# Oro Capital Advisors, LLC v. Borror Construction Co., LLC

> District Court, S.D. Ohio · July 15, 2020

URL: https://www.frixlaw.com/law-library/cases/10375988

## Case

- **Court:** District Court, S.D. Ohio
- **Decided:** July 15, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10375988

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION

ORO CAPITAL ADVISORS, LLC, et al., :
: Case No. 2:19-cv-05087
Plaintiffs, :
: JUDGE ALGENON L. MARBLEY
v. :
: Magistrate Judge Deavers
BORROR CONSTRUCTION CO., LLC, et al., :
:
:
Defendants. :

OPINION & ORDER

I. INTRODUCTION
This matter is before the Court on Defendants Borror Construction Co., LLC, Douglas
Borror, LoriBeth Steiner, Tom Garske, and Danielle Borror-Sugarman’s Motion to Dismiss. Doc.
16. The Motion is fully briefed and is now ripe for review. For the reasons set forth below, the
Court GRANTS Defendants’ Motion [#16].
II. BACKGROUND
Plaintiffs -- Oro Capital Advisors, LLC, Oro Karric South, LLC, Oro Karric North, LLC,
Oro Silvertree, LLC, Oro Springburne, LLC, Oro RB SPE Owner, LLC, and Oro Island Club SPE
Owner -- own and operate residential properties located throughout the Greater Columbus, Ohio
Area. Doc. 1 at 8-9. On June 25, 2018, Plaintiff Oro Capital, acting as agent for all Plaintiffs,
entered into a written contractual agreement with Defendants, whereby Defendants were to
complete renovations on Plaintiffs’ properties. Id. at 6.
Between June 25, 2018 and July 19, 2019, Defendants began renovations on the subject
properties. Id. at 11. This work, however, was never completed. Id. Prior to terminating the
agreement, Defendants informed Plaintiffs that they would no longer complete the entire project
but represented that they would at least finish the renovations they had already begun. Id. at 14.
Subsequently, on July 23, 2019, Defendants told Plaintiffs that they would have the partially-
started renovations completed by August 2, 2019. Id. Defendants would later recant on this
statement and abandon all unfinished work. Id.

Plaintiffs have filed this civil suit against Defendants raising ten causes of action: (1)
Breach of Contract (Count One); (2) Breach of Express Warranties (Count Two); (3) Promissory
Estoppel (Count Three); (4) Breach of Fiduciary Duties (Count Four); (5) Conversion (Count
Five); (6) Fraud as to the Borror Representations (Count Six); (7) Fraud (Count Seven); (8)
Negligent Construction (Count Eight); (9) Quiet Title (Count Nine); and (10) Slander of Title
(Count Ten). Defendants have moved to dismiss Counts Three through Eight.
III. STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint for a
failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive a

motion to dismiss, “the plaintiff must allege facts that, if accepted as true, are sufficient to raise a
right to relief above the speculative level and to state a claim to relief that is plausible on its face.”
Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (citing Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555, 570 (2007)) (internal quotations omitted). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (quoting Ashcroft v. Iqbal,
129 S. Ct. 1937, 1949 (2009)). And although the court “must accept all well-pleaded factual
allegations in the complaint as true,” the court “need not accept as true a legal conclusion couched
as a factual allegation.” Id. (quoting Twombly, 550 U.S. at 555) (internal quotations omitted).
IV. ANALYSIS
Defendants have moved to dismiss Counts Three through Eight of Plaintiffs’ Complaint.
The Court will address each of Defendants’ arguments, in turn, below.
A. Whether Plaintiffs can Assert a Claim for Promissory Estoppel
In Count Three of the Complaint, Plaintiffs raise a claim for promissory estoppel stemming

from Defendants’ promises to complete renovations on the subject properties. Defendants move
to dismiss this claim, arguing that a claim for promissory estoppel cannot be brought where the
parties’ dispute is governed by a valid contractual agreement.
The Sixth Circuit has made clear that “[p]romisory estoppel is not applicable where the
parties’ claims are governed by a valid contract.” Right-Now Recycling, Inc. v. Ford Motor Credit
Co., LLC, 644 F. App’x 554, 558 (6th Cir. 2016). Still, pursuant to Federal Rule of Civil Procedure
8(d), a plaintiff can plead breach-of-contract and promissory estoppel claims in the alternative
where the validity and/or enforceability of the contract at issue is in dispute. Lynch v. Sease, 244
F. App’x 736, 739 (6th Cir. 2007).

