Evelyn Benton v. Phillips Edison & Company, Ltd. d/b/a Phillips Edison & Company
MEMORANDUM OPINION. See for complete details. Signed by District Judge Henry E. Hudson on 12/08/2017. (mailed copy to pro se petitioner) (nbrow)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
PHILLIPS EDISON & CO., LTD.,
Civil Action No. 3:17cv630-HEH
(Granting Motion to Dismiss & Denying Motion for Leave
to File Second Amended Complaint)
Evelyn Benton ("Plaintiff'), acting pro se, brought this action against Phillips
Edison & Co., Ltd. ("Defendant") alleging that Defendant breached the terms of
Plaintifr s commercial lease, violated the Federal Trade Commission Act, and violated
various provisions of the Virginia Code. This matter is before the Court on Defendant's
Motion to Dismiss Under Rule 12(b)(6) 1 (ECF No. 7), filed on October 20, 2017, and
Plaintifr s Motion for Leave to File Second Amended Complaint ("Pl. Mot.," ECF No.
12), filed on October 27, 2017. Although Plaintiff did not file either a response to the
Motion to Dismiss or a reply in support of her Motion for Leave to File Second Amended
Complaint, the Court finds that the facts and legal contentions are adequately presented in
the materials before it, and oral argument would not aid in the decisional process. E.D.
Va. Local Civ. R. 7(J). For the reasons stated herein, Defendant's Motion to Dismiss will
Defendant included an appropriate Roseboro Notice with its Motion, as required by Local Civil Rule
7(K) and the Fourth Circuit's decision in Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975).
be granted, and Plaintiffs Motion for Leave to File Second Amended Complaint will be
As required by Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court
assumes Plaintiffs well-pleaded allegations to be true and views all facts in the light
most favorable to her. T.G. Slater & Son v. Donald P. & Patricia A. Brennan, LLC, 385
F.3d 836, 841 (4th Cir. 2004) (citing Mylan Labs, Inc. v. Matkari, 7 F.3d 1130, 1134 (4th
Cir. 1993)). Legal conclusions, however, enjoy no such deference. Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009).
Generally, the district court does not consider extrinsic materials when evaluating
a complaint under Rule 12(b)(6). The court may, however, consider "documents
incorporated into the complaint by reference," Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322 (2007), as well as documents attached to a motion to dismiss, so
long as they are integral to or explicitly relied upon in the complaint, and the authenticity
of such documents is not disputed. United States ex rel. Oberg v. Pa. Higher Educ.
Assistance Agency, 745 F.3d 131, 136 (4th Cir. 2014); Philips v. Pitt Cnty. Mem. Hosp.,
572 F .3d 176, 180 (4th Cir. 2009). In this case, the lease Plaintiff executed with Ashland
Junction, L.C., the lease-amendment documents, and the notification Plaintiff received
from Defendant telling her that her lease was ending ("Termination Notice") are all
incorporated into the Complaint by reference, and they are additionally attached to both
the Motion to Dismiss and Plaintiffs proposed Second Amended Complaint. Neither
party disputes the authenticity of these documents, and so the Court will consider them
for purposes of resolving the motions before it.
Viewed through this lens, the facts are as follows.
In 2012, Plaintiff entered into a lease with Ashland Junction, L.C., to rent
commercial space in Ashland Junction Shopping Center in Ashland, Virginia ("Lease").
(ECF Nos. 8-1, 12-1.) Plaintiff and Ashland Junction, L.C. executed three subsequent
lease renewal amendments ("Lease Amendments") in 2013, 2014, and 2015. (ECF Nos.
8-2, 8-3, 8-4, 12-3, 12-4, 12-5.) The Third Lease Amendment, executed in 2015,
extended the term of the Lease through August 31, 2017. (ECF Nos. 8-4, 12-5.)
At the time the original Lease was executed, Ashland Junction, L.C. was
registered as a Virginia limited liability company. In February of 2016, Ashland Junction
L.C. domesticated in the state of Delaware and changed its name to Ashland Junction,
LLC. The new entity, Ashland Junction LLC, assumed all the rights and obligations of
Ashland Junction L.C., including all rights and obligations assigned to the Landlord in
Plaintiffs Lease. (See Termination Notice, ECF No. 12-8 (referring to Ashland Junction,
LLC as successor-in-interest to Ashland Junction, L.C.).)
On August 22, 2017, in its capacity as the property management agent for Ashland
Junction LLC, Defendant sent Plaintiff a Termination Notice reminding her that the
Lease was set to expire on August 31, 2017. (Id.) The Termination Notice also provided
that, pursuant to the Lease's 30-day notice requirement, the effective date of leasetermination would be September 21, 2017. (Id.)
