Forest Creek Townhomes, LLC v. Carroll Property Management, LLC
695 F. App'x 908
| 6th Cir. | 2017Background
- Forest Creek Townhomes, LLC owns a Memphis apartment complex; Hediger Enterprises managed it previously under a contract with MPI Coventry Village, LLC.
- The contract included a non-assignment clause; MPI later assigned rights to Highland Creek via bankruptcy proceedings, then foreclosure transferred ownership to Lloyd’s Acceptance Corp., and subsequently to Forest Creek.
- In 2011, Hediger’s employees allegedly told Barry Cohen there was no mold at the Property; Cohen later formed Highland Creek, Lloyd’s, then Forest Creek through successive transfers.
- Forest Creek sued in Tennessee chancery court for negligent misrepresentation and breach of contract; Defendants removed to federal court.
- The district court granted judgment on the pleadings on negligent misrepresentation and summary judgment on breach of contract, denying remand.
- On appeal, the Sixth Circuit affirmed removal timeliness, dismissal of negligent misrepresentation, and dismissal of breach of contract claim based on non-assignability and Georgia law on executory contracts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of removal | Removal was untimely under §1446(b)(3). | Removal timely after receiving solid information Forest Creek was diverse. | Removal timely; 28 U.S.C. §1446(b)(3) applied. |
| Negligent misrepresentation viability | Proposed amendment would show justifiable reliance by Forest Creek. | No foreseeability or intended beneficiary relation to Forest Creek; dismissal proper. | District court proper to dismiss and deny leave to amend. |
| Joinder of Cohen | Cohen could be joined as plaintiff under Rule 20. | Joinder not appropriate since Cohen’s claim involved different transaction. | Joinder properly rejected; Cohen not joined. |
| Breach of contract standing | Forest Creek acquired rights via assignment; contract validly assigned. | Assignment violated non-assignment clause; contract remained executory. | Assignment invalid under Georgia law; no standing for breach claim. |
Key Cases Cited
- Berera v. Mesa Med. Grp., PLLC, 779 F.3d 352 (6th Cir. 2015) (start of removal period when removable information first appears)
- Gascho v. Global Fitness Holdings, LLC, 863 F. Supp. 2d 677 (S.D. Ohio 2012) (CAFA removal timing and reasonable inquiry)
- Graiser v. Visionworks of Am., Inc., 819 F.3d 277 (6th Cir. 2016) (CAFA jurisdiction not directly controlling here)
- Hoven v. Walgreen Co., 751 F.3d 778 (6th Cir. 2014) (judgment on the pleadings standard)
- John Martin Co. v. Morse/Diesel, Inc., 819 S.W.2d 428 (Tenn. 1991) (Restatement §552 liability for negligent misrepresentation)
- Varsity Brands, Inc. v. Star Athletica, LLC, 799 F.3d 468 (6th Cir. 2015) (vital for corporate citizenship analysis of LLCs)
- Mingledorff’s Inc. v. Hicks, 209 S.E.2d 661 (Ga. Ct. App. 1974) (Georgia non-assignment enforcement when contract executory)