Granite Southlands Town Center v. Alberta Town Center, LLC , 445 F. App'x 72 ( 2011 )


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  •                                                                         FILED
    United States Court of Appeals
    Tenth Circuit
    October 19, 2011
    UNITED STATES COURT OF APPEALSElisabeth A. Shumaker
    Clerk of Court
    FOR THE TENTH CIRCUIT
    GRANITE SOUTHLANDS TOWN
    CENTER, LLC,
    Plaintiff-Appellant,
    v.                                                  No. 10-1453
    (D.C. No. 1:09-CV-00799-ZLW-KLM)
    DONALD G. PROVOST; PETER M.                          (D. Colo.)
    CUDLIP,
    Defendants-Appellees,
    and
    ALBERTA TOWN CENTER, LLC;
    LAND TITLE GUARANTEE
    COMPANY; ALLAN G. PROVOST,
    Defendants.
    ORDER AND JUDGMENT *
    Before MURPHY, ANDERSON, and HARTZ, Circuit Judges.
    *
    After examining the briefs and appellate record, this panel has determined
    unanimously that oral argument would not materially assist the determination of
    this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
    therefore ordered submitted without oral argument. This order and judgment is
    not binding precedent, except under the doctrines of law of the case, res judicata,
    and collateral estoppel. It may be cited, however, for its persuasive value
    consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
    Plaintiff Granite Southlands Town Center, LLC (Granite) appeals the
    district court’s order dismissing with prejudice under Fed. R. Civ. P. 12(b)(6) its
    fraud claim against defendants Peter M. Cudlip and Donald G. Provost (the
    Principals), who were principals of codefendant Alberta Town Center, LLC
    (Alberta). The court certified the order as final under Fed. R. Civ. P. 54(b). 1 We
    have jurisdiction under 28 U.S.C. § 1291 and reverse.
    I.
    Because we are reviewing a dismissal for failure to state a claim, we accept
    as true the well-pleaded factual allegations of Granite’s first amended complaint.
    Ashcroft v. Iqbal, – U.S. –, 
    129 S. Ct. 1937
    , 1949 (2009). We also consider the
    documents referenced in that complaint because no question has been raised as to
    their authenticity. See Jacobsen v. Deseret Book Co., 
    287 F.3d 936
    , 941
    (10th Cir. 2002) (“the district court may consider documents referred to in the
    1
    Granite also appeals the district court’s order that denied its motion for
    reconsideration and for leave to file a second amended complaint. Because we
    reverse the dismissal of the complaint, we need not address the denial of the
    motion for reconsideration. As for the denial of the motion to amend, ordinarily
    we would affirm the denial because postjudgment motions to amend are
    disfavored. See generally Tool Box, Inc. v. Ogden City Corp., 
    419 F.3d 1084
    ,
    1087 (10th Cir. 2005) (recognizing that when a plaintiff seeks to amend after
    judgment has entered, the liberal test of Fed. R. Civ. P. 15(a) no longer applies).
    But because we are reversing the order dismissing the Principals, the factors
    relevant to granting or denying the motion have been substantially altered, and the
    district court should reconsider the motion on remand. See Cannon v. City and
    County of Denver, 
    998 F.2d 867
    , 879 (10th Cir. 1993) (denial of motion to amend
    pleadings after final judgment had been entered was not abuse of discretion, but
    in light of reversal of summary judgment, motion to amend could be raised on
    remand.)
    -2-
    complaint if the documents are central to the plaintiff’s claim and the parties do
    not dispute the documents’ authenticity”).
