KD Gretna Properties, LLC v. Decatur Realty Corp., et al
Filing
31
ORDER & REASONS that Defendant Sidney Bach's 11 Motion to Dismiss for Failure to State a Claim is GRANTED. KD Gretna's claims are DISMISSED WITHOUT PREJUDICE. KD Gretna has 14 days from the date of this Order to file an amended compla int. In light of this ruling, IT IS FURTHER ORDERED that KD Gretna's pending 26 Motion for Leave to File Verified First Amended and Supplemental Complaint is DENIED WITHOUT PREJUDICE. KD Gretna may request leave to include a claim for violation of § 12:121 if and when it seeks to re-plead its other claims. Signed by Judge Eldon E. Fallon on 3/26/13.(dno, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
KD GRETNA PROPERTIES, LLC
VERSUS
DECATUR REALTY CORP., ET AL.
*
*
*
*
*
CIVIL ACTION
NO. 13-218
SECTION "L"(4)
ORDER AND REASONS
The Court has pending before it Defendant Sidney Bach’s Motion to Dismiss for Failure
to State a Claim. (Rec. Doc. 11). The Court has reviewed the briefs and the applicable law and
heard oral argument, and now issues this Order and Reasons.
I.
BACKGROUND
This case is a shareholder derivative action involving Defendant Decatur Realty
Corporation. Decatur has only two shareholders: the majority shareholder and president,
Defendant Sidney Bach, owns 59.44 percent of shares; Plaintiff KD Gretna Properties, LLC
owns the remaining 40.56 percent. (Rec. Doc. 1-1 at p. 73, ¶ 6). Decatur owns two properties (a
parking property and a building) in New Orleans, and its only business is leasing out those
properties. Id. at ¶ 8. KD Gretna became a shareholder of Decatur on October 22, 2012, after
purchasing the shares from the Succession of Dorothy Shaumburger. Id. at ¶ 6.
The central conflict in this case arises out of KD Gretna’s attempts to lease Decatur’s
parking property. KD Gretna claims to have initially requested documentation from Decatur
before the October Shareholders’ Meeting regarding the terms of current and future leases. Id. at
p. 74, ¶ 13. At that meeting, a motion was allegedly made to authorize the renewal of the lease of
the parking property to 519 Conti Street, Ltd., a company owned solely by Bach. Id. at p. 75,
¶ 15. 519 Conti had been paying rent of $2,000 per month, and that arrangement had been in
place for approximately a decade. Id. Voting on that motion was apparently deferred until the
December Shareholders’ Meeting. Id. Additionally, a motion to increase Decatur’s management
fee from $500 per month to $1,000 per month was allegedly approved over KD Gretna’s
objection. Id. at ¶ 16. After the October Shareholders’ Meeting, KD Gretna claims to have sent
Bach an offer to lease the parking property for $4,000 per month. Id. at ¶ 17. KD Gretna also
allegedly expressed concerns to Bach regarding the amount of the management fee. Id. at ¶ 18.
KD Gretna alleges that it received either no response or an inadequate response.
On December 12, 2012, KD Gretna filed a Verified Petition for Injunctive Relief in Civil
District Court for the Parish of Orleans. In that case, KD Gretna sought to enjoin Decatur and
Bach both from renewing the lease to 519 Conti and from altering or destroying any of Decatur’s
records. KD Gretna also moved for a TRO against both Defendants, but on December 13, 2012,
the Defendants agreed to postpone any renewal of the lease until after the next shareholders’
meeting, and KD Gretna deferred its TRO request until that time. Id. at p. 77, ¶ 25.
KD Gretna continued to request information both before and during the December
Shareholders’ Meeting, but its requests were allegedly either ignored or denied. Id. at ¶¶ 26, 28.
After the December Shareholders’ Meeting, KD Gretna claims to have made another offer on the
parking property, this time for $7,500 per month, and requested an opportunity to make a
counter-offer before Decatur executed any further lease on that property for less than that
amount. Id. at pp. 77-78, ¶ 29.1 Bach allegedly denied KD Gretna’s request. Id. at p. 78, ¶ 30.
On December 19, 2012, KD Gretna filed an Amended and Restated Verified Petition,
1
Bach disputes the characterization of KD Gretna’s request as an offer, describing it only
as a request for first right of refusal. (Rec. Doc. 11-1 at 2). The details of this dispute are
described below.
along with a second motion for a TRO. That evening, counsel for Decatur and Bach allegedly
notified KD Gretna that Decatur had signed a lease on at least one of the properties. Id. at ¶ 34.
