Riston et al v. Klausmair
Filing
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CORRECTED MEMORANDUM OPINION. Signed by Judge Richard D. Bennett on 9/11/18. (krs, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
JOHN RISTON and AMY HARTMAN, *
Plaintiffs,
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v.
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KURT KLAUSMAIR,
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Defendant.
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Civil Action No. RDB-17-03766
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CORRECTED MEMORANDUM OPINION
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This cases arises out of a roof construction project at Gladden Farm in Harford
County, Maryland. On December 20, 2017, Plaintiffs, Mr. John Riston (“Mr. Riston”) and
Dr. Amy Hartman (“Dr. Hartman”), the property owners, filed suit against the Defendant,
Kurt Klausmair (“Mr. Klausmair”), alleging that Mr. Klausmair, a Pennsylvania resident,
breached various duties related to his roof construction efforts on the property. (ECF No.
1.) Count I alleges that Mr. Klausmair breached the roof construction contract by making
various misrepresentations and performing sub-standard work. (Id. at ¶¶ 17-21.) Count II
alleges that Mr. Klausmair breached a settlement agreement purportedly reached when the
contract was terminated. (Id. at ¶¶ 22-25.) Count III alleges that Mr. Klausmair breached a
warranty of workmanlike performance. (Id. at ¶¶ 26-29.) Finally, Count IV alleges that Mr.
Klausmair violated the Maryland Deceptive Trade Practices Act, Md. Ann. Code,
Commercial Law § 13-301, et seq., by making various alleged misrepresentations before and
during performance of the roofing work. (Id. at ¶¶ 30-35.)
Pending now are Mr. Klausmair’s Motion to Dismiss (ECF No. 20), the Plaintiffs’
Motion to Amend Complaint (ECF No. 23), and the Plaintiffs’ Motion for Partial Summary
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Judgment on Count II (ECF No. 30). The submissions have been reviewed, and no hearing
is necessary. See Local Rule 105.6 (D. Md. 2016). For the reasons set forth below, Plaintiffs’
Motion to Amend Complaint (ECF No. 23) is GRANTED. Mr. Klausmair’s Motion to
Dismiss (ECF No. 20), as applied to the three counts and two defendants contained in the
Amended Complaint, is MOOT IN PART, GRANTED IN PART, and DENIED IN
PART. Specifically, the Amended Complaint removes the warranty claim (Count III of the
original Complaint) and adds Klausmair Construction, LLC – thereby rendering moot Mr.
Klausmair’s challenges on those grounds. Mr. Klausmair’s Motion to Dismiss is granted with
respect to the contract claims (Counts I and II) due to Plaintiffs’ lack of standing, and
Counts I and II are DISMISSED WITHOUT PREJUDICE. The Motion to Dismiss is
denied as to the Maryland Deceptive Trade Practices Act count (Count III of the Amended
Complaint). Count III of the Amended Complaint will therefore proceed against Mr.
Klausmair and Klausmair Construction, LLC. Additionally, Mr. Klausmair’s request to
transfer venue (see ECF No. 20 at 13-21) is DENIED as the related Pennsylvania lawsuit
filed by Klausmair Construction LLC has been dismissed for lack of personal jurisdiction.
Finally, the Plaintiffs’ Motion for Partial Summary Judgment on Count II (ECF No. 30) is
DENIED.
BACKGROUND1
Plaintiffs, Mr. Riston and Dr. Hartman, are the owners of the property at 3881 Rocks
Station Road in Harford County, Maryland known as the Gladden Farm, which is a historic
At the motion to dismiss stage, the court must “accept as true all of the well-pleaded allegations and view the complaint
in the light most favorable to the non-moving party.” LeSueur–Richmond Slate Corp. v. Fehrer, 666 F.3d 261, 264 (4th Cir.
2012). As this Court has not yet granted leave to amend the Complaint, these facts are drawn from the original
Complaint, ECF No. 1. Additional facts relevant to Mr. Klausmair’s jurisdictional challenge (ECF No. 20) and to
Plaintiff’s Motion for Partial Summary Judgment (ECF No. 30) are set forth below. See infra.
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home and farm complex located in Street, Harford County, Maryland. (ECF No. 1 at ¶ 2.)
Gladden Farm contains three historically significant structures dating to 1820 and is listed in
the National Register of Historic Places in 1993. (Id.) The Defendant, Mr. Klausmair, is a
resident of Pennsylvania who holds himself out as a roofing and home improvement
contractor, but he has not been licensed by the State of Maryland as a home improvement
contractor or salesman. (Id. ¶¶ 3, 8.)
Based on prior work by Mr. Klausmair, the Plaintiffs discussed with Mr. Klausmair
whether he could help them to renovate a building that would serve as the Plaintiffs’ home.
(Id. ¶ 6.) Klausmair assured them that he was qualified to perform the work competently,
and he provided them a quote. (Id.) Mr. Klausmair sent a contract to Plaintiffs in Maryland
for consideration and execution. (Id.; Contract, Ex. A, ECF No. 1-1.) The Plaintiffs allege
that, at the time of entering into the contract, they were unaware that Mr. Klausmair lacked a
license and that the contract itself did not comply with Maryland law because it omitted
various required notices, including a Maryland Home Improvement Commission (“MHIC”)
license number for Defendant. (ECF No. 1 at ¶¶ 9, 32.) Upon execution of the contract,
Plaintiffs provided Mr. Klausmair with a $100,000 deposit. (Id. ¶ 10.)
