Blevins-Clark v. Beacon Communities, LLC et al

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
LEXINGTON
LAURA BLEVINS-CLARK,
Plaintiff,
v.
BEACON COMMUNITIES, et al.,
Defendants.
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Case No. 5:22-cv-00281-KKC-MAS
OPINION AND ORDER
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This matter is before the Court on five cross-motions for summary judgment filed by
the various Parties in this case, along with several other related motions. For the reasons
that follow, Blevins-Clark’s motion [R. 178] will be DENIED, and the motions filed by
NIDC and Malvern [R. 191], and NDRCRI [R. 193] will be GRANTED in part and
DENIED in part. The motion for summary judgment filed by Beacon Communities and
Keystone Ventures [R. 194] will be DENIED. The motion for summary judgment filed by
Beacon Companies and NDCREM [R. 195] will be GRANTED. Additionally, the Court will
DENY NIDC and Malvern’s Motion to Strike [R. 217], will GRANT Blevins-Clark’s Motion
for Disbursement of Funds [R. 187], and will DENY NIDC and Malvern’s Motion for
Injunctive Relief [R. 204].
I
Plaintiff Laura Blevins-Clark is the daughter and sole heir of Ivan Blevins, a real
estate developer who was a general partner in five partnerships (“the Kentucky
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Partnerships”) that are at the center of the present dispute1. Defendant NIDC Housing
Corp. (“NIDC”) was a limited partner in the Kentucky Partnerships. Malvern Service Corp.
(“Malvern”) was not directly involved in the Kentucky Partnerships but is an affiliate of
NIDC.2 Defendant NDC Realty Investments, Inc. (“NDCRI”) was the managing general
partner of the Kentucky Partnerships. Defendants Beacon Communities, LLC (“Beacon”),
The Beacon Companies, Inc. (“Beacon Companies”), Keystone Values, LLC (“Keystone”),
and NDC Real Estate Management LLC (“NDCREM”) are also not partners in the
Kentucky Partnerships but are affiliates of NDCRI.3
In the late 1970s and early 1980s, Ivan Blevins, alongside his business associate
Harold Baldwin, entered into four limited partnerships4 for the development and
management of apartment complexes across Kentucky with Kaufman and Broad Housing
Corp5, investor limited partners known as K&B Housing Investors 1979-I and/or K&B
Housing Investors 1979-III6, and NDC Management Corp. Each of the partnerships were
governed by substantively identical written agreements. NDCRI joined the partnerships as
the managing general partner in 1992. Beacon acquired NDCRI in 2017. Importantly,
Blevins and Baldwin were general partners in the partnerships, NDCRI served as the
managing general partner, and NIDC, 1979-I, and 1979-III were limited partners.
1 One partnership, Jackson Street Towers, Ltd., while the subject of this litigation, presents a different posture.
NIDC is not a partner in this entity and thus does not assert a claim as to any sales proceeds related to the sale
of this property. As of the time the motions were filed, Blevins-Clark and the Beacon Defendants had entered a
tentative settlement agreement as to these funds, which is predicated on the occurrence of several conditions
which have not transpired.
2 Collectively, NIDC and Malvern are referred to as the “California Defendants” in much of the briefing on these
cross-motions, as well as other documents in the record.
3 NDCRI, Beacon, Beacon Companies, Keystone, and NDCREM are often referred to collectively in the briefing
on these motions, and elsewhere in the record, as the “Beacon Defendants.” However, the Court will refrain
from employing that terminology here, unless the Court intends to refer to the five entities collectively. Rather,
when only a single Beacon Defendant is at issue, the Court will refer to it directly.
4 The four partnerships are Greater Corbin Manor, Ltd.; Madison Avenue Apartments Phase I, Ltd; Beattyville
Manor Associates, Ltd.; and Campbellsville Manor Ltd.
5 Kaufman and Broad Housing Corp. is the predecessor of NIDC.
6 The record indicates that 1979-I was the investor limited partner in two of the partnerships, and 1979-III was
the investor limited partner in the other two partnerships.
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Ivan Blevins died in 2010, and Harold Baldwin died in 2019. On February 23, 2022,
the Defendants entered the Purchase & Sale Agreement with Amity Companies, LLC, for
the sale of the complexes. Around this time, the effect of Blevins’ and Baldwin’s deaths on
the partnership became a point of contention between the Parties to this lawsuit. NIDC
claimed entitlement to any sales profits attributable to the Blevins and Baldwin shares,
while Ms. Blevins-Clark contended she was entitled to them as her father’s heir. The
Parties also disagreed as to whether NDCRI provided adequate notification to the partners
regarding the death of Blevins and Baldwin.
Ultimately, Blevins-Clark filed her Complaint in this matter on October 21, 2022,
alleging that the Defendants, acting collectively, were attempting to improperly sell the
complexes and, subsequently, to deprive her of sales proceeds attributable to her late
father’s share. [See R. 1.] Some five weeks later, on November 28, 2022, the Court entered
an agreed order among the parties which permitted the sale of the complexes and ordered
the deposit of $701,382 of the proceeds into an escrow account. [See R. 15.] On September
5, 2024, the Court permitted NIDC to bring a number of cross-claims against the Beacon
Defendants, which collectively allege misconduct on the part of NDCRI in addressing the
partners’ deaths, and seek to pierce the corporate veil. [See R. 72.] Now, following
discovery, the various parties have moved for summary judgment. [R. 178; R. 191; R. 193;
R. 194; R. 195.] These motions are now fully briefed and ripe for judicial review.
II
Under Federal Rule of Civil Procedure, summary judgment is appropriate if “there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A party is entitled to summary judgment “if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with
affidavits, if any, show that there is no genuine issue as to any material fact and that the
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moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c); see also
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The United States Supreme Court has
consistently approved and encouraged the use of summary judgments to dispose of claims
having no genuine factual issues. See e.g., Celotex, 477 U.S. 317.
Although a court must construe facts and draw reasonable inferences in the light
most favorable to a non-movant, a non-movant must show sufficient evidence to create a
genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986); Klepper v. First Am. Bank, 916 F.2d 337, 341-42 (6th Cir. 1990) (citing
Celotex, 477 U.S. at 322). To do so, the non-moving party must direct the Court’s attention
“to those specific portions of the record upon which it seeks to rely to create a genuine issue
of material fact.” In re Morris, 260 F.3d 654, 655 (6th Cir. 2001).
“If a party fails to make a showing sufficient to establish the existence of an element
essential to that party’s case, and on which that party will bear the burden of proof at trial,”
entry of summary judgment is appropriate. Id. (citing Celotex, 477 U.S. at 322). The
Court’s role is to determine whether the case contains sufficient evidence from which a jury
could reasonably find for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248-49 (1986). “The standards upon which we evaluate motions for summary
judgment do not change when, as here, ‘both parties seek to resolve [the] case through the
vehicle of cross-motions for summary judgment.’” U.S. Bank, N.A. v. Cent. Bank & Trust
Co., 2025 U.S. Dist. LEXIS 110458, at *4 (E.D. Ky. June 11, 2025) (quoting Taft
Broadcasting Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991).
The fact that both parties have moved for summary judgment does not mean
that the court must grant judgment as a matter of law for one side of the
other; summary judgment in favor of either party is not proper if disputes
remain as to material facts. Rather, the court must evaluate each party’s
motion on its own merits, taking care in each instance to draw all reasonable
inferences against the party whose motion is under consideration.
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Id. (quoting Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir.
1987)).
III
The Parties seek summary judgment as to all counts raised in both Blevins-Clark’s
Amended Complaint and NIDC’s Crossclaim Complaint, with the exception of the Parties’
equitable claims, on which only the relevant Defendants seek summary judgment.
Consequently, a wide array of matters are before the Court. First, the Court will address
the critical question of who is ultimately entitled to the disputed Blevins funds, a question
that rests at the core of each of the Parties’ arguments. Next, the Court will turn to
Blevins-Clark’s equitable claims. Then, the Court will turn to the remaining counts of
NIDC and Malvern’s crossclaims against the Beacon Defendants. The Court will next
address NIDC’s request to pierce the Beacon Defendants’ corporate veil. Finally, the Court
will address the two motions for injunctive relief also pending before the Court in light of
their rulings on each of the foregoing issues.
A
The primary thrust of Blevins-Clark’s complaint contends that the Defendants
breached their contractual obligations – as stated in the partnership agreements – by
refusing to immediately pay her the disputed Blevins share upon the sale of the complexes.
[See R. 35 at 17-18.] Conversely, NIDC contends that it, not Blevins-Clark, is entitled to
Ivan Blevins’s share of partnership proceeds and that NDCRI likewise committed breach by
withholding the sale proceeds attributable to the share. [See R. 73 at 21-22.] In other
words, both Blevins-Clark and NIDC claim to be entitled to proceeds from the sale of the
complexes owned by the Kentucky Partnerships attributable to Ivan Blevins’s share. And
both contend that, by withholding the disbursement of these proceeds, NDCRI has breached
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the terms of the partnership agreements. It is readily apparent that both arguments
cannot be true; only one of the two can be lawfully entitled to these funds. Resolving this
question requires a close examination of the identical language across the four partnership
agreements.
Under Kentucky law, a claim for breach of contract requires the complainant to
demonstrate three things: “(1) the existence of a contract; (2) breach of that contract; and
(3) damages flowing from the breach of contract.” Taylor v. Univ. of the Cumberlands, 2018
U.S. Dist. LEXIS 152513, at *12 (E.D. Ky. Sep. 7, 2018) (quoting Metro Louisville/Jefferson
Cnty. Gov’t v. Abma, 326 S.W.3d 1, 8 (Ky. Ct. App. 2009)). Thus, “[t]o establish a breach of
contract claim under Kentucky law, the plaintiff must show clear and convincing evidence
that an agreement existed between the parties.” MidAmerican Distrib., Inc. v. Clarification
Tech., Inc., 807 F. Supp. 2d 646, 666-67 (E.D. Ky. 2011).
With respect to these elements, the Parties do not dispute the existence of a valid
and enforceable contract embodied in the form of the partnership agreements, as amended.
Nor do Blevins-Clark or NIDC dispute the existence of a breach7. NDCRI does not dispute
that it has withheld the disbursement of profits attributable to the Blevins share, nor does
it claim entitlement to the share itself. Nor do the Parties dispute the existence of
damages; either Blevins-Clark or NIDC is entitled to profits attributable to the Blevins
share. The central legal question, therefore, is to whom do the damages run?
At bottom, the breach damages run to the party who is entitled to receive the portion
of the sale proceeds attributable to Blevins’s partnership share. Blevins-Clark, NIDC, and
NDCRI raise different theories as to how the partnership agreements should be interpreted
and applied to answer this question. Several provisions of the partnership agreements, and
7 NDCRI, on the other hand, argues that neither party can establish breach. This argument is addressed later
in this opinion in Section III(C)(4).
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the scope and effect of amendments thereto, are essential to this dispute. Section 6.03(b)
provides that, “upon the … death … of a Person who is a General Partner, such Person
shall immediately cease to act as a General Partner and his Interest shall be disposed of in
accordance with the provisions of Section 7.18.” [R. 191-37.] As relevant here where the
death of a general partner has occurred, Section 7.18(c)(viii)(A) and (C) provided the
applicable procedure. It states first that, “the executor of the estate … shall have the right
to choose a successor General Partner, subject to compliance with Section 6.02,” however,
“if, within 60 days after such removal, the executor … fails to provide for the entry of an
acceptable substitute General Partner, … then the provisions of Section 7.18(c)(i)-(vii) shall
govern the disposition of the removed General Partner’s Interest.” [R. 191-38.] In turn,
Section 7.18 provides that “the Partnership Interest of the removed General Partner shall
be transferred, without payment of any consideration therefor, to [NIDC] or to any other
Person named by [NIDC] to become the new General Partner in his place” and “the
removed General Partner shall not be entitled to any return of his Capital Contribution.”
[Id.]
NIDC contends that, under these provisions, it became entitled to the economic
value of Blevins’s share of the partnership immediately on the sixty-first day following his
death, because his estate did not seek the admission of a substitute partner within the
requisite timeframe. [R. 191 at 7-8.] NIDC further argues that while subsequent
amendments limited its ability to seek the removal and substitution of a living partner,
none disturbed Section 7.18’s provisions relating to the death of a general partner. [R. 192
at 4-5.] In further support of its argument, NIDC provides that it and the Beacon
Defendants invoked, without objection, the death provisions in Sections 6.03(b) and 7.18
during the sale of Albany Manor in 2020. [R. 191 at 14-15.] The partnership agreement
corresponding to the Albany Manor entity was materially identical to those in dispute here,
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and involved the same partners, including both Blevins and Baldwin. [Id. at 14.]
Consequently, NIDC posits that not only do the partnership agreements provide for its
entitlement to the Blevins share, but the Parties here have also applied those provisions
notwithstanding 2004 Amendment without objection.
Blevins-Clark acknowledges that the executor of her father’s estate did not notify
the partners of her father’s death within 60 days thereafter, nor any time thereafter. She
contends that she did not seek the formal admission of a substitute partner “because she
never had copies of the partnership agreements, and was therefore unaware of the
requirements of section 7.18(c).” [R. 178 at 5-6.] And, she effectively contends that she did
not investigate further until this present controversy arose “because the Defendants always
treated her as if she were a partner from the time of her father’s death.” [Id.]
Furthermore, in Blevins-Clark’s view, NIDC forfeited any right it had to receive the
Blevins share upon his death when it adopted a 2004 amendment to the Agreements. [R.
178 at 10-11.] The third paragraph of the 2004 Amendment provides, “
[i]n addition, notwithstanding anything to the contrary contained in the
Agreement or this Amendment, any special consent, approval, general
partner and managing agent removal and nomination rights granted to
NIDC by name in the Agreement shall be and hereby are deleted and NIDC
shall no longer have such rights individually, except insofar as NIDC has
such rights in its capacity as a Limited Partner under the terms of the
Agreement.
[R. 191-52 at 2.] Because limited partners are not entitled to the “rights, benefits, and
protections described in 6.03 and 7.18,” Blevins-Clark argues that those provisions are
rendered entirely null and void by the amendment. [R. 178 at 11.] Consequently, with
those provisions nullified by amendment, Blevins-Clark provides that Ky. Rev. Stat. §
362.355 governs as a gap-filler and operates to render her entitled to the economic share of
her father’s partnership interest. [Id.]
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NDCRI introduces a third argument into the mix. At the outset, NDCRI agrees with
Blevins-Clark that the 2004 Amendment removed Section 7.18 in its entirety. [R. 193 at 13-
16.] NDCRI likewise agrees that because the partnership is thus rendered silent as to what
happens with the economic value of a general partner’s interest upon death, Ky. Rev. Stat.
§ 362.355 answers that question in favor of Blevins-Clark. [Id. at 16.] (“In view of the
foregoing points and authorities, it seems abundantly clear to NDCRI that the heirs of
Blevins and Baldwin should ultimately receive whatever remaining profits are tied to the
interests of those deceased general partners”). NDCRI goes further, however, and argues
that if the Court were to find that Section 7.18 was not deleted in its entirety by the 2004
Amendment, the partnership agreements are ambiguous and must be submitted to a jury to
resolve the discrepancy. [R. 193 at 17-19.]
1
The first essential question, therefore, is whether the 2004 amendment displaced all
or part of NIDC’s rights with respect to the Blevins share. “Unless a contract is ambiguous,
a court must strictly construe the written document by its own terms in accordance with
the words’ ordinary meaning.” Gonzalez v. Lundy, 2026 U.S. Dist. LEXIS 132302, at *8
(E.D. Ky. June 12, 2026) (citing Frear v. P.T.A. Indus., 103 S.W.3d 99, 106 (Ky. 2003)); see
also Luttrell v. Cooper Indus., Inc., 60 F. Supp. 2d 629, 631 (E.D. Ky. Oct. 27, 1998) (“If the
language is unambiguous, the meaning of the language is a question of law, and the intent
of the parties must be discerned from the words used in the instrument.”) (quoting Taggart
v. U.S., 880 F.2d 867, 870 (6th Cir. 1989)). A contract provision is unambiguous unless “a
reasonable person would find it susceptible to different or inconsistent interpretations.”
