DEMARCO et al v. AVALON COMMUNITIES, INC. et al
Filing
62
OPINION. Signed by Judge Jose L. Linares on 11/3/2015. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DEMARCO, et al.,
Civil Action No.: 15-628 (JLL)
Plaintiffs,
V.
OPINION
AVALONBAY COMMUNITIES, INC., et
al.,
Defendants.
VORONOV, et a!.,
Plaintiffs,
AVALONBAY COMMUNITIES, INC.,
Defendant.
LINARES, District Judge.
This matter comes before the Court by way of a motion to dismiss Count III
(Violations of the New Jersey Consumer Fraud Act (“NJCFA”)) of the Consolidated
Class
Action Complaint (“CAC”) by AvalonBay Communities, Inc. (“AvalonBay
” or
“Defendant”) pursuant to Federal Rule of Civil Procedure I 2(b)(6).
premised upon 28 U.S.C.
Jurisdiction is
§ l332(d)(2) and (6). (See CAC ¶ 21.) No oral argument was
heard pursuant to Rule 78 of the Federal Rules of Civil Procedure. After consid
ering the
submissions of the parties in support of and in opposition to the motion, the Court
grants
Defendant’s motion to dismiss.
1
I.
BACKGROUND
Plaintiffs bring the instant putative class action individually and on behalf of all
persons who were tenants or occupants of the Russell building apartment complex and the
River Mews building apartment complex at Avalon at Edgewater (together the “Avalon”)
as of January 21, 2015, and who suffered property damage or other loss as a result of the
January 21, 2015 fire that occurred on that date. (Id.
¶ 62.)
At all times relevant to this
litigation, Defendant AvalonBay has been a Maryland corporation who develops, owns,
and operates apartment complexes across the country. (Id.
¶
19.) Plaintiffs assert that
Defendant “claims to have direct or indirect ownership interests in 274 apartment
communities across the country, containing a total of 82,333 apartments.” (Id.)
Plaintiffs allege that news reports of the January 21, 2015 fire asserted that the fire
was “an ‘accident’ caused by unlicensed plumbers using an acetylene blowtorch while
attempting to perform plumbing work in a wall.” (Id.
¶ 27.)
Plaintiffs allege—and supply
a supporting fire department violation notice dated February 19, 2015—that no Avalon
employees (including the plumbers who started the fire) called 911 or alerted the fire
department. (Id.
¶f 29-30,
Ex. A.) Quoting from a separate “Cause and Origin Report”
from Michael Blondin of the Arson Task force, Plaintiffs allege that “the majority of the
fire had burned from above causing a collapse
.
.
.
lightweight building materials were
utilized in the buildings construction along with web truss.
.
.
there were plastic piped fire
sprinklers in the common areas but there were none present in the voids andlor attic areas
there were no fire stops in the attic area and the building was constructed with one
common attic.” (Id.
¶ 36
(quoting Ex. B at 2) (alteration in original).) As a result of the
fire, the Russell building “burned to the ground.” (Id.
2
¶ 3.)
This resulted in the loss of
property (both for the Russell building residents as well as for River Mews residents who
had storage areas in the Russell building) as well as the loss of tenants’ pets. (Id.
¶f 13-
18. 52-53.) Tenants of both complexes were displaced from their apartments, the River
Mews tenants temporarily so. (Id.
¶ 44.)
After the fire, an inspection was conducted of the River Mews building, which
resulted in a “Notice of Violations and Order to Correct” for five separate violations of the
Unitbrm Fire Code.
(Id.
¶ 50 (citing Ex. C).) Plaintiffs further state that “[ujpon
information and belief, the same violations were present in the Russell Building at the time
of the Fire and may have contributed to the rapid spread of the fire.” (id.)
