Pena Real Estate Invs. v. One Hardt, LLC
| Docket Number | Civil Action 1:22-cv-11544-IT |
| Decision Date | 14 June 2023 |
| Parties | PENA REAL ESTATE INVESTMENTS, LLC, Plaintiff, v. ONE HARDT, LLC, and DRIMEL A. REYES, Defendants, and ASHGEMI CORPORATION, Trustee Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Plaintiff Pena Real Estate Investments, LLC (“Pena Real Estate”) brings claims against Defendants One Hardt LLC (“One Hardt”) and Drimel A. Reyes, related to the failed purchase and sale of two parcels of property in Lawrence, Massachusetts. 3d Am. Verified Compl. [Doc. No 25].[1] Now pending before the court are One Hardt's and Reyes's Motions to Dismiss [Doc. Nos. 30, 31]. For the reasons below, the motions are granted in part and denied in part.
Bernardo Pena is the Manager of Plaintiff Pena Real Estate, a limited liability company. 3d Am. Verified Compl. ¶¶ 1, 12 [Doc. No. 25].
Maria Kunhardt is the Manager of Plaintiff One Hardt, a limited liability company. Id. at ¶¶ 2, 7. She is listed in One Hardt's corporate filings with the Commonwealth of Massachusetts as the person authorized to execute, acknowledge, deliver, and record any recordable instrument purporting to affect an interest in real property. See Ex. 1 in Support of One Hardt's Motion to Dismiss (2021 Annual Report) [Doc. No. 30-3].
Drimel A. Reyes is Kunhardt's son and is either a Member or “de facto member/owner” of One Hardt. 3d Am. Verified Compl. ¶¶ 8, 55 [Doc. No. 25]. Reyes is a business professional with extensive experience in real estate transactions. Id. at ¶ 18.
Over a significant period prior to March 9, 2022, Pena and Reyes discussed and negotiated Pena Real Estate's purchase of two parcels of real property located at 9 and 15 Water Street and 319-323 Broadway in Lawrence, Massachusetts (the “Property”) from One Hardt. Id. at ¶¶ 5, 13.
Prior to March 9, 2022, Reyes and Kunhardt travelled to Pena Real Estate's office in Lawrence, Massachusetts, to negotiate a sale of the Property. Id. at ¶¶ 14, 28. While Kunhardt waited in a car outside of Pena Real Estate's office, Pena and Reyes negotiated all material terms of the deal and reached an agreement for the sale of the Property. Id. at ¶¶ 15, 16. Reyes was acting on Kunhardt's behalf in those negotiations. Id. at ¶ 8.
Reyes suggested that they contact attorney Arthur Broadhurst to draft a purchase and sale agreement to document the transaction and to hold a deposit. Id. at ¶ 17. Broadhurst had assisted Reyes in the past in conveying a different property to One Hardt, preparing a deed in connection with that purchase, and working on other transactions for One Hardt and/or Reyes. Id. at ¶ 23. Although Reyes knew that Broadhurst had also represented Pena in the past, Reyes anticipated that using attorney Broadhurst's services to document the fully negotiated transaction would be the most efficient course of action. Id. at ¶ 19.
On March 9, 2022, Reyes and Pena went to Broadhurst's offices to request that Broadhurst draft a purchase and sale agreement documenting the transaction and hold the deposit securing Pena Real Estate's performance. Id. at ¶ 20. During that meeting, Broadhurst informed Pena and Reyes that he had a conflict of interest based on his past representation of both Buyer and Seller (including Reyes). Id. at ¶ 21. Pena and Reyes stated that they wanted to proceed and to close the transaction. Id. at ¶ 26. Broadhurst informed Pena and Reyes that he would assist in preparing the documents, and that he would draft a conflict waiver for them to sign. Id. at ¶ 27.
That same day, Pena, on behalf of Pena Real Estate, and Reyes, on behalf of One Hardt, and with the knowledge and authority of Kunhardt, executed a Purchase and Sale Agreement (the “Agreement”) for the Property. Id. at ¶¶ 9, 28, 33-35; Ex. A [Doc. No. 25-1]. The Agreement listed a purchase price of $1.1 million for the Property, and a closing date of July 15, 2022. 3d Am. Verified Compl. at ¶¶ 36-37 [Doc. No. 25]. The Agreement required Pena Real Estate to pay a deposit of $5,000 as earnest money. Id. at ¶ 29. Reyes, on behalf of One Hardt, directed Pena to pay the deposit to Broadhurst, and Pena Real Estate did so. Id. at ¶ 30. Reyes gave Pena the keys to the Property to allow Pena Real Estate to store its property, consisting of various tools and construction equipment totaling approximately $4,000, in advance of the July 15, 2022 closing date. Id. at ¶¶ 31, 32, 36.