Hazard Coal Corp. v. Knight, 325 S.W.3d 290, 298 (Ky. 2010) (quoting Cantrell Supply, Inc.
v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. Ct. App. 2002)). “In interpreting a
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partnership agreement, we look to the document as a whole.” G.P. Renflo, Inc. v.
Renaissance by Lake Ivanhoe, Inc., 1995 U.S. App. LEXIS 35533, at *7 (6th Cir. Nov. 21,
1995) (citing Florida Canada Corp. v. Union Carbide & Carbon Corp., 280 F.2d 193, 195-96
(6th Cir. 1960)). Ultimately, however, “[t]he Court will not create an ambiguity where none
exists.” Friction Materials Co., Inc. v. Stinson, 833 S.W.2d 388 (Ky. Ct. App. 1992).
Additionally, “[t]he terms of an unambiguous contract cannot be varied by extrinsic
evidence.” Luttrell, 60 F. Supp. 2d at 631 (citing O.P. Link Handle Co. v. Wright, 429
S.W.2d 842 (Ky. 1968)). “Thus, a court may not consider parol evidence when interpreting
a contract unless the contract is ambiguous.” Id. (citing Schachner v. Blue Cross and Blue
Shield of Ohio, 77 F.3d 889, 893 (6th Cir. 1996)). Even so, the Court “is not required to
read a contract in a vacuum,” rather, “[a] contract is to be construed as a whole so as to
ascertain and give effect to the true intent of the parties, and the circumstances under
which the contract was executed and the conduct of the parties thereafter can be considered
by the Court in determining what their intention was, without it becoming a violation of the
parol evidence rule.” Id. (quoting Rudd-Melikian, Inc. v. Merritt, 282 F.2d 924, 928 (6th Cir.
1960)).
Although the 2004 Amendment undoubtedly eliminated some of NIDC’s powers in
clear and unambiguous language, it did not stretch as far as Blevins-Clark or NDCRI posit.
The 2004 Amendment purports to delete three specific, discrete powers held by NIDC under
the terms of the partnership agreements: (1) special consent; (2) approval; (3) general
partner and managing agent removal and nomination rights. The common thread
underlying all of these powers is that they require some form of action on the part of NIDC:
to grant special consent, to approve, to remove, and to nominate. Consequently, the 2004
Amendment certainly eliminated portions of 7.18(c) which grant NIDC the sole authority to
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consent, approve, remove, or nominate a successor general partner, but it cannot eliminate
the rights and privileges granted to NIDC therein which require inaction. 	Critically here,
the provision in 7.18(c) which entitles NIDC to Blevins’s partnership share does not require
NIDC to take any action whatsoever in order to become so entitled. And because the
relevant portion of 7.18(c) functions by virtue of NIDC’s inaction – rather than its authority
to consent, approve, remove, or nominate – it cannot have been deleted by the unambiguous
language of the 2004 Amendment.
This conclusion is further supported by the fact that NIDC’s rights invoked here
under Section 7.18(c) – those which operate to automatically entitle them to the interest on
the 61st day following the death of a general partner without requiring any affirmative
action – is not a “removal right.” Rather, NIDC’s rights in this respect are more properly
characterized as a right that arises upon removal. When a general partner dies, the death
itself functions to remove the partner or his estate from the partnership’s operation and
effectively place his interest in abeyance. This is supported by the plain text of Section
6.03(b). [See R. 191-37.] (“such Person shall immediately cease to act as a General Partner
and his interest shall be disposed of in accordance with the provisions of Section 7.18”).
Insofar as any removal occurs it takes place automatically upon the partner’s death,
without any action on NIDC’s part.
That being said, Blevins-Clark and NDCRI are partially correct in that the 2004
Amendment certainly curtailed the scope of NIDC’s rights under Section 7.18. Relevant
here, the Amendment unambiguously revoked NIDC’s authority to nominate a successor
general partner if the deceased partner’s estate failed to do so itself within sixty days. The
Amendment also undoubtedly deleted any removal authority NIDC held to oust a partner
on any basis. These rights bear a key distinction from the one presently at issue: they
require action on NIDC’s part, either by virtue of a nomination or removal. Section
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7.18(c)(i), however, requires NIDC to do nothing whatsoever in order to obtain NIDC’s
interest. Thus, while some parts of the 7.18 framework are clearly within the scope of the
2004 Amendment’s plain language, the provisions that function to automatically entitle it
to the interest are not.
Had the partners sought to delete Section 7.18 in its entirety, and by extension
render moot any provisions which cross-reference 7.18, they could have done so explicitly.
An amendment that reads “section 7.18 is deleted in its entirety” would have accomplished
such a task. However, language of this sort is found nowhere in the amendment. Instead,
the amendment provides for the deletion of three specific powers granted explicitly to NIDC
by name in the agreements’ original text. Nor does the 2004 Amendment provide
replacement text to address the inevitable gap left behind by a complete elimination of
section 7.18. It would seem squarely illogical for the partners to render the agreements
entirely silent on fundamental, yet highly foreseeable, questions related to the disposition
of a late partner’s interest. In contrast, the clear language chosen by the partners in the
2004 Amendment evidence an intent to surgically modify the powers of NIDC to act within
the partnership framework, rather than to eliminate entire provisions wholecloth or render
the partnership agreements silent on key questions. This is especially true considering the
questions at issue (i.e., the death of a general partner) are highly foreseeable to arise and
require resolution during the life of the partnerships.
2
Additionally, the language present in the partnership agreements, as amended, is
not ambiguous. In other words, there is no ambiguity with respect to the essential
provisions which ultimately entitle NIDC to the disputed funds attributable to the Blevins
share. Contrary to NDCRI’s argument, the language in Section 6.03(b) does not render the
Agreements ambiguous regarding the disposition of a deceased partner’s interest. Section
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6.03 provides that upon the death of a general partner:
such Person shall immediately cease to act as a General Partner and his
interest shall be disposed of in accordance with the provisions of Section 7.18,
provided however, that such termination shall not affect the rights,
obligations, or liabilities of the bankrupt, deceased, dissolved or incompetent
General Partner which had matured prior to the bankruptcy, death,
dissolution, or incompetence of such General Partner, or the value, if any, at
the time of such bankruptcy, death, dissolution or incompetence of the
Interest of the bankrupt, deceased, dissolved, or incompetent General
Partner.
[R. 191-37 at 1.] NDCRI contends that this language essentially divests the financial
component of the interest from its operational component at the time of the partner’s death,
thereby bestowing some additional right upon the deceased partner’s estate to recover the
value of the Interest, or to somehow extract future disbursements as the partnerships carry
on. In turn, NDCRI further contends that this provision is in tension, if not directly
contradictory to, the process laid out for disposing of a deceased general partner’s interest
in Section 7.18(c). Therefore, in NDCRI’s view, notwithstanding the Court’s interpretation
of the scope of the 2004 Amendment, the amended Agreements are ambiguous as written,
and such ambiguities must be addressed by a jury.
While the language of 6.03 certainly makes some distinction between the authority
of a deceased partner’s estate to act in the capacity of a general partner and the deceased
partner’s financial interest which arise upon his death, that distinction does not stretch as
far as NDCRI contends, nor does it render the Agreements ambiguous. A line-by-line
reading of Section 6.03(b) reveals its clear, unambiguous meaning and demonstrates the
interrelationship between that provision and Section 7.18(c).
The first clause provides that upon the death of a general partner, “such Person
shall immediately cease to act as a General Partner and his interest shall be disposed of in
accordance with the provisions of Section 7.18.” This language is unambiguous and
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essential to the understanding of the remainder of 6.03(b). In practical effect, this language
draws a clear distinction, a figurative “line in the sand,” which arises upon the death of a
general partner. Immediately upon such death, that person ceases to act in his capacity as
a General Partner; in other words, the authority to act does not automatically vest with the
deceased partner’s estate or any other person. Instead, his interest is held in a state of
abeyance until it is disposed of in accordance with Section 7.18. And, as already stated,
Section 7.18(c) first permits the estate of the deceased general partner to nominate a
successor general partner provided, however, that if the estate fails to nominate a suitable
successor within sixty days following the partner’s death, NIDC receives the interest
automatically. The central purpose of this first clause, then, is to immediately freeze any
present or future rights attributable to the deceased partner’s interest, and provide for the
future disposition of that interest.
The second operative clause begins, “provided, however,” and lays out to caveats to
the first clause upon which the partners sought to provide additional clarity. It continues,
“such termination shall not affect the rights, obligations, or liabilities of the … deceased …
General Partner which had matured prior to the … death … of such General Partner[.]”
This language seeks to clarify the disposition of past “rights, obligations, or liabilities”
which accrued prior to the death of the General Partner. In other words, those previously
matured rights, obligations, or liabilities which existed at or before the date of death do not
transfer alongside the partner’s interest to either a nominated substitute general partner.
For example, if the deceased partner owed a financial obligation to the partnership at the
time of his death, neither the substitute partner nor NIDC would assume responsibility for
that obligation upon transfer; it would remain with the estate. Conversely, the same would
be true if the deceased partner had the right to receive a disbursement from the
partnership, but did not receive it prior to his death. Again, this serves to further the
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distinction between items associated with the interest arising entirely before the partner’s
death, and the nature of the interest which is transferred following his death.
The third, and final, clause of Section 6.03(b) also furthers this distinction. It
provides that the deceased partner’s termination shall also not affect “the value, if any, at
the time of such … death … of the Interest of the … deceased … General Partner.” This
provision establishes the value of the interest at the date of death; it does not state that the
estate of the deceased partner is entitled to receive that value. Rather, it provides that
whoever received that interest – be it a substitute general partner nominated by Blevins’s
estate within sixty days, or NIDC – received it at that value which existed as of the date of
death, not the value as of the date it was received. This squarely comports with the
provisions of 7.18(c). Questions about whether the estate is entitled to receive
compensation for the value of the interest or some other form of “buyout” are foreclosed by
the clear language of Section 7.18(c)(i)-(ii) which provides that the interest shall be
transferred, “without the payment of any consideration therefor” to NIDC and “the removed
General Partner shall not be entitled to any return of his Capital Contribution.” [See R.
191-38.] Thus, the third clause provides that the termination and disposition of the
deceased partner’s interest shall not affect its value; the recipient of the interest will take it
at the value as it was the date the partner died.
Applying that framework here and beginning with the first clause, the disputed
proceeds did not arise until the complexes were sold in 2022, some twelve years after the
death of Blevins. Therefore, these proceeds cannot be said to have “matured prior to the”
death of Blevins, the general partner, and therefore granting some right to the funds to his
estate. This Court is also unaware of any additional rights, disbursements, or obligations
which matured prior to Blevins’s death for which he was not already compensated. As to
the second clause, the value of his Interest was established at the time of his death, per
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6.02(b)’s clear directive. Therefore, when NIDC received the Interest on the 61st day
following Blevins’s death, it received it at precisely that value which was established sixty-
one days prior. That conclusion is required by the application of the unambiguous language
set forth in the Agreements.
As an additional matter, NDCRI points out that the sole question before the Court is
whether Blevins-Clark or NIDC is entitled to the proceeds attributable to the Blevins
share, which came about following the sale of the complexes. [R. 211 at 16-17.] This is
correct, but the answer to this question requires the Court, albeit tangentially, to examine
the disposition of the entirety of the Blevins share following his death. In other words,
while the Court will not enjoin the Partnerships, which are not named parties in this case,
to substitute NIDC as a General Partner in Blevins’s place, it must, at a minimum, reach
the question of what occurred with Blevins’s interest following his death. Therefore, while
the Court agrees that no party in this litigation seeks injunctive relief requiring that they
be admitted as a substitute general partner, and thus that question is not before it, it must
indirectly determine who is entitled to that partnership interest to accord proper relief.
To summarize, the Agreements provided that upon the death of a general partner,
the deceased partner’s estate would be permitted sixty days by which they could nominate a
substitute general partner. If that did not occur, NIDC could either itself nominate a
successor general partner or, if it took no action, would assume the deceased general
partner’s interest. Although the 2004 Amendments deleted certain of NIDC’s authorities
under the Agreements, including its right to nominate a successor partner, it did not
disturb the provision allowing NIDC to inherit the interest, which required no action on its
part. Applying that framework here, because the estate of Ivan Blevins took no action
within sixty days of his death to seek Blevins-Clark’s substitution as a general partner in
his place, his former interest transferred for no consideration to NIDC on the sixty-first
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day. Any actions by NDCRI suggesting a different outcome are contrary to the plain
language of the Agreements. NIDC, therefore, is entitled to the funds from the sale of the
complexes attributable to Blevins’s former interest in the Kentucky Partnerships. In turn,
Blevins-Clark’s breach of contract and anticipatory breach claims, in Counts One and Two
of her Amended Complaint, fail as a matter of law.
B
Blevins-Clark also asserts two equitable claims against the Defendants, which were
pleaded in the alternative. Taken together, these two claims essentially argue that
notwithstanding the interpretation of the partnership agreements, the Defendants should
be estopped from claiming that Blevins-Clark is not entitled to the proceeds attributable to
her father’s partnership share. Although the Plaintiff did not herself move for summary
judgment on her equitable claims, the Defendants both contend that these claims fail as a
matter of law. The Court agrees and will analyze each claim in turn.
1
“Under Kentucky law, equitable estoppel requires both a material misrepresentation
by one party and reliance by the other party[.]” Williams v. Hawkins, 594 S.W.3d 189, 193
(Ky. 2020). The essential elements of equitable estoppel are:
(1) conduct which amounts to a false representation or concealment of
material facts, or, at least, which is calculated to convey the impression that
the facts are otherwise than, and inconsistent with, those which the party
subsequently attempts to assert; (2) the intention, or at least the expectation,
that such conduct shall be acted upon by, or influence, the other party or
other persons; and (3) knowledge, actual or constructive, of the real facts.
And, broadly speaking, as related to the party claiming the estoppel, the
essential elements are (1) lack of knowledge and of the means of knowledge of
the truth as to the facts in question; (2) reliance, in good faith, upon the
conduct or statements of the party to be estopped; and (3) action or inaction
based thereon of such a character as to change the position or status of the
party claiming the estoppel, to his injury, detriment, or prejudice.
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Id. (quoting Fluke Corp. v. LeMaster, 306 S.W.3d 55, 62 (Ky. 2010)). “Equitable estoppel is
a defensive doctrine founded on the principles of fraud[.]” Helm Co., LLC v. Al J. Schneider
Co., 2014 Ky. App. Unpub. LEXIS 768, at *3 (Ky. Ct. App. Sep. 26, 2014) (quoting Ping v.
Beverly Enters., Inc., 376 S.W.3d 581, 594 (Ky. 2012)). It “may be invoked by an innocent
party who has been fraudulently induced to change their position in reliance on an
otherwise unenforceable oral agreement.” As a result, “proving equitable estoppel is a
heavy burden.” George & Co. v. Arch Coal, 2021 U.S. Dist. LEXIS 40731 (E.D. Ky. Mar. 4,
2021) (citing Id.).
“Under the doctrine of equitable estoppel, certain conduct by a party is viewed as
being so offensive that it precludes the party from later asserting a claim or defense that
would otherwise be meritorious.” Akers v. Pike Cnty. Bd. of Educ., 171 S.W.3d 740, 743 (Ky.
2005). “In other words, it serves to offset the benefit that the offending party would
otherwise derive from the conduct.” Id. (citing Edmonson v. Pennsylvania Nat’l Mut. Cas.
Ins. Co., 781 S.W.2d 743, 755 (Ky. 1989).
Both NDCRI and NIDC seek summary judgment with respect to Blevins-Clark’s
equitable estoppel claim. In support of its motion, NDCRI contends that under Kentucky
law, equitable estoppel is viewed as a defensive doctrine, rather than a stand-alone claim.
[R. 193 at 25.] Although Blevins-Clark agrees with NDCRI’s observation, she contends that
“it is not entirely clear from the caselaw that a party can never recover damages for an
equitable estoppel claim as Beacon argues here.” [R. 229 at 18.] In support of this
statement, she cites to PBI Bank, Inc. v. Signature Point Condominiums LLC, in which the
Kentucky Court of Appeals approved an award of punitive damages under a theory of
promissory estoppel, writing, “[Plaintiff’s] claim is more properly characterized as one of
equitable estoppel. However, we decline to reverse based on a mere technicality in
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terminology where it is apparent the jury was properly instructed as to the essential
elements.” 535 S.W.3d 700, 719 n. 13 (Ky. Ct. App. 2016). Therefore, Blevins-Clark opines
that Kentucky courts have at times contemplated an award of monetary damages for an
equitable estoppel claim.