    In 2005, Granite and Alberta entered into a purchase-and-sale agreement
    for what is known as the Southlands Town Center (Town Center), a commercial
    property in Aurora, Colorado, which consists of retail stores, restaurants, a movie
    theater, and office space. Alberta, which owned the real estate, was responsible
    for the development of the Town Center, and Granite agreed to purchase it, upon
    satisfaction of certain conditions, when it was built. The purchase-and-sale
    agreement enabled Alberta to obtain a $160 million construction loan, personally
    guaranteed by the Principals. 2
    Among the preconditions in the purchase-and-sale agreement was the
    requirement that Alberta deliver satisfactory tenant estoppel certificates in which
    tenants certified that there were no issues or disputes with the landlord. Several
    months before the closing on December 12, 2008, the Principals became aware of
    serious construction defects in the Town Center. Several tenants, including the
    Town Center’s largest tenant (the movie theater), began making oral and written
    complaints about problems with the foundations (as revealed in cracked walls and
    floors) and demanded that the defects be corrected. In November 2008, Alberta
    sought a proposal from an engineering firm to investigate the defects, and just a
    2
    Allan G. Provost was also a principal of Alberta. According to Granite, he
    died during the course of these proceedings, and Granite is not pursuing its claims
    against him.
    -3-
    few days before the December closing, Alberta’s lawyers wrote the cinema’s
    lawyers regarding the on-going problems.
    Granite did not learn of the structural problems until after the closing, not
    only because the Principals never told them, but also because the Principals
    actively concealed the defects by submitting, shortly before the closing, estoppel
    certificates from May 2008 (before the defects became evident) and making
    cosmetic repairs to the property when Granite was scheduled to visit.
    On December 8, 2008, four days before the closing, the parties executed the
    “Fifteenth Amendment to Amendment and Agreement and Termination
    Agreement” (Fifteenth Amendment), Aplt. App. Vol. 1 at 205, that served as the
    framework for the closing and resolved some outstanding issues. Among the
    provisions of the Fifteenth Amendment was Granite’s agreement to allow Alberta
    to deliver updated tenant estoppel certificates after the closing. The Amendment
    also required the parties to execute before closing a release (the Release), which,
    among other things, released Granite from any joint-venture agreement with
    Alberta or the Principals. As consideration for the Release, Granite paid Alberta
    an additional $2.15 million (the excess payment) at the closing. And as an
    incentive for Alberta to deliver the estoppel certificates, the parties agreed that
    $650,000 of the excess payment was to be held in escrow until Alberta complied
    with its obligation. If Alberta provided the new certificates by March 1, 2009, the
    -4-
    escrow agent was to release the funds to Alberta; if not, the funds were to be paid
    to Granite.
    Based on the above alleged facts, Granite asserted a fraud claim against the
    Principals for fraudulently inducing Granite to pay $2.15 million for Alberta and
    related parties to release their joint-venture claims. In December 2009 the district
    court granted the Principals’ motion to dismiss under Fed. R. Civ. P. 12(b)(6)
    because Granite “fail[ed] to plausibly plead that its execution of the Release . . .
    has caused it any damage.” Aplt. App. Vol. 1 at 163-64. 3
    In a pleading entitled “Plaintiff’s Motion For Reconsideration And For
    Leave To Amend Complaint,” 
    id. at 166,
    Granite asked the district court to vacate
    its order or to allow Granite to file a second amended complaint. Granite argued
    not only that new evidence uncovered in discovery had established the plausibility
    of its claim, but also that an amendment was necessary to allow it to plead an
    additional fraud claim. The court denied the motion. Several months later the
    court, at the request of the Principals, certified its December 2009 dismissal of
    Granite’s fraud claim as a final judgment under Rule 54(b).
    II.
    We review de novo an order dismissing a complaint under Rule 12(b)(6) for
    failure to state a claim. See Gee v. Pacheco, 
    627 F.3d 1178
    , 1183 (10th Cir.
    3
    The Principals also moved to dismiss on the ground that the first amended
    complaint failed to plead fraud with the particularity required by Fed. R. Civ. P.
    9(b). The court did not address the particularity issue.
    -5-
    2010). “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.” 
    Iqbal, 129 S. Ct. at 1949
    (internal quotation marks omitted). For a claim
    to have facial plausibility, “the plaintiff [must] plead[] factual content that allows
    the court to draw the reasonable inference that the defendant is liable for the
    misconduct alleged.” 
