United States District Court, District of Columbia
BERMAN JACKSON United States District Judge.
Bonfire, LLC has brought this breach of contract action
against defendants Michael R. Zacharia and 1132 19th Street
NW, LLC. Compl. [Dkt. # 1]. The case arises out of a 2014
lease agreement in which Bonfire agreed to rent the premises,
located at 1132 19th Street N.W. in Washington, D.C., from
the defendants for the purpose of operating a restaurant.
Id. ¶ 5. Plaintiff alleges that in the
conversations leading up to the execution of the lease,
defendants granted it a right of first refusal to purchase
the property if defendants sought to sell it, but that
defendants breached the oral agreement and sold the property
without notifying plaintiff. Plaintiff also alleges that
defendants committed fraud by failing to honor the right of
first refusal, and by misrepresenting defendant
Zacharia's ownership stake in the property. See
Compl. Defendants have moved to dismiss plaintiff's
complaint pursuant to Rule 12(b)(6). Mot. to Dismiss [Dkt. #
8] (“Defs.' Mot.”); Mem. of P. & A. in
Supp. of Defs.' Mot. [Dkt. # 8-1] (“Defs.'
Mem.”) at 1-2. Since an oral promise to grant a right
of first refusal to purchase property is unenforceable under
the statute of frauds, and plaintiff has not stated a claim
for misrepresentation, defendants' motion will be
granted, and this case will be dismissed in its entirety.
September 18, 2014, plaintiff entered into a lease agreement
with defendants to rent property at 1132 19th Street, N.W.
and operate a restaurant called Bonfire. Compl. ¶ 5.
Plaintiff alleges that while the deal was being negotiated,
Zacharia, the commercial real estate broker, and manager and
co-owner of the property, orally agreed to provide plaintiff
with a right of first refusal to purchase the property if
defendants decided to sell it. Id. ¶¶ 6,
8, 15. Plaintiff alleges that, in reliance on Zacharia's
oral assurances, it did not insist on a written right of
first refusal clause in the lease agreement. Id.
¶ 16. The lease did not contain any reference to the
right of first refusal, and it did include a provision in
which plaintiff specifically agreed to execute any documents
to subordinate the lease agreement “upon demand”
by the landlord. Ex. 1 to Defs.' Mot. [Dkt. # 8-2]
(“Lease”) § 15. Also, the lease included an
integration clause: “[t]his Lease contains the final
and entire agreement between the parties hereto, and they
shall not be bound by any terms, conditions, oral statements,
warranties or representations not herein contained.”
Id. § 25(a).
April 15, 2016, defendants asked plaintiff to sign the Tenant
Estoppel Certificate and Subordination, Non-Disturbance and
Attornment Agreement (“SNDA”) referenced in
section 15 of the lease. Compl. ¶¶ 9, 18;
see Lease § 15. Plaintiff was not informed that
defendants needed plaintiff to sign those agreements because
of an impending sale of the property to a third party.
Id. Plaintiff signed the documents, believing that
it needed to do so to remain in compliance with the terms of
the lease. Id. ¶ 19. The estoppel document
“forced [plaintiff] to admit that it has no right of
first refusal to purchase the Property.” Id.
¶ 18. Defendants thereafter entered into a sale
agreement with a third party in April 2016 “without
informing or allowing [p]laintiff to meet the purchase
price.” Compl. ¶ 17.
initiated this action on July 27, 2016. Compl. In Count I,
plaintiff alleges that defendants breached their contract
with plaintiff by selling the property to a third party
without honoring the oral agreement to provide plaintiff a
right of first refusal. Id. ¶¶ 14-25. In
Count II, plaintiff alleges that defendants engaged in fraud
when they demanded that plaintiff sign the estoppel and SNDA
“ostensibly for bank requirements without disclosing
beforehand the impending sale for which the documents were
required.” Id. ¶¶ 27-31. On
September 2, 2016, defendants moved to dismiss the complaint
pursuant to Federal Rules of Civil Procedure 12(b)(6).
See Defs.' Mot.; Defs.' Mem. Plaintiff
opposed the motion on September 16, 2016, Pl.'s Mem. in
Opp. to Defs.' Mot. [Dkt. # 10] (“Pl.'s
Opp.”), and defendants filed their reply on September
23, 2016. Defs.' Reply to Pl.'s Opp. [Dkt. # 11]
survive a [Rule 12(b)(6)] motion to dismiss, 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 (2009)
(internal quotation marks omitted); accord Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). In
Iqbal, the Supreme Court reiterated the two
principles underlying its decision in Twombly:
“First, the tenet that a court must accept as true all
of the allegations contained in a complaint is inapplicable
to legal conclusions.” 556 U.S. at 678. And
“[s]econd, only a complaint that states a plausible
claim for relief survives a motion to dismiss.”
Id. at 679.
is facially plausible when the pleaded factual content
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Id. at 678. “The plausibility standard is not
akin to a ‘probability requirement, ' but it asks
for more than a sheer possibility that a defendant has acted
unlawfully.” Id. A pleading must offer more
than “labels and conclusions” or a
“formulaic recitation of the elements of a cause of
action, ” id., quoting Twombly, 550
U.S. at 555, and “[t]hreadbare recitals of the elements
of a cause of action, supported by mere conclusory
statements, do not suffice.” Id.
considering a motion to dismiss under Rule 12(b)(6), the
Court is bound to construe a complaint liberally in the
plaintiff's favor, and it should grant the plaintiff
“the benefit of all inferences that can be derived from
the facts alleged.” Kowal v. MCI Commc'ns
Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994).
Nevertheless, the Court need not accept inferences drawn by
the plaintiff if those inferences are unsupported by facts
alleged in the complaint, nor must the Court accept
plaintiff's legal conclusions. See id.;
Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir.
2002). In ruling upon a motion to dismiss for failure to
state a claim, a court may ordinarily consider only
“the facts alleged in the complaint, documents attached
as exhibits or incorporated by reference in the complaint,
and matters about which the Court may take judicial
notice.” Gustave-Schmidt v. Chao, 226
F.Supp.2d 191, 196 (D.D.C. 2002), citing EEOC v. St.
Francis Parochial Sch., 117 F.3d 621, 624 (D.C. Cir.
this Court sits in diversity pursuant to 28 U.S.C. §
1332, the Court applies state substantive law. See Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). The Court
will apply District of Columbia substantive law since both
parties agree that District of Columbia substantive law
governs this matter. In re Korean Air Lines Disaster of
Sept. 1, 1983, 932 F.2d 1475, 1495 (D.C. Cir. 1991)
(Mikva, C.J., dissenting in part) (explaining that courts
need not address choice of law questions sua
Count I will be dismissed because the oral agreement to
provide a right of first refusal is
have moved to dismiss Count I under Rule 12(b)(6). Defs.'
Mot. They argue that an oral promise to grant a right of
first refusal does not constitute a valid contract, because
any promise related to real estate would need to be in
writing under the statute of frauds, and because the