The Court agrees with NDCRI’s characterization of equitable estoppel under
Kentucky law. As this Court recently stated, “estoppel always acts as a shield, never as a
sword” and, thus, “equitable estoppel is not a claim, but ‘a means of precluding the
assertion of a claim or a defense.” Jeffery v. Medical Protective Co., 446 F. Supp. 3d 177, 183
(E.D. Ky. Mar. 13, 2020) (citing 28 Am. Jur. 2d Operation and Effect § 30). In Jeffery, the
plaintiff pleaded equitable estoppel as a standalone claim, seeking to estop the defendant
from asserting lack of notice as a defense to her indemnity claim. 	The Court held that
while the plaintiff could argue, under a theory of equitable estoppel, that the defendant
should be prevented from litigating the notice question, “that argument need not be
asserted as a claim, and is not a basis for relief as used here.” Id. It thus dismissed the
equitable estoppel claim.
Here, Blevins-Clark seeks to take equitable estoppel even further by asserting it as
an independent claim for which she should be awarded monetary damages regardless of
whether the Court finds her entitled to the disputed funds under the language of the
Agreements. This represents a clearly offensive usage of the defensive doctrine, which
cannot stand under Kentucky law. The fact that the Kentucky Court of Appeals observed,
in a footnote no less, that a promissory estoppel claim should likely have been characterized
as equitable estoppel is of no consequence. Ultimately, the PBI Bank case involved a
promissory estoppel claim, which can occasionally be brought as a standalone claim under
Kentucky law. What is clear is that Kentucky courts restrict equitable estoppel to
defensive uses. See Ping v. Beverly Enters. Inc., 376 S.W.3d 581, 594-95 (Ky. 2012)
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(recognizing equitable estoppel as a “defensive doctrine founded on the principles of fraud”);
Wadley v. Nat’l Railway Equip. Co., 572 F. Supp. 3d 361, 375 (W.D. Ky. 2021) (holding that
equitable estoppel cannot form a separate claim for damages); Bell v. Kokosing Industrial,
Inc., 2020 WL 4210701, at *15 n.18 (E.D. Ky. July 22, 2020) (“[T]he [plaintiffs’] argument
that equitable estoppel is an affirmative action in addition to a defensive action lacks
support”). Insofar as Blevins-Clark seeks to assert an equitable estoppel claim in an
offensive manner (i.e., an independent basis for monetary relief), be it against NDCRI or
NIDC, such a claim is improper under Kentucky law.
Regardless, Blevins-Clark further contends that even if the Court concludes that
equitable estoppel can be used only in a defensive manner, it should still permit her to
estop the Beacon Defendants from asserting certain arguments at trial. [See R. 229 at 19.]
If this case were to proceed to trial, it is plausible that equitable estoppel could be employed
to estop Beacon from making certain arguments. This would comport with the defensive
usage requirement for equitable estoppel claim, and mirror its typical usage in Kentucky
courts. See Derby City Cap., LLC v. Trinity HR Servs., 949 F. Supp. 2d 712, 732 (W.D. Ky.
2013) (“[E]quitable estoppel is typically asserted to bar a party from raising a defense or
from taking certain action.”). None of Blevins-Clark’s claims will be proceeding to trial,
however, because the unambiguous language of the Agreements entitles NIDC to the
disputed funds attributable to the former Blevins interest. Consequently, there is no venue
in which Blevins-Clark would be able to employ equitable estoppel, and as already stated, it
cannot exist as a stand-alone cause of action. As a result, all Defendants are entitled to
summary judgment on this claim.
2
Unjust enrichment was created “as a basis of restitution to prevent one person from
keeping money or benefits belonging to another.” Rose v. Ackerson, 374 S.W.3d 339, 343
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(Ky. Ct. App. 2012) (quoting Haeberle v. St. Paul Fire and Marine Ins. Co., 769 S.W.2d 64,
67 (Ky. Ct. App. 1989)). Under Kentucky law, the party claiming unjust enrichment must
demonstrate: “(1) benefit conferred upon defendant at plaintiff’s expense, (2) a resulting
appreciation of benefit by defendant; and (3) inequitable retention of benefit without
payment for its value.” Collins v. Kentucky Lottery Corp., 399 S.W.3d 449, 455 (Ky. Ct. App.
2012).
Blevins-Clark’s unjust enrichment claim ultimately fails, as to both NDCRI and
NIDC, because such a claim requires the defendant to “keep money or benefits belonging to
another.” See Rose, 374 S.W.3d at 343. Ultimately, Blevins-Clark cannot make such a
showing because, as already stated, she has no entitlement to disputed funds attributable
to the Blevins share. It is these disputed funds that form the basis of the unjust
enrichment claim. Consequently, both NDCRI and NIDC are entitled to judgment as a
matter of law as to the fourth, and final remaining count of Blevins-Clark’s Amended
Complaint.
C
The Court next turns to the merits of NIDC’s cross-claim against the Beacon
Defendants. In this cross-claim, NIDC and Malvern assert a variety of claims, some of
which are pleaded in the alternative, against Beacon which collectively contend that NIDC
is entitled to the disputed funds attributable to both the Blevins and Baldwin shares, that
NDCRI additionally breached the Agreements through its management of partnership
affairs and assets, and also seeks to pierce the corporate veil of the Beacon entities. [See R.
73.] One of these claims is hampered by material factual disputes and will require further
adjudication before the factfinder. Others, however, invoke separate portions of the
Agreements and are thus evaluated entirely independently, and ultimately amount to
questions of law. At any rate, both NIDC and Beacon have moved for summary judgment
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as to all claims. The Court will address each claim in turn.
1
NIDC also claims it is entitled to the funds attributable to the Baldwin interest, for
the same reasons it is entitled to the Blevins share funds. The same provisions which apply
to the disposition of the Blevins interest apply with equal force to the Baldwin share, and
the factual circumstances of both are materially identical. The record indicates that Harold
Baldwin died in 2019, and that no action was taken by his estate to seek the admission of
an acceptable substitute partner within sixty days of his death. Unique to the Baldwin
share, however, is the absence of any representative of the Baldwin estate, or any potential
Baldwin heir, in this litigation. NDCRI contends that any action with respect to Baldwin in
the absence of such parties would be improper, because they represent necessary and
indispensable parties under Rule 19.
To determine whether a person is an indispensable party under Rule 19, the Court
must apply a three-step analysis. Keweenaw Bay Indian Cmty. v. State, 11 F.3d 1341, 1345
(6th Cir. 1993); Glancy v. Taubman Centers, Inc., 373 F.3d 656, 666 (6th Cir. 2004). Under
the first step, the Court “determine[s] whether a person is necessary to the action and
should be joined if possible.” Keweenaw Bay, 11 F.3d at 1345; Soberay Mach. & Equip. Co.
v. MRF Ltd., Inc., 181 F.3d 759, 763-64 (6th Cir. 1999). To make this determination, Rule
19(a) provides:
(A) in that person’s absence, the court cannot afford complete relief among
existing parties; or
(B) that person claims an interest relating to the subject of the action and is
so situated that disposing of the action in the person’s absence may:
(i) as a practical matter impair or impede the person’s ability to
protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations because of the
interest.
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Fed. R. Civ. P. 19(a). “If the court determines that the person or entity does not fall within
one of these provisions, joinder, as well as further analysis, is unnecessary.” Local 670,
United Rubber, Cork, Linoleum & Plastic Workers of Am., AFL-CIO v. Int’l Union, United
Rubber, Cork, Linoleum & Plastic Workers of Am., AFL-CIO, 822 F.2d 613, 618 (6th Cir.
1987).
NDCRI’s argument misses the point, however. As NDCRI itself states, what is in
dispute is who is entitled to the proceeds from the sale of the apartment complexes
attributable to Baldwin’s share. [See R. 15] (“[a]ny further litigation in this case SHALL
center upon this proper disposition of proceeds from the sale of apartment complexes to
those former interests.”) As already set forth above, the answer to this question requires
the Court to at least pass indirectly on the question of what occurred to the entirety of
Baldwin’s partnership interest following his death. In some respects, the two questions are
inextricably linked. Thus, while the Court does not squarely address the issue of general
partner substitution, it must indirectly address the question to resolve the question that is
undeniably before the Court: whether NDCRI breached the partnership agreements by
failing to award the proceeds attributable to the Baldwin partnership share to NIDC.
The Court can reach this question without the joinder of the Baldwin estate, or any
of the other partners, to this lawsuit. As NIDC effectively points out, NDCRI’s argument
overextends the relief sought by NIDC in its crossclaim, which would require the joinder of
additional parties. By its own admission, “NIDC has never sought to become a substitute
general partner, least of all in its Crossclaim. There would be no reason to. Sections
6.03(b) and 7.18(c) required transfer of the Blevins and Baldwin interests to NIDC without
some theoretical ‘substitution’ of NIDC – an existing partner in the partnerships since 1979
– for a deceased partner.” [R. 219 at 7-8.] As the Court explained above, the Agreements
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operated to automatically transfer the entirety of a deceased partner’s interest to NIDC on
the sixty-first day following their death, less any rights or obligations with matured prior to
his death, so long as the deceased partner’s estate did not take action to nominate an
acceptable substitute general partner. Thus, a determination that NIDC is entitled to the
disputed funds attributable to either the Blevins or Baldwin share does not require
injunctive relief ordering that NIDC be rendered a substitute partner. This is because
NIDC is, and always has been, a partner in the partnerships; the Agreements’ provisions
regarding the disposition of a deceased partner’s interest merely increase the size of their
existing interest. In other words, a court-mandated substitution is not needed; such a
substitution already occurred, automatically, upon the sixty-first day following the death of
Blevins and Baldwin, when their estates failed to take action to seek a substitution.
The cases cited by NDCRI involve materially different circumstances from those
presently at bar. For example, the case of Schmidt v. E.N. Maisel & Assocs. involved an
individual partner bringing suit against the partnership to seek injunctive relief, rather
than monetary damages, and the requested relief would have affected the rights or
obligations of the remaining partners. 105 F.R.D. 157, 160 (N.D. Ill. 1985). Here, NIDC
seeks no such relief, and merely seeks money damages as to disputed funds attributable to
a partnership interest it alone is entitled to. The cases of Grant County Deposit Bank v.
McCampbell and Smith v. Smith, Barney, Harris, Upham & Co. are likewise readily
distinguishable. There, individual partners brought suit on behalf of the partnership entity
against third parties with whom the partnerships had conducted business. The Court held
that the remaining partners were necessary and indispensable parties because the claim
arose out of a partnership transaction. See Grant Cnty. Deposit Bank, 194 F.2d at 471-72
(“a partner has an interest in a partnership account arising out of a partnership
transaction”); Smith, 505 F. Supp. at 1383 (holding that other partners are “necessary and
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indispensable parties to any action brought to enforce any claim of the partnership”). Here,
the dispute at the root of NIDC’s crossclaim is a dispute entirely internal to the partnership
and among its own partners. It does not involve a suit on behalf of the partnership against
third parties, as the Smith and Grant cases did.
The case of Hooper v. Wolfe, which is also cited by NDCRI, is particularly insightful,
not only because it comes from our circuit, but also because of its closer conceptual
similarity to the case at bar. See 396 F.3d 744, 749 (6th Cir. 2005). In that case, the
plaintiff, who was not a partner in the partnership, brought suit against the managing
general partner regarding a dispute over an asset owned by the partnership. The plaintiff
did not name the partnership as a defendant. In holding that the partnership itself was not
an indispensable party under Rule 19, the Court stated
When assessing prejudice, the court must consider whether the interests of
an absent party are adequately represented by those already a party to the
litigation. Here, [the partnership]’s general partner, PPM, Inc., and PPM,
Inc.’s sole shareholder, Mr. Wolfe, are before the court as defendants. Only
the general partner may act on behalf of [the partnership], and the …
defendants make no argument that the interests of [the partnership] are
sufficiently distinct from those of PPM, Inc. and Mr. Wolfe, such that [the
partnership] will not be adequately represented in the litigation.
…
[The partnership] is not a human being and its interests can only be known
through the medium of the general partner, PPM, Inc., and its human master
Mr. Wolfe, who are both before the court. Therefore, the ability of PPM, Inc.
and Mr. Wolfe to represent [the partnership] adequately militates against
finding [the partnership] to be an indispensable party.
Id. at 749-50. To paraphrase, the Court held that the partnership entity was not a
necessary and indispensable party to the suit, because its interests were adequately
represented by the general partner and the general partner’s sole shareholder, who were
both named defendants.
Here, the Baldwin estate or any of Baldwin’s heirs, are not a necessary and
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indispensable party to this litigation because, at bottom, they are not partners and have no
viable claim of entitlement to any of the disputed proceeds. And the partnership entities
are not themselves necessary and indispensable, under the framework set forth in Hooper,
because all of the partners are either named parties, or are directly managed by named
parties who adequately represent their interests.8 Just as the general partner and its sole
shareholder were sufficient to represent the partnership in Hooper, so too can NDCRI and
its Beacon Defendant owners in the partnerships presently at issue.
2
Counts Eleven, Twelve, and Thirteen assert three claims for conversion pleaded in
the alternative to several of the breach of contract claims. [R. 73 at 25-26.] Count Eleven
asserts a claim for conversion against the Beacon Defendants, contending they are being
unlawfully denied the use and enjoyment of the disputed Baldwin funds to which they
claim lawful entitlement. Count Twelve alleges the same, but with respect to the reserves
of sale proceeds for the purpose of paying legal expenses incurred in conjunction with this
litigation, to which they claim to be lawfully entitled. Count Thirteen alleges the same but
with respect to the withheld funds to pay for final payables, representations, and
warranties.
“Under Kentucky law, ‘[a]lthough a breach of contract action and a claim for
conversion are not necessarily incompatible,’ a conversion claim does not lie where ‘the
property right alleged to have been converted arises entirely from the contractual rights to
compensation.” Evans v. Novolex Holdings, LLC, 2021 U.S. Dist. LEXIS 101538, at *19-20
(E.D. Ky. May 28, 2021) (citing Jones v. Marquis Terminal, Inc., 454 S.W.3d 849, 853-54
8 More specifically, the managing general partner, NDCRI is a named party, alongside the various other Beacon
Defendants. The other partners who are not named parties are NDC Management LLC, which is wholly owned
by Keystone, which is a named party. Additionally, the investor limited partners, 1979-I and 1979-III, are not
named parties but are directly managed by NIDC, and are therefore adequately represented.
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(Ky. Ct. App. 2014); Davis v. Siemens Med. Sols. USA, Inc., 399 F. Supp. 2d 785, 801 (W.D.
Ky. 2005)). In Davis, as here, the plaintiff (or, here, the crossclaim plaintiff) pleaded breach
of contract and conversion claims in the alternative for failure to pay the plaintiff under a
contractual agreement. The Davis Court “opined that because the plaintiff’s claim was
based on ‘payment of a disputed debt, not payment for the conversion of a specific asset or
specific property right … [t]he interpretation of the contract governs [plaintiff’s]
entitlement to the disputed payments.” Novolex Holdings, 2021 U.S. Dist. LEXIS 101538,
at *20 (citing Davis, 399 F. Supp. 2d at 801).
In the present case, because the underlying basis for the conversion claims asserted
by NIDC arise solely from NDCRI’s failure to pay it, as a limited partner, for funds it
purports to be entitled to under the Agreements, it does not have an independently
actionable conversion claim. See Novolex Holdings, 2021 U.S. Dist. LEXIS 101538, at *20
(“Because the underlying basis for Plaintiff’s conversion claim is Defendants’ failure to pay
Plaintiff funds allegedly owed to him under the [agreement], Plaintiff does not have an
actionable conversion claim”); see also Bus. Payment Sys., LLC v. Nat’l Processing Co., 2012
U.S. Dist. LEXIS 171810, at *17 (W.D. Ky. Dec. 3, 2012) (reaching the same conclusion in
reliance on Davis). In other words, the conversion claim fails because the “property right”
at issue arises entirely from the contractual rights set forth in the partnership agreements.
Consequently, the terms of the Agreement will govern the claim, and NDCRI is entitled to
judgment as a matter of law with respect to Counts Eleven, Twelve, and Thirteen.
