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Traverse v. The Gutierrez Co.

United States District Court, D. Massachusetts

July 15, 2019

NORMAN TRAVERSE AND NASSRINE TRAVERSE, INDIVIDUALLY AND ON BEHALF OF TECHNOLOGY PARK X LIMITED PARNTERSHIP, Plaintiffs,
v.
THE GUTIERREZ COMPANY, GUTIERREZ CONSTRUCTION COMPANY, ARTURO J. GUTIERREZ, ARTHUR J. GUTIERREZ JR., and TECHNOLOGY PARK X LIMITED PARTNERSHIP, Defendants.

          MEMORANDUM AND ORDER

          Denise J. Casper, United States District Judge.

         I. Introduction

         Plaintiffs Norman Traverse and Nassrine Traverse, individually and derivatively on behalf of Technology Park X Limited Partnership (collectively, “the Traverses”), filed suit against The Gutierrez Company (“TGC”), Gutierrez Construction Company, Inc. (“GCCI”), Arturo J. Gutierrez, Arthur J. Gutierrez, Jr. and Technology Park X Limited Partnership (collectively, “Defendants”). D. 15. Defendants now bring a counterclaim against the Traverses alleging breach of contract (Count II), breach of fiduciary duty (Count III) and abuse of process (Count IV) and seek a declaratory judgment (Count I). D. 34. The Traverses have moved to dismiss the counterclaim pursuant to Fed.R.Civ.P. 12(b)(6). D. 38. Defendants have also moved to amend the answer and counterclaim. D. 56. The Court ALLOWS Defendants' motion to amend, D. 56, and accordingly considers the proposed amended counterclaim filed at D. 57-1 to be the operative counterclaim.[1] For the following reasons, the Court ALLOWS in part and DENIES in part the Traverses' motion to dismiss Defendants' counterclaim, D. 38.

         II. Standard of Review

         On a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6), the Court must determine if the facts alleged “plausibly narrate a claim for relief.” Schatz v. Republican State Leadership Comm., 669 F.3d 50, 55 (1st Cir. 2012) (citation omitted). The Court will dismiss a pleading that fails to include “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “To avoid dismissal, a [counterclaim] must provide ‘a short and plain statement of the claim showing that the pleader is entitled to relief.'” García-Catalán v. United States, 734 F.3d 100, 102 (quoting Fed.R.Civ.P. 8(a)(2)). “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “Nor does a [counterclaim] suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Id. (second alteration in original) (quoting Twombly, 550 U.S. at 557). “In determining whether a [pleading] crosses the plausibility threshold, ‘the reviewing court [must] draw on its judicial experience and common sense.'” García-Catalán, 734 F.3d at 103 (second alteration in original) (citation omitted). “This context-specific inquiry does not demand ‘a high degree of factual specificity.'” Id. (citation omitted).

         III. Factual Background

         The following summary is based upon the allegations in the amended counterclaim, D. 57-1 (which starts on page 20), which are accepted as true for the consideration of the motion to dismiss.

         Plaintiff Norman Traverse (“Norman”) entered into the Tech Park Associates Joint Venture Agreement in 1981 to develop property in Billerica, Massachusetts. D. 57-1 ¶ 13. In 2003, Norman assigned his interest in the venture to himself and Nassrine Traverse (“Nassrine”) as joint tenants with rights of survivorship. D. 57-1 ¶ 20. The Traverses currently have a 38% ownership in the joint venture, as well as in two limited partnerships: Technology Park X Limited Partnership (“Tech Park X”) and Technology Park V Limited Partnership (“Tech Park V”). D. 57-1 ¶¶ 21, 49. Tech Park X is a limited partnership that was created by the Tech Park X Limited Partnership Agreement (the “LP Agreement”) in 1987 and amended most recently in 1997. D. 57-1 ¶¶ 22-23. Tech Park V is also a limited partnership created by agreement (the “Tech Park V LP Agreement”) in 1999 and amended most recently in 2015. D. 57-1 ¶ 48. Tech Park X and Tech Park V both own commercial office buildings on the venture's land in Billerica that are managed by Defendant TGC. D. 57-1 ¶ 54. TGC is the general partner of Defendants Tech Park X and Tech Park V. D. 57-1 ¶ 5. Section 4.3 of the LP Agreement grants TGC “the exclusive right to manage the business of the Partnership.” D. 57-1 ¶ 27. Defendant Arthur J. Gutierrez, Jr. (“Arthur”) is the President of TGC and GCCI and a limited partner of Tech Park X and Tech Park V. D. 57-1 ¶ 8. Defendant Arturo J. Gutierrez (“Arturo”) is a limited partner of Tech Park X and Tech Park V. D. 57-1 ¶ 7.

