Vested Housing Group, LLC v. Principal Real Estate Investors, LLC

FILED
NOT FOR PUBLICATION APR 18 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
VESTED HOUSING GROUP, LLC, an No. 14-15168
Arizona limited liability company;
HENDERSON LOFTS DEVCO, LLC, an DC No. CV 13-1643 RCJ
Arizona limited liability company,
Plaintiffs - Appellants, MEMORANDUM*
v.
PRINCIPAL REAL ESTATE
INVESTORS, LLC, a Delaware limited
liability company; HENDERSON
APARTMENT VENTURE, LLC, a
Delaware limited liability company;
PRINCIPAL LIFE INSURANCE
COMPANY, an Iowa corporation;
PRINCIPAL U.S. PROPERTY
SEPARATE ACCOUNT, an unknown
business entity,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, Senior District Judge, Presiding
Argued and Submitted February 12, 2016
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
San Francisco, California
Before: TASHIMA and W. FLETCHER, Circuit Judges and BASTIAN,**
District Judge.
Plaintiffs-Appellants Vested Housing Group, LLC (“VHG”) and Henderson
Lofts Devco, LLC (“HLD”) appeal the district court’s order granting Defendants-
Appellees Principal Real Estate Investors, LLC (“PREI”), Henderson Apartment
Venture, LLC (“HAV”), Principal Life Insurance Co. (“PLIC”), and Principal U.S.
Property Separate Account’s (“PUSPSA”) motion to dismiss. We have jurisdiction
under 28 U.S.C. § 1291, and we affirm.
I.
In June 2007, VHG entered into a contract with HAV, pursuant to which
HLD (VHG’s wholly owned subsidiary) would develop real property in Nevada.
HAV agreed to purchase this property once development was complete. HAV also
warranted in the agreement that it was a valid Iowa corporation and that it was
authorized to enter into the contract. PREI, with which HAV shared a parent
company (PLIC), signed the agreement on behalf of HAV. HLD financed the
transaction with a loan from Wachovia Bank. PLIC guaranteed the loan.
**
The Honorable Stanley Allen Bastian, United States District Judge for
the Eastern District of Washington, sitting by designation.
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Contrary to Defendants’ representations, HAV was not actually incorporated
until October 2008. Unrelatedly, in November 2008, HLD defaulted on its loan
payments to Wachovia Bank. PLIC then repurchased the loan from Wachovia and
assigned the property to HAV, which foreclosed on the property in August 2009.
In April 2013, Plaintiffs sued Defendants for their misrepresentations
regarding the date of HAV’s incorporation. Defendants moved to dismiss under
Federal Rules of Civil Procedure 9(b) and 12(b)(6). The district court granted their
motion based on Plaintiffs’ failure to allege adequately that Defendants’
misrepresentation proximately caused their damages. The district court did not
grant Plaintiffs leave to amend their complaint. Plaintiffs now appeal.
II.
We review a district court’s ruling on a motion to dismiss de novo, taking
into consideration “only allegations contained in the pleadings, exhibits attached to
the complaint, and matters properly subject to judicial notice.” Autotel v. Nev. Bell
Tel. Co., 697 F.3d 846, 850 (9th Cir. 2012) (quoting W. Radio Servs. Co. v. Qwest
Corp., 678 F.3d 970, 975–76 (9th Cir. 2012)). The Court “accept[s] as true all
well-pleaded factual allegations and construe[s] them in the light most favorable to
the plaintiff.” Id. We may affirm “on any ground supported by the record.”
ASARCO, LLC v. Union Pac. R.R. Co., 765 F.3d 999, 1004 (9th Cir. 2014).
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To survive a motion to dismiss under Rule 12(b)(6), a pleading must contain
“a short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). A complaint need not contain detailed factual
allegations to survive a motion to dismiss, but a plaintiff must provide “more than
labels and conclusions.” Bell Atl. Corp v. Twombly, 550 U.S. 544, 555 (2007).
Further, “[f]actual allegations must be enough to raise a right to relief above the
speculative level.” Id. A plaintiff must provide the court with “enough facts to
state a claim to relief that is plausible on its face.” Id. at 570.
III.
