Elena Puga and Nicole Edwards, On Behalf of Themselves and All Others Similarly Situated v. Nephrite Fund I, LLC

CourtMissouri Court of Appeals
DecidedSeptember 10, 2024
DocketWD87149
StatusPublished

This text of Elena Puga and Nicole Edwards, On Behalf of Themselves and All Others Similarly Situated v. Nephrite Fund I, LLC (Elena Puga and Nicole Edwards, On Behalf of Themselves and All Others Similarly Situated v. Nephrite Fund I, LLC) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elena Puga and Nicole Edwards, On Behalf of Themselves and All Others Similarly Situated v. Nephrite Fund I, LLC, (Mo. Ct. App. 2024).

Opinion

In the Missouri Court of Appeals Western District

ELENA PUGA ) AND NICOLE EDWARDS, ) ON BEHALF OF THEMSELVES ) AND ALL OTHERS SIMILARLY ) SITUATED, ) ) WD87149 Appellants, ) ) OPINION FILED: V. ) SEPTEMBER 10, 2024 ) NEPHRITE FUND I, LLC, ET AL., ) ) Respondents. )

Appeal from the Circuit Court of Jackson County, Missouri The Honorable James Kanatzar, Judge

Before Division Four: Anthony Rex Gabbert, Chief Judge, Presiding, Lisa White Hardwick, Judge and Gary D. Witt, Judge

Elena Puga, et. al. ("Appellants") appeal from the judgment of the Circuit Court of

Jackson County, Missouri ("trial court") denying their motion to enforce a settlement

agreement between themselves as representatives of a class, and Nephrite Fund I, LLC,

Jesse Davila, and Strategic Properties, LLC (collectively "Respondents"). In their sole

point on appeal, Appellants contend the trial court erred in denying their motion to

enforce settlement because there was a meeting of the minds as to the material terms of

the agreement, resulting in a valid and binding settlement agreement. We affirm the judgment of the trial court that no settlement agreement was reached and remand for

further proceedings.

Factual and Procedural Background1

This class action against Respondents began in June 2021. Collectively,

Respondents are responsible for the ownership and management of Suncrest Apartments

("Apartment"), located in Raytown, Missouri, which is the subject of this dispute.2

Appellants' class includes Missouri residents "who had a lease with or rented an

apartment unit at Suncrest Apartments (formerly known as Amber Glenn Apartments)

between June 17, 2016 to the present." Appellants contend Respondents failed to

maintain the Apartment in a safe, sanitary, and habitable condition, and allege three

counts against Respondents: Count I, negligence; Count II, breach of the implied

warranty of habitability; and Count III, violations of the Missouri Merchandising

Practices Act ("MMPA").

Relevant to this interlocutory appeal, the parties agreed to participate in a

mediation that was held on October 17, 2023, less than two weeks before a jury trial was

scheduled to commence. The parties were unable to reach a settlement agreement during

the mediation. Afterward, the mediator sent an email to the parties listing potential terms

as "a starting point for additional discussions" between the parties.3 The parties

1 "We defer to the trial court's determinations of credibility and view the evidence and the inferences that may be drawn therefrom in the light most favorable to the judgment." Schubert v. Schubert, 366 S.W.3d 55, 62 (Mo. App. E.D. 2012) (internal citation omitted). 2 Nephrite Fund I, LLC ("Nephrite") bought the Apartment in September 2014. Jesse Davila is an owner, manager, member, and registered agent of Nephrite. Strategic Properties, LLC manages the Apartment. 3 The mediator's potential settlement terms were as follows: 2 continued to negotiate and discuss a potential settlement. Partially inspired by the terms

the mediator set forth, Appellants' counsel, G.L., drafted a settlement offer and sent it to

the mediator to forward to Respondents' counsel, B.G.4 In relevant part, the settlement

offer included the following terms:

1. The class accepts all aspects of paragraph 1 of [the mediator]'s email and incorporates paragraph 1 in this demand. In addition, [Owner of Nephrite] must not be directly involved in providing these improvements in order to avoid substandard labor and inferior construction. 2. Cash [payment] of $1.5 million from any combination of defendants and insurance companies. 3. Rent reduction of $250 per month per tenant for November [,] December [, and] January (time period of notice and final approval of settlement). This reduction does not involve government payments, so those can continue. This rent reduction involves only direct payment from tenants. 4. Case continued by agreement. Plaintiffs will pursue a 537.065 claim, amend the petition within 20 days of settlement execution, and take a

1. Defendants will put $400,000 into the complex as improvements for habitability (not beautification), in November 2023, and those expenditures shall be subject to approval by [G.L.] or his appointee. . . . 2. The cash offer of $150,000 from the defendants and at least $150,000 from the insurance [company] will be paid immediately upon the settlement agreement signed and approved. We will jointly push [insurance company] to increase its participation to $250,000. 3. Rent paid by each member of the class shall be reduced by $100 for each of the months of November and December 2023 and January 2024. This is dollars the individuals [] pay not the subsidized amount. . . . 4. Plaintiffs will receive 50% equity upon sale of the complex. [G.L.] will have a lien on the complex for that %. 5. The case will be continued by agreement. If [G.L.] wants to, he will pursue a 537.065 claim. He may, if he desires, amend the petition and take a judgment for negligence only to be pursued against all other insurance companies. The defendants will not oppose any of this and will agree to any such pleadings. Defendants will within 7 days provide a full and complete list of all such possible liability insurance. 4 Pursuant to section 509.520, RSMo. (2023), we do not include the names of witnesses other than parties. 3 Judgment on Negligence count to be pursued only against insurance companies. Defendants will not oppose any of this. Defendants provide a sworn statement containing a complete list of all possible liability insurance within 7 days of execution of settlement. The list must contain all possible liability insurance for all of the defendants from 2016 through 2024. 5. The parties agree to entry of Final Judgment on claim for breach of the warranty of habitability as part of the executed settlement. Judgment will be in the amount of $2 million to be pursued only against the insurance companies and/or the property. The parties further agree that no lien on the property is superior to the class's Judgment lien with the sole exception of the first and second mortgages. 6. All defendants are prohibited from owning or managing any apartment complex in the state of Missouri for 10 years. . . . 7. Defendants shall not object, dispute or comment upon any request by the class or class counsel for incentive awards, attorney's fees or reimbursement of case expenses. 8. Defendants shall immediately and forever cease filing rent and possession or eviction cases against any class member for alleged default of payment obligations arising from a lease at [the Apartment]. Defendants shall cease all collection efforts relating to the alleged default of payment obligations.

B.G. responded to the mediator, explaining that the most Appellants would ever be

able to collect from Respondents is the net proceeds from the sale of Apartment, which

was estimated to be around $300,000, "after secured creditors are paid off." Respondents

did not accept Appellants' settlement offer.

Throughout the negotiations, the founder and CEO of Strategic Properties, LLC

("Founder") communicated directly with Appellants' counsel, G.L., with Respondent's

counsel, B.G.'s consent and without Respondent's counsel being present or on the phone.

During at least one conversation between Founder and G.L., they spoke about the

Apartment's liens and lien priority. Founder told G.L. there was little equity in the

Apartment due to outstanding liabilities and liens, and sent G.L. spreadsheets confirming

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Elena Puga and Nicole Edwards, On Behalf of Themselves and All Others Similarly Situated v. Nephrite Fund I, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elena-puga-and-nicole-edwards-on-behalf-of-themselves-and-all-others-moctapp-2024.