         Tech Park X rents offices to commercial tenants in its building. D. 57-1 ¶¶ 39-40. TGC manages the building and receives 5% of the gross income generated by the building. D. 57-1 ¶ 29. The LP Agreement specifies that parties to the Agreement may contract with Defendant GCCI, an affiliate of TGC, to provide construction and other services for Tech Park properties. D. 57-1 ¶ 30. The only condition on TGC's ability to retain the services of affiliated entities is that the provision of such services must “be at reasonable and competitive market rates.” Id. (quoting LP Agreement § 4.6). Norman knew at the time of execution of the Joint Venture Agreement and LP Agreement that TGC wanted GCCI to provide most, if not all, construction services to the Tech Park properties. D. 57-1 ¶ 31.

         From approximately 1989 through 2010, the Tech Park X building had consistent occupancy and low vacancy rates and Tech Park X made cash distributions to its partners. D. 57-1 ¶¶ 40-41. In 2010, however, one of the building's tenants filed for bankruptcy and another vacated the building. D. 57-1 ¶ 42. Since that time, there have been continued vacancies in the building and Tech Park X has operated at a deficit. D. 57-1 ¶ 44. Accordingly, Tech Park X has not made any cash distributions to its partners since 2012. Id. That same year, TGC decided to renovate the building to attract tenants and increase occupancy. D. 57-1 ¶ 45. Each year since the renovation, Tech Park X had been able to reduce vacancies, but suffered a blow in 2017 when another tenant filed for bankruptcy and ended its lease. D. 57-1 ¶ 46. Currently, only about 209, 015 square feet of the building's total 449, 000 square feet are occupied. D. 57-1 ¶ 47.

         After the Tech Park partnerships ceased making cash distributions in 2012, the Traverses allegedly decided they wanted to leave the partnerships and embarked on a course of conduct meant to coerce TGC and other partners, including Arturo and Arthur, to acquire their interests. D. 57-1 ¶ 56. Under the LP Agreement, any limited partner needs consent of TGC to sell their partnership interest to anyone other than immediate family members. D. 57-1 ¶ 33.

         In 2013, the Traverses began “bombarding” TGC with ongoing requests and demands for information about the partnerships' finances, including ongoing audits. D. 57-1 ¶ 58. In 2016, the Traverses hired a forensic accountant, and TGC gave the accountant access to Tech Park X and Tech Park V's records. D. 57-1 ¶ 62. The Traverses never shared the results of the forensic audit with TGC, Tech Park X, Tech Park V or any of the other limited partners. D. 57-1 ¶ 65.

         The Traverses' information requests continued after the forensic audit and covered “nearly every expenditure made by Tech Park X, regardless of the nature and amount.” D. 57-1 ¶ 68. For example, Nassrine allegedly sent a lengthy email to TGC seeking documentation for charges that included “such small cost items as caulk and tape.” D. 57-1 ¶ 71. Some of the requests covered years' worth of expenditures, even though the Traverses already had access to audits for some of those years. D. 57-1 ¶ 72. In total, TGC employees spent over 100 hours responding to requests from Nassrine. D. 57-1 ¶ 73.

         The LP Agreement contains several provisions governing the review of ...


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