3
Many of the remaining claims pleaded in NIDC’s crossclaim are rendered moot by
the Court’s ultimate grant of summary judgment for the Defendants as to all of Blevins-
Clark’s claims. Count One asserts a claim for breach of contract against Beacon, premised
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on Beacon’s purported failure to notify NIDC of Blevins’s death for approximately twelve
years, even though they knew, or reasonably should have known, of his death. Count Two
asserts another breach claim, which alleges that Beacon was contractually required to
follow the process contained in the Agreements for admitting a successor general partner,
but instead “ignored that process yet still viewed Plaintiff as a successor partner anyway
and sent her partnership tax documents as if she were a partner for 12 years.” Count
Three pleads a statutory claim, alleging that Beacon violated the Kentucky Limited
Partnership Act by failing to follow the admission procedures set forth in the Agreement or,
alternatively, the procedure prescribed by state law. Count Nine asserts a common law
negligence claim against Beacon, alleging that even if Beacon did not actually know it was
acting in violation of the Agreements in its treatment of Blevins-Clark, “they should have
known as much and owed a duty to NIDC to do so.” Count Ten asserts a claim for breach of
fiduciary duty premised on the same alleged conduct. Finally, Count Fourteen asserts a
claim for indemnification, claiming that “[a]ny liability of NIDC or Malvern that results
from this litigation, as well as the need for NIDC and Malvern’s reasonable costs and
attorney fees related to this litigation, are due solely to the actions of the Beacon
Defendants.”
These claims are rendered moot because the existence of any injury-in-fact was
contingent upon a finding that Blevins-Clark is entitled to the disputed funds, and the
imposition of joint and several liability upon NIDC and the Beacon Defendants. Each of the
claims includes language stating that the specific action at issue injured NIDC “by having
to defend themselves in this litigation and exposing them to potential liability that could
arise from this litigation.” [See R. 73 at 19-26.] This effectively asserts two categories of
injury: potential financial liability which could arise if plaintiff succeeds on her claim, and
litigation costs. For the reasons already stated, the Defendants are entitled to judgment as
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a matter of law regarding the entirety of Blevins-Clark’s complaint. Consequently, NIDC
and Malvern will not face any financial liability in conjunction with this suit, other than
costs incurred in defending this litigation.
These litigation costs alone are insufficient to establish standing. “[W]hen
evaluating a counterclaim, ‘standing must be established independent of the lawsuit filed
by the plaintiff.’” J.S.T. Corp. v. Robert Bosch LLC, 2019 WL 78896, at *3 (E.D. Mich. Jan.
2, 2019) (citing Walker v. City of Lakewood, 272 F.3d 1114, 1124 (9th Cir. 2001)).
“Litigation costs are insufficient to establish standing for the purposes of Article III.” San
Diego Unified Port Dist. v. Monsanto Co., 309 F. Supp. 3d 854, 861 (S.D. Cal. 2018). NIDC’s
reasoning for pleading these additional claims is clear, as it sought to pass any joint and
several liability imposed onto its co-defendants. Had the Defendants not been entitled to
summary judgment as to all of Blevins-Clark’s remaining claims, these claims would likely
have survived. Yet, in the absence of any concrete injury, other than incurring litigation
costs to defend plaintiff’s complaint, NIDC and Malvern lack standing to assert these
claims, regardless of any misconduct on Beacon’s part. Consequently, the Court will not
reach the merits of these claims because, absent any viable injury, NIDC and Malvern lack
standing to assert them, and will dismiss them.
4
In its motion for summary judgment, NDCRI claims that it cannot be held liable on
any theory for its failure to immediately turn over the disputed funds – either on a breach
of contract theory or any other – because it sought to comply with the Court’s prior orders
regarding this case, and because it was necessary to chart a neutral course in the
entitlement dispute between Blevins-Clark and NIDC. [R. 193 at 8-12.] NIDC, on the other
hand, argues that NDCRI was obligated to pick a “winner” and immediately distribute the
disputed profits in accordance with its interpretation. [R. 233 at 10-11.] This points to a
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central question that underlies the aforementioned dispute over contract interpretation –
did NDCRI “breach” the Agreements by failing to hand over the disputed funds to either
Blevins-Clark or NIDC?
In NDCRI’s view, this question is primarily one of timing. NDCRI points out that
the disputed profits at issue did not exist at the time this litigation commenced in October
2022 and did not arise until February 2023 when the complexes were sold to Amity. Before
the time of the sale, NDCRI argues that it cannot be held liable for failing to distribute
profits to either Blevins-Clark or NIDC because those profits did not yet exist. And,
following the sale of the complexes, NDCRI posits that it cannot be said to have “breached”
the Agreements by failing to distribute the disputed profits because the Court ordered those
funds to be placed in escrow. To do so, in NDCRI’s view, would have required it to violate
an order of this Court.
NDCRI further posits that regardless of whether it was required to escrow the
disputed funds, it was obligated to chart a neutral court in its role as managing general
partner. In this respect, NDCRI states that it “cannot be faulted, or held liable in contract
or tort, for taking this position that the dispute between Plaintiff and the NIDC Co-
Defendants should be ‘resolved by agreement or Court order.” “To hold otherwise[,]” in
NDCRI’s view, “would put any fiduciary in the untenable position of having to try and
arbitrate disputes between feuding partners or beneficiaries, only to be later hauled into
court by one side or the other.”
NIDC, on the other hand, argues a different conclusion is forced by a reading of the
plain terms in the Agreement. In its view, NDCRI was immediately required to “pick a
winner” under Section 6.03(c) of the Agreements, which provides:
If, at the time of the … death … of a General Partner, the …deceased …
General Partner was not the sole General Partner of the Partnership, the
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remaining General Partner or General Partners … shall immediately …
make such amendments of this Agreement and execute and file for
recordation such Certificate or other instruments as are necessary to reflect
the disposition of the Interest of the … deceased … General Partner and such
… deceased … General Partner’s having ceased to be a General Partner.
Additionally, Section 6.03(c) also provides that “[a]ll Partners shall give, and hereby do
give, such Consents, shall take such actions, and execute such documents as shall be legally
necessary and sufficient to effect such disposition …” Where a modification in the
governing documents was required, such as the disposition of a deceased partner’s interest
under 7.18(c), the following section, 7.18(d) provides that “[a]ll Partners … shall take such
actions, and shall execute such documents as shall be legally necessary and sufficient to
effect all of the foregoing provisions of this section[.]”
Based on its interpretation of these provisions, NIDC’s argument also amounts to
one about timing. It contends that the proper time in which NDCRI had to “pick a winner”
was not in 2022 when this litigation began, or in 2023 when the complexes were sold, but
rather when Blevins and Baldwin died in 2010 and 2019, respectively. In other words,
NIDC essentially posits that NDCRI breached Section 6.03(c) of the Agreements in 2010
and 2019, and those breaches are directly linked to, if not the sole cause of, their purported
breach in 2023.
NDCRI is right on one key point: Kentucky law certainly discourages fiduciaries
from picking sides in a dispute between stakeholders and cautions that neutrality is a
sounder path. In the present case, however, NDCRI was required to “pick a winner” long
before there was a live dispute in which they should remain neutral. And by failing to
interpret the Agreements and “immediately” effectuate amendments and modification to
the partnerships’ governing documents, NDCRI violated Section 6.03(c) and, thus,
committed breach of contract. In other words, while NDCRI had an obligation to remain
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neutral once a conflict arises between limited partners, no such conflict existed when
NDCRI should have acted, which was sixty days following Blevins’s and Baldwin’s deaths
in 2010 and 2019, respectively.
From this, the Court can conclude that NDCRI breached the contract, and that as a
result of the breach, NIDC suffered damages equal to the amount of the disputed
partnership profits attributable to the Blevins and Baldwin shares. Again, NDCRI’s breach
is not their failure to distribute the disputed profits once this litigation began, but rather
their failure to “immediately” amend the partnerships’ governing documents, as required by
Section 6.03(c). Because of this breach, the Agreements did not reflect the disposition of the
former Blevins and Baldwin shares at the time the complexes were ultimately sold. And,
because the Agreements were unamended, the distribution of these profits was unclear as
the sale unfolded rapidly. In turn, NIDC was not given the disputed funds, despite being
entitled to receive them, and instead this lawsuit resulted. Consequently, NDCRI
“breached” the Agreements back in 2010 and again in 2019, while the resulting damages
did not accrue until the sale of the complexes in 2022. All of the requisite elements of
Counts Four and Five being satisfied, and in the absence of a material dispute of fact, the
Court finds that NIDC and Malvern are entitled to summary judgment on these counts.9
5
NIDC also contends that NDCRI continues to wrongfully withhold certain funds to
cover its own legal expenses incurred in conjunction with this litigation. [R. 191 at 21-22.]
On the other hand, NDCRI contends that, under the terms of the Agreements, it is entitled
to indemnification from partnership funds for its legal fees in the present case. [R. 193 at
19-22.] Section 7.26 of the Agreements provides, in full, as follows:
9 This, in turn, moots Count Six of the Crossclaim Complaint, which seeks equitable estoppel on the same basis.
[R. 73 at 22-23.]
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The Partnership shall indemnify each General Partner against any claim or
liability incurred in connection with the business of the Partnership except
for gross negligence, willful misconduct, or breach of fiduciary duty.
The General Partners shall not be liable, responsible or accountable in
damages or otherwise to any of the Partners for any act or omission
performed or omitted by them in good faith on behalf of the Partnership and
in a manner reasonably believed by them to be within the scope of the
authority granted to them by this Agreement and in the best interest of the
Partnership, except for gross negligence, willful misconduct or any breach of
their fiduciary duty with respect to such acts or omissions.
[See R. 181, Ex. 54.]
NIDC contends that, “Beacon’s failures and refusals to apply the partnership
agreements following the deaths of Blevins and Baldwin were not ‘the business of the
Partnership’ and were not ‘reasonable[,]’” and instead constituted “gross negligence, willful
misconduct, or breach of fiduciary duty.” [R. 233 at 17.] Beyond NIDC’s characterization of
Beacon’s litigation position in this matter, it also notes that its argument is really a
question of timing. It contends that even if NDCRI was entitled to indemnification from
the partnerships for legal fees incurred in connection with this matter, they are not entitled
to withdraw these funds from the partnership’s account until after the litigation concludes.
[Id.]
NDCRI, on the other hand, contends that it is acting under “a reasonable, good faith
belief that NIDC is not entitled to the funds it seeks under those [partnership]
Agreements[,]” and is therefore entitled to indemnification under the terms of Section 7.26.
[R. 193 at 21.] Therefore, NDCRI argues that “[h]ere, the partners each have an obligation
to indemnify NDCRI as the neutral, managing general partner, who has been hailed into
this litigation despite making no claim to the disputed funds.” [Id.]
Regardless of whether NDCRI’s actions with respect to the management of the
partnership are actionable, the Court agrees first with NIDC’s timing argument. NDCRI is
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not permitted to indemnification for legal fees incurred in connection with its role as the
managing general partner pursuant to Section 7.26 while that litigation remains ongoing.
The reasoning for this is relatively straightforward. Permitting NDCRI to indemnify itself
as the litigation continued allows it to decide whether its own conduct amounts to “gross
negligence, willful misconduct, or a breach of fiduciary duty.” In other words, if NDCRI
could decide this question for itself in the middle of litigation, it would practically remove
all objectivity from the determination. Under NDCRI’s reading of Section 7.26, it alone
would have sole control in determining whether its own actions placed it outside the scope
of the indemnity provision, a conclusion it would, frankly, be unlikely to reach. Thus, even
where a partner may be entitled to indemnification from the partnership, the partner
cannot simply periodically withdraw those funds from the partnership’s coffers as the
litigation continues. That is especially true where, as here, there is a question as to
whether the partner seeking indemnification acted with gross negligence, willful disregard,
or in violation of their fiduciary duties.
This conclusion is actually supported by the cases cited by Beacon. In Swyers v.
Allen Family Partnership #1, LLC, the Kentucky Supreme Court affirmed the trial court’s
award of attorneys’ fees to the partner centrally responsible for the disbursement of funds
from the sale of commercial real estate. 694 S.W.3d 257 (Ky. 2024). In that case, however,
the indemnification in question did not occur until the conclusion of the litigation, and only
once the partner had been cleared of wrongdoing. More specifically, the partner sought
indemnification through a counterclaim, alongside an additional claim contending that he
“properly made the distributions pursuant to the terms of [the agreement].” Id. at 262.
NDCRI’s reliance on Swyers improperly conflates NIDC’s timing argument with the
question of whether NDCRI would ever be entitled to indemnification. Although the
responsible partner in Swyers was ultimately indemnified by the trial court’s order, he was
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not reimbursed for the legal fees incurred until the end of the litigation. There was no
evidence that the partner in Swyers indemnified himself from the partnership’s coffers as
the litigation progressed and before he was cleared of wrongdoing. Here, not only is
NDCRI’s alleged wrongdoing still at issue, but Section 7.26 explicitly provides that a
general partner is entitled to indemnification unless they acted with gross negligence,
willful misconduct, or in violation of their fiduciary duties. Because NDCRI had no
objective basis to make such a conclusion when it withdrew partnership funds to cover its
legal expenses, it acted prematurely in view of Section 7.26.
NDCRI asserts, incorrectly, that “[i]f this Court were to agree with Co-Defendants
assertion that by merely alleging breach of fiduciary duty, gross negligence, and misconduct
any party could be deprived of its contractual indemnification rights, indemnification
provisions throughout the Commonwealth would become meaningless if mere allegations in
a complaint could overcome the contractual right.” [R. 211 at 27.] Again, this misconstrues
the argument. The Court does not hold that the right to indemnification is permanently
extinguished by the mere allegations of wrongdoing contained in a complaint. Rather, the
right to indemnification cannot be readily ascertained until questions about such
misconduct are considered and resolved. Once the party seeking indemnification overcomes
those allegations, it will be entitled to reimbursement at that time. If they cannot overcome
those allegations, they would not have been entitled to indemnification in the first place.
This debate as to the timing of the indemnification will ultimately be resolved once
the question of entitlement to indemnification at all is resolved. In other words,
determining whether NDCRI was entitled to indemnification at any time will necessarily
moot the question as to whether the specific timing was appropriate. If NDCRI is entitled
to indemnification for its legal fees, it will have already withdrawn at least a sizeable
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portion of those, and no injury would have resulted from the premature withdrawal.10 If
NDCRI is ultimately not entitled to indemnification for their legal fees, they will ultimately
be required to return these funds to the partnership coffers from which they came. It would
seem pointless in the broader sense to require NDCRI to replace the funds at this time. In
the end, it will either be entitled to keep these funds, or will be obligated to return them,
once the merits of Count VII are reached.
Based upon the evidence before it, the Court cannot find that either NIDC or NDCRI
are entitled to summary judgment on Count VII, because of the existence of a genuine
dispute of material facts. Ultimately, the question of entitlement to indemnification turns
on whether NDCRI breached their fiduciary duties to the partnerships and their respective
partners, and/or whether NDCRI acted with gross negligence in the performance of their
partnership duties. These are legally operative terms with clearly defined legal standards
under Kentucky law. Under the plain language of Section 7.26, NDCRI “shall” be entitled
to indemnification for legal fees unless they acted contrary to their fiduciary duties or with
gross negligence. This contemplates that indemnification is the norm, unless an injured
partner can demonstrate a violation. Thus, the partner seeking to prevent such
indemnification bears the burden of proof under this framework.
“To state a claim for breach of fiduciary duty under Kentucky law, plaintiff must
establish that the defendant owed a fiduciary duty, breached that duty, and that the breach
caused damages.” Ivan Ware & Son, Inc. v. Delta Aliraq, Inc., 2016 U.S. Dist. LEXIS 28356
at *5 (W.D. Ky. Mar. 7, 2016). “Fiduciary duty” is defined as “a duty of utmost good faith,
trust, confidence, and candor owed by a fiduciary … to the beneficiary …; a duty to act with
10 In essence, this is because if NDCRI is entitled for indemnification for its legal fees, NIDC would have no
claim of entitlement to these partnership funds. They would therefore lack any cognizable injury from NDCRI’s
conduct.
