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GBB Properties Two, LLC v. Stirling Properties, Inc.

Court of Appeals of Louisiana, Third Circuit

October 25, 2017

GBB PROPERTIES TWO, LLC, ET AL.
v.
STIRLING PROPERTIES, INC., ET AL. GBB PROPERTIES TWO, LLC, ET AL.
v.
STIRLING PROPERTIES, LLC, ET AL.

         APPLICATION FOR SUPERVISORY WRIT OF CERTIORARI AND ON APPEAL FROM THE FIFTEENTH JUDICIAL DISTRICT COURT PARISH OF LAFAYETTE, NO. C-20162400 HONORABLE EDWARD D. RUBIN, DISTRICT JUDGE

          Brent B. Barriere Fishman Haygood, L.L.P. COUNSEL FOR DEFENDANTS/APPELLEES: Stirling Properties, LLC Ambassador Town Center JV, LLC Four Magnolias, LLC Ambassador Infrastructure, LLC

          Rickey W. Miniex Clyde R. Simien Katrena A. Porter Simien & Miniex, APLC COUNSEL FOR DEFENDANTS/APPELLEES: Stirling Properties, LLC Ambassador Town Center JV, LLC Four Magnolias, LLC Ambassador Infrastructure, LLC Patrick S. McGoey Schonekas, Evans, McGoey & McEachin, LLC COUNSEL FOR PLAINTIFFS/APPELLANTS: GBB Properties Two, LLC DBR Properties, LLC

          Court composed of Sylvia R. Cooks, Shannon J. Gremillion, and Van H. Kyzar, Judges.

          SHANNON J. GREMILLION JUDGE

         Plaintiffs, GBB Properties Two, LLC and DBR Properties, LLC (GBB and DBR), appeal the trial court's judgment granting the defendant's, Stirling Properties, LLC, exception of no cause of action. For the following reasons, we reverse.

         FACTUAL AND PROCEDURAL BACKGROUND

         This case involves complex commercial developments relating to a mixed-use retail center known as "Ambassador Town Center" (Town Center) in Lafayette, Louisiana. The construction of the retail center involved extensive public infrastructure improvements relating to roads, sidewalks, streetlights, traffic signals, street modifications, drainage improvements, and public utilities. There are multiple parties to various contracts and a PILOT (payment in lieu of taxes) agreement.

         In May 2016, GBB and DBR filed suit against Stirling, CBL Associates Management, Inc., and Ambassador Infrastructure, LLC. It alleged breach of contract by Stirling and Ambassador Infrastructure "an entity created by Stirling and/or CBL, " including 1) negligent misrepresentation, 2) breach of fiduciary duty, 3) breach of contract due to substandard construction, 4) property damage, and 5) requested an accounting of the PILOT funds. Ambassador Infrastructure filed an answer and reconventional demand in June 2016. In July 2016, Stirling and CBL filed peremptory exceptions of no cause of action and a dilatory exception of vagueness arguing, essentially, that the PILOT agreement GBR and DBR entered into was with Ambassador Infrastructure, and "Plaintiffs have not alleged facts to suggest that [Ambassador] Infrastructure's corporate veil should be pierced." Attached to its pleading was the "PILOT REIMBURSEMENT AGREEMENT, " a ten-page document signed by representatives of Ambassador Infrastructure, L.L.C. and Ambassador Town Center JV, L.L.C. with subheadings for each as follows:

By: CBL Ambassador Member, LLC, a Louisiana limited liability company, its managing Member
By: CBL & Associates Limited Partnership, a Delaware limited partnership, its Chief Manager
By CBL Holdings I, Inc., a Delaware corporation, its sole general partner

         Both were signed by Farzana K. Mitchell, Executive Vice President and Chief Financial Officer.

         In August 2016, GBB and DBR filed a motion for leave to file an amended petition, which was granted. In their amended petition, they added as a defendant Four Magnolias, LLC, stating that it is "owned and/or controlled by Stirling and is located in and operated from Stirling's corporate office." It also added

         Ambassador Town Center JV, LLC stating that it is "owned and controlled by Stirling and its joint venture partner, CBL & Associates Property, Inc." GBB and DBR further stated that Town Center "is operated from Stirling's corporate office." Finally, GBB and DBR urged that Ambassador Infrastructure is owned and/or controlled by Stirling, that is has no existence separate from Stirling, and that together they "constitute a single business enterprise and/or Infrastructure is the alter ego or instrumentality of Stirling."

         The amended petition then went on to describe, in more than twenty pages, the nature of the relationship between Stirling and GBB/DBR and the agreements pertaining to the PILOT program. In essence, GBB and DBR claim that Stirling failed to construct the public utility improvements it agreed to in the original purchase agreement, instead using PILOT monies to fully develop its tract of land while neglecting the GBB/DBR land.

          The thirty-eight-page amended petition contained the following allegations:

COUNT I: Declaratory Judgment (Against Stirling and Infrastructure)
COUNT 2: Breach of Purchase Agreement and Guaranty (Against Four Magnolias, Town Center, and Stirling)
COUNT 3: Breach of Reimbursement Agreement (Against Stirling and Infrastructure)
COUNT 4: Intentional and/or negligent misrepresentation (Against Stirling)
COUNT 5: Conversion (Against Stirling and Infrastructure)
COUNT 6: Detrimental Reliance (Against Stirling and Infrastructure)
COUNT 7: Unjust Enrichment (Against Stirling and Town Center)

         GBB and DBR entered into a Purchase Agreement with Four Magnolias to sell at least forty-one acres of the master tract of land. Stirling executed a "Guaranty of Buyer's Performance, " guaranteeing the performance of the obligations "under the terms of the Purchase Agreement." Stirling further agreed to be "jointly and severally liable with Buyer" for all obligations of the Purchase Agreement. The development plans outlined that GBB and DBR would give Four Magnolias up to a $1.4 million infrastructure credit against the purchase price. Stirling then proposed to GBB and DBR that the infrastructure improvements could be accomplished through a PILOT program, to which GBB an DBR agreed.

         Regarding its claim that Stirling and Ambassador Infrastructure are a single business enterprise, GBB and DBR state in their first amended and supplemental verified petition:

166.
On information and belief, Infrastructure has no assets or existence separate and apart from Stirling and is wholly owned, controlled, funded and/or financed by Stirling. Infrastructure conducts no ...

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