Here, Defendants have conceded that the parties have a valid and enforceable contract
governing the renovation project. See Doc. 24 at 7 (“There is no dispute, and Defendants readily
admit, that there was a valid and enforceable contract between Borror Construction and Plaintiff
Oro Capital Advisors, LLC (“Oro Capital”), i.e. the Construction Agreement that is attached as
Exhibit 1 to Plaintiffs’ Complaint. Nor is there any dispute that Plaintiff Oro Capital entered into
the Construction Agreement ‘as representative for the property owners with fully (sic)
authority.’”). Defendants also acknowledge that their obligations under the contract are owed to
all Plaintiffs in this case. See id. at 7 n.1. (“While Plaintiffs accuse Borror Construction of
inconsistency in its position here and what Borror Construction has argued in state court in separate
litigation between Borror Construction and Plaintiff Oro RB SPE Owner, LLC (“Runaway Bay”),
Plaintiffs are wrong. There is no inconsistency between arguing (as Borror Construction has in
state court) that Runaway Bay is not a signatory to the Construction Agreement and therefore lacks
standing to enforce the alternative dispute resolution provisions of the Construction Agreement
with the argument being asserted here -- that Borror Construction’s obligations to all the Plaintiffs

in this case arise out of and are governed by the Construction Agreement.”). Hence, Defendants
are now judicially estopped from arguing or pleading otherwise. See Han v. Hankook Tire Co.,
Ltd., 799 F. App’x 347, 349 (6th Cir. 2020) (“When a party convinces a court to take a certain
position, and later advocates an inconsistent position, the court can apply the doctrine of judicial
estoppel to prevent that party from playing ‘fast and loose’ with the courts.”) (citing Edwards v.
Aetna Life Ins. Co., 690 F.2d 595, 598-99 (6th Cir. 1982)).
Notwithstanding the above, Plaintiffs contend that their promissory estoppel claim should
survive dismissal because the promises that form its basis are separate and independent from their
breach-of-contract claim; specifically, Plaintiffs assert that Defendants made some of these

promises after they unilaterally terminated the contract. It appears that Plaintiffs are referring to
Defendants’ July 23, 2019 promise to finish portions of the renovation project that had already
begun. See Doc. at 14. Plaintiffs’ argument, however, is misplaced. Critically, the parties’
contract encompasses the July 23, 2019 promise. To be sure, the contract required Defendants to
complete renovations on the subject properties. Defendants later promise to finish partially-started
renovations represents the exact same performance contemplated by the contract. Plaintiffs’
promissory estoppel claim in Count Three is, therefore, DISMISSED. See Shane v. Bunzl
Distribution USA, Inc., 200 F. App’x 397, 403 (6th Cir. 2006) (“[E]stoppel cannot be the basis for
a claim if it represents the same performance contemplated under a written contact.”).
B. Whether Defendants Owed Plaintiffs a Fiduciary Duty
In Count Four of the Complaint, Plaintiffs raise a claim for breach of a fiduciary duty.
Defendants move to dismiss this claim on the basis that their status as a construction manager
under the parties’ contractual agreement does not give rise to a fiduciary relationship.
“A fiduciary relationship creates the highest order of duty imposed by law.” In re Sallee,

286 F.3d 878, 891 (6th Cir. 2002). In this relationship, “the fiduciary must make every effort to
avoid having his own interests conflict with those of the principal.” Id. Importantly, the creation
of a fiduciary duty requires more than “the generalized business obligation of good faith and fair
dealing.” Id. The Sixth Circuit has made this unequivocally clear:
The duty of good faith and fair dealing merely requires the parties to ‘deal fairly’ with one
another and does not encompass the often more onerous burden that requires a party to
place the interest of the other party before his own, often attributed to a fiduciary duty.

. . .
The fact that one businessman trusts another, and relies upon his promise to perform a
contract does not give rise to a confidential relationship. Every contract includes an
element of confidence and trust that each party will faithfully perform his obligation under
the contract. Neither is the fact that the relationship has been a cordial one, of long
duration, evidence of a confidential relationship.

