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Global Funding Group, LLC v. 133 Community Road, Ltd.

United States District Court, E.D. New York

May 10, 2017

GLOBAL FUNDING GROUP, LLC, Plaintiff,
v.
133 COMMUNITY ROAD, LTD., AMERICAN REAL ESTATE INVESTMENTS, LLC, ARETE REAL ESTATE & DEVELOPMENT CO., CASA CAPITAL GROUP, CASA CAPITAL GROUP DEVELOPMENTS, DAN DODSON, LACHLAN McPHERSON, and JAMES WINE, Defendants.

          PALMIERI, CASTIGLIONE, NIGHTINGALE PC Attorneys for Plaintiff By: Vito A. Palmieri, Esq.

          GANA LLP Attorneys for Defendants By: Adam J. Weinstein, Esq. Adam Julien Gana, Esq.

          MEMORANDUM AND ORDER

          Denis R. Hurley Unites States District Judge.

         Plaintiff Global Funding Group, LLC (“plaintiff”) commenced this action against 133 Community Road, Ltd., American Real Estate Investments, LLC, Arete Real Estate & Development Co., Casa Capital Group, Casa Capital Group Developments, Dan Dodson, Lachlan McPherson, and James Wine (collectively, “defendants”) in Nassau County Supreme Court asserting claims of breach of contract, account stated, and unjust enrichment. On November 17, 2015, defendants removed the action to the United States District Court for the 15 CV 6595 (DRH) (AKT) Eastern District of New York. In an order dated April 19, 2016 (“the April Order”), the Court granted defendants' motion to dismiss the plaintiff's claims pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) and granted plaintiff leave to replead. On May 17, 2016, plaintiff filed an Amended Complaint asserting claims of breach of contract, fraud, unjust enrichment, quantum meruit, and account stated. Presently before the Court, is defendants' motion to dismiss the Amended Complaint. For the reasons set forth below, that motion is granted in part and denied in part.

         BACKGROUND

         On or about January 26, 2015, the plaintiff and defendants entered into an agreement (the “agreement”) for financial services whereby plaintiff as “Broker” and defendants as “Borrowers” agreed that plaintiff would obtain a mortgage loan commitment and/or an equity partner for the defendants in connection with a planned construction project. (Amend. Compl. ¶ 21.)

         Paragraph three of the agreement provided that defendants were to pay the plaintiff for its services in the amount of “TEN (10%) Percent of the Gross Funds Secured via the loan and the [joint venture (“JV”)] equity.” (Amend. Compl., Ex. A (“the agreement”) ¶ 3.) Pursuant to paragraph 4, this fee was to be due “at such time as Broker secures and provides Borrower with a Loan Commitment from a Lender or Bank and or a JV Partnership Agreement or any combination of the two which in the aggregate are accepted by Borrower.” (Id. ¶ 4.) Together, these terms comprise the agreement's “Compensation” provisions.

         Additionally, the agreement stated that “Borrowers acknowledge and agree that they will be in ‘Breach' of this agreement in the event that Borrowers fail to cooperate with Broker in the facilitation of or fail to furnish necessary documents requested by Broker or otherwise deliberately, directly, or, indirectly, hinder or inhibit the loan process of said loan, irrevocably harming and depriving Broker a chance to earn such fee for his services during the term of this agreement” (the “Borrowers' Breach” provision). (Id. ¶ 7.) The Borrowers' Breach provision also provided that “Borrowers shall be subject to payment of Brokers Fee as outlined in paragraph 3 above upon any Breach OF ANY OF THE TERMS OF THIS AGREEMENT . . . .” (Id.)

         Further, the “Non Circumvent-Non-Disclosure-Non-Consent” clause provided as follows: “Borrowers acknowledge and agree that they shall not contact or solicit directly or indirectly any or all Lenders, Banks, Investors, Brokers and or Joint Venture Capitalist introduced by or discovered through Broker. Borrower also agrees not to Circumvent Broker or any of its affiliates in anyway [sic] shape or form, (With-Out the Expressed Written Permission, of Broker)” (the “Non-circumvent” provision). (Id. ¶ 8.)

         In January of 2015, plaintiff obtained a document entitled “Letter of Interest” (Complaint, Ex. B (“LOI”)) from High Rises, LLC (“High Rises” or “HR”). The LOI stated that High Rises “is interested in providing JV funding for [defendants'] project” and proposes funding in the amount of $12, 000, 000 upon “general terms and conditions, as may be required and determined by HR.” (LOI at 1.) It also stated that “IN NO WAY SHOULD THIS BE CONSIDERED A ‘FIRM' FUNDING COMMITMENT” (Id.) The LOI was signed by HR and defendant American Real Estate Investment, LLC.

         In its original complaint, plaintiff alleged that, inter alia, defendants breached the Compensation provisions of the agreement because based on the LOI, it was entitled to the 10% fee. The Court, however, dismissed plaintiff's claim finding that the LOI was not a “Loan Commitment from a Lender or Bank and or a JV Partnership Agreement” such that defendants were required to pay the fee.

         In the Amended Complaint, plaintiff claims that defendants breached the Borrowers' Breach and Non-circumvent clauses of the agreement. It claims that the purpose of these clauses “was to forestall the practice, common in the real estate industry, of Defendants taking advantage of the Plaintiff's efforts and diligence by obtaining a funding commitment through the Plaintiff and then ‘shopping' the commitment to other lenders to obtain better terms.” (Amend. Compl. ¶ 23.) Specifically, with respect to the Borrowers' Breach provision, plaintiff claims that defendants breached the agreement in that they “failed to cooperate with the Plaintiff and/or High Rises, LLC in arranging the financing specified” in the LOI. (Id. ¶ 32.) It alleges that “despite the fact that Plaintiff timely secured a [LOI] from High Rises, LLC and timely resolved all of Defendants' concerns with respect thereto, the Defendants did not provide the documentation requested and required by High Rises, LLC.” (Id. ¶ 29.) It also alleges that defendants stopped returning plaintiff's phone calls and emails. Moreover, it alleges that defendants breached the Non-circumvent provision because they “took the [LOI] and ‘shopped it to other lenders in order to obtain better terms.” (Id. ¶ 33.)

         DISCUSSION

         I. ...


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