Gunapt Dev., L.L.C. v. Peine Lakes, L.P.

• Decision Date: 16 November 2022
• Docket Number: 4:20-cv-1778-MTS
• Parties: GUNAPT DEVELOPMENT, L.L.C., et al., Plaintiffs, v. PEINE LAKES, L.P., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

GUNAPT DEVELOPMENT, L.L.C., et al., Plaintiffs,
v.
PEINE LAKES, L.P., et al., Defendants.

No. 4:20-cv-1778-MTS

United States District Court, E.D. Missouri, Eastern Division

November 16, 2022

MEMORANDUM AND ORDER

MATTHEW T. SCHELP, UNITED STATES DISTRICT JUDGE

Before the Court is Defendants' Motion for Summary Judgment, Doc. [87], on Plaintiffs' Second Amended Complaint, Doc. [48], pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, the Court denies in part and grants in part Defendants' Motion.

The Court begins by mentioning the complexity of this case, one where several different entities entered into a series of complex real estate transactions governed by several interrelated, written agreements. Plaintiffs Gunapt Development, LLC (“Gunapt” or “Developer”) and Gunapt I, LLC (“Gunapt I”) (collectively, “Plaintiffs”) filed this action asserting seven claims against six Defendants relating to the development of a construction project and the subsequent sale of that project. The parties operated under several unique but intertwined agreements. These agreements are complex and lengthy and form the basis of majority of the disputes between the parties. Contract interpretation is at the forefront of this dispute. Plaintiffs claim Defendants owed them monies from Plaintiffs work on the project and instead of paying Plaintiffs as the contracts required, Defendants devised a scheme to deprive Plaintiffs of their monies. Defendants contend the contracts allowed them to take the actions that they did such that Plaintiffs are not entitled to payment as a matter of law. The Court concludes several material facts remain in dispute, thereby precluding summary judgment on some of Plaintiffs' claims.

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I. Background

Defendant Peine Lakes, LP (the “Partnership”) was formed for the purpose of constructing and developing a multifamily apartment complex called the Estates of Peine Lakes in St. Charles County (the “Project”). The Second Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), Doc. [89-3], governs the Partnership. Incorporated into the Partnership Agreement are related agreements including: (1) the Collateral Assignment of General Partner Interest and Deferred Development Fee (the “Collateral Agreement”), Doc. [896]; (2) the Amended and Restated Development Agreement (the “Development Agreement”), Doc. [89-5]; and (3) the Development Deficit Guaranty Agreement (“DDGA”), Doc. [89-7]. The Partnership Agreement, Development Agreement, Collateral Agreement, and DDGA were all executed on January 13, 2006.

Also on January 13, 2006, Gunapt I, lent the Project $1,000,000 for the purpose of financing a portion of the development costs (the “Gundaker Loan”), pursuant to a Partnership Loan Agreement and Partnership Loan Promissory Note (collectively, the “Loan Agreements”), Docs. [89-10], [89-11], and bonds on the Project were increased in the amount of $1.25 million to complete the construction and development.

When the Partnership was formed, Gunapt Peine GP, LLC (“Prior GP”)-an affiliate of Plaintiffs-was the General Partner of the Partnership. Defendant Related Corporate Partners XXVI, LP^[1](“LP”) was the Limited Partner, and Defendant Related Corporate XXVI SLP, LLC (the “SLP”) was the Special Limited Partner of the Partnership.

The Partnership Agreement named Gunapt as Developer of the Project, responsible for overseeing all aspects of the Project's construction and development. Gunapt's rights and

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obligations as Developer were set forth in the Development Agreement. See Doc. [89-5]. One such right-which is the subject matter of all of Gunapt's claims-is that Gunapt would receive a development fee (“Development Fee”) for its services. The Development Agreement provided that the Development Fee was to be paid in accordance with the Partnership Agreement. Id. at 5.

In late 2007 or early 2008, the City of Wentzville issued occupancy permits for all of the buildings at the Project. Beginning in April 2009, the Partnership failed to make monthly payments due under a loan agreement between the issuer of millions of dollars of bonds, dated February 1, 2004 (“Bond Loan”), Doc. [89-13].^[2] Beginning in April 2010, the Partnership also failed to make required deposits to fund taxes, insurance, and a replacement reserve.

