Stone Creek Bus. Ctr., LLLP v. Stone Creek-Colo., LLC
| Decision Date | 09 March 2021 |
| Docket Number | Civil Action No. 20-cv-01413-PAB-GPG |
| Parties | STONE CREEK BUSINESS CENTER, LLLP, a Colorado limited liability limited partnership, Plaintiff, v. STONE CREEK-COLORADO, LLC, a Delaware limited liability company, MIKHAIL KAMINSKI, an individual, CBRE, INC., a Delaware corporation, and PRESCIENT CAPITAL PARTNERS, LTD., a Wisconsin corporation, Defendants. |
| Court | U.S. District Court — District of Colorado |
ORDER
This matter is before the Court on Defendants Stone Creek-Colorado, LLC, and Mikhail Kaminski's Partial Motion to Dismiss, or in the Alternative to Sever Pursuant to F.R.C.P. § 21 and Transfer Venue [Docket No. 37] and Prescient Capital Partners, Ltd.'s Motion to Dismiss Amended Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) [Docket No. 41]. This Court has jurisdiction pursuant to 28 U.S.C. § 1332.
Stone Creek Business Center ("plaintiff") owned commercial property in Avon, Colorado. Docket No. 35 at 2, ¶ 7. Plaintiff entered into a listing contract with defendant CBRE, Inc. ("CBRE") to sell the property. Docket No. 35 at 2-3, ¶ 8. Plaintiff entered into a contract on July 12, 2018 with K Capital, LLC, ("K Capital") to sellthe property for $3,500,000. Id. at 3, ¶ 9. K Capital later assigned the contract to Stone Creek-Colorado, LLC ("SCC"). Id. Defendant Mikhail Kaminski is the only member of both K Capital and SCC, which Mr. Kaminski created for the purpose of holding real estate for his benefit. Id., ¶¶ 10-11. Mr. Kaminski "represented himself" in the transaction for the property. Id., ¶ 13. SCC is an alter ego of Mr. Kaminski. Id., ¶ 14.
As a condition of the sale, the parties agreed that plaintiff would provide seller financing in the form of a secured promissory note for $1,140,000, with the property to serve as collateral. Id. at 3-4, ¶ 16. The parties further agreed that the note would accrue annual interest at 10%, with a maturity date of September 7, 2019. Id. SCC and Mr. Kaminski's lawyer prepared seller financing documents, which included the promissory note. Id. at 4, ¶¶ 17-18. When plaintiff received the documents from CBRE, it asked CBRE whether the documents "look clean, and to [plaintiff's] advantage?," to which CBRE responded, "Yes, I think it's pretty straightforward." Id. ¶ 19. In the same email exchange, plaintiff requested that several changes be made to the promissory note, including that the "jurisdiction" be changed to Eagle County, Colorado, to which CBRE stated that SCC agreed. Id., ¶ 20. The final draft to the note that was provided to plaintiff at closing, however, did not reflect these changes. Id. Rather, the version of the note that SCC executed limited plaintiff's security to a 100% membership interest in SCC, rather than a security interest in the property itself. Id. at 4-5, ¶ 21. Nor did SCC provide plaintiff with a deed of trust. Id. CBRE did not advise plaintiff that it should consult an attorney, seek advice regarding the financing structure, or obtain a deed of trust on the property as security for the note. Id. at 5, ¶ 22.
The promissory note provided that plaintiff would escrow $168,000 of the sale proceeds to reflect a "seller concession" for SCC prior to closing and, in the event that these funds were released to plaintiff, they would be applied, first, to any outstanding interest and then to the principal balance. Id., ¶ 23. The escrowed funds were released to plaintiff on September 25, 2018. Id. The note provided that SCC would make monthly interest-only payments of $5,000, with the remaining balance of the note due on or before September 7, 2019. Id., ¶ 24. Even though the escrowed funds were released to plaintiff, the parties "carried on with the mutual belief" that the interest-only payments were still due monthly. Id. SCC only made the first month's payment. Id. After SCC defaulted, plaintiff asked Mr. Kaminski why payment had not been made. Id., ¶ 25. Mr. Kaminski responded with excuses and promises that payment was forthcoming, in a pattern that recurred for many months. Id. 5-6, ¶¶ 25-26. On or about April 22, 2019, SCC provided a "bad check" to plaintiff for $5,000, which was returned for insufficient funds. Id. at 6, ¶ 27.
