Woodland Drive LLC v. Courtovich
| Decision Date | 30 September 2021 |
| Docket Number | Civil Action 1:19-cv-00750 (CJN) |
| Court | U.S. District Court — District of Columbia |
| Parties | WOODLAND DRIVE LLC, Plaintiff, v. JAMES COURTOVICH, Defendant. |
In 2015, James Courtovich received millions for agreeing to spearhead a new lobbying business. See Compl., ECF No. 1 at ¶ 1. Woodland Drive LLC claims that Courtovich pocketed the windfall, and that he breached various contracts and committed various torts under District law against the corporation in doing so. See generally Id. As a result, Woodland has filed a lawsuit alleging six separate counts against Courtovich. See generally Id. Courtovich has moved to dismiss each of them. See generally Def.'s Mot. to Dismiss. (“Def.'s Mot.”), ECF No. 24. The Court denies Courtovich's Motion for reasons that follow.
I. Background
In late 2014, Courtovich pitched a business plan where he would establish a limited liability corporation (called SGR) to engage in government relations and lobbying efforts in exchange for seed funding. See Compl. ¶ 6. In March 2015, Courtovich borrowed $4, 000, 000 from an entity related to Woodland Drive so he could get SGR off the ground. Id. The loan served two ends. First, half of the funds were earmarked to purchase a piece of property in the District to house the business operations. Id. Second, the remaining funds were set aside to get SGR up and running. Id.
In August 2015, Woodland Drive became an official corporation under Delaware law. See Def.'s Mot., ECF No 24-2, Ex. A. Roughly a year after that, in May 2016, Woodland Drive and Courtovich entered into a security agreement. See Pl.'s Reply in Opp'n to Def.'s Mot to Dismiss (“Pl.'s Opp'n”), ECF No. 28-1 Ex. A at 6. The agreement specifies that the investor, defined as Woodland Drive, “invested . . . $4, 000, 000 . . . for the benefit of SGR.” Id. It stipulates that Courtovich, defined as the grantor, agreed to purchase property to get SGR on its feet. Id. It also obligated Courtovich to grant Woodland Drive a security interest in the property, and it required him to keep the property free and clear of all encumbrances. Id. The agreement, too, states that Courtovich agreed to observe “obligations” between the parties. Id. And it marks March 9, 2015, as the agreement's effective date. Id. As Woodland Drive sees things, the security agreement memorialized the terms and conditions of the business arrangement starting with the loan that was made to Courtovich in early 2015. Compl. ¶ 1.
Woodland Drive asserts that nothing went as planned after the parties signed the security agreement. In particular, Courtovich, Woodland Drive claims, declined to grant it a security interest in SGR, refused to provide financial information about SGR, failed to repay the loan, encumbered the purchased property, and engaged in all-around deceitful conduct. Id. ¶¶ 8, 11.
In light of Courtovich's alleged actions, Woodland Drive has brought six counts under District law: (1) fraud, (2) breach of contract for failing to grant the corporation an interest in the property, (3) breach of contract for failing to grant the corporation an interest in SGR, (4) wrongful conversion, (5) unjust enrichment, and (6) an action for accounting. See generally id.
Courtovich has moved to dismiss each of the counts. See Def.'s Mot. He argues that the fraud claim, the breach of contract claim as to the interest in SGR, the wrongful conversion claim, the unjust enrichment claim, and the action for accounting claim should all be dismissed for lack of Article III jurisdiction. Id. at 5. He also contends that the breach of contract claim for failing to grant Woodland Drive an interest in the property should be dismissed because the corporation cannot demonstrate an enforceable contract. Id. And he argues that, notwithstanding the standing issues and pleading deficiencies, the Complaint should be dismissed because it was filed outside the statute of limitations. Id.