Based on internet postings and other public statements after the fire, Plaintiffs
allege that AvalonBay has a history of fire safety issues. In particular, Plaintiffs point to
the following prior alleged incidents:
•
August 2000: A severe fire during construction of the Avalon
complex occurs, which was caused by a ruptured gas line. In
February 2005, a jury ruled that AvalonBay’s negligence
contributed to the fire due to conditions on the construction site;
•
June 2011: A fire destroyed an apartment complex built in 1997 in
Quincy, Massachusetts. “State fire department investigators later
declare that faulty construction ofthe draft stopping in the building’s
attic and a lack of fire barriers in the balconies allowed the fire to
spread more quickly and contributed to the damage”;
•
December 2011: A carbon dioxide leak at a complex in Danvers,
Massachusetts results in a woman being hospitalized. Allegedly, the
AvalonBay maintenance staff simply removed the detectors when
they went off and
•
April 2003 November 2012: Various fire related violations for
conditions (such as “smoking refuse,” inadequate number and
placement of fire extinguishers, improper storage of flammable
materials) at construction sites across the country.
—
3
(Id, at Ex. D; see also id.
¶J
57-60.) Plaintiffs also point to a February 18, 2015 press
release issued by AvalonBay that they would “voluntarily enhance the fire protection
systems at [Princeton and Maplewood, New Jersey] high density, wood frame communities
to comply with the National Fire Protection Association Standard (‘NFPA’), 13-a
standard, that is greater than what is required by the current building code for this building
type.” (Id.
¶ 61
(alteration in original).)
In addition to these general allegations, Plaintiffs make basic allegations related to
specific individuals which identify where the named plaintiffs lived, what property was
lost, and how long they were displaced. (Id.
¶J
13-18.) Plaintiffs do not make any
individual allegations related to when they rented at the Avalon, or what advertisements or
other representations they saw or heard prior to leasing at Avalon.
Based on the above, Plaintiffs make the following allegations related to their
NJCFA claims:
20. In connection with its marketing and sale of apartments at the Avalon,
Defendant affirmatively claimed that it was offering “the best New Jersey
apartments.”
89. Defendant made numerous affirmative statements in connection with
the marketing/sale of its Avalon units, touting, among other things, the
facilities “beautifully maintained grounds, and top of the line amenities.”
90. Defendant engaged in unlawful conduct in violation of the NJCFA by,
inter alia, making knowing and intentional omissions regarding the
materials in the Edgewater apartment complex, the lack of credentials of the
plumbers who were hired to perform maintenance on the building, its
history of fire-related incidents, and its lack of regard of the safety and well
being of tenants. Under the circumstances these omissions were material.
92. A causal relationship exists between Defendant’s unlawful conduct and
the ascertainable loss suffered by Plaintiffs and the Class. Had Defendant
‘Plaintiffs include in paragraph 20 copies of what appear to be marketing materials for the
Avalon. However, the writing is not legible.
4
actually disclosed that, among other things, it would allow unlicensed
plumbers to use an acetylene blow torch to perform work on the premises
or that the company had a lengthy track record of fire-related incidents that
it apparently had failed to address properly, Plaintiffs and Class Members
would not have agreed to enter into lease transactions with Defendant.
II.
LEGAL STANDARDS.
Under Rule 8(a), for a complaint to survive dismissal, it “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) (citing Bell Ati. Corp. v. Twombly, 550
U.S.
544, 570 (2007)). “Threadbare recitals of the elements of a cause of action, supported
by
mere conclusory statements, do not suffice.” Id.
In determining the sufficiency of a
complaint, the Court must accept all well-pleaded factual allegations in the complaint as
true and draw all reasonable inferences in favor of the non-moving party. See Burtch v.
Milberg Factors, Inc., 662 F.3d 212, 221 (3d Cir. 2011). But, “the tenet that a court must
accept as true all of the allegations contained in a complaint is inapplicable to legal
conclusions.” Iqbal, 556 U.S. at 678. Thus, “a plaintiffs obligation to provide the ground
s
of his entitle[ment] to relief requires more than labels and conclusions, and a formul
aic
recitation ofthe elements of a cause of action will not do.” Burtch, 662 F.3d at 220 (quotin
g
Twotnbly, 550 U.S. at 555) (alteration in Twombly).
