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Wharf, Inc. v. District of Columbia

United States District Court, District of Columbia

September 28, 2015

WHARF, INC., et al., Plaintiffs,
v.
DISTRICT OF COLUMBIA, et al. ., Defendants.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE.

Plaintiffs filed suit on July 23, 2015, against the District of Columbia (“the District”) as well as Hoffman-Madison Waterfront, LLC and Wharf Horizontal Reit Leaseholder, LLC (“Developer Defendants”). Plaintiffs allege that the Developer Defendants violated the terms of the parties’ lease agreements, and that the District violated the Takings Clause of the Fifth Amendment by impeding access to the leased property. Presently before the Court are Developer Defendants’ [20] Motion to Dismiss Plaintiffs’ First Amended Complaint and the Defendant District’s [25] Motion to Dismiss. Upon consideration of the pleadings, [1] the relevant legal authorities, and the record as a whole, the Court DENIES both motions to dismiss for the reasons described herein.[2]

I. BACKGROUND

For the purposes of the motions before the Court, the Court accepts as true the allegations in Plaintiffs’ First Amended Complaint. See generally Compl., ECF No. [17]. The Court does “not accept as true, however, the plaintiff’s legal conclusions or inferences that are unsupported by the facts alleged.” Ralls Corp. v. Comm. on Foreign Inv. in U.S., 758 F.3d 296, 315 (D.C. Cir. 2014). The Court recites the principal facts pertaining to the issues raised in the pending motions relying on the Complaint and undisputed and/or uncontroverted facts.

This case concerns the Municipal Fish Market located at 1100 Maine Avenue, S.W., Washington, D.C. (“Municipal Fish Market” or “the Market”). Compl. ¶ 1. Plaintiffs, Wharf, Inc. (“The Wharf”), BRW, Inc. (“Captain White”), and Salt Water Seafood, Inc. (“Salt Water”), run three seafood businesses in the Municipal Fish Market and bring this action as lessees of property located within the Market. Id. ¶ 2. Each of the Plaintiffs’ businesses is owned and operated by members of the White family. Id. ¶ 34. Defendants are the District of Columbia (“the District”), the original lessor of the property at issue, and Hoffman-Madison Waterfront, LLC and Wharf Horizontal Reit Leaseholder, LLC (“Developer Defendants”), the private entities to which the District assigned its rights to the leases in question in 2014. Id. ¶¶ 1, 44.

The commercial leases at issue are: the agreement entered into by The Wharf and the District dated July 12, 2000, id. ¶ 35; the agreement entered into by Captain White and the District dated July 12, 2000, id. ¶ 37; and the agreement originally entered into by Pruitt’s Seafood, Inc., and the District dated April 1, 2001, and subsequently assumed by Salt Water (then doing business as W.D., Inc.) from DNM Seafood, Inc. on March 20, 2014, with the consent of then-lessor, the District, id. ¶ 40, Ex. D. The term of the lease agreements at issue is defined as “[t]he period that begins on the Commencement Date and ends thirty (30) Lease Years after the New Rent Commencement Date, unless sooner terminated pursuant to this Lease.”[3] Id., Ex. A at 7; id., Ex. C at 6; id., Ex. D at 16.[4] On April 23, 2014, the District assigned the leases at issue to Developer Defendants. Id. ¶ 44. Plaintiffs allege that Developer Defendants breached the terms of their lease agreements and otherwise interfered with their use of the leased property. See generally Id. ¶¶ 91-160.

Plaintiffs also bring a claim against the District of Columbia related to access to the leased property. Prior to May 2014, the Municipal Fish Market could be accessed by vehicular and pedestrian foot traffic via Water Street. Id. ¶¶ 57, 69-70. On June 7, 2011, the Council of the District of Columbia passed Bill 19-69, “Closing of Water Street, S.O. 10-15906 Act of 2011, ” and the Mayor of the District signed the bill on June 28, 2011. Id. ¶¶ 63, 65, 68. Water Street remained in public use until May 2014 when it began to be periodically closed. Id. ¶¶ 69-70. On November 2014, a hole was dug in the location where Water Street was located. Id. ¶ 71. Plaintiffs allege “[b]y closing Water Street, the primary entrance to the Municipal Market was eliminated.” Id. ¶ 72.

