Nidy v. U.S. Bancorp Government Leasing and Finance, Inc. et al
Filing
26
MEMORANDUM OPINION AND ORDER granting defendant's 8 Motion to Dismiss. Denying as moot 10 MOTION to Refer this Civil Action to the United States Bankruptcy Court. Denying as moot plaintiff's 21 MOTION to Provide Additional Authority and Denying as moot Defendant's 22 MOTION to Strike. Signed by Judge John T. Copenhaver, Jr. on 6/19/2019. (cc: attys) (lca)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
DIANNA NIDY, individually and
on behalf of others similarly
situated,
Plaintiff,
v.
Civil Action no. 2:18-cv-01061
U.S. BANCORP GOVERNMENT LEASING
AND FINANCE, INC., as Trustee for
the benefit of the holders of
COMM 2013-CCRE12 Mortgagee Trust
Commercial Mortgage Pass-Through
Certificates; and WELLS FARGO
COMMERCIAL MORTGAGE SERVICING,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is the motion to dismiss filed on August 31,
2018 by defendants U.S. Bancorp Government Leasing and Finance,
Inc. (“U.S. Bank”) and Wells Fargo Commercial Mortgage Servicing
(“Wells Fargo”).1
Also pending is the plaintiff’s motion to
refer this civil action to the United States Bankruptcy Court
for the Southern District of West Virginia, filed September 7,
1
The defendants assert that the plaintiff has incorrectly named
each of them in this lawsuit and that the proper parties are (1)
U.S. Bank, National Association, as Trustee for the benefit of
the holders of COMM 2013-CCRE12 Commercial Mortgage Pass-Through
Certificates and (2) Wells Fargo Bank, National Association.
Defs.’ Mem. Supp. Mot. Dismiss (“Defs.’ Mem.”), ECF No. 9, at 1
n.1.
2018,2 for ultimate transfer to the United States Bankruptcy
Court for the Northern District of West Virginia where there is
pending the bankruptcy case of Tara Retail Group, LLC.
I.
Background
“On or about September 17, 2013, UBS Real Estate
Securities, Inc. (‘Original Lender’) lent $13,650,000.00 (the
‘Loan’) to Tara Retail Group, LLC.”
Compl. ECF No. 1, ¶ 5.
As
evidence of the Loan, Tara Retail Group executed a promissory
note (the “Note”) and Loan Agreement (the “Loan Agreement”) on
that same date for the same amount in favor of the Original
Lender.
Id.
“As security for the repayment of the Loan,” the
borrower executed a Deed of Trust and Security Agreement (“Deed
of Trust”) to a trustee for the benefit of the Original Lender.
Id. ¶ 6.
Under the Deed of Trust, the borrower “conveyed
certain real estate and personal property, . . . known as the
Crossings Mall located at 223 Crossings Mall Road, Elkview, West
Virginia 25071 for the benefit of Original Lender.”
Id.
Also
on September 17, 2013, Tara Retail Group executed an Assignment
of Leases and Rents (“ALR”) in favor of the Original Lender.
2
On December 10, 2018, plaintiff filed a motion to provide
additional authority on its motion to transfer this matter to
the United States Bankruptcy Court. ECF No. 21. The defendants
moved to strike, and alternatively responded to plaintiff’s
motion therein, on December 26, 2018. ECF No. 22.
2
Id. ¶ 8.
The ALR granted to borrower a “revocable license to
collect, receive, use and enjoy the Rents, as well as other sums
due under the Lease Guarantees,” but that license is
automatically revoked upon the occurrence of an “Event of
Default.”
ALR, ECF No. 8-3, at §§ 2.1, 3.1.
At some unspecified later time, the Original Lender
assigned the Note, the Deed of Trust, and the ALR to defendant
U.S. Bank “as Trustee for the Benefit of the Holders of Comm
2013-CCRE12 Mortgagee Trust Commercial Mortgage Pass-Through
Certificates.”
