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Keybank National Association v. Voyager Group

December 28, 2010

KEYBANK NATIONAL ASSOCIATION,
PLAINTIFF,
v.
VOYAGER GROUP,L.P. AND VOYAGER INVESTMENTS LP,
DEFENDANTS.
SPANISH PEAKS LODGE, LLC, VOYAGER GROUP, L.P. AND VOYAGER INVESTMENTS, L.P.,
PLAINTIFFS,
v.
KEYBANK NATIONAL ASSOCIATION AND KEYBANK CAPITAL MARKETS, INC.,
DEFENDANTS.
SPANISH PEAKS HOLDINGS II, LLC, SUCCESSOR TO SPANISH PEAKS HOLDINGS, LLC, PLAINTIFF,
v.
KEYBANK NATIONAL ASSOCIATION AND KEYBANC CAPITAL MARKETS, INC.,
DEFENDANTS.



The opinion of the court was delivered by: Ambrose, Senior District Judge

OPINION AND ORDER OF THE COURT

Synopsis

Defendants KeyBank National Association and KeyBanc Capital Markets, Inc. (collectively, "KeyBank"), move to dismiss the Complaint (Docket No. 65) filed by Spanish Peaks Holdings II, LLC ("SP Holdings") in this consolidated action. SP Holdings asserts claims for breach of contract, breach of the duty of good faith and fair dealing, promissory estoppel, fraudulent and/or negligent misrepresentation and constructive fraud arising from KeyBank‟s alleged failure to provide the necessary financing for a construction project located in Big Sky, Montana. KeyBank has moved to dismiss the Complaint on the grounds that SP Holdings lacks standing to assert claims for breach of contract or breach of the duty of good faith and fair dealing, the claim for promissory estoppel is barred by Montana statute, SP Holdings had no right to rely on any alleged misrepresentations and that KeyBank did not owe a legal duty to SP Holdings. For the reasons set forth below, I deny Defendants‟ motion to dismiss.

I. Applicable Standard

In deciding a motion to dismiss under Fed R. Civ. P. 12(b)(6), all factual allegations, and all reasonable inferences therefrom, must be accepted as true and viewed in a light most favorable to the plaintiff. Haspel v. State Farm Mut. Auto. Ins. Co., 2007 WL 2030272, at *1 (3d Cir. July 16, 2007). "[P]leading standards have. . .shifted from simple notice pleading to a more heightened form of pleading, requiring a plaintiff to plead more than the possibility of relief to survive a motion to dismiss." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). After the Supreme Court‟s opinion in Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), "it is clear that conclusory or "bare-bones‟ allegations will no longer survive a motion to dismiss: "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.‟" Fowler, 578 F.3d at 210 (quoting Iqbal, 129 S. Ct. at 1949).

"[A]fter Iqbal, when presented with a motion to dismiss for failure to state a claim, district courts should conduct a two-part analysis. First, the factual and legal elements of a claim should be separated. . . .Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "plausible claim for relief.‟" Id. at 210-211 (citing Iqbal, 129 S. Ct. at 1950). "As the Supreme Court instructed in Iqbal, "[w]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not "show[n]‟ - "that the pleader is entitled to relief.‟" Id. at 211 (quoting Iqbal, 129 S. Ct. at 1949).

II. Factual Allegations

Plaintiff SP Holdings, a Delaware corporation with its principal place of business in Big Sky, Montana, is the successor-in-interest to Spanish Peaks Holdings, LLC. SP Holdings is the owner and developer of The Club at Spanish Peaks (the "Club"), located in Montana‟s Gallatin and Madison counties, which offers golf, skiing and other leisure activities for its residents who purchase real estate, homes and memberships. As the centerpiece of the Club, SP Holdings planned to construct "The Lodge at Spanish Peaks" (the "Lodge" or "Lodge Project"), a large, mixed-use building containing forty-nine personal residences and a wide range of amenities for the Club‟s members, including a restaurant, lounge, ski shop, spa and fitness center. In addition to serving as the Club‟s picturesque focal point, the Lodge was intended to (1) provide the Club‟s members with a host of benefits and amenities; (2) increase the desirability and market value of the home sites, condominiums and previously constructed residences throughout the Club, and (3) generate a substantial stream of revenue for SP Holdings from sales of homes, condominiums and home sites within the Club. SP Holdings believed that the completed and operational Lodge was imperative to the ultimate viability and success of the Club as a whole, and extensively publicized the Lodge and its amenities to prospective members of the Club.