On December 20, 2012, KD Gretna filed a Second Amended and Restated Petition, along with
yet another motion for a TRO. Judge Robin M. Giarrusso granted the TRO, but on December 28,
2012, following a hearing, Judge Michael G. Bagneris maintained Decatur and Bach’s
exceptions of no cause of action and no right of action, and dismissed KD Gretna’s petitions.
On January 3, 2013, KD Gretna filed the instant case. The Original Verified Petition
claims that Bach breached his fiduciary duties to Decatur in seven different respects:
a.
Repeatedly denying Plaintiff’s requests for information
regarding the terms of any current and/or proposed leases
of the Decatur Properties;
b.
Entering into long-term leases of the Decatur Properties
without first providing Plaintiff with information regarding
the terms of those leases;
c.
Entering into long-term leases of the Decatur Properties
that do not maximize the value to Decatur and its
shareholders;
d.
Failing to accept Plaintiff’s offer to lease the Parking
Property for $7,500.00 per month and instead entering into
a long-term lease of the Parking Property for a value
substantially lower than $7,500 per month;
e.
Failing to meet in good faith with Plaintiff at the court
reporter-transcribed December Shareholders’ meeting;
f.
Failing to discuss the proposed leases of the Decatur
Properties at the December Shareholders’ Meeting; and
g.
Entering into long-term leases on December 17, 2012, on
the Decatur Properties with knowledge of Plaintiff’s
pending offer and failing to notify Plaintiff that the leases
had been signed until late in the night of December 19,
2012.
(Rec. Doc. 1-2 at pp. 1-2, ¶ 54).2 KD Gretna requests both damages for the breach of fiduciary
duty and a declaratory judgment stating that the leases of both properties are invalid. Id. at pp. 23, ¶ V. On February 5, 2013, Bach removed to this court, asserting diversity jurisdiction.3
On February 19, 2013, KD Gretna filed a Motion to Disqualify Lowe Stein as Counsel
for Decatur Realty Corporation. (Rec. Doc. 8). KD Gretna argued that Lowe Stein’s continued
representation of Decatur presented a conflict of interest with Lowe Stein’s duty to its former
client, Sidney Bach. But after oral argument on March 20, 2013, the Court denied KD Gretna’s
motion under Robinson v. Snell’s Limbs and Braces of New Orleans, Inc., 538 So. 2d 1045 (La.
Ct. App. 1989), which expressly allows for the concurrent representation of both a director
accused of mismanagement and a nominal corporate defendant in a derivative suit. (Rec. Doc.
30).
On March 15, 2013, KD Gretna filed a Motion to Leave to File its Verified First
Amended Complaint for Declaratory Judgment, Breach of Fiduciary Duty, and Damages. (Rec.
Doc. 26), which the Court has not yet ruled on. The proposed amendments would add a claim
against Bach and Decatur for voluntarily leasing all or substantially all of Decatur’s assets
without authorization by a two-thirds vote of the shareholders, in violation of § 12:121. There
are no other material changes to the original Petition for Damages.
II.
PRESENT MOTION
The motion presently before the Court for ruling is Bach’s Motion to Dismiss Under Rule
2
KD Gretna alleges that after the case was removed to this Court, Decatur and Bach
provided a copy of the lease for the parking property, which indicates that 519 Conti is leasing
the property at a rate of $62,500 per year, or approximately $5,200 per month. (Rec. Doc. 8-1 at
4-5). Decatur alleges that no lease has been signed on the other property. (Rec. Doc. 15 at 3 n.5).
3
Decatur is a Louisiana corporation. KD Gretna is an LLC in either Louisiana or Florida,
but its sole member, Wayne Ducote, is a Florida citizen. Bach is a citizen of North Carolina.
12(b)(6). (Rec. Doc. 11). Bach makes several arguments in support of his motion. First, he
argues that KD Gretna has not alleged gross negligence, as Louisiana law requires in a suit
against a corporate officer for breach of fiduciary duty. Next, Bach argues that KD Gretna has no
right to inspect corporate records because it has not been a shareholder for six months; that, as a
minority shareholder, KD Gretna has no right to participate in company management; that,
contrary to KD Gretna’s representations, KD Gretna did not actually make an offer to lease the
parking property; and that KD Gretna is estopped from objecting to the lease to 519 Conti
because KD Gretna’s initial offer was lower than the rent ultimately paid by 519 Conti.