Plaintiff eventually conducted additional due diligence and learned that, on or about March 19, 2019, SCC borrowed $3,025,000 from defendant Prescient Capital Partners, Ltd. ("Prescient"), which it secured with a deed of trust on the property. Id., ¶ 28. Prescient was aware of the promissory note and SCC and Mr. Kaminski's financial obligation before providing loan to SCC and Mr. Kaminski, yet SCC did not inform plaintiff of the additional encumbrance on the property. Id., ¶¶ 29-30.
SCC failed to make what would have been its final payment on the note on September 7, 2019, and, as a result, plaintiff sent SCC and Mr. Kaminski a notice ofdefault on September 9, 2019, to which SCC and Mr. Kaminski responded, promising to pay and representing that Mr. Kaminski was attempting to refinance, which would allow him to pay off the promissory note. Id., ¶¶ 31-33. SCC and Mr. Kaminski are still in default and have made no payment since November 2018. Id. at 7, ¶ 34.
Dismissal of a claim under Rule 12(b)(6) is appropriate where a party fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Rule 8 requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. (8)(a)(2). Rule 8(a)'s "short and plain statement" mandate requires that a party allege enough factual matter that, taken as true, makes his "claim to relief . . . plausible on its face." Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
"The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted." Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003). In doing so, the Court "must accept all the well-pleaded allegations of the complaint as true and must construe them in the light most favorable to the plaintiff." Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007).
Generally, "[s]pecific facts are not necessary; the statement need only 'give the defendant fair notice of what the claim is and the grounds upon which it rests.'"Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Twombly, 550 U.S. at 555) (ellipses omitted). The "plausibility" standard requires that relief must plausibly follow from the facts alleged, not that the facts themselves be plausible. Bryson, 534 F.3d at 1286.
However, "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not shown - that the pleader is entitled to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation marks and alteration marks omitted). Thus, even though modern rules of pleading are somewhat forgiving, "a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." Bryson, 534 F.3d at 1286 (quotation marks and citation omitted).
Rule 21 of the Federal Rules of Civil Procedure governs misjoinder and nonjoinder of parties, providing that "[t]he court may [ ] sever any claim against a party." Fed. R. Civ. P. 21. Severance under Rule 21 creates a separate case. Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1519 (10th Cir. 1991). A court has broad discretion in deciding whether to sever parties or claims. German by German v. Fed. Home Loan Mortg. Corp., 896 F. Supp. 1385, 1400 (S.D.N.Y. 1995). "The cases make it clear that parties are misjoined when they fail to satisfy either of the preconditions for permissive joinder of parties set forth in Rule 20(a)." 7 Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Fed. Prac. & Proc. Civ. § 1683 (3d ed. 2010)(updated Oct. 2020).
The joinder of claims in a single action is governed by Rule 20 of the Federal Rules of Civil Procedure, which provides that parties "may join in one action as plaintiffs if: (A) they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (B) any question of law or fact common to all plaintiffs will arise in the action." Fed. R. Civ. P. 20(a)(1). The permissive joinder rule is to be interpreted "to promote trial convenience and to expedite the final determination of disputes, thereby preventing multiple law suits." Cooper v. Fitzgerald, 266 F.R.D. 86, 88 (E.D. Pa. 2010). As the Supreme Court instructed, under the Federal Rules of Civil Procedure, courts entertain the "broadest possible scope of action consistent with fairness to the parties"; thus, "joinder of claims, parties and remedies is strongly encouraged." United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966).
Section 1404(a) of Title 28 provides, in pertinent part, that, "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." Section 1404(a) is "intended to place discretion in the district court to adjudicate motions for transfer according to an 'individualized, case-by-case consideration of convenience and fairness.'" Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). To warrant a transfer, the moving party must establish that: (1) the action could have been brought in the alternate forum; (2)the existing forum is inconvenient; and (3) the interests of...
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