Opinion
No. 49A05-1105-PL-217
12-15-2011
GOOD HOST, LLC, Appellant-Plaintiff, v. ADVANCED INTERVENTIONAL PAIN CENTER, LLC, Appellee-Defendant.
ATTORNEYS FOR APPELLANT : JOHN D. PAPAGEORGE ERIN C. NAVE Taft Stettinius & Hollister, LLP Indianapolis, Indiana ATTORNEY FOR APPELLEE : JEREMY L. FETTY Parr Richey Obremskey Frandsen & Patterson LLP Lebanon, Indiana
Pursuant to Ind.Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before
any court except for the purpose of
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT:
JOHN D. PAPAGEORGE
ERIN C. NAVE
Taft Stettinius & Hollister, LLP
Indianapolis, Indiana
ATTORNEY FOR APPELLEE:
JEREMY L. FETTY
Parr Richey Obremskey Frandsen
& Patterson LLP
Lebanon, Indiana
APPEAL FROM THE MARION SUPERIOR COURT
The Honorable Theodore M. Sosin, Judge
Cause No. 49D02-1007-PL-31155
MEMORANDUM DECISION - NOT FOR PUBLICATION
NAJAM , Judge
STATEMENT OF THE CASE
Good Host, LLC ("Good Host") appeals the dismissal of its amended complaint for damages against Advanced Interventional Pain Center, LLC ("AIPC") alleging breach of a lease for commercial space. Good Host presents a single issue for our review, namely, whether the trial court erred when it granted AIPC's motion to dismiss for failure to state a claim.
We affirm in part, reverse in part, and remand for further proceedings.
FACTS AND PROCEDURAL HISTORY
Deepak Joshi is a member of Good Host, which owns commercial real estate located at 8345 Clearvista Place in Indianapolis ("the leased premises"). Pattanam Srinivasan is the owner of AIPC. Srinivasan and Joshi were also members of Castlepoint Pain Associates, LLC ("Castlepoint") beginning in 2006. On September 21, 2006, Good Host and Castlepoint signed a lease agreement for a five-year term. The leased premises were used by AIPC to operate its business, and Castlepoint's role was the "marketing of [AIPC]'s services" and "manag[ing] [the] administrative activities of [AIPC.]" Appellant's App. at 40.
The parties do not address whether there was any agreement between Castlepoint and AIPC regarding the use of the leased premises or what the terms of any such agreement were.
On July 28, 2008, Srinivasan wrote Joshi a letter with the subject heading: "Re: Dissolution of Castlepoint Pain Associates[.]" Id. That letter stated as follows:
In view to our recent disagreements, the following would the [sic] summarize [the] future role of Castlepoint Pain Associates concerning its operations with Advanced Interventional Pain Center.Id. at 40-43 (emphases added).
Castlepoint Pain Associates was conceived with one major objective: marketing of Advanced Interventional Pain Center's Services and to a lesser extent manage administrative activities of Advanced Interventional Pain Center as pertaining to its Indianapolis office.
Please note that Advanced Interventional Pain Center (AIPC) did not need your partnership money to operate. Your involvement as a partner in Castlepoint Pain Associates was not only to provide marketing expertise but also to manage administrative activities of Castlepoint Pain Associates such as accounting etc. You were made a partner solely for this purpose, your investment was taken so that you will have a financial interest in trying to make the Indianapolis pain center a successful venture by improving patient volume and at the same time lessening the administrative burden of the Indianapolis pain center.
However in the last year and a half of operations of [t]he Indianapolis pain center, your interest to make this venture successful appears to have diminished if not completely vanished. Fall in patient volume since July of 2007 can be attributed to poor marketing efforts:
1. No new doctor referrals.Last January (2008) during our meeting with our staff, it was also indicated to you how patients are flowing from our other offices to the Indianapolis office as a result of AIPC's marketing efforts at its other offices taking the business to the end user. Not only did you ignore and ridicule this fact as being nonexistent but rather stated that your marketing efforts are providing patients to AIPC's other offices, a serious misconception not supported by facts. This attitude has indeed resulted in failure of taking the business to
2. Failed radio advertisement, revenues wasted trying these out.
3. Marketing employee failed to produce any new leads but was paid more than $17k in salaries.
4. Despite repeated request from me to contact major industry employers to inform of our pain services, no efforts were undertaken.
