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Wallace v. Greystar Real Estate Partners, LLC

United States District Court, M.D. North Carolina

September 11, 2019

KATRINA WALLACE, Plaintiff,
v.
GREYSTAR REAL ESTATE PARTNERS, LLC; GREYSTAR GP II, LLC; GREYSTAR MANAGEMENT SERVICES, L.P.; GREYSTAR RS NATIONAL, INC.; GREYSTAR RS SE LLC; GREP SOUTHEAST, LLC; and INNESBROOK APARTMENTS, LLC d/b/a SOUTHPOINT GLEN, Defendants.

          MEMORANDUM OPINION AND ORDER

          LORETTA C. BIGGS, UNITED STATES DISTRICT JUDGE

         Plaintiff initiated this putative class action alleging violations of the North Carolina Residential Rental Agreements Act, N.C. Gen. Stat. § 42-38 et seq., the North Carolina Debt Collection Act (“NCDCA”), N.C. Gen. Stat. § 75-50 et seq., and the North Carolina Unfair and Deceptive Trade Practices Act (“NCUDTPA”), N.C. Gen. Stat. § 75-1 et seq.[1] (ECF No. 32.) Before the Court are three motions to dismiss: (a) Innesbrook Apartments, LLC's (“Innesbrook”) motion to dismiss, (ECF No. 38); (b) GREP Southeast, LLC's (“GREP”) motion to dismiss, (ECF No. 49); and, (c) filing together, Greystar Real Estate Partners, LLC (“Greystar Real Estate”), Greystar Management Services, L.P. (“Greystar Management”), Greystar RS National, Inc. (“Greystar National”), and Greystar RS SE, LLC's (“Greystar SE”) (collectively, “Greystar Defendants”), motion to dismiss, (ECF No. 40).[2] Plaintiff has also filed a Motion for Jurisdictional Discovery. (ECF No. 57.) For the reasons stated below, the Court denies Innesbrook's and GREP's motions to dismiss; denies in part the Greystar Defendants' motion to dismiss; and grants Plaintiff's Motion for Jurisdictional Discovery.

         I. BACKGROUND

         Plaintiff leased an apartment at Southpoint Glen Apartments, the trade name for Innesbrook, for a period from April 23, 2017 through June 21, 2018. (ECF No. 32 ¶¶ 18, 55.)[3] Plaintiff had to undergo unexpected brain surgery in November 2017, after which she was unable to return to work. (See Id. ¶¶ 59-61.) By February 2018, Plaintiff had exhausted her savings and was unable to pay her February rental payment. (Id. ¶ 63.) On February 6, Plaintiff was charged $43.55 as a late fee. (Id. ¶ 64.) On February 13, Plaintiff received an email from a Southpoint Glen Assistant Community Manager instructing her that “all unpaid accounts have now been filed on for possession” and that an additional $201 “filing fee” charge would be required “[t]o dismiss the eviction filing.” (ECF No. 32-8.) On February 16, a charge of $201.00, titled “Legal Fees” (the “Eviction Fees”), was placed on Plaintiff's account ledger. (ECF No. 32-5 at 3.) On February 21, a Complaint in Summary Ejectment was filed in Durham County District Court, seeking possession of the premises only and “omit[ting] any claim for rents or damages.” (ECF No. 32-10 at 2.) That same day, before Defendants had obtained service on Plaintiffs for the summary ejectment action, Plaintiff paid the full balance on her account ledger. (ECF No. 32-5 at 3; ECF No. 32-10 at 5 (serving Plaintiff on February 22).) Defendants dismissed the ejectment action without prejudice a few days later. (ECF No. 32-10 at 1.)

         Plaintiff filed this action in Durham County Superior Court, and Defendants removed this action to this Court on June 13, 2018 pursuant to 28 U.S.C. §§ 1332, 1441, 1446. (ECF Nos. 1, 9.) Defendants Innesbrook and GREP filed nearly identical motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF Nos. 38, 49.) Greystar Defendants filed a motion to dismiss pursuant to Rules 12(b)(2) and 12(b)(6), arguing that this Court does not have personal jurisdiction over them and that Plaintiff has failed to state a claim. (ECF No. 40.) Because personal jurisdiction is a threshold issue which must be decided before turning to the merits of the case, Sucampo Pharm., Inc. v. Astellas Pharma, Inc., 471 F.3d 544, 548 (4th Cir. 2006), the Court will first address Greystar Defendants' arguments pursuant to Rule 12(b)(2).

