Blue Fire Capital, LLC v. Pies & Pints Development Partners, LLC et al
Filing
53
OPINION AND ORDER denying 50 Motion for Attorney Fees. Signed by Judge James L. Graham on 2/6/24. (ds)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
:
Blue Fire Capital, LLC
:
: Case No. 2:20-cv-02982
Plaintiff,
:
v.
: Judge Graham
:
Pies & Pints Development
: Magistrate Judge Jolson
Partners, LLC, et al.,
:
:
Defendants.
:
OPINION & ORDER
This matter is before the Court upon Defendants’ motion for costs and attorney fees, filed
September 8, 2023. ECF No. 50. On October 19, 2021, this Court granted Defendants’ motion for
judgment on the pleadings and denied Plaintiff’s motion for the same. ECF No. 44. Plaintiff
appealed, and the Sixth Circuit affirmed the decision on July 13, 2023. Defendants now seek costs
and expenses, including attorney fees, arguing that they are contractually entitled to such an award
as the “prevailing parties” of the dispute. ECF No. 50. For the reasons that follow, Defendants’
motion is DENIED.
DISCUSSION
Defendants, Pies & Pints Development Partners, LLC (“PPDP”) and Robert Lindeman
(“Lindeman”), argue that Plaintiff, Blue Fire Capital, LLC (“Blue Fire”) must pay the costs and
expenses of litigation, including Defendants’ attorney fees. Defendants base their claim upon the
following clause (“Section 11.8”), which appears in identical form in multiple Operating
Agreements produced in this dispute:
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to its conflict
of laws principles. To the extent that any party to this Agreement
prevails against any other party hereto in connection with the
[1]
prevailing party’s enforcement of its rights under this Agreement,
the prevailing party shall be entitled to its costs and expenses
(including attorney fees) in connection with such dispute.
Pl.’s First Am. Compl., ECF No. 15-1 (emphasis supplied). The Operating Agreement of PPDP
(“PPDP OA”) (Id.), the Amended Operating Agreement of Pies and Pints Management Company
(“PPMC AOA”) (ECF No. 15-4), and the Third Amended Operating Agreement of PPMC
(“PPMC 3OA”) (ECF No. 15-9) all include this identical Section 11.8.
Plaintiff Blue Fire argues that neither Defendant PPDP nor Defendant Lindeman are parties
to the PPDP OA, and that Blue Fire is not a party to the PPMC AOA nor the PPMC 3OA. Pl.’s
Resp. Opp’n, ECF No. 51. Therefore, Plaintiff argues, the Defendants cannot enforce Section 11.8
against Blue Fire under any of the cited operating agreements. Defendants do not dispute which
individuals and/or entities are parties to the operating agreements but argue that “[e]ach [feeshifting] provision is unique and must be decided under the facts of that particular case.” Defs.’
Reply 3, ECF No. 52, citing TranSched Sys. Ltd. v. Versyss Transit Sols., LLC, No. CIV.A. 07C08-286WCC, 2012 WL 1415466, at *2 (Del. Super. Ct. Mar. 29, 2012).
The organizational chart on the following page, reproduced from this Court’s Opinion and
Order filed October 19, 2021 (ECF No. 44), illustrates the respective parties as to each operating
agreement: Plaintiff Blue Fire and R&M Advisors, LLC (“R&M”) are the parties to the PPDP OA,
while Defendant PPDP and KSDB, LLC (“KSDB”) are parties to the PPMC AOA and PPMC
3OA. This party alignment is supported by the respective signatures on each document. ECF No.
15-1; ECF No. 15-3; ECF No. 15-9.
[2]
PPMC
(Delaware LLC)
Managers: Lindeman
(2), Sloane, &
Shingledecker
PPDP
(Delaware LLC)
60%
Manager: Robert
Lindeman
R&M
(Ohio LLC)
50%
Blue Fire
(Kentucky LLC)
50%
Manager: Michael
Sloane
Robert Lindeman
100%
Nicole Sloane
100%
KSDB
(West Virginia LLC)
40%
Robert Lindeman
25%
Kimberly
Shingledecker
75%
Defendants describe the facts of this case as: “Plaintiff Blue Fire filed these proceedings
seeking to enforce, among other things, its claimed rights under the PPMC Operating
Agreements.” Defs. Reply 3 (emphasis supplied). But this does not tell the whole story. As noted
by the Defendants, Plaintiff sought to amend its complaint for a second time to add claims and
parties—notably, to assert derivative claims on behalf of Defendant PPDP, and to add R&M and
KSDB as additional defendants. R&M is the only other member, with Plaintiff, of Defendant
PPDP. KSDB is the only other member, with Defendant PPDP, of Pies & Pints Management
Company (“PPMC”). While Plaintiff’s motion for leave to amend was stayed, the Court granted
judgment on the pleadings in favor of Defendants.