Id. at 891-92 (quoting Crim Truck & Tractor Co. v. Navistar Int’l Transp. Corp., 823 S.W.2d 591
(Tex. 1992)).
Here, the only grounds Plaintiffs advance for the proposition that Defendants owed them a
fiduciary duty is a provision in the contract stating the parties agree to “proceed with the Project
on the basis of mutual trust, good faith, and fair dealing” and the fact that Plaintiffs gave
Defendants managerial responsibilities, such as handling bidding and accounting for the project.
See Doc. 21 at 15. Additionally, Plaintiffs note that Defendants had an obligation to pass on any
discounts it was offered and to disclose conflicts of interest, presumably with bidders. See id.
Nothing about this relationship, however, required Defendants to act primarily for the benefit of
Plaintiffs or gave Defendants a position of superiority or influence over Plaintiffs. See Hope
Academy Broadway Campus v. White Hat Mgt., L.L.C., 145 Ohio St. 3d 29, 40-41 (Ohio 2015)
(“We have defined the term ‘fiduciary relationship’ as one ‘in which special confidence and trust
is reposed in the integrity and fidelity of another and there is a resulting position of superiority or

influence, acquired by virtue of this special trust. In determining whether a fiduciary relationship
has been created, the main question is whether a party agreed to act primarily for the benefit of
another in matters connected with its undertaking.”) (internal citations omitted). To the contrary,
this was purely a business relationship based on mutual trust. See In re Sallee, 286 F.3d at 891-
92. Accordingly, Plaintiffs’ breach of fiduciary duty claim under Count Four is DISMISSED.
C. Whether Plaintiffs can Assert a Claim for Conversion
In Count Five of the Complaint, Plaintiffs bring a conversion claim, alleging Defendants
wrongfully took and misused property -- including money, materials, supplies, and equipment --
that was earmarked specifically for the property renovations. Defendants argue that this claim

must be dismissed because it is precluded by Plaintiffs’ breach-of-contract claim.
Where a conversion claim is based on the same conduct that underlies a breach-of-contract
claim, the conversion claim must be dismissed. See Toledo Mack Sales & Serv., Inc. v. Mack
Trucks, Inc., 437 F. App’x 381, 385 (6th Cir. 2011) (“Once the district court correctly determined
that [MTI’s] obligation to purchase TMSS’s parts inventory arose from the Distributor Agreement,
it was established that the conversion claim is based on the same actions as the contract claim. The
conversion claim is therefore duplicative of the breach of contract claim and is not permitted under
Ohio law.”).
Here, Plaintiffs’ conversion claim is based on Defendants’ alleged failure to use Plaintiffs’
property in accordance with the parties’ contractual agreement. It thus follows that Plaintiffs’
conversion claim arises from Defendants’ obligations under the parties’ contract. Because there
is no dispute that the parties’ contract is valid and legally enforceable, Plaintiffs’ conversion claim
must be DISMISSED.

D. Whether Plaintiffs have Satisfied the Heightened Pleading Requirements for Fraud
In Counts Six and Seven of the Complaint, Plaintiffs raise claims of fraud against all
Defendants. Defendants argue that these claims must be dismissed because no particular
individual is alleged to have made any particular misrepresentation and Plaintiffs fail to plead
where or when these alleged fraudulent statements were made.
Pursuant to Federal Rule of Civil Procedure 9(b), which governs claims of fraud, a plaintiff
must “allege the time, place, and content of the alleged misrepresentation . . . the fraudulent
scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.” United
States ex rel. SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 504 (6th Cir. 2008). “Although Rule

9(b)’s special pleading standard is undoubtedly more demanding than the liberal notice pleading
standard which governs most cases, Rule 9(b)’s special requirements should not be read as mere
formalism, decoupled from the general rule that a pleading must only be so detailed as is necessary
to provide a defendant with sufficient notice to defend against the pleading’s claims.” Id. at 503
(internal citations omitted). Rather, “Rule 9(b) should be interpreted in harmony with Rule 8’s
statement that a complaint must only provide ‘a short and plain statement of the claim’ made by
‘simple, concise, and direct allegations.’” Id. (quoting Fed. R. Civ. P. 8(a)). This is because “Rule
9(b) exists predominantly for the same purpose as Rule 8: to provide a defendant fair notice of the
substance of a plaintiff’s claim in order that the defendant may prepare a responsive pleading.” Id.
at 504 (internal quotations and citation omitted). Under this backdrop, the Court will analyze
Plaintiffs’ fraud claims in Counts Six and Seven.
1. Count Six
The crux of Plaintiffs’ fraud claim in Count Six can be captured by a single paragraph
within the Complaint:

Doug Borror, Steiner, Garske, Borror Sugarman, the John Doe Defendants, Borror
Construction (collectively “Defendants”), and other principals, employees and/or
representatives of Defendants and/or affiliates of the Defendants, represented that Borror
Construction had vast experience renovating multifamily communities and, particularly,
individual apartment units and, specifically, providing third-party construction
management services, including, but not limited to, providing proper scope of work,
bidding, accounting, scheduling, sourcing of materials, identifying qualified vendors,
development of renovation designs and or plans, and organizing and working with labor,
materials, equipment, and the services necessary (the “Borror Representations”).

