PNC Bank, National Association v. Seminary Woods, LLC et al
MEMORANDUM OPINION signed by Senior Judge Charles R. Simpson, III on 3/31/2014, re 88 MOTION TO DISMISS Crossclaim filed by Patricia A. Fiorini, Patricia G. Benz, and Laurence N. Benz; 96 MOTION to Dismiss Cross-Claim filed by Patricia A . Fiorini, Patricia G. Benz, and Laurence N. Benz, and 91 MOTION to Amend Crossclaim filed by Anna J. Risen, Norman E. Risen, and Seminary Woods, LLC. A separate Order and Judgment will entered in accordance with this Opinion.cc: Counsel (RLK)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PNC BANK, NATIONAL ASSOCIATION
CIVIL ACTION NO. 3:13CV-297-S
SEMINARY WOODS, LLC, et al.
This matter is before the court on motion of the defendants, Larry Benz, Patricia Benz,
Albert Fiorini, and Patricia Fiorini (collectively herein “Benz/Fiorini”), for dismissal of the crossclaim filed against them by Seminary Woods, LLC; Norman E. Risen; Anna J. Risen; Marc H.
Risen; Linda Risen; C. Ronald Wise and Jennifer S. Wise (collectively herein “crossclaimants”)(DNs 88; 96),1 and the motion of the cross-claimants to amend their cross-claim (DN 91).
These motions arise in the context of this foreclosure action filed by PNC Bank National
Association (“the Bank”) on certain mortgaged property known as the Seminary Woods
condominium project. The following background facts are alleged in the Complaint.
The condominium is located at 6600 Seminary Woods Place in Jefferson County, Kentucky.
The project was intended to contain a total of sixty-three condominiums and five garage units. As
of the time of the filing of the complaint, nineteen condominium units and five garage units had
allegedly been developed with forty-four additional units still to be constructed. Of the nineteen
There are two motions to dismiss (DNs 88 and 96). They seek to dismiss the cross-claim filed as DNs 80 and 84. The
cross-claim appearing in DNs 80 and 84 appears to be identical, but out an abundance of caution, Benz/Fiorini filed motions to
dismiss both 80 and 84. As the motions are identical, the court will refer to the motions collectively as “the motion to dismiss.”
constructed units, fourteen had been sold to third-parties and five units and five garage units were
owned by the entity Seminary Woods, LLC.
On April 19, 2006, Seminary Woods LLC executed a promissory note for the principal sum
of $29,220,000.00 which was secured by a mortgage, security agreement, fixture financing
statement, and assignment of rents and leases. Certain individuals, including the above-named
parties, executed personal guaranty agreements with the Bank. Seminary Woods, LLC and various
guarantors have filed counter- and cross-claims in the suit.
Presently before the court is a motion to dismiss the cross-claim filed against Benz/Fiorini
by the above-named cross-claimants. Also before the court is a motion by these cross-claimants to
amend their cross-claim.
The proposed Amended Cross-Claim attempts to (1) clarify their breach of fiduciary duty
and purported breach of contract claims; (2) add a claim for indemnity from co-guarantors
Benz/Fiorini; and (3) obtain a declaratory judgment that the arbitration clause in the Seminary
Woods, LLC Operating Agreement is valid and enforceable.
Leave to amend should be freely granted when justice so requires. As noted in Webb v.
Republic Bank & Trust Co., No. 3:11-CV-423-R, 2012 WL 2254205 (W.D.Ky. June 15, 2012):
Plaintiff may only amend the complaint with “the opposing party’s written consent
or the court’s leave.” Fed.R.Civ.P. 15(a)(2). Rule 15(a)(2) directs that the “court
should freely give leave when justice so requires.” Id. This rule gives effect to the
principle that, as far as possible, cases should be determined on their merits and not
on technicalities. Cooper v. Am. Employers’ Ins. Co., 296 F.2d 303, 306 (6th Cir.
1961). Denial of leave to amend may be appropriate “where there is undue delay,
bad faith, or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, futility of the amendment, etc.”
Miller v. Champion Enters., Inc., 346 F.3d 660, 690 (6th Cir. 2003).
The motion for leave to amend will be denied as the Proposed Amended Cross-Claim fails
to state claims upon which relief can be granted, and therefore amendment would be futile.
The court concludes that the motion to dismiss the Cross-Claim is well-taken, and the
proposed amended version of the Cross-Claim does not cure the deficiencies.
To overcome a motion to dismiss, a complaint must contain sufficient facts to state a claim
for relief that is “plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127
S.Ct. 1955, 167 L.Ed.2d 929 (2007). As explained in Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct.
1937, 1950, 173 L.Ed.2d 868 (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. [Twombly, supra.] at 556, 127 S.Ct. 1955. 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. Ibid. Where a complaint pleads
facts that are “merely consistent with” a defendant’s liability, it “stops short of the
line between possibility and plausibility of ‘entitlement to relief.’” Id.., at 557, 127
S.Ct. 1955 (bracket omitted).
The Cross-Claim alleged breach of fiduciary duty in a claim wholly unbounded in time, place
and manner. In the current version of the fiduciary duty claim, for example, they allege that
The Managers and Members have fiduciary duties to Seminary Woods including
duties to approve annual budgets, answer capital calls, and make loans when
required...The Benz and Fiorini Defendants have breached their fiduciary duties...
DN 80, p. 6.
The amended version reads:
Laurence Benz and Albert Fiorini2 have breached their fiduciary duties by, among
other things, not attending meetings, not approving expenses and costs that make up
The cross-claimants apparently determined that Patricia Benz and Patricia Fiorini should not have been named in this
the company’s budgets, not making payments as required, not answering capital calls
and/or loans in such amounts as may be approved by majority vote, not keeping the
confidences of the Company...
DN 91-1, ¶ 21.
Neither version contains any facts specific to the Seminary Woods operations.
The Amended Cross-Claim purportedly seeks to specify that it also alleges breach of
contract. The original Cross-Claim does not mention breach of contract, and clearly does not recite
facts to support such a claim. The proposed amended version states in Count I that Laurence Benz
and Albert Fiorini are bound by the Seminary Woods Operating Agreement and that
Laurence Benz and Albert Fiorini have breached the Operating Agreement by,
among other things, not attending meetings, not approving expenses and costs that
make up the company’s budgets, not making payments as required, not answering
capital calls and/or loans in such amounts as may be approved by majority vote, not
keeping the confidences of the Company...
DN 91-1, ¶ 14.
As with the fiduciary duty claim, neither version of the Cross-Claim contains any facts to support
a breach of contract claim, as the claims speak in generalities, rather than specifics. Not a single
date, name, or event is identified in the Cross-Claim. The fiduciary duty and breach of contract
claims fail to contain sufficient factual allegations to raise them from possibility to plausibility under
Proposed Counts III (Indemnity) and Count IV (Declaratory Judgment) seek certain relief
but do not suggest how that relief is warranted under the facts of the case. The Indemnity claim
simply states that if the Cross-Claimants are held liable, they will look to Benz/Fiorini for indemnity.
They do not state on what basis they would be entitled to such relief. The claim for Declaratory
Judgment recites a provision in the Operating Agreement which provides for arbitration of disputes
among the parties, but the claim does not identify what parties or what disputes they would seek to
submit to arbitration.
For these reasons, the motion to dismiss the Cross-Claim (DNs 88 and 96) will be granted
and the motion for leave to amend the Cross-Claim (DN 91) will be denied. A separate order will
be entered this date in accordance with this opinion.
IT IS SO ORDERED.
March 31, 2014
C al R Smpo I , ei J d e
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U i dSae Ds i C ut
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