ZEHM v. MORGAN PROPERTIES et al
Filing
52
OPINION. Signed by Judge Noel L. Hillman on 12/21/2018. (rtm, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
AVA ZEHM, individually and on
behalf of others similarly
situated,
Plaintiff,
CIVIL NO. 17-1758 (NLH/KMW)
OPINION
v.
MORGAN PROPERTIES and
MOORESTOWNE WOODS APARTMENT
ASSOCIATES, LLC d/b/a
MOORESTOWNE WOODS APARTMENT
ASSOCIATES, LP,
Defendants.
APPEARANCES:
LEWIS G. ADLER
LAW OFFICE OF LEWIS ADLER
26 NEWTON AVENUE
WOODBURY, NJ 08096
PAUL DEPETRIS
LAW OFFICE OF PAUL DEPETRIS
532 ROUTE 70 WEST, 2ND FLOOR
CHERRY HILL, NJ 08002
On behalf of Plaintiff Ava Zehm.
RACHEL C. HEINRICH
DANIEL S. BERNHEIM
WILENTZ GOLDMAN & SPITZER, P.A.
TWO PENN CENTER
SUITE 910
PHILADELPHIA, PA 19102
On behalf of Defendants Morgan Properties Management
Company, LLC and Moorestowne Woods Apartment Associates, LLC.
HILLMAN, District Judge
This is a putative class action concerning allegedly
illegal provisions in a residential lease.
Claims were
originally brought under the New Jersey Consumer Fraud Act
(“CFA”), the New Jersey Truth-in-Renting Act (“TRA”), and New
Jersey common law.
Presently before the Court is Plaintiff Ava
Zehm’s Motion for Leave to File an Amended Complaint and
Defendants Morgan Properties Management Company, LLC’s (“Morgan
Properties”) and Moorestown Wood Apartment Associates, LLC’s
(“MWAA” and, collectively with Morgan Properties, the “Morgan
Defendants”) opposition.
The Court will grant, in part, and
deny, in part, without prejudice, Plaintiff’s Motion for Leave
to File an Amended Complaint.
BACKGROUND
This Court takes its facts from Plaintiff’s January 18,
2017 complaint.
Plaintiff lived in an apartment in Moorestown,
New Jersey owned by MWAA.
The apartment complex consisted of
approximately 172 residential units and was managed by Morgan
Properties.
Plaintiff executed her first lease with MWAA in
2014 for the rental of an apartment (the “First Lease”).
Plaintiff renewed her lease in 2015, signing a second lease (the
“Second Lease”).
As part of her leases, Plaintiff signed a utility addendum,
which provided that charges for water would be based on the
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number of bedrooms in each resident’s apartment unit.
Plaintiff’s leases also contained a provision that stated, in
pertinent part, that with regard to a breach of the lease, if an
attorney is employed, including in-house counsel, the resident
was required to pay $400 in attorneys’ fees.
That amount could
be reduced to $200 “in the event an eviction action is
filed . . . for non-payment of rent, and [the tenant] pay[s] all
rent due.”
The Morgan Defendants filed a complaint in January
2016 against Plaintiff for rent due.
The complaint declared
$873.85 due and owing: $331.65 for rent due, a $142.20 late
charge, and $400 in attorneys’ fees.
Following that litigation,
Plaintiff filed a class action complaint against Defendants, 1
which was removed to federal court on March 15, 2017.
The
complaint alleged:
Count One:
violation of the TRA based on the attorneys’
fees provision (against Morgan Defendants)
Count Two:
violation of the TRA based on the utility
addendum (against Morgan Defendants)
Count Three:
violation of the CFA based on the attorneys’
fees provision (against Morgan Defendants)
Count Four:
civil conspiracy based on the attorneys’
fees provision (against Morgan Defendants)
Count Five:
violation of the CFA based on the utility
addendum (against all Defendants)
1
Here, Defendants include the Morgan Defendants as well as NWP
Services Corporation (“NWP”). NWP was alleged to be the thirdparty billing service provider for the Morgan Defendants.
