Solid Concepts, LLC v. Fallen Soldiers, Inc. et al

Filing 73

MEMORANDUM OPINION (c/m to Defendants Fallen Soldiers, Inc., Karen Bryant Coachman, and The Alliance for Global Business Strategy, Inc. 8/9/10 sat). Signed by Chief Judge Deborah K. Chasanow on 8/9/10. (sat, Chambers)

Solid Concepts, LLC v. Fallen Soldiers, Inc. et al

Doc. 73

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND SOLID CONCEPTS, LLC. v. FALLEN SOLDIERS, INC., ET AL. : : : : : Civil Action No. DKC 09-2377

MEMORANDUM OPINION Presently pending and ready for resolution in this case are (1) a motion and to (2) dismiss a filed to by Defendant filed Isaac by Gibson

(Paper 51)

motion

dismiss

Defendant

Gaylord National, LLC.

(Paper 50).

The issues have been fully

briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow,

Defendants' motions will be granted, with leave to amend as to Gaylord National, LLC. I. Background This case arises from investments made by Plaintiff Solid Concepts, LLC in relation to "The African & International

Friends Inaugural Ball" ("Ball") that was to be held on January 20, 2009, to commemorate the inauguration of President Barack Obama. operates Defendant Gaylord National, LLC ("Gaylord") owns and the Gaylord National Resort and Convention Center

("Convention Center") where the Ball was to be held.

Defendant

Dockets.Justia.com

Isaac Gibson ("Gibson") is an individual whose role in the Ball is unclear. Plaintiff alleges that Fallen Soldiers, Inc., The

Alliance for Business Strategy, Inc., Karen Bryant Coachman, and Walter Fauntroy, who are also Defendants in this action,

organized the Ball, and solicited investments in the Ball from Plaintiff. (Paper 48 ¶ 10). On or about December 26, 2008,

Plaintiff entered into an agreement (the "Reservation Contract") with Gaylord to reserve a block of 576 rooms at the Convention Center for January 20 and 21, 2009. at 19). (Paper 48, Attach. 2, Plaintiff

The cost of these rooms was $1,155,875.44.

alleges that Fallen Soldiers, Inc., The Alliance for Business Strategy, Inc., Karen Bryant Coachman, and Walter Fauntroy,

assured Plaintiff that they would resell the rooms as part of sponsorship packages for the Ball and repay Plaintiff double its investment. (Paper 48 ¶ 18). Plaintiff also alleges that it

paid expenses related to the Ball on behalf of Fallen Soldiers, Inc., which Gibson orally promised to repay. (Paper 48 ¶ 26).

On or about May 8, 2009, Plaintiff commenced this action in the Circuit Court of the Fifteenth Judicial Circuit in Palm Beach County, Florida. (Paper 1 ¶¶ 1, 5). On June 2, 2009,

Gaylord removed this action to the United States District Court for the Southern District of Florida, West Palm Beach Division. (Id.). On September 8, 2009, the case was transferred to the 2

United

States

District

Court

for

the

District

of

Maryland.

(Paper 37).

Plaintiff's Amended Complaint contains ten counts,

three against Gaylord: Breach of Contract (Paper 48, Count V ¶¶ 55-61), Unjust Enrichment (Count VI ¶¶ 62-68), and Accounting (Count VII ¶¶ 69-72), and one against Gibson, Breach of Contract (Count IX ¶¶ 78-82).1 Defendants. The remaining six counts involve the other

On October 23, 2009, Gaylord filed a motion to On October 27, 2009, Gibson

dismiss the claims against it.

filed a motion to dismiss the claim against him. II. Standard of Review The purpose of a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) complaint. (4th Cir. is to test the sufficiency of the plaintiff's

See Edwards v. City of Goldsboro, 178 F.3d 231, 243 1999). Except in certain specified cases, a

plaintiff's complaint need only satisfy the "simplified pleading

In a federal diversity case, the court must apply the choiceof-law rules of the forum state, which in this case, is Maryland. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941). Absent a choice-of-law provision in the contract, "Maryland applies the law of the jurisdiction where the contract was made to matters regarding the validity and interpretation of contract provisions, and a contract is made where the last act necessary to make the contract binding occurs." Riesett v. W.B. Doner & Co., 293 F.3d 164, 173 n.5 (4th Cir. 2002)(internal citations omitted). Here, the last act necessary to make the contract binding between Plaintiff and Gaylord occurred in Maryland, where Rene McCoy signed the Reservation Contract on behalf of Gaylord. It is unclear where the alleged contract between Plaintiff and Gibson was made binding. In any event, the parties all agree that Maryland law applies to this dispute. 3

1

standard" of Rule 8(a), Swierkiewicz v. Sorema N.A., 534 U.S. 506, 513 (2002), which requires a "short and plain statement of the claim showing that the pleader is entitled "Rule blanket to relief." still of

Fed.R.Civ.P. requires a

8(a)(2). `showing,'

Nevertheless, rather than a

8(a)(2)

assertion,

entitlement to relief." 544, 555 (2007).