Additionally, consumer fraud claims under the NJCFA are subject to the “stringent
pleading restrictions of Rule 9(b).” See Frederico v. Home Depot, 507 F.3d 188, 200,
203
(3d Cir, 2007). Pursuant to Federal Rule of Civil Procedure 9(b):
[A] plaintiff alleging fraud must state the circumstances of the alleged fraud
with sufficient particularity to place the defendant on notice of the precise
misconduct with which [it is] charged. To satisfy this standard, the plaintiff
must plead or allege the date, time and place of the alleged fraud or
otherwise inject precision or some measure of substantiation into a fraud
allegation.
5
Id. (internal quotations and citations omitted, alteration in original). Furthermore, in class
action cases, each “individually named plaintiff must satisfy Rule 9(b) independentl
y” so
“[t]he complaint should therefore contain sufficient detail as to [a named plaintiff’s]
claims
to apprise [a defendant] of that plaintiff’s exact grounds for relief and the specific conduc
t
that plaintiff charges.” Pacholec v. Home Depot USA, Inc., 2006 WL 2792788, *2 (D.N.J
.
Sept. 26, 2006) (alteration in original); see also Crozier v. Johnson & Johnson Consu
mer
Cos., Inc., 901 F. Supp. 2d 494, 506 (D.N.J. 2012) (same).
III.
DISCUSSION
Defendants argue that Plaintiffs’ NJCFA claim must be dismissed because “this
is
not a consumer fraud case.” (Def.’s Mot. at 1.) More specifically, Defendant argues that
Plaintiffs
have
inadequately
pled
misrepresentations or omissions.
2
a
NJCFA
violation based
on
affirmative
While the Court recognizes the loss suffered by
Plaintiffs, the Court agrees with AvalonBay that Plaintiffs have not pled suffici
ent facts to
establish a NJCFA violation.
“[T]o state a CFA claim, a plaintiff must allege three elements: (1) unlawful
conduct
.
.
.
; (2) an ascertainable loss
.
.
.; and (3) a causal relationship between the
defendants’ unlawful conduct and the plaintiff’s ascertainable loss.”
Int’l Union of
Operating Eng’rs Local No. 68 Wefare Fund v. Merck & Co., Inc., 192 N.J.
372, 389
(2007) (internal quotations omitted, alteration in original); see also Frederico,
507 F.3d at
2
“Plaintiffs do not oppose AvalonBay’s motion to dismiss the NJCFA claim
to the extent
it is based on the violation of regulations promulgated under that statute.” (Pis.’
Opp’n at
5 n.i.)
6
202 (3d Cir. 2007). Under the NJCFA, “[ujnlawful practices fall into three general
categories: affirmative acts, knowing omissions, and regulation violations.” Frederico,
507 F.3d at 202 (quoting Cox v. Sears Roebuck & Co., 647 A.2d 454, 462 (1994)). But,
“[i]mportantly, the conduct, whether it be an omission or active misrepresentation, must be
made ‘in connection’ with the sale or advertisement of a product or service.” Arcand v.
Brother Int’l Corp., 673 F. Supp. 2d 282, 296-97 (D.N.J. Nov. 30, 2009) (quoting Castro
v.NYT Television, 851 A.2d 88, 95 (N.J. App. Div. 2004)).
A.
Misrepresentations
The only two CAC paragraphs that Plaintiffs reference identifying alleged
misrepresentations are paragraphs 20 and 89. Because the text included from the marketing
materials in paragraph 20 is not legible, the Court considers only the identified statement
within the typed portion of that paragraph, which asserts that the Avalon apartments were
“the best New Jersey apartments.”
(CAC
¶
20.)
Paragraph 89 further alleges that
AvalonBay represented that the Avalon offered “beautifully maintained grounds, and top
of the line amenities.” (Id.
¶ 89.)
Even if Plaintiffs could amend their complaint through
their brief—which they cannot do, the brief adds only that Avalon offered “thoughtfully
designed tloor plans.” (Pls.’ Opp’n at 11.) Plaintiffs argue that these representations “led
tenants to believe—incorrectly——that The Avalon incorporated the latest and best luxury
construction, when in fact it was a fire trap.” (Id. at 12.)
Defendants argue that the alleged affirmative misrepresentations were non-
The parties do not dispute that a landlord-tenant relationship may form the basis for
a
NJCFA claim. See Heyert v. Taddese, 70 A.3d 680, 695 (N.J. App. Div. 2013) (“It is wellestablished that the broad scope of the CFA encompasses transactions between residential
tenants and their landlords.”)
