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Talley v. Lincoln Property Co.

United States District Court, E.D. North Carolina, Western Division

November 14, 2019

TRACIE TALLEY, f/k/a TRACIE JONES, et al., Plaintiffs,
v.
LINCOLN PROPERTY COMPANY, et al., Defendants.

          ORDER

          JAMES C. DEVER III, United States District Judge.

         On February 7, 2019, Trade Talley, f/k/a Trade Jones ("Talley"), Demorris Walters ("Walters"), Snante Pruitt ("Pruitt"), Megan Luckey ("Luckey"), and Latoya Glover ("Glover"; collectively, "plaintiffs"), on behalf of themselves and others similarly situated, filed a second amended complaint against Lincoln Property Company ("Lincoln"), Lincoln Property Company Manager, Inc. ("LPCM"), Greystone WW Company, LLC, d/b/a Greystone at Widewaters ("Greystone"), Sterling Forest Associates, LLC, d/b/a Vert @ Six Forks ("Vert"), and Inman Park Investment Group, Inc., d/b/a Inman Park Apartments ("Inman Park"; collectively, "defendants"). Plaintiffs allege that defendants violated North Carolina's Residential Rental Agreements Act ("RRAA"), 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 ("UDTPA"), N.C. Gen. Stat § 75-1 et seq. [D.E. 42].

         On March 14, 2019, all defendants but Greystone moved to dismiss plaintiffs' second amended complaint [D.E. 47, 52, 54] and filed memoranda in support [D.E. 51, 53, 55]. See Fed.R.Civ.P. 12(b)(2), (6). On May 13, 2019, plaintiffs responded in opposition [D.E. 62, 63, 64]. On June 17 and 18, 2019, defendants replied [D.E. 73, 74, 75]. On March. 14, 2019, Greystone moved to sever [D.E. 49] and filed a memorandum in support [D.E. SO]. On May 13, 2019, plaintiffs responded in opposition [D.E. 61]. On June 11, 2019, Greystone replied [D.E. 72]. On May 16, 2019, Greystone moved for judgment on the pleadings [D.E. 65] and filed memoranda in support [D.E. 66, 76]. On July 8, 2019, plaintiffs responded in opposition [D.E. 77]. As explained below, the court grants Inman Park and Vert's motions to dismiss [D.E. 47, 52], denies Lincoln and LPCM's motions to dismiss for lack of personal jurisdiction [D.E. 54], grants Greystone's motion for judgment on the pleadings [D.E. 65], and denies as moot Greystone's motion to sever [D.E. 49].

         I.

         Plaintiffs are former tenants. See 2d Am. Compl. D.E. 42] ¶¶ 7-13. Talley leased an apartment from Greystone from April 29, 2014, until April 30, 2018. See id. ¶ 108. Walters leased an apartment from Greystone from 2013 until August 31, 2018. See Id. ¶ 130. Pruitt leased an apartment from Inman Park from November 1, 2017, until October 31, 2018. See Id. ¶152. Luckey leased an apartment from Vert from December 18, 2017, until September 17, 2018. See Id. ¶ 174. Glover leased an apartment from Greystone from September 1, 2016, until November 30, 2016. See id. ¶ 196-97. Plaintiffs allege that Greystone, Inman Park, and Vert contract with Lincoln and LPCM to manage their apartment complexes. See Id. ¶¶ 25, 30, 35. Plaintiffs also allege that Greystone, Inman Park, and Vert are vicariously liable for Lincoln and LPCM's actions and that Lincoln and LPCM defendants enforced the same policies at all three apartment complexes against plaintiffs and members of plaintiffs' purported class. See Id. ¶¶ 44-48.

