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Misle Properties, LLC v. LBUBS 2004-C2 Cranberry Retail GP, LLC

United States District Court, D. Nebraska

September 30, 2019

Misle Properties, LLC, Plaintiff,
v.
LBUBS 2004-C2 Cranberry Retail GP, LLC, trading as LBUBS 2004-C2 Cranberry Retail Limited Partnership, et al., Defendants.

          MEMORANDUM AND ORDER

          John M. Gerrard United States District Judge

         This case is before the Court on the defendants' motion to dismiss or, in the alternative, to change venue. Filing 25. The Court will deny their motion.

         I. BACKGROUND

         The plaintiff, Misle Properties, is a Nebraska LLC that bought a property interest in a Pennsylvania shopping center and assumed liability for a promissory note that had been used to finance the seller's purchase of the property. Filing 17 at 1-3. Defendant "LBUBS 2004-C2 Cranberry Retail GP, LLC" apparently held the promissory note. Filing 17 at 1, 3-4. Defendant LNR Partners is a Florida LLC engaged in property and investment management that, according to the plaintiff, acted as a "special servicer" for the Pennsylvania property and has "through the creation of various shell corporations and/or alter egos, assigned and/or transferred the rights of the parties . . . in such a manner as to be the real party in interest on behalf of all the Defendants in this dispute." Filing 17 at 1-2, 4.

         The plaintiff's allegations regarding the sequence of events and financial transactions that led to this case are somewhat hard to follow-but, perhaps that's the point. At some point, the plaintiff allegedly defaulted on the note and other obligations under the original debt agreements associated with the property. Filing 17 at 4. The plaintiff disputed the default, but continued to receive monthly statements on the debt and continued to make the monthly payments. Filing 17 at 4. LNR Partners made its first appearance at that point, and sent the plaintiff a statement assessing past-due default interest that the plaintiff disputed. Filing 17 at 4.

         The plaintiff then defaulted on its next monthly payment, allegedly in an effort to invoke "work-out provisions" of the debt agreements. Filing 17 at 4-5. LNR Partners refused to cooperate, and according to the plaintiff, LNR Partners' refusal to provide the plaintiff with information about the balance of the debt frustrated the plaintiff's ability to seek refinancing. Filing 17 at 5.

         LNR Partners, either for itself or on behalf of LBUBS, sued to foreclose on the property. Filing 17 at 5. In response, the plaintiff filed a Chapter 11 petition in the Bankruptcy Court for the District of Nebraska. Filing 17 at 5. The plaintiff kept making monthly payments to LNR Partners pursuant to a protection order. Filing 17 at 5. But according to the plaintiff, LNR Partners didn't credit those payments to the plaintiff's debt. Filing 17 at 5-6. Instead, the plaintiff alleges that LNR Partners "held those funds in a suspense account without interest, while the underlying debt continued to accumulate interest, late fees and penalties." Filing 17 at 6.

         The plaintiff's bankruptcy proceeding was dismissed, and the plaintiff kept making monthly payments, but LBUBS again pursued foreclosure in Pennsylvania. Filing 17 at 6. The parties tried to mediate the debt and settle the dispute, but failed. Filing 17 at 6. The plaintiff alleges that LNR Partners, for itself or on LBUBS' behalf, "unreasonably delayed the resolution of the litigation." Filing 17 at 6. Under the debt agreements, the plaintiff was obligated to pay the legal fees of LBUBS or LNR Partners in matters relating to enforcement of the agreements-meaning that, according to the plaintiff, their dilatory litigation tactics were unreasonably running up the plaintiff's tab. Seefiling 17 at 6.

         The plaintiff managed to secure refinancing, and demanded that LNR Partners account for additional charges it had allegedly tacked on to the plaintiff's debt. Filing 17 at 7. LNR Partners refused. Filing 17 at 7. So on June 8, 2016, the plaintiff, allegedly under "protest and duress, " paid the amount demanded by LNR Partners for pay-off of the note. Filing 17 at 7. Then, on June 12, 2018, the plaintiff filed this action in state court seeking, in essence, to recover the disputed amounts of its debt. Filing 1-2. The defendants removed the action to this Court. Filing 1.

         II. DISCUSSION

         The plaintiff's operative pleading asserts seven claims, some of which present multiple theories of recovery:

1) Breach of contract and assumpsit for recovery of payments the plaintiff made that allegedly weren't credited to its debt. Filing 17 at 7-8.
2) Breach of contract and assumpsit for alleged overpayment of the principal amount of the original debt. Filing 17 at 9.
3) Breach of contract and assumpsit for improperly charged late fees. Filing 17 at 9-10.
4) Breach of contract and assumpsit for improperly charged legal fees. Filing 17 at 11.
5) Breach of the implied covenant of good faith and fair dealing in refusing to negotiate in good faith to restructure the debt or cure the default. Filing 17 at 12.
6) Unjust enrichment as to all alleged overpayments. Filing 17 at 12-13.
7) Accounting for how payments were allocated to the debt. Filing 17 at 13.

         The defendants have moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). Filing 25. In the alternative, they seek a change of venue to ...


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