KD Gretna opposes Bach’s motion (Rec. Doc. 21) and argues that it has properly pled a
claim against Bach for breach of fiduciary duty because, if the allegations in the Petition are
assumed to be true, they reflect reckless disregard for the best interests of the corporation, which
is sufficient to show gross negligence under Louisiana law. Also, to the extent that Bach disputes
the Petition’s factual allegations, KD Gretna argues that this constitutes a factual issue for the
jury to decide. Finally, KD Gretna argues that despite having been a shareholder for less than six
months, KD Gretna had a right to the information it requested because of the general obligation
of officers and directors to disclose facts within their knowledge to shareholders.
III.
LAW AND ANALYSIS
A.
Standard on Motions to Dismiss
When a court considers a motion to dismiss for failure to state a claim under Federal Rule
of Civil Procedure 12(b)(6), “all well-pleaded facts are viewed in the light most favorable to the
plaintiff, but plaintiffs must allege facts that support the elements of the cause of action in order
to make out a valid claim.” City of Clinton v. Pilgrim’s Pride Corp., 632 F.3d 148, 152-53 (5th
Cir. 2010). “To avoid dismissal, a plaintiff must plead sufficient facts to ‘state a claim to relief
that is plausible on its face.’” Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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.” Id. (quoting Ashcroft v. Iqbal, 129 S. Ct. 1937,
1949 (2009)). The court “do[es] not accept as true conclusory allegations, unwarranted factual
inferences, or legal conclusions.” Plotkin v. IP Axess Inc., 407 F.3d 690, 696 (5th Cir. 2005).
B.
Analysis
a.
Breach of Fiduciary Duty Generally
KD Gretna’s claims against Bach involve several alleged breaches of fiduciary duty.
Section 12:91 is the main statute governing the duty owed by directors and officers of a
corporation to its shareholders. Its relevant provisions are as follows:
A. Officers and directors shall be deemed to stand in a fiduciary
relation to the corporation and its shareholders, and shall discharge
the duties of their respective positions in good faith, and with that
diligence, care, judgment, and skill which ordinary prudent men
would exercise under similar circumstances in like positions;
however, a director or officer shall not be held personally liable to
the corporation or the shareholders thereof for monetary damages
unless the director or officer acted in a grossly negligent manner as
defined in Subsection B of this Section, or engaged in conduct
which demonstrates a greater disregard of the duty of care than
gross negligence, including but not limited to intentional tortious
conduct or intentional breach of his duty of loyalty. . . .
B. As used in this Section, “gross negligence” shall be defined as a
reckless disregard of or a carelessness amounting to indifference to
the best interests of the corporation or the shareholders thereof.
C. A director or officer who makes a business judgment in good
faith fulfills the duty of diligence, care, judgment, and skill under
Subsection A of this Section if the director or officer:
(1) Does not have a conflict of interest with respect to the
subject of the business judgment.
(2) Is informed with respect to the subject of the business
judgment to the extent the director or officer reasonably
believes to be appropriate under the circumstances.
(3) Rationally believes that the business judgment is in the
best interests of the corporation and its shareholders.
...
E. A person alleging a breach of the duty of diligence, care,
judgment, and skill owed by an officer or director under
Subsection A shall have the burden of proving the alleged breach
of duty, including the inapplicability of the provisions as to the
fulfillment of the duty under Subsections C and D and, in a
damage action, the burden of proving that the breach was the legal
cause of damage suffered by the corporation.
...
La. Rev. Stat. Ann. § 12:91.
Bach argues that since the claims against him constitute a personal suit against the officer
of a corporation, allegations of “gross negligence” are required in accordance with § 12:91(A)
and (B). Bach contends that KD Gretna’s claims against him are deficient because the Petition
does not specifically allege that he was grossly negligent.
In response, KD Gretna argues that taken together, the factual allegations in the Petition
are sufficient to establish Bach’s “reckless disregard of . . . the best interests of the corporation,”
which is in turn sufficient to establish gross negligence. La. Rev. Stat. Ann. § 12.91(B).
Specifically, KD Gretna points to Bach’s alleged refusal of KD Gretna’s $7,500 offer; Bach’s
alleged refusal to provide KD Gretna with proposed lease terms; Bach’s alleged failure to assess
(or provide information regarding) the true value of the building property; and Bach’s alleged
failure to maximize the value of the leases of both properties.