         Plaintiffs' rent was due on the first day of each month "with no grace period." E.g., Pl.'s Ex. 1 [D.E. 42-1] 2 ¶ 6; Pl.'s Ex. 5 [D.E. 42-5] 2 ¶ 6; Pl.'s Ex. 6 [D.E. 42-6] 2 ¶ 6; Pl.'s Ex. 26 [D.E. 42-26] 2 ¶ 6. If plaintiffs did not pay rent on time, plaintiffs' leases authorized defendants to file for summary ejectment in state court. See, e.g., Pl.'s Ex. 1 [D.E. 42-1] 5 ¶ 31; Pl.'s Ex. 5 [D.E. 42-5] 5 ¶ 31; Pl.'s Ex. 6 [D.E. 42-6] 5 ¶ 31; Pl.'s Ex. 26 [D.E. 42-26] 5 ¶ 31. If defendants pursued summary ejectment, plaintiffs agreed to pay any "attorneys' fees and all litigation costs to the extent permitted by law." E.g., Pl.'s Ex. 1 [D.E. 42-1] 5 ¶ 31; Pl.'s Ex. 5 [D.E. 42-5] 5 ¶ 31; Pl.'s Ex. 6 [D.E. 42-6] 5 ¶ 31; Pl.'s Ex. 26 [D.E. 42-26] 5 ¶ 31. In addition, plaintiffs' leases authorized defendants to charge one of three fees depending on how far legal action against a defaulting tenant progressed: a complaint-filing fee, a court-appearance fee, or a second trial fee. See. e.g., Pl.'s Ex. 1 [D.E. 42-1] 5 ¶ 31; Pl.'s Ex. 5 [D.E. 42-5] 5 ¶ 31; Pl.'s Ex. 6 [D.E. 42-6] 5 ¶ 31; Pl.'s Ex. 26 [D.E. 42-26] 5 ¶ 31; cf N.C. Gen. Stat. § 42-46(e)-(g).

         Plaintiffs repeatedly did not pay rent on time and thus were in default. See 2d Am. Compl. ¶¶ 111, 133, 155, 177, 199. Because plaintiffs defaulted on their leases, Lincoln and LPCM sent plaintiffs letters ("the Initial CollectionLetters") notifying plaintiffs that they would owe "additional legal charges" upon initiation of summary ejectment proceedings. Id. ¶ 68: see Id. ¶¶ 111.133, 155, 177, 199; see, e.g., Pl.'s Ex. 7 [D.E. 42-7]; Pl.'s Ex. 10 [D.E. 42-10]. Defendants began summary ejectment proceedings if plaintiffs did not pay rent by approximately the 10th day of each month. See, e.g.. Id. ¶¶ 115, 137. Thus, plaintiffs allege that the Initial Collection Letters threatened to assess "eviction fees" against plaintiffs if they did not cure their default before summary ejectment proceedings began. See id. ¶ 71.

         These "eviction fees" comprised the litigation costs that defendants incurred for initiating a summary ejectment action: $96.00 for filing a summary ejectment complaint and $30 for a sheriff to effect service of process. See id. ¶¶ 119-20, 141-42, 163-64, 185-86, 207-08.[1] The "eviction fees" were distinct from the complaint-filing fee, court-appearance fee, or second trial fee that defendants could charge under the lease. See, e.g.. Id. ¶¶ 110, 132. After posting "eviction fees" to a tenant's account, defendants notified tenants that they owed "eviction fees" ("the Subsequent Collection Letter"). Id., ¶ 94; see, e.g., Pl.'s Ex. 11 [D.E. 42-11]; Pl.'s Ex. 18 [D.E. 42-18]; Pl.'s Ex. 19 [D.E. 42-19]; Pl.'s Ex. 20 [D.E. 42-20]; Pl.'s Ex. 22 [D.E. 42-22]. Once defendants assessed "eviction fees," plaintiffs allege that defendants would not remove them from an account even if defendants did not pursue or dismissed summary ejectment proceedings. See Id. ¶ 93. Plaintiffs allege that Greystone, Ihman Park, and Vert all approved the Subsequent Collection Letters that Lincoln and LPCM sent to plaintiffs and similarly-situated tenants. See Id. ¶ 96.

