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LAS VEGAS-The lawsuit over what would have been a $1-billion luxury residential-over-retail project here is heating back up. The locally-based partner in the deal, which saw most of its initial claims dismissed in August, some of them on technicalities, has filed a motion seeking approval to file an amended complaint that would revive the key claims and add new ones, including fraud and negligent misrepresentation. The defendants, from Ireland, are opposing the motion. A hearing before the judge is scheduled for early next week.

“We are essentially changing some of the causes of action based on the judge’s prior ruling,” John Manly, the plaintiff’s attorney, tells GlobeSt.com. “We’re very confident that eventually this case will get to a jury.”

The plaintiff is Glen, Smith & Glen Development and the entities it created for the development. The defendant includes Dublin-based Harcourt Development, its principal Patrick Doherty and the subsidiary it created for the development, Harcourt Nevada LLC. Generally speaking, a development partnership was set up whereby Glen, Smith Glen would manage the development and Harcourt would be responsible for providing all the equity needed to finance construction. The lawsuit was filed after Harcourt decided not to provide the necessary equity.

In its initial complaint, the plaintiff was Sullivan Square Harcourt LLC (SSH), the entity both the plaintiff and the defendant set up for the development and construction of Sullivan Square. In throwing out the breach of contract claim (the first two causes of action), plaintiff’s attorney John Manly tells GlobeSt.com that the judge implied that the claim needed to be alleged by the minority member of SSH LLC, not SSH LLC itself. In the proposed amended complaint, the plaintiff has been changed to GSG DSM Holdings LLC.

In throwing out the causes of action related to breach of fiduciary duty, the judge found that there is no fiduciary duty between members of an LLC unless that LLC is member-managed, akin to a close corporation. The motion seeking approval to file the amended complaint argues that the defect was cured in July when GSG DSM Holdings relinquished its status as managing member of the LLC to Harcourt Nevada. As a result of the change, SSH LLC became akin to a close corporation and, as a result, assumed and owed fiduciary duties to GSG DSM Holdings as the minority member/shareholder of SSH, according to the motion.

In throwing out the initial causes of action, the judge also noted that the allegations “transcend breach of fiduciary duty and get into generalized statements of fraud and conspiracy” and suggested particularized pleading is the plaintiffs wish to allege frauds as a separate cause of action. The amended complaint indeed alleges fraud and negligent misrepresentation in separate causes of action.

As for whether the motion will be successful, Glen Smith & Glen’s attorneys argue that precedent requires that approval to amend a complaint “should be freely given when justice so requires” and when there has been no “undue delay, bad faith or dilatory motive on the part of the movant.”

In opposing the motion to file the amended complaint, Harcourt argues both that “the court lacks personal jurisdiction over the Irish defendants” and that “many of the plaintiffs’ alleged claims are invalid, as a matter of law.”

In its response to the opposition, Glen Smith & Glen’s attorneys argue that Harcourt cannot have it both ways. “The Irish Defendants cannot specially appear on jurisdictional grounds, while, at the same time, make a general appearance by arguing the substantive merits of Plaintiffs’ proposed amended complaint,” states the response. “The Nevada Supreme Court has unequivocally addressed this situation: by addressing the merits of Plaintiffs’ claims, and by going beyond jurisdictional grounds, the Irish Defendants have made a general appearance and have consented to jurisdiction of this Court. Defendants’ proffered “futility” argument, which is seemingly jurisdictional based, therefore becomes moot.”

Harcourt’s local legal counsel did not return a Monday phone call seeking comment. To read previous stories on the case, click on any of the following headlines:

Sullivan Square Developer Sues Ireland Partner

Harcourt Moves to Dismiss

Judge Dismisses Bulk of Claims Against Harcourt

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