Bell Atl. Corp. v. Twombly, 550 U.S.

That showing must consist of more than "a

formulaic recitation of the elements of a cause of action" or "naked assertion[s] v. Iqbal, devoid 129 of S.Ct. further 1937, factual 1949 enhancement."

Ashcroft

(2009)(internal

citations omitted). In its determination, the court must consider all well-pled allegations in a complaint as true, Albright v. Oliver, 510 U.S. 266, 268 (1994), and must construe all factual allegations in the light most favorable to the plaintiff. See Harrison v.

Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir. 1999)(citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993)). The court need not, however, accept unsupported

legal allegations, Revene v. Charles County Comm'rs, 882 F.2d 870, 873 (4th Cir. 1989), legal conclusions couched as factual allegations, Iqbal, 129 S.Ct. at 1950, or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979). 4

See also Francis v. Giacomelli, 588 F.3d 186, 193 (4th 2009). to

Cir.

"[W]here the well-pleaded facts do not permit the court more than the mere possibility of misconduct, the

infer

complaint has alleged, but it has not `show[n] . . . that the pleader is entitled to relief.'" Iqbal, 129 S.Ct. at 1950

(quoting Fed.R.Civ.P. 8(a)(2)).

Thus, "[d]etermining whether a

complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." III. Analysis A. Breach of Contract Claim Against Gibson Id.

The factual allegations about Gibson appear in paragraph 26: "Plaintiff also paid various expenses for or on behalf of Fallen Soldiers related to the Inaugural Ball which, Gibson

orally represented he would repay."

Gibson moves to dismiss Gibson

Count IX, the breach of contract claim against him.

argues that Plaintiff attempts to hold him liable for the debts of Fallen Soldiers, Inc. based on an oral promise. Gibson

maintains that this count fails because the Maryland Statute of Frauds "completely bars a plaintiff from `an action' for an oral promise to answer for the debt of another." Gibson also argues that of the complaint (Paper 51, at 3). to satisfy the

fails

pleading

requirements

Fed.R.Civ.P. 5

8(a)(2).

Plaintiff

contends that it has adequately pled the breach of contract claim and that the claim is not barred by the Statute of Frauds because Gibson was "primarily responsible" for the repayment of expenses Plaintiff paid on behalf of Fallen Soldiers, Inc.

(Paper 60, at 5). The Maryland Statute of Frauds states, in pertinent part: Unless a contract or agreement upon which an action is brought, or some memorandum or note of it, is in writing and signed by the party to be charged or another person lawfully authorized by that party, an action may not be brought:(1) To charge a defendant on any special promise to answer for the debt, default, or miscarriage of another person[.] Md. Code Ann., Cts. & Jud. Proc. § 5-901. Here, Plaintiff does

not point to any written document signed by Gibson and alleges only that it "paid various expenses for or on behalf of Fallen Soldiers related to the Inauguration Ball which, Gibson orally represented he would repay to the Plaintiff . . . ." ¶ 79). for the (Paper 48

Plaintiff states that Gibson was "primarily responsible" debt of Fallen Soldiers, Inc.; however, phrasing

Gibson's obligation in this way does not change the fact that Plaintiff debt. attempts to hold Gibson liable for someone else's

This claim is therefore barred by the Statute of Frauds

and will be dismissed.

6

B. The

Claims Against Gaylord factual allegations against Gaylord are found in

paragraphs 21, 22, 25, and 29.

