CAPITOL SERVICES MANAGEMENT INC. v. VESTA CORPORATION

Filing 10

MEMORANDUM OPINION AND ORDER granting 6 Vesta's Motion to Dismiss. Signed by Judge Emmet G. Sullivan on 7/25/2018. (lcegs3)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
________________________________
)
CAPITOL SERVICES MANAGEMENT,
)
)
Plaintiff,
)
)
v.
) Civil Action No. 17-1756 (EGS)
)
VESTA CORPORATION,
)
)
Defendant.
)
________________________________)
MEMORANDUM OPINION AND ORDER
Plaintiff Capitol Services Management, Inc. (“CSMI”) brings
suit against Defendant VESTA Corporation (“Vesta”) for: (1)
intentional interference with business relations; and (2)
tortious interference with a reasonable expectation of
prospective economic advantage. CSMI alleges that Vesta
interfered with its contract to manage an apartment property in
the District of Columbia, causing CSMI to lose the contract.
Pending before the Court is Vesta’s motion to dismiss the
complaint. See ECF No. 6. Upon consideration of the motion, the
response and reply thereto, and the relevant law, the Court
GRANTS Vesta’s motion and DISMISSES CSMI’s complaint.
I.

Background

CSMI is a property management corporation located in the
District of Columbia. Compl., ECF No. 1 ¶ 3. Vesta is a property
management corporation located in Connecticut. Id. ¶ 4. At

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different times, both corporations managed the Park Southern
Apartments, an apartment property located in Southeast District
of Columbia. Id. ¶¶ 3, 8, 9. This property was owned by the Park
Southern Neighborhood Corporation (“PSNC”) under a Deed of Trust
with the District of Columbia, “acting by and through DHCD [the
District of Columbia Department of Housing and Community
Development].” Id. ¶ 5. The Deed of Trust stated that PSNC was
indebted to the District of Columbia for over three million
dollars. Id. ¶ 6. The Deed of Trust required PSNC to repay the
debt with interest and perform certain duties. Id. ¶ 7.
PSNC contracted with Vesta to manage the Park Southern
Apartments. Id. ¶ 8. However, on March 17, 2014, PSNC terminated
the contract because it was “not satisfied” with Vesta’s
services. Id. The same day, PSNC entered into an “exclusive”
management agreement with CSMI. Id. ¶¶ 9, 10. Pursuant to that
agreement, CSMI was to manage the Park Southern Apartment for a
year with the option to continue the contract on a year-to-year
basis thereafter. Id. ¶ 10. If the contract was terminated
without cause within the first year, CSMI would be entitled to
the compensation owed for the time remaining under the contract.
Id.

¶ 12.
Less than a month after PSNC entered into the management

contract with CSMI, DHCD sent PSNC a “notice of default” and
gave PSNC a month to cure the default. Id. ¶ 26. When PSNC did
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not cure the default by May 2, 2014, DHCD “implemented the
default process.” 1 Id. ¶ 27. The same day, DHCD entered into an
“emergency contract” with Vesta to manage the Park Southern
Apartments. Id. ¶ 28. The emergency contract “authorized Vesta
to take over the management of the Park Southern Apartments on
May 3, 2014 without any notice of termination to CSMI.” Id. ¶
29.
CSMI alleges that Vesta knew about its business relationship
and contractual expectancy, yet interfered with its management
agreement. See id. ¶¶ 36-51. CSMI alleges that Vesta had been in
frequent communication with DHCD regarding DHCD’s “intention to
default” PSNC and remove CSMI as property manager. Id. ¶ 14; see
also id. ¶¶ 15-25. According to CSMI, Vesta told DHCD that it
“was going to continue to manage the property and to provide
(DHCD) whatever assistance we need with respect to the ongoing
condition of the property,” despite having been terminated by
PSNC. Id. ¶¶ 16, 41. CSMI alleges that “its relationship with
PSNC was broken and CSMI lost any income it should have received
for its management services” as a “direct and proximate result
of Vesta performing the management contract.” Id. ¶ 45. CSMI
requests $100,000 in compensatory and economic damages, as well
as punitive damages. Id. ¶¶ 45, 51.

