United States District Court, District of Columbia
COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE.
filed suit on July 23, 2015, against the District of Columbia
(“the District”) as well as Hoffman-Madison
Waterfront, LLC (“HMW”) and Wharf Horizontal REIT
Leaseholder, LLC (“WHRL”), collectively, the
“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. On May 9, 2016, Defendant WHRL filed
its First Amended Counterclaim against Plaintiffs for unjust
enrichment, quantum meruit, and ejectment under a
theory of breach of contract or, in the alternative, as
tenants at sufferance.
before the Court are: Plaintiffs'  Motion to Dismiss
Wharf Horizontal REIT Leaseholder LLC's Amended
Counterclaims; Developer Defendants'  Motion to
Strike Plaintiffs' Demand for Jury Trial; Defendants'
 Motion to Set a Rule 16 Initial Scheduling Conference;
and Plaintiffs'  Motion for Leave to File a Surreply
to Developer Defendants' Reply in Further Support of
their Motion to Set a Rule 16 Initial Scheduling Conference.
Upon consideration of the pleadings,  the relevant legal
authorities, and the record as a whole, the Court: DENIES
Plaintiffs'  Motion to Dismiss Wharf Horizontal REIT
Leaseholder LLC's Amended Counterclaims; DENIES WITHOUT
PREJUDICE Developer Defendants'  Motion to Strike
Plaintiffs' Demand for Jury Trial; DENIES AS MOOT
Defendants'  Motion to Set a Rule 16 Initial
Scheduling Conference; and DENIES AS MOOT Plaintiffs'
 Motion for Leave to File a Surreply to Developer
Defendants' Reply in Further Support of their Motion to
Set a Rule 16 Initial Scheduling Conference for the reasons
of background, the Court shall briefly set out the facts as
alleged in Plaintiffs' First Amended Complaint, reserving
further presentation of the facts alleged in WHRL's First
Amended Counterclaim for the discussion of the individual
issues below. 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 the Developer
Defendants HMW and WHRL, the private entities to which the
District assigned its rights to the leases in question in
2014. Id. ¶¶ 1, 44.
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 (allegedly 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.” Id., Ex.
A at 7; id., Ex. C at 6; id., Ex. D at
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. ¶¶
their Complaint, Plaintiffs raise one claim against the
District, a Fifth Amendment Takings Clause claim (Count I),
related to access to the leased property. 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). Plaintiffs
“request a jury trial for the appropriate claims for
which a jury is permissible.” Compl. at 38. Defendants
now move the Court to strike Plaintiffs' jury demand on
the grounds that the lease agreements contain a binding
waiver of jury trial.
WHRL filed its First Amended Counterclaim against Plaintiffs.
Specifically, WHRL seeks to recover from Plaintiffs on the
ground of unjust enrichment and quantum meruit.
Defendant WHRL also asserts that it is entitled to immediate
possession of the leased premises either on the grounds of
breach of contract or because Plaintiffs are tenants at
sufferance. Plaintiffs now seek to dismiss all of WHRL's
counterclaims against them.
August 12, 2015, Plaintiffs filed a Motion for Preliminary
Injunction against Developer Defendants based on the
Developer Defendants' alleged breaches of the
parties' lease agreements. Specifically, Plaintiffs
sought an order from the Court directing Developer Defendants
to: (1) cease further construction and encroachments onto the
Common Area of the Municipal Fish Market without meeting the
conditions precedent in the Lease Agreements; and (2) to
leave Plaintiffs to quietly enjoy their leased property by
ending their wrongful efforts to evict Plaintiffs through
proceedings in the Superior Court of the District of Columbia
and otherwise harass Plaintiffs. Plaintiffs also requested
that this Court stay the pending eviction proceedings in the
Superior Court of the District of Columbia.
August 13, 2015 and August 19, 2015, respectively, Developer
Defendants and the District filed motions to dismiss
Plaintiffs' First Amended Complaint. Defendants asserted
that Plaintiffs did not hold valid leases to the property in
question because the leases were terminated. As such, the
Developer Defendants contended that the Court should dismiss
Plaintiffs' claims against them in their entirety.
Developer Defs.' Mot. to Dismiss at 6, ECF No. [20-1].
The District also asserted that Plaintiffs did not have
legally enforceable interests in the property and,
consequently, could not establish that the District had taken
their property without just compensation. Def. D.C.'s
Mot. to Dismiss at 6, ECF No. [25-1]. Alternatively, the
District argued that Plaintiffs' Takings Clause claim was
time-barred by the applicable statute of limitations.
Id. at 4-6.