7
actionable puffery. (Def.’s Mot. at 6 & n.2.) They further argue that even if the identif
ied
representations were not considered puffery, the allegations as pled fail to
meet the
pleading requirements of Rule 9(b). (Id. at 11-16.) Plaintiffs acknowledge that
“[tihe
NJCFA distinguishes between actionable misrepresentations of fact and puffery
.” (Pls.’
Opp’n at 11 (internal quotations omitted).) They further acknowledge that “[p]uff
ery
includes vague, highly subjective advertising claims, as opposed to specifi
c factual
assertions that can actually be verified.” (Id.)
Aside from the challenged representations not saying anything about construction,
much less a specific factual statement about the construction, the Court agrees
with
Defendants that the few statements that were identified by Plaintiffs are puffery, and
as
such are not actionable. Compare Urbino v. Ambit Energy Holdings, LLC, No.
14-5 184,
2015 WL 4510201, at *5 n.7 (D.N.J. July 24, 2015) (“[C]laims of ‘substantial saving
s,’
‘low, competitive rates,’ ‘exceptional value,’ and ‘great savings’ are not factual asserti
ons.
As such, they are not actionable under the CFA.”); Glass v. BMWofN. Am., LLC,
No. 105259, 2011 WL 6887721, at *6..7 (D.N.J. Dec. 29, 2011) (dismissing claim
and holding
that statements that the cars were “Rated 4 stars in recent crash tests,” “MINI
is ready to
serve and protect,” and “[a] powerful ally in the war against loss-of-control”
were nonactionable puffery); Hughes v. Panasonic Consumer Elec., Co., No. 10—846,
2011 WL
2976839, at *12..13 (D.N.J. July 21, 2011) (dismissing claim and holding
that statements
such as “industry leading black levels and contrast ratios,” “the way the directo
r intended,”
and “breathtaking” and “vivid” colors are non-actionable puffery); Glaube
rzon v. Pella
Corp., No. 10-5929, 2011 WL 1337509, at *9 n.4 (D.N.J. Apr. 7, 2011)
(statement that
“window combinations were of the highest quality” held to be “puffe
ry and thus not
8
actionable”); Slackv. Suburban Propane Ptnrs., L.P., No. 10-2548, 2010 WL 3810870, at
*5 (D.N.J. Sept. 21, 2010) (dismissing
claim and holding that “[t]o the extent Plaintiffs
allege that Suburban Propane affirmatively misrepresented the cost of the propane by
charging them prices higher than industry averages despite stating on their website that
‘{w]hen you shop at Suburban Propane, you get
the best value!’ and publicly claiming
...
that their prices are ‘competitive,’ such statements are ‘not statements of fact, but are
merely expressions in the nature of puffery and thus are not actionable.”) (internal
citations omitted); In re Toshiba Am. HD DVD Mktg. and Sales Practice Litig., No. 08—
939, 2009 WL 2940081, at *9..lO (D.N.J. Sept. 11,2009) (dismissing claim and holdin
g
that statements that something is the “best” or “For Today, Tomorrow and Beyond” are
puffery); New Jersey Citizen Action v. Schering—Plough C’orp., 842 A.2d 174, 177 (N.J.
App. Div. 2003) (“The central contention of plaintiffs is that statements in DTC
advertisements which used such phrases as ‘you.
.
.
can lead a normal nearly symptom-
free life again’ were intended to be understood by consumers as a guarantee of total and
universal effectiveness of the product. That contention is meritless.”) (affirming dismis
sal
of complaint) with Lieberson v. Johnson & Johnson Consumer Cos., No. 10—6196, 2011
WL 4414214, at
*
(D.N.J. Sept. 21, 2011) (product labels touting that the products were
“clinically proven to help babies sleep better” was not puffery) (emphasis added).
Even assuming that the challenged representations were not puffery, the CAC
provides no information as to when the representations were made, whether any Plainti
ff
actually saw the representations, or when they saw them. See Mladenov v. Wegmans
Food
Markets, Inc., Nos. 15—00373, 15—00382, 15—00618, 2015 WL 5023484, at *9
(D.N.J.
