U.S. Bank National Association et al v. Gatsby Drive Apartments, L.L.C. (CONSENT)
MEMORANDUM OPINION AND ORDER: Defendant's 8 Motion to Dismiss Plaintiff's Complaint is DENIED as further set out in the order. Signed by Honorable Judge Terry F. Moorer on 3/14/2012. (Attachments: # 1 Civil Appeals Checklist)(dmn, )
IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE MIDDLE DISTRICT OF ALABAMA
U.S. BANK NATIONAL
ASSOCIATION, et al.,
GATSBY DRIVE APARTMENTS,
Case No. 2:11-cv-411-TFM
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendant’s Motion to Dismiss Plaintiff’s Complaint
pursuant to Fed. R. Civ. P. 12(b)(6). (Doc. 8, filed July 8, 2011). This action is assigned to
the undersigned magistrate judge to conduct all proceedings and order entry of judgment by
consent of all the parties (Docs. 15, 18-19, filed July 29, 2011, and August 1, 2011) and 28
U.S.C. § 636(c).
Plaintiff is U.S. Bank National Association (“Bank National” or “Successor Trustee”),
Successor Trustee for the Certificate holders of the Registered Holders of ML-CFC
Commercial Mortgage Trust 2007-7, Commercial Mortgage Pass-Through Certificates,
Series 2007-7, acting by and through its Special Servicer, Midland Loan Services, a Division
of PNC Bank, National Association, successor by merger to Midland Loan Services, Inc.,
(“Midland”), under the Pooling and Servicing Agreement (“Servicing Agreement”) dated as
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of June 1, 2007, among Merrill Lynch Mortgage Investors, Inc., Original Trustee, Wachovia
Bank, National Association, and Midland (collectively referred to as “Plaintiff” or “Lender”).
Defendant is Gatsby Drive Apartments, L.L.C. (“Defendant” or “Borrower” or “Gatsby”).
JURISDICTION AND VENUE
U.S. National Bank is a national banking association organized and existing under the
laws of the United States of America with its principal place of business in the State of
Minnesota. Midland is a division of a national banking association, existing under the laws
of the United States of America with its principal place of business in the State of
Pennsylvania. Defendant is a limited liability company organized and existing under the laws
of the State of Alabama with it principal place of business in the State of Alabama. The
property giving rise to the underlying dispute is located within Montgomery County,
Alabama. The amount in controversy exceeds $75,000.00.
The district court has subject matter jurisdiction over the claims in this action pursuant
to 28 U.S.C. § 1332 (diversity of citizenship) and 28 U.S.C. § 2201 (Declaratory Judgment
Act). The parties do not contest personal jurisdiction or venue, and there are adequate
allegations to support both.
III. THE STANDARD OF REVIEW
Although it must accept well-pled facts as true, the court is not required to accept a
plaintiff’s legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d
868 (2009) (“[T]he tenet that a court must accept as true all of the allegations contained in
a complaint is inapplicable to legal conclusions”). In evaluating the sufficiency of a
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plaintiff’s pleadings, the court must indulge reasonable inferences in plaintiff’s favor, “but
we are not required to draw plaintiff’s inference.” Aldana v. Del Monte Fresh Produce, N.A.,
Inc., 416 F.3d 1242, 1248 (11th Cir. 2005). Similarly, “unwarranted deductions of fact” in
a complaint are not admitted as true for the purpose of testing the sufficiency of plaintiff’s
allegations. Id.; see also Iqbal, 129 S.Ct. at 1951 (stating conclusory allegations are “not
entitled to be assumed true”).
A complaint may be dismissed if the facts as pled do not state a claim for relief that
is plausible on its face. See Iqbal, 129 S.Ct. at 1950 (explaining “only a complaint that states
a plausible claim for relief survives a motion to dismiss”); Bell Atlantic Corp. V. Twombly,
550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (retiring the prior “unless it appears
beyond doubt that the plaintiff can prove no set of facts” standard). In Twombly, the
Supreme Court emphasized that a complaint “requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S.
at 555. Factual allegations in a complaint need not be detailed but “must be enough to raise
a right to relief above the speculative level on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).” Id. at 555 (internal citations and emphasis
More recently, in Iqbal, the Supreme Court reiterated that although FED.R.CIV.P. 8
does not require detailed factual allegations, it does demand “more than an unadorned, the
-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S.Ct. at 1949. A complaint must
state a plausible claim for relief, and “[a] claim has facial plausibility when the plaintiff
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pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. The mere possibility the defendant acted
unlawfully is insufficient to survive a motion to dismiss. Id. The well-pled allegations must
nudge the claim “across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.
“Moreover, when ruling on a motion to dismiss, a court must view the complaint in the light
most favorable to the plaintiff and accept all of the plaintiff’s well-pleaded facts as true. Id.
(citing St. Joseph’s Hosp., Inc. V. Hosp. Corp. Of Am., 795 F.2d 948, 954 (11th Cir. 1986)).