Plaintiff filed the instant action on September 19, 2017, alleging that Defendant's
behavior and practices violated the terms of the lease, Virginia Code§§ 55-248.31,
55-222, and 54.1-2106.1, as well as the Federal Trade Commission Act. On September
22, 2017, before Defendant was served with process, Plaintiff filed an Amended
Complaint. Defendant filed its Motion to Dismiss with Roseboro Notice on October 20,
2017. Plaintiff then filed her Motion for Leave to File Second Amended Complaint on
October 27, 2017, and Defendant filed its opposition thereto on November 7, 2017.
II. STANDARD OF REVIEW
A. Motion to Dismiss
"A motion to dismiss under Rule l 2(b)( 6) tests the sufficiency of a complaint;
importantly, it does not resolve contests surrounding the facts, the merits of a claim, or
the applicability of defenses." Republican Party ofN.C. v. Martin, 980 F.2d 943, 952
(4th Cir. 1992) (citation omitted). The Federal Rules of Civil Procedure "require only
'a short and plain statement of the claim showing that the pleader is entitled to relief,' in
order to 'give the defendant fair notice of what the ... claim is and the grounds upon
which it rests."' Bell At/. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v.
Gibson, 355 U.S. 41, 47 (1957)). A complaint need not assert "detailed factual
allegations," but must contain "more than labels and conclusions" or a "formulaic
recitation of the elements of a cause of action." Twombly, 550 U.S. at 555 (citations
omitted). Thus, the "[f]actual allegations must be enough to raise a right to relief above
the speculative level," id. (citation omitted), to one that is "plausible on its face," id. at
570, rather than merely "conceivable." Id. In considering such a motion, a plaintifrs
well-pleaded allegations are taken as true and the complaint is viewed in the light most
favorable to the plaintiff. T. G. Slater, 385 F .3d at 841 (citation omitted). Legal
conclusions enjoy no such deference. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Additionally, "[a] document filed prose is 'to be liberally construed.'" Erickson
v. Pardus, 551 U.S. 89, 94 (2007) (quoting Estelle v. Gamble, 429 U.S. 97, 104-105
(1976)). To that end, "a prose complaint, however inartfully pleaded, must be held to
less stringent standards than formal pleadings drafted by lawyers." Id. (citation and
internal quotation marks omitted). Moreover, "[p]leadings must be construed to do
justice." Fed. R. Civ. P. 8(d). At the same time, courts recognize that a plaintiff "can
plead himself out of court by pleading facts that show that he has no legal claim." Atkins
v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011) (Posner, J.) (citing Hecker v. Deere
& Co., 556 F.3d 575, 588 (7th Cir. 2009); Tamayo v. Blagojevich, 526 F.3d 1074, 1086
(7th Cir. 2008); EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 777 (7th Cir.
2007); Orthmann v. Apple River Campground, 757 F.2d 909, 915 (7th Cir. 1985);
Trudeau v. FTC, 456 F .3d 178, 193 (D.C. Cir. 2006)); see also Dolgaleva v. Va. Beach
City Pub. Sch., 364 F. App'x. 820, 827 (4th Cir. 2010).
B. Motion for Leave to File Second Amended Complaint
When a plaintiff may not file an amended pleading as a matter of right, "the
disposition of a motion to amend is within the sound discretion of the district court."
Davis v. Virginia Commonwealth Univ., 180 F.3d 626, 628 (4th Cir. 1999) (citing Foman
v. Davis, 371U.S.178 (1962)). Pursuant to Fed. R. Civ. P. 15(a)(2), "[t]he court should
freely give leave [to amend pleadings] when justice so requires." "Motions to amend are
typically granted in the absence of an improper motive, such as undue delay, bad faith, or
repeated failure to cure a deficiency by amendments previously allowed." Harless v.
CSX Hotels, Inc., 389 F.3d 444, 447 (4th Cir. 2004). A lack of prejudice to the
nonmoving party, alone, ordinarily warrants granting leave to amend. Ward Elec. Serv.,
Inc. v. First Commercial Bank, 819 F.2d 496, 497 (4th Cir. 1987). However, if the
amendment would be futile such that it fails to satisfy federal pleading requirements and
would not survive a motion to dismiss, then a court may deny leave to amend. Katyle v.
Penn Nat'/ Gaming, Inc., 637 F.3d 462, 471 (4th Cir. 2011) (citation omitted).
Taking the facts in Plaintiffs Amended Complaint as true, the Court finds that she
has failed to state a claim for relief. The Court further finds that Plaintiffs proposed
Second Amended Complaint would not survive a subsequent motion to dismiss and
therefore leave to amend is not warranted.