Within weeks of the start to the roofing work, other contractors started complaining
to Plaintiffs about issues with the roofing work. (Id. ¶ 12.) Mr. Klausmair eventually agreed
to visit the property to inspect the work. (Id. ¶ 13.) Upon Mr. Klausmair’s visit, the Plaintiffs
confronted Klausmair about his lack of a Maryland license and the work performance, and
they demanded a refund of the deposit. Plaintiffs allege that Mr. Klausmair “agreed with
Plaintiffs to terminate and settle their disagreement by having Plaintiffs return to him the
copper flashing stored on the jobsite in exchange for his returning to Plaintiffs the $100,000
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deposit they provided.” (Id. ¶ 23.) Plaintiffs then provided the flashing, which Klausmair
placed in his truck. (Id. ¶ 14.) Mr. Klausmair gave Plaintiffs the $100,000 check and left. (Id.;
Copy of Check, Ex. B, ECF No. 1-2 at 2.)
However, when Plaintiffs attempted to deposit the check, it was dishonored as Mr.
Klausmair had apparently “stop[ped] payment” on the check. (Id. ¶ 15; Ex. B, ECF No. 1-2.)
In order to mend the defective roof, Plaintiffs arranged to have other workers repair the
problems. (Id. ¶ 16.) Plaintiffs also hired a new roofer who, along with Plaintiffs’ architect,
“confirmed the shortcomings of Klausmair’s installation and workmanship.” (Id.)
On December 20, 2017, Plaintiffs filed suit against the Mr. Klausmair alleging that he
breached various duties related to his roof construction efforts on the property. (ECF No.
1.) Count I alleges that Mr. Klausmair breached the roof installation contract by making
various misrepresentations and performing sub-standard work. (Id. at ¶¶ 17-21.) Count II
alleges that Mr. Klausmair breached a settlement agreement purportedly reached when the
contract was terminated. (Id. at ¶¶ 22-25.) Count III alleges that Mr. Klausmair breached a
warranty of workmanlike performance. (Id. at ¶¶ 26-29.) Finally, Count IV alleges that Mr.
Klausmair violated the Maryland Deceptive Trade Practices Act, Md. Ann. Code,
Commercial Law § 13-301, et seq., by making various alleged misrepresentations before and
during performance of the roofing work. (Id. at ¶¶ 30-35.) Pending now are Defendant
Klausmair’s Motion to Dismiss (ECF No. 20), the Plaintiffs’ Motion to Amend Complaint
(ECF No. 23), and the Plaintiffs’ Motion for Partial Summary Judgment on Count II (ECF
No. 30).
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STANDARDS OF REVIEW
I.
Amendments under Rule 15
Under Rule 15(a), a party may amend a pleading once as a matter of course within
“21 days after service of a responsive pleading,” if such a response is required. Fed. R. Civ.
P. 15(a)(1). After this initial window has passed, “a party may amend its pleading only with
the opposing party’s written consent or the court’s leave. The court should freely give leave
when justice so requires.” Fed. R. Civ. P. 15(a)(2). While leave to file an amended complaint
should be freely given when justice requires, it may be denied where the amendment would
be futile. Equal Rights Ctr. v. Niles Bolton Associates, 602 F.3d 597, 603 (4th Cir. 2010). An
amendment is futile when it is insufficient on its face. Johnson v. Oroweat Foods Co., 785 F.2d
503, 510 (4th Cir. 1986). A district court properly denies leave to amend a pleading when a
proposed amendment fails to “correct[] the fundamental defect in the complaint.” New
Beckley Mining Corp. v. Int’l Union, United Mine Workers, 18 F.3d 1161, 1164 (4th Cir. 1994).
II.
Motion to Dismiss under Rule 12(b)(1)
A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure for
lack of subject-matter jurisdiction challenges a court’s authority to hear the matter brought
by a complaint. See Davis v. Thompson, 367 F. Supp. 2d 792, 799 (D. Md. 2005). This
jurisdictional attack may proceed either as a facial challenge, asserting that the allegations in
the complaint are insufficient to establish subject-matter jurisdiction, or a factual challenge,
asserting “that the jurisdictional allegations of the complaint [are] not true.” Kerns v. United
States, 585 F.3d 187, 192 (4th Cir. 2009) (citation omitted).2 In a facial challenge, a court will
As discussed below, Defendant’s challenge to Plaintiffs’ standing presents a facial challenge to subject-matter
jurisdiction as the Defendants do not dispute alleged facts that sufficiently establish constitutional standing – and
thereby subject-matter jurisdiction.
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grant a motion to dismiss for lack of subject-matter jurisdiction “where a claim fails to allege
facts upon which the court may base jurisdiction.” Davis, 367 F. Supp. 2d at 799. In making
this determination, “all the facts alleged in the complaint are assumed to be true and the
plaintiff, in effect, is afforded the same procedural protection as he would receive under a
Rule 12(b)(6) consideration.” Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982).3
III.
Motion to Dismiss under Rule 12(b)(6)
Rule 12(b)(6) of the Federal Rules of Civil Procedure authorizes the dismissal of a
complaint if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6).