Compl., ECF No. 1, ¶ 9.
It is alleged that defendant Wells Fargo “is holder of
certain escrow accounts, including the maintenance and repair
account held for the protection of the secured property, ‘Elk
Crossings Mall.’”
Id. ¶ 3.
The secured property is leased by
Tara Retail Group, LLC, to approximately twenty-one tenants such
as “Kmart, Kroger and McDonald’s.”
Id. ¶ 7.
Wells Fargo is
named as Master Servicer in the Pooling and Servicing Agreement.
Id. ¶ 17.
The plaintiff notes that the Pooling and Servicing
Agreement states that Wells Fargo “shall use reasonable efforts
consistent with the Servicing Standard to . . . advance the
amount of any shortfall as a Property Advance unless the Master
Servicer determines in accordance with the Servicing Standard
3
that such Advance would be a Nonrecoverable Advance . . . .”
Id.
The Standard of Care in the Pooling and Servicing Agreement
also states that Wells Fargo should act to “diligently service
and administer the Loans in the best interests of [and] for the
benefit of all Certificate Holders.”
Id.
The court notes that the Pooling and Servicing
Agreement is one between and for the benefit of those on the
lender side of the transaction described above and consists of
the following entities: Deutsche Mortgage and Asset Receiving
Corporation (the “Depositor”), Wells Fargo (the “Master
Servicer” and the “Certificate Administrator, Paying Agent and
Custodian”), U.S. Bank (the “Trustee”), LNR Partners, LLC (the
“Special Servicer”), and Park Bridge Lender Services LLC (the
“Operating Advisor”).
ECF No. 8-4, at 1.
The plaintiff further alleges that there was a
covenant under the “lease agreement” between the debtor and one
of its tenants and “the Standard of Care in the Pooling and
Servicing Agreement” to maintain and preserve the property and
an “agreement to maintain the property so as to ensure that the
debt under the loan agreement would be maintained.”
No. 1, ¶ 26.
Compl., ECF
Plaintiff also claims that “[u]nder the terms of
the leases, the common areas were to be maintained for the
benefit of customers, employees, licensees and invitees of the
4
tenants.”
Id.
The plaintiff attempts to conflate the
agreements between the debtor and the lender with those between
the debtor and its tenants, despite those agreements having
different purposes and parties.
The Lease Agreement referenced by the plaintiff in her
complaint is between Tara Retail Group (Landlord) and Anytime
Fitness (Tenant) and states that the landlord “covenant[s] that
Tenant on paying the rent and performing the conditions and
covenants herein contained, shall and may peaceably and quietly
have, hold and enjoy the Premises.”
Id. ¶ 14.
The Lease
Agreement also prescribes that the “Landlord shall keep the
structural portions of the premises and the Shopping Center, as
applicable, in reasonable repair.”
Id.
“On or about January 16, 2016, the Defendant Wells
Fargo, as agent and holder of the maintenance escrow account,
was contacted by Gold Coast Partners LLC,3 requesting the
expenditure of twenty four thousand dollars, for the repair of
the culvert over which the only entrance to the shopping center
3
It is not specified in the complaint what Gold Coast Partners
LLC is or how it is related to the agreements listed above. In
the quoted note that follows, Gold Coast Partners seems to refer
to itself as the landlord which, instead, appears to be Tara
Retail Group. The defendants indicate in their memorandum in
support of their motion to dismiss that Gold Coast Partners is
the debtor’s property manager. Defs.’ Mem., ECF No. 9, at 3.
5
passed, and the repair of the ‘dirt cliff’ behind K Mart.”
¶ 11.
Id.
This request stated:
If these issues are not resolved immediately the only
entrance to the center could collapse and dirt could
continue falling behind Kmart both scenarios could
expose us, the Landlord, to personal and injury
liability cases.
Id.
Wells Fargo did not authorize the repairs as requested, and
no other defendant independently offered to pay for the repairs.
Id. ¶ 12.
