Summary judgment on unjust enrichment claim denied in dispute over St. Louis housing project

By Charmaine Little | Feb 4, 2019

ST. LOUIS – A mixed ruling was delivered by a federal judge in a dispute involving a St. Louis residential housing project.

On Jan. 23, U.S. District Judge E. Richard Webber of the U.S. District Court for the Eastern District of Missouri in the Eastern Division granted in part and denied in part Alliant Asset Management Co. LLC, Alliant Capital LTD, Alliant Credit  Facility LTD, Alliant Credit Facility ALP LLC, Alliant Tax Credit Fund 36 LTD and Alliant Tax Credit 36's motion for summary judgment in a suit over a limited partnership agreement for Water Tower Place.

Plaintiffs in the case are NTD I LLC, North Tower Development LLC and Paul Weismann.

The defendants argued that rental achievement wasn’t met; Weismann’s guaranty obligations are in place; since rental achievement wasn’t met, the plaintiffs’ breach of implied covenant of good faith complaints should be tossed out; and that the plaintiffs' claims are blocked since the plaintiffs allegedly breached the contract themselves before there was any breach from the defendants.

As for the rental achievement argument, the court pointed out the occupancy requirements for the project were never fulfilled since the plaintiffs failed to show they had 100 percent occupancy as the agreement requires and granted summary judgment on that claim. The court also determined summary judgment for rental achievement concerning waivers was improper and denied it under the notion that the defendants waived the rental achievement requirement.

As for Weismann’s guaranty obligations, the defendants said Weismann was supposed to continue to fund the development deficits “irrespective of an alleged cap of $500,000 because the cap only exists to funds expended following rental achievement,” according to the opinion. Since there are genuine issues of material fact, the court denied summary judgment.

The court then looked at the unjust enrichment count and denied summary judgment.

"While the court has determined rental achievement has not been achieved because of the failure to achieve 100 percent occupancy, the court has not granted summary judgment on the issue of whether defendants have waived rental achievement. Accordingly, there are genuine issues of material fact as to plaintiffs’ claims for unjust enrichment and therefore summary judgment will be denied," according to the ruling.

The court did grant summary judgment on the equitable contribution claim as it relates to the Alliant entities serving as a co-obligor for Weismann’s financial obligations.

The court also denied the motion for summary judgment on breach of implied contract, since there are multiple notions that challenge if defendants “evaded the spirit of the transaction and therefore denied plaintiffs the expected benefit of their contract, namely, capital contributions,” according to the opinion.

The court also denied the summary judgment motion concerning whether the plaintiffs were the first to breach the contract.

The issue dates back to 2006 when the Water Tower Place Limited Partnership was formed to construct, remake and monitor affordable housing apartment units to qualify for federal and state housing tax credits for low-income households.

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