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Holliday Fenoglio Fowler, L.P. v. L'Auberge Newco LLC

United States District Court, D. Arizona

November 20, 2017

Holliday Fenoglio Fowler, L.P., Plaintiff,
v.
L'Auberge Newco, LLC, Defendant.

          ORDER

          HONORABLE STEVEN P. LOGAN, UNITED STATES DISTRICT JUDGE.

         Before the Court are the parties' Cross Motions for Summary Judgment. (Docs. 50, 53.) For the reasons set forth below, Defendant's Motion for Summary Judgment (Doc. 50) is granted.

         I. Factual Background[1]

         Plaintiff Holliday Fenoglio Fowler, L.P. (“HFF”) is a financial services provider for the commercial real estate industry (Doc. 54, ¶ 1), and Defendant L'Auberge Newco, LLC (“LAN”) owns and operates the L'Auberge de Sedona Resort and Spa (“L'Auberge Resort”), a luxury hotel in Sedona, Arizona. (Doc. 51, ¶ 1.) Defendant LAN's affiliate- non-party Orchards Newco, LLC (“ON”)-owns and operates the Orchards Inn, which is adjacent to the L'Auberge Resort. (Doc. 51, ¶ 3.) IMH Financial Corporation (“IMH”) is the sole member and manager of both Defendant LAN and non-party ON. (Doc. 51, ¶ 4.) Although the exact circumstances under which Plaintiff became aware of Defendant's need to refinance a loan on the L'Auberge Resort are disputed, the parties entered into a contract on August 22, 2014 (henceforth, “the agreement”). (Doc. 51, ¶ 11; Doc. 54, ¶ 17.) Under the terms of the agreement, Plaintiff would serve as Defendant's “exclusive representative for the purpose of arranging financing” during the exclusivity period beginning August 22, 2014 and ending on October 30, 2014. (Doc. 51-6, ¶ 1.) Absent written notice to the contrary from either party, Plaintiff would continue to serve as Defendant's exclusive representative after October 30, 2014 on a month-to-month basis. (Doc. 51-6, ¶ 1.) As its exclusive financial intermediary, Defendant would refer all finance sources interested in refinancing Defendant's loan to Plaintiff. (Doc. 51-6, ¶ 1.) With regard to compensation for Plaintiff, the agreement reads, in part:

[Defendant] shall pay the Fee (as defined below) to [Plaintiff] only in the event a financing of the Property . . . closes (a) at any time during the Exclusivity Period, (b) at any time following the Exclusivity Period in the event such financing closes pursuant to any letter of intent, term sheet, application or commitment issued during the Exclusivity Period or (c) at any time during the Tail Period [defined as the six months following the expiration of the Exclusivity Period].

(Doc. 51-6, ¶ 2.) The agreement defined the fee as “0.75% of the final aggregate negotiated loan amount.” (Doc. 51-6, ¶ 2.)

         During the exclusivity period, Plaintiff referred nearly fifty potential financing sources to Defendant. (Doc. 51, ¶ 19; Doc. 54, ¶ 30.) The record reflects that Defendant did not execute an agreement with any of the financing sources referred by Plaintiff during the initial exclusivity period. (Doc. 51, ¶ 28; Doc. 61, ¶ 28.) In mid-October, Plaintiff became aware from potential financing sources that another entity-Cushman & Wakefield (“Cushman”)-was also attempting to secure financing for IMH assets, including the L'Auberge Resort loan. (Doc. 54, ¶ 34; Doc. 59, ¶ 34.) When contacted by Plaintiff regarding Cushman, Defendant explained that Cushman was working to secure financing for other IMH assets, but were specifically told not to include the L'Auberge Resort loan. (Doc. 59, ¶ 34.)

         On November 25, 2014, Defendant sent Plaintiff an e-mail that read, in its entirety, as follows: “Looks like we area [sic] hitting all dead ends [sic] I would say.” (Doc. 51, ¶ 31; Doc. 61, ¶ 31.) Later that afternoon, Defendant informed Plaintiff that it had received favorable terms from a financing source, but did not disclose the name of the financing source to Plaintiff at that time. (Doc. 51, ¶ 8; Doc. 54, ¶ 41.) Three days later, Defendant received a term sheet from Karlin Real Estate, LLC (“Karlin”) in response to Defendant's inquiry to serve as a financing source for IMH's assets, including the L'Auberge Resort loan. (Doc. 51, ¶ 36.) While the record is unclear as to whether Defendant ultimately executed the refinancing of the loan with Karlin or one of its subsidiaries, and what IMH assets were used to secure the loan, both Plaintiff and Defendant agree that Defendant executed a $50, 000, 000 loan-which included the L'Auberge Resort loan- in early spring 2015. (Doc. 51, ¶ 41; Doc. 54, ¶ 47.)

         On March 5, 2015, Plaintiff sent Defendant an invoice for $375, 000-the fee to which Plaintiff believed itself to be entitled to under the exclusivity agreement with Defendant. (Doc. 51, ¶ 47; Doc. 54, ¶ 50.) Plaintiff did not receive payment from Defendant. (Doc. 54, ¶ 51.) Plaintiff filed the present suit against Defendant for breach of contract, breach of good faith, and alternatively, unjust enrichment. (Doc. 1.) Defendant and Plaintiff have filed Cross Motions for Summary Judgment. (Docs. 50, 53.)

         II. Standard of Review

         A court shall grant summary judgment if the pleadings and supporting documents, viewed in the light most favorable to the non-moving party, “show[] 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); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Material facts are those facts “that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine dispute of material fact arises if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         The party moving for summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the record, together with affidavits, which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. If the movant is able to do such, the burden then shifts to the non-movant who, “must do more than simply show that there is some metaphysical doubt as to the material facts, ” and instead must “come forward with ‘specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). At this stage, the function of the judge is “not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249; see also Scott v. Harris, 550 U.S. 372, 380 (2007).

         III. Discussion

         A. Breach of ...


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