To survive a motion under Fed. R. Civ. P. 12(b)(6), a complaint must contain facts sufficient
to “state a claim to relief that is plausible on its face.” Bell Atl., Corp. v. Twombly, 550 U.S. 544,
570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 684 (2009). In reviewing a Rule 12(b)(6) motion to
dismiss, the court must “accept as true all of the well-pleaded allegations and view the
complaint in the light most favorable to [Plaintiff].” Quintana v. City of Alexandria, et al., 692
F. App’x 122, 125 (4th Cir. 2017) (citing LeSeur-Richmond Slate Corp. v. Fehrer, 666 F.3d 261,
264 (4th Cir. 2012)); Semenova v. Maryland Transit Admin., 845 F.3d 564, 567 (4th Cir. 2017).
Without converting a motion to dismiss to one for summary judgment, a court may
consider documents that are “explicitly incorporated into the complaint by reference and
those attached to the complaint as exhibits . . . .” Goines v. Valley Cmty. Servs. Bd., 822 F.3d
159, 166 (4th Cir. 2016) (internal citations omitted). “When the plaintiff attaches or
Where the challenge is factual, “the district court is entitled to decide disputed issues of fact with respect to subject
matter jurisdiction.” Kerns, 585 F.3d at 192. The court “may regard the pleadings as mere evidence on the issue and may
consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Velasco v.
Gov’t of Indon., 370 F.3d 392, 398 (4th Cir. 2004); see also Sharafeldin v. Md. Dept. of Pub. Safety & Corr. Servs., 94 F. Supp. 2d
680, 684-85 (D. Md. 2000). In resolving a factual challenge raised in a motion to dismiss, the court “should apply the
standard applicable to a motion for summary judgment . . . ” Richmond, Fredericksburg & Potomac R.R. v. U. S., 945 F.2d
765, 768 (4th Cir. 1991) (internal citations omitted); see also Parson v. Miles, No. 17-0708-RBH-KDW, 2018 WL 1477601,
at *1 (D.S.C. Mar. 27, 2018).
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incorporates a document upon which his claim is based, or when the complaint otherwise
shows that the plaintiff has adopted the contents of the document, crediting the document
over conflicting allegations in the complaint is proper.” Id. at 167.
IV.
Motion for Summary Judgment under Rule 56
Rule 56 of the Federal Rules of Civil Procedure provides that a court “shall grant
summary judgment if [a] movant 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(c). A
material fact is one that “might affect the outcome of the suit under the governing law.”
Libertarian Party of Va. v. Judd, 718 F.3d 308, 313 (4th Cir. 2013) (quoting Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986)). A genuine issue over a material fact exists if “the
evidence presents a sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at 251–52; see
also Drewitt v. Pratt, 999 F.2d 774, 778-79 (4th Cir. 1993) (explaining that a court must abide
by its affirmative obligation to prevent factually unsupported claims and defenses from going
to trial).
DISCUSSION
Before this Court decides whether to dismiss any claims or parties from this action,
this Court will first address Plaintiff’s Motion to Amend Complaint (ECF No. 23) in order
to establish which counts and parties should even be under consideration.
I.
Motion to Amend Complaint
Plaintiffs filed their Motion to Amend Complaint (ECF No. 23) on May 11, 2018,
which was 14 days after Mr. Klausmair filed a Motion to Dismiss (ECF No. 20). In an
attempt to resolve two arguments in the Defendant’s Motion to Dismiss, the proposed
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Amended Complaint removes the breach of warranty claim (Count III in the original
Complaint) and adds Klausmair Construction, LLC as a co-defendant to be held jointly and
severally liable under each of the three counts. (ECF No. 23-1.)
Defendant concedes that the timing of the motion places the proposed amendment
within the 21-day period for amendments as of right under Rule 15(a)(1), but he argues that
– by filing a motion instead of simply entering the Amended Complaint – Plaintiffs have waived
the procedural guarantee of Rule 15(a)(1). (ECF No. 28 at 1 (citing Coventry First, LLC v.
McCarty, 605 F.3d 865, 870 (11th Cir. 2010); Glazer v. Chase Home Finance, LLC, 704 F3d 453,
458 (6th Cir. 2013)).) Defendant asks this Court to exercise its discretion under Rule 15(a)(2)
to reject the proposed Amended Complaint in its entirety as “futile” based upon the
arguments laid out in his briefs in support of his Motion to Dismiss (ECF No. 20).
As an initial matter, it is not clear that the filing of a motion to amend automatically
waives the protections of Rule 15(a)(1) in the Fourth Circuit. Indeed, this Court is skeptical
that a litigant should be penalized for carefully seeking the Court’s confirmation that Rule
15(a)(1) applies. Furthermore, Plaintiffs’ motion explicitly asserts, “Pursuant to Federal Rule
of Civil Procedure 15(a)(1), Plaintiffs can file this Amended Complaint as of right.” (ECF
No. 23 at 2.) Waiver of Rule 15(a)(1) in this case is therefore inappropriate. Even if this
Court were to exercise discretion under Rule 15(a)(2), “justice” in this case will be efficiently
served by first granting leave to amend and then considering what portions, if any, of the
Amended Complaint remain viable after analyzing Defendant’s Motion to Dismiss.