The plaintiff asserts that the tenants were required
to pay into that maintenance escrow account.
See id. ¶ 30.
On June 23, 2016, the Elk Crossings Mall and the
surrounding area was flooded.
Id. ¶ 19.
“The only point of
access to the Crossings Mall shopping center was asphalt
covered, dirt and gravel fill over a culvert.
During the flood
. . . the culvert, fill and paving were washed away.”
Id. ¶ 20.
“The culvert was replaced with a bridge and the tenants began
restoration of their businesses and equipment in August, 2017.”
Id. ¶ 21.
The plaintiff and class representative, Dianna Nidy,
was employed by Kmart Corporation, a tenant of the Crossings
Mall shopping center.
Id. ¶ 1.
She lost her employment when
the center closed as a result of the loss of access.
Id.
Ms.
Nidy represents the proposed class of plaintiffs who consist of
“employees of tenants who suffered loss of income and benefits
6
as a result of flooding caused or contributed to by the
Defendants.”
Id. at 15, ¶ 26-27.
The plaintiff initiated this action in this court on
June 21, 2018.
In her complaint, plaintiff asserts four causes
of action against both defendants:
(1) “Breach of Duty Under
Loan Documents Including the Servicing Standard”; (2) “Breach of
Fiduciary Duty Under the Power of Attorney Provision of the
Assignments of Leases and Rents and the Structure of the
Financing Transaction”; (3) “Tortious Interference with a
Business Relationship”; and (4) “Breach of General Duty of
Care.”
A fifth claim is simply a request for punitive damages.
Id. at 11-15.
Each of these causes of action is based on
plaintiff’s belief that defendants breached a duty by failing to
distribute money, out of a maintenance fund into which the
tenants of Elk Crossings Mall were obligated to contribute,
which led to the closing of the businesses on the premises,
thereby harming the plaintiff and those similarly situated to
her.
The defendants have moved to dismiss each of
plaintiff’s claims on the grounds that she has failed to state a
claim upon which relief might be granted.
Before responding to
defendants’ motion, the plaintiff moved to refer this civil
7
action to the United States Bankruptcy Court.
Both motions have
been fully briefed.
II.
Jurisdiction
The plaintiff neglected to include in her complaint
the basis for federal jurisdiction in this case.
However, there
are sufficient facts available for the court to assert
jurisdiction over this matter pursuant to 28 U.S.C. § 1332.
First, it appears that Ms. Nidy is a West Virginia resident
inasmuch as it is claimed she worked in Kanawha County, West
Virginia at the time of the incident.
Next, the plaintiff
states that U.S. Bank’s legal address is in Ohio, see Compl.,
ECF No. 1, ¶ 4, and Wells Fargo does not assert that it is
principally located or was incorporated in West Virginia.
For
these reasons, it appears as though there is complete diversity
between the parties.
Regarding the amount in controversy, the plaintiff
asserts that she lost income and benefits from her employment
while the businesses at Elk Crossings Mall were closed from June
2016 until August 2017.
See id. ¶¶ 19, 21, 47.
She also
asserts a claim for punitive damages against the defendants.
Id. ¶ 45.
Accordingly, it is apparent that the amount in
controversy exceeds $75,000.
For these reasons, the court will
8
rule on the defendants’ motion to dismiss inasmuch as it has
jurisdiction over this civil action pursuant to 28 U.S.C. §
1332.
III. Legal Standard
Federal Rule of Civil Procedure 8(a)(2) requires that
a pleader provide “a short and plain statement of the claim
showing . . . entitle[ment] to relief.”
Fed. R. Civ. P.
8(a)(2); Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007).
Rule
12(b)(6) correspondingly permits a defendant to challenge a
complaint when it “fail[s] to state a claim upon which relief
can be granted . . . .”
Fed. R. Civ. P. 12(b)(6).
The required “short and plain statement” must provide
“‘fair notice of what the . . . claim is and the grounds upon
which it rests.’”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
545 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957),
overruled on other grounds, Twombly, 550 U.S. at 563); see also
Anderson v. Sara Lee Corp., 508 F.3d 181, 188 (4th Cir. 2007).
