AHG Tax Credit Fund XVIII, LLC v. Blitchton Station, Ltd. ( 2016 )

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
FIFTH DISTRICT
NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
DISPOSITION THEREOF IF FILED
AHG TAX CREDIT FUND XVIII, LLC,
ET AL.,
Appellants,
v. Case No. 5D15-3163
BLITCHTON STATION, LTD., ET AL.,
Appellees.
________________________________/
Opinion filed March 24, 2016
Non-Final Appeal from the Circuit Court
for Marion County,
Lisa D. Herndon, Judge.
Stacy D. Blank, Jason H. Baruch and
Patrick M. Chidnese, of Holland & Knight,
Tampa, for Appellants.
Ian C. White and Anthony L. Bajoczky, Jr.,
of Ausley McMullen, Tallahassee, for
Appellees.
COHEN, J.
AHG Tax Credit Fund XVIII, LLC, et al., appeal the trial court’s nonfinal order
denying their motion to transfer venue under section 47.122, Florida Statutes (2015).
Appellants argue that their motion to transfer should have been granted to consolidate
this suit with ongoing litigation in Alachua County. Finding no abuse of discretion in the
trial court’s decision to deny the motion, we affirm.
This dispute arose from the failure of several partnerships formed to develop and
manage low-income housing in Marion County, Florida. Appellants are the limited
investor partners, the (“Investor Partners”), who moved to transfer to Alachua County.
Appellees are the various partnerships themselves, the (“Partnerships”), which sued
Appellants in Marion County for breach of the partnership agreements. The partnership
agreements required the managing partner and the developer to construct and manage
the day-to-day operations of the housing developments. These agreements also
required the Investor Partners to make capital contributions to the Partnerships as the
managing partners and developers met certain performance criteria. A portion of these
capital contributions was to go toward paying the developer fees.1
The Alachua County litigation, which the Investor Partners seek to join, is based
on an alleged violation of a loan agreement for these projects executed by the
developer, John Curtis, now deceased, and Wachovia Bank, N.A., now Wells Fargo, to
finance the development of the housing projects. Curtis pledged the developer fees he
would receive from the Partnerships as collateral for the loan. Curtis also executed a
reimbursement agreement with the Partnerships authorizing them to pay Curtis’s
developer fees directly to Wells Fargo, subject to the terms of the partnership
agreements.
1
In their complaint, the Partnerships allege that the Investor Partners failed to
make the required capital contributions as they became due under the partnership
agreements. They also seek a declaratory judgment as to whether the Investor Partners
are entitled to reduce any required capital contributions by the amount owed to Wells
Fargo, N.A. (“Wells Fargo”), the bank funding the project, for the developer fees.
2
In May 2013, Wells Fargo sued Curtis, his wife, the Partnerships, TKG
Development, LLC, and TKG Properties, LLC,2 in Marion County alleging breach of the
loan agreement by Curtis. Wells Fargo also sought a declaratory judgment that, among
other things, it had a senior security interest in Curtis’s developer fees and that the
Investor Partners should pay the developer fees to Wells Fargo directly. That action was
transferred from Marion County to Alachua County, on agreement between the
defendants and Wells Fargo, where it remains pending.3
The issue in this appeal is whether these two actions, based on separate
agreements and involving different parties, should be consolidated to avoid possibly
inconsistent verdicts and conserve judicial resources. Section 47.122 allows a trial court
to transfer a civil action to any venue where the action might have originally been
brought “[f]or the convenience of the parties or witnesses or in the interest of justice.”
Where, as here, venue is proper in more than one county, a plaintiff’s choice of venue
will not be set aside without a showing of substantial inconvenience to the parties or
2
TKG Development, LLC, was the co-developer for three of the Partnerships
while TKG Properties was a general partner in one of the Partnerships. Curtis’s wife
was also on the loan as a guarantor.
3
The Investor Partners argue that the Partnerships should be estopped from
opposing transfer of this action to Alachua County since they moved to transfer the first
action to Alachua County. Yet when the Partnerships sought transfer in the Alachua
County litigation, they argued that Alachua County was the only proper venue for that
action under sections 47.061 and 47.011, Florida Statutes (2015), because the claim
was based on a promissory note signed in Alachua County, and the defendants all
resided or had their principal places of business in Alachua County. The Partnerships’
argument at that time was based on propriety of the venue rather than convenience, so
there is nothing inconsistent in arguing, in this action, that venue is convenient in Marion
County when it is statutorily proper. Moreover, the parties are not the same and the
issues are distinct—mutuality of parties and issues are prerequisites for estoppel. See
Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1066 (Fla. 2001) (quoting Chase &
Co. v. Little, 156 So. 609, 610 (Fla. 1934)).