    Id. “Determining whether
    a complaint states a plausible
    claim for relief [is] a context-specific task that requires the reviewing court to
    draw on its judicial experience and common sense.” 
    Id. at 1950.
    Under Iqbal’s plausibility standard, Granite was required to plead facts that
    created a reasonable inference of a claim of fraudulent inducement under
    Colorado law. See Haberman v. Hartford Ins. Grp., 
    443 F.3d 1257
    , 1264
    (10th Cir. 2006) (“In diversity cases, the substantive law of the forum state
    governs the analysis of the underlying claims.”). The elements of fraudulent
    inducement are: (1) the defendant made a fraudulent misrepresentation of fact or
    knowingly failed to disclose a fact that defendant had a duty to disclose;
    (2) the fact was material; (3) the plaintiff relied on the misrepresentation or
    failure to disclose; (4) the plaintiff’s reliance was justified; and (5) the reliance
    resulted in damage to the plaintiff. See M.D.C./Wood, Inc. v. Mortimer, 
    866 P.2d 1380
    , 1382 (Colo. 1994) (misrepresentation); Nielson v. Scott, 
    53 P.3d 777
    , 779
    (Colo. App. 2002) (nondisclosure or concealment).
    -6-
    Granite’s claim is straightforward: It paid an additional $2.15 million for
    the Town Center to obtain a release of any claim by Alberta or related parties that
    they were in a joint venture with Granite, and it would not have done so if the
    Principals had not concealed the construction defects. The Principals’ challenges
    to this theory are, at least at the pleading stage of the litigation, flawed.
    First, the Principals contend that “Granite paid $2,150,000 as part of the
    purchase price [for the Town Center] – not as consideration for the Release [of
    the joint venture claims].” Aplee. Br. at 15. They point to the Fifteenth
    Amendment, which states: “[Granite] agrees to pay, and [Alberta] agrees to
    accept, as consideration for the conveyance of the [Town Center] to [Granite],
    [$2.15 million] plus [the closing price].” Aplt. App. Vol. 1 at 207. Thus, the
    document characterizes the $2.15 million as part of the price of the property, not
    as a specific payment for the Release. But that characterization does not
    contradict Granite’s claim. Execution of the joint-venture release was one of the
    requirements of the Fifteenth Amendment. There can be no doubt that a benefit
    obtained by Granite in return for paying an additional $2.15 million for the
    property was that ownership of the Town Center would now be free and clear of
    joint-venture claims by Alberta and related parties. Granite is entitled to try to
    prove (at trial or in response to a summary-judgment motion) that it would not
    have paid that additional sum if its interest in the Town Center would have been
    burdened by joint-venture claims. Even if the joint-venture release was worth
    -7-
    less than $2.15 million to Granite, it may be entitled to part of the sum. Granite’s
    claim would not fail just because it cannot establish its full alleged damages.
    The Principals also argue that “Granite’s alleged reliance was implausible
    because the [Fifteenth Amendment] made the [Town Center’s] condition
    immaterial.” Aplee. Br. at 17. They rely on the language in the purchase-and-
    sale agreement that “the [Town Center] is being sold to [Granite] on the Closing
    Date in its then ‘AS IS, WHERE IS’ condition, with all faults.” Aplt. App.
    Vol. 2 at 488. But even if Granite would have had to pay the $160 million
    closing price for the Town Center regardless of construction defects (an issue we
    need not resolve), it may well have refused to pay an additional $2.15 million if it
    had known of the defects.
    In district court the Principals also argued that Alberta had no duty to
    disclose construction defects to Granite and that they could not be personally
    liable even if Alberta violated a disclosure duty. But those arguments have not
    been pursued on appeal, and we do not address them.
    The order of the district court is REVERSED, and the case is REMANDED
    for further proceedings consistent with this order and judgment.
    Entered for the Court
    Harris L Hartz
    Circuit Judge
    -8-