A. Motion to Dismiss
Plaintiffs Amended Complaint can be read as presenting four counts: Defendant
violated the Lease (Count One) and Virginia Code§ 55-222 (Count Two) by only giving
Plaintiff thirty days' notice regarding the termination of her lease; Defendant violated
Virginia Code§ 55-248.31 "by non-compliance with its rental agreement" (Count Three);
and Defendant violated the Federal Trade Commission Act ("FTCA") by operating as a
managing agent for Ashland Junction, L.C./LLC without a license issued by the
Department of Professional and Occupational Regulation ("DPOR") or Certificate of
Authority issued by the State Corporation Commission ("SCC") (Count Four). As
discussed below, however, the facts and the Lease documents, construed as liberally as
possible, show that Plaintiff has not raised any viable legal claims. 2
Defendant argues that Plaintiff has failed to state a claim on Counts One through
Three because Defendant is neither the Landlord referenced in the Lease nor a party to
the Lease or its Amendments. (Mem. Supp. Mot. Dismiss 7, ECF No. 8; Lease & Lease
Amendments, ECF Nos. 8-1, 8-2, 8-3, 8-4.) Instead, all of Defendant's allegedly
unlawful actions pertaining to the termination of Plaintiffs lease were performed in its
capacity as property management agent for the landlord, Ashland Junction L.C./LLC.
(Termination Notice, ECF No. 12-8.) The law is clear that a fully disclosed agent who
acts on behalf of their principal cannot be held personally liable for such conduct.
Duncan v. Peninger, 624 F.2d 486, 490 (4th Cir. 1980) (citing Restatement (Second) of
§ 320 & Comment a (1958)); !nova Health Sys. Servs. v. Bainbridge, 2011
Va. LEXIS 255 *3-4 (Va. Oct. 21, 2011) (citing Richmond Union Passenger Ry, Co. v.
New York & Sea Beach Ry. Co., 95 Va. 386, 395 (1897)). In the Amended Complaint,
Plaintiff herself alleges that Defendant is the "Management Agent" and/or "Managing
Agent" "for the Landlord .... " (Am. Compl. 2, ECF No. 4.) The Court finds that, by
doing so, Plaintiff has effectively pied herself out of court on her claim for breach of
contract and the accompanying claims for violation of the Virginia Code. See Atkins, 631
F.3d at 588; Do/ga/eva, 364 F. App'x. at 827.
Regarding Count Four, Plaintiffs claim that Defendant has violated the FTCA, the
Court finds that Plaintiff lacks a private right of action under the Act. The Fourth Circuit
Because the Court finds that Plaintiff fails to state a claim upon which relief may be granted, it need not
address the legality and/or suitability of the various forms of relief sought in the Amended Complaint.
has explicitly recognized that "the substantive prohibitions of [the FTCA] [are]
'inextricably intertwined with provisions defining the powers and duties of a specialized
administrative body charged with its enforcement,"' and, as a result, "courts have
declined to imply any private right of action [in the FTCA] and have relied upon the
regulatory scheme to police the industry." A & E Supply Co. v. Nationwide Mut. Fire
Ins. Co., 798 F.2d 669, 675 (4th Cir. 1986) (quoting Holloway v. Bristol-Myers Corp.,
485 F.2d 986, 988-989 (D.C. Cir. 1973)). Accordingly, this Court follows the Fourth
Circuit and numerous other circuit courts in finding that Plaintiff has no legal claim
against Defendant under the FTCA.
Because Plaintiff has pied facts that show she cannot recover from Defendant for
the alleged breach of contract or violations of the Virginia Code, and because she has no
right to relief under the FTCA, the Amended Complaint must be dismissed.
B. Motion for Leave to File Second Amended Complaint
Facing Defendant's Motion to Dismiss, Plaintiff attempted to cure the deficiencies
of her Amended Complaint by filing the Motion for Leave to File Second Amended
Complaint. In the proposed Second Amended Complaint, which was incorporated into
Plaintifrs Motion, Plaintiff seeks to add Phillips Edison Limited Partnership, Phillips
Edison & Company, Inc.,3 and Ashland Junction, L.C. 4 as defendants. (See Pl. Mot. 1,
When appropriate, the Court will adopt Plaintiff's collective label "PECO" to refer to Phillips Edison &
Co., Ltd. (the original Defendant), Phillips Edison & Company, Inc., and Phillips Edison Limited
Despite explicitly adding Ashland Junction, L.C. as a defendant, Plaintiff does not name the entity in
any of her claims. Plaintiff does, however, refer to Ashland Junction, LLC in her claim for "Termination
of the Lease by an Entity Not a Party to the Lease," which the Court construes in part as Count One:.