3
Count Six:
civil conspiracy based on the utility
addendum (against all Defendants)
Count Seven:
declaratory judgment (against all
Defendants)
Count Eight:
violation of the CFA (against Morgan
Defendants)
The Morgan Defendants filed an April 5, 2017 motion for
partial abstention and partial dismissal of the complaint.
then filed an April 26, 2017 motion to dismiss.
NWP
By Order and
Opinion on October 27, 2017, this Court denied the Morgan
Defendants request for partial abstention and granted the
request for partial dismissal.
The Court found Plaintiff failed
to state a claim on the basis of the utility addendum.
In the
same Order and Opinion, this Court granted NWP’s motion to
dismiss, thus terminating it from this case.
As a result,
Counts 2, 5, 6, and 7 were dismissed, with Count 7 only being
dismissed to the extent it sought declaratory judgment against
the Morgan Defendants on the basis of the utility addendum.
On May 11, 2018, Plaintiff filed a Motion for Leave to
Amend the Complaint.
In it, Plaintiff requests this Court allow
her to amend the caption and allegations to properly name the
Morgan Defendants, eliminate the dismissed counts, and add to
Count 1 and 7 further allegations concerning allegedly illegal
clauses in the lease agreements.
The Motion for Leave to Amend
the Complaint is fully briefed and is ripe for adjudication.
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A.
Subject Matter Jurisdiction
This Court has diversity jurisdiction pursuant to 28 U.S.C.
§ 1332.
B.
Motion for Leave to Amend Complaint Standard
The decision to grant or deny leave to amend pleadings
under Federal Rule of Civil Procedure 15(a)(2) is committed to
the sound discretion of the Court.
768, 772 (3d Cir. 1990).
Gay v. Petsock, 917 F.2d
Leave to amend is freely granted “when
justice so requires,” but may be denied where there is “undue
delay, bad faith or dilatory motive on the part of the movant,
repeated failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, [or] futility of the amendment.”
Foman v. Davis, 371 U.S. 178, 182 (1962).
Amendment is futile if it “is frivolous or advances a claim
or defense that is legally insufficient on its face.”
Harrison
Beverage Co. v. Dribeck Imps., Inc., 133 F.R.D. 463, 468 (D.N.J.
1990) (citations omitted) (internal quotations marks omitted).
To test for futility, the Court employs the Rule 12(b)(6)
standard used for motions to dismiss.
In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997).
The Rule 12(b)(6) standard is well-settled.
Pursuant to
Federal Rule of Civil Procedure 12(b)(6), a court must accept
all well-pleaded allegations in the complaint as true and view
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them in the light most favorable to the plaintiff.
Fisher, 423 F.3d 347, 351 (3d Cir. 2005).
Evancho v.
A pleading is
sufficient if it contains “a short and plain statement of the
claim showing that the pleader is entitled to relief.”
FED. R.
CIV. P. 8(a)(2).
“While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do . . . .”
Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007) (alteration in original)
(citations omitted) (first citing Conley v. Gibson, 355 U.S. 41,
47 (1957); Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc.,
40 F.3d 247, 251 (7th Cir. 1994); and then citing Papasan v.
Allain, 478 U.S. 265, 286 (1986)).
To determine the sufficiency of a complaint, a
court must take three steps.
First, the court must
“tak[e] note of the elements a plaintiff must plead to
state a claim.”
Second, the court should identify
allegations that, “because they are no more than
conclusions, are not entitled to the assumption of
truth.” Third, “whe[n] there are well-pleaded factual
allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an
entitlement for relief.”
Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011) (alterations
in original) (citations omitted) (quoting Ashcroft v. Iqbal, 556
6
U.S. 662, 664, 675, 679 (2009)).
A court may “generally
consider only the allegations contained in the complaint,
exhibits attached to the complaint and matters of public
record.”
Schmidt v. Skolas, 770 F.3d 241, 249 (3d Cir. 2014)
(citing Pension Benefit Guar. Corp. v. White Consol. Indus.,
Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)).
