Patel v. AR Grp. Tenn., LLC, 3:20-cv-00052

CourtUnited States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
PartiesRAJENDRA PATEL, NAVNEET PATEL, and NAVRAJ GROUP, LLC a Tennessee Limited Liability Company, Plaintiffs, v. AR GROUP TENNESSEE, LLC a New Jersey Limited Liability Company, et al., Defendants.
Decision Date10 September 2021
Docket Number3:20-cv-00052

RAJENDRA PATEL, NAVNEET PATEL, and NAVRAJ GROUP, LLC a Tennessee Limited Liability Company, Plaintiffs,

AR GROUP TENNESSEE, LLC a New Jersey Limited Liability Company, et al., Defendants.

No. 3:20-cv-00052

United States District Court, M.D. Tennessee, Nashville Division

September 10, 2021



Pending before the Court is “Defendants' Motion to Transfer Venue and/or Dismiss Plaintiffs' First Amended Complaint (Doc. No. 42, “Motion”). The Motion actually consists of two alternative motions: a motion to transfer venue (to the District of New Jersey) and an alternative motion to dismiss Plaintiffs' First Amended Complaint. In other words, via the Motion, Defendants ask this Court to transfer this action to federal district court in New Jersey or, failing that, to dismiss the First Amended Complaint.

Plaintiffs have responded to the Motion. (Doc. No. 44). Defendants have replied. (Doc. No. 45). The Motion is ripe for review.

For the reasons discussed herein, the Motion will be granted in part and denied in part. More specifically, the motion to transfer venue will be denied, and the motion to dismiss will be denied as moot. The Court will dismiss sua sponte without prejudice Plaintiffs' First Amended Complaint, with any amended complaint to be filed within 21 days.


The allegations in the First Amended Complaint (Doc. No. 36, “Amended Complaint”) regrettably fail to make sense in various ways, and yet it falls to the Court to summarize them here as best it can without trying unduly to rewrite the allegations to say what the Court suspects Plaintiffs perhaps meant to say or to say what a subsequent filing of Defendants suggests Plaintiffs should have said.[1] In the following paragraphs, the Court sets forth those facts that it accepts as true (for purposes of both the motion to dismiss and motion to transfer venue) but also describes certain allegations that the Court cannot accept as true for any purposes because they are not well-pleaded as defined below.[2]

On or about June 5, 2017, Plaintiff Navraj Group, LLC (“Navraj”) and Defendant AR Group Tennessee, LLC (“ARGT”) entered into a document called a “Partnership Agreement” (Doc. No. 36-1)[3] for the purpose of owning and operating eleven Popeye's restaurant franchises in the Middle Tennessee area. (Doc. Nos. 36 at 3; 36-1 at 1, 5). More specifically, the Partnership Agreement provided that Plaintiff Navraj would own 15 percent of ARGT “and their 11 Popeyes in [the] Nashville, TN market.” (Doc. No. 36-1 at 1). The so-called Partnership Agreement was signed on behalf of ARGT by some of its members/managers, [4] and on behalf of Navraj by the two individual Plaintiffs herein (Rajendra Patel and Navneet Patel).

As alleged by Plaintiffs and indicated by the Partnership Agreement, ARGT is a limited liability company (LLC), so one would think that Navraj would be a member of that LLC, with a 15 percent ownership interest in the LLC. But alas, that is not what the Amended Complaint alleges. Instead, for whatever reason, it alleges that “the express terms of the Partnership Agreement create a general partnership and the Plaintiffs own fifteen percent (15%) of the partnership and partnership properties.”[5] (Doc. No. 36 at 3) (emphasis added). This is patently incorrect because in fact what the Partnership Agreement expressly provides is that one Plaintiff (Navraj) owns 15 percent of an LLC (namely, ARGT), which is simply not the same thing as a general partnership. And even if the entity at issue were a general partnership rather than an LLC, it untrue that the (so-called) Partnership Agreement created the general partnership; the Partnership Agreement contains no language purporting to create any entity and no language bestowing the other 85 percent upon anyone (or indeed saying anything about who owns the other 85 percent). To the contrary, the Partnership Agreement is written as if ARGT already existed and that a 15 percent ownership interest of this existing entity was being bestowed upon Navraj.[6]Accordingly, the Court cannot and does not accept the allegation that “the express terms of the Partnership Agreement create a general partnership and the Plaintiffs own fifteen percent (15%) of the partnership and partnership properties.” The consequences of this non-acceptance will be explained later herein as appropriate. For present purposes, suffice it to say that with respect to the matter of who on the Plaintiffs' side owned what, the Court accepts as true that (and only that) Navraj owned 15 percent of an entity called ARGT (which based on its very name was at least supposed to be an LLC).