5. Print ads in major newspapers were not done despite its success with AIPC's other offices.
6. Overall poor efforts to inform about the pain services and take the business to the end user.
the end user with no improvement in patient volume for the Indianapolis pain center.
Furthermore your undertaking of the administrative responsibilities of Castlepoint Pain Associates were poorly carried out:
1. Poor recordkeeping of expense accounts. You were last minute running for details and invoices for expenses done more than a year ago.Despite your shortcomings, the Indianapolis pain center carried on per our verbal agreement. My pain services provided for all expenses including paying rent for office space in which you have an ownership interest without me. Revenues were allocated per our verbal agreement. All accounting from AIPC was done to the last penny correctly reflecting the revenues and expenses, accurately. You have frequently complained that accounting is not transparent despite the fact you have been provided proper accounting reports every month that accurately reflect the. Indianapolis pain center revenues. I can emphatically assert your doubts that AIPC is secretly hiding revenues are quite unfounded, you may verify these accounts using an independent accountant if needed, however AIPC shall not bear the expenses for independent accountants acting on your behalf.
2. As a result you were not able to produce the K-1 forms by January 31. You pushed this until April making personal taxes inconvenient.
Perhaps your disinterest and unwillingness to support the Indianapolis pain venture was best reflected during the last three months when our billing services were becoming independent of the Agency services thereby saving us [a] billing commission fee. During this temporary phase revenues as expected had dropped. Not only were you unwilling to offer additional working capital during this phase but rather wanted AIPC to undertake all the financial needs including wanting to keep up marketing expenses for your failed methods. Moreover you noted that your partnership had some value more than what you had invested and wanted AIPC to buy you out by offering you more than what you had invested. At a time when patient volume had seriously fallen through poor marketing efforts, with Indianapolis revenues barely making for its expenses, you appear seriously mistaken to think you had built some kind of positive equity for and into the Indianapolis pain center. It is your own fantasy and self[-]induced illusion to think that the Indianapolis pain center has been helped by your marketing efforts when poor patient volume and revenues indicate otherwise.
I do not see any part of our verbal agreement that has not been carried out to date by AIPC. This is evidenced by the fact that you did not attempt to get a written agreement until December 2007, nearly eleven months after the start of the Indianapolis pain center.
Yet it was your own wish to obtain an agreement formulated to your benefit from attorneys acting on your behalf that you wanted me to sign. I have many times expressed my wish that AIPC or I personally cannot bear the expenses of attorneys acting on your behalf to formulate this agreement. I objected to several clauses found in the initial agreement, those that appear to benefit only you and wanted to include other clauses that have been cleverly left out once again to your benefit. Just because I wanted you to change the agreement you brought forward to be signed by me in no way implies either I or AIPC was willing to bear expenses of getting your attorneys to formulate the agreement. Your attorneys were acting on your behalf and they did not get in touch with me or take input from me directly.
Taking into consideration of all the above events I as a member of Castlepoint Pain Associates and owner and Director of AIPC declare the following:
1. AIPC no longer desires the involvement of Castlepoint Pain Associates in any aspect of its operations.
2. Castlepoint Pain Associates is no longer needed for marketing, administrative or promotional activities of AIPC.
3. As a member wishing to disengage from Castlepoint Pain Associates, this letter confirms the formal dissolution of our partnership and dissolution of Castlepoint Pain Associates in accordance with the Indiana Uniform Partnership Act.
4. Castlepoint Pain Associates as an entity shall not carry out any business activity except for self accounting and tax filing. It shall have no new relationship to other businesses, persons or entities. Neither you, nor me [sic] is permitted to represent this entity to other businesses except for fulfilling financial obligations that existed before today.