3
witnesses, or that justice requires transfer. Resor v. Welling, 44 So. 3d 656, 657 (Fla.
5th DCA 2010). The party seeking transfer carries the burden of establishing that the
transfer is required. See Hall v. Animals.com, LLC, 171 So. 3d 216, 218 (Fla. 5th DCA
2015) (quoting Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Nat’l Bank of Melbourne &
Trust Co., 238 So. 2d 665, 667 (Fla. 4th DCA 1970)). When venue is statutorily proper
in both counties, we review the trial court’s decision to grant or deny a transfer for an
abuse of discretion. McDaniel Reserve Realty Holdings, LLC v. B.S.E. Consultants, Inc.,
39 So. 3d 504, 508 (Fla. 4th DCA 2010) (citing PricewaterhouseCoopers, LLP v. Cedar
Res., Inc., 761 So. 2d 1131, 1133 (Fla. 2d DCA 1999)).
The Investor Partners argue that this cause should be transferred to Alachua
County in the interest of justice. They point out that the plaintiffs in both actions seek
declarations as to whether the developer fees are to be paid to the Partnerships or
directly to Wells Fargo. They also reference a reimbursement agreement between the
Partnerships and Curtis whereby the Partnerships pledged to earmark the capital
contributions from the Investor Partners to pay Curtis’s developer fees directly to Wells
Fargo. The Investor Partners conclude from this evidence that their obligations to pay
fees—to whom and in what amount—will be a substantial issue in both cases, leading,
at a minimum, to a waste of judicial resources and, potentially, to inconsistent verdicts.
We do not find this argument convincing. First, the Investor Partners’ argument
ignores the gravamen of the two actions. The Alachua County litigation focuses on
Curtis’s personal obligations to Wells Fargo and is based on the loan agreement and
promissory note while this action considers the Investor Partners’ obligations to the
Partnerships and is based on the partnership agreements. The Partnerships’ complaint
4
in this case alleges the Investor Partners failed to make payments in violation of the
partnership agreements while the Investor Partners’ answer asserts defenses based on
the Partnerships’ failure to perform conditions precedent to the Investor Partners’
obligations.
The Alachua County litigation is a relatively simple matter seeking judgment on
an outstanding debt and involving comparatively minimal judicial resources. The Marion
County litigation, however, will focus on interpreting a complex partnership agreement
and determining the Investor Partners’ and the Partnerships’ contractual obligations and
potential breach of the contract. Far from saving judicial resources, transferring this
case to Alachua County would likely complicate that litigation needlessly.
Second, there is no risk of inconsistent verdicts because the Partnerships will not
be entitled to keep the developer fees that Curtis earned under any interpretation of the
various agreements. The Partnerships have no right to the developer fees, which must
either be paid to Wells Fargo directly or to the Partnerships and then to Curtis or Wells
Fargo. In the Alachua County litigation, liability for the developer fees is assumed, and
the only question is whether Curtis defaulted on his loan and is obligated to pay those
fees directly to Wells Fargo. If Wells Fargo succeeds in obtaining a declaratory
judgment that Curtis’s developer fees must be paid directly to it, Wells Fargo will still
need to await a determination of the amount of fees Curtis was entitled to before it will
be able to enforce the judgment.4
4
The Investor Partners urge us to treat the Partnerships and Curtis as one and
the same, arguing that Curtis is hiding behind the Partnerships to avoid paying his
obligations to Wells Fargo. Yet Florida law does not allow us to disregard the
distinctions between separate legal entities absent a showing of improper conduct.
Dania Jai-Alai Palace, Inc. v. Sykes, 450 So. 2d 1114, 1121 (Fla. 1984) (reaffirming that
5
Finally, we note that the Investor Partners have provided no affidavits, witness
lists, or other evidence that establish any need to transfer this action to Alachua County.
They merely presume that the actions should be consolidated—despite a previous
ruling in Alachua County that the Investor Partners are not a necessary party to that
litigation—and assert that there would be increased judicial economy and conservation
of resources. Since the Investor Partners have not demonstrated how consolidation
would actually simplify issues and save resources, nor how separate proceedings would
expose them to inconsistent obligations, we find that the trial court did not abuse its
discretion in denying the Investor Partners’ motion to transfer.
AFFIRMED.
SAWAYA and EDWARDS, JJ., concur.
under Florida law the corporate veil will “not be pierced absent a showing of improper
conduct”). The record suggests only that this was a business deal gone wrong. Thus,
there is no reason to disregard the separate legal status of the Partnerships and Curtis
to force the Partnerships to litigate alongside Curtis.
6