Capitol Services Management, Inc. v. Vesta Corp., 081319 FEDDC, 18-7135
|Opinion Judge:||MILLETT, CIRCUIT JUDGE.|
|Party Name:||Capitol Services Management, Inc., Appellant v. Vesta Corporation, Appellee|
|Attorney:||Donald M. Temple argued the cause and filed the briefs for appellant. Lindsay D. Breedlove argued the cause and filed the brief for appellee.|
|Judge Panel:||Before: Tatel, Millett, and Katsas, Circuit Judges.|
|Case Date:||August 13, 2019|
|Court:||United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit|
Argued April 12, 2019
Appeal from the United States District Court for the District of Columbia (No. 1:17-cv-01756)
Donald M. Temple argued the cause and filed the briefs for appellant.
Lindsay D. Breedlove argued the cause and filed the brief for appellee.
Before: Tatel, Millett, and Katsas, Circuit Judges.
MILLETT, CIRCUIT JUDGE.
This case concerns the proper application of the discovery rule to tortious interference claims under District of Columbia law. The district court determined that the lawsuit filed by plaintiff Capitol Services Management, Inc. was barred by the statute of limitations because Capitol Services was on "inquiry notice" of the defendant's alleged interference with its contract long before the limitations period expired. But at the motion-to-dismiss stage, dismissal on statute-of-limitations grounds is permissible only if a plaintiff's claims are conclusively time-barred on the face of the complaint. That strict standard was not met here, so we reverse and remand the case for further proceedings.
The Park Southern building (the "Property") is an apartment complex located in Southeast Washington, D.C. In 2006, the Park Southern Neighborhood Corporation ("Park Southern") acquired the Property from its prior owner, the District of Columbia, subject to a Deed of Trust. Under the terms of their agreement, if Park Southern defaulted on the terms of the Deed, the District could resume control of the Property.
Park Southern contracted with Vesta Corporation to serve as the Property's manager. However, Park Southern eventually became dissatisfied with Vesta's performance and, in March 2014, terminated its contract. Park Southern and Capitol Services then entered into a one-year management agreement that would then continue on a "year-to-year basis," unless either party terminated it with three months' notice. Complaint ¶¶ 9-10, J.A. 6.
District officials began talking almost immediately about Park Southern's management reshuffle. Milton Bailey, a District employee, emailed the Mayor's chief of staff advising that "'[w]e already have enough to send default and foreclosure notices' to effectively takeover [sic] the property." Complaint ¶ 13, J.A. 7. In a telephone call in late March, Vesta relayed to Bailey its intent to "continue to manage the property and to provide [the District with] whatever assistance [it] need[s] with respect to the ongoing condition of the property." Id. ¶ 16, J.A. 7. Vesta also communicated with the District by private email, and participated in at least five other conference calls regarding Capitol Services, the Property's "management issues," and Vesta's "interests." Id. ¶¶ 17-18, J.A. 8.
Things came to a head on May 2, 2014, when the District exercised its default remedy under the Deed of Trust and immediately took over the Property. That same day, without providing any notice to Capitol Services, the District entered into an "emergency contract" with Vesta, authorizing it to take over property management duties from Capitol Services the very next day.
Capitol Services filed suit against the District in Superior Court in July 2014. It filed an amended complaint against the District in October 2014, asserting (as relevant here) claims of tortious interference with contract and with business opportunity. In July 2016, as part of discovery in that action, Capitol Services deposed Milton Bailey. In Capitol Services' view, Bailey's testimony "revealed considerable evidence" of Vesta's alleged tortious interference. J.A. 57. Yet with respect to its claims against the District, Capitol Services came up short. In a May 2017 opinion, the Superior Court entered judgment for the District, finding that the court lacked jurisdiction because the District was entitled to sovereign immunity. The court also ruled that Capitol Services had failed to establish a prima facie case of tortious interference by the District.
On August 28, 2017, Capitol Services filed suit against Vesta in the United States District Court for the District of Columbia. Its complaint asserted claims for tortious interference with business relations and tortious interference with reasonable expectation of prospective economic advantage. Vesta moved to dismiss, asserting that (i) Capitol Services' claims were time-barred; (ii) Capitol Services was collaterally estopped from relitigating issues decided in the Superior Court action; and (iii) Capitol Services failed to state claims for which relief could be granted.
Reaching only the first issue, the district court agreed that the statute of limitations barred the suit. The court ruled that the District's three-year statute of limitations for tortious interference claims began to run on May 3, 2014, when the District terminated Capitol Services' contract and substituted Vesta in its place. Because Capitol Services did not file suit until August 28, 2017, the court dismissed the lawsuit as untimely.
In so ruling, the district court rejected Capitol Services' rejoinder that the discovery rule delayed the start of the limitations period until July 2016, when Capitol Services deposed Milton Bailey as part of the Superior Court action. In the district court's view, Capitol Services was on inquiry notice of its claims against Vesta as soon as the District ended the contract because, at that point, Capitol Services had "reason to suspect that [Vesta] did some wrong." J.A. 111. The court added that Capitol Services surely was on inquiry notice far earlier than Bailey's deposition because Capitol Services' Superior Court amended complaint against the District alleged Vesta's involvement in terminating its management agreement.
Capitol Services timely appealed.
The district court had diversity jurisdiction under 28 U.S.C. § 1332(a)(1). This court's jurisdiction rests on 28 U.S.C. § 1291.
We review de novo a Rule 12(b)(6) dismissal on statute-of-limitations grounds, accepting plaintiff's well-pleaded factual allegations as true and drawing all reasonable inferences in plaintiff's favor. Momenian v. Davison, 878 F.3d 381, 387 (D.C. Cir. 2017). At the motion to dismiss stage, dismissal on statute-of-limitations grounds is proper "only if the complaint on its face is conclusively time-barred." Commonwealth Land Title Ins. Co. v. KCI Techs., Inc., 922 F.3d 459, 464 (D.C. Cir. 2019); accord Firestone v. Firestone, 76 F.3d 1205, 1209 (D.C. Cir. 1996).
Capitol Services argues that the district court effectively converted the case to summary judgment by considering its pleadings in the Superior Court action, and so the summary-judgment standard of review should govern. But no such conversion occurred. District courts may, at the Rule 12(b)(6) stage, take judicial notice of publicly filed pleadings in related actions as evidence of what was alleged in the other actions...
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