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Wharf, Inc. v. District of Columbia

United States District Court, District of Columbia

July 5, 2017

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


          COLLEEN KOLLAR-KOTELLY, United States District Judge

         Plaintiffs Wharf, Inc., (‘The Wharf”), BRW, Inc. (“Captain White”), and Salt Water Seafood, Inc. (“Salt Water”) (collectively, the “Plaintiffs”) filed suit on July 23, 2015, against the District of Columbia (“the District”), Hoffman-Madison Waterfront, LLC (“HMW”) and Wharf Horizontal Reit Leaseholder, LLC (“WHRL”) (with HMW and WHRL are collectively referred to as the “Initial Developer Defendants”). See generally Compl, ECF No. [1]. Plaintiffs alleged that the Initial Developer Defendants violated the terms of the Plaintiffs' lease agreements, and further that the District violated the Takings Clause of the Fifth Amendment by impeding access to the property leased by Plaintiffs at the Southwest Waterfront in the District of Columbia. Id.

         The Initial Developer Defendants moved to dismiss the Complaint and Plaintiffs subsequently filed their First Amended Complaint. See 8/6/2015 Mot. to Dismiss, ECF No. [12]; 1st Am. Compl., ECF No. [17]. The District and the Initial Developer Defendants then moved to dismiss the First Amended Complaint. See 8/13/15 Initial Developer Defs.' Mot. to Dismiss, ECF No. [20]; 8/19/15 Mot. to Dismiss by the District, ECF No. [25]. This Court denied both motions to dismiss in a [47] Memorandum Opinion and [46] Order dated September 28, 2015. On March 29, 2016, the Initial Developer Defendants filed their answers to the Plaintiffs' First Amended Complaint, but Defendant WHRL also filed a counterclaim alleging that Plaintiffs breached their lease agreements and were unjustly enriched as a result of WHRL's improvement of the premises. See generally Answer and Counterclaim, ECF No. [54]. On February 12, 2017, WHRL made an unopposed motion for joinder of an additional party, which was granted by the Court, with the effect that Wharf Fish Market REIT Leaseholder LLC (“WFMRL”) was added as a defendant and counterclaim plaintiff.[1] See Order, ECF No. [75].

         On April 26, 2017, Plaintiffs moved for leave to file a Second Amended Complaint, which was consented to by the District, unopposed by the three Developer Defendants, and granted by the Court. See April 26, 2017 Minute Order. Plaintiffs' [82] Second Amended Complaint added the following Defendants: Wharf District GP Joint Venture LLC (“WDGJV”); Wharf Horizontal Reit, LLC (“WHR”); Hoffman-Struever Waterfront, LLC (“HSW”); and Wharf District Joint Venture, L.P. (“WDJV”) (collectively, the “New Developer Defendants”). On May 9, 2017, these New Developer Defendants filed a [92] Motion to Dismiss, which is presently pending before this Court. Upon consideration of the pleadings, [2] the relevant legal authorities, and the record as a whole, the Court HOLDS IN ABEYANCE the New Developer Defendants' [92] Motion to Dismiss until such time as the Plaintiffs file a Third Amended Complaint.

         I. Background

         This case concerns the Municipal Fish Market located at 1100 Maine Avenue, S.W., Washington, D.C. (“Municipal Fish Market” or “the Market”). 2nd Am. Compl. ¶ 1. Plaintiffs run three seafood businesses in the Municipal Fish Market and bring this action as alleged lessees of property located within the Market. Id. ¶ 2. As previously noted, Plaintiffs initially named as defendants: 1) the District; 2) HMW; 3) WHRL; and 4) WRMRL was added as a defendant by WHRL. Plaintiffs' Second Amended Complaint also names WDGJV, WHR, HSW, and WDJV as defendants. See 2nd Am. Compl. ¶¶ 1, 23-29, 58 (noting that all the Developer Defendants are “affiliated” entities and further, that the District assigned Plaintiffs' leases to the Developer Defendants, acting through WHRL, which in turn assigned the leases to WFMRL.) Plaintiffs allege that all of the Developer Defendants breached the terms of their lease agreements and otherwise interfered with their use of the leased property. See generally Id. ¶¶ 75-155. The commercial leases at issue are: the agreement entered into by The Wharf and the District dated July 12, 2000; the agreement entered into by Captain White and the District dated July 12, 2000; and the agreement originally entered into by Pruitt's Seafood, Inc. and the District, 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. 2nd Am. Compl. ¶¶ 44, 46, 52.

         In their Second Amended Complaint, Plaintiffs include three claims against the District, including two Fifth Amendment Takings Clause claims (Counts I and II) and a violation of due process claim (Count III). Plaintiffs also raise eight claims against all of the Developer Defendants: declaratory judgment (Count IV); specific performance and injunctive relief based on breach of lease (Count V); breach of lease (Count VI); breach of covenant of good faith and fair dealing (Count VII), trespass and conversion (Count VIII); nuisance (Count IX); tortious interference with prospective business advantage (Count X); and unjust enrichment (Count XI).

