Sullivan Square: One Motion Granted, One Denied

LAS VEGAS-The local plaintiffs lost some ground last week in the lawsuit over Sullivan Square, a would-have-been $1-billion, 1,300-unit luxury residential-over-retail project at Durango Drive and Interstate 215. Eighth Judicial District Court Judge Mark Denton granted the defendants’ motion to dismiss for lack of jurisdiction on behalf of the individual Irish defendants. In addition, Judge Denton dismissed several of the causes of action in the plaintiff’s first amended complaint. On the other hand, Judge Denton did not grant the motion to dismiss for lack of jurisdiction on behalf of the Ireland-based company operated by the individual Irish defendants, and he upheld, at least for now, several of the causes of action in the amended complaint including breach of contract.

The players are locally based Glen, Smith & Glen Development and Dublin, Ireland-based Harcourt Developments, the individuals behind those companies and the LLC entities they created for the now defunct partnership and project. Generally speaking, GSG and Harcourt created a development partnership whereby GSG would manage the development and Harcourt would be responsible for providing all the equity needed to finance construction. The lawsuit was filed in April 2008 after Harcourt decided not to provide the necessary equity.

In December, Judge Denton threw out most of the original complaints in August on a technicality regarding which entities the plaintiff should actually be suing. The amended complaint revived key claims such as breach of contract and breach of fiduciary responsibility, and added new ones including fraud and negligence.

Judge Denton dismissed with prejudice the negligence and consumer fraud causes of action in the plaintiff’s amended complaint, as well as the plaintiff’s allegations of intentional interference and conspiracy. Several of the causes of action were not dismissed, including breach of contract, breach of fiduciary responsibility, breach of good faith and fair dealing, unjust enrichment and derivative claims.

“The court cannot say to a legal certainty…that the First Amended Complaint fails to state [these] claims,” Judge Denton states in his decision. “Much of what the defendants have argued in this Motion is fact specific and would be better deal with by way of motion for summary judgment to the extent that resolution short of trial is appropriate.”

The plaintiff contends that Harcourt Developments, the Ireland-based company that formed the local LLCs that were involved in the development, is liable for the actions of the LLCs—Harcourt Development LLC and Sullivan Square LLC. The plaintiff’s argument is that because the Ireland company is the sole member of Harcourt Development LLC, and because it directed the actions of Harcourt Development LLC, a member of Sullivan Square LLC, in the transactions that are at issue in the case.

The defendant argues that the Ireland-based company is not liable for the actions of the local LLC in which it has an interest. “If people or entities were subject to in personam jurisdiction simply by virtue of owning r controlling interests in entities that have been formed for the very reason of conducting the envisioned business, then formation of separate business entities would be a charade and waste of time.”

“These things being so, Plaintiffs have alternatively contended that they should be allowed some discovery on the jurisdictional issues,” Judge Denton determined. “Plaintiffs appear to maintain that Harcourt Developments is not only the owner and member of Harcourt Nevada LLC, but that Harcourt Developments, apart from such LLC ownership/membership, actively went beyond such role into actually involving itself in, inter alia, ‘…hiring and directing employees…’ on the project.”

To read previous stories on the case, click on any of the following headlines:

Sullivan Square Lawsuit Ramping Up Again

Judge OKs Amended Sullivan Square Complaint

GSG Seeks Amended Sullivan Square Complaint

Judge Dismisses Bulk of Claims Against Harcourt

Harcourt Moves to Dismiss

Sullivan Square Developer Sues Ireland Partner