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SHENANDOAH ASSOCIATES LTD. PARTNERSHIP v. TIRANA
August 15, 2001
SHENANDOAH ASSOCIATES LIMITED PARTNERSHIP ET AL., PLAINTIFFS,
BARDYL D. TIRANA, ESQ., DEFENDANT.
The opinion of the court was delivered by: Urbina, District Judge.
Granting in Part and Denying in Part the Defendant's Motion
to Dismiss; Denying the Defendant's Motion to Transfer Venue
This matter comes before the court upon defendant Bardyl Tirana's
motion to dismiss for failure to state a claim and motion to transfer
venue. The plaintiffs. Shenandoah Associates Limited Partnership,
Jefferson House Associates Limited Partnership, and Leesburg Manor
Associates Limited Partnership ("the partnerships"), seek relief under
four separate counts, each of which the defendant contests as
insufficient to state a claim. The defendant also contends that the
plaintiffs, as limited partnerships. are precluded from bringing their
claims because they do not have the capacity to sue in their own name
pursuant to Federal Rule of Civil Procedure Rule 17(b), and because they
lack privity with the defendant. Lastly, the defendant contends that
venue is improper in the District of Columbia, and moves to transfer this
case to a federal district court in Virginia or Maryland.
After careful consideration of the parties' submissions and the
applicable law, the court concludes that the plaintiffs meet the
requirements of Rule 17(b) and thus can sue in their own names. The
plaintiffs do not need to show that they are in privity with the
defendant. As to count I, tortious interference with contractual rights,
the plaintiffs have stated a claim on which relief can be granted. With
respect to count II, conspiracy to convert the plaintiffs' property, the
plaintiffs' claim is a mere restatement of count I. On count III, unjust
enrichment, the plaintiffs have failed to establish, as a matter of law,
that they conferred a benefit on the defendant. As to count IV, creation
of a constructive trust, the plaintiffs are not entitled to this
equitable remedy. Finally, for the reasons stated below, the court denies
the defendant's motion to transfer venue.
This case arises out of a contract dispute between three limited
partnerships registered in Virginia, and the Community Management
Corporation of Maryland ("CMC") represented by defendant Tirana. Each
limited-partnership plaintiff owns, as its only asset, one apartment
building in Virginia. See Compl. ¶ 8. Between 1982 and 1989, each of
the three partnerships entered into an exclusive management agreement
with CMC. See id. ¶¶ 9-11. The agreements required CMC to deposit
rents and other funds into a separate, government-insured account
designated in the names of the partnerships' respective house-operating
accounts. See id. ¶ 13. The agreements also specified the precise
uses of the house-operating accounts and required the management agent to
turn over all accounts, trust funds and records immediately, but in no
event more then thirty days after the termination of the agreements. See
id. ¶¶ 13-16. Two of the agreements required CMC to comply with the
U.S. Department of Housing and Urban Development Regulatory Agreement
that all funds collected by CMC be kept in trust, separate and apart from
CMC's other funds. See id. ¶ 15.
In late 1997, the three partnerships terminated their agreements with
CMC, effective January 1998. See id. ¶ 17. In accordance with the
terms of the contracts, the partnerships then sought to retrieve the
funds and relevant records from all the trusts and accounts. See id. At
this time, according to the plaintiffs, CMC was in poor financial shape
and owed the defendant about $300,000 in legal fees. See id. ¶ 25.
Allegedly acting on the advice of its counsel, Mr. Tirana, CMC
transferred the partnerships' funds from the escrow account into its own
general fund and used the general fund to pay Mr. Tirana's outstanding
legal fees. See id. ¶¶ 26-53.