In their Complaint, Plaintiffs raise one claim against the District, a Fifth Amendment Takings Clause claim (Count I). Plaintiffs also raise eight state and common law claims against the Developer Defendants: declaratory judgment (Count II); specific performance and injunctive relief based on breach of lease (Count III); damages based on breach of lease (Count IV); breach of the covenant of good faith and fair dealings (Count V); trespass and conversion (Count VI); nuisance (Count VII); tortious interference with prospective business advantage (Count VIII); and unjust enrichment (Count IX). Defendants now move the Court to dismiss all of Plaintiffs’ claims.

II. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss a complaint on the grounds it “fail[s] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). The Federal Rules of Civil Procedure require that a complaint contain “‘a short and plain statement of the claim showing that the pleader is entitled to relief, ’ in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accord Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam). “[A] complaint [does not] suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 557). Rather, a complaint must contain sufficient factual allegations that, if accepted as true, “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “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.” Iqbal, 556 U.S. at 678.

In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court must construe the complaint in the light most favorable to the plaintiff and must accept as true all reasonable factual inferences drawn from well-pleaded factual allegations. In re United Mine Workers of Am. Employee Benefit Plans Litig., 854 F.Supp. 914, 915 (D.D.C. 1994). Further, in deciding a Rule 12(b)(6) motion, a court may consider “the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, ” or “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.” Ward v. D.C. Dep’t of Youth Rehab. Servs., 768 F.Supp.2d 117, 119 (D.D.C. 2011) (citations omitted).

A motion to dismiss may be granted on statute of limitations grounds only if apparent from the face of the complaint. See Nat’l R.R. Passenger Corp. v. Lexington Ins. Co., 357 F.Supp.2d 287, 292 (D.D.C. 2005) (“A defendant may raise the affirmative defense of a statute of limitations via a Rule 12(b)(6) motion when the facts giving rise to the defense are apparent on the face of the complaint”). “Because statute of limitations defenses often are based on contested facts, the court should be cautious in granting a motion to dismiss on such grounds; ‘dismissal is appropriate only if the complaint on its face is conclusively time-barred.’” Rudder v. Williams, 47 F.Supp.3d 47, 50 (D.D.C. 2014) (quoting Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996)).

III. DISCUSSION

Developer Defendants in their Motion to Dismiss assert that Plaintiffs do not hold valid leases to the property in question because the leases were terminated. As such, the Developer Defendants contend that the Court should dismiss Plaintiffs’ claims against them in their entirety. Developer Defs.’ Br.. in Supp. of Mot. to Dismiss at 6, ECF No. [20-1]. The District argues that the Court also should dismiss the Fifth Amendment Takings Clause claim, the sole claim against the District, for two reasons. First, the District adopts the arguments made by the Developer Defendants that the Plaintiffs do not have a valid leasehold interest in the property, but does not make any additional arguments in support of this contention. Rather, the District asserts that because Plaintiffs do not have legally enforceable interests in the property, the District has not taken their property without just compensation. Def. D.C.’s Memo. in Supp. of Mot. to Dismiss at 6, ECF No. [25-1]. Second, the District argues that Plaintiffs’ Takings Clause claim is time-barred by the applicable three-year statute of limitations. Id. at 4-6. The Court shall first address the District’s statute of limitations argument and then shall address the validity of the lease agreements at issue in this action.

Before starting its discussion, the Court acknowledges that parsing the language of the statute and documents, and discerning the nuanced meaning of the words in those documents has been a challenging exercise of judgment. The Court agrees that the parties have proffered positions that have merit on both sides of the issues and, as such, recognizes that the decision on both issues is difficult. However, the Court is left to determine which party has presented the ...


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