DCJM, LP v. Aunt Bug's Cabin Rentals, LLC
3:24-cv-00354
E.D. Tenn.Apr 14, 2025Background
- DCJM, LP (“Plaintiff”), a Texas real estate investment entity, contracted with Aunt Bug’s Cabin Rentals, LLC (“AB”) for management of five luxury cabins in Tennessee, including one on Laurelwood Lane.
- The agreement for the Laurelwood property covered management through at least December 31, 2025 (potentially extended to 2027 by a promotion), with certain obligations regarding notice of sale and use of Mighty Peaks Realty, LLC (“MP”) for brokerage services.
- Plaintiff decided to sell the Laurelwood property before the management contract’s expiration and ultimately sold it to a buyer who did not assume AB’s property management.
- Plaintiff brought several claims—including breach of contract, conversion, and unfair trade practices—while defendants counterclaimed for breach of contract (regarding the sale and supposed obligation for the buyer to assume the management agreement; for both AB and MP).
- Defendants filed a partial motion to dismiss; Plaintiff moved to dismiss defendants’ counterclaims; the case is at the motion to dismiss stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of buyer-assumption requirement | Clause is an unreasonable restraint on alienation & void | It is not a restraint on alienation; only enforces contract vs. owner, not buyer | Clause unenforceable as against TN public policy; dismissed claim as to this theory |
| Breach by early termination of management agreement | Sale does not constitute breach under contract terms | Sale/termination before term ends is breach | Survives motion to dismiss; claim may proceed on early termination grounds |
| MP as third-party beneficiary of agreement | MP not a party nor intended beneficiary of contract | MP is an intended third-party beneficiary based on contract language | MP not an intended beneficiary; claim dismissed in its entirety |
| Request for more definite statement | Seeks clarity if claims survive dismissal | Pleadings are adequate under Rule 8 | Moot as Count II (relating to MP) is dismissed |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (standard for plausibility in pleadings under Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading standard under Rule 8)
- Dick Broad. Co. of Tenn. v. Oak Ridge FM, Inc., 395 S.W.3d 653 (implied covenant of good faith and fair dealing under Tennessee law)
- Benton v. Vanderbilt Univ., 137 S.W.3d 614 (requirements for third-party beneficiary enforcement in Tennessee)
- First Tennessee Bank Nat. Ass’n v. Thoroughbred Motor Cars, Inc., 932 S.W.2d 928 (criteria for intended vs. incidental beneficiaries)