The plaintiffs allege three counts of wrongdoing by the defendant: (1)
tortious interference with the plaintiffs' contractual rights; (2)
conspiracy to convert the plaintiffs' property; and (3) unjust enrichment
through acceptance of payment from CMC's general fund. The plaintiffs
also ask the court to create a constructive trust to prevent the
defendant from being unjustly enriched by the plaintiffs' funds. In his
motion to dismiss, the defendant contends that the plaintiffs, as limited
partnerships, lack the capacity to sue in their own name and lack privity
with the defendant. In addition, the defendant argues that each of the
four counts pled in the complaint fails to state a claim on which relief
can be granted. Finally, the defendant moves to transfer venue to a
federal district court in Maryland or Virginia pursuant to
28 U.S.C. § 1404 (a).
A motion to dismiss for failure to state a claim tests not whether the
plaintiffs will prevail on the merits, but whether the complaint has
properly stated a claim. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94
S.Ct. 1683, 40 L.Ed.2d 90 (1974); FED. R.CIV.P. 12(b)(6). The court may
dismiss a complaint for failure to state a claim "only if it is clear
that no relief could be granted under any set of facts that could be
proved consistent with the allegations." See Hishon v. Spalding,
467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). In deciding such
motions, the court must accept as true all well-pleaded factual
allegations and draw all reasonable inferences in the plaintiffs' favor.
See Antonelli v. Sheahan, 81 F.3d 1422, 1427 (7th Cir. 1996) (citing
Arazie v. Mullane, 2 F.3d 1456, 1465 (7th Cir. 1993)). However, the court
need not accept as true the plaintiffs legal conclusions. See Taylor v.
FDIC, 132 F.3d 753, 762 (D.C.Cir. 1997).
Because the basis for jurisdiction in this case is diversity,*fn1 see
28 U.S.C. § 1332 (a), the court must determine which choice-of-law
principles to apply. This court has held that "[i]n a diversity action,
this Court sitting in the District of Columbia is obligated under Erie
R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to
apply the choice of law rules prevailing in this jurisdiction." Dowd v.
Calabrese, 589 F. Supp. 1206, 1210 (D.D.C. 1984) (applying Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477
The District of Columbia's choice-of-law principles utilize the"
"governmental interests' analysis, under which [the court] evaluate[s]
the governmental policies underlying the applicable laws and determine[s]
which jurisdiction's policy would be more advanced by the application of
its law to the facts of the case under review.' District of Columbia v.
667 A.2d 811, 816 (D.C. 1995) (citing Hercules & Co. v. Shama
Restaurant, 566 A.2d 31, 40-41 (D.C. 1989)). As part of this analysis,
the court also may look to factors contained within the Restatement
(Second) of Conflicts of Laws § 145, including: "(a) the place where
the injury occurred; (b) the place where the conduct causing the injury
occurred; (c) the domicile, residence, nationality, place of
incorporation and place of business of the parties; and (d) the place
where the relationship is centered." See id. (citing Estrada v. Potomac
Elec. Power Co., 488 A.2d 1359, 1361 n. 2 (D.C. 1985)).
In this case, the weight of the governmental interests lies with the
Commonwealth of Virginia. All three partnerships, as well as the physical
assets of those partnerships, are located in Virginia. The contracts in
dispute were written and executed pursuant to Virginia law. Virginia.
therefore, has a significant interest in seeing its substantive law
applied in this case.
By contrast, with respect to the plaintiffs' capacity to sue under Rule
17(b), the district court must use the law of the jurisdiction in which
the district court sits, in this case the District of Columbia. See
FED.R.CIV.P. 17(b) (". . . capacity to sue or be sued shall be determined
by the law of the state in which the district court is held
C. Capacity of a Limited Partnership to Sue In Eo Nomine
The law governing partnerships is contained within Title 41 of the
D.C.Code. Title 41 contains three chapters: Chapter 1A, the Uniform
Partnership Act of 1996 ("UPA"); Chapter 3, the Dissolution and Payment
of Debts; and Chapter 4, the Uniform Limited Partnership Act of 1987
("ULPA"). The plaintiffs contend that they have capacity to sue because
Chapter 1A allows for "a partnership to sue or be sued in the name of the
partnership." See Pl.'s Reply at 4 (citing D.C.Code § ...