Doc. 1 at 6. Plaintiffs suggest that these fraudulent representations were made sometime prior to
and leading up to June 25, 2018, the date on which the parties signed the construction agreement.
See id. Further, Plaintiffs assert that they were injured by these misrepresentations because they
were induced into signing a contractual agreement that was never fulfilled.
Here, even assuming Plaintiffs have set forth facts putting Defendants on notice of the time,
place, and content of the alleged misrepresentations, the intent of Defendants, and Plaintiffs’
resulting injury, Plaintiffs fail to identify which Defendants made each misrepresentation. Instead,
Plaintiffs group all Defendants together as one, which is not sufficient to enable a particular
Defendant to determine with what it is charged. See Hoover v. Langston Equipment Assocs., Inc.,
958 F.2d 742, 745 (6th Cir. 1992) (“The complaint identifies relationships between various of the
defendants but it alleges misrepresentations without sufficiently identifying which defendants
made them. The complaint does not enable a particular defendant to determine with what it is
charged.”); Heinrichs v. Dunn, 2014 WL 3572404, at *10 (S.D. Ohio July 21, 2014) (Marbley, J.)
(“Because a complaint may not rely on blanket allegations against all defendants because each
defendant named in the complaint is entitled to be apprised of the circumstances surrounding the
fraudulent conduct with which he individually stands charged, Plaintiff’s complaint, which
collectively refers to Defendants, except Mr. Dunn, fails to allege the required specificity.”)
(internal quotations and citations omitted). Accordingly, Plaintiffs’ fraud claim in Count Six must

be DISMISSED. See Arnold v. Alphatec Spine, Inc., 2014 WL 2896838, at *12 (S.D. Ohio June
26, 2014) (“Plaintiffs’ reference to ‘Defendants’ collectively is insufficient to ‘identify the
speaker’ of the false statements. As a practical matter, even if all named Defendants contributed
to the fraud offense, they did not all simultaneously transmit the alleged false statements.
Therefore, Plaintiffs cannot accurately allege that false statements were made by all Defendants.”).
2. Count Seven
In Count Seven, Plaintiffs allege several bases for its fraud claim. The relevant allegations
are as follows:
Borror Construction, through Steiner, Garske and/or Borror Sugarman, represented to
Plaintiffs that would (sic) complete certain portions, in good workmanlike condition, of the
Renovations by specific deadlines when, in fact, at the time Borror Construction made such
representations it knew or reasonably should have known that it would not complete those
portions of the Renovations within those deadlines.

Borror Construction, through Steiner, Garske and/or Borror Sugarman, represented to
Plaintiffs that it would and was passing on any discounts it received from the Borror
Vendors to Plaintiffs, when, in fact, at the time Borror Construction made such
representations, it knew or reasonably should have known that it would not and was not
passing on any discounts it received from the Borror Vendors to Plaintiffs, but instead was
insisting that certain Borror Vendors charge higher than usual or non-discounted prices for
the Renovations so that Borror Construction could in turn obtain a higher construction
management fee under the Borror Construction Agreement due to such fee being structured
as a percentage of the cost of the Renovations.

Borror Construction, through Steiner and/or Garske, represented to Plaintiffs that it and/or
the Borror Vendors performed, inspected, or completed certain portions of the
Renovations, when in fact, Borror Construction knew or should have reasonably known
that it and the Borror Vendors had not performed, inspected, or completed certain portions
of the Renovations.

Borror Construction, through Doug Borror, Steiner, Garske, and/or Borror Sugarman,
represented to Plaintiffs that amounts billed by Borror Construction for labor costs were
actual costs with no additional mark ups attached when in fact Defendants knew there was
a mark-up on the labor costs.

Borror Construction, through Steiner, Garske and/or Borror Sugarman, represented that its
team members under the employ of Borror Construction were qualified to manage the
completion of the Renovations although they knew or reasonably should have known that
they lacked the required knowledge and experience to do so.

Borror Construction represented, through requests for payment (without proper backup),
the costs Borror Construction was improperly charging for the Renovations associated with
the unit upgrades, or otherwise, when in fact, Borror Construction knew or should have
known that such charges were not in-line with agreed upon expenses between Borror
Construction and Plaintiffs.

Borror Construction represented through invoices provided that charges incurred for the
ordering of materials were necessary to complete the Renovations, when in fact, Borror
Construction knew or should have known that such charges included the ordering of
material in excess of what was required to complete the Renovations.

Borror Construction represented, through Steiner and/or Garske, that discussions were
underway for correction or compensation for defective components of the Renovations,
when in fact, no such discussions between Borror Construction and the Borror Vendors
actually occurred.