In order to survive a motion to dismiss, “a complaint 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) (quoting Twombly, 550 U.S. at
9
570); see also Monroe v. City of Charlottesville, 579 F.3d 380,
386 (4th Cir. 2009).
Application of the Rule 12(b)(6) standard requires
that the court “‘accept as true all of the factual allegations
contained in the complaint. . . .’”
Erickson, 551 U.S. at 94
(quoting Twombly, 550 U.S. at 555-56); see also S.C. Dept. of
Health and Envt’l Control v. Commerce and Indus. Ins. Co., 372
F.3d 245, 255 (4th Cir. 2004) (quoting Franks v. Ross, 313 F.3d
184, 192 (4th Cir. 2002)).
“A motion to dismiss tests the sufficiency of a
complaint,” Occupy Columbia v. Haley, 738 F.3d 107, 116 (4th
Cir. 2013), “and [the court’s] evaluation is thus generally
limited to a review of the allegations of the complaint itself.
However, [the court] also consider[s] documents that are
explicitly incorporated into the complaint by reference . . . .”
Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 165–66 (4th
Cir. 2016) (citing Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
551 U.S. 308, 322 (2007)).
10
IV.
Discussion
A. “Breach of Duty Under Loan Documents Including the
Servicing Standard”
While not clear from the complaint what cause of
action is being asserted here, the plaintiff, in her response to
the defendants’ motion to dismiss, acknowledges that this first
count is “a claim for breach of contract.”
Pl.’s Resp., ECF No.
12, at 7.
In the complaint, the plaintiff contends
[t]he failure to repair the culvert in January, 2016,
and replace it in June, 2016 was a breach of the
covenant to maintain and preserve the property under
the lease agreement, the Standard of Care in the
Pooling and Servicing Agreement . . . , the agreement
to maintain the property so as to ensure that the debt
under the loan agreement would be maintained, and
other provisions of the loan documentation.
Compl., ECF No. 1, ¶ 26.
She further alleges that “[u]nder the
terms of the leases, the common areas were to be maintained for
the benefit of customers, employees, licensees and invitees of
the tenants.”
Id.
The plaintiff also states that “as an
employee of a lease holder,” she “has the benefit of the lease
contract under assignment to the Defendants, and is beneficiary
of the duties set forth therein.”
Id. ¶ 27.
It appears from
these allegations the plaintiff concedes that neither she nor
11
any other employee of a tenant of Elk Crossings Mall is a party
to any of the relevant contracts.
West Virginia Code § 55-8-12 states:
If a covenant or promise be made for the sole benefit
of a person with whom it is not made, or with whom it
is made jointly with others, such person may maintain,
in his own name, any action thereon which he might
maintain in case it had been made with him only, and
the consideration had moved from him to the party
making such covenant or promise.
The Supreme Court of Appeals of West Virginia has “repeatedly
applied this statute and ha[s] consistently given force to the
‘sole benefit’ requirement.”
E. Steel Constructors, Inc. v.
City of Salem, 209 W. Va. 392, 403, 549 S.E.2d 266, 277 (2001).
Here, the plaintiff has only stated that the “common
areas were to be maintained for the benefit of customers,
employees, licensees and invitees of the tenants.”
No. 1, ¶ 26.
Compl., ECF
In her response, the plaintiff also presents for
the first time portions of Kmart’s lease, which purportedly was
assigned to the defendants in the ALR (Assignment of Leases and
Rents) and provides that the landlord grants to “Tenant’s
agents, employees, customers, licensees and Invitees . . . the
use of parking areas, common areas . . . , roadways, sidewalks
and access ways to public streets and highways.”
ECF No. 12, at 3 n.2.
12
Pl.’s Resp.,
Plaintiff also states that another tenant, “The
Elswick Company, LLC, d/b/a Anytime Fitness,” was directed by
Tara to pay rent directly to Wells Fargo, and that the rent
included a contribution to a common area maintenance fund.