In anticipation and reliance on the Agreement, Pena Real Estate borrowed funds and forewent other real estate transactions. Id. at ¶¶ 39-40.
On the closing date, One Hardt did not perform, allegedly because Kunhardt had COVID. Id. at ¶¶ 42-43. Pena Real Estate attempted to contact One Hardt to schedule a new closing date, but One Hardt continued to not comply with its obligations under the Agreement. Id. at ¶¶ 44-45.
On August 24, 2022, One Hardt sold the Property to Ashgemi Corporation for $1.3 million via deed recorded August 30, 2022. Id. at ¶ 48; Ex. B [Doc. No. 25-2]. Kunhardt signed the deed as manager of One Hardt. Id. Reyes aided and caused the sale of the Property to Ashgemi Corporation. 3d Am. Verified Compl. ¶ 52 [Doc. No. 25]. Reyes, individually or on behalf of One Hardt, removed Pena Real Estate's property formerly being stored at Property. Id. at ¶ 111.
In evaluating a motion to dismiss for failure to state a claim, the court assumes “the truth of all well-pleaded facts” and draws “all reasonable inferences in the plaintiffs favor.” Nisselson v. Lernout, 469 F.3d 143, 150 (1st Cir. 2006). “Exhibits attached to the complaint are properly considered part of the pleading for all purposes, including Rule 12(b)(6).” Trans-Spec Truck Service, Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008) (internal citations and quotations omitted). In ruling on a motion to dismiss, the court may also consider matters of public record. Lydon v. Loc. 103, Int'l Bhd. of Elec. Workers, 770 F.3d 48, 53 (1st Cir. 2014).
To survive dismissal, a complaint must contain sufficient factual material to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations . . . [f]actual allegations must be enough to raise a right to relief above the speculative level . . . .” Id. at 555 (internal citations omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In addition, “an adequate complaint must include not only a plausible claim but also a plausible defendant.” Penalbert-Rosa v. Fortuno-Burset, 631 F.3d 592, 594 (1st Cir. 2011).
When a plaintiff brings claims sounding in fraud, there is an exception to Rule 12(b)(6)'s general plausibility pleading standard. See N. Am. Cath. Educ. Programming Found., Inc. v. Cardinale, 567 F.3d 8, 15-16 (1st Cir. 2009) (). Pursuant to Rule 9(b) of the Federal Rules of Civil Procedure, “a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Rule 9(b) requires that a plaintiff's averments of fraud “specifically plead the time, place, and content of an alleged false representation.” Mulder v. Kohl's Dep't Stores, Inc., 865 F.3d 17, 22 (1st Cir. 2017) (internal quotations and citations omitted).
The First Circuit has interpreted this rule to require that beyond pleading “the false statements and by whom they were made,” a plaintiff must also identify “the basis for inferring scienter.” N. Am. Cath. Educ. Programming Found., 567 F.3d at 13. In application, this renders a “general averment of the defendant's ‘knowledge' of material falsity” insufficient. Id. (quoting Greenstone v. Cambex Corp., 975 F.2d 22, 25 (1st Cir. 1992), superseded by statute on other grounds by, Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737). Instead, plaintiffs must put forth “specific facts that make it reasonable to believe that defendant knew that a statement was materially false or misleading.” Id.
To state a claim for breach of a written contract, a plaintiff must prove that “a valid, binding contract existed, the defendant breached the terms of the contract, and the plaintiff[] sustained damages as a result of the breach.” Brooks v. AIG SunAmerica Life Assur. Co., 480 F.3d 579, 586 (1st Cir. 2007). Pena Real Estate alleges that One Hardt breached the Agreement by selling the Property to Ashgemi instead of Pena Real Estate. 3d Am. Verified Compl. ¶¶ 5760, 70-73 [Doc. No. 25]. One Hardt claims that the Agreement was not enforceable because neither Pena nor Reyes signed the Agreement in their corporate capacities, because Reyes did not have authority as a matter of statute, and because Reyes had neither actual nor apparent authority to bind One Hardt to the Agreement. One Hardt Mem. 4-5, 8-9 [Doc. No. 30-1].
As to the first argument, Reyes and Pena signed the Agreement on signature lines labeled as “SELLER” and “BUYER,” which the Agreement defines as One Hardt and Pena Real Estate, respectively. See Agreement ¶ 1 (“Parties”) [Doc. No. 25-1]. Although courts do draw a distinction in determining liability on a contract signed by a...
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