Aug. 26, 2015) (“Since plaintiffs did not identify when the alleged misrepresenta
tions were
9
made and which particular advertisements plaintiffs had seen, the Court held that
the
complaint failed to satisfy Rule 9(b)’s particularity requirements. The instant cases suffer
from the same defect.”) (internal citation omitted); In re Ridell Concussion Reduc
tion
Litig., 77 F. Supp. 3d 422, 433 (D.N.J. 2015) (“Plaintiffs’ scatter-shot pleadin
g lists
examples of Defendants’ marketing statements without identifying which specifi
c
statement(s), if any, Plaintiffs were exposed to.”).
Additionally, even had Plaintiffs sufficiently plead the representations with
particularity including with respect to the individual plaintiffs, Plaintiffs have
plead no
facts for how such statements could reasonably be construed to mean that Avalon
was
offering the “latest and best construction” or even what that non-specific phrase means
.
B.
Omissions
Plaintiffs’ NJCFA claim based on omission is derived from allegations that
Defendant was required, but failed, to disclose: (1) the building materials
used in
construction of the complex, (2) the “lack of credentials of the plumbers who were
hired
to perform maintenance on the building,” and (3) AvalonBay’s “history of fire-rel
ated
incidents” at its various properties. (CAC
¶ 90.)
AvalonBay argues that, as a matter of
law, none of these items can form the basis for a NJCFA claim based on omissi
ons because
there is no duty to disclose such information. (Def. ‘5 Mot. at 7-10.) AvalonBay
further
argues, even if not insufficient as a matter of law, Plaintiffs’ allegations are insuffi
ciently
pled. (Id. at 11.)
To state a claim based on omission under the NJCFA, “the plaintiff must show
that
the defendant acted with knowledge, and intent is an essential element of
the fraud.” Cox,
647 A.2d at 462 (emphasis in original); see also Holt v. Laube, 2011 WL
6141466, at *8
10
(N.J. App. Div. Dec. 12, 2011) (“[T]he plaintiffs must show that the defendant had actual
knowledge of the material fact and acted knowingly with an intent to deceive.”). Thus,
knowledge and intent at the time of the transaction are required to state a NJCFA claim
based on omission.
Instead of citing to NJCFA cases demonstrating that allegations similar to those
made by Plaintiffs are sufficient to state a NJCFA claim based on omission, Plaintiffs cite
to two cases related to landlord-tenant duties, one from 1959 and one from 1974. The first
case stands for the proposition that a “landlord, knowing of an actually or deceptively
concealed dangerous condition on the premises is under a duty to disclose it to the tenant
at or prior to the transfer of possession.” Faber v. Creswick, 31 N.J. 234, 242 (N.J. 1959)
(case where the defendant had put plasterboard without support over a stairwell withou
t
informing the tenant, who later fell through it) (emphasis added). The second held that
a
landlord is “under a duty to disclose a material latent condition, known to him
but
unobservable by the tenant.” See also Weintraib v. Krobatsch, 64 N.J. 445,456 (N.J. 1974)
(case dealing with an alleged known but undisclosed infestation) (emphasis added). Aside
from not dealing with NJCFA claims, none of Plaintiffs’ alleged omissions are analogous
to these cases as currently pled.
Building Materials. Plaintiffs do not allege that the Avalon was not built to code.
And, Plaintiffs have cited no case that holds that a building that is lawfully constru
cted
using materials approved by the building code can be found to be a “concealed danger
ous
condition.” That AvalonBay may have chosen after-the-fact to voluntarily exceed
the
lawful building requirements on newer buildings is of no moment for a NJCFA
claim.
Plaintiffs also have not provided any law requiring a landlord to disclose all
building
11
materials to prospective tenants, much less law saying that failure to disclose such
information can form the basis of an NJCFA claim. Additionally, Plaintiffs’ statement that
“[hjad Defendant actually disclosed that, among other things, it would allow unlicensed
plumbers to use an acetylene blow torch to perform work on the premises
.
.
.
