SSGT Garrett Burn v. Lend Lease (US) Pub. P'ships
| Decision Date | 13 September 2021 |
| Docket Number | 7:20-CV-174-D |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | SSGT GARRETT BURN, et al., Plaintiffs, v. LEND LEASE (US) PUBLIC PARTNERSHIPS LLC, et al., Defendants. |
On September 18, 2020, Staff Sergeant Garrett Burn and his wife Kalie Burn ("the Burns"), and Corporal William Lewis and his wife Lakin Lewis ("the Lewises" collectively "plaintiffs"), filed a complaint alleging claims under N.C. Gen. Stat. §§ 75.1-1 et seq("UDPTA")and N.C. Gen. Stat §§ 42-38 et seq. ("RRAA"); North Carolina law claims for breach of contract, negligence, and nuisance; and claims for declaratory and injunctive relief against Lend Lease (US) Public Partnerships LLC ("Lend Lease"), Lend Lease (US) Public Partnerships Holdings LLC ("Lend Lease Holdings"), AMCC Managing Member LLC ("AMCC Managing Member"), Atlantic Marine Corps Communities LLC ("AMCC"), AMCC Property Management LLC ("AMCC Properties"), Atlantic Marine Corps Communities Property Management, LLC ("AMCC Property Management")) Winn Management Group LLC ("Winn"), and WR South LLC ("WR South" collectively "defendants") [D.E. l].[1] As explained below, the court grants in part and denies in part defendants' motion to dismiss for failure to state a claim.
Defendants are entities of Lend Lease and Winn, who own and manage over 4, 000 housing units on Marine Corps Base Camp Lejeune ("MCB Camp Lejeune") under a 50-year ground lease with the United States Department of the Navy ("DON"). See Compl.¶1 Defendants are part of a network of interconnected business activities. Specifically, Lend Lease is a Delaware limited liability company doing business in North Carolina that performed housing-related construction, renovation, or demolition work at MCB Camp Lejeune. See Id. ¶ 17. Lend Lease Holdings is a Delaware limited liability company doing business in North Carolina and is the sole member of AMCC Managing Member. See Id. ¶18. AMCC Managing Member is a Delaware limited liability company doing business in North Carolina and is an indirect subsidiary of a multinational company based in Australia also called Lend Lease. See Id. 119. AMCC Managing Member and DON are the sole members of AMCC, with AMCC Managing Member controlling a two-thirds interest in AMCC. See. Id. ¶¶19, 21. AMCC is a Delaware limited liability company doing business in North Carolina that was formed on May 16, 2005, in connection with Lend Lease winning the bid to provide privatized military housing at MCB Camp Lejeune. See Id. ¶¶ 20-21. AMCC Properties and AMCC Property Management are Delaware limited liability companies doing business in North Carolina. See Id. ¶¶ 22-24. AMCC Property Management is a division of Winn. See Id. 124. Winn is a Massachusetts limited liability company doing business in North Carolina. See Id. ¶ 25. WR South is a Delaware limited liability company doing business in North Carolina by assisting Winn with real estate management on MCB Camp Lejeune. See Id. ¶26.
Plaintiffs are service members and their spouses who lived in defendants' privatized military housing at MCB Camp Lejeune between 2015 and 2019. See Id. ¶¶ 7-15. Specifically, on August 7, 2018, the Burns executed a form lease with AMCC for a rental home at 6855 Omaha Road, Jacksonville, North Carolina 28543. See Id. ¶¶ 10-12. On October 9, 2019, the Lewises executed a form lease with AMCC for a rental unit located at 1237 Monarch Court, Jacksonville, North Carolina 28543. See Id. ¶¶ 13—15.
Each form lease listed as parties AMCC and the respective plaintiffs. See Id. ¶¶ 24, 43. AMCC was listed as "Owner" and the plaintiffs as "Resident." See [D.E. 21-2] 3.[2] Additionally, the lease listed AMCC Properties as AMCC's "Agent." See id The lease stated that AMCC was obligated to provide quality housing and property management and was "responsible for maintenance and repair of the Premises, and for ensuring that the Premises are safe and habitable." Id. at 5; Compl. ¶¶ 43-44. In exchange, plaintiffs agreed "to pay monthly Rent equal to the Basic Allowance for Military Housing at the 'with dependent' rate (the 'BAH') at the Resident's duty station of the pay grade of the Resident service member." Compl. ¶ 48 (quoting [D.E. 21-2] 3).