In support of this argument, KD Gretna cites a Louisiana appellate court case that held
that a director of a nonprofit organization breached his fiduciary duty to the organization when
he arranged for a piece of its property to be sold to himself. Stokes v. Bruno, 98-323 (La. App. 3
Cir. 10/7/98), 720 So.2d 388. Specifically, the appellate court found no error in the trial court’s
holding that the director breached his fiduciary duty to the organization when he “just decided a
value for the property” without any formal process or consultation of the governing committee;
“worked under a perceived apparent authority he could set values and complete sales on his
own”; failed to disclose various facts surrounding the sale and value of the property to the
corporation; and failed to investigate certain potential purchasers of the land. Id. at 391. As a
result, the court found that the director “owed a fiduciary [duty] to the Corporation to maximize
the return” and that the sale of the property constituted breach of that duty. Id.
KD Gretna cites Stokes for the proposition that failure to maximize the value of a
corporation’s assets can constitute a breach of fiduciary duty by the director of a corporation.
This point may technically be correct, but it ignores a potentially important distinction between
Stokes and the present case: Stokes involved a failure to disclose various information to the other
directors of the corporation before the directors voted to approve the sale. Id. at 389 (noting that
the board of directors voted to accept a recommendation to sell the property). In this case, Bach
was the only director of the corporation, so there was no analogous failure to disclose to other
directors. Although the Court acknowledges KD Gretna’s allegations of self-dealing by Bach in
leasing the parking property to an entity he allegedly controls, the Court also notes that the
misconduct in Stokes ran much more clearly afoul of the business judgment rule. Additionally,
the misconduct of the director in Stokes was arguably more egregious than the allegations against
Bach in this case. Therefore, it is really not clear whether Stokes supports KD Gretna’s claim that
its allegations are sufficient to show reckless indifference to the interests of the corporation by
Bach.
For this reason, and because of the problems with some of the more specific problems
with KD Gretna’s individual allegations of misconduct listed below, the Court agrees with Bach
that KD Gretna’s failure to allege gross negligence is problematic. In the interest of justice,
however, the Court will allow KD Gretna an opportunity to cure the defects in its Petition, rather
than dismissing the Petition with prejudice.
b.
Denial of KD Gretna’s Request for Corporate Records, Including
Proposed Leases
Bach argues that he cannot be held liable for failure to provide KD Gretna with Decatur’s
records because, under Louisiana law, a shareholder has no right to examine a corporation’s
records until he or she has owned at least 5% of the corporation for at least six months. La. Rev.
Stat. Ann. § 12:103(D)(1)(a). It appears to be undisputed that KD Gretna acquired its shares of
Decatur in October 2012. Therefore, Bach argues that KD Gretna had no right to examine any of
Decatur’s records at the time of its requests in December 2012.
KD Gretna responds by arguing that Louisiana law obligates officers and directors to
disclose facts within their knowledge to shareholders, particularly when those officers or
directors “control the voting power of the corporation and the minority shareholder represents an
opposing faction.” Junker v. Crory, 650 F.2d 1349, 1356-57 (5th Cir. 1981). Like the present
case, Junker involved two companies, one of which owned certain property, and one of which
leased that property. The Junker Court found that the officers and directors of the propertyowning company had breached their fiduciary duty to its shareholders when they caused the
company to lease property for inadequate rentals, to pay excessive management fees on the
property, and to merge their company with the leasing company without properly valuing the
owning company’s stock. Id. at 1357. The result of all this was a merger that was “detrimental”
to shareholders. Id.
Again, KD Gretna’s argument, while perhaps technically correct, ignores the context of
Junker. In that case, as described above, the low rent and high management fees were ultimately
combined with an extremely unfavorable merger. In Junker, the plaintiff, as a minority
shareholder, suffered not just from the financial losses of the company’s leases, but also from the
inability to meaningfully exercise his right to vote on the merger.4
KD Gretna has not identified any legal authority, either in its briefs or at oral argument,
to support the claim that either Bach or Decatur was required to share Decatur’s records before
six months had passed. Accordingly, KD Gretna’s claim must be dismissed.
c.
