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Millennium Square Residential Association v. 2200 M Street LLC

United States District Court, District Circuit

July 10, 2013

MILLENNIUM SQUARE RESIDENTIAL ASSOCIATION, Plaintiff,
v.
2200 M STREET LLC, et al., Defendants.

BARBARA J. ROTHSTEIN, District Judge.

I. INTRODUCTION

Plaintiff Millennium Square Residential Association ("MSRA") filed this action over problems with the maintenance and repair of the Millennium Square Condominium's parking garage. The Complaint sets forth claims against 2200 M Street LLC, the developer of the condominium; Millennium Washington Commercial Trust ("Millennium Trust"), Millennium CAF II ("Millennium CAF") (collectively the "Millennium Defendants"), the Millennium Square Commercial Association ("MSCA"), and seven individuals who are either on the condominium's Board of Directors or the Board's Executive Committee ("Individual Defendants"). All of the defendants have brought motions seeking to dismiss the claims brought against them. The plaintiff, MSRA, moves to dismiss the defendants' counterclaims. Having reviewed the parties' briefs, arguments, relevant case law and the entire record, the court grants the motions to dismiss brought by Millennium Trust and MSCA and denies the motions brought by the other defendants. The court grants the plaintiff's motion to dismiss the counterclaim count of unjust enrichment, and denies the remainder of the plaintiff's motion to dismiss the Millennium Defendants' counterclaims.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

The Millennium Square Condominium is a mixed-use condominium containing 161 residential units, four commercial units, a Ritz-Carlton hotel, a fitness facility, a retail unit, and a parking facility ("Parking Unit"), located in Washington D.C.[1] The Parking Unit provides parking for both commercial unit owners and residential unit owners. The Millennium Square Condominium was created under the District of Columbia's Condominium Act when the Condominium's Declaration, Bylaws and Plat ("governing documents") were recorded. Compl. ¶¶ 2-4. The governing documents created MSRA, a residents' association for residents of Millennium Square Condominium. The MSRA is governed by the Residential Executive Committee. Id . ¶¶ 2-3, 8. Each owner of a residential unit is a member of the MSRA and each owner enters into a 98-year lease for the exclusive use of at least one parking space located within the Parking Unit. Section 1 of the parking leases states that the residential unit owners are obligated to pay the Millennium Defendants fees to cover part of the Millennium Defendants' operating expenses, including maintenance, for the Parking Unit.[2] According to the Complaint, the defendants have represented that Millennium Trust owns the Parking Unit through a trustee named Millennium CAF II, LLC, for the benefit of and at the direction of 2200 M Street LLC, and that 2200 M Street LLC designed and developed Millennium Square. Id . ¶¶ 4, 6-10, 45. The Complaint alleges that Millennium Trust is a real estate investment trust. Id . ¶ 9. The owners of the commercial units are members of the MSCA, which is governed by a Commercial Executive Committee. The Complaint defines the MSCA as an "unincorporated association" that was created under the District of Columbia Condominium Act. Id . ¶ 2, 19. All of the Individual Defendants except Craig Mooney are members of the Board of Directors of the Condominium Unit Owners Association, [3] and all of the Individual Defendants are members of the Commercial Executive Committee. Id . ¶¶ 6, 11-18.

A. The Complaint

According to the Complaint, Section 3.4 of the Condominium Declaration states that "the Bylaws shall govern the division of maintenance and repair responsibilities between the Unit Owners, the Unit Owners Association, the Residential Association and the Commercial Association." Compl. ¶ 41. Section 15(b)(1) of the Condominium's Bylaws states that "each Commercial Unit Owner shall keep the Commercial Unit and its equipment, appliances and appurtenances in good order, condition and repair and in a clean and sanitary condition." Section 13.1(c) of the Bylaws states that "the Commercial Executive Committee shall, on behalf of the Commercial Association... [p]rovide for the operation, care, upkeep and maintenance of the Commercial Sections, additions, alterations, renovations or improvements to the Commercial Section[.] Id . ¶ 42, 50. Section 18.1 of the Bylaws states that the "Bylaws may not be modified or amended except as provided in... the Condominium Act[, ]" which MSRA alleges requires amendments to condominium instruments to be in writing. Pl.'s Stmt. of P. & A. in Supp. of Mot. to Dismiss the Counterclaims ("Pl.'s Mem.") Ex. A.

