MAIA FALCONI-SACHS v. LPF SENATE SQUARE, LLC

District of Columbia
Court of Appeals
No. 14-CV-433
JUL - 7 2016
MAIA FALCONI-SACHS,
Appellant,
v. CAB-5314-12
LPF SENATE SQUARE, LLC, et al.,
Appellees.
On Appeal from the Superior Court of the District of Columbia
Civil Division
BEFORE: BLACKBURNE-RIGSBY and EASTERLY, Associate Judges; and PRYOR,
Senior Judge.
JUDGMENT
This case came to be heard on the transcript of record and the briefs filed,
and was argued by counsel. On consideration whereof, and as set forth in the opinion
filed this date, it is now hereby
ORDERED and ADJUDGED that the trial court‟s decision is affirmed in
part and reversed and remanded in part.
For the Court:
Dated: July 7, 2016.
Per Curiam opinion for the court.
Concurring opinion by Associate Judge Catharine Easterly.
Notice: This opinion is subject to formal revision before publication in the
Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the
Court of any formal errors so that corrections may be made before the bound
volumes go to press.
DISTRICT OF COLUMBIA COURT OF APPEALS
No. 14-CV-433 7/7/16
MAIA FALCONI-SACHS, APPELLANT,
V.
LPF SENATE SQUARE, LLC, et al., APPELLEES.
Appeal from the Superior Court
of the District of Columbia
(CAB-5314-12)
(Hon. Thomas J. Motley, Trial Judge)
(Argued October 13, 2015 Decided July 7, 2016)
Daniel Hornal for appellant.
Ward B. Coe III, with whom David W. Kinkopf, and Hillary H. Arnaoutakis,
were on the brief, for appellees.
Before BLACKBURNE-RIGSBY and EASTERLY, Associate Judges, and PRYOR,
Senior Judge.
Per Curiam opinion for the court.
Concurring opinion by Associate Judge EASTERLY at page 21.
PER CURIAM: Appellant Maia Falconi-Sachs appeals from an order
dismissing her complaint pursuant to Superior Court Rule of Civil Procedure 12
(b)(6) for failure to state a claim. Having paid a late rent fee of $249.85, she
2
alleges that this fee—assessed and collected by appellees, apartment building LPF
Senate Square LLC (“Senate Square”), and Bozzuto Management Company, LLC
(“Bozzuto”)—was illegal under various theories. We affirm the Superior Court‟s
12 (b)(6) ruling as to all claims but one: Ms. Falconi-Sachs‟s claim of unjust
enrichment. As to that claim, we reverse and remand for further proceedings
consistent with this opinion.
I. Facts
On August 24, 2011, appellant and another person (both recent law school
graduates) signed a one-year lease agreement—with a term beginning on that
date—for a Senate Square apartment at 201 I Street Northeast, Washington, D.C.
20002. The lease named appellant and the other person as the “Lessee,” Senate
Square as the “Lessor,” Bozzuto as the lessor‟s “Agent,” and set the monthly rent
amount at $2,499.00. The lease section entitled “Rent Payments” included a clause
(in capital letters) as follows:
RENT PAYMENTS NOT RECEIVED BY THE FIFTH
(5TH) DAY OF THE MONTH FOR WHICH SAID
PAYMENT IS DUE SHALL BE SUBJECT TO A LATE
PAYMENT CHARGE OF TEN PERCENT (10%) OF
THE MONTHLY RENT AND SUCH LATE CHARGE
3
WILL BE IMMEDIATELY DUE AND PAYABLE AS
ADDITIONAL RENT PURSUANT TO THE TERMS
OF THE LEASE. PROVIDED, HOWEVER, IN THE
EVENT LESSEE FAILS TO PAY THE RENT WITHIN
FIVE (5) DAYS AFTER THE DUE DATE, SUCH
FAILURE SHALL BE CONSIDERED A WILLFUL
NON-COMPLIANCE AND THE LESSOR OR ITS
AGENTS MAY PROCEED WITH LEGAL ACTION
PURSUANT TO STATE LAW. THE LESSEE SHALL
BE RESPONSIBLE FOR ALL COSTS, INCLUDING
ATTORNEY‟S FEES, EXPENDED BY THE LESSOR
OR HIS AGENT, IN ENFORCING THE COLLECTION
OF ANY DELINQUENT RENT AND/OR LATE
CHARGES AS PERMITTED BY STATE LAW.