5. Attorney fees for formulating the agreement between AIPC and Castlepoint Pain Associates is your expense. In accordance with the [U]niform [P]artnership [A]ct it is your own willful and reckless act which was attempted to your
benefit. Therefore I will not bear the expenses incurred to you for formulating or trying to formulate this agreement.Future business with AIPC and you shall continue in the following manner consistent with our verbal agreement and e-mail exchanges:
Facts:
1. Initial investment of $22K by you and me for the Indianapolis Pain Center.Business shall be continued by AIPC at the Indianapolis office until January 31, 2012[,] when the office lease expires.
2. Each of us ha[s] received [a] $4K distribution in January of 2008.
3. This leaves $18k for each of us as investment in the business pending recoupment.
1. Net revenues shall be distributed for expenses and profit sharing after deduction by 25% towards professional fees.
2. Profits remaining after all expenses shall be shared 50% between you (Deepak Joshi) and AIPC up to 3 years from start of business until February 31, 2010 or until you and AIPC have each made $18K (or 22K total i.e., all investment recouped) whichever is later. Thereafter profits after expenses shall be shared 30% by you (Deepak Joshi) and 70% by AIPC consistent with our preliminary agreement.
3. Monthly reports will be given to you indicating revenues, expenses and profits if any. A profit distribution check if determined shall be made to you in your name periodically in accordance with the above formula in 2 at the discretion of AIPC. You have the right to inspect accounts through an independent accountant at your own expense and at AIPC's convenience. AIPC shall not bear that expense.
4. You (Deepak Joshi) shall have no role in any activities relating to marketing or administration of AIPC except as landlord of the leased space of the Indianapolis office ensuring proper work space and associated conveniences.
5. AIPC shall close its Indianapolis office located at 8345 Clearvista Place, IN 46256 on expiry of the office lease. All movable property shall be sold, auctioned or otherwise disposed and the monetary proceedings shall be equally 50% given to you (Deepak Joshi) and AIPC. Such movable property shall also be divided through other arrangements agreeable by you and AIPC.The following options are also acceptable:
6. Revenues from ARs pending shall be distributed up to 1 year following the closure of AIPC operations using the formula in 2 above. In the event that you (Deepak Joshi) ha[ve] been unable to recoup your initial investment, AIPC shall pay the balance to you so that all investment has been recouped.
7. AIPC assures the above except in circumstances beyond control such as a serious illness, disability, death of the physician(s) of AIPC or during a malpractice event to name a few.
8. You (Deepak Joshi) can get your remaining investment 18K paid to you immediately by AIPC, marking the date of such payment.Along the same lines:
9. All ARs pending up to that date will be marked and followed up to one year. Any profits obtained using the formula in 2 shall be applied to the 18K paid out to you. Any profits obtained using the formula in 2 exceeding this 18K from the pending ARs before the 1 year period shall be given to you up to the 1 year period.
10. All movable property shall belong to AIPC once you accept your 18K payment.
11. AIPC shall continue operations until lease expiration. You shall have no further claims with AIPC or any of its property.
12. AIPC shall discontinue operation immediately if you pay $18K to AIPC which is the remaining investment.
13. You undertake to take the Indianapolis office space lease and payments of the C-arm and pain table and free AIPC and its physician(s) of all financial obligations relating to the Indianapolis pain center.I think the above is a fair and equitable arrangement. If you undertake to recoup your investment, the above mentioned 18K presumes that amount at this point in time. If you get some profit distribution then this amount will reduce to reflect the correct unrecouped investment.
14. AIPC shall relinquish all claims of movable property present in its Indianapolis office.
15. ARs receivable shall be marked and followed up to one year. 100% profits after deducting professional fee shall be given to you until they reach 18K paid to AIPC, thereafter you shall receive 50% of profits until one year.
You may forward this letter to your legal team.
