United States District Court, District of Columbia
WERTH MARC V. ZUVER, Plaintiff,
GREGORY SPRIGG, Defendant.
L. FRIEDRICH, UNITED STATES DISTRICT JUDGE
defaulting on a real estate purchase, Werth Marc V. Zuver
sued the seller, Gregory Sprigg. After Sprigg moved to
dismiss Zuver's complaint, Dkt. 7, the previously
assigned judge allowed limited discovery to facilitate
mediation, Minute Order of July 31, 2017, but the
parties' attempt at mediation failed. Because discovery
revealed significant inconsistencies between the complaint
and Zuver's own account, Sprigg moved for Rule 11
sanctions. Dkt. 24. In responding to the Rule 11 motion,
Zuver's pro bono counsel breached the confidentiality
provision of the parties' mediation agreement by
disclosing to the Court that Sprigg had rejected a proposal
from the mediator at the end of mediation. Dkt. 33 at 8, 45.
reasons that follow, the Court will dismiss five of the
complaint's eight counts for failure to state a claim,
grant summary judgment to Sprigg with respect to the other
three counts, deny the Rule 11 motion, and require
Zuver's counsel to reimburse Sprigg for fees incurred as
a result of the breach of the mediation agreement.
decades, Zuver ran a non-profit art company named Fondo del
Sol and operated a home-based art center out of his residence
in the Dupont Circle neighborhood of Washington, D.C. Compl.
¶¶ 2, 16, 19-20, Dkt. 1. Zuver rented the home for
several decades until 2000, when Fondo purchased it.
Id. ¶¶ 18, 23. In 2010, Zuver, more than
eighty years old, was diagnosed with colon cancer.
Id. ¶ 25. Thereafter, Fondo began to experience
financial difficulty and sold the Dupont Circle property in
September 2012. Id. ¶ 26. The purchase
agreement allowed Zuver to remain in the home for one year
after the sale but required him to find a new place to live
(and to store Fondo's art collection) by September 2013.
Id. ¶ 29.
accordingly approached Sprigg, a next-door neighbor who
happened to be a real estate broker, about renting
Sprigg's property. Id. ¶¶ 22, 34.
Sprigg, who had lived at the property since 1997, planned to
move to Virginia and was open to selling-but not renting-his
property to Zuver. Id. ¶¶ 4, 22, 34. In
fall 2013, Zuver and Sprigg entered into an agreement in
which Zuver paid Sprigg $20, 000 in exchange for Sprigg
keeping portions of his property vacant and off the market
from November 1 through December 31 while the parties
discussed the potential purchase. Id. ¶ 38. The
agreement allowed Zuver to credit the $20, 000 to the
prospective purchase. Id. ¶ 40.
December 2013, Zuver and Sprigg entered into a sales contract
for the purchase of the property at $1, 845, 000 (a $1, 200,
000 down payment plus $645, 000 in seller-provided financing
with a fifteen-year mortgage) with a settlement date of April
30, 2014. Id. ¶¶ 49-50. The contract
required Zuver to deliver a $200, 000 earnest-money deposit
to an escrow account; the deposit was credited to the
purchase price. Id. ¶ 51; First Sales Contract
at 3, Dkt. 1-2. The contract also included a pre-settlement
occupancy agreement that allowed Zuver to occupy the ground
floor of the property for the first four months of 2014 in
exchange for a nonrefundable $40, 000 lump-sum payment.
Compl. ¶ 56. The pre-settlement occupancy agreement
disclaimed any tenancy relationship, stated that Sprigg would
credit Zuver $50, 000 at settlement, and noted that the
per-month payment would increase to $12, 000 if settlement
did not occur by April 30 and Zuver failed to vacate the
property. Id. ¶¶ 56-57. Sprigg
later agreed to extend settlement and the $10, 000 monthly
rate to September 21, 2014. Id. ¶ 60.
Zuver failed to raise the funds necessary to complete the
purchase. Id. ¶ 63. On September 22, 2014,
Zuver and Sprigg signed a release of the sales contract that
nullified the contract, released both parties from liability
in connection with the sales contract, authorized Sprigg to
sell the property to another party, and directed the escrow
agent to disburse the $200, 000 earnest-money deposit to
Sprigg. First Release Agreement, Dkt. 1-3.
October 2014, Zuver and Sprigg signed a second sales contract
for purchase of the property with a settlement date of
December 31, 2014. Compl. ¶ 72. The sales price was $1,
600, 000 ($245, 000 less than the sales price in the first
contract), with a $1, 000, 000 down payment and $600, 000 in
seller-provided financing. Id. ¶ 74. The second
sales contract required Zuver to deliver $5, 000 to the
escrow account. Id. ¶ 75. It also included a
pre-settlement occupancy agreement with the same terms as the
first except that it required Zuver to pay a lump sum of $30,
000 for October, November, and December, omitted the clause
crediting Zuver $50, 000 toward settlement, and increased the
monthly payment to $12, 000 if settlement did not occur by
December 31, 2014 and Zuver failed to vacate. Id.