[Emphasis in original]
On April 6, 2012, appellees placed a “Final Notice Letter” under appellant‟s
door, informing her that her April rent had not been received, and that a late fee in
the amount of $249.85 was due immediately. Appellant gave appellees a check for
$249.85 on April 21, 2012.
II. Procedural History
On June 27, 2012, appellant filed a class action complaint in the District of
Columbia Superior Court, alleging violations of the Consumer Protection
Procedure Act (“CPPA”), fraud, negligent misrepresentation, unconscionability,
and restitution/unjust enrichment. She amended the complaint on July 12, 2012, in
4
order to add appellees‟ addresses for service of process. On August 16, 2012, the
case was removed to the United States District Court for the District of Columbia,
but later was remanded and appellees were ordered to pay appellant‟s attorneys‟
fees. Falconi-Sachs v. LPF Senate Square, LLC, 963 F. Supp. 2d 1, 3 (D.D.C.
2013). On February 14, 2013, the case was re-opened in Superior Court, and
appellant filed a motion for class certification. Appellant later orally requested
without opposition that the motion for class certification be stayed, and the trial
court granted her request. On June 21, 2013, appellant filed a subsequent amended
complaint. Appellees then filed a motion to dismiss on July 12, 2013, and the
motion was granted on February 7, 2014.
The trial court dismissed appellant‟s CPPA cause of action, holding that it
“falls within the realm of landlord-tenant relations and thus outside the scope of the
CPPA.” The court further held that appellant‟s fraud and negligent
misrepresentation claims failed to meet the respective elements of those torts, that
her unconscionability claim failed to plead sufficient facts to show either
procedural or substantive unconscionability, and that her unjust enrichment claim
was barred by the voluntary payment doctrine. This appeal followed.
5
III. Analysis
A. Scope of Review
This court reviews de novo the dismissal of a complaint under Superior
Court Rule of Civil Procedure 12 (b)(6) for failure to state a claim on which relief
can be granted. Tingling-Clemmons v. District of Columbia, 133 A.3d 241, 245
(D.C. 2016). “In so doing, we apply the same standard the trial court was required
to apply, accepting the [factual] allegations in the complaint as true and viewing all
facts and drawing all reasonable inferences in favor of the plaintiff[ ].” Id.
(quoting Hillbroom v. PricewaterhouseCoopers LLP, 17 A.3d 566, 572 (D.C.
2011)). “To pass muster,” a complaint must “allege the elements of a legally
viable claim, and its factual allegations must be enough to raise a right to relief
above the speculative level.” Id. (quoting OneWest Bank, FSB v. Marshall, 18
A.3d 715, 721 (D.C. 2011)); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
6
B. CPPA
With respect to appellant‟s CPPA claims, this court has previously addressed
the question whether the CPPA applies to landlord-tenant relations. See Gomez v.
Independence Mgmt. of Delaware, Inc., 967 A.2d 1276, 1286 (D.C. 2009) (holding
that the CPPA does not apply to landlord-tenant relations). In Gomez, we found
that although the Council of the District of Columbia amended the enforcement
provisions of the CPPA to no longer limit the CPPA‟s private right of action
contained in D.C. Code § 28-3905 to the jurisdictional boundaries of the
Department of Consumer and Regulatory Affairs (“DCRA”)—which “may not . . .