Pl.’s Resp., ECF No. 12, at 3-4.
She further contends that
other tenants were required to pay a certain amount to Wells
Fargo for common area maintenance.
Id. at 4.
First, the plaintiff never contends that she or those
similarly situated constitute the sole beneficiary of the loan
documents.
Further, the terms of certain loan documents
expressly state that there is no third-party beneficiary.
Specifically, the Loan Agreement states, in part:
This Agreement and the other Loan Documents are for
the sole and exclusive use of Borrower and Lender and
may not be enforced, nor relied upon, by any other
Person. Nothing contained in this Agreement or the
other Loan Documents shall be deemed to confer upon
any Person other than Borrower and Lender any right to
insist upon or to enforce the performance or
observance of any of the terms, covenants and
conditions contained herein or therein.
Loan Agreement, ECF No. 8-1, at § 11.31(b).
The provisions of
the Loan Agreement and other loan documents, including the
provision set forth above, were incorporated by reference into
both the Deed of Trust and the ALR.
8-2, § 3.2; ALR, ECF No. 8-3, § 2.3.
Servicing Agreement provides:
13
See Deed of Trust, ECF No.
Finally, the Pooling and
[N]o Person other than a party to this Agreement, any
Mortgage Loan Seller, any Initial Purchaser, any
Underwriter or any Certificateholder shall have any
rights with respect to the enforcement of any of the
rights or obligations hereunder. Without limiting the
foregoing, the parties to this Agreement specifically
state that no Borrower, Manager or other party to a
Mortgage Loan is an intended third-party beneficiary
of this Agreement.
Pooling and Servicing Agreement, ECF No. 8-4, § 11.10.
Even if the defendants did breach the terms of the
loan documents or pooling agreement, the plaintiff has offered
no allegation of fact to support the contention that the
contracts were entered into for the “sole benefit” of plaintiff
or those similarly situated to her.
Indeed, the last two
provisions quoted above could hardly be plainer in establishing
the sharply limited scope of the beneficiaries of those
documents and agreements.
Plaintiff’s breach of contract claim
is dismissed.
B. Breach of Fiduciary Duty
The plaintiff asserts that each of the defendants
assumed a fiduciary duty to the Plaintiff, through the
structure of the financing transaction, including but
not limited to the collection of rents, including
funds for costs of maintenance by Wells Fargo, and the
Power of Attorney set forth in the [ALR] . . . to
maintain reasonably functional commercial premises for
the transaction of the Plaintiff’s business. The
Defendants further assumed the duties to employees of
the tenants under the contracts.
14
*
*
*
The refusal of the Defendants and each of them, to
maintain the premises in a reasonably functional
commercial condition was a breach of its obligations.
Compl., ECF No. 1, ¶¶ 30, 32.
“The fiduciary duty is a duty to act for someone
else’s benefit, while subordinating one’s personal interests to
that of the other person.
implied by law.”
It is the highest standard of duty
Elmore v. State Farm Mut. Auto. Ins. Co., 202
W. Va. 430, 435, 504 S.E.2d 893, 898 (1998) (internal citations
and quotations omitted).
“As a general rule, a fiduciary
relationship is established only when it is shown that the
confidence reposed by one person was actually accepted by the
other, and merely reposing confidence in another may not, of
itself, create the relationship.”
(citations omitted).
Id. at 436, 504 S.E.2d at 899
“In West Virginia, the required elements
of a cause of action for breach of a fiduciary duty are threefold: (1) existence of the fiduciary relationship, (2) its
breach, and (3) damage proximately caused by the breach.”
Wittenberg v. First Indep. Mortg. Co., No. 3:10-cv-58, 2011 WL
1357483, at *17 (N.D.W. Va. Apr. 11, 2011) (citing State ex rel.