Refusal of KD Gretna’s First Offer to Lease the Parking Property
Bach argues that KD Gretna cannot claim that Bach breached his fiduciary duty to the
corporation by rejecting an offer for $4,000—which KD Gretna’s sole shareholder, Mr. Ducote,
stated that he believed was fair to the corporation—when Bach ultimately leased the parking
property for an even higher amount. Bach argues that it is “aware of no legal support for the
notion that a lease on certain terms to the plaintiff would have been fine, but a lease on the same
or even better terms to a third party” is a breach of fiduciary duty. (Rec. Doc. 29 at 5). In
response to this argument, KD Gretna suggests that its $4,000 offer must be viewed in context,
and specifically, that it made that offer following Bach’s proposal to lease the parking property
to 519 Conti for $2,000 per month.5
4
Similarly, in Yuspeh v. Koch, 02-698 (La. App. 5th Cir. 2/25/03), 840 So.2d 41, which
KD Gretna also cites, the plaintiff minority shareholders alleged that the defendants had
fraudulently obtained additional shares of stock to get enough votes to conduct a freezeout
merger. Id. at 43.
5
Additionally, KD Gretna argues that Bach failed to rely in good faith on Mr. Ducote’s
opinion as an expert in the parking business in violation of § 12:92(e). However, this second
argument is misleading, as § 12:92(e) simply states that a director is protected if he chooses to
rely in good faith on the opinion of an expert; it does not require a director to rely on any
particular expert opinion in good faith.
The Court agrees with Bach that KD Gretna cannot bring a claim based on the refusal of
an offer that is less profitable than the ultimate lease provisions. However, the issue appears to
be moot, as KD Gretna does not include rejection of its first offer in its list of alleged breaches of
fiduciary duty.
d.
Refusal of KD Gretna’s Second Offer to Lease the Parking Property
Bach’s main argument here is that KD Gretna never actually made an offer to lease the
property for $7,500; instead, KD Gretna asked for a right of first refusal on any offer below
$7,500, so that KD Gretna could make a counteroffer. Attached to KD Gretna’s Petition (and
also quoted in its Petition) is a copy of the email in which KD Gretna alleges that it made this
offer. The pertinent text of that email is as follows:
The $4,000/mo. rent over a ten year term discussed by Mr. Ducote
at today’s shareholders’ meeting was an offer he made,
contemplating only the current lease as he understands it:
$2,000/mo. paid by Mr. Bach’s company, 519 Conti Street, Ltd.,
expiring at the end of this year. We hereby request that Mr. Ducote
be provided with the terms of any proposed parking lot lease, the
value of which is less than $7,500/mo., prior to its execution, such
that Mr. Ducote can counter such a proposal with more money in
rent for the corporation under the same terms that Mr. Bach may
be considering. Please confirm that Mr. Bach will agree to this
request, which is clearly in the best interests of the corporation.
Rec. Doc. 1-1 at 44.
Bach argues that the Court should not accept as true KD Gretna’s allegation that it made
an offer for $7,500, because that is a legal conclusion rather than a factual allegation. Bach
argues that because KD Gretna attached the email to its Petition, the Court must look to the
contents of that email in adjudicating KD Gretna’s motion. See Tellabs, Inc. v. Makor Issues &
Rights, Ltd., 551 U.S. 308, 322 (2008) (holding that when adjudicating a motion to dismiss an
action for securities fraud, a court “must consider the complaint in its entirety, as well as other
sources courts ordinarily examine” when deciding motions to dismiss, including “documents
incorporated into the complaint by reference”). But see Wright & Miller, 5C Fed. Prac. & Proc.
Civ. §§ 1357, 1364 (3d ed. 2012) (stating that a court is “allowed” to consider these materials,
rather than required to consider them). Furthermore, Bach argues that “[i]f . . . an allegation is
contradicted by the contents of an exhibit attached to the pleading, then indeed the exhibit and
not the allegation controls.” United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d
370, 377 (5th Cir. 2004) (citing Simmons v. Peavy-Welsh Lumber Co., 113 F.2d 812, 813 (5th
Cir. 1940)).
Bach then argues that the contents of KD Gretna’s email do not constitute an offer under
Louisiana law. Specifically, Bach argues that in order to constitute an offer to lease, KD Gretna’s
email would have to contain the essential elements of the lease, including both a precise
reference to the thing to be leased and the exact rent to be paid. See La. Civ. Code art 2676
(noting that rent must be fixed “in a sum either certain or determinable”). Furthermore, Bach
argues that an offer must give the other party the right to assent to the contract, or in other words,
an offer must “declare[] the offeror’s intent to be bound.” Reynolds v. Conger, No. 95-2643,
1995 WL 686878, at *5 (E.D. La. Nov. 17, 1995). Otherwise, the overture is merely “an
invitation to negotiate or an expression of willingness to receive offers.” Delta Testing &
Inspection, Inc. v. Ernest N. Morial New Orleans Exhibit Hall Auth., 96-2340 (La. App. 4 Cir.