apply the provisions of section 28-3905 to . . . landlord-tenant relations”—this
limitation had been deleted only for budgetary reasons to remove the DCRA‟s
under-funded role. Id. at 1287. In other words, the Council had no intention of
“expand[ing] the reach of the CPPA,” id. at 1287, and “did not intend by that
amendment to extend the private right of action created by the CPPA into the
realm of landlord-tenant relations.” Id. at 1286.2 Accordingly, appellant‟s CPPA
2
Appellant‟s argument that this holding was dicta is misplaced. This court
in Gomez, after deciding that the trial court had erred in granting summary
judgment on appellants‟ Sales Act claim, affirmed the dismissal of the CPPA claim
—even though the appellants had wholly premised that claim upon on the Sales
(continued . . .)
7
claims were appropriately dismissed for failure to state a claim upon which relief
can be granted.
C. Fraud
The elements of fraud are “(1) a false representation, (2) made in reference
to a material fact, (3) with knowledge of its falsity, (4) with the intent to deceive,
and (5) an action that is taken in reliance upon the representation.” In re Estate of
Nethken, 978 A.2d 603, 607 (D.C. 2009) (emphasis added). Here, appellant
alleges that appellees committed fraud by falsely representing “that [appellant] had
____________________________________
(. . . continued)
Act claim—because it concluded that the CPPA does not apply to landlord-tenant
relations. Gomez, supra, 967 A.2d at 1284-85.
Appellant further claims that this court‟s decision in Brandywine
Apartments, LLC v. McCaster, 964 A.2d 162, 170 (D.C. 2009) supports her
argument that the logic of Gomez only applies, if at all, where an existing landlord-
tenant relationship is fundamental to the claim. We find this argument
unpersuasive. In Brandywine, after a jury ruled for the plaintiff/appellee in a case
involving a rejected housing application, we upheld an award of attorneys‟ fees on
the claim. The appellant, however, did not challenge the application of the CPPA,
only the award of attorneys‟ fees. Therefore, the scope of our review in
Brandywine was limited to whether the trial court abused its discretion in
determining the appropriate attorneys‟ fees. We did not address the substance of
the jury‟s verdict regarding the CPPA claim, instead focusing on the factual record,
finding that “the trial court approached the issue of attorney fees in a careful
manner.” Id. at 169. Accordingly, our opinion in Brandywine does not affect the
applicability of Gomez to the facts of this case, which clearly arise from a dispute
occurring in a landlord-tenant relationship.
8
the obligation to pay late fees and attorney‟s fees.” Appellant‟s claim fails,
however, because the alleged misrepresentation is in essence an alleged
misrepresentation of law, not a misrepresentation of fact. Thus, even when we
accept appellant‟s allegations as true, she fails to allege the second element of
fraud, which is material fact. Accordingly, appellant‟s fraud claim was
appropriately dismissed.
D. Negligent Misrepresentation
To prevail on this claim, appellant must show that appellees (1) “made a
false statement or omitted a fact that he had a duty to disclose; (2) that it involved a
material issue; and (3) that [appellant] reasonably relied upon the false statement or
omission to [her] detriment.” Sundberg v. TTR Realty, LLC, 109 A.3d 1123, 1131
(D.C. 2015) (citation omitted, emphasis added).
Here, unlike in the fraud context, a plaintiff alleging negligent
misrepresentation “need not allege that the defendant had knowledge of the falsity
of the representation or the intent to deceive.” Id. However, she must still show
that the appellees falsely stated (or omitted) a material fact. Thus, as we have
already discussed in the fraud context, appellant‟s negligent misrepresentation
9
claim fails because they only amount to an allegation that appellees misrepresented
the law—not that they misrepresented the facts. Accordingly, the trial court did
not err in dismissing appellant‟s claim for negligent misrepresentation.
E. Unconscionability
The doctrine of unconscionability is generally applied as an affirmative
defense, not a cause of action. Williams v. Cent. Money Co., 974 F. Supp. 22, 28
(D.D.C. 1997) (“The claim of common law unconscionability appears to apply
only defensively, for example, as a response to an attempt to enforce a contract.”)