Plaintiffs asserted five causes of action under Nevada law in their complaint:
(1) intentional misrepresentation or fraud, (2) negligent misrepresentation,
(3) intentional interference with prospective economic advantage, (4) unjust
enrichment, and (5) civil conspiracy. Plaintiffs have failed to state any plausible
claim to relief.
To state a claim for intentional misrepresentation, negligent
misrepresentation, or intentional interference with prospective economic advantage
under Nevada law, Plaintiffs must allege that Defendants’ misrepresentation
proximately caused their damages. See Nelson v. Heer, 163 P.3d 420, 426 (Nev.
2007) (listing elements of intentional misrepresentation claim); Barmettler v. Reno
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Air, Inc., 956 P.2d 1382, 1387 (Nev. 1998) (listing elements of negligent
misrepresentation claim); Consol. Generator-Nev., Inc. v. Cummins Engine Co.,
971 P.2d 1251, 1255 (Nev. 1998) (quoting Leavitt v. Leisure Sports Inc., 734 P.2d
1221, 1225 (Nev. 1987)) (listing elements of intentional interference with
prospective economic advantage claim).
Plaintiffs have not adequately alleged that Defendants’ misrepresentation —
that HAV was a validly formed corporation when the contract was signed —
proximately caused their damages. According to Plaintiffs, had they known HAV
did not exist at the time, they would not have signed the contract. They allege that
they would have instead sold the property to another party and would not have
begun to develop the property. This is simply not plausible. Plaintiffs have not
shown that the status of HAV – the sole purpose of which was to purchase the
property once it had been developed – when the parties entered into their
development deal was material. Rather, the foregone business opportunities and
development costs on which Plaintiffs rest their claims can be considered losses
only because the deal ultimately failed when Plaintiffs defaulted on the Wachovia
loan. Had Plaintiffs not defaulted, and instead finished developing the property,
there is no allegation or indication that Defendants would not have made good on
their promises and purchased the property.
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Plaintiffs’ unjust enrichment claim also fails. Under Nevada law, a claim of
unjust enrichment requires “a benefit conferred on the defendant by the plaintiff,
appreciation by the defendant of such benefit, and acceptance and retention by the
defendant of such benefit under circumstances such that it would be inequitable for
him to retain the benefit without payment of the value thereof.” Leasepartners
Corp. v. Robert L. Brooks Tr. Dated Nov. 12, 1975, 942 P.2d 182, 187 (Nev. 1997)
(quoting Unionamerica Mortg. & Equity Tr. v. McDonald, 626 P.2d 1272, 1273
(Nev. 1981)). Plaintiffs allege that Defendants obtained the property through
foreclosure unjustly because Plaintiffs spent close to a million dollars developing
the property, and Defendants never compensated Plaintiffs for that benefit. But
there is no allegation that Defendants did not properly follow the foreclosure
procedures outlined in the loan agreement, which Plaintiffs themselves triggered
by defaulting on their loan. Plaintiffs cannot plausibly claim that Defendants have
retained a benefit that equitably belongs to them when Defendants obtained the
property through a valid foreclosure.
Finally, Plaintiffs have not stated a claim of civil conspiracy. Civil
conspiracy is not an independent cause of action under Nevada law. Rather, a
claim for civil conspiracy lies only where an underlying civil wrong was
committed, which resulted in damages. See Jordan v. State ex rel. Dep’t of Motor
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Vehicles & Pub. Safety, 110 P.3d 30, 51 (Nev. 2005), abrogated on other grounds
by Buzz Stew, LLC v. City of N. Las Vegas, 181 P.3d 670 (Nev. 2008). Because
Plaintiffs have not adequately alleged any substantive civil wrong, their civil
conspiracy claim fails.
IV.
The district court dismissed Plaintiffs’ action without granting Plaintiffs
leave to amend their complaint. We review this decision for an abuse of discretion.
Abagninin v. AMVAC Chem. Corp., 545 F.3d 733, 737 (9th Cir. 2008). A district
court may properly deny leave to amend if it “determines that allegation of other
facts consistent with the challenged pleading could not possibly cure the
deficiency.” Id. (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806
F.2d 1383, 1401 (9th Cir. 1986)).
The district court concluded that Plaintiffs could not allege, under any set of
facts, that Defendants’ misrepresentation had proximately caused their damages.
As explained above, this was not error.
AFFIRMED.
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