Joshi did not respond to Srinivasan's letter, and AIPC continued its operations at the leased premises, with AIPC paying the rent to Good Host. But on September 14, 2008, Srinivasan wrote a letter to Joshi stating, "This letter will serve as your one month notice." Id. at 46. In the letter, Srinivasan outlined alleged "fire safety" and "health safety" violations by Joshi, "who represents or is the landlord solely by partnership to whom rents were being paid and had also provided janitorial services for a fee." Id. Srinivasan also stated in the letter:
As a partner of the dissolved Castlepoint Pain Associates you share any existing debts and obligations until its dissolution on 7/28/08. With ceasing of operations of the Castleton pain center, your debt in the business far exceeds any income received as of date.
Debt Description of Castlepoint Pain Associates:
* * *
Rent payments 44 [months] [$]136,000Id. And on October 14, 2008, Srinivasan wrote to Joshi "d/b/a Castlepoint Pain Associates" to notify him that AIPC "has stopped operating at the [leased] premises[.]" Id. at 49. That letter also stated, "Since you are the landlord, lessor, lessee and tenant of the [leased premises] you can proceed with your plans for the above premises without my involvement." Id.
On July 15, 2010, Good Host filed a complaint against AIPC alleging breach of contract under the lease agreement. And Good Host filed an amended complaint on November 1. Attached to the amended complaint were five exhibits: the lease agreement; a letter of understanding regarding the lease executed by Srinivasan for Castlepoint; Srinivasan's July 28, 2008 letter to Joshi; Srinivasan's September 14, 2008 letter to Joshi; and Srinivasan's October 14, 2008 letter to Joshi. In the amended complaint, Good Host alleged that Srinivasan's July 2008 letter to Joshi constituted an assignment of the lease from Castlepoint to AIPC and that AIPC is, therefore, liable for the amount still due under the lease agreement. In the alternative, Good Host alleged that AIPC assumed the lease by operation of an equitable assignment.
AIPC moved to dismiss the amended complaint for failure to state a claim under Trial Rule 12(B)(6). In particular, AIPC argued that Castlepoint did not assign its interest in the lease to AIPC, neither as a matter of law nor in equity. Following a hearing, the trial court granted AIPC's motion to dismiss Good Host's amended complaint. This appeal ensued.
DISCUSSION AND DECISION
Good Host contends that the trial court erred when it concluded that it had failed to state a claim upon which relief can be granted. The standard of review on appeal of a trial court's grant of a motion to dismiss for the failure to state a claim is de novo and requires no deference to the trial court's decision. Lei Shi v. Cecilia Yi, 921 N.E.2d 31, 36 (Ind. Ct. App. 2010). The grant or denial of a motion to dismiss turns only on the legal sufficiency of the claim and does not require determinations of fact. Id. Further, as we stated in Irish v. Woods, 864 N.E.2d 1117, 1120 (Ind. Ct. App. 2007):
When reviewing a motion to dismiss for failure to state a claim upon which relief can be granted, this court accepts as true the facts alleged in the complaint. In re Train Collision (Dillon v. Chicago Southshore & South Bend R.R. Co.), 670 N.E.2d 902, 905 (Ind. Ct. App. 1996), trans. denied, cert. denied, 522 U.S. 914 (1997). But a court need not accept as true allegations that are contradicted by other allegations or exhibits attached to or incorporated in the pleading. Rainey v. Nat'l Check Bureau, Inc., 849 N.E.2d 776, 778 (Ind. Ct. App. 2006). Further, "[i]t is a well-settled rule that when a written instrument contradicts allegations in the complaint to which it is attached, the exhibit trumps the allegations." N. Ind. Gun & Outdoor Shows v. City of S. Bend, 163 F.3d 449, 454 (7th Cir. 1998).[] Indeed, "a plaintiff may plead himself out of court by attaching documents to the complaint that indicate that he or she is not entitled to judgment." Id. at 455 (quoting In re Wade, 969 F.2d 241, 249 (7th Cir. 1992)). Nor need a court accept as true conclusory, non-factual assertions or legal conclusions. Richards & O'Neil v. Conk, 774 N.E.2d 540, 547 (Ind. Ct. App. 2002).(Emphasis added). " 'A motion to dismiss under Rule 12(B)(6) tests the legal sufficiency of a complaint: that is, whether the allegations in the complaint establish any set of circumstances under which a plaintiff would be entitled to relief.' " Lei Shi, 921 N.E.2d at 36 (quoting Trail v. Boys & Girls Clubs of Nw. Ind., 845 N.E.2d 130, 134 (Ind. 2006)). Thus, while we do not test the sufficiency of the facts alleged with regards to their adequacy to provide recovery, we do test their sufficiency with regards to whether or not they have stated some factual scenario in which a legally actionable injury has occurred. Id.