In 2010, Prior GP agreed to transfer its General Partnership interest in the Partnership to an affiliate of the SLP. Defendant 2010 Peine Road LLC (“New GP”) was formed to assume the role as General Partner of the Partnership. Plaintiffs contend that they and Andrew Weil, on behalf of the “Related” entities, had an oral agreement (“2010 Oral Agreement”) that as a condition Prior GP would agree to step down as General Partner, Gunapt would retain its right to the Development Fee, and that the Gundaker Loan would remain payable to Gunapt I. On September 22, 2010, the SLP removed Prior GP as General Partner of the Partnership and made New GP the General Partner, pursuant to the Amendment to Second Amended and Restated Agreement of Limited Partnership (“2010 Amendment”).^[3]See Doc. [89-4].

In 2011, the LP loaned the Partnership around $1.7 million. In 2013, the Project reached “Stabilization,” a financial metric defined in the Bond Loan and related agreements. That same

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year, Defendant Alden Torch Financial LLC (“Alden Torch”) acquired the Project and the Defendant entities. Annual certified audit and financial reports for the Project showed that the Development Fee was owed to Gunapt as well as the Gundaker Loan continuously through 2017 and early 2018. See Doc. [94-2] at 78-118; Doc. [101] ¶ 11; see also Doc. [94-2] at 70-77.

In March 2018, approximately eight years after Prior GP was replaced as General Partner of the Partnership, the SLP served “notice” on Plaintiffs that Gunapt's interest in the Development Fee was being assigned and that Gunapt I forfeited its right to repayment of the Gunmaker Loan, in accordance with the Collateral Agreement. Doc. [89-14]. On April 8, 2018, the SLP assigned the Development Fee to New GP. In October 2018, the Project sold for $20,000,000. After the Project was sold and the proceeds were distributed, the New GP received the portion of the Development Fee that could be paid,^[4] and those funds were then immediately transferred into the operating account of Defendant Centerline Affordable Housing Advisors LLC (“Manager”). The sale netted proceeds were insufficient to repay any portion of the Gundaker Loan.

To date, Gunapt has not been paid the Development Fee and accrued interest, and Gunapt I has not been paid the principal and interest on the Gundaker Loan. Plaintiffs assert the sale of the Project was in the works before the 2018 “notice” to Plaintiffs, in an effort to prevent Development Fee and Gundaker Loan payment to Plaintiffs so that Defendants could take the monies for themselves.

Plaintiffs^[5]filed this action asserting seven counts against six Defendants for: breach of contract-the Development Fee (Count I) by Gunapt against the Partnership and New GP; breach

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of contract-the Gundaker Loan (Count II) by Gunapt I against the Partnership and New GP; accounting (Count III) by Plaintiffs against all Defendants, except Alden Torch; unjust enrichment (Count IV) by Gunapt against all Defendants, except Alden Torch; constructive trust (Count V) by Plaintiffs against all Defendants; tortious interference (Count VI) by Gunapt against New GP, the SLP, LP, and Manager; and civil conspiracy (Count VII) by Plaintiffs against all Defendants, except Alden Torch. See Doc. [48]; Doc. [73] (adding Alden Torch as Defendant). Defendants now move for summary judgment on all claims under Federal Rule of Civil Procedure 56. Doc. [87].

II. Legal Standard

“A court must grant a motion for summary judgment if the moving party shows that there are no genuine disputes of material fact and that it is entitled to judgment as a matter of law.” Bedford v. Doe, 880 F.3d 993, 996 (8th Cir. 2018) (citing Fed.R.Civ.P. 56(a)). The movant bears the initial burden of explaining the basis for its motion, and it must identify those portions of the record that demonstrate the absence of a genuine issue of material fact. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude” summary judgment. Wierman v. Casey's Gen. Stores, 638 F.3d 984, 1002 (8th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A party will not withstand summary judgment with “[m]ere allegations, unsupported by specific facts or evidence beyond [his or her] own conclusions.” Thomas v. Corwin, 483 F.3d 516, 526 (8th Cir. 2007). But, where sufficient evidence supports a factual dispute, it is up to the jury to resolve the dispute at trial. Liberty Lobby, 477 U.S. at 24849. The court views any factual disputes in the light most favorable to the nonmoving party. Scott v. Harris, 550 U.S. 372, 380 (2007). The moving party may also discharge its burden by showing

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there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). If the nonmoving party fails to make a sufficient showing on an essential element of its case with respect to which it has the burden of proof, the moving party is “entitled to a judgment as a matter of law.” Id. at 323.

III. Discussion

A. Breach of Contract (Counts I-II)^[6]

In Count I, Gunapt asserts a breach of contract claim against New GP and the Partnership for failure to pay the Development Fee. In Count II, Gunapt I asserts a breach of contract claim against New GP and the Partnership for failure to repay the Gundaker Loan. Defendants argue Plaintiffs are not entitled to payment of the Development Fee or repayment of the Gundaker Loan.

Plaintiffs breach of...