Hirschfeld v. Athena Point Lookout, LLC

• Decision Date: 08 November 2018
• Docket Number: Docket no. 1:18-cv-00203-GZS
• Parties: DAVID J. HIRSCHFELD & TAMI L. HIRSCHFELD, Plaintiffs, v. ATHENA POINT LOOKOUT, LLC, Defendant.
• Court: U.S. District Court — District of Maine

DAVID J. HIRSCHFELD & TAMI L. HIRSCHFELD, Plaintiffs, v. ATHENA POINT LOOKOUT, LLC, Defendant.

Docket no. 1:18-cv-00203-GZS

UNITED STATES DISTRICT COURT DISTRICT OF MAINE

November 8, 2018

ORDER ON MOTION TO DISMISS

Before the Court is Defendant's Motion to Dismiss (ECF No. 18), which seeks dismissal of Plaintiffs' Amended Complaint (ECF No. 17) for failure to state a claim upon which relief can be granted. Having reviewed the Motion, as well as the related memoranda filed by both parties (ECF Nos. 21 & 22), the Court hereby GRANTS the Motion.

I. LEGAL STANDARD

To survive a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a complaint must contain sufficient factual matter "to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "In evaluating whether a complaint states a plausible claim, we 'perform [a] two-step analysis.'" Saldivar v. Racine, 818 F.3d 14, 18 (1st Cir. 2016) (alteration in original) (quoting Cardigan Mtn. Sch. v. N.H. Ins. Co., 787 F.3d. 82, 84 (1st Cir. 2015)). First, "the court must separate the complaint's factual allegations (which must be accepted as true) from its conclusory legal allegations (which need not be credited)." Morales-Cruz v. Univ. of Puerto Rico, 676 F.3d 220, 224 (1st Cir. 2012) (citing Iqbal, 556 U.S. at 678). Second, the court "must determine whether 'the factual content ... allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Id. at 224 (quoting Iqbal, 556 U.S. at 678). "This standard is 'not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.'" Saldivar, 818 F.3d at 18 (quoting Iqbal, 556 U.S. at 678).

"Although evaluating the plausibility of a legal claim requires the reviewing court to draw on its judicial experience and common sense, the court may not disregard properly pled factual allegations, even if it strikes a savvy judge that actual proof of those facts is improbable." Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 12 (1st Cir. 2011) (internal citations and quotations omitted). Rather, "[t]he relevant inquiry focuses on the reasonableness of the inference of liability" from the facts. Id. at 13. As here, when "a complaint's factual allegations are expressly linked to—and admittedly dependent upon—a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and the trial court can review it in deciding a motion to dismiss." Beddall v. State St. Bank & Tr. Co., 137 F.3d 12, 17 (1st Cir. 1998). With these principles in mind, the Court now outlines the well-pled factual allegations.

II. FACTUAL BACKGROUND

Beginning in January 2018, and continuing through April 6, 2018, Plaintiffs David and Tami Hirschfeld (together, "Plaintiffs"), engaged in negotiations to buy property from Defendant Athena Point Lookout, LLC ("Defendant"). The property, known as Point Lookout Resort & Conference Center ("Point Lookout"), is located in Northport, Maine. On April 4, 2018, Plaintiffs tendered their "final offer" of $6,500,000 for the property. (Am. Compl. ¶ 7) The next day, April 5, after Defendant had notified Plaintiffs it would be accepting another offer, Plaintiffs' agent called Defendant's agent and asked whether an increased bid of $7,000,000 would make a difference. Defendant's agent responded "I think that might." (Id. at ¶ 8) Plaintiffs' agent thenasked Defendant's agent "[i]f I get them up to $7,000,000, you aren't going to shop this offer, are you?" (Id.) Defendant's agent replied "definitely not!" (Id.)

Following that conversation, Defendant prepared a two-page letter of intent ("LOI")—appended to the Amended Complaint as Exhibit A—and sent it to Plaintiffs. Upon doing so, Defendant advised Plaintiffs that if Plaintiffs signed the LOI, Defendant would likewise sign, and the parties would "have a deal." (Id. at ¶ 9) The LOI enumerates a purchase price of $7,000,000, provides a description of the property, outlines procedures for, among other things, due diligence, and states the following "Definitive Agreement" between the parties:

The Parties will negotiate a definitive Purchase and Sale Agreement (the "PSA"), which will provide for A) the insurable transfer of the Portfolio free and clear of all liens and B) the assignment of all leases covering tenants in possession, and all contracts and reservations. Buyer and Seller will make best efforts to execute a Purchase and Sale Agreement within (15) days of this agreement.

