Old Town Util. & Tech. Park, LLC v. MFGR, LLC
| Decision Date | 25 May 2018 |
| Docket Number | DOCKET NO. BCD-RE-17-11 |
| Parties | OLD TOWN UTILITY & TECHNOLOGY PARK, LLC, et al. Plaintiffs, v. MFGR, LLC, et al. Defendants. |
| Court | Maine Superior Court |
CUMBERLAND, ss.
Before the Court is Defendants Old Town Holdings II, LLC (hereafter "OTH") and Joseph Deschenes' Motion to Dismiss Counts VII,1 VIII, and IX of the Second Amended Verified Complaint (the "Complaint"). Plaintiffs are represented by Attorney Clifford Ginn and Defendants listed above are represented by Attorney Julia Pitney and Attorney Emily Howe. The Court has considered the parties' written filings along with their oral arguments made on May 7, 2018 and for the reasons set out below grants in part and denies in part the Motion.
Plaintiffs Old Town Utility and Technology Park, LLC (hereafter "OTU"), Relentless Capital Company, LLC, and Samuel Eakin, filed the Complaint on February 9, 2018 in response to this Court's January 31, 2018 Combined Order on Defendants' Motions to Dismiss (the "Prior Order"), requiring Plaintiffs to file a more definite statement pursuant to M.R. Civ. P. 12(e) toaddress flaws in the Plaintiffs' former pleading identified by the Court in its order. (See Prior Order 18-21.) The request for a more definite statement implicated only those causes of action alleged against these Defendants. In the motion now before the Court, Defendants have again moved to dismiss Plaintiffs' Complaint on the grounds that Plaintiffs have failed to remedy the flaws the Court identified in its prior order. (Def's Mot. Dismiss 6, 9.)
In reviewing a motion to dismiss under Rule 12(b)(6), courts "consider the facts in the complaint as if they were admitted." Bonney v. Stephens Mem. Hosp., 2011 ME 46, ¶ 16, 17 A.3d 123. The complaint is viewed "in the light most favorable to the plaintiff to determine whether it sets forth elements of a cause of action or alleges facts that would entitle the plaintiff to relief pursuant to some legal theory." Id. (quoting Saunders v. Tlsher, 2006 ME 94, ¶ 8, 902 A.2d 830). "Dismissal is warranted when it appears beyond a doubt that the plaintiff is not entitled to relief under any set of facts that he might prove in support of his claim." Id. "The legal sufficiency of a complaint challenged pursuant to M.R. Civ. P. 12(b)(6) is a question of law" and thus subject to de novo appellate review. Marshall v. Town of Dexter, 2015 ME 135, ¶ 2, 125 A.3d 1141.
Count VIII of Plaintiffs' Complaint alleges breach of contract and Count IX alleges breach of fiduciary duty. As noted in the previous order, there is factual and legal overlap in the allegations made in these two counts. With respect to Count VIII, Plaintiffs allege that Defendants are liable for breach of contract based on the allegation that they breached several duties imposed by OTU's Operating Agreement (hereinafter "OA"), specifically the duty of loyalty, the duty not to exploit a business opportunity without disclosure and offer, and the duty of confidentiality. (Pl's Compl. ¶¶ 155-156.) These allegations are the same as those that form the basis of their claim in Count IXfor breach of fiduciary duty. (Pl's Compl. ¶ 164.)
Plaintiffs allege that the OA imposes fiduciary obligations on managers and members involved in management, and the parties agree that the OA is a binding contract.2 See 31 M.R.S. §§ 1521(1), 1523(2). They do not agree, however, as to whether the certificate of formation (hereinafter "COF") is a contract. The Court has considered the parties' arguments on that issue and concludes that the COF is not a contract. It is instead an "agreement to agree." See, e.g. Muther v. Broad Cove Shore Ass'n, 2009 ME 37, ¶ 6, 968 A.2d 539. The Court therefore concludes that the COF did not impose contractual obligations on the Defendants. See 31 M.R.S.A § 1531(1)(B). Thus, Count VIII states a claim for breach of contract only with respect to the OA. This means that Defendants had no contractual duties before the OA was entered into.
Viewing the Complaint in the light most favorable to the Plaintiffs, the Court concludes that Count VIII alleges facts supporting the allegation that both Defendants3 had contractual duties under the OA sufficient to survive this motion to dismiss. To be clear, however, no conduct on the part of Defendants prior to the formation of the OA can in and of itself constitute a breach of contract.
