Marshall Square LLC v. Bette et al
ORDER denying 21 Defendants Mark Bette, Ron Rollins, Mary Ellen Cusano, and Martex, LLC's Motion to Dismiss and ordering Plaintiff to amend its Complaint in relation to its violation of the lien statute claim to state the exact number and amount of allegedly lienable claims within 10 days of the date of this Order (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 2/12/2018. (ks)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
MARSHALL SQUARE, LLC,
An Oklahoma Limited Liability Company,
MARK BETTE, an individual,
RON ROLLINS, an individual,
MARY ELLEN CUSANO, an individual, and )
a New York Limited Liability Company,
Case No. CIV-17-425-M
Before the Court is Defendants Mark Bette, an individual, Ron Rollins, an
individual, Mary Ellen Cusano, an individual, and Martex, LLC, a New York
Limited Liability Company’s (“Defendants”) Motion to Dismiss (“Motion”) filed on
June 19, 2017. Plaintiff Marshall Square, LLC, an Oklahoma Limited Liability
Company (“Plaintiff”) filed a response (“Response”) on July 10, 2017. Defendants
filed a reply on July 17, 2017. Based on the parties’ submissions, the Court makes
Plaintiff constructed an apartment complex (“Property”) using a general
contractor, BBL Builders, L.P. (“BBL”), a New York based limited partnership
which filed for bankruptcy protection in October 2016. Plaintiff alleges it relied on
Defendants and their agents to make sure the construction trust funds were handled
properly. By the time BBL went into bankruptcy, $2,111,038.66 in unpaid invoices
were owed to vendors/subcontractors for work done on the Property and many have
asserted liens against the Property. Plaintiff alleges Defendants were partners and
officers of BBL and Defendants Mark Bette and Mary Cusano had signing power.
Plaintiff further alleges Defendant Martex was the managing member of BBL.
Plaintiff asserts Defendants violated the lien trust statute, Okla. Stat. tit. 42, § 152
and committed fraud and constructive fraud.
Standard for Dismissal
Regarding the standard for determining whether to dismiss a claim pursuant
to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which
relief may be granted, the United States Supreme Court has held:
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. 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. 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. 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.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations
omitted). Further, “where the well-pleaded facts do not permit the court to infer
more than the mere possibility of misconduct, the complaint has alleged - but it has
not shown - that the pleader is entitled to relief.” Id. at 679 (internal quotations and
citations omitted). Additionally, “[a] pleading that offers labels and conclusions or
a formulaic recitation of the elements of a cause of action will not do. Nor does a
complaint suffice if it tenders naked assertion[s] devoid of further factual
enhancement.” Id. at 678 (internal quotations and citations omitted). A court “must
determine whether the complaint sufficiently alleges facts supporting all the
elements necessary to establish an entitlement to relief under the legal theory
proposed.” Lane v. Simon, 495 F.3d 1182, 1186 (10th Cir. 2007) (internal quotations
and citation omitted). Finally, “[a] court reviewing the sufficiency of a complaint
presumes all of plaintiff’s factual allegations are true and construes them in the light
most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir.
Claim under Okla. Stat. tit. 42, § 152
The Oklahoma lien trust statute states in pertinent part:
The amount payable under any building or
Remodeling contract shall upon receipt by
any contractor or subcon-tractor,be held as
trust funds for the payment of all lienable
claims due and owing or to become due and
owing by such contractors or subcontractors
by reason of such building or remodeling contract.
Okla. Stat. tit. 42, § 152. Defendants assert to state a valid claim under section 152,
plaintiff must plead the nonpayment of a “valid lienable claim.” Defendants further
contend the “valid lienable claim” must be perfected within the 90-day statutory
period and the lien must be directly attributable to the defendant’s non-payment
under a building or remodeling contract.
Oklahoma law states
That the statutory duty imposed on a general contractor to hold funds
in trust for the payment of subcontractors creates a fiduciary
relationship between the owner and the contractor. It is also well settled
that the owner of real property who places trust funds with a general
contractor pursuant to the Oklahoma construction trust fund statutues
is a beneficiary of the statutory construction lien scheme to the extent
of any valid lienable claims arising from the contract between owner
and the general contractor. A subcontractor’s valid lienable claim arises
upon commencement of work or the furnishing of materials pursuant to
a subcontract. From that point onward, this lienable claim remains
“inchoate” throughout the construction period and for ninety days
following the last furnishing of materials or performance of labor on
the subcontract. If the subcontractor takes no action to enforce the lien,
or if the lien is not perfected according to the statutory procedures, then
the lienable claim loses all its vitality and force.
Murphy Oil USA, Inc. v. Wood, 438 F. 3d 1008, 1017-18 (10th Cir. 2006)(internal
quotes and citations omitted).
Defendants request plaintiff be required to amend its pleading to state the exact
number and amount of allegedly lienable claims. The Court orders plaintiff to amend
its complaint on this claim to state the exact number and amount of allegedly lienable
Fraud/Constructive Fraud Claim
Federal Rule of Civil Procedure 9(b) governs pleadings of special matters
including fraud claims. Rule 9(b) requires a plaintiff to “state with particularity the
circumstances constituting fraud . . .” Fed. R. Civ. P. 9(b). The Tenth Circuit has
found that Rule 9(b) requires a plaintiff to plead “the who, what, when, where and
how of the alleged [claim]” or, in other words, “to identify the time, place, content,
and consequences of the fraudulent conduct.” United States ex rel. Lemmon v.
Envirocare of Utah, Inc., 614 F.3d 1163, 1171 (10th Cir. 2010)(internal citations and
Having carefully reviewed plaintiff’s First Amended Complaint, the Court
finds that plaintiff has set forth sufficient facts to state a claim for fraud/constructive
fraud. Specifically, the Court finds that Plaintiff has pled the who, what, when,
where, and how of its fraud claim. Plaintiff specifically alleges Defendants were
officers of BBL, the builder of its property, and responsible for paying the
Plaintiff has requested an opportunity to amend rather than dismiss this claim. Response at p. 12.
subcontractors. Plaintiff alleges all draw requests verified by and through Defendant
Martex contained language stating the contractor certified all amounts had been paid
for work “for which previous Certificates of Payments were issued.” See First
Amended Complaint at para. 29. Plaintiff further alleges it relied to its detriment on
the false representation and continued to advance additional payments to BBL while
believing funds previously advanced had been paid to vendors and subcontractors
for work performed on the property. The Court, therefore, finds that Plaintiff’s
fraud/constructive fraud claim should not be dismissed.
Accordingly, the Court
DENIES the Motion to Dismiss [Docket no. 21]; and
ORDERS Plaintiff to AMEND its Complaint in relation to its violation
of the lien statute claim to state the exact number and amount of
allegedly lienable claims within 10 days of the date of this Order.
IT IS SO ORDERED this 12th day of February, 2018.
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