Guevara v. Umh Props., Inc.

• Decision Date: 29 October 2014
• Docket Number: No. 2:11-cv-2339-SHL-tmp,2:11-cv-2339-SHL-tmp
• Parties: RUBEN GUEVARA, et al., Plaintiffs, v. UMH PROPERTIES, INC., et al., Defendants.
• Court: U.S. District Court — Western District of Tennessee

RUBEN GUEVARA, et al., Plaintiffs, v. UMH PROPERTIES, INC., et al., Defendants.

No. 2:11-cv-2339-SHL-tmp

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION

October 29, 2014

ORDER ADOPTING IN PART AND REJECTING IN PART THE RECOMMENDATION; ADOPTING THE REPORT; GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

Before the Court is the Magistrate Judge's Report and Recommendation on Defendants' Motion to Dismiss (the "Report and Recommendation"), filed on August 21, 2014. (ECF No. 95.) In the Report and Recommendation, the Magistrate Judge recommended that Defendant's Motion to Dismiss be granted as to Plaintiff's claims under the common law warranty of habitability, intentional misrepresentation (except Plaintiff Guevara's claim,) and the Tennessee Consumer Protection Act (except Plaintiff Guevara's claim). The Magistrate Judge recommended that Defendant's Motion to Dismiss be denied as to all other claims.

Defendants filed objections to the Report and Recommendation on September 4, 2014. (ECF No. 96.) Plaintiffs filed a response to Defendants' objections on September 29, 2014.¹ (ECF No. 98.)

For the reasons stated below, the Court ADOPTS the factual findings in the Report and ADOPTS IN PART and REJECTS IN PART the conclusions of law. Accordingly, Defendant'sMotion to Dismiss (ECF No. 74) is hereby GRANTED as to Counts V, VI, and VII, and IX (except as to Plaintiff Guevara) and DENIED as to Counts I, II, III, IV, VIII, and IX (as to Plaintiff Guevara only).

BACKGROUND

For the purposes of Defendants' Motion to Dismiss, the Court adopts the Magistrate Judge's proposed findings of fact as laid out in the Report and Recommendation, to which neither party objected.

The Plaintiffs in this action are all residents of Memphis Mobile City ("MMC"), a manufactured housing community that was either owned by or a subsidiary of Defendant UMH Properties, Inc. Plaintiffs are of Hispanic descent, as were almost all of the residents in MMC. Many of these residents have limited English proficiency. Defendants are the owners and managers of MMC. The Plaintiffs did not purchase their mobile homes directly from Defendants, but assumed the Retail Installment Contract and Security Agreements ("RISCs") of a prior owner, either financing their mobile home through a "straw man" at the coaching of Defendant Gail Whitten (who was the manager of MMC and an employee or agent of UMH Properties, Inc.), or purchasing a mobile home with cash.

On May 1, 2010, a major flood hit Memphis and flood water rose up to nine feet within the mobile home park, necessitating coordinated rescue efforts by workers who used motor boats to evacuate residents who were stranded in high water and causing massive damage to the property of Plaintiffs and others at the mobile home park. The mobile home park is in a designated flood plain and has experienced serious flooding problems over the years. There were major floods in the park in 1987 and 1995, and many less severe ones in between.

On May 2, 2011, Plaintiffs brought this putative class action seeking declaratory judgment, permanent injunctive relief, and damages for discrimination in housing on the basis of national origin. This action is brought under the Fair Housing Act of 1968 ("FHA"), as amended, 42 U.S.C. §§ 3601 et seq., and the Tennessee Human Rights Act ("THRA"), as amended, Tenn. Code Ann. § 4-21-601 et seq. Plaintiffs also bring the action for violations of the Tennessee Consumer Protection Act ("TCPA"), Tenn. Code Ann. § 47-18-101 et seq.; breach of the common law duty to disclose a latent defect; breach of the common law warranty of habitability; violations of the Tennessee Uniform Residential Landlord and Tenant Act ("TURLTA"), Tenn. Code Ann. § 66-28-101, et seq.; fraud in the inducement of contract; fraud in the inducement of an arbitration agreement; breach of contract; intentional misrepresentation; and conversion. Defendants moved to stay the proceedings and require the Plaintiffs to arbitrate their claims because of arbitration clauses in the RISCs signed by many of the Plaintiffs. The Court required nineteen Plaintiffs to arbitrate, but allowed the case to continue as to ten remaining Plaintiffs.

On September 25, 2013, Defendants filed a motion to dismiss all claims in Plaintiffs' Amended Complaint with prejudice, pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b). On August 21, 2014, the Magistrate Judge issued a Report and Recommendation on this motion. The Magistrate Judge recommended that Defendant's Motion to Dismiss be granted as to Plaintiff's claims under the common law warranty of habitability, intentional misrepresentation (except Plaintiff Guevara's claim,) and the Tennessee Consumer Protection Act (except Plaintiff Guevara's claim).