Accordingly, the Plaintiffs’ Motion to Amend Complaint (ECF No. 23) is GRANTED.
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II.
Motion to Dismiss
In support of his Motion to Dismiss (ECF No. 20), Mr. Klausmair advances
numerous grounds for dismissing this action. First, he asserts under Rule 12(b)(1) that this
action should be dismissed for lack of subject-matter jurisdiction because the Plaintiffs lack
standing to bring any of the claims in the original Complaint. (Def.’s Mem. Mot. Dismiss,
ECF No. 21 at 4-10.) Second, the Defendant contends that under Rules 12(b)(6) and
17(a)(1) both Plaintiffs and Mr. Klausmair, individually, are not the “real part[ies] in
interest.” (Id. at 10-13.) Third, Defendant argues that any remaining claims should be filed in
or transferred to the United States District Court for the Eastern District of Pennsylvania,
where Klausmair Construction, LLC initiated a related suit against Gladden Farm, LLC and
Mr. Riston. (Id. at 13-21.)
Plaintiffs assert broadly that the Amended Complaint – which shall be formally
entered as the operative complaint pursuant to this Memorandum Opinion and
accompanying Order – renders moot the entire Motion to Dismiss. (Ps’ Mem. Resp., ECF
No. 24-1 at 5.) However, the Amended Complaint only addresses two issues raised by the
Defendant. In challenging the Court’s subject-matter jurisdiction, the Defendant argues that
Plaintiffs lack standing to bring a breach of warranty claim (Count III in the original
Complaint); the Amended Complaint eliminates this claim entirely (see ECF No. 23-1).
Defendant has also argued that this action should be dismissed because the Plaintiffs failed
to name Klausmair Construction, LLC as defendant, but the Amended Complaint has added
this entity as a co-defendant that is jointly and severally liable under all counts of the
Amended Complaint. (Id.) With only these two contentions rendered moot by the Amended
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Complaint, this Court will now proceed to address the remainder of Mr. Klausmair’s
arguments.
A. Standing
This Court turns first to Mr. Klausmair’s argument that Mr. Riston and Dr. Hartman
lack standing to bring this suit because only Gladden Farm, LLC was a party to the contracts
at issue.4 The Defendant has not clarified whether his challenge is based on the “injury in
fact” requirement of constitutional standing or on the judicial doctrine of prudential
standing, which generally prevents a party with constitutional standing from enforcing the
rights of third parties. Freilich v. Upper Chesapeake Health, Inc., 313 F.3d 205, 215 (4th Cir.
2002) (quoting Powers v. Ohio, 499 U.S. 400, 410–11, 111 S. Ct. 1364 (1991)).5 This Court will
therefore analyze whether at least one of the Plaintiffs has both forms of standing to bring each
claim in the Amended Complaint. Bostic v. Schaefer, 760 F.3d 352, 370 (4th Cir. 2014).6
1. Constitutional Standing
Federal jurisdiction under Article III of the United States Constitution is limited to
“actual cases or controversies,” and the “‘irreducible constitutional minimum’ of standing
4 One response by the Plaintiffs is essentially that Mr. Klausmair should be judicially estopped from challenging Mr.
Riston’s standing because Klausmair Construction, LLC has filed a Complaint – verified by Mr. Klausmair – against Mr.
Riston (not Dr. Hartman) individually in the Eastern District of Pennsylvania. (See ECF No. 24 at 5-6.) Plaintiffs call Mr.
Klausmair’s inconsistent positions “disingenuous, in bad faith and near sanctionable,” (id. at 6), but Plaintiffs cite no
authority and fail to establish that the U.S. District Court for the Eastern District of Pennsylvania ever “accepted” Mr.
Klausmair’s factual assertion regarding Mr. Riston being bound under the contracts at issue. See Emergency One, Inc. v. Am.
Fire Eagle Engine Co., 332 F.3d 264, 274 (4th Cir. 2003) (finding that judicial estoppel requires that the first court “accept”
the prior factual position). Indeed, the Pennsylvania action was dismissed for lack of personal jurisdiction. Klausmair
Constr., LLC v. Gladden Farm, LLC, No. 5:18-CV-00358, 2018 WL 3707380, at *5 (E.D. Pa. Aug. 3, 2018). This Court
therefore finds judicial estoppel unwarranted in this case.
5 The Supreme Court recently observed that most of its own decisions suggest that third-party standing remains a matter
of prudential standing. Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 127 n. 3, 134 S. Ct. 1377, 1386,
188 L. Ed. 2d 392 (2014). At this stage, constitutional and prudential standing are governed by different standards of
review. See Bluefeld v. Cohen, No. PX-15-2857, 2017 WL 1546406, at *4 n.2 (D. Md. Apr. 27, 2017), aff’d, 697 F. App’x 788
(4th Cir. 2017), cert. denied, 138 S. Ct. 1701, 200 L. Ed. 2d 958 (2018) (citing Doe v. Virginia Dep’t of State Police, 713 F.3d
745, 753 (4th Cir. 2013)) (noting that constitutional standing, which goes to subject-matter jurisdiction, generally falls
under Rule 12(b)(1) while prudential standing is properly addressed under Rule 12(b)(6)).
