Painter's Mill Grille, LLC v. Brown

• Citation: 716 F.3d 342
• Decision Date: 24 May 2013
• Docket Number: No. 12–1357.,12–1357.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)
• Parties: PAINTER'S MILL GRILLE, LLC, d/b/a Cibo's Bar & Grill; Alessandro Vitale; Sergio Vitale; Rinaldo “Aldo” Vitale, Plaintiffs–Appellants, v. Howard S. BROWN; 100 Painters Mill, LLC; David S. Brown Enterprises, Ltd; Carmella Bell; Marjorie A. Goodman and Maurice Offit, Personal Representatives of the Estate of Lee N. Sachs, Defendants–Appellees.

716 F.3d 342

PAINTER'S MILL GRILLE, LLC, d/b/a Cibo's Bar & Grill; Alessandro Vitale; Sergio Vitale; Rinaldo “Aldo” Vitale, Plaintiffs–Appellants,

v.Howard S. BROWN; 100 Painters Mill, LLC; David S. Brown Enterprises, Ltd; Carmella Bell; Marjorie A. Goodman and Maurice Offit, Personal Representatives of the Estate of Lee N. Sachs, Defendants–Appellees.

No. 12–1357.

United States Court of Appeals, Fourth Circuit.

Argued: Jan. 29, 2013.

Decided: May 24, 2013.

ARGUED:Richard Winelander, Baltimore, Maryland, for Appellants. Ramona Raula Cotca, Thompson O'Donnell LLP, Washington, D.C.; John S. Vander–Woude, Eccleston & Wolf PC, Hanover, Maryland, for Appellees. ON BRIEF:Randall H. Norton, Thompson O'Donnell LLP, Washington, D.C., for Appellees Howard S. Brown, 100 Painters Mill, LLC, and David S. Brown Enterprises, Ltd.

Before NIEMEYER, DUNCAN, and FLOYD, Circuit Judges.

Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Judge DUNCAN and Judge FLOYD joined.

OPINION

NIEMEYER, Circuit Judge:

In this appeal, we evaluate the legal sufficiency of a complaint filed by Painter's Mill Grille, LLC, the owner and operator of a restaurant in Owings Mills, Maryland, and its principals against the restaurant's landlord, 100 Painters Mill, LLC, and its agents. The complaint alleges that the landlord and its agents, motivated by racial animus, interfered with Painter's Mill Grille's business and its opportunity to sell the restaurant, including its leasehold interest, in violation of 42 U.S.C. §§ 1981, 1982, and 1985(3), as well as state tort principles.

The district court dismissed the complaint under Federal Rule of Civil Procedure 12(b)(6), finding generally that Painter's Mill Grille's principals did not have standing to be plaintiffs and that Painter's Mill Grille did not set forth sufficient “facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). We agree and accordingly affirm.

I

Painter's Mill Grille operated a restaurant known as Cibo's Bar & Grill, leasing the premises from 100 Painters Mill. The long-term lease, which commenced in 2002, provided that Painter's Mill Grille could not assign its leasehold rights without 100 Painters Mill's consent.

The relationship between landlord and tenant was a rocky one. Painter's Mill Grille repeatedly failed to pay rent as due, leading 100 Painters Mill to obtain multiple judgments against it for unpaid rent. In October 2008, Painter's Mill Grille entered into an Asset Purchase Agreement with Earnest and Betty Hines, who agreed to purchase Painter's Mill Grille's interest in the restaurant through their company CiboGrille, LLC, but the deal fell through sometime after April 2009. In January 2010, Painter's Mill Grille filed for bankruptcy protection, but the proceeding was later dismissed.

Painter's Mill Grille and its principals commenced this action against 100 Painters Mill, as well as 100 Painters Mill's parent company, David S. Brown Enterprises, Ltd., and three employees of both companies, Howard S. Brown, Lee Sachs, and Carmella Bell, seeking damages for what they allege was the defendants' racially motivated interference with the restaurant's business and with the contract between Painter's Mill Grille and the Hineses' company.

In the complaint, the plaintiffs alleged that during the course of the lease with 100 Painters Mill, Painter's Mill Grille's “clientele began to change until it became predominantly African–American. As the racial mix of the clientele changed, all of the Defendants became progressively more hostile to the Plaintiffs.” Without reciting when, where, and under what circumstances, the plaintiffs alleged that Brown, Sachs, and Bell “would refer to [the restaurant's] African–American clientele as the ‘Element,’ the ‘Undesirable Element,’ or ‘Niggers.’ ” They alleged that 100 Painters Mill arbitrarily charged rent, common area maintenance fees, and attorneys' fees and that it unreasonably refused to allow the restaurant to use the patio and to install proper signage to advertise the business. They claimed that the defendants repeatedly turned off lights in the common area, which was used to access the restaurant, or locked the doors to the common area, barring access of patrons. They alleged that the defendants had refused to accept money tendered for rent and that the rent court prosecutions were based in part on unsubstantiated amounts and were intended to drive Painter's Mill Grille “out of their building and out of business.” They also alleged that Brown, Sachs, and Bell instructed fellow employees not to patronize the restaurant.

