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Aegean, LLC v. Meridian Senior Living, LLC

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

August 30, 2019

Aegean, LLC, Muncie Senior Living, LLC, Madison Senior Living, LLC, Greenwood Senior Living, LLC, Plaintiffs,
Meridian Senior Living, LLC, a North Carolina LLC, and Meridian Senior Living, LLC, a Delaware LLC, Defendants.



         Plaintiffs Aegean, LLC (“Aegean”), Muncie Senior Living, LLC (“Muncie”), Madison Park Senior Living, LLC (“Madison Park”), and Greenwood Senior Living, LLC (“Greenwood”), filed a Second Amended Complaint against Defendants Meridian Senior Living, LLC of North Carolina (“MSL North Carolina”), and Meridian Senior Living, LLC of Delaware (“MSL Delaware”). [Filing No. 22-1.] This case involves an alleged agreement between the parties concerning the development of several senior living facilities in central Indiana. Presently pending before the Court are MSL North Carolina's and MSL Delaware's Motions to Dismiss. [Filing No. 22; Filing No. 29.] For the reasons stated herein, the Court grants both motions.


         Standard of Review

         The Federal Rules of Civil Procedure require that a complaint provide the defendant with “fair notice of what the . . . claim is and the grounds upon which it rests.” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007)). In reviewing the sufficiency of a complaint, the Court must accept all well-pled facts as true and draw all permissible inferences in favor of the plaintiff. Alarm Detection Sys., Inc. v. Vill. of Schaumburg, 930 F.3d 812, 821 (7th Cir. 2019).

         A party may move to dismiss a complaint that fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). In order to survive a motion to dismiss under Rule 12(b)(6), the complaint must contain allegations that collectively “state a claim to relief that is plausible on its face.” Alarm Detection Sys., 930 F.3d at 821 (internal quotations omitted) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “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.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555). This plausibility determination is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Munson v. Gaetz, 673 F.3d 630, 633 (7th Cir. 2012).

         However, when a party alleges fraud, he or she “must state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). This means that the plaintiff ordinarily must describe the “who, what, when, where, and how” of the fraud. United States ex rel. Berkowitz v. Automation Aids, Inc., 896 F.3d 834, 839 (7th Cir. 2018) (internal quotations and citation omitted). Although what constitutes “particularity” may depend on the facts of each case, plaintiffs must “use some means of injecting precision and some measure of substantiation into their allegations of fraud.” Id. (internal quotations, alteration, and citation omitted).



         Aegean filed a Complaint in Marion Superior Court against MSL North Carolina, alleging breach of contract, breach of joint venture, unjust enrichment, and violation of the Indiana Uniform Trade Secrets Act (“IUTSA”). [Filing No. 1-1 at 2-7.] After MSL North Carolina filed a Motion to Dismiss, [Filing No. 1-1 at 18-33], Aegean amended the complaint to include as Plaintiffs Muncie, Madison Park, and Greenwood (collectively, “the Senior Living Plaintiffs”), and add a claim for constructive fraud, [Filing No. 1-1 at 36-44]. MSL North Carolina then filed another Motion to Dismiss, [Filing No. 1-1 at 49-66], which was denied, [Filing No. 1-1 at 101-02]. Thereafter, Plaintiffs filed a Second Amended Complaint, adding MSL Delaware as a Defendant. [Filing No. 1-1 at 122-132.] MSL Delaware then removed the case to this Court. [Filing No. 1].

         In the Second Amended Complaint, Plaintiffs allege that Aegean entered into a Consultant Agreement (“the Agreement”) with MSL North Carolina on January 15, 2015. [Filing No. 22-1 at 2.] The Agreement stated that Aegean was a land developer in Anderson, Indiana, that controlled Madison Park. [Filing No. 22-2 at 1]. As such, Aegean agreed to consult with MSL North Carolina on the construction of senior living facilities, in exchange for “a fee of $300, 000 per each senior living project which [MSL North Carolina] agree[d] to construct.” [Filing No. 22-2 at 1.] The fee was to be paid to Aegean as follows: 50% when MSL North Carolina closed on the real estate; 25% upon assumption of the tax increment financing; 12.5% six months after closing; and 12.5% immediately upon the issuance of a certificate of occupancy. [Filing No. 22-2 at 1.] Aegean was responsible for arranging contracts with architects, engineers, and designers, with any costs already paid by Aegean to be reimbursed out of the fee. [Filing No. 22-2 at 1.] The Agreement expressly stated that: (1) “[w]hether to purchase the ground upon which these projects are to be built and whether to continue to build these projects is solely up to [MSL North Carolina] who may at any time decide to decline to participate in any one or more of these Senior Living Projects;” and (2) the relationship created between the parties was “not a joint venture or partnership but rather Aegean is an independent consultant to [MSL North Carolina] and there is no fiduciary or special relationship between the two.” [Filing No. 22-2 at 2].