By the spring of 2007, SP Holdings had completed the infrastructure necessary to develop the Lodge Project and sold completed homes and cabins as well as numerous parcels of real estate for the construction of homes. In March 2007, SP Holdings created SP Lodge, a single purpose entity wholly owned by SP Holdings established for the explicit purpose of developing and constructing the Lodge Project. SP Holdings conveyed to SP Lodge the right to construct the Lodge on the Club‟s land, but retained its ownership of the land.

In May of 2007, SP Lodge entered into negotiations with KeyBank to provide the necessary financing. During the course of negotiations, KeyBank‟s representatives, including David Paisley, traveled with representatives of SP Holdings, SP Lodge and the Voyager Entities, including Messrs. Hein and Dolan, to the Spanish Peaks site to evaluate the Lodge Project. Mr. Paisley stated that KeyBank was interested in underwriting the $120 million credit facility necessary to construct the Lodge.

On June 21, 2007, KeyBank decided to proceed with the underwriting of the credit facility. It hired Intermountain Consultants, Inc. ("Intermountain") to appraise the Lodge Project, having rejected all appraisers recommended by SP Lodge. SP Lodge expressed its concern that Intermountain lacked experience with comparable projects and its doubt that Intermountain would be able to determine an accurate value for the Lodge Project. KeyBank ignored these clearly expressed concerns.

On July 31, 2007, KeyBank provided a written commitment to loan $120 million to SP Lodge for the development and construction of the Lodge Project. (A copy of the Loan Commitment is annexed to the Complaint as Exhibit A.) The Loan Commitment identifies as "Borrower" "SP Lodge, LLC, the sole member of which will be Spanish Peaks Holdings, LLC." It was signed by Brad Paisley on behalf of KeyBank, and by Doug Hein, as assistant manager of SP Lodge. SP Holdings and the Voyager Entities agreed to guarantee the $120 million credit facility. The completion of an appraisal of the Lodge Project was a condition precedent to the closing of the loan. From July through October 2007, KeyBank assured representatives of SP Holdings, SP Lodge and the Voyager Entities that it had the intent and ability to obtain a timely appraisal of the Lodge Project and to satisfy other conditions in order to ensure a timely closing of the loan. All parties expected the credit facility to close on or before October 15, 2007. Indeed, on September 14, 2007, Mr. Paisley represented to the contractor hired to construct the Lodge Project that KeyBank had committed to finance the Lodge Project and was in the process of closing the loan.

In reliance on these repeated representations, SP Holdings contributed substantial funds towards the Lodge Project‟s construction. SP Holdings directed SP Lodge to enter into agreements with the construction contractor, which in turn contracted with various subcontractors and vendors to begin construction on the Lodge Project. SP Holdings itself also entered into various agreements, including the pre-sale agreements with purchasers of Lodge condominium units, and continued pre-existing contractual relationships with other parties, such as CTA, the Lodge Project‟s architect.

On September 17 and 18, 2007, SP Holdings, SP Lodge, the Voyager Entities and KeyBank met with representatives of various banks interested in joining a lending syndicate that KeyBank had formed to underwrite the $120 million credit facility. The purpose of the meeting was to permit the potential syndicate members to evaluate the overall Lodge Project. During that meeting, representatives of KeyBank made oral and written representations to SP Holdings and the other entities that KeyBank had the intent and ability to obtain a timely appraisal of the Lodge Project, ensure the occurrence of conditions to closing and loan the funds necessary to complete the Lodge Project. KeyBank‟s representatives proposed a closing date of October 15, 2007. On or after this meeting, the lenders agreed to join the ...


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