Plaintiff filed this action seeking judgment against Gatsby for breach of a contract in
the amount of $9,158,545.76, representing the amount of unpaid principal plus interest as of
the date filed, plus attorneys’ fees and expenses, court costs, interest, and other expenses
incurred. (Doc. 1, at pg 5, see also Exhibits A through G (copies of said contract and lending
documents)). Plaintiff also requests that the Court appoint a Receiver to take possession of
the property with the responsibilities and authorities necessary to manage, care for and
preserve the property and the income derived therefrom. (Doc. 1. at pg 13). Plaintiff also
seeks injunctive relief that will enjoin the defendants from interfering with the Receiver
and/or Plaintiff in any way from the management of the Gatsby Drive Apartments, their
maintenance, and the collection of revenues therefrom. Id.
On July 8, 2011, Gatsby filed Defendants’ Motion to Dismiss Plaintiff’s Complaint
and accompanying Brief in Support of Motion to Dismiss Plaintiff’s Complaint. (Doc. 8-9.
see also Doc. 10, correction to motion, filed on July 11, 2011). Gatsby argues in support of
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its motion that the appointment of a receiver for Gatsby is inappropriate, that the facilities
are not in imminent danger of being lost, concealed, injured, diminished in value or
squandered, and that the harm to Gatsby and its customers if a receiver is appointed would
outweigh any harm to the Plaintiff if receivership is denied. (Doc. 10-1).
On August 1, 2011, Plaintiff filed Plaintiff’s Memorandum in Support of Opposition
to Defendant’s Motion to Dismiss. (Doc. 16). Plaintiff avers that the complaint sets out the
necessary factual allegations for a plausible claim in both counts of the complaint and meets
the Twombly/Ashcroft standard to withstand a motion to dismiss. Id. at 8-12. (citing Ashcroft
v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), and Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Plaintiff also avers that
the lender meets the burden of appointing a receiver, citing to the seven factors to be
considered by a court. Id. at 12-16. (citing i.e., Canada Life Assur. Co. LaPeter, 563 F.3d
837 (9th Cir. 2009) (stating the factors to be considered are (1) “whether [the party] seeking
the appointment has a valid claim”; (2) “whether there is fraudulent conduct or the
probability of fraudulent conduct,” by the defendant; (3) whether the property is in imminent
danger of “being lost, concealed, injured, diminished in value, or squandered”; (4) whether
legal remedies are inadequate; (5) whether the harm to plaintiff by denial of the appointment
would outweigh injury to the party opposing appointment; (6) “the plaintiff’s probable
success in the action and the possibility of irreparable injury to plaintiff’s interest in the
property”; and, (7) “whether [the] plaintiff’s interest sought to be protected will in fact be
well-served by receivership.”). Plaintiff also argues that where the parties have contractually
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agreed to a receivership that this should be given great weight and has been held by other
courts to be a factor given considerable deference. Id. at 12- 15. (citing e.g., American Band
and Trust Co. V. Bond Int’l Ltd., 2006 WL 2385309 at *7 (D.D. Okla. Aug. 16, 2006)).
Finally, Plaintiff argues that the lender has afforded the borrower ample time to remedy the
default which is the underlying cause of action.
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S.Ct. at
1949 (ctiting Twombly, 550 U.S. at 570). The arguments presented by the parties, especially
those of the Defendants, branch off onto the arguments surrounding the receivership
requested in the original complaint without focusing on whether there is sufficient factual
matter to state a claim to relief that is plausible on its face. Id. Plaintiff is correct in noting
that count one regarding the breach of contract, requesting a judgment against Gatsby Drive
for $9,158,545.76, plus fees, expenses, costs, interest and other charges, was wholly ignored
by Defendant. (Doc. 16, at 9). The Court draws the reasonable inference from the complaint
and the attached exhibits that a contractual relationship existed and was breached by the
Defendant. As a result, the Court concludes the Plaintiff has met its burden to state a claim
to relief that is plausible, surviving the motion to dismiss pursuant to FED.R.CIV.P12(b)(6),
in regards to the first count.
Count two of the complaint requests the court to appoint a receivership as well as
grant injunctive relief. (Doc. 1, at 13). Substantial arguments are presented for both parties.
However, applying the standard of reviewing the facts in the light most favorable to the
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Plaintiff, the second count states a claim wherein Plaintiff could prove a set of facts in
support of his claim, surviving the motion to dismiss pursuant to FED.R.CIV.P12(b)(6).
Conley, 355 U.S. at 45.
Furthermore, Defendant is correct in stating that “[t]he appointment of a receiver
would be premature at this point in the litigation” due to the fact that this is a question to be
answered in the trial on the merits. University of Texas v. Camenisch, 451 U.S. 390, 395,
101 S.Ct. 1830, 1833, 68 L.Ed.2d 175 (1981) (stating “it is generally inappropriate for a
federal court at the preliminary-injunction stage to give a final judgment on the merits.”).
The Court finds that the facts as plead state a claim for relief that is plausible on its face,
Iqbal, 129 S.Ct. at 1950, the Defendant’s motion to dismiss is due to be denied pursuant to
Pursuant to the foregoing, Defendant’s Motion to Dismiss Plaintiff’s Complaint (Doc.
8) is DENIED.
DONE this 14th day of March, 2012.
/s/Terry F. Moorer
TERRY F. MOORER
UNITED STATES MAGISTRATE JUDGE
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