September 28, 2015, the Court issued two Memorandum Opinions
and Orders denying the motions to dismiss filed by the
District and the Developer Defendants as well as
Plaintiffs' motion for a preliminary injunction. Notably,
the Court found that the language of the lease agreements was
ambiguous and susceptible to different interpretations, one
which would render the leases valid at this time and one
which would render the leases expired. As such, the Court
explained: “In order to determine the appropriate
interpretation of the ambiguous provision, the Court must
examine the parties' intention in light of the
circumstances surrounding their execution of the agreements
and/or by applying rules of construction.” Wharf,
Inc. v. District of Columbia, 133 F.Supp.3d 29, 42
(D.D.C. 2015). The Court shall summarize the basis for this
holding because it is relevant to the Court's analysis of
the instant motions.
reaching this holding, the Court focused on the operation of
two different lease provisions. As the Court explained, the
parties' lease agreements contemplate two distinct time
periods in the lease, one occurring prior to the completion
of the “Landlord's Work” and one commencing
upon completion of the “Landlord's Work.”
See Compl., Ex. A at 4-5; id., Ex. C at
4-5; id., Ex. D at 14-15. Specifically, the leases
set annual minimum rent “Before New Rent Commencement
Date” and the annual minimum rent “After New Rent
Commencement Date.” Id., Ex. A at 4-5;
id., Ex. C at 4-5; id., Ex. D at 14-15. The
“New Rent Commencement Date” is the date upon
which the “Landlord's Work” is substantially
completed, as signaled by the receipt of a Certificate of
Substantial Completion from the Corps of Engineers.
Id., Ex. A at 5; id., Ex. C at 5;
id., Ex. D at 15. The “Landwork's
Work” is defined in the lease agreements as certain
improvements that the parties agree should be made to the
Municipal Fish Wharf with $3, 000, 000 appropriated from the
federal government and from other sources of funding
available to the landlord. Id., Ex. A at 8-9;
id., Ex. C at 8; id., Ex. D at 17-18. The
lease agreements further provided that: “Landlord shall
use reasonable commercial efforts to complete Landlord's
Work by June 30, 2001, but shall have no liability to Tenant
if it is unable to complete Landlord's Work by that date
or by any other date.” Id., Ex. A at 9
(emphasis added); id., Ex. C at 8 (emphasis added);
id., Ex. D at 18 (emphasis added).
the parties agree that the Landlord's Work has not been
completed. In light of this fact, the parties presented
different arguments in their briefing on the motions to
dismiss about the operation of Provision 38.E of the leases
Rule Against Perpetuities. Notwithstanding any provision in
this Lease to the contrary, if the Lease Term has not
commenced within three (3) years after the date of this
Lease, this Lease shall automatically terminate on the third
(3rd) anniversary of the date hereof. The sole purpose of
this provision is to avoid any possible interpretation that
this Lease violates the Rule Against Perpetuities or other
rule of law against restraints on alienation.
Id., Ex. A at 26; id., Ex. C at 24;
id., Ex. D at 34. In their motion to dismiss,
Developer Defendants asserted that this provision provides
that the leases would terminate if after three years of the
date of their execution, the New Rent Commencement Date had
not been triggered by the completion of the Landlord's
Work. As such, it was the Developer Defendants'
contention that the leases expired in light of the fact that
the Landlord's Work was not completed within three years
of the execution the lease. Plaintiffs argued that the
provision provides that the leases would terminate if the
“Lease Term, ” or the date of the lease
agreement, had not commenced within three years. While
“Lease Term” was not defined in the lease,
“Term” 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.” Id., Ex. A
at 7; id., Ex. C at 6; id., Ex. D at 16.
The “Commencement Date” is defined as
“[t]he date of this lease.” Id., Ex. A
at 4; id., Ex. C at 4; id., Ex. D at 14. As
such, it was Plaintiffs' position that the “Lease
Term” commenced on the date of each lease and,
accordingly, the three commencement dates fall within the
three-year window provided by Provision 38.E.
Court found that Provision 38.E is ambiguous and that each
party offered a reasonable interpretation of the provision.
The Court declined to interpret Provision 38.E at this early
stage of the proceeding, noting “‘interpretation
of ambiguous contract language, particularly if it requires
consideration of extrinsic evidence, is a question of fact .
. . .'” Wharf, Inc., 133 F.Supp.3d at 42
(quoting Flynn v. Dick Corp., 481 F.3d 824, 831 n.7
(D.C. Cir. 2007)). The Court further summarized its holding
in addressing Plaintiffs' motion for a preliminary
[T]he Court left open the issue of whether Plaintiffs have
valid leasehold interests in the property at issue until the
factual record in this action is further developed.
Relatedly, the Court has not yet addressed the merits of
either party's arguments regarding the alleged breaches
of the lease agreements or Plaintiffs' argument that if
the leases have terminated, then the Court should apply
certain equitable principles. In sum, the Court's only
holding at this time with respect to the parties' lease
agreements is that the language of Provision 38.E is
Mem. Op. (Sept. 28, 2015), at 6, ECF No. . The Court now
turns to the parties' instant motions.
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 ...