Good Host maintains that Castlepoint assigned its entire interest in the lease to AIPC when Srinivasan, as a member of the LLC, wrote the July 28 letter to Joshi, which Good Host attached as an exhibit to the amended complaint. Thus, Good Host contends that AIPC breached the lease agreement when it abandoned the leased premises and stopped paying rent before the lease expired on January 31, 2012. AIPC argued to the trial court that no assignment occurred and, therefore, that Good Host failed to state a claim for breach of contract in its complaint.
An assignment is the transfer by a lessee of one's entire leasehold interest. Board of Comm'rs of Delaware County v. Lions Delaware County Fair, Inc., 580 N.E.2d 280, 284 (Ind. Ct. App. 1991), trans. denied. The construction of an assignment is the same as that of any contract. See Downing v. Dial, 426 N.E.2d 416, 419 (Ind. Ct. App. 1981). The basic requirements of a contract are offer, acceptance, consideration, and a meeting of the minds of the contracting parties. Sands v. Helen HCI, LLC, 945 N.E.2d 176, 180 (Ind. Ct. App. 2011), trans. denied. The question of whether a certain or undisputed set of facts establishes a contract is one of law for the trial court. Buschman v. ADS Corp., 782 N.E.2d 423, 428 (Ind. Ct. App. 2003). Contract formation requires mutual assent or a meeting of the minds on all essential contract terms. See id.; see also Pinnacle Computer Servs., Inc. v. Ameritech Publ'g, Inc., 642 N.E.2d 1011, 1013 (Ind. Ct. App. 1994). In order to be enforceable, a contract must be reasonably definite and certain in its material terms so that the intention of the parties may be ascertained. Wenning v. Calhoun, 827 N.E.2d 627, 629 (Ind. Ct. App. 2005), trans. denied.
Good Host maintains that Srinivasan's July 28, 2008, letter "constituted an assignment because Castlepoint reserved no right of re-entry for itself and thus assigned its entire leasehold interest [to AIPC]." Brief of Appellant at 5. In support of that contention, Good Host argues:
The facts pleaded in the amended complaint clearly establish the existence of the assignment, offer, and acceptance. AIPC and Castlepoint sent Good Host the Letter offering the assignment. Good Host had a reasonable opportunity to reject it pursuant to a consent clause contained in the Lease, and Good Host did not do so. The Letter made clear Castlepoint was assigning the Lease to AIPC, and that AIPC was offering to pay rent through the expiration of the Lease with the expectation AIPC would be permitted to continue for the entire course of the Lease. AIPC then occupied the premises and paid rent for three months—conduct which conformed to the offer and clearly manifested AIPC's intention to assume the lease. Good Host's actions of accepting AIPC's rent payments and permitting AIPC to occupy the property manifested its intention to accept the assignment. Notably, no confusion could exist regarding offer and acceptance because Good Host's actions conformed only to the offer and none of the alternative proposals in the Letter, both of which required either a payment to Good Host or AIPC.Id. at 8 (citations omitted). AIPC contends that the July 28 letter was not an assignment of Castlepoint's interest in the lease, but merely explained Srinivasan's reasons for the dissolution of Castlepoint and proposed options for Joshi to choose to complete the winding down of the business.