6 As the Supreme Court has emphasized, “standing in federal court is a question of federal law, now state law.”
Hollingsworth v. Perry, 570 U.S. 693, 715, 133 S. Ct. 2652, 2667 (2013).
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consists of three elements.” Spokeo, Inc. v. Robinson, 136 S. Ct. 1540, 1547 (2016) (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). A plaintiff must show (1) an injury in
fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is
likely to be redressed by a favorable judicial decision. Id. (citing Lujan, 504 U.S. at 560-61).7
Mr. Klausmair’s challenge essentially goes to first element, injury in fact. This element is met
when a plaintiff demonstrates “‘an invasion of a legally protected interest’ that is ‘concrete
and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Id. at 1548
(citing Lujan, 504 U.S. at 560).
While the Defendant contends that the Plaintiffs were not parties to the contracts at
issue, he does not challenge Plaintiffs’ allegation that they own Gladden Farm, the property
on which Defendant provided his services. Plaintiffs specifically allege, “Plaintiffs, John
Riston and Amy Hartman, are the owners of the property at 3881 Rocks Station Road in
Harford County, Maryland known as the Gladden Farm” (Am. Compl., ECF No. 23-1 at ¶
2), and they attach the Deed naming both individuals as the grantees (Ex. A to Am. Compl,
ECF No. 23-1 at 12-20). The Defendants allegedly performed “faulty, defective and
substandard work” on the Plaintiffs’ home, which resulted in over $100,000 dollars in
damages, and Defendants stopped payment on a check allegedly intended to remedy those
damages. (Id. at ¶¶ 1, 16, 18, 24.) These allegations plausibly establish that the Plaintiffs
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The plaintiff bears the burden of establishing these three elements, id. (citing FW/PBS, Inc. v. Dallas, 493 U.S. 215, 231,
110 S. Ct. 596 (1990)), and at the motion to dismiss stage, the complaint must “clearly . . . allege facts demonstrating”
each element of standing, id. (citing Warth v. Seldin, 422 U.S. 490, 500, 95 S. Ct. 2197 (1975)). Constitutional standing
goes to the Court’s jurisdiction, so this question is governed by Rule 12(b)(1). White Tail Park, Inc. v. Stroube, 413 F.3d
451, 458 (4th Cir. 2005). Facial challenges under Rule 12(b)(1) implicate the same standard of review as Rule 12(b)(6).
Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982).
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suffered an injury in fact sufficient to provide them with constitutional standing for the
purpose of all three counts. Spokeo, 136 S. Ct. at 1548.8
2. Prudential (Third-Party) Standing
This Court now turns to the question of whether “the prudential limitation on thirdparty standing” prevents the Plaintiffs from asserting any of the three claims. Freilich v. Upper
Chesapeake Health, Inc., 313 F.3d 205, 215 (4th Cir. 2002)).9 The United States Court of
Appeals for the Fourth Circuit has held that in order to enforce a third party’s rights, “a
plaintiff must demonstrate: (1) an injury-in-fact; (2) a close relationship between herself and
the person whose right she seeks to assert; and (3) a hindrance to the third party’s ability to
protect his or her own interests.” Id. (citing Powers v. Ohio, 499 U.S. 400, 410–11, 111 S. Ct.
1364 (1991)).10
Regarding the contracts at issue in Counts I and II, the Plaintiffs do not assert their
own contractual rights. While the Plaintiffs allege that they – rather than Gladden Farm, LLC
– entered into the construction contract and settlement agreement (ECF No. 1 at ¶¶ 18, 23),
the Plaintiffs’ own exhibits override this allegation. 11 Specifically, the construction contract
was signed by Mr. Riston as the “President” of “Gladden Farm, LLC.” (Ex. C to Amended
Complaint, ECF No. 23-1 at 26; see also ECF No. 1-1 at 3.) Dr. Hartman did not sign the
Even if this Court were to consider additional facts and apply the summary judgment standard, the Defendant does not
dispute the Plaintiffs’ ownership stake in the property. Thus, the issue of who exactly entered into the contracts would
be immaterial to the question of injury in fact when the Defendants allegedly damaged a home owned by the Plaintiffs
and stopped payment on a check allegedly intended to remedy those damages.
9 As the question of prudential standing is non-jurisdictional, United States v. Day, 700 F.3d 713, 721 (4th Cir. 2012), Rule
12(b)(6) provides the appropriate standard of review. See Bluefeld, No. PX-15-2857, 2017 WL 1546406, at *4 n.2; see also
Lexmark 572 U.S. at 128 n. 4 (suggesting that matters of prudential standing are not jurisdictional).
10 The Defendant has cited CX Reinsurance Co. Ltd. v. Levitas, 207 F.Supp.3d 566, 570 (D. Md. 2016) to distinguish
between “third-party beneficiaries” and “incidental beneficiaries,” but that insurance contract case does not address
standing or apply the three-part test in Freilich, 313 F.3d at 215.
11 This Court may properly consider documents attached to the Amended Complaint as well as documents integral
thereto. Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 166 (4th Cir. 2016). “When the plaintiff attaches or incorporates a
document upon which his claim is based, or when the complaint otherwise shows that the plaintiff has adopted the
contents of the document, crediting the document over conflicting allegations in the complaint is proper.” Id. at 167.
