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LLC v. Healthy Food Corporation

United States District Court, D. New Hampshire

March 30, 2016

17 Outlets, LLC,
v.
Healthy Food Corporation, d/b/a Frozurt, and Tai H. Pham
v.
ThurKen III, LLC and Richard E. Landry, Jr. Opinion No. 2016 DNH 072

          ORDER

          JOSEPH DICLERICO, Jr., District Judge.

         17 Outlets, LLC brought suit against Healthy Food Corporation, d/b/a Frozurt, ("HFC") and Tai H. Pham after HFC failed to pay rent due under a lease for commercial space in Merrimack, New Hampshire, that is subject to a guaranty signed by Pham. HFC brought a third-party complaint against ThurKen III, LLC and ThurKen's manager, Richard E. Landry, Jr., arising from the original lease agreement with ThurKen. ThurKen and Landry move to dismiss the claims against them.

         In response to the motion to dismiss, HFC has voluntarily dismissed its claims for breach of contract and promissory estoppel, Counts I and III of the Third Party Complaint. HFC objects to the motion to dismiss the claim against ThurKen and Landry for fraudulent misrepresentation, Count II.

         Standard of Review

         In considering a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), the court assumes the truth of the properly pleaded facts and takes all reasonable inferences from the facts that support the plaintiff's claims. Mulero-Carrillo v. Roman-Hernandez, 790 F.3d 99, 104 (1st Cir. 2015). Conclusory statements in the complaint that merely provide the elements of a claim or a legal standard are not credited for purposes of a motion under Rule 12(b)(6). Lemelson v. U.S. Bank Nat'l Assn., 721 F.3d 18, 21 (1st Cir. 2013). Based on the properly pleaded facts, the court determines whether the plaintiff has stated "a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

         Background

         Beginning in October of 2011, HFC was in the business of selling frozen yogurt products at retail outlets. In February of 2012, HFC contacted Dustin Burke, Jr., president of American Commercial Real Estate, LLC, about leasing a retail location for its frozen yogurt business in Westford, Massachusetts. Burke responded that the Westford location was not available.

         Burke contacted HFC in April of 2012 about leasing space at a proposed strip mall that would be built by ThurKen in Merrimack, New Hampshire. The financing for the mall required ThurKen to have signed leases for all four spaces in the mall. By early April, ThurKen had signed leases with Starbucks, Qdoba Mexican Grill, and Digital Credit Union.

         On April 18, 2012, Burke, on behalf of ThurKen, sent a letter of intent to HFC to rent space at the mall. The letter proposed a "triple net lease" with an initial term of fifteen years, base yearly rent of $80, 000 for the first five years, and other charges. HFC responded that it could not afford the space under the terms of the lease, particularly the fifteen year term. Either Burke or Landry on behalf of ThurKen told HFC that the bank required the fifteen year lease term. Landry also told HFC that if HFC could not pay the rent, the space easily could be leased to other tenants.

         HFC signed the lease on June 1, 2012. HFC agreed to the lease terms "based on Landry's assurances that meant the most it would lose if it defaulted on the lease would be the cost to fit up the space to conduct its frozen yogurt business." ThurKen bought the property to build the mall on June 1, 2012.

         ThurKen sold the mall to 17 Outlets on April 17, 2014. In October of 2014, 17 Outlets served HFC with an eviction notice for failure to pay rent. 17 Outlets also brought this action against HFC to recover damages for breach of the lease.

         Discussion

         In the fraud claim, HFC alleges that ThurKen and Landry falsely represented to it that the fifteen-year lease term was required to obtain bank financing and that HFC could terminate the lease at any time "without any further adverse economic consequence." HFC asserts that those representations were false and that it relied on those representations in signing the lease, which has resulted in the action by 17 Outlets seeking damages from HFC. ThurKen and Landry move to dismiss the fraud ...


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