         Plaintiffs allege that, on October 6, 2015, Defendants created MSL Delaware to avoid liability under the Agreement. [Filing No. 22-1 at 2]. They further allege that both companies use the same name, substantial goodwill and assets have been transferred from MSL North Carolina to MSL Delaware, and “[t]he same people are involved in both.” [Filing No. 22-1 at 2.]

         In addition, the Senior Living Plaintiffs allege that they “all worked closely with Defendants, to develop senior living facilities Muncie, Anderson and Greenwood, Indiana, ” and that “Defendants' representative, Todd Hudgins, signed contracts and performed other acts which reflected that Plaintiffs, Muncie, Madison Park and Greenwood and Defendants were in a joint venture with respect to these three projects.” [Filing No. 22-1 at 3.] Defendants allegedly “caused senior living projects to be constructed in Anderson and Greenwood, ” and contracted to purchase land for a project in Muncie, although they defaulted on that contract. [Filing No. 22-1 at 3.] Plaintiffs allegedly provided MSL North Carolina “with a large volume of information, including but not limited to market studies, related to those projects, ” and “considered this information to be trade secret information, ” which MSL North Carolina then transferred to MSL Delaware without Plaintiffs' permission. [Filing No. 22-1 at 3.] Plaintiffs also allege that they “expended time and money to seek and receive approval for these projects.” [Filing No. 22-1 at 3.]

         As to Count I (Breach of Contract), Aegean alleges that, when MSL Delaware was created, it assumed MSL North Carolina's obligations under the Agreement, and both Defendants breached the Agreement by failing to pay the fees owed. [Filing No. 22-1 at 4.]

         Under Count II (“Breach of Joint Venture”), the Senior Living Plaintiffs allege that they each engaged in joint ventures with both Defendants, and Defendants breached these joint ventures. [Filing No. 22-1 at 5.]

         In Count III (Unjust Enrichment), the Senior Living Plaintiffs allege that they have provided “hundreds of hours of work, confidential market studies, engineering work, financial pro forma and other materials” to MSL North Carolina, which MSL North Carolina used to develop its own senior living projects and then gave to MSL Delaware. [Filing No. 22-1 at 5.] Accordingly, they allege, both “Defendants have been unjustly enriched by Plaintiffs' work, ” and, “[i]n equity, Defendants should be required to pay.” [Filing No. 22-1 at 5.]

         Relatedly, in Count IV (“Indiana Trade Secrets Act”), all of the Plaintiffs allege that they provided “trade secret information” to MSL North Carolina, who received it while knowing it was confidential, and “misappropriated the information and used it for its own benefit.” [Filing No. 22-1 at 6.] Plaintiffs also allege that MSL North Carolina transferred the information to MSL Delaware and “other third parties” without their knowledge or consent. [Filing No. 22-1 at 6.]

         As to Count V (Constructive Fraud), Plaintiffs allege that they “relied to their detriment upon promises made by Defendants, and their authorized agent and representative, Todd Hudgins.” [Filing No. 22-1 at 6.] Specifically, they allege that “Defendants repeatedly represented to Plaintiffs that Defendants would develop facilities at these locations, ” and, based upon such representations, “Plaintiffs expended tens of thousands of dollars in market studies, engineering fees, as well as countless man hours to develop these projects.” [Filing No. 22-1 at 6-7.] Then, Plaintiffs allege, “Defendants simply took Plaintiffs' work and completed these projects with another company.” [Filing No. 22-1 at 7.] They further allege that Defendants, as “one of the largest senior living companies in the United States, . . . ha[d] much greater knowledge regarding the development of these facilities, ” were in a much stronger financial position, and “took advantage of Plaintiffs' relatively weaker position” when they “misled Plaintiffs” into believing that they would work together to develop the senior living projects. [Filing No. 22-1 at 6-7.]

         In Count VI (“Fraud and Fraudulent Transfer”), Plaintiffs allege that MSL North Carolina told them that it was the entity that was developing the senior living facilities in Indiana. [Filing No. 22-1 at 7.] However, they allege, MSL North Carolina developed a new entity to do the work, MSL Delaware, without informing them, and thereby both Defendants “lied” regarding the identity of the entity responsible for building the facilities. [Filing No. 22-1 at 7.] Plaintiffs allege that ‚ÄúDefendants committed a material misrepresentation of past or existing fact or otherwise ...

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