Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

McVay v. The Store House Co.

United States District Court, S.D. Indiana, Indianapolis Division

February 21, 2017

EDWARD L. MCVAY, MARY W. MCVAY, ONE STOP STORAGE, INC, Plaintiffs,
v.
THE STORE HOUSE COMPANY, STORE HOUSE OF INDIANAPOLIS LLC, TSHI STORAGE, LLC, DONALD TOLVA, Defendants.

          ORDER ON MOTIONS

          SARAH EVANS BARKER, JUDGE UNITED STATES DISTRICT COURT

         The currently pending motions were referred to the Magistrate Judge for a report and recommendation (“R&R”). Those R&Rs were filed and have generated various objections, which we address in this order. Now before the Court are Defendants' Motions to Dismiss [Docket Nos. 21 & 45] and their corresponding R&Rs [Docket Nos. 39 & 61], as well as Plaintiffs/Counter Defendants' Motion to Dismiss Defendants' Counterclaim [Docket No. 58] and its corresponding R&R [Docket No. 68].

         For the reasons explained herein, Defendants' First Motion to Dismiss [Docket No. 21] is DENIED as moot, and the Magistrate Judge's R&R on that motion [Docket No. 39] is VACATED as moot. The Magistrate Judge's R&R on Defendants' Second Motion to Dismiss [Docket No. 61] is MODIFIED & ADOPTED, and Defendant's Motion to Dismiss [Docket No. 45] is thus GRANTED in part and DENIED in part. The Magistrate Judge's R&R on Plaintiffs/Counter Defendants' Motion to Dismiss Defendants' Counterclaim [Docket No. 68] is ADOPTED in full, and Plaintiffs/Counter Defendants' Motion to Dismiss [Docket No. 58] is therefore GRANTED.

         Factual Background[1]

         This action stems from a contract dispute between Plaintiffs Edward and Mary McVay, and One Stop Storage Inc. (“One Stop”) (collectively, “Plaintiffs”) and Defendants The Store House Company (“Store House”), Store House of Indianapolis L.L.C. (“SHI”), TSHI Storage L.L.C. (“TSHI”), and Donald Tolva (collectively, “Defendants”). Plaintiffs assert they owned property at 2425 N. Mitthoeffer Road in Indianapolis, Indiana (the “Property”) on which they operated a storage business from March 2003 to 2007. Dkt. 42 at ¶¶ 14-18. In 2007, Plaintiffs entered into negotiations with Defendants to sell the Property to them. Id. at ¶¶ 19-20. Plaintiffs allege that during the negotiations, Defendants interacted solely and concertedly with Mary who was unrepresented by counsel, unfamiliar with the business, and unaware of the true value of the Property. Id. at ¶ 23, 27. Their negotiations culminated in the execution of a Purchase Agreement for Industrial Real Estate (“Purchase Agreement”) which set out the terms of the sale. Id. at ¶ 24.

         The Purchase Agreement describes two payments to be made to Plaintiffs in purchasing the Property: the first, a one-time payment of $1, 950, 000.00 which was due at closing, Id. at ¶ 30, 46, and the second, a payment to be made pursuant to a Contingent Consideration Payment clause (“Contingent Payment” clause) in the contract. Id. at ¶ 47-48. The Contingent Payment clause provides, in part, as follows:

Seller shall be eligible to receive future contingent earned equity (“Contingent Payment”) at the rate of 50% of any funds available after payment of all “Priority Debt” upon the sale or refinance of the property. [“Priority Debt” shall mean and include all secured and unsecured debt of the property and the LLC or other entity holding title to the Property; and shall include all costs associated with the sale or refinance of the Property.]

Dkt. 42-1 at ¶ G. Plaintiffs allege that on or around December 18, 2007, the parties to the contract executed an Amendment to the Purchase Agreement (the “Amendment”). Dkt. 42 at ¶ 49. This Amendment purportedly obligated Store House to provide written notice to the Plaintiffs of any subsequent sale or refinance of the Property that would trigger the Contingent Payment. Id. at ¶ 51. Plaintiffs allege that on December 27, 2007, Store House refinanced the mortgage on the Property for $3, 060, 000.00, thus triggering the Contingent Payment clause, and neither paid the Contingent Payment nor notified Plaintiffs of the refinance as it was contractually obligated to do. Id. at ¶¶36-58. Further, Plaintiffs allege that Store House sold the Property to SHI at an unknown date, who then sold it to TSHI on or about May 20, 2014, who refinanced the Property on that same date. Id. at ¶¶ 60-61. Plaintiffs allege that, after each of these transactions, Store House neither made a Contingent Payment to Plaintiffs nor notified Plaintiffs of the sales and refinances of the Property. Id. at ¶¶ 64-65.