Affiliated Constr. Trades Found. v. Vieweg, 205 W. Va. 687, 701,
520 S.E.2d 854, 868 (1999) (Maynard, J., concurring)).
15
The plaintiff alleges that the Power of Attorney
provision in the ALR provides a basis for the fiduciary duty
owed by defendants to plaintiff.
That provision states that the
Borrower assigned to the Lender, among other rights:
Borrower’s irrevocable power of attorney, coupled with
an interest, to take any and all of the actions set
forth in Section 3.1 of this Assignment and any or all
other actions designated by Lender for the proper
management and preservation of the Property.
Compl., ECF No. 1, ¶ 18.
In her response, the plaintiff also
refers to the Deed of Trust which states:
Borrower acknowledges that Lender has a valid interest
in maintaining the value of the property so as to
ensure that should Borrower default in the repayment
of the Debt or the performance of the Other
Obligations, lender can recover the Debt by the sale
of the property.
Pl.’s Resp., ECF No. 12, at 6; Compl., ECF No. 1, ¶ 15.
However, neither of these provisions in the Loan
Agreements creates any duty that defendants might owe to unknown
employees of the tenants of the “Borrower.”
The ALR
additionally states that the Lender has no such duty under the
agreement:
This Assignment shall not be construed to bind Lender
to the performance of any of the covenants, conditions
or provisions contained in any Lease or Lease Guaranty
or otherwise impose any obligation upon Lender.
Lender shall not be liable for any loss sustained by
Borrower resulting from . . . any other act or
omission of Lender in managing the Property after an
Event of Default. Lender shall not be obligated to
perform or discharge any obligation, duty or liability
under the Leases or any Lease Guarantees or under or
16
by reason of this Assignment and Borrower shall
indemnify Lender for, and hold Lender harmless from,
any and all liability, loss or damage which may or
might be incurred under the Leases, any Lease
Guaranties or under or by reason of this Assignment
and from any and all claims and demands whatsoever
including the defense of any such claims or demands
which may be asserted against Lender by reason of any
alleged obligations and undertakings on its part to
perform or discharge any of the terms, covenants or
agreements contained in the Leases or any Lease
Guaranties.
ALR, ECF No. 8-3, at § 4.1.
Moreover, as set forth at p. 11-14,
supra, the plaintiff and those similarly situated to her are not
parties to, nor are they the beneficiaries of, any of the
written agreements at issue.
Here, the plaintiff is merely an employee of a tenant
whose rent had been assigned to a creditor of the tenant’s
landlord, Tara Retail Group.
As noted above, there is no
contractual provision that establishes a fiduciary duty, and the
relatively attenuated relationship between the plaintiff and the
defendants is insufficient to create such a duty.
Inasmuch as the plaintiff has pled no facts that
indicate there was a fiduciary relationship between the
plaintiff and the defendants, this claim is dismissed.
17
C. Tortious Interference with a Business Relationship
The plaintiff asserts that she had a business
relationship with her employer, that the defendants “acting
intentionally, failed to maintain access to the property,
thereby depriving the Plaintiff of their employment, and the
benefits thereof,” and that the defendants knew of the nature of
the business of plaintiff’s employer.
36.
Compl., ECF No. 1, ¶¶ 34-
In her response, the plaintiff also contends that Wells
Fargo “knowingly disregarded [its duties under the loan
documents] and intentionally refused to maintain the crossing,
then, once it collapsed, refused to replace it.”
Pl.’s Resp.,
ECF No. 12, at 11.
The West Virginia Supreme Court has stated that in
order to establish a claim for tortious interference a plaintiff
must show: “(1) existence of a contractual or business
relationship or expectancy; (2) an intentional act of
interference by a party outside that relationship or expectancy;
(3) proof that the interference caused the harm sustained; and
(4) damages.”
Hatfield v. Health Mmgt. Assocs. of W. Va., 223
W. Va. 259, 267, 672 S.E.2d 395, 403 (2008) (per curiam)
(emphasis in original).
