A/P Hotel, LLC v. Lehman Brothers Holdings Inc. et al, No. 2:2010cv00720 - Document 71 (D. Nev. 2010)

Court Description: ORDER Granting 25 Motion to Dismiss as to Woodlands Commercial Bank. Signed by Chief Judge Roger L. Hunt on 12/8/10. (Copies have been distributed pursuant to the NEF - ASB)
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A/P Hotel, LLC v. Lehman Brothers Holdings Inc. et al Doc. 71 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 DISTRICT OF NEVADA 7 *** 8 9 10 11 12 13 14 A/P HOTEL, LLC, ) ) Plaintiff(s), ) ) vs. ) ) LEHMAN BROTHERS HOLDINGS, ) INC. et al., ) ) Defendant(s). ) ____________________________________) ) AND ALL RELATED CLAIMS ) ____________________________________) Case No. 2:10-cv-0720-RLH-RJJ ORDER (Motion to Dismiss–#25) 15 16 Before the Court is Defendant Woodlands Commercial Bank’s Motion to Dismiss 17 (#25, filed June 14, 2010). Plaintiff A/P Hotel, LLC filed an Opposition (#38) and Woodlands filed 18 a Reply (#42). Woodlands contends that A/P Hotel fails to state a claim upon which relief can be 19 granted. Fed. R. Civ. P. 12(b)(6) After consideration of the moving papers, the motion will be 20 granted. 21 In this case, arising as it does out of a commercial development project gone bad, and 22 with the Defendant Lehman Brothers Holdings, Inc., the lender on the project, having filed 23 bankruptcy, it appears that Plaintiff A/P Hotel is attempting to find a deeper pocket. Unfortunately, 24 it appears that A/P Hotel is attempting to make lemonade out of a lemon, but only has a prune as it 25 relates to its claim against Woodlands. 26 //// 1 Dockets.Justia.com 1 To begin with, A/P Hotel not only ignores current law on the standard for a Rule 2 12(b)(6) motion, it attempts to persuade the Court to disregard it, citing cases decided in the 1960s, 3 80s and 90s, but disregarding very recent pronouncements by the United States Supreme Court. 4 5 STANDARD OF REVIEW A court may dismiss a plaintiff’s complaint for “failure to state a claim upon which 6 relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled complaint must provide “a short 7 and plain statement of the claim showing that the pleader is entitled to relief.” While a pleading 8 generally need not contain detailed allegations, it must allege sufficient facts “to raise a right to 9 relief above the speculative level.” Bell Atlantic Corp. V. Twombly, 550 U.S. 544, 555 (2007). A 10 complaint does not allege sufficient facts to raise a right to relief above the speculative level if it 11 contains nothing more than “labels and conclusions” or a “formulaic recitation of the elements of a 12 cause of action.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Papasan v. Allain, 478 13 U.S. 265, 286 (1986)). Instead, in order to survive a motion to dismiss, a complaint must contain 14 sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 129 S. Ct. At 15 1949 (internal citations omitted). 16 In Ashcroft v. Iqbal, the Supreme Court provided a two-step approach for district 17 courts to apply when considering motions to dismiss. First, the court must accept as true all factual 18 allegations in the complaint. Id. at 1950. A court does not, however, assume the truth of legal 19 conclusions merely because the plaintiff casts them in the form of factual allegations. Id. at 1950; 20 Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003). Mere recitals of the 21 elements of a cause of action, supported only by conclusory statements also do not suffice. Iqbal, 22 129 S. Ct. at 1949. Second, the court must consider whether the factual allegations in the complaint 23 allege a plausible claim for relief. Id. at 1950. “A claim has facial plausibility when the plaintiff 24 pleads factual content that allows the court to draw a reasonable inference that the defendant is 25 liable for the alleged misconduct.” Id. at 1949. Thus, where the complaint does not permit the 26 court to infer more than the mere possibility of misconduct, the complaint has “alleged—but not 2 1 shown—that the pleader is entitled to relief.” Id. (Internal quotation marks omitted). When the 2 claims in a complaint have not crossed the line from conceivable to plausible, plaintiff’s complaint 3 must be dismissed. Twombly, 550 U.S. at 570. The Court also notes the well-established rule that pro se complaints are subject to 4 5 “less stringent standards than formal pleadings drafted by lawyers” and should be “liberally 6 construed.” Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007). 7 Moreover, a plaintiff can “plead himself out of a claim” by including factual 8 allegations contrary to the factual elements of his claims or contradicted by documents referred to in 9 the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Soo Line R.R. 10 v. St. Louis Southwestern Ry., Co., 125 F.3d 481, 483 (7th Cir. 1997) (“A plaintiff can plead himself 11 out of court by alleging facts which show that he has no claim, even though he was not required to 12 allege those facts.”). Indeed, a plaintiff can plead himself out of a claim by attaching to his 13 complaint documents that negate any purported cause of action. Steckman v. Hart Brewing, Inc., 14 143 F.3d 1293, 1295-96 ( 9th Cir. 1998) (“[W]e are not required to accept as true conclusory 15 allegations which are contradicted by documents referred to in the complaint.”). 