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the highest degree of honesty and loyalty toward another person and in the best interest of
the other person.” In re Tolliver, 464 B.R. 720, 746 (E.D. Ky. 2012) (internal citations
omitted). “Under Kentucky law, partners owe each other a fiduciary duty.” Haymaker
Development Co., LLC v. C.M. Gatton, 2021 WL 297128, at *6 (E.D. Ky. Jan. 28, 2021)
(citing Waldman v. Stone, 599 F. App’x 569, 575 (6th Cir. 2015); Lach v. Man O’War, LLC,
256 S.W.3d 563, 569 (Ky. 2008)).
“Gross negligence under Kentucky law is a wanton or reckless disregard for the
safety of other persons.” Sanders v. Clements, 2026 WL 883421, at *8 (W.D. Ky. Mar. 31,
2026) (citing Kinney v. Butcher, 131 S.W.3d 357, 358-59 (Ky. Ct. App. 2004)). “Kentucky
distinguishes ordinary from gross negligence, the former meaning the absence of ordinary
care, … and the latter meaning the absence of slight care.” Donegan v. Beech Bend Raceway
Park, Inc., 894 F.2d 205, 207 (6th Cir. 1990); Lowe v. Commonwealth, 181 S.W.2d 409, 412
(Ky. 1944) (“Two degrees of negligence are recognized in Kentucky: ‘Ordinary negligence,’ or
the failure to exercise care which ordinarily prudent persons would exercise in like or
similar circumstances; and ‘gross negligence,’ which is the absence of slight care.”); Shearer
v. Hall, 399 S.W.2d 701, 703 (Ky. 1965) (“Gross negligence is the failure to exercise slight
care.”); see also Hollingsworth v. Daley, 2016 WL 5415781, at *19 (E.D. Ky. July 19, 2016)
(collecting cases).
Based on the evidence before the Court, a genuine factual dispute exists
surrounding the Parties’ various conduct from the time of Blevins’s death in 2010 until the
ultimate sale of the complexes in 2022, such that a reasonable juror could find that NDCRI
acted in violation of its fiduciary duties as a general partner and/or acted with gross
negligence. In turn, then, a reasonable juror could also find that NDCRI was not entitled to
indemnification for its legal fees incurred in connection with this case, under the language
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set forth in Section 7.26. Therefore, the Court finds that neither party is entitled to
summary judgment as to Count Seven of the Crossclaim Complaint.
The evidence at issue was actually presented by the Parties with respect to NIDC’s
various claims which alleged standalone claims for breach of fiduciary duty, gross
negligence, and intentional misconduct, all of which were rendered moot by the breach of
contract claims. However, the same evidence and conduct underlie this claim, because the
partners intentionally chose legally operative language for the standard to determine
entitlement to indemnification for legal fees. Ultimately, determining whether a breach of
fiduciary duty occurred, or whether NDCRI acted with gross negligence in its handling of
partnership affairs, is a fact-intensive analysis. See e.g., Kendall v. Godbey, 537 S.W.3d
326, 332 (Ky. Ct. App. Dec. 15, 2017) (“The breach of duty question is generally a fact issue
for a jury.”) (citing A.A. By and Through Lewis v. Shutts, 516 S.W.3d 343, 349 (Ky. Ct. App.
2017)).
Under NIDC’s recitation of the relevant facts, NDCRI breached its fiduciary duties
and acted with gross negligence in several distinct ways. First, NIDC claims a breach
occurred where NDCRI erroneously treated Blevins-Clark and IBIA as substitute partners
for the Blevins interests, without following the requirements of the Agreements, and sent
them tax documents on an annual basis. Second, NIDC further claims a second breach
occurred when NDCRI failed to notify NIDC, or any other partner, of the death of either
Blevins or Baldwin, so that they could take proper corrective action.11 Third, NIDC argues
that the inconsistencies in NDCRI’s conduct with respect to the disputed Blevins shares
11 NIDC claims that NDCRI’s knowledge of Blevins’s death is evidenced by their treatment of his former
interest in the Albany Manor partnership, which is not the subject of this litigation. There, NDCRI sent annual
K-1s to the “Estate of Ivan G. Blevins”, which demonstrates that current NDCRI leadership must have had
some knowledge of his death at least as early as 2017. In response, NDCRI’s representative testified that they
failed to “connect the dots to the other partnerships” from Albany Manor.
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demonstrates, at a minimum, a lack of the requisite loyalty at the core of their fiduciary
obligations. To this effect, NIDC points out how NDCRI addressed the sale of the Albany
Manor property in 2020, whereby they correctly applied the language of Section 7.18(c) of
the partnership agreement and did not dispute NIDC’s entitlement to the interest. NIDC
further alleges that at the outset of the present dispute, Beacon officers acting on NDCRI’s
behalf noted that it would again acknowledge NIDC’s right to the funds attributable to the
Blevins and Baldwin interests, but abruptly shifted its position once Blevins-Clark filed her
complaint in this matter. NIDC further alleges that NDCRI did not develop its proffered
interpretation of the Agreements – whereby the 2004 Amendment deleted the applicable
portions of Section 7.18(c) – in December 2025, some thirty-eight months into this
litigation. Taken together, NIDC contends that the foregoing conduct could constitute a
breach of fiduciary duty or grossly negligent conduct, and, in turn, renders NDCRI
unentitled to indemnification for its legal expenses.
NDCRI presents a different characterization of this sequence of events. As a whole,
it frames its conduct as an attempt to charter a neutral course between a limited partner,
and a third party which it believed was lawfully entitled to a portion of partnership
proceeds. NDCRI further contends that, once this litigation commenced, its hands were
tied because the Court ordered the disputed partnership profits deposited first in escrow in
defense counsel’s IOLTA account, and later with the Court. Furthermore, NDCRI contends
that not only was NIDC not entitled to notice regarding the death and substitution of a
general partner12, but that NIDC in fact received such notice in the form of annual audit
reports which listed Blevins-Clark as a substitute general partner. NDCRI further points
to an “evidentiary void” around the question of whether NDCRI notified NIDC of the
12 NDCRI points to Section 6.03(c), which provides only that notice is required to the “investor limited partner”
which would not include NIDC.
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proposed substitution of Blevins-Clark as a general partner following Blevins’s death.13
Additionally, in regard to the alleged pre-suit communication inconsistencies, NDCRI notes
that “[NIDC has] failed to demonstrate that there are no issues of material fact related to
the interpretation of these communications, and the Court should decline Co-Defendants’
invitation to improperly weigh evidence at the summary judgment stage related to the
interpretation of pre-suit communications between lay witnesses that are open to various
interpretations.” [R. 211 at 24.]
The Court agrees with NDCRI’s final characterization: understanding the full scope
of actions leading up to this dispute and whether NDCRI’s conduct is actionable requires
evaluating the credibility of lay witnesses and, ultimately, resolving factual disputes. With
the factual disputes before it, the Court is unable to determine, as a matter of law, whether
NDCRI contravened its fiduciary duties or acted in a grossly negligent fashion. Thus, in
turn, the Court is unable to determine whether, as a matter of law, NDCRI is entitled to
indemnification for its legal fees incurred in conjunction with this suit, under Section 7.26
of the Agreements. Therefore, the cross-motions for summary judgment as to Count Seven
of the Crossclaim Complaint are denied.
6
In addition to the legal holdbacks, NIDC further claims that NDCRI wrongfully
withheld certain additional categories of funds after the sale of the complexes: (1)
approximately $50,000 per property for “post-closing reconciliations” to be repaid to the
partners “after giving a reasonable amount of time for all receipts, invoices, and payments
to circulate and clear”; and (2) 4% of the purchase price for each property to cover
13 Here, NDCRI points to testimony of the former NDCRI President, William Balsinger, who testified that he
believed, but without certainty, that he notified NIDC of a proposed substitution of Blevins-Clark as general
partner.” [R. 211 at 23.]
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representations and warranties, to be repaid to the partners seven months after closing. [R.
191 at 19-20.] These holdbacks first arose in March 2023, when NDCRI notified NIDC of
various categories of funds which would be reserved following the sale of the apartment
complexes. In NIDC’s view, “the only final payables left are ones that should have been
avoided had Beacon properly wound up the partnerships once they had no business
remaining, there is no excuse to withhold money for seller’s representations and
warranties, and Beacon is actually holding the funds to potentially use toward its
individual defense costs in this litigation.” [Id. at 20.] [See also R. 219 at 18.] (“Beacon is
withholding them still in 2026 as leverage over NIDC and to use them for an unintended
purpose – further dissipation to its law firms”).
Section 10.04 of the Agreements addresses the distribution of the proceeds from the
sale, refinancing, or liquidation of any partnership property by establishing the applicable
priority. [See R. 191-53.] First, the proceeds are to be applied “to the payment of debts and
liabilities of the Partnership …, excluding debts and liabilities of the Partnership to
Partners or any Affiliates[.]” [Id.] Second, and especially relevant here, the proceeds are to
be applied “to the setting up of any reserves which the Liquidator deems reasonably
necessary for contingent, unmatured or unforeseen liabilities or obligations of the
Partnership[.]” [Id.] Then, and only then, are disbursements to be made to any of the
partners pursuant to Section 10.04(a)(iii)-(vi).
Under the plain language of these provisions, the Court cannot conclude, and a
reasonably jury could not find, that NDCRI violated the Agreements by maintaining these
additional holdbacks. Section 10.04 clearly and unambiguously sets forth the priority by
which the managing general partner must apply the proceeds from the sale or liquidation of
any partnership property, which undoubtedly includes the apartment complexes at issue
here. Only after the proceeds have been applied to the payment of partnership debts and
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liabilities, and after the proceeds are applied to set up the requisite reserves may
disbursements be made to any of the partners. And, Section 10.04 places significant
discretion in the hands of the general partner, requiring only that it set up those reserves
which it “deems reasonably necessary for contingent, unmatured, or unforeseen liabilities
or obligations of the Partnership.” [See R. 191-53.] NDCRI exercised that broad discretion
in setting aside these reserves.
Rather than contending that the reserves created by NDCRI are objectively
unreasonable, NIDC instead argues that “[t]he holdbacks breached the terms that Beacon
proposed to NIDC to obtain consent from the investor limited partners to sell the Kentucky
Partnerships.” Around March 2022, during discussions about the potential sale of the
complexes, NDCRI indicated to NIDC via email, that it would “have a holdback of $50,000
for settlement of final property payables that will be distributed two to three months post
closing” and would also withhold “4% of the of the Purchase Price, to back the Seller’s post-
closing representation and warranty requirements capped at this amount in the Purchase
Agreement that will be distributed after the expiration of the seven (7) month survival
period.” [R. 191 at 22; R. 191-35.] The letters were accompanied by a “Certificate of
Partnership Authority” which was signed and returned by the limited partners. [R. 191 at
23; R. 191-55.] In NIDC’s view, this certificate created a freestanding contractual
obligation, which superseded Section 10.04, and required NDCRI to disburse the holdbacks
along these timelines. [R. 191 at 23.] By continuing to withhold these funds, NIDC posits
that NDCRI is in breach of their contract.
This argument falls short for several key reasons. First, NIDC does not assert that
the Certificate of Partnership Authority created a distinct, independent contract between
the partners. At any rate, such an argument would exceed the scope of what NIDC pleaded
in Count VIII of its crossclaim, where it stated that the continued withholdings “constitutes
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a breach of the partnership agreements of the Kentucky Partnerships.” [See R. 73 at 23.]
Second, the Certificate also cannot constitute an amendment to the partnership
agreements. Each of the prior amendments, three in total, follow a consistent format
detailing the changes which the amendment brings into effect, and includes a signature for
each of the partners, as required by the Agreements. The partners, by signing a certificate
of partnership authority related to holdbacks following the sale of the partnerships’ key
assets, cannot have been on notice that, by signing, they were actually amending the
partnership agreements.
Third, and perhaps most fatally to the claim, is the fact that NIDC assert no
damages separate and apart from those included in Count VII, which pertains to the use of
holdbacks for legal fees. To explain, the only damages which NIDC claims resulted from
the long withholding period is the Beacon Defendants’ purported usage of those
withholdings to pay their legal expenses. NIDC does not otherwise allege that the creation
of the reserves was improper, or that the continued existence of such reserves violates the
Agreements. If the Beacon Defendants’ indemnification for its legal fees violates the
Agreement, that injury will be fully redressed by Count VII of the Crossclaim Complaint.
At bottom, the continued existence of the holdbacks does not violate the Agreements
and cannot form the basis of a breach of contract claim. Section 10.04 of the Agreements
grants the managing general partner broad discretion in the setting aside of reserves, out of
the proceeds from the sale of partnership property, to address contingent, unmatured, or
unforeseen liabilities that may arise following the sale. At present, the partnerships
continue to operate and continue to accrue certain routine liabilities. Furthermore, ever
since the sales proceeds were generated following the sale, the assets of the partnership
have been the central subject of this litigation, creating further uncertainty as to potential
future partnership liabilities. The continued existence of these reserves so long as this
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uncertainty remains does not violate the plain language of the Agreements. Nor does the
relatively informal email correspondence between the partners give rise to some obligation
on NDCRI’s part to accelerate the disbursement of the holdbacks. And insofar as any usage
of those withholdings towards the managing general partner’s legal bills is improper under
the Agreements, that will be redressed by Count VII. Count VIII, therefore, does not
present a viable claim and the Beacon Defendants are entitled to judgment as a matter of
law.
D
The remaining Beacon Defendants – those other than NDCRI – are named in this
suit for the sole purpose of Blevins-Clark’s and NIDC’s request that the Court pierce the
corporate veil. First, because Blevins-Clark cannot recover against NDCRI on any of her
legal or equitable claims contained in its Amended Complaint, the Court will not address
her motion to pierce the corporate veil.
“A basic tenet of American corporate law is that the corporation and its shareholders
are distinct entities.” Dole Food Co. v. Patrickson, 538 U.S. 468, 474 (2003). That being
said, “the corporate veil may be pierced and the shareholder held liable for the corporation’s
conduct when, inter alia, the corporate form would otherwise be misused to accomplish
certain wrongful purposes, most notably fraud, on the shareholder’s behalf.” United States
v. Bestfoods, 524 U.S. 51, 61-63 (1998). The Kentucky Supreme Court has explained the
rationale underpinning the doctrine of piercing as follows:
Piercing the corporate veil is an equitable doctrine invoked by courts to allow
a creditor recourse against the shareholders of a corporation. In short, the
limited liability which is the hallmark of a corporation is disregarded and the
debt of the pierced entity becomes enforceable against those who have
exercised dominion over the corporation to the point that it has no real
separate existence. A successful veil-piercing claim requires both this
element of domination and circumstances in which continued recognition of
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the corporation as a separate entity would sanction a fraud or promote
injustice.
Inter-Tel Techs., Inc. v. Linn Station Props., LLC, 360 S.W.3d 152, 155 (Ky. 2012). Despite
its name, “[t]he doctrine can also apply to limited liability companies.” Turner v. Andrew,
413 S.W.3d 272, 277 (Ky. 2013); see also Kaycee Land and Livestock v. Flahive, 46 P.3d 323,
327-328 (Wyo. 2002) (“We can discern no reason, in either law or policy, to treat LLCs
differently than we treat corporations… Most, if not all, of the expert LLC commentators
have concluded the doctrine of piercing the veil should apply to LLCs.”).
Ultimately, “[t]he burden of proof to demonstrate grounds for piercing the corporate
veil is on the party seeking to impose liability on the parent corporation.” Pro Tanks
Leasing v. Midwest Propane & Refined Fuels, LLC, 988 F. Supp. 2d 772, 783 (W.D. Ky.
2013) (citing Corrigan v. U.S. Steel Corp., 478 F.3d 718, 723 (6th Cir. 2007)). In sum,
piercing the corporate veil requires the movant to prove “two dispositive elements: (1)
domination of the corporation resulting in a loss of corporate separateness and (2)
circumstances under which continued recognition of the corporation would sanction fraud
or promote injustice. Inter-Tel Techs., Inc., 360 S.W.3d at 165. “The issue of whether to
pierce the corporate veil under Kentucky law is an equitable determination for the court,
and not one for the jury.” Thornton v. Dutch Nats. Processing, LLC, 629 F. Supp. 3d 777,
797 (M.D. Tenn. 2022) (citing Schultz v. Gen. Elec. Healthcare Fin. Servs. Inc., 360 S.W.3d
171, 174-75 (Ky. 2012)).
