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Gulf Coast Visuals Management Company, LLC v. Wedelstedt

United States District Court, N.D. Alabama, Southern Division

March 9, 2018

GULF COAST VISUALS MANAGEMENT COMPANY, LLC, Plaintiff,
v.
EDWARD J. WEDELSTEDT, individually; EDWARD J. WEDELSTEDT, as Personal Representative of THE ESTATE OF LYNDA ENTRATTER, deceased; SOUTHERN STAR, LLC, Defendants.

          MEMORANDUM OPINION AND ORDER

          T. MICHAEL PUTNAM UNITED STATES MAGISTRATE JUDGE

         This action is before the court on the motion (doc. 19) filed by the defendants on August 14, 2017, seeking either to strike or dismiss the amended complaint (doc. 16) filed by the plaintiff on July 31, 2017. Defendants also have filed a motion to stay the scheduled deadlines in the case (doc. 31).[1]

         On the same day, January 23, 2017, this action was removed to this court by the defendants and they filed their answer to the complaint originally filed in state court. The original complaint, filed in the Circuit Court of Jefferson County, Alabama, on December 22, 2016, alleged that a dispute existed between the plaintiff and one or more of the defendants as to the purported ownership of a parcel of real property located in Jefferson County, Alabama. Alleging that it had a contract to purchase the disputed real estate, toward which it was paying $1, 500.00 per month to consummate the purchase, plaintiff Gulf Coast Visuals Management Company, LLC (“Gulf Coast Visuals”) pleaded claims for equitable relief in the form of quiet title, specific performance, and an equitable lien against the real property. (Doc. 1-1). Several months after the removal and filing of the answer by the defendants, the plaintiff filed, without prior leave of court, an amended complaint greatly expanding the nature of the controversy and the claims being alleged. It is this amended complaint that the defendants move to strike or dismiss.

         In the amended complaint, the plaintiff alleges not just a contract to purchase real property in Jefferson County, Alabama, but a separate and much broader contract to purchase the stock in several companies owned purportedly by the Estate of Lynda Entratter (“the Estate”). Defendant Wedelstedt is the personal representative of the Estate, which was formed in Georgia, where the decedent lived prior to her death. The plaintiff alleges that in 2010, it entered into a series of contracts with the Estate to manage several businesses owned by the Estate under a “Management Contract.” At the same time, the plaintiff and the Estate (through Wedelstedt) entered into a separate “Purchase Contract” that gave Gulf Coast Visuals the option to purchase the stock of several companies owned by the Estate. On May 2, 2011, the plaintiff exercised its option, and on October 7, 2011, the sale of stock was closed.[2] At the closing, Gulf Coast executed a promissory note in the amount of $1, 593, 662.72, calling for monthly payments of $20, 000. The note was secured by a pledge of stock in various companies owned by Gulf Coast Visuals. Filed on July 31, 2017, the amended complaint goes on to allege:

11. Contemporaneously with the Stock Sale, Wedelstedt agreed to sell the Birmingham store (as alleged by Gulf Coast in this action), in a transaction calling for payments of $1, 500 per month under the real estate note at issue in the Alabama Suit. The amortization schedule for the Real Estate Sale ends at the same time as amortization schedule for the Stock Sale. Gulf Coast has made all the $1, 500 payments.
12. Thus, each month, Gulf Coast pays the Estate (the checks are sent to Mr. Wedelstedt) Payments of $21, 500 per month.

(Doc. 16). Paragraph b. of the opening section of the amended complaint further states that the sale of the real estate was “secured by payment by Gulf Coast of $1, 500 per month pursuant to an unsigned promissory note made by Gulf Coast (“RE Note”).” (Doc. 16, at 2) (italics added).

         Gulf Coast Visuals alleges that it has made all payments due so far under both promissory notes, totaling $21, 500 per month, but it also alleges that it is concerned that, in fact, the Estate does not own the stock it purported to sell to the plaintiff. Due to that concern, on June 27, 2017, counsel for the plaintiff delivered a letter to counsel for the defendants demanding certain specified assurances that the Estate owns the stock that is the subject of the Purchase Agreement and that it is capable of conveying the stock to Gulf Coast Visuals free of any liens or encumbrances. Finally, the amended complaint alleges that when the defendants failed to provide reasonably satisfactory assurances, the amended complaint was filed to assert claims and causes of action arising out of the stock sale, not just the sale of the Alabama real estate.

         The amended complaint greatly expanded the scope of this action by adding eleven new claims, as follows:

Count IV-Declaratory Judgment that the plaintiff is entitled to reasonable assurances of the Estates ability to comply with the stock Purchase Agreement;
Count V-Breach of Contract of the Purchase Agreement;
Count VI-Suppression of materials facts to induce plaintiff to enter into the Purchase and Management Agreements;
Count VII-Fraud and Fraudulent Suppression relating to required disclosures under the Purchase Agreement;
Count VIII-Securities Fraud in that the defendants made material misstatements and omissions relating to the sale of stock to the plaintiff in violation of state and federal law;
Count IX-Civil Theft and Conversion in that the moneys paid by the plaintiff for the purchase of the stock has been diverted to Wedelstedt and that a conspirator with Wedelstedt has converted money and assets from the plaintiff while employed by the plaintiff;
Count X-Fraudulent Transfer in that Wedelstedt has used moneys paid to the Estate for purchase of the stock for the benefit of other entities in order to avoid the IRS and others;
Count XI-Misappropriation of Funds in that the defendants have taken the plaintiff's money while refusing to honor ...

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