         II. RULE 12(b)(2)-PERSONAL JURISDICTION

         A. Standard of Review

         On a personal jurisdiction challenge, the plaintiff bears the burden of ultimately proving personal jurisdiction by a preponderance of the evidence. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). When, however, as here, the court decides a pretrial personal jurisdiction motion without conducting an evidentiary hearing-relying instead on the motion papers, supporting legal memoranda, and allegations in the complaint[4]-the plaintiff need only make a prima facie showing of personal jurisdiction. See Consulting Eng'rs Corp. v. Geometric Ltd., 561 F.3d 273, 276 (4th Cir. 2009); Carefirst of Md., 334 F.3d at 396. “[A] plaintiff makes a prima facie showing of personal jurisdiction by presenting facts that, if true, would support jurisdiction over the defendant.” See Universal Leather, LLC v. Koro AR, S.A., 773 F.3d 553, 561 (4th Cir. 2014) (citing Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 862 (9th Cir. 2003)). However, a threshold prima facie finding of jurisdiction does not settle the issue, as the plaintiff “must eventually prove the existence of personal jurisdiction by a preponderance of the evidence, either at trial or at a pretrial evidentiary hearing.” New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416 F.3d 290, 294 n.5 (4th Cir. 2005) (citation omitted).

         When considering whether the plaintiff has made a prima facie showing of jurisdiction, the court “must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction.” Universal Leather, 773 F.3d at 558 (quoting Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)); see also Sneha Media & Entm't, LLC v. Associated Broad. Co. P Ltd., 911 F.3d 192, 196 (4th Cir. 2018) (“[W]hen the parties have not yet had a fair opportunity to develop and present the relevant jurisdictional evidence, we have treated the disposition of Rule 12(b)(2) motions to dismiss for a lack of personal jurisdiction in conceptually the same manner as we treat the disposition of motions to dismiss under Rule 12(b)(6).”). “Once a defendant presents evidence indicating that the requisite minimum contacts do not exist, the plaintiff must come forward with affidavits or other evidence in support of its position.” Pathfinder Software, 127 F.Supp.3d at 538 (quoting Vision Motor Cars, Inc. v. Valor Motor Co., 981 F.Supp.2d 464, 468 (M.D. N.C. 2013)). When both sides present evidence, factual conflicts must be resolved in favor of the party asserting jurisdiction for the limited purpose of determining whether a prima facie showing has been made. Id.

         B. Discussion

         Greystar Defendants argue that this Court lacks personal jurisdiction over them. (ECF No. 41 at 7.) Greystar Defendants introduced evidence, in the form of a declaration, that Innesbrook owns Southpoint Glen Apartments and GREP manages Southpoint Glen Apartments. (ECF No. 41-1 ¶ 7.) Greystar Defendants argue, then, that none of them have “ever performed property management services at Innesbrook.” (Id. ¶ 6.) Plaintiff argues in response that this Court has specific personal jurisdiction over Greystar Defendants, or, in the alternative, has jurisdiction under a partnership or alter ego theory. (ECF No. 56 at 10-21.) Plaintiff also moves for jurisdictional discovery, “should the Court determine that there is not sufficient evidence in the record” to exercise personal jurisdiction over each Greystar Defendant. (ECF No. 58 at 1-2.)

         A federal district court can exercise personal jurisdiction over a nonresident defendant only if “(1) such jurisdiction is authorized by the long-arm statute of the state in which the district court sits; and (2) application of the relevant long-arm statute is consistent with the Due Process Clause of the Fourteenth Amendment.” Universal Leather, 773 F.3d at 558. North Carolina's long-arm statute “permits the exercise of personal jurisdiction over a defendant to the outer limits allowable under federal due process.” Id. (citing N.C. Gen. Stat. § 1- 75.4(1)(d); Dillon v. Numismatic Funding Corp., 231 S.E.2d 629, 630 ( N.C. 1977)). The two-prong test therefore “merges into [a] single question” when North Carolina is the forum state, allowing the court to proceed directly to the constitutional analysis. See Universal Leather, 773 F.3d at 558-59; see also ESAB Grp., Inc. v. Zurich Ins. PLC, 685 F.3d 376, 391 (4th Cir. 2012).