1
Determining whether there has been a sufficient loss of corporate separateness to
merit piercing a party’s corporate veil requires the balancing of numerous factors including:
(1) Inadequate capitalization;
(2) Failure to issue stock;
(3) Failure to observe corporate formalities;
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(4) Nonpayment of dividends;
(5) Insolvency of the debtor corporation;
(6) Nonfunctioning of the other officers or directors;
(7) Absence of corporate records;
(8) Comingling of funds;
(9) Diversion of assets from the corporation by or to a stockholder or other
person or entity to the detriment of creditors;
(10) 	Failure to maintain arm’s-length relationships among related entities;
and
(11) 	Whether, in fact, the corporation is a mere façade for the operation of
the dominant stockholders.
Michael W. Dickinson, Inc. v. Keeneland Ass’n, 2017 U.S. Dist. LEXIS 45011, at *6-7 (E.D.
Ky. Mar. 28, 2017) (citing Inter-Tel, 360 S.W.3d at 163).14 That being said, “the most
critical factors are ‘grossly inadequate capitalization, egregious failure to observe legal
formalities and disregard of distinctions between parent and subsidiary, and a high degree
of control by the parent over the subsidiary’s operations and decisions, particularly those of
a day-to-day nature.’” Thornton, 629 F. Supp. 3d at 797 (citing Arapahoe Res., LLC v. Pro.
Land Res., LLC, 2015 U.S. Dist. LEXIS 108419, at *3 (E.D. Ky. Aug. 15, 2015); Inter-Tel
Techs., Inc., 360 S.W.3d at 164) (applying Kentucky law).
a
Beginning with the question of inadequate capitalization, the parties are in
substantial disagreement as to whether NDCRI is inadequately capitalized. The core of
this disagreement is the subject of a distinct motion, in which NIDC and Malvern seek to
strike the declaration of Timothy Cowles, which was filed in conjunction with NDCRI’s
response, as well as the summary judgment motions filed by the other Beacon Defendants.
The Court must first address whether the Cowles declaration should be stricken from the
14 Although the Inter-Tel veil piercing framework applies to both corporations and LLC’s, the Court
acknowledges that several of the factors set forth in Inter-Tel, such as “failure to issue stock,” for example, do
not squarely apply in the LLC context. Consequently, to some extent, the Court is required to lean more heavily
into those factors which apply to both corporations and LLCs on an equal basis.
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record, and will then turn to the question of whether NIDC has demonstrated that NDCRI
is undercapitalized so as to suggest that veil piercing is warranted.
i
NIDC and Malvern seek to strike five paragraphs of the February 27, 2026,
declaration from Timothy Cowles, the Chief Financial Officer of Beacon. [See R. 217.] In
reliance on this declaration, NDCRI asserts in regard to its own capitalization that,
“NDCRI is a demonstrably solvent company that controls substantial unliquidated assets
totaling $8,306,344 and further receives 175,000 annually in distributions and incentive
management fees[,]” and that this valuation is based on the market value of NDCRI’s
interest in apartment complexes owned by approximately seventeen partnerships in which
NDCRI is a partner. [R. 194 at 4-5.] In NIDC’s view, this declaration directly contradicts
with Cowles’s deposition testimony, in which he was asked whether NDCRI had “an
estimate anywhere internally of the total value of those ownership interests, aside from tax
basis accounting.” [R. 217 at 2; R. 217-1 at 14.] Cowles responded that NDCRI did not have
those numbers and did not have a practice of obtaining that information with regularity.
[Id.] Therefore, NIDC contends that because Cowles testified that such valuation
information was not available and did not supply estimates during discovery, he cannot
now provide contradictory information to the Court once discovery has closed.
NDCRI, on the other hand, attempts to paint this apparent disconnect in a different
light. NDCRI provides that it was served notice from NIDC on October 29, 2025, pursuant
to Rule 30(b)(6) to take the testimony of NDCRI’s corporate representative, and listed as a
noticed topic “the capitalization, net asset value, and net liability value for each of the
Beacon Defendants at end-of-fiscal year for 2017-2024 and at present as of the date of the
deposition held under this notice.” [R. 154.] NDCRI notes that Cowels “provided NDCRI’s
capitalization for each fiscal year,” but specifically pointed out that “these are all income
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tax basis accounts, accounting” and that it reflects their records because “we keep the books
on a tax basis.” [R. 231 at 2.] Insofar as Cowles was asked about NDCRI’s total assets and
liabilities, NDCRI notes that it objected to this line of questioning, “on the ground that this
inquiry exceeded the scope of the noticed deposition topics, which sought only the ‘net’ asset
and liability value.” [Id.] When asked directly, “[d]oes Beacon have an estimate anywhere
internally of the total value of those ownership interests, aside from tax basis accounting?”
Cowles responded that he did not have immediate access to that information, because it
was outside the scope of the noticed topic, but that information could be put together upon
request.15 [Id.; R. 231-1 at 7.] NDCRI further observes that Cowles sat for two subsequent
depositions as NDCRI’s corporate representative – on December 9, 2025, and March 4, 2026
– and that NIDC did not seek to compel his testimony regarding the market value of
NDCRI’s partnership interests at either.16 Furthermore, NDCRI provides that discovery in
this matter remained ongoing after Cowles’s October deposition, and “[d]espite Mr. Cowles’
explicit testimony that he could, if asked, retrieve information concerning the estimated
market value of NDCRI’s assets, the Co-Defendants neglected to serve any discovery
request for such information.” [R. 231 at 3.] Therefore, in NDCRI’s view because the
declaration addresses market value, which was not the subject topic at issue in the October
Cowles deposition, it does not contradict with the deposition testimony and should not be
stricken.
As a general rule, “[a] party may not create a factual issue by filing an affidavit,
15 NIDC specifically contests NDCRI’s characterization of this statement. In NIDC’s view, NDCRI’s counsel
promised to obtain that information and to provide an estimate to NIDC before discovery concluded.
Ultimately, it is undisputed that NDCRI never disclosed this information to NIDC during discovery. Rather,
NDCRI contends that regardless of any statements during the deposition, NIDC still had an obligation to
formally request the information through a request for production, and, since they failed to do so, they elected to
not provide this information.
16 NDCRI also opines that, even had NIDC sought to compel testimony related to this market valuation at one
of these depositions, it still would have been improper because NIDC never properly noticed this topic in their
deposition notices.
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after a motion for summary judgment has been made, which contradicts her earlier
deposition testimony. Reid v. Sears, Roebuck & Co., 790 F.2d 453, 460 (6th Cir. 1986)
(citing Biechele v. Cedar Point, Inc., 747 F.2d 209, 215 (6th Cir. 1984)). In more recent
cases, the Sixth Circuit has sought to define the scope of the rule it set forth in Reid,
writing
The rule set forth in Reid is grounded on the sound proposition that a party
should not be able to create a disputed issue of material fact where earlier
testimony on that issue by the same party indicates that no such dispute
exists. Reid and its progeny have thus barred the nonmoving party from
avoiding summary judgment by simply filing an affidavit that directly
contradicts that party’s previous testimony.
Aerel, S.R.L. v. PCC Airfoils, L.L.C., 448 F.3d 899, 907 (6th Cir. 2006) (citing Peck v.
Bridgeport Machines, Inc., 237 F.3d 614, 619 (6th Cir. 2001)). This, however, “is a far cry …
from preventing a party who was not directly questioned about an issue from
supplementing incomplete deposition testimony with a sworn affidavit.” Id. An affidavit of
this latter variety, “fills a gap left open by the moving party and thus provides the district
court with more information, rather than less, at the crucial summary judgment stage.” Id.
“If … there is no direct contradiction, then the district court should not strike or
disregard that affidavit unless the court determines that the affidavit ‘constitutes an
attempt to create a sham fact issue.’” Id. at 908 (citing Franks v. Nimmo, 796 F.2d 1230,
1237 (10th Cir. 1986)). The Franks Court set forth a non-exhaustive list of factor to
determine whether a “sham fact issue” has arisen, including “whether the affiant was cross-
examined during his earlier testimony, whether the affiant had access to the pertinent
evidence at the time of his earlier testimony or whether the affidavit was based on newly
discovered evidence, and whether the earlier testimony reflects confusion [that] the
affidavit attempts to explain.” Franks, 796 F.2d at 1237.
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Here, Cowles’s declaration does not contradict his deposition testimony and
therefore should not be stricken. During the deposition, Cowles was asked to provide
information about the capitalization of NDCRI and provided this information in the form of
tax basis accounts, which reflects the routine balance sheet practices of NDCRI. Cowles
provided this information. Cowles was then asked to provide information about the value
of NDCRI’s ownership interests in various other partnerships, “aside from tax basis
accounting[,]” and Cowles responded that he did not have that information available at that
time. The reason Cowles did not have this information available during the deposition is
because the “market value” of NDCRI’s portfolio was not a noticed topic. Thus, Cowles did
not research this question, nor did he prepare any documentation to that effect, prior to the
deposition. Rather, he informed NIDC’s counsel that such information was available, even
though he did not have it with him, and that it could be compiled and made available. The
Cowles declaration contains precisely this “market value” information. Cowles cannot be
held at fault for failing to come prepared to testify on information outside the scope of the
Rule 30(b)(6) notice. Nor can NDCRI be faulted for then introducing this non-contradictory
evidence in the form of a declaration at the summary judgment stage. In other words, the
“market value” information included as part of the Cowles declaration does not contradict
with the tax-basis information he provided during the deposition; rather, it provides
financial information of a different sort.
Nor does the declaration give rise to a sham fact issue. For one, it does not fall
within any of the categories of sham fact issues previously recognized in Franks, as adopted
by the Sixth Circuit. Furthermore, it would be squarely illogical to find the existence of a
sham fact issue present in a non-contradictory assertion when the contents of the latter
declaration fall outside the scope of the noticed topics which were the subject of the original
deposition.
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NIDC’s attempt to concoct a narrative of deception based upon statements made by
NDCRI’s counsel during the deposition fail to move the needle. NIDC states that NDCRI’s
argument “completely ignores that NIDC’s counsel asked Beacon’s counsel to provide the
information that Beacon’s counsel promised to do so on the record in the deposition.” [R.
236 at 3.] NIDC further provides that “Beacon’s counsel even went further to condition
Beacon’s use of the information for summary judgment purposes on first providing the
information to NIDC.” [See. R. 217-1 at 16] (“I may want it for my summary judgment
motion. So if we’re going to use it, you will definitely get it.”). NIDC’s counsel responded to
this statement by saying, “[w]ell, if you’re going to use it, we’re going to get it[.]”17 [Id.]
These speculative and hypothetical statements did not create some enforceable obligation
upon NDCRI to prepare documentation and then disclose it to NIDC. Even if NIDC
presumed that NDCRI’s counsel was promising to promptly provide this “market value”
information, the solution seems simple: once time passed and the information had not been
disclosed, move to compel the production of this information. NIDC did not do this,
however, apparently electing to instead rely on the equivocal and contingent side-
statements made by counsel during the deposition. NIDC further compounded this
unjustifiable reliance by failing to ask about the “market value” information it now claims
to have been expecting in either of its subsequent depositions with Cowles. NIDC’s
shortcomings in obtaining this information during discovery cannot now be salvaged by
striking a declaration that simply does not contradict with the affiant’s deposition
testimony.
As an additional matter, NIDC’s reliance on Smith and Lockard is likewise
17 Just as NIDC reads this statement as a promise by NDCRI that it will prepare and disclose information about the
market value of NDCRI’s partnership interests, NDCRI could equally construe this statement from NIDC’s counsel
to suggest that it would seek to compel the production of this information (i.e., we’re going to get it).
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misplaced. In Smith v. Consolidated Rail Corp., which involved essentially the same factual
circumstances as Reid itself, the deponent, a lay witness, was “specifically questioned”
about key factual questions related to her employment interview, provided a less than
forthcoming answer, then submitted a contradictory affidavit later in the litigation. Smith,
1996 U.S. App. LEXIS 19126, at *10-12 (6th Cir. 1996); cf. Reid, 790 F.2d at 460. Here, by
contrast, Cowles was specifically questioned at the deposition about the market value of
NDCRI’s partnership interests, but unlike the deponent in Smith, Cowles did not answer.
Rather, he acknowledged that he did not have that information available, because it was
not a noticed topic, and acknowledged that it could be compiled and made available later
upon request. In other words, this case lacks the sort of bald contradiction present in
Smith and Reid. In Lockard v. General Motors Corp., the Sixth Circuit somewhat expanded
the scope of Reid, holding that a party’s “ample opportunity during discovery to present
evidence provides courts with reason to prevent that party from introducing new evidence
in an affidavit opposing summary judgment” constitutes an independent basis for striking
all or part of an affidavit. Lockard, 52 F. App’x at 789. Importantly, the Sixth Circuit in
Aerel appeared to draw back the more expansive interpretation of the Reid holding in cases
like Lockard. See Aerel, 448 F.3d at 907 (“In our opinion, the expansive view of the Reid
rule adopted in the latter two of these nonprecedential opinions [Lockard and Rosinski]18 is
unwarranted.”).19 Regardless, the circumstances underlying the Lockard opinion are
distinguishable from those at bar.
At bottom, the Cowles declaration does not contradict with the testimony he
18 See Rosinski v. Electronic Data Systems Corp., 1991 U.S. App. LEXIS 19126 (6th Cir. 1991).
19 Although the Aerel Court did not reach the question of whether the district court abused its discretion by
relying on the Reid holding as extended by the unpublished opinions in Lockard and Rosinski, because the
district court misapplied the rule regardless, the Court nonetheless expressed clear disfavor for that expanded
interpretation.
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provided in the October 2025 deposition, nor does it create a sham factual issue.
Consequently, there is no basis upon which the Court can strike portions of it from the
record. The Court will therefore consider the declaration, in full, in evaluating the relevant
questions to which it pertains.
ii
In Inter-Tel, the Kentucky Supreme Court clarified that the “consideration of the
adequacy of capitalization concerns the financing of the corporation, not its condition at the
time of the events complained of or thereafter.” Inter-Tel, 360 S.W.3d at 167 (citing
Anderson v. Abbott, 321 U.S. 349, 362 (1944)). “Thus, the undercapitalization inquiry
focuses on whether or not [the defendant] was undercapitalized at the time of the initial
financing.” Pro Tanks Leasing v. Midwest Propane & Refined Fuels, LLC, 988 F. Supp. 2d
772, 786 (W.D. Ky. Dec. 18, 2013). In turn, “[s]ubsequent economic developments that
weaken the debtor’s financial condition, even those leading to insolvency, are irrelevant for
[the determination of whether undercapitalization exists if the corporation was adequately
financed at the outset.” Inter-Tel, 360 S.W.3d at 167.
The Inter-Tel Court also set forth two caveats to this general rule which, under
certain circumstances, expand the lens of the undercapitalization inquiry. First, “[w]hen
the inadequacy of capitalization arises after commencement of the business, as a result of
capital transfers to the controlling shareholder, it may be taken into account; the
withdrawal renders the initial inadequacy irrelevant.” Id. Second, “when the corporation
substantially expands its size or the nature of its business, its capital requirements change,
and there may be undercapitalization of the new business despite any additional infusion of
capital.” Id. Although they do not state so clearly, NIDC’s undercapitalization argument
focuses on this first caveat. NIDC presents no evidence that the initial capitalization of
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NDCRI was inadequate in any way.
NIDC’s characterization of NDCRI’s capitalization focuses on its current financial
situation, and in particular the tax-based accounting records which were the subject of the
Cowles deposition testimony. NIDC states that “NDCRI’s capitalization – its assets minus
its liabilities – has been a negative value since 2018.” [R. 191 at 29.] It acknowledges,
however, that “NDCRI’s assets are mostly or almost exclusively these … interest in various
partnerships and entities that own real property.” [Id.] NIDC suggests that this
demonstrates inadequate capitalization, market value notwithstanding, because “NDCRI
cannot liquidate those assets without the consent of third parties.” [Id.]
NDCRI paints a starkly different picture of its financial situation, largely reliant
upon the Cowles declaration. First, and perhaps most critically, NDCRI states that it “is
well capitalized” and “enjoys over $8 million in members’ equity at this juncture.” [R. 194 at
10.] It further provides that “the assets of the four Kentucky Partnerships have been
properly preserved and documented by NDCRI” and “those assets have been meticulously
maintained in the respective operating account of each partnership, rather than comingled
in any account held by NDCRI.” [Id.] It therefore contends that NIDC’s “arguments to the
contrary are entirely speculative and unsubstantiated by any actual evidence in this case.”
