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Boardakan Restaurant LLC v. Gordon Group Holdings, LLC

United States District Court, E.D. Pennsylvania

July 31, 2015

BOARDAKAN RESTAURANT LLC, et al., Plaintiffs,
v.
GORDON GROUP HOLDINGS, LLC, et al., Defendants.

OPINION

Slomsky, J.

I. INTRODUCTION

Plaintiffs Boardakan Restaurant, LLC and Oceanental Restaurant, LLC own two upscale restaurants at “The Pier at Caesar’s” (“The Pier”) in Atlantic City, New Jersey. Plaintiffs lease space from Atlantic Pier Associates, LLC (“APA”), a limited liability company owned and operated by the Gordon Group[1] and the Taubman Group.[2] In late 2005, the parties began negotiating amendments to Plaintiffs’ leases for the two restaurants at The Pier. On February 22, 2006, Plaintiffs signed Amended Leases.

On August 14, 2014, Plaintiffs filed a Second Amended Complaint against APA, the Gordon Group, and the Taubman Group asserting various claims arising from negotiations that led to the execution of the Amended Leases. Specifically, Plaintiffs allege in the Second Amended Complaint the following claims against all Defendants: Count I-Fraudulent Inducement based on concealment, [3] nondisclosure, [4] and misrepresentation[5]; Count II- Negligent Misrepresentation; Count III-Civil Conspiracy[6]; Count IV-Promissory Estoppel; and Count V-Alter Ego.[7] (Doc. No. 147.)

On December 29, 2014, this Court approved a stipulation dismissing APA and the Taubman Group as Defendants in this case. (Doc. No. 198.) On February 6, 2015, the Gordon Group (hereinafter “Defendants”) and Plaintiffs filed cross-motions for summary judgment. (Doc. Nos. 204, 205.) Defendants contend that they are entitled to summary judgment on all of Plaintiffs’ claims. Plaintiffs submit that they are entitled to summary judgment on their claim of fraudulent inducement based only on nondisclosure.

The parties’ cross-motions for summary judgment are now ripe for decision.[8] For reasons that follow, the Motions (Doc. Nos. 204, 205) will be denied.

II.BACKGROUND

The factual background of this case is discussed in the Opinion of this Court dated July 17, 2014 (Doc. No. 142). The relevant portion of the Opinion reads as follows:

Plaintiffs originally entered into lease agreements (the “Lease Agreement” or “Agreement”)[9] with Defendants in 2004 when The Pier was still undergoing construction with a scheduled opening date of March 2006. Under the terms of the Lease Agreement, if The Pier did not open on time, then Plaintiffs’ lease would automatically become null and void. (Doc. No. 13 ¶ 51.)
In 2004, two other upscale restaurants, RumJungle and English Is Italian, also entered into lease agreements with Defendants. It soon became apparent that The Pier would open later than scheduled. Knowing they would be able to walk away from the project, Plaintiffs sent a letter to Defendants asking for further assurances. (Id. ¶ 85.) Specifically, Plaintiffs asked if RumJungle and English Is Italian maintained binding leases with Defendants. Plaintiffs then met with Defendant Peter Fine, who informed them that RumJungle and English Is Italian would “definitely” be opening at The Pier, when in fact they had both already terminated their leases. (Id. ¶ 103.) Plaintiffs allege that Defendants sent emails, letters, and press releases, all confirming the participation of RumJungle and English Is Italian. (Id. ¶¶ 96, 99, 109.) Plaintiffs argue that Defendants conspired to keep them in the dark, knowing that they would not continue with the project without the other restaurants on board. On February 22, 2006, one month before their lease was set to expire, Plaintiffs entered into amended lease agreements with Defendants, investing substantial sums of money “to construct, improve, open and operate” their restaurants at The Pier. (Id. ¶ 114.) Plaintiffs claim that they would not have made these investments but for Defendants’ misrepresentations. (Id. ¶ 96.)

(Doc. No. 142 at 1-2.)

III.STANDARD OF REVIEW

Granting summary judgment is an extraordinary remedy. Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). In reaching this decision, the court must determine whether “the pleadings, depositions, answers to interrogatories, admissions, and affidavits show there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.” Favata v. Seidel, 511 F. App’x 155, 158 (3d Cir. 2013) (quoting Azur v. Chase Bank, USA, Nat’l Ass’n, 601 F.3d 212, 216 (3d Cir. 2010) (quotation omitted)). A disputed issue is “genuine” only if there is a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party. Kaucher v. Cnty. of Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). For a fact to be considered “material, ” it “must have the potential to alter the outcome of the case.” Favata, 511 F. App’x at 158. Once the proponent of summary judgment “points to evidence demonstrating no issue of material fact exists, the non-moving party has the duty to set forth specific facts showing that a genuine issue of material fact exists and that a reasonable factfinder could rule in its favor.” Id. (quoting Azur, 601 F.3d at 216 (internal quotation marks omitted)).