(Ex. A to Am. Compl. (ECF No. 17-1)) It also specifies, just above the signature lines, that "Seller and Buyer acknowledge that this proposal is not binding as there are multiple offers being considered and is intended as the basis for the preparation of documents for the definitive purchase and sale agreement." (Id.) On April 5, 2018, Plaintiffs and Defendant signed the LOI.

On April 6, 2018, Defendant twice represented to Plaintiffs that the parties "had a deal and that [it] would be preparing the purchase and sale agreement." (Am. Compl. ¶ 13) Plaintiffs then, "[i]n reliance upon the Defendant's representations that the parties had a deal," reduced the price of land they already had listed for sale in Montana.¹ (Id. at ¶ 14) Plaintiffs' goal in doing so was to raise money for the Point Lookout purchase price. However, three hours after representing thatit was preparing the purchase and sale agreement, Defendant informed Plaintiffs that it had entered into a contract to sell the property to another party who had offered more money. Plaintiffs then advised Defendant that they considered the LOI to be a binding contract. In response, Defendant stated "we get out of these all the time." (Id. at ¶ 16) On April 23, 2018, Plaintiffs initiated this litigation in state court. Defendant removed the case to this Court on May 18, 2018.

III. DISCUSSION

Based on the foregoing factual allegations, Plaintiffs argue that Defendant violated state law. Specifically, Plaintiffs' Amended Complaint lists six claims: Specific Performance (Count I), Breach of Contract (Count II), Declaratory Relief (Count III), Promissory Estoppel/Equitable Estoppel (Count IV), Negligent Misrepresentation (Count V), and Fraudulent Misrepresentation (Count VI).² For the reasons explained below, the Court concludes that the facts as pled are insufficient to state any of these claims.

A. Breach of Contract & Declaratory Relief (Counts II & III)

Plaintiffs first assert that the LOI was an enforceable contract for the sale of land and that Defendant breached it by accepting another offer for Point Lookout. The unambiguous, plain language of the LOI defeats this claim. See Moody v. State Liquor & Lottery Comm'n, 843 A.2d 43, 49 (Me. 2004) ("The question of whether a contract is ambiguous, and if unambiguous, the interpretation of that contract, are questions of law").

Under Maine law, the elements of breach of contract are "(1) breach of a material contract term; (2) causation; and (3) damages." Me. Energy Recovery Co. v. United Steel Structures, Inc., 724 A.2d 1248, 1250 (Me. 1999). "Contract language is ambiguous when it is reasonably susceptible of different interpretations." Portland Valve Inc. v. Rockwood Sys. Corp., 460 A.2d1383, 1387 (Me. 1983). Here, the LOI is not susceptible of different interpretations. See id. It is clear from the language of the entire document that it did not establish a duty for Defendant to sell Plaintiffs the property. See id. ("The interpretation of an unambiguous writing must be determined from the plain meaning of the language used and from the four corners of the instrument"). Rather, the "Definitive Agreement" in the LOI was that the parties would "negotiate a definitive Purchase and Sale Agreement" with the further caveat that even that understanding "is not binding as there are multiple offers being considered." (Ex. A to Am. Compl.) Therefore, as written, the LOI did not create any binding terms that Defendant could have breached. On that ground, the breach of contract claim must be dismissed. See Me. Mun. Emps. Health Tr. v. Maloney, 846 A.2d 336, 338 (Me. 2004) (dismissing breach of contract claim where written instrument did not create duty allegedly breached); Moody, 843 A.2d at 49 (dismissing breach of contract claim where contract was unambiguous and the defendant could not have breached it as a matter of law). Likewise, given the LOI's unambiguous terms to the contrary, Plaintiffs fail to state a claim for a declaratory judgment that the LOI gives them a right to purchase Point Lookout.

B. Promissory Estoppel & Equitable Estoppel (Count IV)

Via Count IV, Plaintiffs contend that Defendant should be estopped from denying several oral promises that it made, and that Plaintiffs are entitled to specific performance and damages based on those promises. As best the Court can glean from the Amended Complaint, the alleged "promises" include two statements Defendant made before signing the LOI and two statements it made after signing. Defendant's alleged promises prior to signing the LOI were that: (1) it would not "shop" the offer; and (2) if Plaintiffs signed the LOI, then Defendant would also sign and the parties would "have a deal." (Am. Compl. ¶¶ 8, 9) The alleged promises after signing were Defendant's repeated assertions that the parties "had a deal and that [it] would be preparing thepurchase and sale agreement."³ (Id. at ¶ 13) These statements are insufficient to state a claim for either equitable or promissory estoppel.

First, as to the equitable estoppel claim, the Court notes that "equitable estoppel is a defense, not a cause of action." Weaver v. New England Mut. Life Ins. Co., 52 F. Supp. 2d 127, 134 (D. Me. 1999). Indeed, it is a "well settled principle that estoppel is 'available only for protection, and cannot be used as a weapon of...