1

It is unclear why PSNC “defaulted” or what the “default
process” entailed.
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II.

Standard of Review

A motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6) tests the legal sufficiency of a complaint.
Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). To
survive a 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 quotations and citations
omitted). A claim is facially plausible when the facts pled in
the complaint allow the court to “draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id.
The standard does not amount to a “probability requirement,” but
it does require more than a “sheer possibility that a defendant
has acted unlawfully.” Id.
“[W]hen ruling on a defendant’s motion to dismiss [pursuant
to Rule 12(b)(6)], a judge must accept as true all of the
factual allegations contained in the complaint.” Atherton v.
D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009)
(internal quotations and citations omitted). In addition, the
court must give 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). Even so,
“[t]hreadbare recitals of the elements of a cause of action,

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supported by mere conclusory statements” are not sufficient to
state a claim. Iqbal, 556 U.S. at 678.
III. Analysis
Vesta moves to dismiss CSMI’s complaint pursuant to Federal
Rule of Civil Procedure 12(b)(6). See Def.’s Mot., ECF No. 6. It
makes three arguments: (1) CSMI’s complaint must be dismissed as
time-barred; (2) CSMI is collaterally estopped from bringing its
case against Vesta because the same issues were already
litigated against the District of Columbia in the Superior Court
of the District of Columbia; 2 and (3) CSMI’s complaint must be
dismissed because it fails to state claims of tortious
interference. See id. at 3. 3 Because the Court agrees that CSMI’s