         Plaintiffs all paid the "eviction fees" and defendants voluntarily dismissed their summary ejectment complaints. See id. ¶¶ 126-27, 148-49, 170-71, 192-93, 214-15. Plaintiffs claim that, at that time, no attorney had been hired, no attorney had appeared in court, no hearing had been held, and no summary ejectment complaint had been filed. See, e.g., id.¶¶ 120-24, 142-46. Defendants also only sought possession of plaintiffs' apartments, not money damages. See, e.g.. Id. ¶¶ 125, 147. Thus, when plaintiffs paid the "eviction fees," plaintiffs allege that no court had awarded the "eviction fees" to defendants. See, e.g.. Id. ¶¶ 128.150. Plaintiffs also allege that they did not agree to a settlement with defendants. See, e.g.. Id. ¶¶ 129, 151.

         II.

         Lincoln and LPCM, both nonresident business entities, challenge personal jurisdiction. The court does not have personal jurisdiction over a nonresident defendant unless personal jurisdiction comports with North Carolina's long-arm statute and the Fourteenth Amendment's Due Process Clause. See, e.g. Mitrano v. Hawes, 377 F.3d 402, 406 (4th Cir. 2004). North Carolina's long-arm statute extends personal jurisdiction over nonresident defendants to the extent permitted by the Fourteenth Amendment's Due Process Clause. See Christian Sci. Bd. of Dirs. v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001). Thus, the statutory and constitutional inquiries merge. See id.

         Due process requires a defendant to have "certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Helicopteros Nacionales de Colombia. S.A. v. Hall, 466 U.S. 408, 414 (1984) (alteration and quotation omitted). The extent of the contacts needed for jurisdiction turns on whether the claims asserted against a defendant relate to or arise out of the defendant's contacts with the forum state. See ALS Scan. Inc. v. Dig. Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002). If the defendant's contacts with the state are the basis for the suit, specific jurisdiction may exist. Id. In determining specific jurisdiction, the court considers "(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." Id. (alteration and quotations omitted). Thus, the "constitutional touchstone" of specific personal jurisdiction "remains whether the defendant purposefully established minimum contacts in the forum state." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quotation omitted). Plaintiffs do not argue that Lincoln and LPCM are subject to general personal jurisdiction. See [D.E. 63] 5.

         When the court rules on a motion to dismiss for lack of personal jurisdiction without conducting an evidentiary hearing, a plaintiff need only make a prima facie showing of personal jurisdiction. See Sneha Media & Entm't LLC v. Associated Broad, Co. P Ltd., 911 F.3d 192, 196-97 (4th Cir. 2018); Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 60 (4th Cir. 1993). A plaintiff need not establish personal jurisdiction by a preponderance of the evidence at this stage. See Sneha Media, 911 F.3d at 196-97. In addition, the court construes all relevant jurisdictional allegations in the light most favorable to the plaintiff and draws the most favorable inferences for the existence of jurisdiction. Mylan Labs., Inc., 2 F.3d at 60. The court has not held an evidentiary hearing. Thus, plaintiffs need only make a prima facie showing of personal jurisdiction over Lincoln and LPCM to survive the motion to dismiss.

         Lincoln and LPCM have produced evidence that they do not own properties in North Carolina, maintain offices or agents in North Carolina, conduct any business in North Carolina, or manage any properties in North Carolina. See Austin Decl. [D.E. 55-1] ¶¶ 5(a)-(g). Thus, the court need not take plaintiffs' allegations to the contrary as true. See Wolf v. Richmond Cty. Hosp. Auth.,745 F.2d 904, 908 (4th Cir. 1984); Clark v. Remark.993 F.2d 228, 1993 WL134616, at *2 (4th Cir. 1993) (per curiam) (unpublished table decision); Bassett v. Strickland's Auto & Truck Repairs, Inc., No. 1:17CV590, 2018 WL 3542868, at ...


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