United States District Court, D. Delaware
B. Cicero, Gregory E. Stuhlman, Stephanie H. Dallaire,
Chipman Brown Cicero & Cole, LLP, Wilmington, DE -
Attorneys for Plaintiff.
L. Cole, LeClairRyan, PLLC, Wilmington, DE - Attorneys for
NOREIKA, U.S. DISTRICT JUDGE.
the Court is a motion to dismiss pursuant to Rule 12(b)(6) of
the Federal Rules of Civil Procedure, filed by Defendants
LienClear - 0001, LLC (“LienClear0001”),
LienClear, LLC (“LienClear”), BCMG, LLC
(“BCMG”), BLOXTrade, LLC
(“BLOXTrade”), Thomas McOsker
(“McOsker”), and Donald Byrne
“Defendants”) (D.I. 15), asserting that the
Amended Complaint (D.I. 13) filed by Plaintiff REI Holdings,
LLC (“REI” or “Plaintiff) fails to state a
claim with respect to Counts I, II, IV, V, VI, and VII and
fails to state a claim against BLOXTrade with respect to all
claims. For the reasons set forth below, Defendants'
motion to dismiss the Amended Complaint will be
GRANTED-IN-PART and DENIED-IN PART.
in the business of purchasing and reselling tax lien
portfolios. (D.I. 13 ¶¶ 1, 21). According to the
Amended Complaint, “Defendants are a part of an
elaborate enterprise of purchasing and securitizing tax lien
assets in order to broker sales and sell tax lien portfolios
to buyers throughout the United States and Puerto Rico, and
to service the sale of these portfolios to buyers.”
(Id. ¶ 3). Plaintiff alleges that in November
of 2015, McOsker and Byrne, on behalf of BCMG, approached REI
about purchasing a portfolio of certain Ohio tax liens
(“the Tax Liens”). (Id. ¶ 22).
McOsker informed Plaintiff that foreclosure actions had been
commenced for all the Tax Liens and assured Plaintiff
“that there was substantial value in the Tax Liens and
the properties subject thereto.” (Id. ¶
23). “On November 9, 2015, McOsker informed REI that
the transfers of the Tax Liens, and the acquisition and
servicing of properties resulting therefrom, would be handled
by Byrne through LienClear” and another person.
(Id. ¶ 24). The next day, a vice president for
BCMG shared a spreadsheet with Plaintiff detailing certain
tax liens. (Id. ¶ 25). This spreadsheet was
later modified to identify “approximately 383 [Tax
Liens] with a purported redemptive value of $1, 893, 437.07
and recoverable attorney's fees in the amount of $614,
881.35.” (Id. ¶ 26). On December 22,
2015, LienClear0001 and REI entered into a Tax Lien Purchase
and Sale Agreement (“Sale Agreement”).
(Id. ¶ 29, Ex. B). Under the Sale Agreement,
Plaintiff purchased the Tax Liens for $1, 921, 997.16, which
included the costs of brokerage, escrow, and other
transaction and service fees. (Id.). The Sale
Agreement states, in pertinent part:
The Tax Lien Purchase Agreement (this
“Agreement”) is made as of 12-22-2015
(the “Effective Date”) by and among
LienClear - 0001, LLC (the “Seller”) and
REI Holdings (the “Buyer”).
Section 3.02. Closing. The “Closing
Date” with respect to the purchase and sale of the
Tax Liens shall be the date on which ownership of all Tax
Liens (excluding and Excluded Tax Liens, as applicable)
has been transferred to Buyer through the execution,
endorsement, delivery and filing of all applicable documents
and certificates as is required by the applicable taxing
authority and under Applicable Laws as such is certified by
Servicer in accordance with the Servicing Agreement. Upon
delivery of the foregoing and certification thereof by
Servicer, the Purchase Price (as adjusted by subtracting that
portion of the Purchase Price allocable to any Excluded Tax
Liens as set forth on the Tax Lien Schedule (as applicable)
and net of Seller's Brokerage Fee and Transaction Fees)
shall be disbursed to Seller . . . .
Section 3.03 Collections Received On or After the
Effective Date. To the extent Seller receives any
Collections in respect of the Tax Liens on or after the
Effective Date, Seller shall hold such amounts in trust for
Section 3.05 Assurance of Further Action. From time
to time after the Closing Date and without further
consideration, each of the parties to this Agreement shall
execute and deliver, or cause to be executed and delivered,
such further instruments and agreements, and shall take such
other actions, as any other party may reasonably request in
order to more effectively effectuate the transactions
contemplated by this Agreement.
Section 4.01. Seller's Limited Representations.
Seller hereby represents and warrants that: (a) the Seller,
it's [sic] affiliated subsidiary, or its wholly owned
subsidiary is the owner of the Tax Liens, with good and valid
title thereto, and with full right to sell and transfer the
same; (b) the Seller has the authority to sell the Tax Liens
to Buyer; (c) the Tax Liens will be transferred to Buyer free
and clear of all encumbrances; (d) to the Seller's
knowledge the Tax Liens are validly issued under Applicable
Section 5.07. Merger and Integration. This agreement
contains all of the terms and conditions relating to its
subject matter to which the parties have agreed. All prior
understandings of any kind are superseded by this Agreement.
(e) once the Purchase Price has been paid by the Buyer and
delivered to the Seller in accordance with the terms hereof,
the Seller shall have no further rights or claims to the Tax
(f) the Seller intends to convey to the Buyer legal title to
all of the Tax Liens;
(g) Seller has the full right, power and authority, without
the consent of any other persons, to execute and deliver this
Agreement and to perform its obligations under this Agreement
and the transactions on its part contemplated hereby.
(D.I. 13, Ex. B). Attached to the Sale Agreement, as Schedule
1, was a chart listing each of the 383 Tax Liens and a
representation of the redemptive value thereof. (D.I. 13
¶ 34). Plaintiff alleges that total redemptive value of
the Tax Liens in Schedule 1 was $2, 508, 318.42. (D.I. 13
¶ 26). REI, LienClear, and LienClear0001 also executed a
Servicing Agreement (“Servicing Agreement”).
(D.I. 13, Ex. D). The Servicing Agreement states, in
THIS SERVICES AGREEMENT (this
“Agreement”) is made this 12-22-2015
(“Date”), by and among LienClear - 00001, LLC
(the “Seller”), REI Holdings (the
“Buyer”) LienClear, LLC
1. Services. Servicer shall provide
the services to Buyer and Seller as set forth on Exhibit
A hereto (the “Services”) in
accordance with the Agreement.
21. Authority to Execute. Each
person executing this Agreement represents and warrants that
it is duly authorized to execute this Agreement by the party
on whose behalf it is so executing.
SCHEDULE 1 TAX LIENS