A district court, in weighing a motion to dismiss, asks
“not whether a plaintiff will ultimately prevail but whether the
claimant is entitled to offer evidence to support the claim.”
Twombly, 550 U.S. at 563 n.8 (quoting Scheuer v. Rhoades, 416
U.S. 232, 236 (1974)); see also Iqbal, 556 U.S. at 684 (“Our
decision in Twombly expounded the pleading standard for ‘all
civil actions’ . . . .”); Fowler v. UPMC Shadyside, 578 F.3d
203, 210 (3d Cir. 2009) (“Iqbal . . . provides the final nail in
the coffin for the ‘no set of facts’ standard that applied to
federal complaints before Twombly.”).
“A motion to dismiss
should be granted if the plaintiff is unable to plead ‘enough
facts to state a claim to relief that is plausible on its
face.’”
Malleus, 641 F.3d at 563 (quoting Twombly, 550 U.S. at
570).
C.
Motion for Leave to Amend Complaint
Plaintiff presents three proposed amendments to her
complaint.
First, Plaintiff requests this Court to allow her to
correct the names of the Morgan Defendants throughout the
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complaint.
Second, Plaintiff requests this Court to allow her
to eliminate the claims that this Court dismissed in its October
27, 2017 Order.
Third, Plaintiff requests this Court to allow
her to add additional violations to her TRA claims and include
additional statutory, case law, and rule citations.
The Morgan Defendants only resist Plaintiff’s third
request. 2
Accordingly, this Court will grant Plaintiff’s request
to perform the housekeeping matters described supra.
The Court
will now consider the Morgan Defendants’ arguments concerning
the third request.
a. Whether the Proposed TRA Claims Are Futile Because of
a Failure to Allege an Injury in Fact Sufficient to
Satisfy Article III
First, the Morgan Defendants argue the proposed TRA claim
is futile because it does not claim an injury in fact sufficient
to satisfy Article III.
The Morgan Defendants assert the new
provisions complained of by Plaintiff are merely “procedural and
technical violations of the TRA based upon the purported illegal
lease provisions” which did not result in a concrete or
particularized injury.
(Defs.’ Br. 1.)
2
Plaintiff does not
Based on the Court’s analysis, infra, the Morgan Defendants’
argument concerning whether this Court is the proper forum for
these new claims or whether these claims can be brought in a
class action is moot.
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contest this argument. 3
Because Plaintiff does not contest that
she lacks standing to bring the new claims concerning the TRA,
this Court will deny Plaintiff’s Motion for Leave to File an
Amended Complaint – as to the new TRA claims only - for lack of
subject matter jurisdiction. 4
While the Court lacks subject matter jurisdiction over the
new TRA claims, the Court must still address Plaintiff’s
remaining arguments.
Plaintiff requests, if this Court finds
Plaintiff does not have standing to assert the new TRA claims,
the Court remand the entire case.
It appears the Plaintiff’s
3
Instead of contesting this argument, Plaintiff instead asserts
this Court does not have subject matter jurisdiction over all
the TRA claims, both new and old. Upon review of the relevant
pleadings, this Court does not find subject matter jurisdiction
lacking here over the original TRA claim. If Plaintiff believes
the notice of removal is inaccurate in any respect, Plaintiff is
free to file a motion that comports with the Federal and Local
Rules of Civil Procedure requesting appropriate relief. In the
alternative, Plaintiff requests this Court either remand the
entire case or sever and remand the TRA claim based on its
ruling here. This is discussed in more detail, infra.
4
The Court notes that it appears Plaintiff has failed to
properly allege an injury in fact because she has not pleaded a
past injury nor threat of imminent injury. See Spokeo, Inc. v.
Robins, 136 S. Ct. 1540, 1549 (2016) (“Congress’ role in
identifying and elevating intangible harms does not mean that a
plaintiff automatically satisfies the injury-in-fact requirement
whenever a statute grants a person a statutory right and
purports to authorize that person to sue to vindicate that
right. Article III standing requires a concrete injury even in
the context of a statutory violation. For that reason, [a
plaintiff] could not, for example, allege a bare procedural
violation, divorced from any concrete harm, and satisfy the
injury-in-fact requirement of Article III.”).