The Complaint states that the Parking Unit has "numerous structural problems" that have deleteriously affected the residents' ability to use their parking spaces and created safety hazards such as conditions that cause residents to slip and fall, conditions that cause vehicles parked inside the Parking Unit to corrode, and conditions that cause mold to accumulate. The failure of the defendants to fix the Parking Unit has allegedly deleteriously affected the marketability and value of the residential units. The Complaint alleges that the structural problems would cost at least $600, 000 to fix. Co mpl. ¶¶ 29-30, 39. MSRA has asked the defendants to fix the structural problems with the Parking Unit, but the defendants have not done so. MSRA asserts that 2200 M Street LLC knew or should have known about the structural defects in the Parking Unit, but did not inform prospective purchasers of them. Id . ¶ 35.

The nine-count Complaint seeks repair of the Parking Unit. The Complaint alleges one count of negligence against all defendants (Count Six) and one count of breach of contract against all defendants for breaching the condominium governing documents (Count Eight); counts of breach of contract, breach of express warranty, and breach of implied warranty against the Millennium Defendants and MSCA seeking specific performance (Counts One through Four); one count of strict liability against the Millennium Defendants (Count Five), one count alleging a violation of the D.C. Consumer Protection Act against the Millennium Defendants (Count Seven); and one count of breach of fiduciary duty against the seven Individual Defendants (Count Nine). 2200 M Street LLC and Millennium Caf II filed a three-count counterclaim against the plaintiff, alleging that MSRA breached the operating agreement and the parking lease (Counts One and Two), and one count of unjust enrichment (Count Three).

B. Pending Motions

The defendants have filed dispositive motions. The Individual Defendants have moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss Counts Six, Eight, and Nine, arguing that the Complaint fails to state plausible claims of individual liability. The Millennium Defendants have moved under Rule 12(b)(6) to dismiss Counts Five and Six as barred by the economic loss doctrine. Millennium Washington Commercial Trust and MSCA have also moved under Rule 12(b)(6) to dismiss, arguing that they cannot be sued, and that the Complaint fails to state plausible causes of action against them. MSRA has moved to dismiss the counterclaims.

III. ANALYSIS

A. LEGAL STANDARD FOR A MOTION TO DISMISS

"A complaint can be dismissed under Rule 12(b)(6) when a plaintiff fails to state a claim upon which relief can be granted.'" Howard Univ. v. Watkins, Civil Action No. 07-492 (RWR), 2012 WL 1454487, at *2 (D.D.C. April 27, 2012) (quoting Peavey v. Holder, 657 F.Supp.2d 180, 185 (D.D.C. 2009) (citing Fed.R.Civ.P. 12(b)(6))). Motions to dismiss under Rule 12(b)(6) test the legal sufficiency of a complaint. Smith-Thompson v. Dist. of Columbia, 657 F.Supp.2d 123, 129 (D.D.C. 2009).

To survive a motion to dismiss, a complaint must contain sufficient factual matter, acceptable as true, to "state a claim to relief that is plausible on its face."... A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 570 (2007)). "The complaint must be construed in the light most favorable to the plaintiff and the court must assume the truth of all well-pleaded allegations.'" Watkins, 2012 WL 1454487, at *2 (quoting Warren v. Dist. of Columbia, 353 F.3d 36, 39 (D.C. Cir. 2004)). "[A] complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations[.]" Twombly, 550 U.S. at 555. However, "[w]here a complaint pleads facts that are merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief.'" Iqbal, 556 U.S. at 662 (quoting Twombly, 550 U.S. at 557.

When assessing a motion brought under Rule 12(b)(6), a court avoids consideration of matters outside the pleadings, but may consider "the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, " Gustave-Schmidt v. Chao, 226 F.Supp.2d 191, 196 (D.D.C. 2002), public records, and "documents upon which the plaintiff's complaint necessarily relies' even if the document is produced not by the plaintiff in the complaint but by the defendant in a motion to dismiss[.]" Hinton v. Corr. Corp. of Am., 624 F.Supp.2d 45, 46 (D.D.C. 2009) ...


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