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Bixby v. Lifespace Communities, Inc.

United States District Court, D. Minnesota

July 2, 2018

MARLENE H. BIXBY, MARTHA ROGERS, WILLIAM NICKLES, and ELEANOR NICKLES, Plaintiffs,
v.
LIFESPACE COMMUNITIES, INC., d/b/a Friendship Village of Bloomington, Defendant.

          Edward P. Sheu, BEST & FLANAGAN LLP, for Plaintiff Marlene Bixby.

          Adam G. Chandler, BRIGGS & MORGAN, P.A., for Plaintiff Martha Rogers.

          Mamie E. Fearon, GRAY PLANT MOOTY, for Plaintiffs William and Eleanor Nickles.

          Thomas F. DeVincke, MALKERSON GUNN MARTIN LLP, for defendant.

          ORDER GRANTING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION

          JOHN R. TUNHEIM CHIEF JUDGE

         Plaintiffs Marlene Bixby, Martha Rogers, and William and Eleanor Nickles (collectively, "Plaintiffs") seek to enjoin a redevelopment that would demolish the townhomes in which they live. Defendant Lifespace Communities, Inc. ("Lifespace"), owns and operates Friendship Village of Bloomington (the "Village"), the residential- retirement development in which Plaintiffs live. Lifespace plans to redevelop the Village, and the approved redevelopment plans require demolishing Plaintiffs' homes.

         Plaintiffs negotiated with Lifespace to live in their respective townhomes for life. Now, Plaintiffs seek to enjoin Lifespace from terminating its contracts with them, from demolishing or destroying their townhomes, and from taking steps toward any redevelopment affecting their homes, including selling interest in the planned redevelopment by collecting deposits on the new units. Because the Court will find that Plaintiffs are likely to prevail on the merits of their claims and will suffer irreparable harm absent a preliminary injunction, the Court will grant Plaintiffs' Motion for Preliminary Injunction and enjoin Lifespace.

         BACKGROUND

         I. FACTUAL BACKGROUND

         A. The Parties

         Lifespace is an Iowa non-profit corporation with its principal place of business in Iowa. (Compl. ¶ 4, Mar. 23, 2018, Docket No. 1.) Lifespace was the Village's developer and continues to own and operate the Village. (Id.)

         Marlene Bixby is an 81-year-old Minnesota resident. (Id. ¶ 1.) She lives at 8168 Parkview Lane, Bloomington, Minnesota (the "Bixby Property"), which is a townhome in the Village. (Id.) Bixby and her late husband entered into a Residency Agreement with Lifespace in 2012. (Id. ¶ 11.) They paid Lifespace an entrance fee of $652, 392 and an initial monthly fee of $4, 148. (Id. ¶ 16.) The Residency Agreement gave them the right to occupy the Bixby Property for their lifetimes, subject only to limited exceptions. (Id. ¶ 11.) The property is and has been Bixby's homestead since 2012. (Id.)

         Martha Rogers is an 83-year-old Minnesota resident. (Id. ¶ 2.) She lives at 8174 Parkview Lane, Bloomington, Minnesota (the "Rogers Property"), a townhome in the Village. (Id.) Rogers and her late husband entered into a similar Residency Agreement with Lifespace in 1998. (Id. ¶ 12.) They paid Lifespace an entrance fee of $375, 000 and an initial monthly fee of $ 1, 344. (Id. ¶ 17.) The Residency Agreement gave them the right to occupy the Rogers Property for their lifetimes, subject only to limited exceptions. (Id. ¶ 12.) The property is and has been Rogers's homestead since 1998. (Id.)

         William Nickles is 87 years old, and Eleanor Nickles is 81 years old. (Id. ¶ 3.) The Nickels are married Minnesota residents and live at 8176 Parkview Lane, Bloomington, Minnesota (the "Nickles Property"), a townhome in the Village. (Id.) The Nickles entered into a Residency Agreement with Lifespace in 2002. (Id. ¶ 13.) They paid an entrance fee of $394, 000 and an initial monthly fee of $2, 693. (Id. ¶ 18.) The Residency Agreement gave them the right to occupy the Nickles Property for their lifetimes, subject only to limited exceptions. (Id. ¶ 13.) The property is and has been the Nickels' homestead since 2002. (Id.)

         B. The Residency Agreements

         The Residency Agreements between Plaintiffs and Lifespace are titled "Return-of-Capital" agreements. (Decl. of Marlene H. Bixby ("Bixby Dec!.") ¶ 3, Ex. 1 (Bixby Return-of-Capital Agreement ("BA")), Mar. 26, 2018, Docket No. 8; Decl. of Martha Rogers ("Rogers Decl") ¶ 3, Ex. A (Rogers Return-of-Capital Agreement ("RA")), Mar. 26, 2018, Docket No. 9; Decl. of Eleanor Nickles ("Nickles Decl") ¶ 5, Ex. A (Nickles Return-of-Capital Agreement ("NA")), Mar. 26, 2018, Docket No. 10.) The Residency Agreements refer to the Plaintiffs as "Residents" and to Lifespace as the "Sponsor." (BA at 6; RA at 2; NA at 6.) Each Residency Agreement requires the Sponsor "to make available to Resident, for as long as Resident lives and subject to the terms of this Agreement, a living unit in the Village described as follows: [description of each Plaintiffs townhome], and to provide, for the Resident's lifetime, the services, utilities and furnishings described . . . below." (BA at 6; RA at 2; NA at 6)

         1. Fees The Residency Agreements lay out various costs, including an "entrance fee," paid by Plaintiffs "[i]n order to reside at the Village for life and to receive the services described above." (BA at 7; RA at 3; NA at 7.) The entrance fees were determined by the location and type of unit selected by each Plaintiff. (Compl. ¶ 19.) Plaintiffs' townhomes are standalone buildings comprised of two units with an attached two-car garage, two bedrooms, a large sunporch, and a walk-out to a grassy space and pond. (Id.) Each unit has more than 1, 640 square feet of living space. (Id.) The Residency Agreements also set forth monthly fees to be paid by each Plaintiff and note that the fee may be increased "if [Lifespace], in its sole discretion, deems it necessary to meet the financial needs of the Village and to provide the services to the residents." (BA at 8; RA 3; NA at 8.)

         2. Nature of the Rights

         The Residency Agreements state that "Resident may reside in the Living Unit for as long as Resident is capable of meeting the requirements of living unit occupancy or this Agreement is terminated by Resident or [Lifespace]." (BA at 8; NA at 9; see also RA at 3 (using similar language).) However, "Resident is not given exclusive possession of the Living Unit in the Village as against [Lifespace]" and each Residency Agreement "is not a lease or easement and does not transfer or grant to Resident any interest in real property owned by [Lifespace]." (BA at 8; RA at 3; NA at 9) The Bixby and Nickles Agreements also require the Residents "to make application for and receive homestead classification for the Living Unit." (BA at 8; NA at 9.)

         3. Termination

         The Residency Agreements can be terminated by Residents after they move in for any reason with 120 days' written notice. (BA at 13; RA at 5; NA at 14.) Lifespace may only terminate the Residency Agreements "for just cause," which is defined differently in each Residency Agreement but generally includes failure to pay associated fees, concerns regarding Resident's physical or mental health, disturbance, or violation of operating procedures. (BA at 14-15; RA at 5-6; NA at 14-15.) ...


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