8/20/97), 699 So.2d 122, 124, writ denied, 97-2350 (La. 12/12/97), 704 So. 2d 1194.
In response to Bach’s argument, KD Gretna contends that the Court should assume that
KD Gretna’s allegation that it made an offer is true. Furthermore, KD Gretna argues that whether
it intended to be bound is a factual question for the jury, and is therefore inappropriate for the
Court to determine on a motion to dismiss.
The Court appreciates that factual disputes are outside the bounds of a motion to dismiss
under Rule 12(b)(6). However, as Bach argues, whether KD Gretna’s email constituted an offer
is a legal question for the Court to decide. Furthermore, Bach correctly points out that documents
referenced in and attached to the pleadings, such as KD Gretna’s email, are fair game for the
Court to examine when adjudicating a motion to dismiss. Accordingly, the Court holds that KD
Gretna’s email did not contain an offer to lease the property for $7,500, and KD Gretna’s claim
that Bach breached his fiduciary duty to Decatur and KD Gretna by rejecting that “offer” must
be dismissed.
e.
Other Claims
Bach argues that KD Gretna’s allegations with respect to the building, rather than the
parking property, do not meet the plausibility standards set forth by Twombly and Iqbal. KD
Gretna alleges that “while rent of $10,000 for the Building may be reasonable,” it is impossible
to know without other information whether the lease is “in fact ‘worth $50 a month or $50,000 a
month.’” (Rec. Doc. 1-1 at p. 80, ¶ 46) Bach argues that this language reflects a “mere
possibility” that the rent on the building is inadequate. Furthermore, both in their briefs and at
oral argument, the Defendants asserted that no lease has actually yet been signed on the building,
and it was not clear whether KD Gretna agreed with that conclusion. At this point, Bach’s
arguments are moot, because the Court has already chosen to dismiss KD Gretna’s claims
relating to both properties without prejudice for other reasons. The Court will address any
remaining issues with the specificity of KD Gretna’s allegations should KD Gretna choose to file
an amended complaint.
Finally, as described above, KD Gretna has filed an ex parte motion to amend its
complaint to add a claim for violation of § 12:121, which requires the authorization of two-thirds
of shareholders when a corporation sells or leases “all or substantially all” of its assets. However,
this requirement applies only if “the entire corporate business” was “ended” by the transaction.
§ 12:121(E), and as KD Gretna itself alleges, Decatur’s entire business is leasing its two
properties. This issue was raised at oral argument, but it has not been fully briefed. Therefore,
the Court will also defer any ruling on KD Gretna’s proposed § 12:121 claim.
IV.
CONCLUSION
KD Gretna has listed seven specific instances in which it alleges that Bach breached his
fiduciary duty to Decatur and KD Gretna. To the extent that those instances involve Bach’s
refusal to provide KD Gretna with information, they must be dismissed on the grounds that Bach
did not yet owe KD Gretna a duty to share corporate records at the time they were requested. To
the extent that KD Gretna’s claims rely on Bach’s rejection of its emailed “offer” to lease the
parking property for $7,500, they must be dismissed because the Court holds that KD Gretna’s
email did not actually contain such an offer. KD Gretna’s remaining claims must be dismissed
for failure to plead either gross negligence or reckless disregard for the interests of the
corporation as required by Louisiana law. However, KD Gretna will have the opportunity to
amend its complaint to address these problems.
Accordingly, IT IS ORDERED that Defendant Sidney M. Bach’s Motion to Dismiss for
Failure to State a Claim (Rec. Doc. 11) is GRANTED. KD Gretna’s claims are DISMISSED
WITHOUT PREJUDICE. KD Gretna has 14 days from the date of this Order to file an amended
complaint.
In light of this ruling, IT IS FURTHER ORDERED that KD Gretna’s pending Ex Parte
Motion for Leave to File Verified First Amended and Supplemental Complaint (Rec. Doc. 26) is
DENIED WITHOUT PREJUDICE. KD Gretna may request leave to include a claim for
violation of § 12:121 if and when it seeks to re-plead its other claims.
New Orleans, Louisiana, this 26th day of March, 2013.
________________________________
UNITED STATES DISTRICT JUDGE
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