16 DISCUSSION 17 In this case, A/P Hotel has attached documents to its Amended Complaint (which 18 brought Woodlands into this action) which totally refute its allegations against Woodlands. Those 19 documents clearly establish that as a matter of law, Woodlands has no legal relationship with, and 20 owes no legal duty to, A/P Hotel. 21 A/P Hotel is the developer of commercial property in Las Vegas, Nevada. Lehman 22 Brothers is the lender which financed the development. Woodlands lent money to Lehman Brothers 23 to enable it to finance the project for A/P Hotel and thus has a participation interest to the extent it 24 had the right to recover from Lehman Brothers moneys which Lehman Brothers received from A/P 25 Hotel in repayment of the loan. There is no contract or relationship between A/P Hotel and 26 Woodlands. 3 1 A/P Hotel claims that Woodlands had some unspecified interest in Lehman Brothers’ 2 rights in the loan documents between A/P Hotel and Lehman Brothers, and/or that Woodlands acted 3 as Lehman Brothers’ agent. The documents directly and clearly contradict that allegation. A/P 4 Hotel further claims that Woodlands failed to disclose its participation interest with Lehman 5 Brothers. First, Woodlands had no duty disclose to A/P Hotel its participation interest. Second, the 6 documents A/P Hotel attaches to its Amended Complaint clearly show that Woodlands had no 7 control over the loan contract in question and was forbidden from acting as Lehman Brothers agent. 8 Under the express terms of the contracts A/P Hotel proffered to the Court, Wood- 9 lands has no obligation to A/P Hotel, it has no right to enforce any of A/P Hotel’s obligations, or 10 any role in any foreclosure in the hotel property. Woodlands has no right to direct the decision to 11 disburse or not to disburse funds in response to any request for a draw from A/P Hotel. Woodlands 12 is not A/P Hotel’s lender and not in privity of contract with A/P Hotel. 13 The Loan Agreement attached to the Amended Complaint is between A/P Hotel and 14 Lehman Brothers, not Woodlands. That Agreement makes no mention of or reference to Wood- 15 lands, and imposes no obligations on Woodlands. In fact, the Agreement has a “No Third Party 16 Beneficiaries” clause which precludes anyone other than the parties from enforcing the Agreement 17 or any related loan documents. 18 The only parties to the Deed of Trust are A/P Hotel and Lehman Brothers–not 19 Woodlands. The security interest established by the Deed of Trust is granted only to Lehman 20 Brothers, the lender, and the rights of foreclosure are only vested in the lender, Lehman 21 Brothers–not Woodlands. 22 The Revised Master Participation Agreement in which Woodlands agreed to 23 purchase certain participation interests in loans and commitments that Lehman Brothers made to 24 various borrowers, makes no mention of A/P Hotel and A/P Hotel did not execute it. It specifically 25 provides that “[a]ll rights and remedies under or relating to the Loan Documents, at law, or in equity 26 shall be exercised solely by Seller [i.e., Lehman Brothers].” Amended Complaint Exhibit 10 at 4 1 paragraph 4. Moreover, it states that Woodlands shall have no right or authority to exercise such 2 rights and remedies. Id. It also provides that Lehman Brothers has the sole discretion, and without 3 notice, to amend, modify, or terminate any of the loan documents or to waive their terms without 4 authorization from Woodlands. Finally, it provides that upon default Lehman Brothers has the sole 5 right to pursue all rights and remedies and that the document does not constitute a formal assign- 6 ment of the Loan Agreement to Woodlands. 7 Notwithstanding some of A/P Hotel’s allegations, the documents and other allega- 8 tions demonstrate that A/P Hotel and Woodlands had no direct dealings with each other and have no 9 legal relationship, duty or obligations to each other. It is well-settled law that a third party, who 10 provides funds to a lender who utilizes the funds to make loans to a borrower, has no obligations to 11 the borrower. The only obligations or duties of the third party are to the lender, not to the lender’s 12 borrower. 13 Almost conceding that Woodlands had no authority to foreclose, and thus injunctive 14 relief would provide no benefit, A/P Hotel argues that it would also do no harm, so an injunction 15 should issue. That argument does not even merit a response. Furthermore, there is no basis for 16 contract or breach of good-faith claims because there was no contract between A/P Hotel and 17 Woodlands. Without any duty to A/P Hotel, its claims from fraudulent concealment by Woodlands 18 is also without merit. No facts have been alleged that the failure to disclose the participation 19 agreement was based on an intention to defraud A/P Hotel, or with an evil intent. A/P Hotel’s 20 argument that it would not have borrowed the money from Lehman Brothers if it had known it was 21 using Woodlands to help finance the loan is ludicrous. There is no evidence that the financial 22 stability of Woodlands was ever in question. Lehman Brothers was the one who filed bankruptcy. 23 There is nothing presented to suggest that A/P Hotel had any interest in the source of the funds until 24 the present self-serving effort to try to raise a non-issue. 25 //// 26 //// 5 1 IT IS THEREFORE ORDERED that Defendant Woodlands Commercial Bank’s 2 Motion to Dismiss (#25) is GRANTED. 3 Dated: December 8, 2010. 4 5 ____________________________________ Roger L. Hunt Chief United States District Judge 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 6