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LLC v. FGG Inc.

United States District Court, D. Delaware

July 26, 2018

NNN 400 CAPITAL CENTER 16, LLC, et al., Plaintiffs,
v.
FGG, INC., et al., Defendants.

          MEMORANDUM OPINION

          MATTHEW W. BRANN UNITED STATES DISTRICT JUDGE

         Defendants moved to dismiss Counts IV and V of Plaintiffs' Complaint. For the reasons that follow, that motion will be granted.

         I. BACKGROUND[1]

         Plaintiffs are joint owners of an office building in Arkansas.[2] Defendants were the property managers of that building.[3]

         On July 24, 2014, JS Partners (“JSP”) made an offer to purchase the office building.[4] By its own, written terms the offer expired on August 10, 2014.[5] Defendants, as part of their property managing duties, indicated that they would vet the offer and provide an analysis and recommendation on it to Plaintiffs.[6] On August 12, 2014, Defendants and Plaintiffs held a conference call, during which Defendants recommended that the offer be rejected.[7] On August 14, 2014, Defendants memorialized their recommendation in an email.[8]

         At that time, one of the building's largest tenants was Blue Cross Blue Shield (“BCBS”), whose lease was set to expire on June 30, 2016.[9] BCBS ultimately did not renew its lease, and the value of the building therefore “dramatically declined.”[10] Partially as a result, Plaintiffs were later forced to file for bankruptcy.[11]

         Plaintiffs' Complaint contains claims for breach of contract (Count I), breach of the implied covenant of good faith and fair dealing (Count II), breach of fiduciary duty (Count III), negligence (Count IV), and constructive fraud (Count V). As relevant here, Plaintiffs' negligence claim is based on allegations that Defendants failed to exercise “due care, skill, and diligence” when considering JSP's offer, which negligence led Plaintiffs, mistakenly, to decline the offer.[12] And Plaintiffs' constructive fraud claim is based on allegations that Defendants' “acts, omissions and/or concealments” breached their fiduciary obligations to Plaintiffs.[13]

On February 22, 2018, Defendants move to dismiss Plaintiffs' Complaint.[14]Defendants' motion also sought to dismiss Paul Michael Getty for lack of personal jurisdiction. Because Plaintiffs subsequently dismissed Mr. Getty voluntarily, [15]this Court will not address that portion of Defendants' motion.

         II. DISCUSSION

         A. Whether Plaintiffs' Negligence Claim is Timely

         Defendants argue that Plaintiffs' negligence claim should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) because it is untimely.

         Both parties agree that the relevant statute of limitations for Plaintiffs' negligence claim is two years.[16] JSP's offer expired on August 10, 2014; the last alleged act of Defendants vis-à-vis this offer occurred on August 14, 2014. The instant suit was commenced on August 1, 2017, nearly three years after that act.

         Plaintiffs, however, argue that the relevant starting date for limitations purposes should be June 30, 2016, when BCBS's lease expired, since (1) the expiration of BCBS's lease damaged Plaintiffs (through a decline in the value of the building), and (2) a claim for negligence does not accrue until “it is complete with all of its elements, ” including the damages element.[17] This Court disagrees. While the building's depreciation may have injured Plaintiffs, the Complaint does not indicate, nor can this Court infer, that BCBS's decision not to renew was in any way caused by, or related to, Defendants' actions. In other words, Defendants' acts did not cause those damages.[18]

         Plaintiffs next argue that they should be able to utilize the “discovery rule, ” which “postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.”[19] To take advantage of the discovery rule, however, a plaintiff “must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.”[20] Because Plaintiffs have not satisfied that pleading burden, the discovery rule cannot aid them.

         It appears, therefore, that Plaintiffs' negligence claim is untimely; it will consequently be dismissed. The dismissal, however, will be without prejudice, and Plaintiffs may amend their Complaint in to ...


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