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Regions Treatment Center, LLC v. New Stream Real Estate, LLC

United States District Court, Eighth Circuit

January 10, 2014

Regions Treatment Center, LLC, Plaintiff,
New Stream Real Estate, LLC, Defendant.

Jon R. Brakke, Esq., Vogel Law Firm, Fargo, ND, on behalf of Plaintiff.

Edwin H. Caldie, Esq., Katherine E. Devlaminck, Esq., and Sharon R. Markowitz, Esq., Leonard Street and Deinard, PA, Minneapolis, MN, on behalf of Defendant.


ANN D. MONTGOMERY, District Judge.


On October 23, 2013, the undersigned United States District Judge heard oral argument on Defendant New Stream Real Estate, LLC's ("New Stream") Motion to Dismiss the Complaint [Docket No. 12] and Plaintiff Regions Treatment Center, LLC's ("RTC") Motion to Amend the Complaint [Docket No. 39]. For the reasons set forth below, New Stream's motion is granted, and RTC's motion is denied.


Defendant New Stream holds loans, a judgment, and other interests in The Douglas Place, Inc., a rehabilitation center, and its related entities (together, the "Douglas Place"). Not. of Removal [Docket No. 1] Ex. A (Complaint) ¶ 3. In November 2011, the Douglas Place filed Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Minnesota. See id. ¶ 16.

In late 2012, RTC began negotiating for the purchase of New Stream's interests in the Douglas Place. These interests included a promissory note payable by the Douglas Place in the zamount of $3.6 million, stock in the Douglas Place, a mortgage, an assignment of leases, liens on the Douglas Place's personal property, and a judgment against the Douglas Place (together, the "Assets"). Id . ¶ 3. RTC and New Stream eventually agreed on a sale price of $3.5 million for the Assets, but did not finalize the terms of the sale. Id . ¶ 5. New Stream also informed RTC that it had been approached by a second buyer who was interested in purchasing the Assets, but that New Stream intended to complete its sale to RTC. RTC alleges that it used its tentative agreement with New Stream to form a separate tentative agreement with the Trustee for the Douglas Place bankruptcy estate, in which RTC planned to exchange the Assets for ownership of certain interests in the Douglas Place after that entity emerged from bankruptcy. Id . ¶ 16.

Negotiations over New Stream's sale of the Assets to RTC continued for months, and the parties reached a general agreement as to the ancillary terms of sale by May 2013. Id . ¶ 7. On June 5, 2013, New Stream sent RTC a "final, clean Word version" of the agreement, which reflected all final revisions. Supp. Caldie Decl. [Docket No. 37] Ex. A (email dated June 5, 2013), Ex. B (the "Agreement"). New Stream's counsel asked RTC's counsel to review the final terms and have RTC complete the Agreement by adding RTC's address to the opening paragraph and then executing the signature page. Id. at Ex. A. New Stream's counsel also wrote that, due to a delay in RTC's efforts to obtain funding, RTC must execute the contract documents by no later than the next day, June 6, 2013. Id . RTC's attorney ultimately executed the Agreement on June 7, 2013, but New Stream never delivered a countersigned Agreement. See id. at Ex. B.

RTC argues New Stream's June 6, 2013 deadline was an arbitrary condition imposed to sabotage negotiations and allow New Stream to avoid completing the contract. See Compl. ¶ 9. RTC alleges the parties had already made a binding agreement prior to June 6, and that New Stream's failure to formally execute the Agreement by this date did not prevent New Stream from being bound to the Agreement. Id . ¶¶ 7-8.

On July 3, 2013, RTC filed this action in Polk County, Minnesota, alleging claims for breach of contract, promissory estoppel, and tortious interference with contract. RTC simultaneously filed motions requesting an ex parte temporary restraining order (TRO) as well as a preliminary injunction enjoining New Stream from selling the Assets to any third party. On the same day as it was filed, the Polk County District Court granted RTC's ex parte TRO request.

On July 5, 2013, New Stream removed this action to federal court. Shortly thereafter, RTC filed two motions seeking continued injunctive relief [Docket Nos. 3, 6]. This Court denied both motions. Order, August 7, 2013 [Docket No. 28]. On July 26, 2013, New Stream moved to dismiss the Complaint, and on October 1, 2013, RTC moved for leave to amend the Complaint, seeking to supplement its allegations and add several new claims.


Rule 12(b)(6) of the Federal Rules of Civil Procedure states a party may move to dismiss a complaint for failure to state a claim upon which relief can be granted. In ruling on a motion to dismiss, the court views the pleadings in the light most favorable to the nonmoving party. Hamm v. Groose , 15 F.3d 110, 112 (8th Cir. 1994) (citation omitted). The court also assumes the truth of the complaint's factual allegations, but "must reject conclusory allegations of law and unwarranted inferences." Silver v. H&R Block, Inc. , 105 F.3d 394, 397 (8th Cir. 1997). In addition, the ruling court may not consider evidence or allegations outside of the pleadings, but "documents necessarily embraced by the complaint are not matters outside the pleading[s]." Ashanti v. City of Golden Valley , 666 F.3d 1148, 1151 (8th Cir. 2012) (citation omitted).

RTC has moved for leave to amend the Complaint. See Am. Complaint [Docket No. 40] ("Proposed Amended Complaint"). Under Rule 15 of the Federal Rules of Civil Procedure, the ruling court should "freely give leave [to amend] when justice so requires." However, "[t]here is no absolute or automatic right to amend." Williams v. Little Rock Mun. Water Works , 21 F.3d 218, 224 (8th Cir. 1994). "A district court may appropriately deny leave to amend where there are compelling reasons such as undue delay, bad faith, or dilatory motive, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the non-moving ...

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