United States District Court, District of Columbia
David L. JEFFERSON, and Naima A. Jefferson, Plaintiffs,
Mark Nathan COLLINS, et al., Defendants.
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Andrew J. Lawrence, Lawrence & Fisher, PLLC, Washington, DC, for Plaintiffs.
Christopher C. Fogleman, William J. Chen, III, Gleason, Flynn, Emig & Fogleman, Chtd., Rockville, MD, for Defendants, Mark Nathan Collins and B & C Homebuyers, LLC.
Seth Adam Robbins, Seeger, P.C., Washington, DC, for Defendants, Victor O. Villalobos and VB Platinum Tile & Carpet, Inc.
REGGIE B. WALTON, District Judge.
The plaintiffs, David L. Jefferson and Naima A. Jefferson, bring this action against Mark Nathan Collins, B & C Homebuyers, LLC (" B & C" ), Victor O. Villalobos, and VB Platinum Tile & Carpet, Inc., dba Platinum Builders, Inc. (" Platinum Builders" ), asserting claims for breach of contract, fraud, and other violations of District of Columbia law arising out of the plaintiffs' purchase of residential real estate located at 1121 Kalmia Road, N.W., Washington, D.C. (the " Property" ). See Amended Complaint (" Am. Compl." ) ¶¶ 8, 36-74. Currently before the Court are three motions to dismiss filed by Collins, B & C, and Platinum Builders and Villalobos. Upon careful consideration of the parties' submissions, the Court concludes for the following reasons that Collins' motion must be denied, B & C's motion must be granted in part and denied in part, and Platinum Builders' and Villalobos' motion must also be granted in part and denied in part.
The amended complaint contains the following allegations. On February 10, 2011, B & C and Collins " purchased the Property from a bank." Am. Compl. ¶ 9. Collins then retained Platinum Builders and Villalobos (the " Renovator Defendants" ) " to act as his agent for remodeling the Property for re-sale." Id. " In June 2011, [the p]laintiffs and their two children relocated to Washington, D.C. and began searching for a home for their family." Id. ¶ 10. They " viewed the Multiple Listing Service listing for the Property," in which the defendants marketed the Property as a " ‘ gorgeous renovation.’ " Id. A month later, in July 2011, the plaintiffs " entered into a standard ... Regional Sales Contract (the " Contract" ) to purchase the Property from ... B & C." Id. ¶ 11. " Collins executed the Contract and all related forms and addenda on behalf of ... B & C." Id.
The plaintiffs then " had a home inspection performed" at the Property. Id. ¶ 12. " This inspection revealed a number of deficiencies in the home, including in the electrical systems." Id. " Using the standard [Contract] ... Addendum forms, [the p]laintiffs requested that certain repairs be
made," and " Collins agreed to make those repairs." Id.
" On August 17, 2011, the designated settlement date, [the p]laintiffs performed a final walk-through of the Property," during " which they noticed that certain repairs were not yet completed." Id. ¶ 13. The plaintiffs told Collins " that the electrical system required additional work," and while Collins " acknowledged that the electric system was not in normal working order," he " assured [the p]laintiffs that all repairs would be performed, and agreed to perform a ‘ heavy-up’ to fix the electrical system" at a later date. Id. " Relying on ... Collins' promises to complete the work after closing, [the p]laintiffs proceeded with settlement that afternoon." Id.
The following week, on " August 25, 2011, [the d]efendants sent an electrician to the Property, ostensibly to complete the ‘ heavy-up’ " work on the electrical system. Id. ¶ 14. Although the electrician completed some work, he " also identified additional required repairs that he could not perform at that time." Id. He did not, however, " complete the ‘ heavy-up’ " work as Collins had promised. Id. As a result, " electrical issues prevented [the p]laintiffs from fully utilizing their home." Id.
Several weeks later, on " September 7, 2011, [the p]laintiffs discovered that water was leaking into their basement because the sump pump was not operating." Id. ¶ 15. They " immediately contacted a plumber to address the issue." Id. But, before the plumber arrived, " water continued to flow out of the sump pump and into [the p]laintiffs' basement, damaging the carpet and [the p]laintiffs' property therein." Id. The plaintiffs thereafter " contacted a restoration company to address the water damage." Id.
On " September 9, 2011, ... Villalobos finally arrived at the Property with his electrician." Id. ¶ 16. " Villalobos promised that his electrician would repair all outstanding issues the next day, but he did not show up at the appointed time." Id.
The following day, on " September 10, 2011, the restoration company retained by [the p]laintiffs arrived to address the water damage in the basement." Id. ¶ 17. " Upon removing the damaged carpet, the contractor informed [the p]laintiffs that they had asbestos flooring in their basement, and that the basement had prior water damage." Id. The plaintiffs then " retained an environmental clean-up company to investigate the asbestos" problem. Id.
" Unwilling to continue to wait for [the d]efendants to address the electrical issues in [their] home, [the p]laintiffs contacted their own electrician." Id. ¶ 18. The plaintiffs' electrician inspected the Property on September 15, 2011, and " found numerous problems, including improper installation and illegal wiring resulting in a circuit overload." Id.
On " September 16, 2011, [the p]laintiffs' environmental contractor confirmed the presence of asbestos in the Property." Id. ¶ 19. " The asbestos was disturbed by the water damage and therefore needed to be abated." Id. The plaintiffs were also forced " to destroy all of their property in their contaminated basement." Id.
