Senior Hous. Managers, LLC v. Highway 2 Dev., LLC
| Decision Date | 28 June 2021 |
| Docket Number | 4:18-CV-3167 |
| Citation | 552 F.Supp.3d 866 |
| Parties | SENIOR HOUSING MANAGERS, LLC, an Oregon limited liability company, Plaintiff and Counterclaim Defendant, v. HIGHWAY 2 DEVELOPMENT, LLC, d/b/a Pemberly Place, a Nebraska limited liability company, Defendant and Counterclaimant. |
| Court | U.S. District Court — District of Nebraska |
Brian T. McKernan, Maryl C. Sattler, McGrath, North Law Firm, Omaha, NE, for Plaintiff and Counterclaim Defendant.
Audrey R. Svane, Craig C. Dirrim, Woods, Aitken Law Firm, Lincoln, NE, for Defendant and Counterclaimant.
This dispute involves the construction and management of an assisted living center in Lincoln, Nebraska. The defendant, Highway 2 Development, LLC, contracted with the plaintiff, Senior Housing Managers, LLC, to provide certain management and oversight services during the construction, opening, and operation of Pemberly Place, a new assisted living facility owned and operated by Highway 2.
Highway 2 terminated the parties’ Management Services Agreement (filing 1-1), and Senior Housing sued alleging breach of contract, violation of the Nebraska Uniform Deceptive Trade Practices Act (UDTPA), and "unfair competition and unjust enrichment." Filing 1. Highway 2 counterclaimed alleging contract, tort, and statutory claims related to actions taken by Senior Housing during the construction and opening of Pemberly Place. Filing 13. The Court partially granted Senior Housing's motion to dismiss Highway 2's counterclaim but allowed Highway 2's claims for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) negligent misrepresentation, and (4) unjust enrichment to proceed. Filing 33.
The parties have now filed cross-motions for partial summary judgment. Senior Housing moves for summary judgment on the issue of liability for its breach of contract claim, and on all of Highway 2's remaining counterclaims. Filing 61. Highway 2 moves for summary judgment on Senior Housing's UDTPA and unjust enrichment claims, and on Senior Housing's claim for unfair competition damages under each of its theories of recovery. Filing 59. For the reasons set forth below, Senior Housing's motion will be granted in part and denied in part and Highway 2's motion will be granted.
Summary judgment is proper if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). The movant bears the initial responsibility of informing the Court of the basis for the motion, and must identify those portions of the record which the movant believes demonstrate the absence of a genuine issue of material fact. Torgerson v. City of Rochester , 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). If the movant does so, the nonmovant must respond by submitting evidentiary materials that set out specific facts showing that there is a genuine issue for trial. Id.
On a motion for summary judgment, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts. Id. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the evidence are jury functions, not those of a judge. Id. But the nonmovant must do more than simply show that there is some metaphysical doubt as to the material facts. Id. In order to show that disputed facts are material, the party opposing summary judgment must cite to the relevant substantive law in identifying facts that might affect the outcome of the suit. Quinn v. St. Louis Cty. , 653 F.3d 745, 751 (8th Cir. 2011). The mere existence of a scintilla of evidence in support of the nonmovant's position will be insufficient; there must be evidence on which the jury could conceivably find for the nonmovant. Barber v. C1 Truck Driver Training, LLC , 656 F.3d 782, 791-92 (8th Cir. 2011). Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Torgerson , 643 F.3d at 1042.
Senior Housing is an Oregon business specializing in the development, operation, management and marketing of senior living facilities. See generally filing 13; see also filing 1-3 at 5. Christian Mason is the President and CEO of Senior Housing and was its designated representative under the Management Agreement. Filing 13 at 6; filing 1-1 at 1. Highway 2 is a Nebraska real estate development company. See filing 68-3 at 3-4. Monte Froehlich and his wife are the final decision makers for Highway 2, but work with a team of professionals. Filing 68-3 at 4. Jessica Lindersmith is Highway 2's VP of Operations and its designated representative under the Management Agreement. See filing 1-1 at 2. Lindersmith and Colin Mues, in-house counsel, were most involved in the Pemberly Place project. Filing 68-3 at 4.