It is undisputed that the plaintiff had
a business relationship with her employer, Kmart.
18
The plaintiff has failed to plead facts to meet the
second element necessary to establish a tortious interference
with business relationship.
Here, the plaintiff argues that
Wells Fargo intentionally refused to pay to repair the culvert
both before and after the flood.
The court does not find this
to be an “intentional act of interference.”
Rather, it was at
most a failure to act.
The Restatement (Second) of Torts § 766 (Oct. 2018
Update), defines intentional interference with performance of a
contract by a third person as follows:
One who intentionally and improperly interferes with
the performance of a contract (except a contract to
marry) between another and a third person by inducing
or otherwise causing the third person not to perform
the contract, is subject to liability to the other for
the pecuniary loss resulting to the other from the
failure of the third person to perform the contract.
“The essential thing is the intent to cause the result.
If the
actor does not have this intent, his conduct does not subject
him to liability under this rule even if it has the unintended
effect of deterring the third person from dealing with the
other.”
Id. cmt. h.4
4
The intent element of this claim can be met “if the actor acts
for the primary purpose of interfering with the performance of
the contract, and also if he desires to interfere.” The element
is also met when the actor “does not act for the purpose of
interfering with the contract or desire it but knows that the
interference is certain or substantially certain to occur as a
19
In evaluating the elements for tortious interference
under California law, the Court of Appeals for the Ninth Circuit
noted that the “[m]otive or purpose to disrupt ongoing business
relationships is of central concern in a tortious interference
case.”
Rickards v. Canine Eye Registration Found., Inc., 704
F.2d 1449, 1456 (9th Cir. 1983) (citing Lowell v. Mother’s Cake
& Cookie Co., 79 Cal. App. 3d 13, 18 (1978)).
Similarly, the
Second Circuit has emphasized that a claim for tortious
interference with a contract in New York includes an
“intentional procurement of the third-party's breach of the
contract without justification.”
Premium Mortg. Corp. v.
Equifax, Inc., 583 F.3d 103, 107 (2d Cir. 2009) (quoting Lama
Holding Co. v. Smith Barney Inc., 646 N.Y.S.2d 76 (N.Y. 1996)).
The United States Bankruptcy Court for the Northern
District of West Virginia has interpreted the law in West
Virginia in a manner consistent with the Restatement and the
cases noted above:
By including “of,” [in the phrase “intentional act of
interference,”] the Hatfield court makes clear that an
act that leads to interference by coincidence is
insufficient. Moreover, “[d]efendants are not liable
for interference that is negligent rather than
intentional....” Otherwise, the law would simply
require “an intentional act that led to interference.”
result of his action.”
j.
Restatement (Second) of Torts § 766 cmt.
20
In re 201 N. George St., LLC, 551 B.R. 786, 792 (Bankr. N.D.W.
Va. 2016) (citing Hatfield 223 W. Va. at 267, 672 S.E.2d at 403)
(internal citations omitted)).
The request made by Gold Coast Partners for funds to
repair the culvert only notified the defendants that if the
culvert and “dirt wall” were not repaired, the entrance to the
shopping center could collapse, which might expose the landlord
to “personal and injury liability cases.”
11.
Compl., ECF No. 1, ¶
While the defendants, or either of them, may have acted or
failed to act intentionally with respect to repair of the
culvert, there is no allegation that the defendants did so
intentionally to interfere with the business relationship
between the plaintiff and her employer, a tenant of the
property.5
Inasmuch as the defendants are not alleged to have
intended to interfere with the business relationship between
plaintiff and her employer, the claim for tortious interference
with business relations is dismissed.
5
The plaintiff only contends that the nature of the businesses
of the tenants were known to the defendants and that they
intentionally failed to maintain access to the property,
“thereby depriving the Plaintiff” of her employment. Compl.,
ECF No. 1, at ¶¶ 35-36.
21
D. Breach of General Duty of Care
In the fourth count the plaintiff contends that the
defendants breached a duty arising under both “the Servicing
Standard” as well as the “general duty of all persons.”
