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Hambrick v. Mashhoon

United States District Court, M.D. Tennessee, Nashville Division

January 30, 2015

JAMES HAMBRICK and DENISE HAMBRICK, Plaintiffs,
v.
HAMID MASHHOON, et al., Defendants.

REPORT AND RECOMMENDATION

JOHN S. BRYANT, Magistrate Judge.

TO: THE HONORABLE ALETA A. TRAUGER

Defendants Charles Kaelin and Marcus French have filed their motion to dismiss based upon the statute of limitations and Plaintiffs' alleged failure to state a claim upon which relief can be granted (Docket Entry No. 9). Plaintiffs, who are proceeding pro se, have not responded in opposition.

For the reasons stated below, the undersigned Magistrate Judge recommends that Defendants' motion be GRANTED and the complaint DISMISSED against Defendants Kaelin and French.

STATEMENT OF THE CASE

This case arises out of an option contract to purchase certain real property owned by Plaintiffs James and Denise Hambrick on Posey Hill Road in Mount Juliet, Wilson County, Tennessee. Plaintiffs assert claims against Defendants Kaelin and French under theories of breach of contract, breach of fiduciary duties and good faith, and promissory fraud (Counts I, II and VII).

SUMMARY OF PERTINENT FACTS

According to the complaint, in early 2006 Defendant CRK Real Estate, LLC, then owned solely by Defendant Kaelin and represented by its agent, Defendant French, approached the Hambricks and proposed an agreement regarding the Hambricks' home and land located on Posey Hill Road near Mount Juliet, Tennessee. Following negotiations, the Hambricks entered into the Option to Purchase Real Estate ("the Agreement") with Defendant CRK on February 18, 2006. A copy of this Agreement is included as an exhibit to the complaint (Docket Entry No. 1-1 at 39-46).

Summarizing the pertinent provisions, the Agreement provides that, in consideration for a payment of $25, 000, the Hambricks granted to CRK the option - but not the obligation - to purchase their Posey Hill Road property for a purchase price of $660, 000. The term of this option was two years from the date of execution, February 18, 2006. The Agreement also provided: "In the event [CRK] sells the Property for more than Six Hundred Sixty Thousand Dollars ($660, 000), [CRK] shall pay to the [Hambricks] one-half (½) of the excess less expenses at the time of closing of such sale." ( Id. at 39). The Agreement provided that CRK could exercise its option to purchase the Hambrick property by providing written notice of its election to do so to the Hambricks on or before the expiration of the two year option period ( Id. at 41). The Agreement allowed the Hambricks to retain possession of the property for a period of one year after the closing so long as they maintained insurance on the home and its contents ( Id. ). Finally, the Agreement contained the following provision in paragraph 14: "Assignment. This Agreement may be assigned by (CRK)." ( Id. at 41).

It appears undisputed that CRK never exercised this option to purchase the Hambrick property under the terms of the Agreement, and that the option therefore expired two years after its execution, on or about February 18, 2008.

The Hambricks allege that "on or around July or August of 2006, " or "sometime prior to October of 2006, " Defendant French "represented to the [Hambricks] that [CRK] promised to exercise its option to purchase the Hambrick property in October of 2007 but then subsequently failed to do so despite having the financial resources in hand...." ( Id. at 20). The Hambricks assert that in reliance on this representation by Defendant French, they located and purchased a new home. Later, after CRK declined to exercise its option to purchase their Posey Hill Road property, the Hambricks sold the property to Defendant RM Wilson County Investor, LLC for the amount of $500, 000, or $160, 000 less than the option price contained in their option Agreement with CRK.

The Hambricks maintain that they have recently met Mr. Jay Wilfong, who owned property near the Hambricks' Posey Hill Road property. The Hambricks claim that in March 2014 they learned through Wilfong of certain transactions that occurred in September by which Defendant Kaelin, on behalf of CRK, conveyed property owned by CRK, including the option to purchase the Hambricks' Posey Hill Road property, to RM Wilson County Investor, LLC, of which Defendants Hamid Mashhoon and Carol Perrin were members (Docket Entry 1-1 at 12).

Plaintiffs have attached as an exhibit to their complaint a copy of a document entitled "Option Agreement and Escrow Instructions" dated September 25, 2006, between CRK and RM Wilson County Investor, LLC (Docket Entry No. 1-1 at 94-107). In summary, CRK in this agreement grants to RM Wilson County Investor LLC an option to purchase certain property of CRK, including both owned land, land under sales contracts, and land under options to purchase. This agreement grants to RM the option - but not the obligation - to purchase some or all of the included property of CRK. Paragraph 1.4 of this agreement provides in pertinent part: "To the extent that all or any portion of the Optioned Land is included among the Property that [RM] intends to purchase, [CRK] agrees that it shall exercise its option with respect to such Optioned Land and acquire fee title to such Optioned Land prior to the close of the Escrow (as defined below)." (Docket Entry No. 1-1 at 95).

The Hambricks also have included as an exhibit to their complaint the "Amended and Restated Operating Agreement of CRK Real Estate LLC" also dated September 25, 2006 (Docket Entry No. 1-2 at 14-64). By this agreement, Defendant Kaelin admitted RM Wilson County Investor, LLC as an additional member of CRK in consideration of a capital contribution paid by RM to CRK. Paragraph 3.8 of this agreement grants to RM the sole right to determine whether CRK should exercise any or all of the options ...


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