[Id.]
Again, what initially appears like conflicting testimony at first glance actually
reflects the different financial metrics NIDC and NDCRI rely on to frame their argument.
During his deposition, Cowles clarified that the financial information he provided reflected
NDCRI’s tax-basis accounting, which reflects the method by which NDCRI generally
maintains its books. Such tax-basis accounting practices do not generally encompass the
true market value of all of a company’s assets because, ultimately, this information is of no
consequence to the taxing authorities. The information provided by the Cowles declaration,
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which includes the market value of the partnership interests owned by NDCRI,
demonstrates a more comprehensive assessment of its capitalization. This information is
not reflected in the balance sheet. As Cowles explains,
[t]hat is because the value of NDCRI’s interest in various partnerships is
recorded at ‘income tax basis’ on its balance sheet, which is a calculation that
stems from NDCRI’s original investment in those partnerships, or ‘basis.’
NDCRI’s balance sheet is maintained in this manner in order to facilitate its
compliance with the Internal Revenue Code, and otherwise align with best
accounting practices.
[R. 194-3 at 3.] NDCRI also identifies two additional lines of revenue – “approximately
$125,000 of annual incentive management fees from two of the seventeen partnerships” and
“approximately $50,000 in annual distributions as a result of its ownership interest in
various partnerships” – both of which are unrelated to their interests in the Kentucky
Partnerships. This information suggests that the simple fact that NIDC and NDCRI have
submitted different financial information to formulate their argument does not give rise to
a genuine dispute of material fact. Here, no such factual dispute exists. The Court finds
that this factor weighs against a finding of undercapitalization resulting in a loss of
corporate separateness.
b
Next, NIDC contends that the Beacon Defendants egregiously failed to observe
various legal formalities and continually disregarded the distinctions between parent and
subsidiary. In NIDC’s view, the absence of distinction between the various Beacon
Defendants here is evident from the “Certificate of Organization of Beacon Communities
LLC” which states that the business purpose of Beacon Communities LLC shall be:
to (i) conduct a real estate business including without limitation the
acquisition, development, redevelopment, ownership, asset management and
disposition of multifamily rental, condominium and mixed-use properties and
(ii) engage in other activities related or incidental to the foregoing. The
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foregoing activities shall be pursued primarily though organization of, or
participation in, a limited liability company, limited partnership, joint
venture or other entity (whether or not wholly-owned by the LLC).
[R. 233 at 22-23; R. 233-8.] In other words, NIDC posits that this statement of purpose
demonstrates Beacon’s intent to minimize corporate separateness from its very inception.
This alone is clearly not enough, however, and NIDC points to several additional
observations to denote further disregard of the distinction between the various entities.
First, NDCRI, Keystone, NDCREM, and Beacom Companies lack their own boards
of directors. Beacon Communities also lacks a board of directors but acknowledges that it
“has a manager board via Mount Ebal LLC,” which is Beacon Communities’ managing
member. [R. 191 at 27; R. 191-9 at 50-52.] 	The Mount Ebal manager board consists of only
two people is “responsible to manage Beacon Communities” and make major decisions on
Beacon Communities behalf.20 [Id.] Additionally, many of the senior officers at Beacon
Communities have also simultaneously hold officer roles in Beacon Companies, Keystone,
and NDCREM simultaneously. [Id.; see also R. 191-57.] NDCRI, however, had no officers of
its own, because it was “wholly owned by Keystone.” [R. 191-9 at 36.]
This web is further complicated by the fact that NDCRI, Keystone, Beacon
Communities, and Beacon Companies lack their own employees. Beacon Communities and
Beacon Companies jointly own another entity, Beacon Residential Management LP, which
is “the employment entity of Beacon Communities,” and employs the individuals who
perform the regular functions of NDCRI, Keystone, and Beacon. [R. 191 at 28; R. 191-9 at 2,
8, 11-15.] 	No formal agreement dictates this employment arrangement, and the Beacon
Defendants acknowledge this is because of the common ownership among the entities. [R.
20 One of the two members of the Mount Ebal LLC managing board is Howard Cohen, who is also the sole director
and president of the Beacon Companies Inc., and an officer of Keystone.
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191-9 at 15.]
As an additional matter, several other financial and managerial considerations point
to the overlapping nature of the Beacon entities. NDCRI does not maintain its own bank
accounts, with all revenue flowing directly to and from Keystone. [Id. at 41-43, 45.] As
Cowles stated during his deposition, “NDCRI gets a bill for something and Keystone Values
uses the bank account in its name to issue payment for that bill” and “when Keystone
Values uses its accounts to pay the bills and liabilities of NDCRI, it does that for all of
NDCRI’s expenses.” [Id.] This arrangement also applies to any profits received by NDCRI.
[Id. at 49-50.] NDCRI also does not insure itself individually; rather the Beacon
Defendants obtain these policies together and are listed alongside one another as insureds
on the same policies. [R. 191 at 29; R. 191-9 at 16-17, 19.] NDCRI and the other Beacon
Defendants share the same office space located in Boston, Massachusetts, for which NDCRI
pays no rent and owns no office equipment of its own. [R. 191-58 at 3-4.]
Rather than refuting the foregoing, NDCRI attempts to frame NIDC’s argument as
“rest[ing] almost entirely on the use of ‘Beacon’ branding on emails and letterhead, in pre-
suit communications regarding the Disputed Partnership Profits.” [R. 194 at 10-11.]
NDCRI is undoubtedly correct in stating “[t]he mere use of common branding and logos …
does not justify piercing the corporate veil under Kentucky law.” [Id.] In support of this
proposition, NDCRI cites to a string of Kentucky cases holding, under various factual
circumstances, that a franchisor cannot be held liable for certain actions of its franchisee,
despite their usage of common advertising and branding materials. [Id. at 11.] While this is
certainly an accurate assessment of the law of franchises, it is inapposite to the present
case. Here the defendant parties are not in a franchise relationship with a parent company,
and are rather in an ownership dynamic where the parent companies exert an
extraordinary degree of control over subsidiaries which lack any capacity to act
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independently. See infra, Section III(D)(1)(c). In other words, this situation extends well
beyond a mere shared usage of name and corporate identity between several independent
functional entities.
Taken together, the uncontroverted facts laid out by NIDC adequately demonstrate
that the Defendant entities embrace a high degree of disregard for corporate formalities
and/or a distinctiveness between each individual entity, to suggest a loss of corporate
separateness. Among these facts, the most concerning is the absence of any officers,
directors, or even employees of NDCRI, which requires the various entities to share critical
executives without clear delineations of the respective duties or responsibilities owed to
each company. Beyond that, NDCRI lacks other key hallmarks of its separate identity
including its own workspace, its own bank accounts, or its own insurance policies, to name
a few. While any of these things standing alone would likely be insufficient, the
combination of them points toward a structure whereby NDCRI bears minimal
distinctiveness from its parent companies beyond the maintenance of a different balance
sheet and tax filings. Thus, the Court finds that this factor weighs in favor of finding a lack
of corporate separateness.
c
Turning third, and finally, NIDC argues that NDCRI, any by extension the
Kentucky Partnerships, are controlled by the remaining Beacon Defendants. NIDC argues
that “Beacon Communities managed, and was responsible for, NDCRI’s actions that are
relevant to its role as managing general partner of the Kentucky Partnerships and the
actions underlying this dispute.” [R. 191 at 30.] In NIDC’s view, a finding that NDCRI is
controlled by Beacon is forced by Cowles own deposition testimony in which he stated,
unequivocally, that “Beacon Communities has a role to run the day-to-day operations of
Keystone Values” and that Beacon Communities is responsible for “overseeing and running
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the day-to-day operations of … the NDCRI general partner and responsibilities and things
of that nature.” [Id.; R. 191-9 at 13.]
NDCRI counters that “[t]here is no evidence that Beacon Communities exercises any
control, much less an improper level of control, over the day-to-day operations and decisions
of NDCRI.” [R. 194 at 12.] NDCRI again contends that “NIDC’s entire pierce the veil claim
against Beacon Communities rests on the use of a trade name by individuals who were not
employed by Beacon Communities” and that “[t]he record is clear that Beacon Communities
cannot control the day-to-day operations of Keystone or NDCRI, which should be dispositive
of any claim against Beacon Communities.” [Id. at 13-14.] And, with respect to Keystone,
the Defendants state, without citation, that “Keystone does not provide services for, and is
not engaged in, the day-to-day management or operations of NDCRI.” [Id. at 15.]
The complex web of interrelationships, once untangled, almost alone forces the
inescapable conclusion that Beacon Communities and Keystone entirely control NDCRI.
This is all the more true where, as discussed above, NDCRI lacks its own officers, directors,
employees, office space, bank accounts, or insurance policy, and rely on Keystone and
Beacon for all of the foregoing. Beacon Communities owns 100% of Beacon Keystone LLC,
which owns 50% and is the managing member of Keystone Values MM LLC, which in turn
owns 36.91% and is the managing member of Keystone. [R. 191 at 31; R. 194 at 3.] Recall
that Keystone, in turn, owns NDCRI. By its own definition the role of a “managing
member” is “managing the LLC, so the day-to-day business and all of that.” [R. 191-9 at 10.]
The Beacon Defendants are correct that, generally speaking, economic realities often
force related companies to share certain operational responsibilities, and that such
integration, standing alone, is generally insufficient to support disregarding the corporate
form. See e.g., Papa v. Katy Indus., 166 F.3d 937, 942 (7th Cir. 1999). At least with respect
to Beacon Communities and Keystone, the facts demonstrate something well beyond
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streamlined integration between separate entities for purposes of efficiency. Rather, the
direct control exercised upon NDCRI by Beacon Communities and Keystone is
demonstrated through the trail of ownership and managing membership tying the three
entities together. Furthermore, this chain of control, coupled with the lack of corporate
formalities discussed prior, begs the question: how could NDCRI operate at all without the
control of another? It lacks any employees, officers, or directors. It has no office space and
does not maintain its own bank accounts. In fact, Timothy Cowles, the corporate
representative put forth to testify at several depositions on NDCRI’s behalf, is, in fact, a
Beacon Communities officer. This suggests, at a minimum, that NDCRI can only speak
when Beacon speaks. In this framework, NDCRI’s role falls somewhere between at best a
barebones investment vehicle, or worse, a corporate puppet. The record squarely indicates
that there is nothing self-sufficient about NDCRI. On its own two feet, NDCRI consists of
nothing more than a balance sheet, which includes investments in the form of partnership
interests in some seventeen partnerships, excluding those presently at issue. In other
words, NDCRI’s ability to do anything at all is directly tied to either Beacon Communities
or Keystone’s ability and willingness to act on its behalf. Needless to say, this critical factor
weighs strongly in favor of finding a high degree of control over the subsidiary’s operations
and decision-making, including those of a day-to-day nature, and therefore suggests a lack
of corporate separateness.
The circumstances with respect to the Beacon Companies and NDCREM are
materially different, however. Unlike Beacon Communities and Keystone, NIDC cannot
demonstrate any degree of control over NDCRI exercised by either Beacon Companies or
NDCREM. [See R. 195.] Although a parent-subsidiary relationship between the parties is
not a prerequisite to veil piercing, there still must be some degree of connection between
the entities beyond merely existing in the same family of companies under the same
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umbrella. See Inter-Tel, 360 S.W.3d at 166 (collecting cases where veil piercing was applied
to companies lacking a parent-subsidiary relationship). That notwithstanding, NIDC has
failed to demonstrate any degree of control which NDCRI or Beacon Companies exhibit over
NDCRI. Without doubt, there is some degree of connection between all of the various
Beacon entities, because, as discussed above, they generally fail to adhere to corporate
formalities and do not function at arms-length. Even so, that is a distinct inquiry from
whether NDCREM and Beacon Companies actually exert control over NDCRI. The fact
that both NDCRI and NDCREM draw officers and executives from the same pool does not
necessarily mean that one controls the other. When compared to Beacon Communities and
Keystone, the proximity between Beacon Companies, NDCREM, and NDCRI is far more
attenuated.
When viewed in totality, the first of the two prongs of the veil piercing analysis is
satisfied: the Court finds that there is sufficient domination of NDCRI to merit a finding of
a lack of corporate separateness between NDCRI, Beacon Communities, LLC, and Keystone
Values, LLC. In reaching this finding, the Court notes that two of the three “critical” Inter-
Tel factors weigh in favor of such a finding. Although the evidence indicates that NDCRI is
adequately capitalized, it also suggests that the various Beacon Defendants frequently fail
to maintain any legal or practical distinctions between the various entities in their
network. As to the third factor, the evidence further indicates a high degree of control by
Beacon Communities and Keystone over NDCRI’s operations and decision-making,
including on day-to-day matters. On the other hand, NIDC has failed to make such a
showing of control and domination with respect to Beacon Companies or NDCREM.
Consequently, with two of three factors weighing in favor, the Court finds an actionable
lack of corporate separateness between NDCRI, Keystone, and Beacon Communities.
However, with two of three factors weighing against such a finding with respect to Beacon
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Companies and NDCREM, the Court finds that there is not an adequate lack of corporate
separateness to merit piercing the veil with respect to these Defendants. Thus, Beacon
Companies and NDCREM are entitled to judgment as a matter of law at this juncture,
while the inquiry will proceed with respect to the other Beacon Defendants.
2
To determine whether a case presents circumstances under which continued
recognition of the corporate form would sanction fraud or promote injustice, the Inter-Tel
Court adopted the analysis of the Seventh Circuit in Sea-Land Services, Inc. v. Pepper
Source. Pro Tanks Leasing, 988 F. Supp. 2d at 792 (citing Inter-Tel, 360 S.W.3d at 164-65).
In that case, the Court specifically clarified what circumstances would “promote an
injustice[,]” stating:
[W]e see that the courts have properly have pierced the corporate veils to
avoid “promoting injustice” have found that, unless it did so, some “wrong”
beyond a creditor’s inability to collect would result: the common sense rules of
adverse possession would be undermined; former partners would be
permitted to skirt the legal rules concerning monetary obligations; a party
would be unjustly enriched; a parent corporation that caused a sub’s
liabilities and its inability to pay for them would escape those liabilities; or
an intentional scheme to squirrel assets into a liability-free corporation while
heaping liabilities upon an asset-free corporation would be successful.
Sea-Land, 941 F.2d 519, 52-24 (7th Cir. 1991). The “mere inability to collect a debt from a
corporation” is insufficient. Inter-Tel, 360 S.W.3d at 165.
The Court is unconvinced that the record demonstrates that the Defendants would
be unjustly enriched by continued recognition of the corporate form, at least not at the
present juncture. NIDC claims that “it would be an injustice to permit Beacon to ‘escape’
liability created by its employees and officers in fulfilling their role of running the day-to-
day business of NDCRI and Keystone,” and that “[d]oing so would unjustly enrich the
people who intentionally created this corporate structure.” [R. 191 at 32.] Again, however,
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NDCRI makes no claim to the disputed funds attributable to the Blevins or Baldwin shares.
Absent such a claim, it is difficult to see how NDCRI, Beacon, or Keystone would be
enriched at all, regardless of whether NIDC is entitled to these funds. NDCRI, Beacon, and
Keystone could potentially be unjustly enriched if it were determined that NDCRI was not
entitled to indemnification for its legal fees in this case but nonetheless withdrew these
funds from the partnership coffers during the pendency of this case. For sake of argument,
if it were determined that NDCRI was not entitled to these funds, they would otherwise go
to NIDC and, consequently, NDCRI would be unjustly enriched if they wrongfully withdrew
such funds from the partnership accounts. Determining whether unjust enrichment has
occurred, however, cannot occur until it has been determined whether NDCRI’s
indemnification was permitted under the Agreements. And this question is ultimately one
for the jury.