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CSMI sued the District of Columbia in the Superior Court for
the District of Columbia, claiming breach of contract, a breach
of the covenant of good faith, tortious interference with
contractual relations, and tortious interference with a business
opportunity. See Ex. A, ECF No. 6-1 (Civil Case Number 2014-cv4551). Judge Mott granted the District of Columbia’s motion for
summary judgment, finding that the District of Columbia was
entitled to sovereign immunity. See Ex. B, ECF No. 6-1 at 22
(Civil Case Number 2014-cv-4551). Judge Mott also found that
“CSMI cannot establish a prima facie case of tortious
interference with contractual or business relationship” because
“no evidence exists that the District of Columbia actually
interfered with CSMI’s contract” because “CSMI voluntarily
decided not to enforce its claimed rights under the Management
Agreement after DHCD entered the property.” Id. CSMI argues that
Judge Mott’s findings related to its tortious interference claim
are dicta. Pl.’s Opp’n, ECF No. 9 at 7-8. Because the Court
finds that CSMI’s complaint is time-barred, it need not resolve
the significance of Judge Mott’s second finding.
3 When citing electronic filings throughout this Opinion, the
Court cites to the ECF page number, not the page number of the
filed document.
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complaint is time-barred, it need not consider Vesta’s
additional arguments.
A. CSMI’s Claims are Time-Barred
Vesta argues that CSMI was aware of its alleged tortious
actions on May 3, 2014—the date that DHCD took control of the
Park Southern Apartments and contracted with Vesta, thereby
terminating CSMI’s contract. Def.’s Mot., ECF No. 6 at 5-7.
Because the statute of limitations for tortious interference
claims is three years under District of Columbia law, Vesta
contends that CSMI’s complaint—filed on August 28, 2017—is timebarred. Id. at 6 (citing D.C. Code. § 12-301(8)).
It is undisputed that CSMI’s claims are subject to a threeyear statute of limitations pursuant to D.C. Code § 12-301(8).
Pl.’s Opp’n, ECF No. 9 at 4 (“Defendant is correct that the
statute of limitations for tortious interference is three (3)
years.”). At issue, then, is when the three-year statute of
limitations began to run. CSMI contends that the statute of
limitations did not begin to run until it had “actual notice” of
Vesta’s offending conduct, which did not occur until July 14,
2016. Id. at 5. Therefore, CSMI concludes that its August 28,
2017 complaint was timely.
Federal Rule of Civil Procedure 12(b)(6) “is the vehicle
for asserting the affirmative defense of statutory time
limitation.” Peart v. Latham & Watkins LLP, 985 F. Supp. 2d 72,
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80 (D.D.C. 2013). “[B]ecause statute of limitations issues often
depend on contested questions of fact, dismissal is appropriate
only if the complaint on its face is conclusively time-barred.”
Bregman v. Perles, 747 F.3d 873, 875-76 (D.C. Cir. 2014)
(quoting de Csepel v. Republic of Hungary, 714 F.3d 591, 603
(D.C. Cir. 2013)). “As a general matter, a statute of
limitations begins to run when the cause of action ‘accrues’—
that is, when the plaintiff can file suit and obtain relief.”
Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99,
105 (2013)(quotations omitted). “The statute of limitations on a
tort claim ordinarily begins to run when the plaintiff sustains
[the] tortious injury.” Beard v. Edmonson, 790 A.2d 541, 546
(D.C. 2002) (discussing a tortious interference claim under
District of Columbia law). Based on the facts alleged in the
complaint, CSMI was injured on May 3, 2014, when DHCD terminated
CSMI’s management contract due to Vesta’s purported influence
and interference. Compl., ECF No. 1 ¶¶ 29-30, 36-51. Thus, CSMI
should have filed its claim by no later than May 3, 2017.
However, CSMI argues that the discovery rule applies and
thus, its claims are not barred. Pl.’s Opp’n, ECF No. 9 at 4-7.
The discovery rule applies when “the relationship between the
fact of injury and the alleged tortious conduct is obscure.”
Beard, 790 A.2d at 546 (quoting Colbert v. Georgetown Univ., 641
A.2d 469, 472 (D.C.1994) (en banc)). “Under the discovery rule,
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a claim does not accrue until a plaintiff knows, or by the
exercise of reasonable diligence should know, of (1) an injury,
(2) its cause, and (3) some evidence of wrongdoing.” Bradley v.
Nat’l Ass’n of Secs. Dealers Dispute Resolution, Inc., 433 F.3d
846, 849 (D.C. Cir. 2005).
CSMI alleges that it did not have “actual notice” of the
“predicate facts” until July 14, 2016. Pl.’s Opp’n, ECF No. 9 at
5. On July 14, 2016, CSMI received “considerable evidence” of
Vesta’s alleged tortious interference by way of discovery in the
Superior Court litigation against the District of Columbia. Id.
Prior to discovery, CSMI states that it “had no direct
relationship with Vesta nor any basis to know the depth and
breadth of Vesta’s involvement and communications with the
District.” Id. While the Court must accept CSMI’s factual
allegations as true, the complaint makes clear that CSMI had
“reason to suspect that [Vesta] did some wrong,” Bradley, 433
F.3d at 849, when it was injured in May 2014, long before CSMI
had access to discovery in the Superior Court case. For example,
CSMI knew on May 3, 2014 that DHCD issued an immediate
“emergency contract,” allowing Vesta to manage the Park Southern
Apartments. Compl., ECF No. 1 ¶ 30. Vesta’s “emergency contract”
“inappropriately terminated” CSMI’s property management
agreement and “precluded [CSMI’s] opportunity to bid upon and
continue its contractual management of the property contract.”
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Id. Furthermore, CSMI alleges that when Vesta began “performing
the management contract” on May 3, 2014, Vesta ended “CSMI’s
relationship with PSNC” and caused CSMI to lose the income that
“it should have received for its management services.” Id. ¶ 45.
It is not necessary that CSMI have “actual notice” of the
full extent of Vesta’s involvement, as CSMI contends. See Pl.’s
Opp’n, ECF No. 9 at 4-5. “Indeed, a right of action may accrue
before the plaintiff becomes aware of all of the relevant
facts.” Hendel v. World Plan Executive Council, 705 A.2d 656,
661 (D.C. 1997). A plaintiff is on “inquiry notice” pursuant to
the discovery rule “when ‘the plaintiff has reason to suspect
that the defendant did some wrong, even if the full extent of
the wrongdoing is not yet known.’” Bradley, 433 F.3d at 849
(quoting Wagner v. Sellinger, 847 A.2d 1151, 1154 (D.C. 2004)).
To that end, CSMI had reason to suspect that Vesta did “some
wrong,” id., when it was the “immediate” recipient of an
“emergency contract” after having been terminated weeks before,
see generally Compl., ECF No. 1. The complaint establishes that
CSMI knew, “or by the exercise of reasonable diligence should
know” that Vesta contributed in some way to its injury. See
Beard, 790 A.2d at 546 (quotations omitted). CSMI “does not have
‘carte blanche to defer legal action indefinitely if [it] knows
or should know that [it] may have suffered injury and that the