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contract in any capacity. (Id.) Regarding the settlement agreement, the $100,000.00 check
from Klausmair Construction was made out to “Gladden Farm,” not to either of the
Plaintiffs individually. (ECF No. 23-1 at 29.)12 The Plaintiffs therefore seek to enforce a third
party’s contractual rights. Under the third requirement in Freilich, however, Plaintiffs have
failed to allege any hindrance to Gladden Farm, LLC’s ability to bring Counts I and II on its
own behalf. Freilich, 313 F.3d at 215. Mr. Klausmair’s Motion to Dismiss (ECF No. 20) is
therefore GRANTED IN PART, and Counts I and II are DISMISSED WITHOUT
PREJUDICE.13
Mr. Klausmair would also have this Court dismiss Count III for the same reason, but
“the prudential limitation on third-party standing” only applies if the Plaintiffs’ claim under
the Maryland Deceptive Trade Practices Act relies on a third party’s rights. Freilich, 313 F.3d
at 215. The initial question of whether these Plaintiffs possess their own rights under the
statute is a matter of statutory interpretation, not prudential standing or subject-matter
jurisdiction. See Lexmark, at 572 U.S. at 128 n.3 and n.4 (quoting Verizon Md. Inc. v. Public
Serv. Comm’n of Md., 535 U.S. 635, 642–643, 122 S. Ct. 1753, (2002)) (observing that while
this issue has been labeled “statutory standing,” the “absence of a valid (as opposed to
arguable) cause of action does not implicate subject-matter jurisdiction”).
Furthermore, the Plaintiffs attached a bank record showing “Gladden Farm LLC” as the account holder, not either of
the Plaintiffs individually (ECF No. 23-1 at 28), and the Plaintiffs have not alleged that Gladden Farm, LLC assigned any
rights or duties under the contracts, Cf. Sprint Communications Co., L.P. v. APCC Services, Inc., 554 U.S. 269, 128 S. Ct.
2531, 171 L. Ed. 2d 424 (2008) (finding that assignees have first-party standing even though litigation proceeds would be
returned to assignor).
13 This Court will grant a motion for leave to file a second amended complaint that adds Gladden Farm LLC under
Counts I and II or otherwise fulfills Plaintiffs’ third-party standing to bring Counts I and II. As is reflected in this
Court’s analysis of the Maryland Deceptive Trade Practices Act, it is doubtful that Gladden Farms would qualify as a
“consumer” under Count III. See Morris v. Osmose Wood Preserving, 340 Md. 519, 540-41, 667 A.2d 624, 635 (1995) (finding
that builders cannot sue manufacturers under the MDTPA as it is only the ultimate consumer who holds the protected
interest in the personal, family, household, or agricultural uses of the goods or services).
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B. Authority to Sue under the Maryland Deceptive Trade Practices Act (Count
III)
As this question of Plaintiffs’ authority to sue under the Maryland Deceptive Trade
Practices Act (“MDTPA”), Md. Code, Commercial Law § 13-301, et seq., does not implicate
this Court’s jurisdiction, Rule 12(b)(6) provides the appropriate standard of review. See id.;
Bluefeld, No. PX-15-2857, 2017 WL 1546406, at *4 n.2. Plaintiff must therefore make out a
plausible claim to relief under the statute, and this Court should accept as true all well-pled
factual allegations. Iqbal, 556 U.S. at 678. The MDTPA provides, “A person may not engage
in any unfair or deceptive trade practice, as defined in this subtitle or as further defined by
the Division, in . . . [t]he sale, lease, rental, loan, or bailment of any consumer goods,
consumer realty, or consumer services.” Id. § 13-303.14 “Consumer services” includes any
“[b]uilding repair or improvement service” that is provided “primarily for personal,
household, family, or agricultural purposes.” Id. §§ 13-101(d)(1) and (j)(1). “A consumer who
is subjected to a violation of [the MDTPA]” is authorized to enforce the act by filing a
complaint in court. Id. § 13-401. The term “consumer” is defined as “an actual or
prospective purchaser, lessee, or recipient of consumer goods, consumer services, consumer
realty, or consumer credit.” Id. § 13-101(c)(1).
Mr. Klausmair argues that the Plaintiffs have failed to establish that the roofing
services were “primarily for personal, household, family, or agricultural purposes,” id. § 13101(d)(1), and to show that the Plaintiffs, who were not parties to the construction contract,
are “consumer[s]” under § 13-101(c)(1). As to the purpose of the roofing services, this court
On October 1, 2018, a recent amendment adding, inter alia, “abusive” to the list of prohibited trade practices in § 13303 will take effect. See Financial Consumer Protection Act of 2018, 2018 Maryland Laws Ch. 731 (H.B. 1634). The
other statutory provisions in at issue in the instant motion, however, have not been altered.
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must accept as true the allegations that the home was being renovated “for use as [the
Plaintiffs’] primary residence” and that the contract involved “work on Plaintiffs’ home.”
(ECF No. 1 at ¶ 1.) This allegation plausibly fulfills the definition of “consumer services”
under § 13-101(d)(1). In terms of the definition of “consumer,” the statute’s broad language
reaches a “prospective purchaser, lessee, or recipient of . . . consumer services,” Md. Code,
Commercial Law § 13-101 (emphasis added). Plaintiffs, who own the property and who
intend to live in the home once renovated, are plausibly “recipients” of the roofing services
at issue.