The form lease contains a mediation provisioa See [D.E. 25-15] 9. That provision states:
Mediation. Owner and Resident agree to mediate any dispute or claim arising between them out of this Lease, before resorting to court action. Mediation fees, if any, shall be divided equally among the parties involved. The parties agree to use a mediator selected from the mediation list incorporated in the Community Guidelines and Policies. If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to make reasonable efforts to resolve the matter through mediation, or refuses to mediate in good faith after a request has been made, men that party shall not be entitled to recover attorney's fees even if that party eventually prevails in the court proceeding. The following matters are excluded from this paragraph: (i) an unlawful detainer action; (ii) the filing or enforcement of a mechanic's lien; (iii) any claim in an amount less than or equal to $2000; and (iv) any matter within the jurisdiction of a probate, or bankruptcy court. The filing pf a court action to enable the recording of a notice of pending action, for order of attachment, receivership, injunction, or other provisional remedies, shall not constitute a waiver of the mediation provisioa
Id. The form lease also contains a choice-of-law provisioa See id. at 9. That provision states, in relevant part:
During their tenancy, plaintiffs experienced numerous problems with the residences they leased from defendants. At their residence, the Burns had standing water and moisture, the fire alarm triggering at odd hours, and problems with their HVAC system. See Compl. ¶¶ 131-33. The Burns also discovered mold throughout their home as well as evidence of moisture and water intrusion. See Id. ¶¶ 134-37. When me Burns reported me problems to defendants, defendants made ineffectual repairs that failed to abate the mold. See Id. ¶ 138. The Burns now suffer from health issues related to the moldy conditions in their home. See Id. ¶ 147.
The Lewises experienced a roach infestation and a faulty HVAC system. See Id. ¶¶ 152-71. When the Lewises reported these problems to defendants, defendants made service visits to their residence. The vendor addressing the roach infestation told the Lewises that defendants limited his service calls to 15 minutes at defendants' properties. See Id. ¶ 165. The vendors addressing the Lewises's HVAC problems failed to make proper repairs and exacerbated the HVAC system's problems. See Id. ¶ 170. The Lewises also discovered mold in their home. See Id. ¶ 172. Defendants attempted to address the mold problems but failed to address the root cause of the problem. See id ¶173.
In addition to conduct associated with the problems in plaintiffs' residences, Congress and the Government Accountability Office ("GAO") investigated defendants for various misrepresentations related to their privatized military housing, including during the periods associated with plaintiffs' issues. Specifically, plaintiffs cite a 2020 GAO investigation concluding that Lend Lease and Winn conducted, sponsored, and participated in misleading resident satisfaction surveys resulting in defendants receiving government performance bonuses and incentive payments. See Id. ¶¶ 5, 72. GAO investigations also revealed that AMCC, Lend Lease, and Winn maintained false or misleading customer service and repair and maintenance records, which plaintiffs allege continued during their residency period. See Id. ¶¶ 5, 73-82. Together, these misrepresentations allowed defendants to keep costs low and generate greater revenue from their privatized military housing. See Id. ¶ 75.
A motion to dismiss under Rule 12(b)(6) tests the complaint's legal and factual sufficiency. See Ashcroft v. Iqbal, 556 U.S. 662, 677-80 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 554-63 (2007); Coleman v Md. Court of Appeals, 626 F.3d 187.190 (4th Cir. 2010). aff d. 566 U.S. 30 (2012); Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). To withstand a Rule 12(b)(6) motion, a pleading "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal. 556 U.S. at 678 (quotation omitted); see Twombly, 550 U.S. at 570; Giarratano. 521 F.3d at 302. In considering the motion, the court must construe the facts and reasonable inferences "in the light most favorable to [the nonmoving party]." Massey v. Ojaniit 759 F.3d 343, 352 (4th Cir. 2014) (quotation omitted); see Clatterbuck v. City of Charlottesville, 708 F.3d 549.557 (4th Cir. 2013), abrogated on other grounds by Reed v. Town of Gilbert. 576 U.S. 155 (2015). A court need not accept as true a complaint's legal conclusions, "unwarranted inferences, unreasonable conclusions, or arguments." Giarratano. 521 F.3d at 302 (quotation omitted): see Iqbal, 556 U.S. at 678-79. Rather, a party's factual allegations must "nudge[ ] [its] claims," Twombly. 550 U.S. at 570, beyond the realm of "mere possibility" into "plausibility." Iqbal. 556 U.S. at 678-79.
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