In deciding a motion for summary judgment, “[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Id. (quoting Chambers ex rel. Chambers v. Sch. Dist. of Philadelphia Bd. of Educ., 587 F.3d 176, 181 (3d Cir. 2009) (internal quotation marks omitted)). The court’s task is not to resolve disputed issues of fact, but to determine whether there exist any factual issues to be tried. Anderson, 477 U.S. at 247-49. Whenever a factual issue arises which cannot be resolved without a credibility determination, at this stage the court must credit the non-moving party’s evidence over that presented by the moving party. Id. at 255. If there is no factual issue, and if only one reasonable conclusion could arise from the record regarding the potential outcome under the governing law, summary judgment must be awarded in favor of the moving party. Id. at 250.

“The same standards and burdens apply on cross-motions for summary judgment.” Allah v. Ricci, 532 F. App’x 48, 50 (3d Cir. 2013) (citing Appelmans v. City of Phila., 826 F.2d 214, 216 (3d Cir.1987)). When the parties have filed cross-motions for summary judgment, as in this case, the summary judgment standard remains the same. Transguard Ins. Co. of Am., Inc. v. Hinchey, 464 F.Supp.2d 425, 430 (M.D.Pa.2006). “When confronted with cross-motions for summary judgment . . . ‘the court must rule on each party’s motion on an individual and separate basis, determining, for each side, whether a judgment may be entered in accordance with the summary judgment standard.’” Id. (quoting Marciniak v. Prudential Fin. Ins. Co. of Am., 184 F. App’x 266, 270 (3d Cir. 2006)). “If review of [the] cross-motions reveals no genuine issue of material fact, then judgment may be entered in favor of the party deserving of judgment in light of the law and undisputed facts.” Id. (citing Iberia Foods Corp. v. Romeo, 150 F.3d 298, 302 (3d Cir. 1998)).

IV.ANALYSIS

As noted above, the parties have filed cross-motions for summary judgment. (Doc. Nos. 204, 205.) The Court has carefully considered the relevant pleadings, motions, briefs, and exhibits in the light most favorable to the non-moving party. Many arguments of the parties hinge upon disputed issues of material fact that preclude granting summary judgment.

Plaintiffs, in their Partial Motion for Summary Judgment (Doc. No. 205), argue that they are entitled to summary judgment on their claim of fraudulent inducement based only on Defendants’ nondisclosure. (Doc. No. 205-2 at 25.) This claim is based on Defendants’ failure to disclose to Plaintiffs the contents of certain letters Defendants received in November 2005 regarding the tenancy of RumJungle and English Is Italian at The Pier. As noted previously, Pennsylvania has adopted the tort of nondisclosure in Restatement (Second) or Torts § 551. Youndt v. First Nat’l Bank of Port Allegany, 868 A.2d 539, 550 (Pa. Super. Ct. 2005). In relevant part, § 551 reads as follows:

§ 551. Liability for Nondisclosure.
(2) One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated,
(b) matters know to him that he knows to be necessary to prevent his partial or ambiguous statement of the facts from being misleading; and
(e) facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts.

The Court has reviewed the pleadings, deposition transcripts, and exhibits on file, as well as Defendants’ arguments in opposition to Plaintiffs’ Motion. The Court is satisfied that there are genuine issues of material fact as to whether: (1) Defendants exercised reasonable care to disclose facts material to the transaction; (2) there were matters known to Defendants that were necessary to prevent partial or ambiguous statements of fact from being misleading; (3) such facts were basic to the transaction; and (4) Plaintiffs, because of their relationship with Defendants, could reasonably expect Defendants to disclose such facts. Accordingly, Plaintiffs’ Motion for Partial Summary Judgment will be denied.

Defendants, in their Motion for Summary Judgment (Doc. No. 204), argue that Plaintiffs cannot establish their fraudulent inducement claim because: (1) Defendants made no misrepresentation; (2) Plaintiffs cannot establish fraudulent intent; and (3) Plaintiffs cannot establish justifiable reliance. (Doc. No. 204 at 6-21.) After a review of the pleadings, deposition transcripts, and exhibits on file, as well as Plaintiffs’ arguments in opposition to Defendants’ Motion, the Court is satisfied that there are genuine issues of material fact regarding these issues. In addition, there are genuine issues of material fact regarding negligent misrepresentation and promissory estoppel claims. Thus Defendants’ Motion for Summary Judgment also will be denied.

In conjunction with the denials of summary judgment, four arguments of Defendants merit further discussion because they raise questions of law that can be decided by the Court at this stage of the litigation. Defendants argue that: (1) the parol evidence rule bars Plaintiffs’ claims; (2) Defendants cannot be liable for negligent misrepresentation because such claims are “limited to situations in which the defendant accepts the role of advisor and provides guidance to the plaintiff”; (3) Defendants cannot be liable for fraudulent concealment because such claims are limited to situations where there is a confidential or fiduciary relationship between the parties; and (4) Defendants cannot be liable for ...


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