Senior Housing and Highway 2 began talking sometime in 2014 or 2015. See filing 68-3 at 14-15; filing 13 at 7. Froehlich testified that he knew Senior Housing's marketing director, Bob Zink, from "the real estate world," and approached Zink about developing a site in Lincoln for senior living. Filing 68-3 at 13-15. And Froehlich testified that Senior Housing represented "they knew how to design, build, [and] operate a high-end senior living community in Lincoln, Nebraska," and that an attached medical clinic "would be a great profit center and should bring in a million dollars a year in profit [alone]." Filing 68-3 at 13-14. That "sounded great" to Froehlich, and the relationship was off and running. See filing 68-3 at 15.
The first communication in the record between the parties is an August 25, 2015 email from Mason to Froehlich with an attached "draft version of a 120 unit mixed care community." Filing 70-19. Mason described the draft as his "best guess at [that] point what it would cost to put a project like this in the ground," and included "all architectural, engineering, site work (offsite and on site), furniture, fixtures, and equipment and all other related costs." Filing 70-19 at 1. Mason was also arranging a visit to Lincoln to meet with Froehlich and "tour[ ] other competitors in the area ... to confirm many of [his] assumptions." Id. And a November 18, 2015 e-mail from Mason attached a "project overview" that "outline[d] the project to be built and [gave] guidelines for the architects to help keep the project on scope." Filing 70-20. The project overview was updated in March 2016. See filing 68-8; filing 68-6 at 3-4.
The parties both eventually retained counsel to negotiate a formal agreement, see filing 64-1 at 5-7, and executed the Management Agreement on October 21, 2016—the only written contract between the parties.1 Filing 1-1; see also filing 62 at 3; filing 67 at 1-2. It was effective beginning January 1, 2017 and had a term of five years. Filing 1-1 at 1, 7. No written modifications have been made to the Agreement, filing 62 at 3; filing 67 at 2, and the parties agree that their oral agreements were all made prior to execution of the Management Agreement, which contains an integration clause, filing 62 at 4, filing 67 at 2; see filing 1-1 at 10. Much of this dispute stems from the parties’ conflicting interpretations of the Management Agreement.
Under the Management Agreement, Senior Housing had sweeping authority over personnel, regulatory compliance, operation and admissions policies, financial management, selection of legal counsel, facility maintenance, and marketing. Filing 1-1 at 2-5. In exchange for Senior Housing's services, Highway 2 agreed to pay Senior Housing a management fee. Filing 1-1 at 9. Senior Housing contends that its only contractual obligations were to manage Pemberly Place once fully operational, and that Highway 2 alone was responsible for developing the property. Filing 62 at 12-13. And Senior Housing generally denies that it breached any of its obligations under the Management Agreement. Filing 62 at 11-17.
Highway 2 has a very different view. It contends that "the plain language of the [Management Agreement] and the understanding of the parties was that Senior Housing would act as an advisor to Highway 2 throughout the construction phase and during the term of the [Agreement]." Filing 67 at 4. Moreover, Highway 2 asserts that in addition to the duties explicitly listed in the Management Agreement, Senior Housing took on additional duties and responsibilities. Id.
Froehlich testified that Mason helped select the architect and general contractor. Filing 68-3 at 4-6. Lindersmith testified that Mason participated on "almost every call with the architect in the predesign planning phase," and helped make design decisions. Filing 68-4 at 3-4. She also testified that Highway 2 entered into the relationship "with the understanding that [Senior Housing] were the experts and that they would be helping us through the process of construction and management," which was reflected in the Management Agreement in part through a "construction period fee" paid to Senior Housing. Filing 68-4 at 11.2 And Lindersmith testified Highway 2 delegated certain design decisions to Senior Housing during construction. See filing 68-4 at 5-8.
Mason testified that Senior Housing was involved in an advisory capacity during the construction phase to "support [Lindersmith] as the project manager, to assist her as needed, and to help where we could to get a better product so that when [Senior Housing] took over as managers of the building, we could make it successful." Filing 68-6 at 5. According to Mason, the construction period fee was paid "to ramp up the management side" while Pemberly Place was being built, including "learning the licensing rules and regulations," "setting up systems," "hiring people," and "building relationships." Filing 68-6 at 5.
Highway 2 claims that it began to discover problems with the...
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