39.
Id. ¶
Under both duties, the plaintiff contends that the
defendants’ refusal “to maintain the premises in a reasonably
functional commercial condition was a breach of its duty.”
Id.
¶ 42.
The defendants move to dismiss this claim on the
grounds that plaintiff has not and cannot plead that defendants
owed her a duty of care.
Defs.’ Mem., ECF No. 9, at 10.
In her response, the plaintiff cites Syllabus Point 9
of Aikens v. Debow, 208 W. Va. 486, 541 S.E.2d 576 (2000):
An individual who sustains economic loss from an
interruption in commerce caused by another's
negligence may not recover damages in the absence of
physical harm to that individual's person or property,
a contractual relationship with the alleged
tortfeasor, or some other special relationship between
the alleged tortfeasor and the individual who sustains
purely economic damages sufficient to compel the
conclusion that the tortfeasor had a duty to the
particular plaintiff and that the injury complained of
was clearly foreseeable to the tortfeasor.
Pl.’s Resp., ECF No. 12, at 10-11 (quoting Syl. Pt. 9, Aikens,
208 W. Va. at 489, 541 S.E.2d at 579).
22
She also cites the
supreme court’s description of the circumstances under which
such a duty might arise:
The existence of a special relationship will be
determined largely by the extent to which the
particular plaintiff is affected differently from
society in general. It may be evident from the
defendant's knowledge or specific reason to know of
the potential consequences of the wrongdoing, the
persons likely to be injured, and the damages likely
to be suffered. Such special relationship may be
proven through evidence of foreseeability of the
nature of the harm to be suffered by the particular
plaintiff or an identifiable class and can arise from
contractual privity or other close nexus.
Id. (quoting Aikens, 208 W. Va. at 499, 541 S.E.2d at 589).
The plaintiff does not further argue the point that a
special relationship existed between her and the defendants.
In
her complaint, the plaintiff only states, conclusionarily, that
“[t]here existed further at all times relevant herein a special
relationship under the leases between the Plaintiff’s employer
and the Defendants.”
Compl., ECF No. 1, ¶ 40.
Here, there is no physical injury, no contractual
relationship and no close nexus, nor is there any apt allegation
of the basis of a special relationship between the plaintiff and
any defendant.
The plaintiff is thus unable to show a viable
claim on that ground.
Accordingly, plaintiff’s negligence claim
is dismissed.
23
E. Punitive Damages
The complaint argues that the defendants’ conduct was
“intentional, willful and wanton, and in disregard of the civil
rights of others, and justifies the award of punitive damages.”
Id. ¶ 45.
A separate cause of action for punitive damages is
not recognized by the State of West Virginia.
Leo v. Beam Team
Inc., No. 2:10-CV-00534, 2012 WL 1111374, at *5 (S.D.W. Va. Apr.
2, 2012) (citing Roney v. Gencorp., 431 F. Supp. 2d 622, 638
(S.D.W. Va. 2006)).
In plaintiff’s response, she contends that the intent
of this cause of action “is to incorporate the preceding
paragraphs by reference,” presumably to assert a claim for
punitive damages as to each of the four causes of action.
Each
of those causes of action having been dismissed, the request for
punitive damages is moot.
V.
Conclusion
For all the foregoing reasons, it is ORDERED that
defendants’ motion to dismiss the plaintiff’s complaint be, and
hereby is, granted.
It is further ORDERED that plaintiff’s
motion to refer this civil action to the United States
Bankruptcy Court be, and hereby is, denied as moot.
24
It is also ORDERED that plaintiff’s motion to provide
additional authority in support of her motion to refer this
action to the bankruptcy court, as well as defendants’ motion to
strike plaintiff’s motion to provide additional authority, be,
and hereby are, denied as moot.
The Clerk is directed to transmit this memorandum
opinion and order to all counsel of record.
ENTER: June 19, 2019
25
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