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Bellwether Enterprise Real Estate Capital v. Jaye

United States District Court, E.D. Louisiana

September 10, 2019

BELLWETHER ENTERPRISE REAL ESTATE CAPITAL
v.
CHRISTOPHER JAYE and KRISTI MORGAN

         SECTION “F”

          ORDER AND REASONS

          MARTIN L. C. FELDMAN UNITED STATES DISTRICT JUDGE

         Before the Court is the defendants' motion to dismiss the plaintiff's complaint on the ground of res judicata. For the reasons that follow, the motion is DENIED.

         Background

         This contract dispute arises from a project to rebuild a New Orleans East housing community ravaged by Hurricane Katrina and a loan secured to fund the project. Principally at issue is the interplay between res judicata (or claim preclusion) and crossclaims asserted under Federal Rule of Civil Procedure 13(g).

         Christopher Jaye and Kristi Morgan own Mirus New Orleans, LLC. Mirus is a real estate developer of the Village of Versailles, a multi-family housing complex in New Orleans East. Jaye and Morgan financed the project through a commercial mortgage loan from Bellwether Enterprise Real Estate Capital. As a condition of the loan, Jaye and Morgan entered into an Extension Fee Agreement, promising to pay Bellwether a monthly fee in the event the mortgage note evidencing the loan was not finally endorsed by August 31, 2018.

         Final endorsement did not follow; litigation did. In September 2018, the contractor on the project, Broadmoor, LLC, pointed to missed payments and sued Mirus, Bellwether, and others in this Court. But the suit soon settled. And in March 2019, the parties stipulated to a with-prejudice dismissal of the “action, ” excepting “CREA Corporate Tax Credit Fund 40, LLC's claim for attorneys' fees, costs and expenses against Mirus[.]” See Broadmoor, LLC v. Mirus New Orleans, LLC, No. 18-9064-MLCF-JVM, docket entry 30 (E.D. La. Mar. 25, 2019). No. crossclaims were filed.

         Two months later, Bellwether brought a separate suit against Jaye and Morgan in this Court, alleging breach-of-contract claims. Bellwether complains, in particular, that Jaye and Morgan failed to pay it the fees it is owed under the Extension Fee Agreement.

         Now, Jaye and Morgan move to dismiss under Rule 12(b)(6), contending that Bellwether's claims are barred by res judicata. They submit that Bellwether could and should have asserted the breach-of-contract claims as Rule 13(g) crossclaims in the prior suit. Bellwether counters that Jaye and Morgan's assertions clash with Rule 13(g) and would, if adopted, make all crossclaims compulsory.

         I.

         A party may move for dismissal of a complaint for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). Rule 12(b)(6) motions are rarely granted because they are viewed with disfavor. See Leal v. McHugh, 731 F.3d 405, 410 (5th Cir. 2013) (quoting Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011)).

         In considering a Rule 12(b)(6) motion, the Court “accept[s] all well-pleaded facts as true and view[s] all facts in the light most favorable to the plaintiff.” See Thompson v. City of Waco, Tex., 764 F.3d 500, 502 (5th Cir. 2014) (citing Doe ex rel. Magee v. Covington Cty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th Cir. 2012) (en banc)). But in deciding whether dismissal is warranted, the Court will not accept conclusory allegations as true. Thompson, 764 F.3d at 502-03 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         To overcome a Rule 12(b)(6) motion, “‘a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 678) (internal quotation marks omitted). “Factual allegations must be enough to raise a right to relief above the speculative level[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations and footnote omitted).

         “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.” Iqbal, 556 U.S. at 678. This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. “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.” Id. at 678 (internal quotations omitted) (citing Twombly, 550 U.S. at 557). Consequently, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to ...


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