On the next day, " September 17, 2011, [the p]laintiffs gave [the d]efendants one last chance to correct the electrical issues and allowed ... Villalobos' electricians to work on the home." Id. ¶ 20. " [T]he electricians discovered additional problems with the wiring," which they felt obligated " to disclose to [the p]laintiffs." Id. " The electricians described these issues as a ‘ fire hazard.’ " Id. In response to those revelations, Villalobos told the electricians " that they were ‘ talking too much’ and made arrangements for them to leave as soon as possible without completing the necessary repairs." Id. The defendants
never completed the " ‘ heavy-up’ " work on the electrical system, resulting in the plaintiffs " retain[ing] their own electrician to correct the multiple deficiencies and hazards in the electrical system." Id. ¶¶ 20-21.
" As the weather turned colder, [the p]laintiffs discovered that [the d]efendants failed to properly install the [heating, ventilation, and air conditioning (" HVAC" ) ] system in the Property, rendering the heating and cooling system inoperable in certain areas of the house." Id. ¶ 22. " This defect, which includes ducts that were not properly connected, was concealed by the drywall in the Property." Id. The plaintiffs " incurred further damages diagnosing the problems" and anticipate that they " will incur additional damages restoring [the HVAC system] to normal working order." Id.
The plaintiffs " later discovered that an area of the first floor of the Property was sagging." Id. ¶ 23. They consequently " retained a structural engineer to evaluate the problem, who determined that [the d]efendants improperly removed at least one and possibly two load bearing walls during their remodeling, causing significant structural damage to the Property." Id.
" Due to the effects of the presence of asbestos, the water damage, the structural damages and the inoperable HVAC system, [the p]laintiffs are required to demolish and fully renovate their basement and to perform additional repairs." Id. ¶ 24. They " have already spent over $25,000 repairing their home and will need to spend well over six figures to make the Property safe and habitable." Id. " Prior to selling the Property to [the p]laintiffs, [the d]efendants remodeled the basement, including installing new carpet, new windows, and a re-finished bathroom." Id. ¶ 25. This indicates to the plaintiffs that the " [d]efendants had knowledge of the presence of asbestos, prior water damage, and structural defects in the Property." Id. Yet, " [n]o [d]efendant disclosed the existence of these hazards, defects and damages to [the p]laintiffs." Id.
The plaintiffs instituted this action in the Superior Court for the District of Columbia on January 20, 2012, and Collins and B & C later removed the case to this Court on February 13, 2012, invoking the Court's diversity jurisdiction. The plaintiffs' amended complaint, filed on March 2, 2012, contains the following seven counts, all of which arise under District of Columbia law: Breach of Contract— against Collins & B & C (Count I), id. ¶¶ 36-41; Breach of the Implied Covenant of Good Faith and Fair Dealing— against Collins and B & C (Count II), id. ¶¶ 42-46; Fraud— against all defendants (Count III), id. ¶¶ 47-53; Negligent Misrepresentation— against all defendants (Count IV), id. ¶¶ 54-59; Violation of the District of Columbia Consumer Protection Procedures Act (" D.C. Consumer Protection Act" ), D.C.Code § 28-3904 (2001)— against all defendants (Count V), id. ¶¶ 60-65; Breach of Warranty— against Collins and B & C (Count VI), id. ¶¶ 66-70; and Negligence— against all defendants (Count VII), id. ¶¶ 71-74.
The defendants have now moved to dismiss the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).
II. STANDARD OF REVIEW
A Rule 12(b)(6) motion tests whether the complaint " state[s] a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). " To survive a motion to dismiss [under Rule 12(b)(6) ], a complaint must contain sufficient factual matter, accepted as true, to ‘ state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A plaintiff receives the " benefit of all inferences that can be derived from the facts alleged." Am. Nat'l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C.Cir.2011) (internal quotation marks and citation omitted). But raising a " sheer possibility that a defendant has acted unlawfully" fails to satisfy the facial plausibility requirement. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. Rather, a claim is facially plausible " when the plaintiff pleads factual content that allows the court to draw [a] reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). While the Court must " assume [the] veracity" of any " well-pleaded factual allegations" in the complaint, conclusory allegations " are not entitled to the assumption of truth." Id. at 679, 127 S.Ct. 1955.
A. Collins' Motion to Dismiss
Collins moves to dismiss all of the claims against him on the ground that, " [a]s an owner and member of B & C," he cannot " be held personally liable for B & C's acts and omissions" because B & C is " a limited liability company." Collins' Mem. at 4. He further contends that the " plaintiffs have failed to allege facts to support piercing the corporate veil to impose personal liability" upon him. Id. The Court will address each claim asserted against Collins in turn.
1. Breach of Contract Claim (Count I)
Count I of the amended complaint alleges that Collins and B & C breached the Contract " by failing to deliver the Property with all systems in normal working order and failing to disclose actually known hazards, damages and defects in the Property." Am. Compl. ¶ 40. Collins contends that he is immune from this claim under D.C.Code § 29-803.04(a) (2001), Collins' Mem. at 4, which provides:
The debts, obligations, or other liabilities of a limited liability company, whether arising in contract, tort, or otherwise shall:
(1) Be solely the debts, obligations, or other liabilities of the company; and
(2) Not become the debts, obligations, or other liabilities of a member or manager solely by reason of the member acting as a member or manager acting as a manager.
Notably, the plaintiffs do not allege that Collins was a party to the Contract; they instead claim that they contracted with B & C to purchase the Property, and that Collins merely " executed the Contract and all related forms and addenda on behalf of ... B & C." Am. Compl. ¶ 11 (emphasis added). Under a straightforward application of § 29-803, then, it would appear that the plaintiffs' breach of contract claim is barred because it seeks to hold ...