Reed v. Luxury Vacation Home LLC

• Decision Date: 30 September 2022
• Docket Number: 20 Civ. 4243 (PGG)
• Parties: GRANT REED, Plaintiff, v. LUXURY VACATION HOME LLC; HUGH BARTON; and ANDREW ROBBINS, as Trustee of the Bird Street Real Estate Development Trust, Defendants.
• Court: U.S. District Court — Southern District of New York

GRANT REED, Plaintiff,
v.
LUXURY VACATION HOME LLC; HUGH BARTON; and ANDREW ROBBINS, as Trustee of the Bird Street Real Estate Development Trust, Defendants.

No. 20 Civ. 4243 (PGG)

United States District Court, S.D. New York

September 30, 2022

ORDER

Paul G. Gardephe United States District Judge

This case concerns the effect of the COVID-19 pandemic on the validity of a luxury vacation rental services agreement and the refundability of a security deposit paid pursuant to that agreement. Plaintiff Grant Reed seeks a declaratory judgment, and asserts claims for constructive fraud and unjust enrichment against Defendants Luxury Vacation Homes LLC (“LVH”); Hugh Barton; and Andrew Robbins, in his capacity as trustee of Bird Streets Real Estate Development Trust. Subject matter jurisdiction is premised on diversity of citizenship. (Cmplt. (Dkt. No. 1) ¶¶ 1, 7, 35-54)

Defendants have moved to dismiss, pursuant to Fed.R.Civ.P. 12(b)(1), 12(b)(2), and 12(b)(6) or, in the alternative, to dismiss or transfer this case pursuant to 28 U.S.C. § 1404 or the forum non conveniens doctrine. (Def. Motion (Dkt. No. 19))

For the reasons stated below, Defendants' motion to dismiss will be granted in part and denied in part.

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BACKGROUND

I. FACTS^[1]

Defendant LVH is a Delawar e entity with its principal place of business in New York, It “offers luxury vacation rental services for over 5,000 luxury homes in over 90 destinations worldwide.” (Cmplt. (Dkt. No. 1) ¶ 3) Defendant Barton is the “co-founder and Chief Operating Officer of LVH” and is domiciled in New York, (14 ¶ 4)

On February 17, 2020, Plaintiff executed a booking services agreement (the “Booking Agreement”) with LVH to rent a property at 1380 Mockingbird Place, Los Angeles, California (the “Property”). (Id. ¶ 5; 14, Ex. A (“Booking Agreement”) (Dkt. No. 1-1) at 2-4^[2]) The Property is owned by the Bird Streets Real Estate Development Trust (the “Trust” or the “Owner”). (Cmplt. (Dkt. No. 1) ¶ 6) Defendant Robbins is the trustee of the Trust.^[3] (Id.)

Pursuant to the Booking Agreement, LVH - as an “agent of the Owner” - agreed to rent Plaintiff the Property from August 1, 2020 through August 31, 2020, for a total cost of $347,500. (14 ¶¶ 15, 17; Booking Agreement (Dkt. No. 1-1) at 2-3) The Booking Agreement provides that the Property can accommodate up to 12 guests, plus additional staff, and that daily maid and butler services were included. (Cmplt. (Dkt. No. 1) ¶¶ 19-20; Booking Agreement (Dkt. No. 1-1) at 2) Pursuant to the Booking Agreement, $148,750 - half of the total cost for the rental - was due within two days of signing the agreement. (Booking Agreement (Dkt. No. 1-1) at 2-3)

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The balance would be due on April 30, 2020, with a security deposit of $50,000 due on July 25, 2020. (Id at 2)

The Booking Agreement provides that it “becomes binding when submitted electronically or signed by you or once the Company [LVH] has received your initial payment whichever occurs first.” (Id. at 3)

The agreement contains a “Cancellation Policy,” which states

To cancel your booking, you must provide the Company with written notice of your cancellation. All payments made by you are non-refundable. The Company will make best efforts to re-book the property for the same period and refund on [a] pro-rata basis any new rental fees up to the total amount paid by you

(Id.)

The agreement also contains a “Force Majeure” clause, which states:

Neither the Company (including its Affiliates) nor the Owner will be liable for any damages, losses or injuries caused by conditions outside of that person's control, including, without limitation, any fire, flood, hurricane, tsunami, war, revolution, terrorism or change to any law, regulation or government policy.

(Id at 4)

The agreement also contains a “Roles of the Company” provision, which states, in relevant part, that “you acknowledge with your written consent that [sic^[4] may act on your- behalf as your agent to enter into agreements with vendors and owners in order to provide services covered under this agreement.” (Id. at 3-4)^[5]

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Finally, the agreement states that

[a]ny change or amendment to this agreement, including, without limitation, an increase or decrease in the number of guests or an increase, decrease or other change to the rental period, must be made in conformity with the provisions of this agreement and, in all cases, is subject to the prior written approval of the Company, which approval may be withheld at its sole discretion, This agreement will be governed under the laws of New York State, USA and any disputes must be referred to a New York court. You cannot transfer or assign this agreement or any part thereof.

