Warhorse-Baltimore Real Estate, LLC v. Fore

296 F.R.D. 396, 2013 WL 6200092, 2013 U.S. Dist. LEXIS 167674
CourtDistrict Court, D. Maryland
DecidedNovember 26, 2013
DocketCivil Action No. WMN-13-2336
StatusPublished
Cited by1 cases

This text of 296 F.R.D. 396 (Warhorse-Baltimore Real Estate, LLC v. Fore) is published on Counsel Stack Legal Research, covering District Court, D. Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Warhorse-Baltimore Real Estate, LLC v. Fore, 296 F.R.D. 396, 2013 WL 6200092, 2013 U.S. Dist. LEXIS 167674 (D. Md. 2013).

Opinion

MEMORANDUM

WILLIAM M. NICKERSON, Senior District Judge.

Before the Court is Defendants’ Motion to Dismiss. ECF No. 12. Plaintiffs opposed the motion. Defendants have not replied to that opposition and the time for so doing has expired. Upon a review of the papers and the applicable case law, the Court determines that no hearing is necessary, Local Rule 105.6, and that the motion will be denied.

Plaintiffs Warhorse-Baltimore Real Estate, LLC (Warhorse), Richard Burton, Dale Dowers, and Michael Borden filed a 27 page, 87 paragraph Complaint in this action on August 12, 2013. Thomas Fore, Patrick Turner, Westport Partners, LLC, and Westport Development, LLC were named as Defendants. Briefly stated, the facts relevant to the pending motion are as follows.

This dispute relates to a 42 acre parcel of real property located on the Middle Branch of Baltimore’s Inner Harbor (the Property) which is owned by Inner Harbor West, LLC (IHW) and Inner Harbor West, II, LLC. Defendants and their various affiliates developed plans to build a residential, hotel, retail, office, dining, and entertainment complex on the Property (the Westport Project). In July of 2007, Citigroup Global Markets Realty Corp. (Citi) entered into a loan agreement (the Loan) secured by, inter alia, a mortgage lien granted to Citi by IHW on the Property.

By July 2010, the Loan was in payment default. On July 26, 2010, Citi entered into a forbearance agreement with the borrower, IHW, Defendant Patrick Turner, and others, pursuant to which Citi agreed to forbear from exercising its rights under the loan documents and also to sell the Loan for a discounted amount by a certain deadline. Defendants and their affiliates, however, experienced difficulty finding financing to purchase the Loan and Defendants requested, and Citi granted, numerous extensions of the closing date. The final extension expired on September 15, 2011, with Defendants still unable to obtain financing to purchase the Loan. On November 20, 2012, Citi commenced an action against IHW to foreclose on the Property.

Defendants continued to seek financing to prevent the foreclosure and, towards that end, began discussions with a potential financing source, Vision Capital Partners, LLC (Vision). On or about November 27, 2012, Vision and the Defendants entered into a Mutual Confidentiality and Non-Disclosure Agreement (NDA). Compl. Ex. 2. Defendants, through the NDA, sought to limit disclosure of confidential information regarding the proposed Westport Project that might be revealed during the course of their discussions. The NDA also provided that the parties, “their partners, consultants and agents and any other person to whom they show the [Westport] Project” are prohibited from circumventing the interests of the other party by entering into any agreement regarding the Property or Project without the other party’s consent. Id.

In December 2012, Vision contacted Plaintiff Richard Burton to inquire if he might be interested in participating in the Westport Project as a developer. At that time, Burton was also involved with several development projects with Plaintiffs Dale Dowers and Michael Borden. On January 9, 2013, Burton, Dowers, and Borden traveled to Baltimore to meet with Defendants Turner and Thomas Fore. Plaintiffs and Defendants engaged in a series of discussions in Baltimore from January 9 through January 15 but no agreement [398]*398regarding Plaintiffs’ participation in the Westport Project was reached. Plaintiffs allege that, at no time prior to or during these conversations, were they informed about the NDA or told that the information they were given was considered confidential. On January 16, 2013, Plaintiffs informed Defendants that they were no longer interested in further discussions.

While declining the opportunity to go forward with Defendants, on January 17, 2013, the individual Plaintiffs formed Warhorse for the purpose of purchasing the Loan from Citi for themselves. Defendants soon learned that Plaintiffs were attempting to purchase the Loan and communicated on numerous occasions their position that Plaintiffs could not purchase the Loan from Citi without Defendants’ prior consent. Plaintiffs responded that no such consent was required and, shortly thereafter, Warhorse entered into a Loan Purchase Agreement (LPA) with Citi.

On February 8, 2013, an involuntary Chapter 7 bankruptcy petition was filed against IHW by one of its creditors. Plaintiffs maintain that the filing of this petition was a ruse, orchestrated by Defendants to delay Citi’s foreclosure on the Property. On February 15, 2013, Defendants sent Plaintiffs and Citi a draft complaint for an adversary action against Plaintiffs and Citi that Defendants represented they would be filing shortly in the bankruptcy case. Plaintiffs assert that sending this draft complaint to Citi was simply a ploy to induce Citi to breach the LPA with Plaintiffs.

An adversary action was filed by Defendants and IHW in the bankruptcy action on February 20, 2013, but the complaint, as filed, did not include claims against Citi. The basis for this action was the claim that the individual Plaintiffs were consultants to Vision and thus were bound by, but violated, the terms of the NDA. It was also asserted that the actions taken by Plaintiffs to secure from Citi the rights to the Loan were “equitably undertaken for the benefit” of IHW and Defendants, and that, accordingly, the Bankruptcy Court should impose a constructive trust on those rights. Compl. Ex. 18, Complaint in Adversary No. 13-00111 ¶ 6. In addition to Plaintiffs, the adversary action also named Vision as a defendant.

On June 11, 2013, a hearing was held on Plaintiffs’ motion to dismiss the adversary action and, according to Defendants, the adversary action was dismissed without prejudice for lack of jurisdiction because the defendants in that action had asserted a right to a jury trial. Defs.’ Mot. at 4.1 Plaintiffs represent in the Complaint in this action that Bankruptcy Judge Robert Gordon also opined from the bench that there was merit in Plaintiffs’ argument that Debtor IHW had no rights under the NDA because IHW was not a party to that agreement. Compl. ¶ 69.

In this action, Plaintiffs seek a declaratory judgment that they were never bound by the terms of the NDA and, thus, Defendants have no valid claims arising from that agreement. They also assert a claim for interference with a business relationship based upon Defendants’ alleged attempts to frustrate and delay Plaintiffs’ efforts to close on the LPA with Citi. Finally, they assert a claim for fraud, alleging that Defendants’ failure to disclose the existence of the NDA and their position that Plaintiffs were bound by its terms was an intentional and knowing suppression of material facts.

In moving to dismiss this action, Defendants argue that, under Rule 19 of the Federal Rules of Civil Procedure, IHW and Vision are necessary parties to this action. Defendants argue that IHW is a third party beneficiary to the NDA and, for that reason, is a necessary party in this action. They also note that IHW has expressed its intention to file its own action against Plaintiffs in this Court, asserting the claims raised in the adversary action, thus creating the possibility of multiple actions with conflicting results.

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Bluebook (online)
296 F.R.D. 396, 2013 WL 6200092, 2013 U.S. Dist. LEXIS 167674, Counsel Stack Legal Research, https://law.counselstack.com/opinion/warhorse-baltimore-real-estate-llc-v-fore-mdd-2013.