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River House Partners, LLC v. Grandbridge Real Estate Capital LLC

United States District Court, M.D. Louisiana

August 30, 2017




         Before the Court is the Motion for Summary Judgment (Doc. 91) filed by Defendant Grandbridge Real Estate Capital LLC ("Grandbridge") against Plaintiff River House Partners, LLC ("River House"). Pursuant to Federal Rule of Civil Procedure 56, Grandbridge seeks an order dismissing the remaining claims against it for breach of fiduciary duty, breach of contract, and negligence.[1] Jurisdiction is proper under 28 U.S.C. § 1332(a)(1). For the reasons that follow, Grandbridge's motion is DENIED.

         I. BACKGROUND

         River House initiated this action over the alleged failure of Grandbridge to secure a loan insured by the Department of Housing and Urban Development ("HUD") for construction and permanent financing of a multi-family commercial and residential development in Baton Rouge. (Doc. 1-2 at p. 2). River House was founded in 2009 in order to acquire and develop a parcel of land in Baton Rouge into a mixed- use development. (Doc. 98-1 at ¶ 10). River House engaged Grandbridge to secure a HUD-insured loan. (Doc. 98-1 at ¶ 11). According to River House, a May 2009 written lending application agreement ("the Agreement") bound Grandbridge to work on River House's behalf to secure the loan. (Doc. 1-2 at p. 2). In January 2010, Grandbridge submitted a pre-application package to HUD. (Doc. 98-1 at ¶ 24). In 2012, HUD issued a Conditional Commitment for mortgage insurance for the River House project. (Doc. 98-1 at ¶ 34). River House Accepted the HUD Conditional Commitment in November of 2012. (Doc. 98-1 at ¶38). After a number of extensions to close the transaction were granted, HUD issued its final extension that ran through December 11, 2013. (Doc. 112-2 at ¶¶ 45, 52). On February 27, 2014, HUD sent a letter to Grandbridge terminating the Conditional Commitment. (Doc. 98-1 at 56).

         River House argues that Grandbridge lost a firm commitment made by HUD to insure a loan for the development due to its submission of inaccurate and untimely materials, and its repeated failure to act. (Doc. 112 at pp. 2-3) As a result, River House asserts that it had to secure a conventional loan for the project on terms significantly less favorable than the HUD-guaranteed loan. (Doc. 1-2 at p. 2). It also alleges that it suffered construction delays and increased costs. (Doc. 1-2 at p. 2).

         River House initially filed suit in the Nineteenth Judicial District Court for the Parish of East Baton Rouge. (Doc. 1-2 at p. 2). That action was removed to this Court. (Doc. 1 at p. 1). It asserted claims for breach of contract, bad faith breach of contract, negligence, breach of fiduciary duty, and specific performance. (Doc. 1-2 at pp. 9-11). This Court granted in part and denied in part a motion to dismiss (Doc. 10), dismissing the bad faith breach of contract and specific performance claims. (Doc. 27). Defendants filed this Motion for Summary Judgment (Doc. 91) seeking dismissal of the remaining claims.


         Pursuant to the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). In determining whether the movant is entitled to summary judgment, the court views the facts in the light most favorable to the non-raovant and draws all reasonable inferences in the non-movant's favor. Coleman v. Hous. Indep. Sch. Dist., 113 F.3d 528, 533 (5th Cir. 1997).

         After a motion for summary judgment is filed, the non-movant "must set forth specific facts showing there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (internal citations omitted). "A genuine issue of material fact exists when the evidence is such that a reasonable jury could return a verdict for the non-moving party." Austin v. Kroger Texas, L.P., 846 F.3d 326, 328 (5th Cir. 2017) (quoting Gates v. Tex. Dep't of Protective & Regulatory Servs., 537 F.3d 404, 417 (5th Cir. 2008)). At this stage, however, the court does not evaluate the credibility of witnesses, weigh the evidence, or resolve factual disputes. Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263 (5th Cir. 1991).

         On the other hand, the non-movant's burden is not satisfied by some metaphysical doubt as to the material facts, or by conclusory allegations, unsubstantiated assertions, or a mere scintilla of evidence. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (internal quotations omitted). Summary judgment is appropriate if the non-movant "fails to make a showing sufficient to establish the existence of an element essential to that party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). In other words, summary judgment will lie only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." Sherman u. Hallbauer, 455 F.2d 1236, 1241 (5th Cir. 1972).


         A. Breach of Fiduciary Duty

         The elements for breach of fiduciary duty in Louisiana are "proof of fraud, breach of trust, or an action outside the limits of the fiduciary's authority, " Gerdes v, Estate of Cush, 958 F.2d 201, 205 (5th Cir. 1992), In order "for a fiduciary duty to exist, there must be a fiduciary relationship between the parties." Scheffler v. Adams & Reese, LLP, 2006-1774 (La. 2/22/07); 950 So.2d 641, 647.

         The core dispute in the motion sub judice is whether a fiduciary relationship existed. Grandbridge argues that summary judgment is appropriate on the fiduciary duty claim because the Louisiana Credit Agreement Statute ("LCAS") bars River House's claims. (Doc. 98 at pp. 10-11). Alternatively, Grandbridge insists that notwithstanding the LCAS, there is no evidence that River House authorized Grandbridge to act as its agent, and therefore, no fiduciary duty was created. (Doc. 98 at pp. 13-14). River House counters that the statute does not apply to Grandbridge because it does not fit the definition of a "financial institution" under the LCAS. (Doc. 112 at pp. 12-13). River House also insists that regardless of the LCAS's applicability, the Agreement was a written agency contract. (Doc. 112 at pp. 14-15).

         As an initial matter, this court determines that the LCAS does not apply to River House's breach of fiduciary duty claim. The LCAS states, in the pertinent part:

No financial institution or officer or employee thereof shall be deemed or implied to be acting as a fiduciary, or have a fiduciary obligation or responsibility to its customers or to third parties . . . unless there is a written agency or trust agreement under which the financial institution ...

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