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defendant may have caused [its] harm.’” Id. (quoting Hendel, 705
A.2d at 660-61).
The Court’s conclusion is bolstered by CSMI’s allegations
against the District of Columbia in the Superior Court
litigation. See Civil Case Number 2014-cv-4551 (filed July 24,
2014). In claiming tortious interference against the city, CSMI
alleges that the District of Columbia “collaborated with Vesta
regarding the government’s actions in advance of Defendant’s May
3, [2014] takeover of the property.” Ex. A, ECF No. 6-1 ¶ 18. 4
According to CSMI, DHCD terminated CSMI’s contract in order to
award the emergency management contract to Vesta “because of
political and personal connections on the pretense of an
‘emergency contract’ award.” Id. CSMI also alleged that the
District of Columbia conspired with “non-government private
parties” by entering into an agreement to “sabotage [CSMI’s]
contract and/or business relationship and opportunities in an
unlawful manner.” Id. ¶ 53. Such allegations regarding Vesta’s
and DHCD’s tortious collaboration were made well before CSMI had
access to the 2016 discovery. Compare id., with Pl.’s Opp’n, ECF
No. 9 at 5 (arguing that CSMI required discovery to uncover

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The Court may take judicial notice of public records on a
motion to dismiss. Kaempe v. Myers, 367 F.3d 958, 965 (D.C. Cir.
2004); see also Covad Commc’ns Co. v. Bell Atlantic Corp., 407
F.3d 1220, 1222 (D.C. Cir. 2005) (permitting judicial notice of
facts in public records of other proceedings).
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Vesta’s alleged wrongdoing and as such, CSMI “did not have
notice of the cause . . . [or] actual evidence of Vesta’s
actionable conduct until July 14, 2016”). CSMI does not address
its 2014 allegations that Vesta had collaborated with DHCD to
interfere with CSMI’s management contract, nor does it address
that it made such allegations well before receiving discovery.
The Court finds that CSMI knew or had reason to know about
Vesta’s alleged tortious conduct more than three years before it
filed its claim in this Court. The Court therefore denies CSMI’s
request for “limited discovery on the narrow issue of when CSMI
knew or should have known about Vesta’s tortious conduct.” Pl.’s
Opp’n, ECF No. 9 at 6-7.
IV.

Conclusion and Order

The Court finds that CSMI had reason to know of Vesta’s
alleged tortious conduct in May 2014. Because it is undisputed
that the applicable statute of limitations is three years and
CSMI did not file its claim until August 2017, the Court must
GRANT Vesta’s motion to dismiss and DISMISS CSMI’s claims as
time-barred. This is a final, appealable Order.
SO ORDERED.
Signed:

Emmet G. Sullivan
United States District Judge
July 25, 2018

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