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PB and Associates, Inc. v. Bakken Group, Inc.

United States District Court, D. North Dakota, Northwestern Division

April 9, 2014

PB and Associates, Inc., Plaintiff,
v.
Bakken Group, Inc., Defendant.

ORDER DENYING MOTION TO DISMISS AND IN THE ALTERNATIVE FOR RELEASE OF LIS PENDENS

CHARLES S. MILLER, Jr., Magistrate Judge.

Before the court is a motion to dismiss by defendant Bakken Group, Inc. or, in the alternative, for an order expunging a Notice of Lis Pendens. For the reasons set forth below the motion (Doc. No. 6) will be denied.

I. BACKGROUND[1]

Plaintiff PB and Associates, Inc. ("PB") and defendant Bakken Group, Inc. ("Bakken Group") entered into a non-binding Letter of Intent ("LOI") on October 25, 2013, which stated that the mutual intent of the parties was to form a Montana limited liability company ("LLC") to establish, own, and operate a private waste water treatment plant on a specifically-identified 189 acre tract in Williams County, North Dakota, in or near the City of Williston. The LOI stated, among other things, that the intent was that the Bakken Group would convey the subject property to the LLC to serve as its 80% contribution and ownership share and PB would contribute a 20% cash equivalent for its 20% ownership share.

Following the execution of the LOI, a third party - Burning Run LLC ("Burning Run") - got involved in the proposed project. On October 29, 2013, the Bakken Group, PB, and Burning Run entered into a Memorandum of Understanding ("MOU") for the development of the "NextGen Sewer Treatment Plant."

As did the LOI, the MOU provides for the development of a private waste water treatment plant on a 189 acre tract in Williston, North Dakota, to be owned and operated by an LLC to be formed by the parties. The MOU purports to spell out: (1) the ownership interest of each of the three parties in the LLC; (2) the initial capital contributions of each member; (3) the identities of the two persons who will serve as managers of the LLC; and (4) certain additional "representations and warranties" that provide some outline for the project and its financing. The MOU then goes on to state:

The Parties agree and acknowledge that this MOU is legally binding, and it is an enforceable agreement between the parties hereto with respect to the provisions herein, and that it will inure to the benefit of the Parties and their respective successors and assigns.
The Parties hereby agree use [sic] their respective best efforts to negotiate in good faith and with all deliberate speed to enter into an Operating Agreement for WNTF, LLC and all additional agreement(s) that incorporate the essential terms, conditions, and constitutive elements in this MOU. The Parties agree to use their respective best efforts to execute such Operating Agreement and other agreements within fifteen (30) [sic] days of the execution of this LOI [sic].

PB filed its complaint in this action on January 10, 2014, suing only the Bakken Group. Attached to the complaint are copies of the LOI, a document containing certain financial projections, and the MOU. Following a recitation of some of the background facts, the complaint alleges: 21.

Significant time and resources were spent on preparing to successfully pursue the joint venture. Plaintiff and other partners made a total of five trips to meet with Defendant and expended additional resources on discussions with attorneys in anticipation of entering into the Operating Agreement and developing the Property.
22.
Subsequent correspondence from Gary Chilcott (hereinafter referred to as "Chilcott"), President and Chief Executive Officer of Bakken Group, Inc., indicated that Defendant would be regrouping and reconsidering its plan for the waste water treatment plant and another project, citing the interest in securing fair financing with experienced partners.
23.
Further correspondence from Chilcott indicated that Defendant had no intention of honoring the MOU, that it had merely been a first step, and that when he signed it he had said if it was ...

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