(Id at 4)

On February 17, 2020, Plaintiff executed the Booking Agreement and paid the $148,750 initial deposit (the “Deposit”), as specified in the Booking Agreement. (Cmplt. (Dkt. No. 1) ¶ 18) Plaintiff asserts that “LVH did not provide [him] with an executed copy of the Booking Agreement.” (Id. ¶ 16)

In March 2020, “international health organizations declared that the emerging threat from Covid-19 had risen to the level of a global pandemic.” (Id., ¶ 21) “As a resident of the United Kingdom, [Plaintiff was] subject to heightened travel restrictions, which includes a Covid-19 Exceptional Travel Advisory Notice advising against all non-essential travel.”

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Moreover, California - the state where the Property is located - “prohibited non-essential travel for vacations or pleasure.” (Id. ¶ 23) Similarly, the City of Los Angeles - the municipality where the Property is located - required that all non-essential businesses that require in-person attendance cease operations and prohibited private gatherings of more than nine people. (Id. ¶ 37)

Plaintiff contacted LVH to inquire about rescheduling his stay for late 2020 or 2021. (Id., ¶ 22) The Owner of the Property stated that Plaintiff could not reschedule his rental and that Plaintiffs deposit would not be refunded. (Id. ¶¶ 22, 24)

“On May 20, 2020, [Plaintiff] sent a letter to Defendants demanding the return of his Deposit, and noted Defendants' failure to register the Property and obtain a valid short-term registration number in violation of the Los Angeles Home Sharing Ordinance.” (Id., ¶ 25) According to Plaintiff, the referenced ordinance “prohibits short-term rental of real estate, such as the Property, without a registration number, and requires all advertisements for the Property to clearly list the registration number. (Id. ¶ 26)

On May 26, 2020, the Owner's representatives responded by reiterating that the Deposit would not be refunded, and that Plaintiff “was responsible for remitting the remaining balance under the ‘Lease' and ‘Rider.'” Plaintiff asserts that neither the Owner nor the Owner's representatives had previously mentioned a Lease or Rider. (See id, ¶ 27)

Shortly thereafter, the Owner disclosed to Plaintiff two “never before seen” contractual documents regarding Plaintiffs rental of the Property, including (1) a Residential Lease or Month-to-Month Rental Agreement (the “Lease”) and its attachments; and (2) a Rider to the Residential Lease or Month-to-Month Rental Agreement (the “Rider”). (Id, ¶ 28; id,, Ex. B (“Lease”) (Dkt. No. 1-1) at 6-23; id., Ex. C (“Rider”) (Dkt. No. 1-1) at 25-38) Plaintiff asserts

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that he was “surprise[d]” to see that the Rider was entered into between the Trust and ‘“Grant Reed represented by Luxury Vacation Home LLC/Hugh Barton.'” (Cmplt. (Dkt. No. 1) ¶ 29; Rider (Dkt. No. 1-1) at 25) “The Rider is signed by Barton in his purported capacity as a representative of Mr. Reed.” (Cmplt. (Dkt. No. 1) ¶ 30; Rider (Dkt. No. 1-1) at 32) The Lease, and its attachments, were also signed by Barton. (See Lease (Dkt. No. 1-1)) Barton's signatures on both the Lease and Rider are dated February 27, 2020. (E.g, Lease (Dkt. No. 1-1) at 22; Rider (Dkt. No. 1-1) at 32)

The Rider states that “[t]he Lease, as modified by this Rider, constitutes the entire agreement between the parties and supersedes any prior understanding or representation of any kind preceding the date of this Agreement. There are no other promises, conditions, understandings or other agreements, whether oral or written, relating to the subject matter of this Lease. The Lease may be modified in writing and must be signed by both Landlord [the Trust] and Tenant [Plaintiff, represented by LVH or Barton].” (Rider (Dkt. No. 1-1) at 30)

According to Plaintiff, “[t]he Booking Agreement did not authorize LVH to execute any contracts on Mr, Reed's behalf, and Mr. Reed did not provide LVH or Barton with the authority, either express or implied, to execute the Rider on his behalf.” Plaintiff also notes that “the Booking Agreement ma[kes] no reference to the Lease or Rider at all.” (Cmplt. (Dkt. No. 1) ¶ 33)

Plaintiff further alleges that “[t]he terms and conditions of the [Lease and] Rider differ substantially from those included in the Booking Agreement.” (See Id. ¶ 32) For example, rent under the Rider is $225,000, plus a security deposit of $50,000 and an exit-cleaning fee of $1,500 - for a total of $276,500. (Rider (Dkt. No. 1-1) at 25) By contrast, rent under the Lease

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and Rider is $281,000, plus a security deposit of $50,000 and $16,500 in service fees - for a total of $347,500. (Booking Agreement (Dkt. No. 1-1) at 2)

The Rider also states that

[the] Lease shall be governed by and construed in accordance with the laws of the State of California. Any action instituted by any party hereto against the other with regard to this Lease shall be in Los Angeles County, California, To the extent that any provision of this Lease shall be deemed to be invalid under applicable law, such provision shall be deemed to be deleted from this Lease, and all remaining provisions of this Lease shall remain in full force and effect.

(Rider...