That Gladden Farm, LLC initially contracted for the work does not change the
analysis. The statute itself does not require contractual privity, and the Maryland Court of
Appeals has observed that “one who directly sells or offers to sell to consumers” is not “the
only entity that can engage in a deceptive trade practice.” Morris v. Osmose Wood Preserving, 340
Md. 519, 541, 667 A.2d 624, 635 (1995). For example, “[i]t is quite possible that a deceptive
trade practice committed by someone who is not the seller would so infect the sale or offer
for sale to a consumer that the law would deem the practice to have been committed ‘in’ the
sale or offer for sale.” Id.; see also Backyard Paradise of Edgewood, Inc. v. Walker, No. 1544, Sept.
Term 2016, 2018 WL 300405, at *8 (Md. Ct. Spec. App. Jan. 5, 2018), cert. denied, 458 Md.
582, 183 A.3d 157 (2018) (“Liability under the Consumer Protection Act extends to third
parties where his actions were so integral that the sale of consumer goods would not have
proceeded without their involvement.”); Lawley v. Northam, No. ELH-10-1074, 2011 WL
6013279, at *20 (D. Md. Dec. 1, 2011) (finding that residents of property, which was actually
purchased by a relative, were “consumers” when the defendants engaged directly with the
prospective residents). In this case, the Plaintiffs, whether acting in personal or
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representative capacities, allegedly communicated directly with the Defendants regarding
their qualifications for the job. (ECF No. 23-1 at ¶ 7-8; ECF No. 1 at ¶ 6.) Plaintiffs further
allege that they would have refused to allow the work had they “known that Klausmair was
unlicensed and that he would use unskilled and unqualified workers to perform the work on
Plaintiffs’ home.” (ECF No. 23-1 at ¶ 35.) Notwithstanding the involvement of Gladden
Farms, LLC, the Defendants’ statements directly to the Plaintiffs were integral to their
acceptance of the roofing services performed on their home. Morris, 340 Md. at 541; Backyard
Paradise, 2018 WL 300405, at *8; Lawley, 2011 WL 6013279, at *20. Plaintiffs have therefore
plausibly established their own authority to bring a claim under the MDTPA.
C. Real Parties in Interest under Rule 17(a)
Mr. Klausmair’s challenge under Rule 17(a) that the Plaintiffs are not the “real party
in interest” rests on the same standing and statutory arguments addressed above. Rule
17(a)(1) requires that an action “be prosecuted in the name of the real party in interest,” and
explicitly provides that “a party authorized by statute” fulfills this requirement even if the
action is intended to benefit a non-party. Fed. R. Civ. P. 17(a)(1). The purpose of the real
party in interest requirement is to ensure that the action is brought by “a person who
possesses the right to enforce the claim and who has a significant interest in the litigation.”
Virginia Elec. & Power Co. v. Westinghouse Elec. Corp., 485 F.2d 78, 83 (4th Cir. 1973).
In this case, the Plaintiffs are authorized by the MDTPA to bring a claim against the
Defendants, see supra, and they have a “significant interest” in vindicating those rights based
on the alleged damage to their home. Accordingly, Defendant’s effort to dismiss this entire
action for noncompliance with Rule 17 fails.
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D. Mr. Klausmair Individually
Mr. Klausmair’s Motion to Dismiss seeks to dismiss the entire action because
“Plaintiffs erroneously sued the wrong defendant, Kurt Klausmair in his individual capacity.”
(ECF No. 12 at 13.) While the Amended Complaint partially addresses this argument by
adding Klausmair Construction, LLC as a Defendant, the Amended Complaint retains “Kurt
Klausmair d/b/a Klausmair Construction” as a Defendant. (ECF No. 23-1.) Having already
dismissed Counts I and II, this Court must now determine whether Count III of the
Amended Complaint states a plausible claim against Mr. Klausmair in his individual capacity.15
The Amended Complaint largely alleges that both Kurt Klausmair and Klausmair
Construction LLC (collectively, “Defendants”) acted in concert throughout the transaction.
For example, the Amended Complaint asserts:
Plaintiffs[] discussed with Defendants whether Defendants were qualified to
and could complete work on Gladden Farm which Plaintiffs had begun to
renovate so that they could make it their permanent residence. Defendants
assured Plaintiffs that they were qualified, could perform the work
competently and provided them a quote for performing the work.
(ECF No. 23-1 at ¶ 7). Regarding Mr. Klausmair’s alleged deceptive and unfair trade
practices under the MDTPA, the Amended Complaint states that “[h]ad Plaintiffs been
aware that the contract which they executed was sold by an unlicensed salesmen, that it was
illegal under Maryland law and that Defendants were not qualified to perform the work, they
never would have executed the contract for the roofing work.” (Id. ¶ 33.) As Mr. Klausmair
is alleged to have been involved in all stages of the transaction, it is reasonable to infer that
In reply (ECF No. 26 at 4-5), Mr. Klausmair re-characterizes this issue as a matter of the Plaintiffs’ “standing” and
“subject-matter jurisdiction” in an apparent attempt to have this Court consider Mr. Klausmair’s Declarations (ECF
Nos. 22, 27), documents that are outside the pleadings and not integral thereto. This attempt is misguided and
unfounded, see Lexmark, at 572 U.S. at 128 n.3 and n.4, so this Court will disregard these submissions.