I. Standard of Review
Federal Rule of Civil Procedure 12(b)(1) requires dismissal of a complaint if the Court lacks “subject-matter jurisdiction.” See Fed. R. Civ. P. 12(b)(1). When ruling on a motion filed under Civil Rule 12(b)(1), the Court must “treat the complaint's factual allegations as true” and must afford the plaintiff “the benefit of all inferences that can be derived from the facts alleged.” Delta Air Lines, Inc. v. Export Import Bank of U.S., 85 F.Supp.3d 250, 259 (D.D.C. 2015) (quotation omitted). Although the Court need not accept inferences unsupported by the facts alleged, the Court “may consider such materials outside the pleadings as it deems appropriate to resolve the question whether it has jurisdiction to hear the case.” XP Vehicles, Inc. v. Dep 't of Energy, 118 F.Supp.3d 38, 56 (D.D.C. 2015) (quotation omitted).
Federal Rule of Civil Procedure 12(b)(6) requires dismissal of a complaint if it “fail[s] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss filed under Civil Rule 12(b)(6), a plaintiff must plead “facts to state a claim of relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A court treats the “complaint's factual allegations as true and afford[s] the plaintiff the benefit of all inferences that can be derived from the facts alleged.” Atlas Brew Works, LLC v. Barr, 391 F.Supp.3d 6, 11 (D.D.C. 2019) (quotation omitted). Although the Court accepts all well pleaded facts in the complaint as true, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. The claim to relief must be “plausible on its face, ” id., meaning that the plaintiff must have pleaded “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).[1]
When a claim sounds in fraud, the plaintiff must satisfy the “heightened” pleading standard under Civil Rule 9(b). See United States ex rel. Cimino v. Int'l Bus. Machines Corp., 3 F.4th 412, 421 (D.C. Cir. 2021). Civil Rule 9(b) requires that when “alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Such circumstances require the plaintiff to “state the time, place and content of the false misrepresentations” and to “identify individuals allegedly involved in the fraud.” Aston v. Johnson & Johnson, 248 F.Supp.3d 43, 54 (D.D.C. 2017) (quotation omitted).
Courtovich claims that Woodland Drive “is not the proper party to maintain nearly every claim asserted” because the corporation “was formed after Courtovich allegedly received the alleged loan and after Courtovich used the proceeds of the alleged loan to purchase the property.” Def.'s Mot. at 9. Put differently, Courtovich contends that because Woodland Drive did not exist at the time of those alleged actions, it could not have suffered an injury from them. Id. As a result, he argues, Woodland Drive lacks standing to enforce any rights under the loan or to seek damages related to Courtovich's alleged noncompliance with the terms.
The Constitution of the United States limits the “judicial Power” to resolving “Cases” and “Controversies.” U.S. Const. art. III, § 2. To satisfy the case-or-controversy requirement, a plaintiff must show that she has “suffered an injury in fact, ” that is, “an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (quotation omitted). Second, the plaintiff must allege “a causal connection between the injury and the conduct complained of.” Id. (quotation omitted). In other words, “the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court.” Id. (quotation omitted). Third, the plaintiff must state facts that make it “likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Id. at 561 (quotation omitted). At the pleading stage, the plaintiff must “clearly . . . allege facts demonstrating” the existence of standing. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (quotation omitted). Stated differently, the plaintiff must assure the Court that it is a proper party to bring the lawsuit. Arizona State Legislature v. Arizona Indep. Redistricting Comm'n, 576 U.S. 787, 799 (2015).
The Complaint, along with attached exhibits, describe a single transaction over the course of more than a year. According to the Complaint, the single transaction, while drawn-out, started with Courtovich's business proposal, led to the securement of seed funding, advanced to a signed agreement, and concluded with alleged breach. Based on those allegations, Woodland Drive has standing to assert the claims in its Complaint.[2]
Moreover correspondence between Courtovich and representatives of Woodland Drive evinces Courtovich's knowledge of the existence of the corporation prior to its official incorporation in August 2015. Take, for example, an email sent on May 28, 2015, from Courtovich in which Courtovich denotes the subject line as “Woodland and SGR.” Pl.'s Opp'n, Ex. A at 4. A representative's response to that email noted that although Woodland Drive was in the offing, “the Delaware corporation, Woodland, [had not yet been] established.” Id. In an email sent roughly a year later, on March 18, 2016, Courtovich recognized the initial loan and the later agreement regarding the property as a single...
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