breach of the Lease. (Pl. Mot. 7-8.) Because Ashland Junction, LLC is the successor in interest to
ECF No. 12.) Plaintiff additionally reframes her claims and asserts what the Court
liberally construes as nine counts: (1) breach of the Lease; (2) violation of Virginia Code
§ 55-222; (3) violation of Virginia Code§ 54.1-2105.2; (4) fraud in the factum and fraud
in the inducement, under Virginia law; (5) violation of the FTCA; (6) violation of federal
criminal fraud statutes, 18 U.S.C. §§ 1341, 1343; (7) violation of the Age Discrimination
in Employment Act ("ADEA"), 28 U.S.C. § 621, et seq.; (8) tortious interference with a
business expectancy under Virginia law; and (9) violation of§ 3631 of the Fair Housing
Act, 42 U.S.C. § 3601, et seq.
1. Counts Two. Three, Five, Six, Seven, & Nine
As a preliminary matter, the Court notes that Count Two of the proposed Second
Amended Complaint is identical to Count Two of the Amended Complaint, and as a
result the Court can summarily dispose of that Count as unable to survive a motion to
dismiss. See supra discussion at Part III.A. The Court can also dispose of Counts Three,
Five, Six, Seven, and Nine because these claims are founded on inapplicable law and/or
laws that do not provide for private, civil relief. Plaintifr s claims that the PECO
Defendants violated Virginia Code§ 54.1-2105.2 (Count Three), the FTCA (Count Five),
and federal criminal fraud statutes (Count Six) all fail for lack of a private right of
action. 5 The claim that the PECO Defendants violated the Age Discrimination in
Ashland Junction, L.C., and because the Court must construe prose complaints ''to do justice," see Fed.
R. Civ. P. 8(d), the Court will consider Ashland Junction, LLC to be a named Defendant for purposes of
analyzing Plaintiff's Motion for Leave to File Second Amended Complaint.
Virginia Code § 54.1-21 OS .2 provides solely for regulatory enforcement by the Virginia Real Estate
Board, the FTCA provides for regulatory enforcement by the Federal Trade Commission (see supra Part
III.A), and federal criminal law is reserved for the Department of Justice to prosecute.
Employment Act (Count Seven) necessarily fails because the statute only applies to
discrimination in the context of an employment relationship, and nowhere in the
Amended Complaint or the proposed Second Amended Complaint does Plaintiff allege
that she was an employee of any of the Defendants. Finally, Plaintifrs attempted claim
of housing discrimination (Count Nine) is not viable because the Fair Housing Act only
governs residential properties, not commercial spaces such as the leased property that is
the subject of the present dispute. Accordingly, amendment would be futile as to each of
these proposed counts.
2. Count One
Plaintifrs claim that Ashland Junction, LLC 6 breached the Lease (Count One)
would similarly not survive a motion to dismiss. To the extent that Plaintiff alleges that
Ashland Junction, LLC, is not a party to the Lease and therefore had no authority to
terminate it, her argument fails as contrary to both law and the text of the Termination
Notice, which explicitly designates Ashland Junction, LLC as successor-in-interest to
Ashland Junction, L.C, the original "Landlord". (ECF 12-8.) Additionally, Plaintifrs
assertion that the Lease was breached because she was only given ten days' notice of
termination fails to state a claim because it is contradicted by the facts as alleged and the
text of the incorporated Lease documents.
Plaintiff received the Termination Notice on August 21, 2017. (Pl. Mot. 8.) The
Notice provided Plaintiff a full 30 days before the termination would become effective on
September 21, 2017. (Id.) By doing so, Ashland Junction, LLC actually allowed
See supra note 4.
Plaintiff to continue renting the premises beyond the date on which the Third Lease
Amendment would have naturally expired: August 31, 2017. (Id.; Third Lease Am.,
ECF No. 12-5.) Moreover, although Plaintiff relies on Paragraph 26 of the Lease to
claim that she should have been relocated rather than have her lease terminated, Plaintiff
misconstrues the text of the Lease. Paragraph 26 states explicitly that, in the event it
wished to relocate the Tenant (Plaintiff), the "Landlord may, upon ninety (90) days' prior
written notice" do so. (Lease at 5, ECF No. 12-1 (emphasis added).) The word "may"
imparts no legal obligation; rather, it creates an option for the Landlord. Accordingly,
even if Paragraph 26 was applicable to Plaintiffs lease-termination scenario, Ashland
Junction, LLC, could not be held liable for failing to exercise this option.