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Mr. Klausmair is the “unlicensed salesm[a]n” who deceived the Plaintiffs. As addressed
above, the Plaintiffs have attached numerous documents to the Amended Complaint. The
construction contract (ECF No. 23-1 at 24) and check (ECF No. 23-1 at 29) both indicate
that “Klausmair Construction” transacted with “Gladden Farm, LLC” in providing the
roofing services at issue. Rather than rule out Mr. Klausmair as a Defendant, these
documents are consistent with both Defendants’ involvement in the transaction at issue.16
The Plaintiffs have therefore stated a plausible claim that Kurt Klausmair, doing business as
“Klausmair Construction,” is liable under the Maryland Deceptive Trade Practices Act, Md.
Ann. Code, Commercial Law § 13-301, et seq. Mr. Klausmair’s Motion to Dismiss is therefore
DENIED IN PART, and Count III will proceed against both Defendants.
E. Transfer
Mr. Klausmair’s Motion to Dismiss also contends that any remaining claims should
be transferred to the Eastern District of Pennsylvania, where Klausmair Construction, LLC
had commenced a suit against Gladden Farm, LLC and Mr. Riston regarding the same
underlying dispute at issue in this case. Mr. Klausmair invokes the “first-to-file rule” and the
broader considerations for transferring venue.
The “first-to-file rule” provides that when “choosing among possible venues when
parallel litigation has been instituted in separate courts,” priority goes “to the party who first
establishes jurisdiction.” LWRC Int’l, LLC v. Mindlab Media, LLC, 838 F. Supp. 2d 330, 337–
38 (D. Md. 2011) (quoting Nw. Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir.
Without leave, the Plaintiffs filed an untimely supplement inviting this Court to consider various documents related to
the bank account associated with the check from “Klausmair Construction” (ECF Nos. 25-1 through 25-4), but again,
this Court cannot consider those documents under Rule 12(b)(6). The Plaintiffs also contend that Mr. Klausmair is
individually liable under the Maryland Code, Business Regulation, § 8-301, et seq. (see ECF No. 23 at 1-2; ECF No. 24-1
at 7), but the Amended Complaint does not seek relief under this statutory provision.
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1993); see also Carbide & Carbon Chems. Corp. v. U.S. Indus. Chems., 140 F.2d 47, 49 (4th Cir.
1944). Similarly, 28 U.S.C. § 1404(a) only permits transfer of a case to jurisdictions where “it
might have been brought,” which requires personal jurisdiction. D2L Ltd. v. Blackboard, Inc.,
671 F. Supp. 2d 768, 778 (D. Md. 2009); see also Wright & Miller, Forums to which Transfer
Possible, 15 Fed. Prac. & Proc. Juris. § 3845 (4th ed.) (observing that “courts are uniform in
requiring that the transferee have personal jurisdiction over the defendant”).
While the Pennsylvania action may have been filed first, that action has since been
dismissed for lack of personal jurisdiction. Klausmair Constr., LLC v. Gladden Farm, LLC, No.
5:18-CV-00358, 2018 WL 3707380, at *5 (E.D. Pa. Aug. 3, 2018). Mr. Klausmair has
therefore failed to fulfill the jurisdictional requirements for the requested transfer of this
case. D2L, 671 F. Supp. 2d at 778. Accordingly, Mr. Klausmair’s transfer request is
DENIED.
III.
Motion for Partial Summary Judgment as to Count II
This Court has already dismissed Count II (breach of settlement agreement) for lack
of standing (see supra; ECF No. 23-1 at 28-29 (showing alleged settlement check was made
payable to Gladden Farm, LCC, not Mr. Riston or Dr. Hartman)), so the Plaintiffs’ Motion
for Partial Summary Judgment on that count must therefore be DENIED.
CONCLUSION
For the reasons set forth above, Plaintiffs’ Motion to Amend Complaint (ECF No.
23) is GRANTED. Mr. Klausmair’s Motion to Dismiss (ECF No. 20), as applied to the
three counts and two defendants contained in the Amended Complaint, is MOOT IN
PART, GRANTED IN PART, and DENIED IN PART. Specifically, the Amended
Complaint removes the warranty claim (Count III of the original Complaint) and adds
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Klausmair Construction, LLC – thereby rendering moot Mr. Klausmair’s challenges on those
grounds. Mr. Klausmair’s Motion to Dismiss is granted with respect to the contract claims
(Counts I and II) due to Plaintiffs’ lack of standing, and Counts I and II are DISMISSED
WITHOUT PREJUDICE. The Motion to Dismiss is denied as to the Maryland Deceptive
Trade Practices Act count (Count III of the Amended Complaint). Count III of the
Amended Complaint will therefore proceed against Mr. Klausmair and Klausmair
Construction, LLC. Additionally, Mr. Klausmair’s request to transfer this case (see ECF No.
20 at 13-21) is also DENIED. Finally, the Plaintiffs’ Motion for Partial Summary Judgment
on Count II (ECF No. 30) is DENIED.
A separate Order follows.
Date: September 11, 2018
_/s/________________________
Richard D. Bennett
United States District Judge
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