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Seibert v. Precision Contracting Solutions, LP

United States District Court, District of Columbia

November 8, 2019



          Rosemary M. Collyer United States District Judge.

         Plaintiff Michael Seibert and his attorney, Timothy Hyland, move to dismiss counterclaims brought by Precision Contracting Solutions, LP (PCS) and its sole owner and partner, Derrick Sieber, against Messrs. Seibert and Hyland in connection with a construction contract dispute. Mr. Seibert brought several tort and contract claims against PCS and Mr. Sieber concerning a PCS construction project performed on Mr. Seibert's residential property. Defendants answered and counterclaimed, alleging breach of contract and fraud against Mr. Sieber and defamation against Messrs. Seibert and Hyland. Both have moved to dismiss any fraud and defamation counterclaims brought against them. Because the Court finds that Defendants have failed to plead a fraud claim under D.C. law and have conceded their defamation claims, the Court will grant Messrs. Seibert's and Hyland's motions to dismiss.

         I. FACTS

         Michael Seibert and PCS signed a contract on December 8, 2017, by which PCS agreed to make certain upgrades to Mr. Seibert's residential property in Washington, D.C. See Ex. 1, Compl., Precision Construction Contract (Contract) [Dkt. 1-1].[1] Mr. Seibert paid for most of the work but refused to make the last payment because the work was allegedly shoddy, incomplete, and performed without the necessary permits. PCS initiated arbitration to collect the unpaid balance of the Contract, and Mr. Seibert sued PCS, Derrick Sieber, and Stephen Sieber[2]on April 10, 2018, seeking a declaratory judgment that the arbitration clause is unenforceable and raising claims of fraud in the inducement, reformation, breach of contract, and unlawful trade practices. Mr. Seibert moved to stay the arbitration initiated by PCS and Defendants separately moved to dismiss for lack of subject matter jurisdiction. On February 26, 2019, the Court issued a Memorandum Opinion and Order granting Mr. Seibert's Motion to Stay and denying Defendants' Motions to Dismiss. See Mem. Op. [Dkt. 35]; Order [Dkt. 36].

         On March 19, 2019, PCS and Mr. Sieber filed their Answer and Counterclaim. The Counterclaim advances three counts: Count I alleges breach of contract against Mr. Seibert; Count II alleges common law fraud against Mr. Seibert; and Count III alleges defamation against Mr. Seibert and Mr. Seibert's counsel, Timothy Hyland. Mr. Seibert filed his Answer to Count I and moved to dismiss Counts II and III on March 26, 2019. See Michael Seibert's Corrected Answer to Count I of the Countercl. [Dkt. 42]; Michael Seibert's Partial Mot. to Dismiss the Countercl. [Dkt. 41]. Mr. Hyland moved to dismiss Count III shortly thereafter. See Countercl. Def. Timothy Hyland's Mot. to Dismiss the Countercl. [Dkt. 43]. The matter is ripe for review.[3]


         A motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges the adequacy of a complaint on its face. Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, the complaint must contain sufficient factual information, accepted as true, to “state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A court must assume the truth of all well-pleaded factual allegations and construe reasonable inferences from those allegations in favor of the plaintiff. Sissel v. Dep't of Health & Human Servs., 760 F.3d 1, 4 (D.C. Cir. 2014). A court need not accept inferences drawn by a plaintiff if such inferences are not supported by facts set out in the complaint. Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Further, a court need not accept as true legal conclusions set forth in a complaint. Iqbal, 556 U.S. at 678. In deciding a motion under Rule 12(b)(6), a court may consider the facts alleged in the complaint, documents attached to the complaint as exhibits or incorporated by reference, and matters about which the court may take judicial notice. Abhe & Svoboda, Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007). The same standards govern a motion to dismiss a counterclaim. Kevin S. Bennett Trust U/A Dated August 2, 1989 v. Bennett, 561 F.Supp.2d 22, 26 (D.D.C. 2008).[4]

         III. ANALYSIS

         A. Fraud Claim

         The essential elements of common law fraud under District of Columbia law are: “(1) a false representation (2) in reference to material fact, (3) made with knowledge of its falsity, (4) with the intent to deceive, and (5) action is taken in reliance upon the representation.”[5] Va. Acad. of Clinical Psychologists v. Grp. Hospitalization & Med. Servs., Inc., 878 A.2d 1226, 1233 (D.C. 2005) (quoting Atraqchi v. GUMC Unified Billing Servs., 788 A.2d 559, 563 (D.C. 2002)).

         Fraud claims are subject to a heightened pleading standard. See Fed. R. Civ. P. 9(b). “In alleging fraud . . . a party must state with particularity the circumstances constituting fraud, ” though “conditions of a person's mind may be alleged generally.” Id. To satisfy Rule 9(b), a plaintiff must “set[ ] forth in sufficient detail the time, place, and manner” of the alleged fraudulent scheme, so as “to guarantee all defendants sufficient information to allow for preparation of a response.” United States ex rel. Heath v. AT&T, Inc., 791 F.3d 112, 123 (D.C. Cir. 2015) (internal quotation marks and citation omitted). Such information often includes “specific fraudulent statements, who made the statements, what was said, when or where these statements were made, and how or why the alleged statements were fraudulent.” Brink v. Cont'l Ins. Co., 787 F.3d 1120, 1127 (D.C. Cir. 2015) (citation omitted).

         Further, “[u]nder D.C. law, for a plaintiff to recover in tort for conduct that also constitutes a breach of contract, ‘the tort must exist in its own right independent of the contract, and any duty upon which the tort is based must flow from considerations other than the contractual relationship.'” Attias v. Carefirst, Inc., 365 F.Supp.3d 1, 18 (D.D.C. 2019) (quoting Choharis v. State Farm Fire & Cas. Co., 961 A.2d 1080, 1089 (D.C. 2008)). “[T]he injury to the plaintiff must be an independent injury over and above the mere disappointment of plaintiff's hope to receive his contracted-for benefit.” Choharis, 961 A.2d at 1089 (internal quotation marks omitted). Therefore, the viability of Defendants' fraud counterclaim depends on whether Defendants have plausibly alleged sufficient facts that Plaintiff owed them an independent duty beyond the parties' contractual obligations.

         Defendants' fraud claim is based on allegations that, “[i]n consummating the Contract [between PCS and Plaintiff], Plaintiff represented to [Defendants that] Plaintiff bore full responsibility for obtaining all required permits for PCS's work under the Contract.” Countercl. ¶ 8. Defendants note that neither the December 2017 Contract nor its January 2018 Modification addressed the issue of permitting; rather, Defendants claim that Plaintiff orally committed to obtain permits.[6] Defendants assert that Plaintiff “had no intention of obtaining the required permits, ” id. ¶ 39, and “never obtained the required permits” as promised. Id. ¶ 12.

         Defendants further allege that in early 2018, a PCS construction superintendent observed a D.C. Department of Consumer and Regulatory Affairs (DCRA) vehicle “stopped in front of Plaintiff's domicile.” Id. ¶ 14. Defendants claim that the PCS superintendent informed Plaintiff that the construction required a permit, and Plaintiff asked PCS “to obtain a permit as soon as possible on Plaintiff's behalf” and at Plaintiff's expense. Id. ΒΆΒΆ 15, ...

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