Doc. 1 at 39-42.
Here, unlike in Count Six, Plaintiffs have made some effort, though not necessarily
sufficient, to identify which Defendants made each alleged misrepresentation. In addition,
Plaintiffs have pled facts establishing the content of the alleged misrepresentations, the scheme
and intent of Defendants (i.e., to, among other things, induce Plaintiffs to sign the construction
agreement and to increase their profit under said agreement), and Plaintiffs’ resulting injury.
Further, it can arguably be inferred, though more specificity is desired, that all of the alleged
misrepresentations in Count Seven took place between June 25, 2018 -- the date on which the
parties signed the construction agreement -- and July 23, 2019 -- the date on which Defendants
promised to finish portions of the renovations they had already begun. See Zaptron (HK) Ltd. v.
Air Sea Transport, Inc., 221 F.R.D. 482, 484 (N.D. Ill. 2004) (“While it is true that the time
requirement is not exact, the plaintiff must allege an ‘approximate time frame.’”). Where
Plaintiffs’ Complaint clearly falls short, however, is identifying where, how, and to whom these
misrepresentations were communicated. The Complaint does not explain, for example, “whether

the communications occurred in face-to-face meetings, letters, written correspondence, brochures,
or telephone conversations.” See Fischer Indus. Inc. v. Medivance Instruments, Ltd., 1992 WL
686866, at *6 (N.D. Ill. Aug. 31, 1992). And, “[b]ecause Plaintiffs were the recipients of the
alleged misrepresentations, Plaintiffs must know—and could have alleged—where and how the
Defendants communicated these false statements.” See id. For these reasons, Plaintiffs’ fraud
claim in Count Seven is DISMISSED.
E. Whether Plaintiffs can Assert a Claim for Negligent Construction
Finally, in Count Eight of the Complaint, Plaintiffs raise a negligent construction claim,
alleging Defendants failed to complete the property renovations in a workmanlike manner and in

accordance with industry standards. Defendants move to dismiss this claim on the basis that it is
precluded by Plaintiffs’ breach-of-contract claim.
Although Ohio law recognizes a legal duty of a contractor to perform services in a
workmanlike manner, this duty arises from contract law rather than tort law. See Jarupan v.
Hanna, 173 Ohio App. 3d 284, 294 n.1 (Ohio Ct. App. 2007) (“When a party contracts for future
construction services (such as the remodeling or repair of an existing structure), the contract
includes an implied duty to perform in a workmanlike manner. Consequently, if the builder or
contractor breaches that implied duty, it is liable in contract, not tort.”) (internal citations omitted);
Hilsinger Building and Dev. Corp. v. Terracon Consultants, Inc., 2019 WL 4601774, at *7 (S.D.
Ohio Sept. 23, 2019) (‘Ohio law recognizes a duty of builders or contractors to perform work in a
workmanlike manner—a duty which arises out of contract law.”). Hence, where a defendant’s
duties arise out of contract, there can be no negligent construction claim. See Cork-Howard
Constr. Co. v. Dirty D Props., LLC, 2017 WL 5574145, at *3 (N.D. Ohio Nov. 20, 2017) (“Since
this is a contractual duty, the tort claims must be dismissed as a matter of law.”).
Here, Defendants’ obligation to complete the property renovations in a workmanlike
manner arise directly from the parties’ contractual agreement. Because this is a valid and legally
enforceable contract, Plaintiffs’ negligent construction claim must be DISMISSED.
V. CONCLUSION
For the reasons stated herein, the Court GRANTS Defendants’ Motion to Dismiss [#16]
Counts Three through Eight of the Complaint. The Court will, however, permit Plaintiffs to file a
Motion for Leave to Amend their Complaint, but only as it relates to the fraud claims in Counts
Six and Seven. See Mason v. Wal-Mart Corp., 2015 WL 1197916, at *10 (S.D. Ohio Mar. 16,
2015) (Marbley, J.) (“In cases where a more carefully drafted complaint might state a claim, a
plaintiff must be given at least one chance to amend the complaint before the district court
dismisses the action with prejudice.) (internal quotations and citation omitted). To be clear, the
Court’s decision to allow Plaintiffs to file for leave to amend their complaint does not weigh on
the merits of Plaintiffs’ fraud claims. Plaintiffs will have fourteen (14) days from the date of this
Opinion and Order to file their Motion, which should include a copy of their proposed amended
complaint attached as an exhibit.
IT IS SO ORDERED. ies
i <7

ALGENONA. MARBLEY————_ =
CHIEF UNITED STATES DISTRICT JUDGE
DATED: July 15, 2020
12

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10375988. Public record. Not legal advice.