[3]
On appeal, the Sixth Circuit noted, “it is clear that the Second Amended Complaint could
not have saved the allegations of the Amended Complaint.” Blue Fire Cap., LLC v. Pies & Pints
Dev. Partners, LLC, No. 21-4098, 2023 WL 4535563, at *11 (6th Cir. July 13, 2023). However,
Judge White, dissenting in part, observed: "Recharacterizing the… breach-of-fiduciary-duty
claims as derivative on behalf of PPDP would remedy a key weakness to those claims—that as
President of PPMC [Defendant] Lindeman owes fiduciary duties to PPDP as a member but does
not owe fiduciary duties directly to [Plaintiff] Blue Fire." Id. at *12, (White, J., dissenting.). The
majority opinion concluded that "the district court did not err by implicitly denying Blue Fire's
motion for leave to amend," because, "[a]t best, the Second Amended Complaint alleges distinct,
new allegations on behalf of the derivative plaintiff, PDPP." Id. at *12.
Though Plaintiff’s pleading deficiencies may have fundamentally undermined Plaintiff’s
purpose in bringing suit, an additional result of those deficiencies is that the Defendants in this
case have no contractual claim for costs and attorney fees against Plaintiff. None of the operating
agreements discussed by the parties establishes that this Plaintiff has a contractual obligation to
pay costs and attorney fees for these Defendants, because none of the operating agreements form
a contract between this Plaintiff and these Defendants. Defendants argue that the PPDP OA
identifies R&M and Rob Lindeman as “interchangeable” based on this clause: “R&M Advisors,
LLC (Rob Lindeman) shall be the “tax matters partner” of the Company for federal income tax
purposes. Defs. Reply, 3. Therefore, according to Defendants, “Plaintiff cannot escape its
obligations under [the PPDP OA] by now claiming R&M Advisors is not a party to this lawsuit.”
Id. The Court is not persuaded that the cited clause renders R&M and Defendant Lindeman
“synonymous for purposes of the [PPDP OA].” Id.
[4]
Had Plaintiff been granted leave to amend its Complaint for the second time, R&M would
have been added as a Defendant and Plaintiff would have raised a derivative claim on behalf of
PPDP. With those parties joined, Plaintiff would have “remed[ied] a key weakness” in its claims,
but on the other hand, Defendant R&M would have held a potential contractual right to costs and
attorney fees against Plaintiff Blue Fire, as would Defendant KSDB against Defendant PPDP (and,
in both cases, vice versa).
But those parties were not joined. As the Sixth Circuit observed from Defendants’ appellate
brief, “Notably, Lindeman and PPDP concede that,”
‘[T]he new claims against new entities and individuals who were
not (and never have been) parties to this lawsuit that Blue Fire
sought to include when it requested leave to file its proposed Second
Amended Complaint were not dismissed by the district court with
prejudice in this matter. Those claims have never been asserted,
have never been ruled upon, and could have been brought in a
separate action since the claims are based on different operative
facts and against individuals and entities who were not originally
made parties to this lawsuit.’
Blue Fire Cap., LLC, 2023 WL 4535563, 22 n.2 (citing Appellee Br. At 24-25).1 Simply put, the
specific identities of the parties, and the respective rights they hold, mattered then as now.
But see Defs.’ Reply, 2 (“Plaintiff suddenly wants to claim that the matter didn’t involve parties to operating
agreements that it expressly acknowledged were involved in these proceedings.”)
1
[5]
CONCLUSION
Because these Defendants cannot enforce Section 11.8 of any of the relevant operating
agreements against this Plaintiff, the Court has no basis upon which to grant Defendants’ motion.
Accordingly, Defendants motion (ECF No. 50) is DENIED.
IT IS SO ORDERED.
s/ James L. Graham
JAMES L. GRAHAM
United States District Judge
DATE: February 06, 2024
[6]
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