The Court can conclude that “a parent corporation … caused a sub’s liabilities and
its inability to pay for them would escape those liabilities” and therefore satisfies the
second Inter-Tel / Sea-Land scenario sufficient to pierce the corporate veil. As NIDC
already sufficient demonstrated under the “corporate separateness” prong of the Inter-Tel
analysis, insofar as any of NDCRI’s liabilities have arisen, they must have accrued due to
actions undertaken by Beacon Communities or Keystone officials. Recall that NDCRI has
no officers, directors, or employees of its own and that NDCRI can act or speak only when a
Beacon or Keystone officer or employee acts on its behalf. Consequently, any breach of the
Agreements or any resulting violations of NDCRI’s fiduciary duties as managing general
partner must necessarily have involved the participation of NDCRI’s parent, Keystone, or
its grandparent, Beacon Communities. And while the Beacon Defendants have
demonstrated that NDCRI is adequately capitalized, it has not demonstrated that it has
any ability to pay damages. While the capitalization inquiry is solely focused on the assets
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which an entity holds in its own name, this “factor” is squarely concerned with the
subsidiary’s liquidity (i.e., its ability to pay a judgment). The various partnership interests
owned by NDCRI are highly illiquid, especially considering it would require the consent of
various other partners in order to sell any partnership property, which is the core value of
the interests.
When this likely inability to pay – at least any amount in excess of that currently
remaining in the Kentucky Partnerships’ accounts – is coupled with the inescapable
conclusion that any liability directly results from the actions taken by an officer or
employee of the parent entity, the Court can conclude that continued recognition of the
corporate form would result in manifest injustice beyond a mere inability to recover.
Consequently, having found the two Inter-Tel elements are satisfied, the Court will pierce
the corporate veil of NDCRI, Beacon Communities, and Keystone Values.
E
Also before the Court are two motions for forms of injunctive relief, related to certain
disputed funds, that arose during the pendency of the motions for summary judgment. In
the first motion, Blevins-Clark moves the Court to order the release of a portion of the
settlement funds previously deposited with the Court, pursuant to Rule 67(b). [R. 187.] In
the second motion, NIDC and Malvern move the Court to issue a preliminary injunction
ordering the Beacon Defendants to deposit a total of $1,599,598.00 with the Court, which is
greater than the amount already deposited, to safeguard such funds until a final judgment
is rendered in this case. [R. 204.] The Court will address each motion in turn.
1
In a separate motion, Blevins-Clark requests that the Court release the funds
attributable to the Blevins share of the Jackson Street Towers partnership in the total sum
of $5,284.00. The Jackson Street Towers partnership is differently situated from the four
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partnerships discussed above, because NIDC was never a partner in the Jackson Street
Towers partnership. Nevertheless, the sale of the apartment complexes to Amity, which is
at the core of this dispute, involved five partnerships, including Jackson Street Towers, and
the profits associated with all five of Blevins’s shares, including Jackon Street Towers, was
deposited with the Court. [See R. 117.]
NIDC does not claim entitlement to any proceeds from the Jackson Street Towers
property. Rather, it opposes the immediate disbursement on several bases, each of which
concerns the timing of the disbursement relative to the remaining issues in this case. First,
NIDC contends that disbursement is improper because the funds currently deposited with
the Court were not itemized by the sale amount attributable to each individual property,
therefore it is impossible to ascertain which specific funds derive solely from the Jackson
Street property. [R. 201 at 2.] Second, NIDC states that the value of its claims here “exceed
and attaches to every dollar in the court account plus more, meaning that the court account
is not sufficient to satisfy NIDC’s potential judgment.” [Id.] Additionally, NIDC contends
that Blevins-Clark’s request is premised upon a tentative partial settlement agreement
between the parties, and thus, has not yet reached fruition. To that effect, NIDC states
“[Blevins-Clark] and Beacon may have reached a tentative settlement agreement that is
contingent on NIDC’s consent, but NIDC does not consent, and the foregoing demonstrates
that the dust has yet to settle regarding who owns the money in the court account.” [Id. at
4.] Consequently, while NIDC does not claim that Blevins-Clark will never be entitled to
the funds attributable to Ivan Blevins’s interest in the Jackson Street partnership, it does
contend that she is not entitled to an immediate disbursement of those funds from the
money presently deposited with the Court. In short, the Court disagrees and finds that no
legal barrier exists to prevent Blevins-Clark from immediate entitlement to the funds
attributable to the Jackson Street Towers partnership currently deposited with the Court.
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Rule 67(b) provides that “[m]oney paid into court under this rule must be deposited
and withdrawn in accordance with 28 U.S.C. §§ 2041 and 2042 and any like statute. The
money must be deposited in an interest-bearing account or invested in a court-approved,
interest-bearing instrument.” Fed. R. Civ. P. 67(b). In turn, 28 U.S.C. § 2042, which is the
applicable statute addressing withdrawal, provides as follows:
No money deposited under section 2041 of this title shall be withdrawn
except by order of court.
In every case in which the right to withdraw money deposited in court under
section 2041 has been adjudicated or is not in dispute and such money has
remained so deposited for at least five years unclaimed by the person entitled
thereto, such court shall cause such money to be deposited in the Treasury in
the name and to the credit of the United States. Any claimant entitled to any
such money may, on petition to the court and upon notice to the United
States attorney and full proof of the right thereto, obtain an order directing
payment to him.
28 U.S.C. § 2042. Thus, under this statute, “funds deposited into court are subject to court
orders and will be paid out when the proper recipients and amounts are determined.”
Limbright v. Hofmeister, 2012 U.S. Dist. LEXIS 157465, at *5-6 (E.D. Ky. Nov. 2, 2012).
It is important to denote that the question of who is entitled to the Blevins’s share of
funds which came about from the sale of the Jackson Street property is not before the
Court. Rather, the sole question contemplated by this motion is whether Blevins-Clark is
entitled to a portion of the funds currently deposited with the Court at the present stage of
the litigation. Ultimately, at this time, there are no longer remaining questions as to who
the proper recipients are of the deposited funds, and in what proportion. As already stated,
ad nauseum, NIDC is entitled to the funds attributable to the former Blevins and Baldwin
shares in the four “Kentucky Partnerships” at the center of this case. Funds derived from
the sale of a fifth property, Jackson Street Towers, likewise attributable to Blevins’s share
in this fifth partnership, were also deposited with the Court. Blevins-Clark and NDCRI,
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the relevant parties, agree that Blevins-Clark is entitled to these funds, and the parties
have agreed on the amount of $5,255.00. With the question of the proper interpretation of
the partnership Agreements out of the way, it is abundantly clear that Blevins-Clark is
entitled to this amount while NIDC is entitled to the balance remaining on deposit with the
Court, plus an additional amount yet to be determined.
Thus, while NIDC is correct that the specific amount of damages is not yet
determinable, the entitlement to the funds presently deposited is clear. Nor is the status of
any potential settlement agreement between all parties to this litigation of any
consequence. While such an agreement may be preferable, it is certainly not a prerequisite
to the withdrawal and disposition of a portion of these funds. NIDC does not, and cannot,
make any claim of ownership to the funds derived from the sale of the Jackson Street
Towers property. And NIDC has not pointed to any statute or case law which would
otherwise give it the ability to further delay the disbursement of funds to which it bears no
claim of entitlement. Therefore, the Court agrees with the Plaintiff and NDCRI that
Blevins-Clark is presently entitled to the $5,255.00 from the sale of the Jackson Street
Towers property. NIDC is entitled to the remainder of the funds deposited with the Court,
plus an additional amount which cannot readily be ascertained at this time. Blevins-
Clark’s Motion for Disbursement will be granted.
2
NIDC and Malvern also separately request that this Court order NDCRI to deposit
additional funds with the Court during the remaining pendency of this case. In some
respects, the foregoing shifts the foundation of much of the motion for preliminary
injunction. For example, the motion is premised on the argument that the Court may find
that NIDC is entitled to the disputed partnership funds for both the Blevins and Baldwin
share, and the Court has, in fact, made such a finding. Yet, this does not necessarily moot
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the entirety of the preliminary injunction motion because certain aspects of the case,
specifically the question of NDCRI’s entitlement to indemnification for its legal fees,
survive summary judgment. Thus, a final judgment will not issue following this opinion
and order. However, the Courts ruling here undermines certain essential elements of the
preliminary injunction analysis on the merits. Consequently, the Court will deny the
motion for a preliminary injunction.
To secure a preliminary injunction, “a plaintiff must make a clear showing that he is
likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of
preliminary relief, that the balance of equities tips in his favor, and that an injunction is in
the public interest.” Starbucks Corp. v. McKinney, 602 U.S. 339, 345 (2024). Because such
a remedy “is never awarded as of right, the plaintiff must make a clear showing that these
factors favor him.” EOG Res., Inc. v. Lucky Land Mgmt., LLC, 134 F.4th 868, 874 (6th Cir.
2025) (quoting Starbucks, 602 U.S. at 345). No one factor is dispositive, as “each of these
factors should be balanced against one another and should not be considered prerequisites
to the grant of a preliminary injunction.” Liberty Coins, LLC v. Goodman, 748 F.3d 682, 690
(6th Cir. 2014).
The Federal Rules of Civil Procedure direct that “[t]he court may issue a preliminary
injunction only on notice to the adverse party.” Fed. R. Civ. P. 65(a)(1). The Sixth Circuit
interprets this requirement “to imply a hearing in which the defendant is given a fair
opportunity to oppose the application and prepare for such opposition.” Certified
Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 552 (6th Cir. 2007).
The Sixth Circuit, however, only requires a hearing “when there are disputed factual
issues, and not when the issues are primarily questions of law.” Id. (citing Lexington-
Fayette Urban County Gov’t v. BellSouth Telecomm., Inc., 14 F. App’x 636, 639 (6th Cir.
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2001)). The Sixth Circuit adopted the rule first announced by the Eleventh Circuit, holding
that:
Where facts are bitterly contested and credibility determinations must be
made to decide whether injunctive relief should issue, an evidentiary hearing
must be held. However, where material facts are not in dispute, or where
facts in dispute are not material to the preliminary injunction sought, district
courts generally need not hold an evidentiary hearing.
Id. at 553 (citing McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1312-13 (11th Cir. 1998)).
Here, at this juncture, there are no material facts in dispute, at least insofar as the
preliminary injunction motion is concerned, and therefore the Court determines that an
evidentiary hearing is unnecessary.
The first factor – the likelihood of success on the merits – is substantially altered by
the foregoing. Of course, in its motion, NIDC premised its argument on its likelihood to
demonstrate entitlement to the disputed funds, along with other violations of the
Agreements by NDCRI, and essentially incorporated arguments presented by the motion
for summary judgment by cross-reference. As already made clear, NIDC succeeded on the
merits of several of its key arguments, while on other more tangential issues, such as the
continued holdbacks, NDCRI was entitled to summary judgment. With respect to the
remaining claim, whether NDCRI was entitled to holdbacks for its legal fees in this case,
the Court is unconvinced that NIDC is likely to succeed on the merits, given the burden of
proof before them. At any rate, because NIDC has largely succeeded on the merits, and
only a small portion of this case will proceed beyond summary judgment, the Court finds
that this factor weighs in favor of granting the preliminary injunction.
The remaining factors, however, weigh more heavily against issuing a preliminary
injunction at this time. The second factor – whether NIDC would suffer irreparable harm if
the preliminary injunction were denied – is particularly instructive at present.
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“Irreparable harm is an ‘indispensable’ requirement for a preliminary injunction, and ‘even
the strongest showing’ on the other factors cannot justify a preliminary injunction if there
is no ‘imminent and irreparable injury.’” Memphis A. Philip Randolph Inst. v. Hargett, 978
F.3d 378, 391 (6th Cir. 2020) (quoting D.T. v. Sumner Cnty. Schs., 942 F.3d 324, 326-27
(6th Cir. 2019)). “To merit a preliminary injunction, an injury ‘must be both certain and
immediate,’ not ‘speculative or theoretical.’” Sumner Cnty. Schs, 942 F.3d at 327 (quoting
Michigan Coalition of Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 154
(6th Cir. 1991)). It is also “well settled that a plaintiff does not suffer irreparable injury if
fully compensable by money damages.” Overstreet v. Lexington-Fayette Urban Cnty. Gov.,
205 F.3d 556, 578 (6th Cir. 2002).
Here, NIDC’s success on its corporate veil piercing motion essentially proves fatal to
any irreparable harm it might have otherwise been able to demonstrate. NIDC posits that
“[i]njunctions are appropriate where there is evidence that the defendant is dissipating
funds in such a way that may frustrate a claimant’s ability to collect on a judgment.” [R.
204 at 6.] NIDC claims, therefore, that NDCRI will simply squander the funds to which
NIDC is entitled during the continued pendency of this case and will, ultimately, be unable
to effectuate a judgment. This harm is crippled, however, by the success of NIDC’s attempt
to pierce the Beacon Defendants’ corporate veil. Veil piercing presents NIDC with the
ability to recover beyond the funds available only to NDCRI, and presents additional
avenues of recovery. Consequently, at this juncture, it appears that the Beacon Defendants
collectively will be able to satisfy any judgment in this matter, which undermines the
existence of any irreparable harm. This proves fatal to NIDC’s motion.
While the absence of any irreparable harm is fatal to the motion, the Court will
briefly address the remaining elements. As NDCRI points out, a preliminary injunction of
this nature could substantially harm others, specifically various other partners who are not
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parties to this case. [R. 216 at 10-12.] NIDC urges that “the Kentucky Partnerships do not
require the funds” because, having sold the complexes, “they have no remaining purpose
other than to be wound up.” [R. 204 at 8.] This may be true, but a preliminary injunction
requiring the deposit of certain additional funds from the partnership coffers with the
Court would likely impair this winding up process. As NDCRI points out, “the remaining
funds [in the partnership accounts] do not belong solely to these two parties.” [R. 216 at 11.]
NDCRI further provides that “[t]o the contrary, any reserves held back by NDCRI to
manage the partnerships must, upon dissolution, be distributed among all partners,
including non-parties, in accordance with the Partnership Agreements.” [Id.] In this
respect, then, placing certain funds outside of the partnership accounts with the Court
would likely inhibit, rather than facilitate, the winding up process. Consequently, this
favor too weighs against granting a preliminary injunction.
Fourth, and finally, NIDC has not demonstrated that granting a preliminary
injunction under these circumstances is in the public interest. NIDC provides that
individuals in the Commonwealth who operate their businesses through partnership are
bolstered by a preliminary injunction in this matter because “[s]uch partners need to have
faith that mechanisms exist to protect partnership assets from misuse, or at least potential
misuse, while those disputes play out in the courts.” [R. 204 at 8-9.] The converse is also
true, however. Individuals who operate partnerships should also be reassured that Court
intervention will not inhibit their ability to wind up partnership affairs once its purpose has
effectively terminated. Therefore, this element is generally neutral as to whether a
preliminary injunction should be entered.
Accordingly, the Court finds that a preliminary injunction should not be entered at
this time, due to the absence of a risk of irreparable harm. Not only is that risk mitigated
by the Court’s ruling on NIDC” s request to pierce the corporate veil, but it is also fully
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compensable by monetary damages. This alone proves fatal to the preliminary injunction
inquiry. Thus, NIDC’s separate motion for injunctive relief is denied.
IV
Accordingly, and the Court being otherwise sufficiently advised, it is hereby
ORDERED as follows:
1. 	Plaintiff Laura Blevins-Clark’s Motion for Summary Judgment [R. 178] is
DENIED;
2. 	Defendant/Crossclaim Plaintiff NIDC and Malvern’s Motion for Summary Judgment
[R. 191] is GRANTED in part and DENIED in part
3. 	Defendant NDC Realty Investments LLC’s (“NDCRI”) Motion for Summary
Judgment [R. 193] is GRANTED in part and DENIED in part;
4. 	Defendant Keystone Values LLC and Beacon Communities LLC’s Motion for
Summary Judgment [R. 194] is DENIED;
5. 	Defendant Beacon Companies, Inc. and NDCREM’s Motion for Summary Judgment
[R. 195] is GRANTED;
6. 	Defendant/Crossclaim Plaintiff NIDC and Malvern’s Motion to Strike [R. 217] is
DENIED;
7. 	Plaintiff Blevins-Clark’s Motion to Disburse Court-Controlled Funds, pursuant to
Fed. R. Civ. P. 67(b) [R. 187] is GRANTED;
8. 	Defendant/Crossclaim Plaintiff NIDC and Malvern’s Motion for Injunctive Relief [R.
204] is DENIED AS MOOT.
This 14th day of October 2026
Case: 5:22-cv-00281-KKC-MAS Doc #: 255 Filed: 10/14/26 Page: 72 of 72 - Page
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