         II. Treating the Plaintiffs' Opposition as a Motion to Amend

         The New Developer Defendants have moved to dismiss the Plaintiffs' Second Amended Complaint on grounds that the Complaint fails to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). More specifically, the New Developer Defendants argue that although the Plaintiffs have alleged that the New Developer Defendants are “affiliated” with the Initial Developer Defendants, “[t]he four numbered allegations that make this “affiliated” claim set forth not one additional fact regarding the alleged affiliation.” Defs.' [92-1] Memo. in support of Mot. to Dismiss at 2.[3]Furthermore, “none of the allegations set forth in the remainder of the [Plaintiffs'] forty-nine page Second Amended Complaint contains even one more specific reference to any of these entities.” Id. The New Developer Defendants analyze several cases that address the standard for piercing the corporate veil pursuant to an alter ego theory before concluding that Plaintiffs' “conclusory allegations” do not satisfy this standard, and thus, the Second Amended Complaint should be dismissed as it pertains to the New Developer Defendants. See generally Defs.' Memo in support of Mot. to Dismiss at 5-10.

         Responding to the Motion to Dismiss, the Plaintiffs do not address any of the case law cited by the New Developer Defendants but instead focus on an Organizational Chart to describe the interconnectedness between the various Developer Defendants. See Pls.'Opp'n at 6, 9; Pls.' Opp'n, Ex. A (Organizational Chart). Plaintiffs also reference a Land Disposition Agreement, which allegedly “demonstrates the extent to which HSW acting in its capacity as Developer, exercises direction and control over the affiliated entities in its corporate chain.” See Pls.' Opp'n at 7-8; Pls.' Opp'n, Ex. B (Land Disposition Agreement). Furthermore, Plaintiffs refer to a Certificate of Limited Partnership of WDJV obtained from the Secretary of State of Delaware to highlight the relationship between HSW, WDJV, WDGPJV and HMW, and to allege that Lamont Hoffman, an individual, acted on behalf of several of the entities. See Pls.' Opp'n at 8; Pls' Opp'n, Ex. C (Certificate of Limited Partnership). Plaintiffs explain that “[t]he Newly Named Defendants were added to this case because, pursuant to this Court's order, the parties exchanged organizational charts [and] [t]he Developer Defendants' organizations chart showed a web of entities that is responsible for the Southwest Waterfront development.” Pls.' Opp'n at 9. In their Reply, however, the New Developer Defendants argue that common ownership among entities is not enough to state a viable claim for alter ego liability. Defs.' Reply at 4-6.

         Plaintiffs contend that “[t]o the extent that alter ego allegations concerning the Newly named Defendants is deemed necessary, those allegations should await discovery, or Plaintiffs should be given leave to advance those allegations.” Pls.' Opp'n at 5. The New Development Defendants argue that Plaintiffs cannot rely on the prospect of obtaining information through discovery in order to meet their pleading obligations. Defs.' Reply at 6-7. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (Although “Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era [ ] it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”) Plaintiffs conclude their Opposition by requesting leave to amend their complaint “[s]hould the Court find that Plaintiffs need to state that the Newly Named Defendants often share addresses, directors, and officers, and have signed some of the foundational agreements with the District of Columbia authorizing construction on the Fish Market.”[4] Pls.' Opp'n at 9.

         The Court is inclined to consider Plaintiffs' request to amend their complaint; however, the Court notes that Plaint iffs did not attach t o t he ir O p p o sit io n a copy of any proposed Third Amended Complaint. Pursuant to LCvR 7(i), “[a] motion for leave to file an amended pleading shall be accompanied by an original of the proposed pleading as amended.” A “bare request in an opposition to a motion to dismiss [ ] without any indication of the particular grounds on which the amendment is sought” is not a motion to amend within the contemplation of Fed.R.Civ.P. 15 (a). Confederate Mem'l Ass'n, Inc. v. Hines, 995 F.2d 295, 299 (D.C. Cir. 1993); see also Kim v. U.S., 840 F.Supp.2d 180, 189-90 (D.D.C. 2012), aff'd, 707 F.3d 335 (D.C. Cir. 2013) (A mere statement by the plaintiffs in an opposition to a motion to dismiss, without any detail, should not be treated as a motion to amend).

         In the instant case, however, Plaintiffs not only request allowance to amend their complaint but they also indicate that the basis for amending their complaint is to add claims against new defendants who are alleged to be affiliates or alter egos of existing defendants, and they note additional proposed facts relevant to the new defendants, with such facts largely drawn from the three exhibits attached to the Opposition. Accordingly, Plaintiffs' failure to attach a proposed Third Amended Complaint is not a reason to deny their request to amend. See Rozenzweig v. Claimfox, Inc., 2:16 -cv-01849 (ADS)(AYS), 2017 WL 1458742, at *4-5 (E.D.N.Y. Apr. 22, 2017) (finding that a failure to include a proposed amended complaint was not fatal to a motion for leave to amend where the memorandum of law adequately explained the basis for the amendment, included proposed factual additions, and incorporated several exhibits containing additional facts). This Court will therefore consider Plaintiff's request to amend their complaint and apply the applicable legal standard thereto.

         III. Applying the Legal Standard ...

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