Motion to Dismiss.
Mr. Brutsche purchased undeveloped real property in Santa Fe County, New Mexico (the "Property") from Grevey-Liberman or Grevey-Liberman's predecessors. See Complaint, ¶¶ 10 and 11. On or about June 24, 2005, Mr. Brutsche executed a Secured Promissory Note (the "Note") in favor of Grevey-Liberman or their predecessors in the amount of $5,182,000.00. See Complaint, ¶ 10. The Note called for annual payments of $460,304.00 plus accrued interest. See Secured Promissory Note attached to the Complaint as Exhibit A (Docket No. 1-1). The Note provides that payments are to be applied first to any accrued interest and then to principal. Id. The full amount of the debt due under the Note was due on June 24, 2010. Id.
On June 24, 2005, Mr. Brutsche executed and delivered a mortgage (the "Mortgage") in favor of Grevey-Liberman or their predecessors pledging the Property and improvements thereon, rents, and profits as security for payment of the Note. See Mortgage attached to the Complaint as Exhibit B (Docket No. 1-2). The Mortgage was duly recorded with the Clerk of Santa Fe County, New Mexico. See Complaint, ¶ 13.
Paragraph 5.15.5 of the Mortgage provides:
Partial releases from the lien of the Mortgage shall be given for the subdivided residential lots as generally shown on Exhibit B (Phase 1) and future residential lots for which there are future approved subdivision plats for future phases (total of 107 lots) (provided that the appropriate infrastructure security has posted with the County of Santa Fe for the required infrastructure for the phase in which the lots to be released are located) at a Lot Release Price (principal payment per acre) of Seventy Three Thousand Dollars ($73,000.00) per lot plus all accrued interest due under the Note and subject to the following requirements: (A) Each generally shown on Exhibit C; and (B) the "shared lots" as shown on Exhibit C must be released first at a Lot Release Price of $25,000 per lot to be applied against the One Million Dollar credit referenced above
Paragraph 5.15.6 of the Mortgage provides:
Partial releases will be allowed only based on recorded subdivision plats and only for an entire lot or tract as shown on an approved recorded subdivision plat. Prior to any release of any Lots, an infrastructure guarantee (or equivalent bond, letter of credit, etc.) in favor of the applicable government entity must be in place to cover all infrastructure requirements applicable to such the subdivision plat (roads, sewer, utility lines, etc.). Mortgagor shall deliver to Mortgagee written notice requesting such partial release, identifying the lot(s) or tract(s) sought to be released (Request for Release). Mortgagor shall not be entitled to any partial releases during any period of time when there exists an event of default or an event with which the giving of notice or lapse of time, or both, would constitute an event of default pursuant to the terms of the Mortgage. Buyer shall pay all costs in preparing and recording each release and any necessary and reasonable out-of-pocket expenses incurred by Mortgagee in connection with any partial release.
See Mortgage attached to the Complaint as Exhibit B (Docket No. 1-2).
Between June 2007 and July 22, 2007, Mr. Brutsche paid Grevey-Liberman at least $162,270.00 in principal under the Note (the "2007 Transfer"). See Complaint, ¶ 15. Between July 22, 2007 and July 22, 2012 (the "Petition Date"), Mr. Brutsche paid Grevey-Liberman at least $366,939.00 in principal under the Note (the "Four Year Transfers"). Id. at ¶ 16. Mr. Brutsche did not designate which lots he wanted released after making payments under the Note. Id. at ¶ 17. According to Mr. Brutsche, the parties agreed that Grevey-Liberman would release those lots from the lien of the Mortgage at such time when Mr. Brutsche designated the desired lots. Id. Mr. Brutsche also alleges that at the time of the Four Year Transfers: (1) he was not in default under the Note or Mortgage; and (2) he met all the necessary conditions entitling him to the release of a certain number of lots under the terms of the Mortgage. Id. at ¶¶ 18-19.
Mr. Brutsche filed a petition commencing a voluntary bankruptcy case under Chapter 11 of the Bankruptcy Code on July 22, 2011.4 Id. at ¶ 1. Shortly before commencing the case, Mr. Brutsche made demand for release of lots 40, 45, 48, 49, 50, and 27 in High Summit III, Phase 2(the "Phase 2 Lots"), which were secured by the Mortgage. Id. at ¶ 20. Grevey-Liberman refused to release any lots from the lien of the Mortgage. Id. at ¶ 21.
Mr. Brutsche commenced this adversary proceeding for breach of contract, unjust enrichment, and to avoid and recover fraudulent transfers pursuant to 11 U.S.C. §§ 544, 548, 550(a), and 551 and the New Mexico Fraudulent Transfer Act ("NMFTA"), N.M.S.A.1978 § 56-10-18(A)(2) (1989). See Mr. Brutsche's Complaint ("Complaint") (Docket No. 1). In December, 2011, Grevey-Liberman filed a Motion for Summary Judgment seeking...
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