         Under the Due Process Clause of the Fourteenth Amendment, two paths permit a court to exercise personal jurisdiction over a nonresident defendant: general or specific personal jurisdiction. Universal Leather, 773 F.3d at 559. “General personal jurisdiction requires ‘continuous and systemic' contacts with the forum state.” Perdue Foods LLC v. BRF S.A., 814 F.3d 185, 188 (4th Cir. 2016) (quoting Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S. 408, 414-16 (1984)). Plaintiff does not attempt to argue that Greystar Defendants had such contacts with North Carolina and does not assert that this Court has general personal jurisdiction over Greystar Defendants.[5] (ECF No. 56 at 10.) Instead, Plaintiff claims that this Court has specific personal jurisdiction over Greystar Defendants arising from Greystar Defendants' actions in North Carolina. (ECF No. 56 at 10.)

         For specific personal jurisdiction, the defendant must have “purposefully established minimum contacts in the forum State” such “that [it] should reasonably anticipate being haled into court there.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (internal quotation marks and citations omitted). Courts use a three-prong test to evaluate specific personal jurisdiction: “(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiffs' claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable.” Perdue Foods, 814 F.3d at 189 (quoting ALS Scan, Inc. v. Dig. Serv.

         Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002)).

         The first prong, purposeful availment, requires the district court to evaluate whether “the defendant's conduct and connection with the forum [s]tate are such that he should reasonably anticipate being haled into court there.” Universal Leather, 773 F.3d at 559 (alteration in original) (quoting Fed. Ins. Co. v. Lake Shore Inc., 886 F.2d 654, 658 (4th Cir. 1989)). This analysis is “flexible” and involves a case-by-case consideration of several factors. Id. at 560 (quoting Tire Eng'g & Distribution, LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 302 (4th Cir. 2012)). Courts have generally considered the following nonexclusive factors:

(1) whether the defendant maintained offices or agents in the State; (2) whether the defendant maintained property in the State; (3) whether the defendant reached into the State to solicit or initiate business; (4) whether the defendant deliberately engaged in significant or long-term business activities in the State; (5) whether a choice of law clause selects the law of the State; (6) whether the defendant made in-person contact with a resident of the State regarding the business relationship; (7) whether the relevant contracts required performance of duties in the State; and (8) the nature, quality, and extent of the parties' communications about the business being transacted.
Sneha Media & Entm't, 911 F.3d at 198-99 (citing Consulting Eng'rs, 561 F.3d at 278). The relationship among the defendant, the forum state, and the litigation “must arise out of contacts that the ‘defendant himself ' creates with the forum [state].” Walden v. Fiore, 571 U.S. 277, 284 (2014) (quoting Burger King, 471 U.S. at 475).

         The second prong of the specific personal jurisdiction test “requires that [Greystar Defendants'] contacts [with the forum state] form the basis for the suit.” Manley v. Air Can., 753 F.Supp.2d 551, 559 (E.D. N.C. 2010). The analysis for this prong is “generally not complicated. Where activity in the forum state is the ‘genesis of [the] dispute,' this prong is easily satisfied.” Tire Eng'g, 682 F.3d at 303 (alteration in original) (quoting CFA Inst. v. Inst. of Chartered Fin. Analysts of India, 551 F.3d 285, 295 (4th Cir. 2009)).

         The third prong requires the exercise of personal jurisdiction to be constitutionally reasonable. Perdue Foods, 814 F.3d at 189. This prong allows the Court to consider factors regarding the appropriateness and fairness of the forum, including:

(1) the burden on the defendant of litigating in the forum; (2) the interest of the forum state in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the shared interest of the states in obtaining efficient resolution of disputes; and (5) the interests of the states in furthering substantive social policies.

Consulting Eng'rs, 561 F.3d at 279 (citing Burger King, 471 U.S. at 477).

         The Court will address each Greystar Defendant to determine whether Plaintiff has made a prima facie showing of personal jurisdiction and, if Plaintiff has not made such a showing, whether Plaintiff should be allowed jurisdictional discovery on such issues.

         1. Greystar Real Estate Partners, LLC

         Most of Greystar Real Estate's contacts with North Carolina and this case stem from its operation of the Greystar website, greystar.com. (See ECF No. 32 ¶ 23(f)-(g).) Personal jurisdiction arising out of contacts established over the internet is evaluated using factors first stated in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119 (W.D. Pa. 1997), and adopted by the Fourth Circuit in ALS Scan, Inc. v. Digital Service Consultants, Inc., 293 F.3d 707 (4th Cir. ...


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