         Procedural Background

         On March 22, 2016, Plaintiffs filed their Complaint, alleging breach of contract, fraud in the inducement, and fraudulent conspiracy. Dkt. 1. On May 6, 2016, Defendants filed a Motion to Dismiss seeking dismissal with prejudice of each of Plaintiffs' claims. Dkt. 21. On July 27, 2016, the Magistrate Judge issued a Report and Recommendation granting Defendants' motion in part without prejudice. Dkt. 39. On August 10, 2016, Defendants objected to the Report and Recommendation. Dkt. 41. On August 17, 2016, Plaintiffs filed an Amended Complaint, repleading the above claims and asserting new claims of breach of the duty of good faith and fair dealing, fraud by omission, unjust enrichment, and breach of fiduciary duty. Dkt. 42. Plaintiffs' Amended Complaint renders the original Motion to Dismiss [Dkt. 21] moot, and thereby renders portions of the Report and Recommendation [Dkt. 39] and Defendants' objection thereto [Dkt. 41] moot as well. Accordingly, Docket Nos. 21 and 41 are hereby DENIED AS MOOT and Docket No. 39 is VACATED AS MOOT to the extent it addresses Plaintiffs' breach of contract claims, which are addressed by the Magistrate Judge in his R&R on Defendants' second Motion to Dismiss.

         On August 31, 2016, Defendants filed their second Motion to Dismiss, seeking dismissal of each of Plaintiffs' claims. Dkt. 45. On October 24, 2016, the Magistrate Judge issued a Report & Recommendation on that motion, recommending that we DENY Defendants' motion regarding Plaintiffs' breach of contract claims, and GRANT their motion regarding Plaintiffs' claims of fraudulent inducement, conspiracy to commit fraud, breach of the duty of good faith and fair dealing, breach of fiduciary duty, and unjust enrichment. Dkt. 61. On November 8, 2016, Plaintiffs filed an Objection to the R&R, contending that the Magistrate Judge erred in recommending that their claims of fraud, breach of the duty of good faith and fair dealing, and breach of fiduciary duty should be dismissed. Dkt. 67. Defendants responded to the Objection on November 22, 2016, Dkt. 72. These issues are now ripe for decision by this Court.

         Legal Standard

         Rule 72(b) of the Federal Rules of Civil Procedure requires a party who disagrees with a magistrate judge's report and recommendation on a dispositive motion to file “specific written objections to the proposed findings and recommendations.” Fed.R.Civ.P. 72(b)(2); see also 28 U.S.C. § 636(b)(1); Johnson v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999). “The district court ‘makes the ultimate decision to adopt, reject, or modify' the report and recommendation, and it need not accept any portion as binding; the court may, however, defer to and adopt those conclusions where a party did not timely object.” Jamerson v. Colvin, 2013 WL 6119245, at *1 (S.D. Ind. Nov. 21, 2013). Upon a timely objection, the district court then determines, de novo, “any part of the magistrate judge's disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3); see also 28 U.S.C. § 636(b)(1); Remy Inc. v. Tecnomatic, S.P.A., 2013 WL 1311095, at *1 (S.D. Ind. Mar. 26, 2013).[2]

         Accordingly, our review of the challenged portions of the magistrate judge's R&R on Defendants' motion to dismiss is conducted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Rule 12(b)(6) provides that a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. lqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).

         Discussion

         In his Report & Recommendation filed on October 24, 2016, Magistrate Judge Dinsmore reached the following conclusions:

(1) Plaintiffs have stated a facially plausible claim that Defendants breached the Purchase Agreement by failing to make appropriate contingent payments, pursuant to the Agreement's Contingent Payment Clause. Dkt 61 at 5.
(2) Plaintiffs have stated a facially plausible claim that Defendants committed a breach of contract by failing to notify Plaintiffs that the priority debt(s) had been extinguished, pursuant the Amendment to the Purchase Agreement. Id. at 6.
(3) Plaintiffs' claims of actual fraud and fraud in the inducement must be dismissed because Plaintiff's Amended Complaint contained no allegations that Defendants made material misrepresentations of past or existing fact, but instead alleged that Defendants failed to fulfill their alleged promises under the Purchase Agreement. Id. at 8.
(4) Plaintiffs' claim of breach of the duty of good faith and fair dealing and breach of fiduciary duty must be dismissed because, based on the allegations contained in the Amended Complaint, no fiduciary ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.