As a result of the defendants' “constant harassment,” the plaintiffs alleged that Painter's Mill Grille decided to sell its business and, pursuant to that decision, entered into the Asset Purchase Agreement with the Hineses. After the appropriate approval was received from Baltimore County to assign the liquor license, the parties met in April 2009 to discuss the transaction. 100 Painters Mill was represented at the meeting by its in-house attorneys Sachs and Bell. During the course of that meeting, the plaintiffs alleged that Sachs asked the Hineses, who are African–American, if they were going to open another “chicken and waffle shack,” and both Sachs and Bell made “unfounded derogatory comments and accusations about [the restaurant], the Plaintiffs, and the Plaintiffs' African–American clientele.” The plaintiffs also alleged that the defendants unreasonably withheld consent from Painter's Mill Grille to assign its lease interest to the Hineses' company. They claimed that the derogatory comments and the withheld consent were designed to—and, in fact, did—cause the Hineses' company to breach its contract with Painter's Mill Grille.

Based on these allegations, the plaintiffs asserted multiple claims, including seven counts alleging violations of 42 U.S.C. §§ 1981, 1982, 1985(3), and state law prohibitions against interference with contracts and economic relationships.¹

The defendants filed motions to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) and, alternatively, for summary judgment under Rule 56. By order dated February 21, 2012, the district court granted the motions to dismiss. In its memorandum opinion, the court first addressed the ability of Painter's Mill Grille's principals (Alessandro Vitale, Sergio Vitale, and Rinaldo Vitale) to be plaintiffs in the action, concluding that “the Vitales, as members of Painter's Mill Grille, LLC, cannot bring individual claims against Defendants for injuries to their business” and that, consequently, “Painters' Mill Grille, LLC is the only Plaintiff with standing to bring this action.”

The court also dismissed with prejudice all claims against Sachs and Bell, holding that, as lawyers “acting within the scope of their legal representation of Brown Enterprises and 100 Painters Mill, LLC, they are not individually liable.”

The court then dismissed without prejudice the plaintiffs' claims of racial discrimination under 42 U.S.C. §§ 1981 and 1982 (Counts I, II, and III), concluding that, especially in light of the multiple judgments against Painter's Mill Grille for unpaid rent, it had failed plausibly to allege sufficient facts to show that the defendants were liable under those statutes.

As for the plaintiffs' § 1985(3) conspiracy claim (Count IV), the court dismissed the claim with prejudice, relying on the proposition that agents of a corporation who are acting in that capacity generally cannot conspire with each other or with their corporate principal; the plaintiffs therefore “cannot allege that two or more persons conspired against them.”

And finally with respect to the state law claims, the court decided to retain supplemental jurisdiction in the interests of judicial economy, fairness, and convenience. It dismissed Counts V and VI with prejudice, holding that the plaintiffs could not state claims for tortious interference with contract based on allegations that the defendants induced the Hineses and an unidentified third party to breach contracts to buy plaintiffs' business, reasoning that because Painter's Mill Grille could not contract to assign the lease to a third party without the landlord's consent, the defendants could not be liable for interfering with “a contract to which they have a relationship.” Finally, the court dismissed without prejudice the claim of tortious interference with economic relationships (Count VII) on the ground that the plaintiffs had failed to allege specific, actionable wrongful acts committed by the defendants.

When the plaintiffs filed an appeal from the district court's February 21, 2012 order, the defendants moved to dismiss the appeal as interlocutory because the district court had dismissed several of the plaintiffs' claims without prejudice. In opposing that motion, the plaintiffs argued that “[w]here, as here, a plaintiff elects to stand on the complaint rather than amend it, the order dismissing [the] action without prejudice becomes appealable.” Based on this election by the plaintiffs, we denied the defendants' motion to dismiss the appeal by order dated June 15, 2012.

II

Alessandro, Sergio, and Rinaldo Vitale contend that the district court erred in dismissing them as plaintiffs and holding that Painter's Mill Grille was the only proper plaintiff. They contend that they were proper plaintiffs because they “suffered personal out-of-pocket losses” as a result of the defendants' discrimination against the restaurant's African–American clientele and its prospective purchasers. They claim that they “had an independent claim for emotional distress and the financial losses personal to them,” including “the loss of net profits that would have flowed to them from the sale of [the restaurant] to the Hineses, the [money they borrowed] to refinance [the...