,
Plaintiffs
and Class Members would not have agreed to enter into lease transactions with Defend
ant”
(see Pis.’ Opp’n 15), says nothing about what AvalonBay knew, when it knew it, or
even
if the use of such a blow torch was improper under the circumstances. In short, Plaintiffs
have offered no support for a NJCFA claim based on this alleged omission.
Plumbing/Maintenance Worker Credentials. Plaintiffs offer no support for their
assertion that failure to provide maintenance worker credentials in general can form the
basis for a NJCFA claim. Plaintiffs again appear to be overlooking the requirements of
NJCFA claims: they must show not only that the omission was a material fact that was
required to be disclosed, but that the fact was knowingly concealed, at the time
of the
transaction, with the intent that the plaintiffrely on the concealment, and that such omissi
on
was causally connected to the loss. The CAC contains no such allegations with respec
t to
maintenance credentials. Even if Plaintiffs had alleged that AvalonBay knew that
there
could be some risk of some unidentified harm because they planned, prior to leasing
the
units to Plaintiffs, to use unlicensed maintenance workers (which they have not so
alleged
with any particularity, if at all), such an allegation would be insufficiently specific
to state
a NJCFA claim.
Fire Safety History. Again, for an NJCFA omission claim, Plaintiffs
must
establish that, at the time of the transaction, Defendant knowingly concealed a
material fact
with the intent to deceive.
Essentially what Plaintiffs assert with respect to the fire
12
violations in their briefing is that Defendant knew the Avalon was a “fire trap” when they
rented the apartments. (See Pis.’ Opp’n at ii, 15.) First, this is not a case, for example,
where Plaintiffs allege that, prior to renting the apartments to the various Plaintiffs, there
were warnings or violations from the fire department that unsafe conditions existed at
Avalon, that Avalon failed to remedy the violations knowing there was a risk of fire absent
remediation (much less a certain or even likely risk), and that Avalon failed to disclose that
information to Plaintiffs so as to induce them to rent at Avalon.
Second, Plaintiffs have not cited to any case that provides that generally there is a
duty of a landlord to disclose all past safety or building issues of any kind at any property
the landlord does or has owned. The vast majority of past violations alleged by Plaintiffs
relate to conditions on constructions sites, not occupied apartment buildings, and the
violations have nothing to do with the event at issue here. The remainder—like an issue
with carbon monoxide alarms at another property—do not appear to have any relation
to
what happened here based on the pleadings. Additionally, the reference to an after-th
efact fire inspection that showed existing violations of the fire code at the River Mews
building says nothing about the conditions that existed at the time Defendant leased the
property. Plaintiffs appear to be arguing not only that there was an original duty to disclos
e
at the time of the transaction, but that under the NJCFA there was a continuing duty
to
disclose. Again, Plaintiffs cite no authority for such a position, nor do they allege
that
Defendant had any awareness of existing violations at the time of leasing the apartm
ents
or even at the time of the fire (even if knowledge at that time could form a basis
for a
NJCFA claim).
Far from being a “a textbook example of a NJCFA claim” as Plaintiffs assert,
13
without supporting citations (see Pls.’ Opp’n at 9), the current allegations do not come near
to stating a plausible NJCFA claim based on omissions, much less one pled with sufficient
particularity. The Court understands the emotion behind the pleadings, but Plaintiffs must
understand that not every alleged wrong can be remedied with every cause of action. Cf
Akhtar v, JDN Properties atFiorham Park, L.L.C., 2015 WL 751769, at *5 (N.J. App. Div.
Feb. 24, 2015) (“Although the breach of contract here was devastating to the construction,
the extent of damages does not in itself prove a CFA violation).
IV.
CONCLUSION
For the reasons set forth above, AvalonBay’s motion to dismiss is granted.
Although Plaintiffs’ current allegations suggest that they may not be able to state a valid
NJCFA claim, the Court will provide them an opportunity to re-plead the claim. Therefore,
the dismissal of Count III is without prejudice. Plaintiffs may file an amended complaint
by December 3, 2015. Failure to do so by this date will result in dismissal of Count III
with prejudice. An appropriate Order accompanies this Opinion.
DATED: November 1l5
JØ’SE L. LINARES
JS. DISTRICT JUDGE
14
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