The Court does not venture a guess as to what kind of entity ARGT was supposed to be, a question clouded by the title of the Partnership Agreement and the fact that Navraj's signature block in the Partnership Agreement identified it as a “partner.” Notwithstanding these incongruous references to a “partner[ship], ” it is undeniable that what the Partnership Agreement expressly did in pertinent part was to make Navraj an owner-called a “member” in LLC parlance-of an LLC, namely, ARGT. On the other hand, given Plaintiffs' allegations that ARGT was a “partnership, ” the Court cannot conclude that ARGT was actually run as an LLC as it should have been. Ultimately, although it is quite clear that the express terms of the Partnership Agreement suggest that it relates not to a partnership at all but rather to an LLC, it unclear whether ARGT actually was properly organized, owned, or functioned as an LLC rather than as a partnership.

Accordingly, where the Court refers below to Plaintiffs' allegations regarding a “partnership, ” it is with the understanding that the Court cannot and does not (i) accept as true that there was legally any partnership, or (ii) infer from the Amended Complaint any fact(s) one way or the other as to what ARGT de facto actually was in practice

In March 2018 (nine months after the execution of the Partnership Agreement), the parties entered into a First Amendment to the Operating Agreement of [ARGT] (Doc. No. 36-2, “First Amendment to Operating Agreement”). According to the Amended Complaint, “[t]hese two documents comprise the only written agreements with respect to AR Group Tennessee, LLC (“ARGT”). (Doc. No. 36 at 3). But this allegation is patently incorrect, because the First Amendment to Operating Agreement makes clear that (naturally) there was an original operating agreement between the parties-dated March 11, 2017-and that, moreover, the original operating agreement “remain[ed] in full force and effect” except to the extent amended by the First Amendment to Operating Agreement. (Doc. No. 36-2 at 4). Regrettably, the original operating agreement has not been filed. But the First Amendment to the Operating Agreement repeatedly refers to ARGT as an LLC and repeatedly identifies the three individual Defendants and the two individual Plaintiffs as “members”-i.e., (part) owners of an LLC.[7] Moreover, it refers to Defendant Ali Butts “sell[ing] fifteen percent (15 percent) of membership interest to” the two individual Plaintiffs (Doc. No. 36-2 at 2) thus indicating that the fifteen percent transfer contemplated by the Partnership Agreement ultimately would not go to Navraj (contrary to the expectation set forth in the Partnership Agreement nine months earlier)[8] and reinforcing that the 15 percent interest granted in the Partnership Agreement was in an LLC and not a general partnership. Thus, this document further casts serious doubt on the notion that a general partnership rather than an LLC was involved here and also clouds the issue of which Plaintiff(s) owned the 15 percent interest in ARGT-an issue that the Amended Complaint does absolutely nothing to clarify.[9]

In seeking to understand the complaint, the Court has considered the possibility that Plaintiffs mean to allege something along the lines of the formation (via the Partnership Agreement) of a general partnership (owned 15 percent by Navraj Group) that in turn became a member of ARGT. Something like this might explain why the Amended Complaint refers to a general partnership existing separately and alongside ARGT. (Doc. No. 36). But the Court simply cannot come close to teasing this out of the Amended Complaint and the attachments thereto, none of which suggest that a general partnership (or, for that matter, a limited partnership) ever was an owner of ARGT. Ultimately, the Court is at a loss as to which Plaintiff(s) allegedly owned an interest in what entity or entities, and how these entities (if indeed there are multiple entities) relate to one another. And this is problematic because an understanding (and perhaps the validity of) most if not all of Plaintiffs' claims depends on the Court understanding these things.

For example, to determine what (if any) fiduciary duties were actually owed to Plaintiffs, it is helpful (if not essential) to know what kind of entity (or what kind of entity's decision-makers) supposedly owed those duties and how they were legally situated via-a-vis particular Plaintiff(s). Additionally, to determine the extent to which any Plaintiffs had title to, or a right to possession of, the entity's assets-a key issue in assessing a conversion claim under Tennessee law or New Jersey law-it is vital to understand what kind of entity this was. And to assess the extent to which this case involves one or more Defendants violating the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961 et seq. it is important to know what kind of entity ARGT (an alleged RICO enterprise) supposedly was-and how, considering what kind of enterprise it is, the individual Defendants conducted its affairs, invested in it, and gained control of it in violation of RICO as alleged. As noted, the Court cannot treat as true any...

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