STANDARD OF REVIEW

Pursuant to federal statute,

[a] judge of the court shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made. A judge of the court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge may also receive further evidence or recommit the matter to the magistrate judge with instructions.

28 U.S.C. § 636(b) (2006); accord Fed. R. Civ. P. 72(b)(3). The portions of the Report and Recommendation to which no objections were timely filed are reviewed for clear error. See Fed. R. Civ. P. 72(b) advisory committee notes (1983 Addition), Subdivision (b).

Defendants argue that Plaintiffs failed to state a claim upon which relief can be granted. Federal Rule of Procedure 12(b)(6) requires that a plaintiff provide enough facts to state a claim for relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint must "contain either direct or inferential allegations respecting all the material elements to sustain a recovery under some viable legal theory." Indiana State Dist. Council of Laborers & HOD Carriers Pension & Welfare Fund v. Omnicare, Inc., 719 F.3d 498, 502 (6th Cir. 2013), cert. granted, 134 S. Ct. 1490, 188 L. Ed. 2d 374 (U.S. 2014) (quoting Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005)). "While plausibility requires relief to be more than speculative, it need not be probable; rather, 'a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that recovery is very remote and unlikely.'" Montesi v. Nationwide Mut. Ins. Co., 2013 WL 4522905, *2 (W.D. Tenn. 2013) (quoting Erie County, Ohio v. Morton Salt, Inc., 702 F.3d 860, 867 (6th Cir. 2012)). While this is a liberal standard, a plaintiff must still state factual matter that, if true, would plausibly state a claim; mere conclusory allegations will not suffice and the Court need not accept as true legal conclusions or unwarranted factual inferences. Twombly, 550 U.S. 544 at 557; Gregory v. Shelby Cnty., 220 F.3d 433, 446 (6th Cir. 2000). In any complaint averring fraud or mistake, "the circumstances constituting fraud or mistake shallbe stated with particularity." Fed. R. Civ. P. 9(b). "The Plaintiffs must plead more than a generalized grievance against a collective group of Defendants in order to meet the requirements of FRCP 9(b)." Masterson v. Meade Cnty. Fiscal Court, 489 F. Supp. 2d 740, 749 (W.D. Ky. 2007).

ANALYSIS

A. FHA & THRA Claims

Plaintiffs allege that Defendants specifically targeted them for exploitative and discriminatory housing practices because of their national origin in violation of the Fair Housing Act (specifically 42 U.S.C. § 3604(b) and § 3604(c)) and the Tennessee Human Rights Act (specifically Tenn. Code Ann. § 4-21-601(2) and § 4-21-601(5)). Tennessee courts have held that the legislature intended the Tennessee Human Rights Act to be coextensive with federal civil rights laws, and the Tennessee Supreme Court looks to federal interpretation for guidance in interpreting the THRA. See Parker v. Warren Cnty. Util. Dist., 2 S.W.3d 170, 172 (Tenn. 1999). Thus, the analysis is identical for housing discrimination claims under both the FHA and the THRA.

1. § 3604(b) and §4-21-601(2)

The Fair Housing Act and Tennessee Human Rights Act both prohibit discrimination in the terms, conditions, and privileges of housing or in the provision or services in connection therewith on the basis of race, color, religion, sex, familial status, or national origin. 42 U.S.C. § 6404(b); Tenn. Code Ann. § 4-21-601(2). A plaintiff is only required to provide a short and plain statement of the claim that gives the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests in order to withstand a motion to dismiss a § 3604(b) claim and is not required to allege every element of a prima facie case. Dickinson v. ZanesvilleMetro. Hous. Auth., 975 F. Supp. 2d 863, 870-72 (S.D. Ohio 2013). Under this standard, a plaintiff need allege only the statutory basis for their claims, and the factual predicate of those claims, such that the defendants are apprised of the claims and the grounds upon which they rest. Id.

The Magistrate Judge held that Plaintiffs set forth the statutory bases for their claims and outlined the factual details supporting the allegations of Defendant's misconduct in the following ways:

1. Failing to register mobile homes in the names of buyers in spite of the fact that they were charged fees for titling, leaving them with no badge of ownership but all the responsibilities attendant thereto (Am. Compl. ¶¶ 338-55);

2. Improperly requiring residents to pay all of the property taxes associated with lots (even taxes that accrued prior to their residency), rather than only the increased taxes for affixing "their" mobile home to the land (Am. Compl. ¶¶ 129-34; 157-61);

3. Shifting all the burden for maintaining and insuring the mobile homes to the resident, even though their "ownership" rights were...