Plaintiff purchased the block of

rooms, understanding that the rooms would only be utilized by attendees or guests at the Ball. contract and unjust enrichment As relevant to the breach of claims, Plaintiff avers upon

information and belief that Gaylord competed with Plaintiff in the sale of the rooms by offering other rooms at a lower price. Plaintiff also alleges that Gaylord received separate payments from guests for rooms in Plaintiff's block which were not

reimbursed to Plaintiff. be dismissed, Plaintiff

While the currently pled claims will may be able to state a breach of

contract claim against Gaylord based on the alleged reselling of rooms in Plaintiff's block to other guests and will be given an opportunity to amend again. 1. Breach of Contract Claim Against Gaylord alleges in Count V that Gaylord breached the

Plaintiff

implied duty of good faith and fair dealing in the Reservation Contract by renting hotel rooms, on the nights of Plaintiff's reservations, for less than it had charged Plaintiff. Gaylord

argues that the implied duty of good faith and fair dealing did not prohibit it from competing with Plaintiff for the sale of rooms. (Paper 50, at 7). Plaintiff responds that Gaylord's 7

actions prevented Plaintiff from obtaining the "fruits of the contract" and therefore breached the implied duty of good faith and fair dealing in the Reservation Contract. (Paper 60, at 9).

Maryland law recognizes an implied duty of good faith and fair dealing in negotiated contracts. Eastern Shore Markets,

Inc., v. J.D. Associates, 213 F.3d 175, 182 (4th Cir. 2000). This duty prohibits one party from preventing the other party from performing his obligations under the contract. 83. Id. at 182-

It does not, however, "interpose new obligations about Id. at 183. inherent in It is

which the contract is silent . . . ." "simply a recognition Id. at 184. of conditions

expressed

promises."

In Eastern Shore Markets, the United

States Court of Appeals for the Fourth Circuit explained: [I]f a party promises to pay for its purchase of a business from the profits of a business, inherent in this promise is the agreement that the promisor will exercise reasonable diligence in continuing to conduct the business. See Automatic Laundry [Service, Inc. v. Demas], 141 A.2d [497], 501 [(1958)]. In the same vein, a promisor who undertakes to distribute products for the promisee impliedly agrees to exercise best efforts, see Foster-Porter Enterprises v. De Mare, 198 Md. 20, 81 A.2d 325, 332-33 (Md. 1951), and a promisor who undertakes to exercise judgment on behalf of a promisee impliedly agrees to exercise good judgment, see Julian v. [Christopher], 575 A.2d [735], 738-39 [(2000)]. Id. at 184. 8

Here, Plaintiff attempts to impose a substantial obligation on Gaylord that is not mentioned in the written agreement.2

Gaylord rents hotel rooms for profit.

When it contracts to

reserve rooms for a party, even if it knows that these rooms will be resold for profit, it does not implicitly agree to

refrain from renting its remaining rooms at a profitable rate. Prohibiting Gaylord from renting its remaining rooms would not be a recognition of a condition inherent in its express promises to Plaintiff, but rather, it would be the insertion of an

entirely new promise into the agreement. good faith and fair dealing did not

The implied duty of prohibit Gaylord claim from

renting

rooms

to

third

parties.

Plaintiff's

against

Gaylord for breach of contract fails to state a claim and will be dismissed. 2. Unjust Enrichment Claim Against Gaylord

Plaintiff alleges in Count VI that Gaylord was unjustly enriched because it retained Plaintiff's payment for rooms that were rented out to third parties, and for rooms that went

2

Plaintiff cites Electronics Store, Inc., v. Cellco Partnership, 127 Md. App. 385 (1999) to support its contention. Plaintiff fails to note, however, that the court in Electronics Store was interpreting New Jersey contract law. Id. at 396. Furthermore, unlike Electronics Store, where the plaintiff challenged the way in which the defendant carried out an express term of the contract, here Plaintiff seeks to insert a new condition that would govern aspects of Gaylord's business that were not the subject of its contract with Plaintiff. 9

unoccupied.

(Paper 48 ¶¶ 63-67).

Gaylord argues that Plaintiff

has failed to state a claim for unjust enrichment because: (1) the subject matter of the claim is governed by the parties' contract, and (2) Plaintiff has not alleged that Gaylord

received a benefit from Plaintiff that it did not have the right to receive. (Paper 50, at 8, 11). Plaintiff responds that its

claim is not barred by the existence of a contract because there is a dispute as to whether Gaylord terminated the contract by reselling the rooms, and because the existence of an adequate legal remedy is uncertain. (Paper 60, at 9, 10).

To state a claim for unjust enrichment under Maryland law, Plaintiff must allege that (1) it conferred a benefit on

Gaylord, (2) that Gaylord appreciated or had knowledge of that benefit, and (3) that Gaylord accepted or retained the benefit without the payment of its value. See Hill v. Cross Country A claim for unjust

Settlements, LLC, 402 Md. 281, 295 (2007).

enrichment, however, may not be brought where the subject matter of the claim is covered by an express contract between the

parties.