¶¶ 76-77. In early January 2015, the parties
extended the settlement date through the month in exchange
for a $10, 000 payment from Zuver to Sprigg. Id.
again failed to raise sufficient funds, and on January 30,
2015, the parties signed another release agreement. The
agreement nullified the second sales contract, released both
parties from liability relating to the second sales contract,
authorized Sprigg to sell the property to another party, and
directed the escrow agent to disburse the $5, 000 deposit to
Sprigg. Id. ¶¶ 80-81; Second Release
Agreement, Dkt. 1-5.
same day, Zuver and Sprigg signed a third sales contract with
a settlement date of September 30, 2015 and a sales price of
$1, 700, 000 with a $1, 000, 000 down payment and $700, 000
in seller-provided financing. Compl. ¶ 82-83. The third
sales contract required Zuver to deliver another $5, 000
deposit to the escrow account. Id. ¶ 84. The
pre-settlement occupancy agreement this time required Zuver
to pay $20, 000 for February 2015 and $15, 000 per month
thereafter with $5, 000 per month credited to Zuver upon
settlement. Id. ¶¶ 85-86.
again failed to close, and the parties signed a third release
agreement on February 26, 2016. Third Release Agreement, Dkt.
Like the others, the agreement nullified the third sales
contract, released both parties from liability relating to
the third sales contract, and authorized Sprigg to sell the
property to another party. Unlike the others, the release
directed the escrow agent to disburse the $5, 000 deposit to
Zuver instead of Sprigg. Id. The parties signed
another agreement that allowed Zuver to store the artwork at
the property during the month of March for $10, 000. Compl.
¶ 100. In early April, Sprigg demanded that Zuver vacate
the property entirely. Id. ¶ 101.
sued Sprigg in this Court in December 2016. Zuver alleges
that Sprigg took advantage of his old age and vulnerability
in several ways:
• Sprigg misled Zuver into believing that the initial
$20, 000 paid for keeping the property available for two
months while the parties discussed the prospective purchase
would be credited toward the purchase price as in a
rent-to-buy agreement, id. ¶ 36;
• Sprigg misrepresented the sales contracts as
boilerplate, id. ¶ 43;
• Although encouraging Zuver to retain a lawyer, Sprigg
also told Zuver that attorneys were unnecessary and would
“muck things up, ” id. ¶ 46;
• Sprigg misrepresented the pre-settlement occupancy
agreements as similar to rent-to-buy arrangements,
id. ¶ 54;
• To obtain the first release agreement, Sprigg isolated
Zuver by meeting with him alone without Zuver's
girlfriend Delfa Castillo, an attorney who had communicated
with both Zuver and Sprigg about the purchase, id.
• Sprigg continued to press forward with the property
sale despite knowing that Zuver was elderly, did not have the
support of family members or lawyers, and did not have
sufficient funds to complete the purchase, id.
¶¶ 47, 48, 63, 64, 73, 78, 81, 88-89.
asserts counts of unconscionability, unjust enrichment,
fraud, negligent representation, and breach of fiduciary
duty. See id. ¶¶ 105-162. The complaint
seeks $450, 000 in damages plus treble damages, punitive
damages, attorneys' fees and costs, rescission of the
contracts, and other relief. Id. at 28-29.
Sprigg moved to dismiss, the judge previously assigned to
this case allowed limited discovery, consisting of document
exchanges and depositions of key witnesses, for the purpose
of facilitating mediation. Minute Order of July 31, 2017.
During Zuver's deposition, he repeatedly denied having
seen the complaint before affirming after a break that he had
in fact read the complaint. See Mem. in Supp. of
Mot. for Sanctions at 2-3, Dkt. 24-1. Zuver also undermined
the claims of undue influence and breach of fiduciary duty by
recounting that he and Sprigg “never had any
relationship” before they began negotiating the
purchase. Id. at 14. Citing these and other
incongruities between the complaint and discovery evidence,
Sprigg filed a motion for sanctions under Rule 11 of the
Federal Rules of Civil Procedure. See Id. at 1;
Fed.R.Civ.P. 11. In its opposition to Sprigg's motion for
Rule 11 sanctions, Zuver's counsel conceded-consistent
with Zuver's testimony-that Zuver and Sprigg had no
“close personal relationship prior to the signing of
the First Sales Contract.” Opp'n to Mot. for
Sanctions at 23, Dkt. 33 (emphasis omitted). Zuver's
counsel also revealed that the mediator made a proposal that
Sprigg rejected. Id. at 8, 45. The case was
reassigned to the undersigned judge on December 5, 2017.
12(b)(6) of the Federal Rules of Civil Procedure allows a
defendant to move to dismiss the complaint for failure to
state a claim upon which relief can be granted. Fed.R.Civ.P.
12(b)(6). To survive a Rule 12(b)(6) motion, a complaint must
contain factual matter sufficient to “state a claim to
relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). A facially
plausible claim is one 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). This standard does not amount to a
specific probability requirement, but it does require
“more than a sheer possibility that a defendant has
acted unlawfully.” Id.; see also
Twombly, 550 U.S. at 557 (“Factual allegations
must be enough to raise a right to relief above the
speculative level.”). A complaint alleging facts that
are “merely consistent with a defendant's liability
. . . stops short of the line between possibility and
plausibility.” Iqbal, 556 U.S. at 678
(internal quotation marks omitted).
factual allegations are “entitled to [an] assumption of
truth, ” id. at 679, and the court construes
the complaint “in favor of the plaintiff, who must be
granted the benefit of all inferences that can be derived
from the facts alleged, ” Hettinga v. United
States, 677 F.3d 471, 476 (D.C. Cir. 2012) (internal
quotation marks omitted). The assumption of truth does not
apply, however, to a “legal conclusion couched as a
factual allegation.” Iqbal, 556 U.S. at 678
(quotation marks omitted). An “unadorned, the
defendant-unlawfully-harmed-me accusation” is not
credited; likewise, “[t]hreadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id.
grants summary judgment if the moving party “shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986). A
“material” fact is one with potential to change
the substantive outcome of the ...