Count IX alleges breach of fiduciary duty. As noted above, Defendants do not contest the proposition that the OA imposes this duty as a matter of contract. However, Plaintiffs seem to argue that even if no contract was formed before the OA was executed, Defendants still owed acommon law fiduciary duty to Plaintiffs during this period. (See Pl's Compl. ¶¶ 159-164.) Because Count IX alleges breach of the duty of loyalty (as a component of the fiduciary duty) by misrepresentation and omission of material facts, Count IX sounds in fraud. (Pl's Compl. ¶ 163.) The allegations contained in Count VIII likewise allege breaches of the OA through misrepresentation and omission. (Pl's Compl. ¶ 156.) Therefore, the Court must review those restated allegations supporting both Counts VIII and IX under a heightened standard of particularity. See M.R. Civ. P. 9(b).
There is no question that the Complaint contains more information than its predecessor. However, with respect to their theory of common law breach of fiduciary duty, Plaintiffs fail to provide particularized allegations of "great disparity of position and influence between the parties" and therefore the Court will grant the motion with respect to the common law breach of fiduciary duty claim. Ramsay v. Baxter Title Co., 2012 ME 113, ¶¶ 7-8, 54 A.3d 710 (). The Defendants clearly owed fiduciary duties under the OA, but can only be held liable for those breaches pursuant to that agreement.
With respect to the allegations of misrepresentation of facts, the Court concludes that the Complaint, in particular paragraphs 31 through 106, provides the particularity called for under the heightened pleading standard. They lay out the chronology of the relationship between the parties, explain what various parties knew and when they knew certain critical facts, and the actions Mr. Deschenes in particular took at various stages of the negotiations. They allege that he hid the true nature of his relationship with CVG as well as his knowledge of CVG's role in the Con Ed hid. While specific dates are sometimes missing from the allegations, the chronology is sufficientlyclear.4 The Plaintiffs' theory on how Mr. Deschenes allegedly misled his partners, behaved in ways suggesting that he was not acting the interest of OTU and its members but rather to the benefit of their competitor, along with never mentioning these efforts to OTU's other members and managers, has now been sufficiently clarified relative to the prior pleading that the Court is satisfied the standard has been met. See M.R. Civ. P. 9(b). (See Pl's Compl. ¶¶ 31-156.) It remains to be seen whether Plaintiffs will be able to establish proof by clear and convincing evidence with respect to the fraud allegations, but they will be allowed to develop a factual record to attempt to meet that standard. See Harris Mgmt. v. Coulombe, 2016 ME 166, ¶ 26 n.7, 151 A.3d 7.
Based on the foregoing, the entry will be:
Defendants' Motion to Dismiss is granted in part and denied in part.
Defendants' Motion to Dismiss is DENIED as to Count VIII.
Defendants' Motion to Dismiss is GRANTED as to Count IX. Plaintiffs may pursue their claims for breach of fiduciary duty only under their claim for breach of contract, and to the extent that duty is imposed by the OA.
DATE
/s/_________
SUPERIOR COURT JUSTICE
Entered on the Docket:5/25/18
Copies sent via Mail___Electronically v
This matter is before the Court on Plaintiffs Old Town Utility and Technology Park, LLC's ("OTU"); Relentless Capital Company, LLC's ("Relentless"); and Samuel Eakin's ("Eakin") motion for preliminary injunction brought pursuant to M.R. Civ. P. 65(b). Plaintiffs seek to enjoin Defendants MFGR, LLC ("MFGR") and William Firestone ("Firestone") from directly or indirectly affecting transfer of any real property, improvements, fixtures, or equipment, or other property and rights associated with the Expera Mill Facility (the "Facility"). Defendants oppose the motion.5 The Court heard oral argument on January 5, 2018 at the Capital Judicial Center in Augusta, Maine. Clifford Ginn, Esq., appeared for Plaintiffs and Daniel Mitchell, Esq. appeared on behalf of Defendants.
The Court incorporates by reference the Factual Background section on pages 1-5 of its Combined Order on Defendants' Motions to Dismiss (the "Combined Order") filed this sameday, January 31, 2018, in this action.
In order to prevail on a motion for a preliminary injunction, the plaintiff has the burden of proving:
(1) that plaintiff will suffer irreparable injury if the injunction is not granted, (2) that such injury outweighs any harm which granting the injunctive relief would inflict on the defendant, (3) that plaintiff has exhibited a likelihood of success on the merits (at most, a probability; at least, a substantial possibility), (4) that the public interest will not be adversely affected by granting the injunction.
Ingraham v. Univ. of Me., 441 A.2d 691, 693 (Me. 1982). These criteria "are not to be applied woodenly or in isolation from each other; rather, the court of...
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