FLF, Inc. v. World Publications, Inc., 999 F.Supp. In County Comm'rs of Caroline County v.

640, 642 (D.Md. 1998).

J. Roland Dashiell & Sons, Inc., 358 Md. 83 (2000), the Court of Appeals of Maryland explained: The general rule is that no quasicontractual claim can arise when a contract 10

exists between the parties concerning the same subject matter on which the quasicontractual claim rests. (Citations omitted.) The reason for this rule is not difficult to discern. When parties enter into a contract they assume certain risks with an expectation of a return. Sometimes, their expectations are not realized, but they discover that under the contract they have assumed the risk of having those expectations defeated. As a result, they have no remedy under the contract for restoring their expectations. In desperation, they turn to quasi-contract for recovery. This the law will not allow. Id. (quoting Mass Transit Admin. v. Granite Constr. Co.,

57 Md.App. 766, 776 (1984)). Plaintiff's rental of the hotel rooms was covered by the parties' bring a Reservation Contract. claim Therefore, for Plaintiff may not and

quasi-contractual

unjust

enrichment

Plaintiff's unjust enrichment claim will be dismissed. 3. Claim for Reselling of Rooms in Plaintiff's Block

Plaintiff has argued that it had the exclusive right to use and occupy rooms in the Block and that Gaylord resold at least some of those rooms. These allegations may potentially state a

viable claim for breach of contract, although currently included in the unjust enrichment claim. (Plaintiff argues that the

reselling of the same rooms served to "terminate" the contract.) While Gaylord recites these facts in its motion to dismiss, it argues somewhat contradictorily as follows: 11 "Here the Plaintiff

simply

avers

that

Gaylord

received

payment

from

other

individuals for rooms in the block reserved by the Plaintiff. However, Plaintiff has not claimed that Plaintiff attempted to sell rooms from its hotel block and was unable to do so because Gaylord had already sold them to other customers." at 12). This argument misses the point. The (Paper 50, rooms in

Plaintiff's Block were not Gaylord's to sell to others.

If all

of its other rooms were rented, and additional customers sought rooms, Gaylord would have to advise the potential guests that it had no rooms available. Of course, they might also tell the

potential guests that Plaintiff might have available rooms in its block. vacant. Those rooms were Plaintiff's to use or rent or leave Gaylord can't have it both ways. It received full

payment from Plaintiff for the rooms in the Block and agreed to reserve those rooms for Plaintiff. If, as Plaintiff alleges,

Gaylord resold some of those rooms to others, it could have been in breach of its contractual obligations to Plaintiff because it did not reserve those rooms exclusively for Plaintiff. Plaintiff has not moved for leave to amend, but, because there might be a different breach of contract claim available, Plaintiff will have twenty-one days to amend its complaint.

12

C.

Accounting Claim Against Gaylord

Gaylord argues that the accounting claim against it, Count VII, is moot and should be dismissed if the breach of contract and unjust enrichment claims are dismissed. Gaylord also argues that Plaintiff has (Paper 50, at 14). adequately to

failed

plead an accounting claim because it has not alleged that the accounts between Plaintiff and Gaylord are so complicated as to justify a separate accounting, or that "Gaylord national has a duty to render to it [Plaintiff] an account." 15). (Paper 50, at

Plaintiff responds that "[i]n light of the number of hotel

rooms, the number of Plaintiff's guests occupying the rooms paid for by the Plaintiff, [and] the number of Gaylord's third party guests occupying the rooms paid for by the Plaintiff, an

accounting is an appropriate and an equitable remedy under the circumstances." (Paper 60, at 11).

An accounting is a remedy, not an independent cause of action. See, e.g., IFAST, Ltd. v. Alliance for

Telecommunications Industry Solutions, Inc., Civil No. CCB-062088, 2007 WL 3224582, at *11 (D.Md. 2007)(citing 1A C.J.S. Accounting § 6 (2007))("An accounting is . . . a remedy, not a separate cause of action, and not available absent some

independent cause of action.").

The present breach of contract

and unjust enrichment claims against Gaylord will be dismissed, 13

and therefore the accounting claim against Gaylord will also be dismissed. Plaintiff will, however, be able to include a request for an accounting in any newly pled contract claim. IV. Conclusion For the foregoing reasons, the motions to dismiss filed by Defendants granted. Isaac Gibson and Gaylord National, LLC will be

A separate Order will follow.

/s/ DEBORAH K. CHASANOW United States District Judge

14