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basis for this argument is the “entire controversy doctrine,”
which is a claim preclusion doctrine under New Jersey common
law.
See Hulmes v. Honda Motor Co., Ltd., 924 F. Supp. 673
(D.N.J. 1996).
The contours of the entire controversy doctrine
and whether Plaintiff’s claim would be subject to preclusion
under it does not limit or expand subject matter jurisdiction in
the federal courts.
As long as this Court is satisfied it
possesses subject matter jurisdiction over claims, it has an
obligation to continue to exercise that jurisdiction.
See
Rarick v. Federated Serv. Ins. Co., 852 F.3d 223, 227 (3d Cir.
2017) (“When an action seeks legal relief, federal courts have a
‘virtually unflagging obligation’ to exercise jurisdiction.”
(quoting Colo. River Water Conservation Dist. v. United States,
424 U.S. 800, 817 (1976)).
Plaintiff has cited no authority,
and the Court is unaware of any, that stands for the proposition
that a federal Court should decline to exercise jurisdiction
over claims it has jurisdiction over merely because Plaintiff
also has additional state law claims that do not meet Article
III standards.
Plaintiff also argues if the Court lacks subject matter
jurisdiction over the new TRA allegations, then it should sever
the entire TRA claim and remand it to New Jersey state court.
This also cannot be done, for the same reasons as expressed
supra.
The Court has jurisdiction over the original TRA claim,
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but not over the new allegations.
It therefore continues to
have an obligation to exercise jurisdiction over the original
TRA claim.
If the standard for standing is broader in New Jersey state
court, notwithstanding the entire controversy doctrine, nothing
in this Opinion precludes Plaintiff from filing the new TRA
claims in New Jersey state court. 5
While this may create
additional logistical issues because two courts, one federal and
one state, will be deciding cases involving the same general
subject matter, there are a number of ways in which the two
courts and the litigants might coordinate, including staying the
5
The Court assumes without deciding that such an action would
not be removable to federal court since the absence of actual
damages would preclude Defendants from meeting the amount in
controversy threshold. See 28 U.S.C. § 1441. This Court also
does not opine on the application of the entire controversy
doctrine to these procedural facts, as that is a task left for
the New Jersey state court - if Plaintiff wishes to bring the
new TRA claims there. But, the Court notes “[t]he ‘polestar of
the application of the rule is judicial fairness.’” Wadeer v.
N.J. Mfrs. Ins. Co., 110 A.3d 19, 27 (N.J. 2015) (quoting
DiTrolio v. Antiles, 662 A.2d 494, 505 (N.J. 1995)).
“Fairness,” for purposes of the entire controversy doctrine,
“‘focuses on the litigation posture of the respective parties
and whether all of their claims and defenses could be most
soundly and appropriately litigated and disposed of in a single
comprehensive adjudication.’” Id. (quoting Ditrolio, 662 A.2d
at 507). As the Plaintiff has made clear, she would prefer to
be in state court where all her claims may be adjudicated
together and would be there but-for the Defendant’s statutory
right of removal. We leave the consideration of these issues in
the context of the entire controversy doctrine to the state
court presented with them if Plaintiff chooses that forum for
any TRA claims that fail to meet the applicable standard for
subject matter jurisdiction in this Court.
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state court action until disposition of the first-filed federal
court action.
Regardless, this Court is unable to assert
jurisdiction over the new TRA claims presented.
Therefore, the
Court leaves it to the Plaintiff to determine whether it is
appropriate and advisable for her to pursue the new TRA claims
in state court.
CONCLUSION
Based on the foregoing, this Court will grant, in part, and
deny, in part, Plaintiff’s Motion for Leave to File an Amended
Complaint.
An appropriate Order will be entered.
Date: December 21, 2018
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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