For these reasons, the Court finds that Plaintiff has failed to state a claim for
breach of contract against Ashland Junction, LLC, the successor-in-interest to the only
other party to the Lease. To the extent that Plaintiff attempts to state a claim for breach
of contract against the PECO defendants as well, such claim fails for the reasons
discussed in the Court's analysis of the Motion to Dismiss.
3. Count Four
In Count Four, Plaintiff alleges that the PECO Defendants committed fraud by
misrepresenting their status as authorized to transact business in the Commonwealth of
Virginia, despite allegedly lacking any such certificate of authority or registration. (Pl.
Mot. at 9-10.) Specifically, Plaintiff asserts that this constituted fraud in the factum and
fraud in the inducement. Under Virginia law, the elements of common law fraud are:
"(l) a false representation, (2) of a material fact, (3) made intentionally and knowingly,
(4) with intent to mislead, (5) reliance thereon by the party misled, and (6) resulting
damage to the party misled." Owens v. DRS Auto. Fantomworks, Inc., 288 Va. 489, 497
(2014 ). A claim of fraud in the factum requires a showing of fraud in the execution of a
negotiated instrument itself, for example where the instrument was misread to the signor
or the signor was presented a document other than that which she believed herself to be
signing. Sager v. W. T. Rawleigh Co., 153 Va. 514, 526-27 (1929). Finally, to state a
claim for fraud in the inducement, a plaintiff must show that misrepresentations were
made, which were "positive statements of fact, made for the purpose of procuring the
contract; that they are untrue; that they are material; and that the party to whom they were
made relied upon them, and was induced by them to enter into the contract." Brame v.
Guarantee Finance Co., Inc., 139 Va. 394, 124 S.E. 477 (1924).
Other than alleging that the PECO Defendants' actions constituted fraud in the
factum, Plaintiff has made no allegation that fraud occurred in the execution of the Lease,
such that the document she ultimately signed was not what she believed it to be. Plaintiff
has therefore not stated a claim for fraud in the factum. Similarly, Plaintiff has not
alleged any facts to show that the PECO Defendants positively represented to her that
they were registered with the SCC, or that Plaintiff relied upon any such statements when
she negotiated the Lease and its Amendments. For this reason, Plaintiff has failed to state
a claim for fraud in the inducement or common law fraud in general.
4. Count Eight
Plaintiffs last proposed claim is that "Phillips Edison & Company constructive[ly]
denied Plaintiff other empty properties." (Pl. Mot. at 12.) The Court construes this as a
claim for tortious interference with a business expectancy (Count Eight). In support of
her claim, Plaintiff presents excerpts of what appears to be a failed negotiation for
alternative rental space, occurring two days after Plaintiff received the Termination
Notice. (Id. at 12-13.)
As established by the Virginia Supreme Court, the elements oftortious
interference with a business expectancy are as follows: "(l) the existence of a business
relationship or expectancy, with a probability of future economic benefit to plaintiff; (2)
defendant's knowledge of the relationship or expectancy; (3) a reasonable certainty that
absent defendant's intentional misconduct, plaintiff would have continued in the
relationship or realized the expectancy; and (4) damage to plaintiff." Commercial Bus.
Sys. v. Halifax Corp., 253 Va. 292, 300 (1997) (quoting Glass v. Glass, 228 Va. 39, 51-
The facts alleged in the Complaint and the excerpted e-mail exchange fail to
demonstrate that Plaintiff had a business expectancy in continuing to lease space from the
PECO Defendants after the expiration of the Third Lease Amendment. Additionally, the
facts presented are insufficient to show that the PECO Defendants engaged in intentional
misconduct by refusing to offer Plaintiff the lease-rates and/or discounts she sought. As a
result, Plaintiff has failed to state a claim on this Count as well.
For all the foregoing reasons, the Court finds that granting Plaintiff leave to amend
her Amended Complaint would be futile because none of the claims in the proposed
Second Amended Complaint would survive a successive motion to dismiss. Therefore,
Plaintiffs Motion for Leave to File Second Amended Complaint will be denied.
In sum, the Court finds that Plaintiff has failed to state a claim upon which relief
may be granted in the Amended Complaint. The Court further finds that granting
Plaintiff leave to file the proposed Second Amended Complaint would be futile, as the
claims stated therein are similarly deficient as a matter of law. Accordingly, the Motion
to Dismiss (ECF No. 7) will be granted, the Motion for Leave to File Second Amended
Complaint (ECF No. 12) will be denied, and the action will be dismissed.
An appropriate Order will accompany this Memorandum Opinion.
Henry E. Hudson
United States District Judge
Date:"'\)4. ~ aot'l
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