Indiana Code Section 23-18-9-3 provides in relevant part that a dissolved limited liability company may only carry on business that is appropriate to wind up and liquidate its business and affairs, including discharging or making provision for discharging liabilities. Here, in the July 28 letter, Srinivasan gave Joshi the option to "take the Indianapolis office space lease" himself or to permit AIPC to continue to operate its business at the leased premises "until lease expiration." See Appellant's App. at 43. Three months passed without any response from Joshi before AIPC closed its office at the leased premises. Good Host argues that because AIPC occupied the premises and paid rent for three months, that conduct "conformed to the offer and clearly manifested AIPC's intention to assume the lease." But the letter does not state that AIPC offered, intended, or had agreed to assume the lease.
We hold that there was no assignment of the lease as a matter of law. Srinivasan's letter was, at best, equivocal on this issue, and nothing in the July 28 letter states that AIPC would assume the lease. Rather, AIPC, which had operated its business at the leased premises from the inception of the lease, merely continued its operations. And nothing in the letter indicates an intention to release Castlepoint from its liability under the terms of the lease. Instead, Srinivasan's September 14 letter, which was also included as an exhibit to Good Host's amended complaint, states, "As a partner of the dissolved Castlepoint Pain Associates you share any existing debts and obligations[,]" including rent payments for the remainder of the lease. Id. at 46. That statement, without more, defeats the allegation in Good Host's complaint that AIPC had assumed the lease. See Irish, 864 N.E.2d at 1120.
In sum, there was no offer, acceptance, or meeting of the minds on the alleged assignment, and the terms of the July 28 letter were insufficiently definite to bind AIPC under the lease. In light of the options Srinivasan gave to Joshi, without any response from Joshi or further negotiations, there was no assignment of the lease. Joshi reads one sentence in the letter in isolation. We must construe the meaning of the letter in its entirety. Srinivasan gave Joshi options and continued operating AIPC's business pending a response, and the letter is consistent with the dissolution of Castlepoint, the parties' LLC, which remained liable under the lease. The trial court did not err when it found that Good Host failed to state a claim for breach of contract under the theory of an assignment of the lease.
However, Good Host has also asserted that AIPC is liable under the theory of equitable assignment. In Collins v. McKinney, 871 N.E.2d 363, 372-73 (Ind. Ct. App. 2007), this court held that even where there is " 'no formal assignment' " of a contract, an assignment may be found in equity. (Quoting The Indianapolis Mfg. & Carpenters Union v. The Cleveland, C., C. & I. Ry Co., 45 Ind. 281, 288 (1873)). In Collins, where we reversed the trial court's grant of a directed verdict, we held:
Here, Collins presented sufficient evidence to support a jury finding that the arrangement between Tomkinson and Glenbrook constituted an equitable assignment as discussed in Indianapolis Manufacturing. First, the evidence as to whether there was ever actually a management agreement between Tomkinson and Glenbrook is in conflict. At one point, Doug McKibben, the owner of Glenbrook, testified, "We had a Management Agreement." Tr. p. 123. However, he then testified that the "only" agreement between Tomkinson and Glenbrook was the Asset Purchase Agreement. Id. at 123-24. Furthermore, there is evidence that Glenbrook assumed Tomkinson's lease obligations for Parcel 1 in August 2004, took possession of Parcel 1, and began paying rent directly to McKinney for the parcel. Finally, there is evidence that Glenbrook began selling a different brand of cars than McKinney after taking possession of Parcel 1, suggesting that Glenbrook was in primary control. The jury could have reasonably found that the arrangement between Tomkinson and Glenbrook constituted an assignment of the Sublease.871 N.E.2d at 373. Thus, there are three elements to establish an equitable assignment: the existence of an agreement (here, the lease); an assumption of the obligation under the agreement (here, AIPC made rent payments); and control (here, AIPC was in possession of the leased premises).
Because the grant or denial of a motion to dismiss turns only on the legal sufficiency of the claim and does not require determinations of fact, Good Host has stated a claim for relief under the doctrine of equitable assignment. We, of course, express no opinion on the merits of Good Host's equitable assignment claim, but it is sufficient to state a claim for relief under 12(b)(6). The trial court erred when it dismissed Good Host's claim on that theory.
Affirmed in part, reversed in part, and remanded for further proceedings. RILEY, J., and MAY, J., concur.