(citing Restatement (Second) of Contracts § 208 comment g); see also Findlay v.
CitiMortgage, Inc., 813 F. Supp. 2d 108, 122 (D.D.C. 2011) (“At common law . . .
unconscionability was used as a defense in contract actions, not as a basis for
obtaining damages in tort.”) (citing Williams v. Walker-Thomas Furniture Co., 350
F.2d 445, 449 (D.C. Cir. 1965)). For this reason, we do not reach the merits of the
parties‟ arguments regarding the sufficiency of appellant‟s unconscionability claim
and affirm the trial court dismissal of this claim.3
3
Although the trial court did not rest its dismissal on this ground, this court
may affirm for reasons other those given by the trial court. Chevalier v. Moon, 576
A.2d 722, 724 (D.C. 1990) (quoting Garrett v. Washington Air Compressor Co.,
466 A.2d 462, 464 n.5 (D.C. 1983)).
10
F. Unjust Enrichment/Restitution
The doctrine of unjust enrichment applies “when a person retains a benefit
(usually money) which in justice and equity belongs to another.” Jordan Keys &
Jessamy, LLP v. St. Paul Fire & Marine Ins. Co., 870 A.2d 58, 63 (D.C. 2005).
The recipient of such a benefit has “a duty to make restitution to the other person
„if the circumstances of its receipt or retention are such that, as between the two
persons, it is unjust for [the recipient] to retain it.‟” Id. (quoting RESTATEMENT OF
RESTITUTION § 1 cmt. c (AM. LAW INST. 1937)). The elements of an unjust
enrichment claim are “(1) the plaintiff conferred a benefit on the defendant; (2) the
defendant retains the benefit; and (3) under the circumstances, the defendant‟s
retention of the benefit is unjust.” News World Communications, Inc. v.
Thompsen, 878 A.2d 1218, 1222 (D.C. 2005). Here, there is no dispute that
appellant adequately pled the first two elements of an unjust enrichment claim: her
complaint alleges that she conferred a benefit on appellees by giving them her late-
fee payment and that appellees retained the payment. The issue before us is
whether the third element of the action was adequately pled.
Appellant acknowledged in her amended complaint that she paid the late fee
11
pursuant to a provision in her lease. Unjust enrichment claims typically lie in the
absence of a contractual arrangement—they provide relief in equity where
“circumstances are such that justice warrants a recovery as though there had been a
promise.” 4934, Inc. v. District of Columbia Dep’t of Emp’t Servs., 605 A.2d 50,
55 (D.C. 1992). But the existence of a contract does not automatically foreclose an
unjust enrichment claim. As the authors of the RESTATEMENT (THIRD) OF
RESTITUTION AND UNJUST ENRICHMENT § 2 cmt. c (AM. LAW INST. 2011) explain:
Judicial statements to the effect that “there can be no
unjust enrichment in contract cases” can be misleading if
taken casually. Restitution claims of great practical
significance arise in a contractual context, but they occur
at the margins, when a valuable performance has been
rendered under a contract that is invalid, or subject to
avoidance, or otherwise ineffective to regulate the
parties‟ obligations. Applied to any such circumstance,
the statement that there can be no unjust enrichment in
contract cases is plainly erroneous.
The rule is thus more nuanced: “Considerations of both justice and efficiency
require that private transfers be made pursuant to contract whenever reasonably
possible, and that the parties‟ own definition of their respective obligations—
assuming the validity of their agreement by all pertinent tests—take precedence
over the obligations that the law would impose in the absence of agreement.” Id.
(emphasis added); accord Jordan Keys & Jessamy, 870 A.2d at 64 (“One who has
12
entered into a valid contract cannot be heard to complain that the contract is unjust,
or that it unjustly enriches the party with whom he or she has reached agreement.”
(emphasis added) (footnote omitted)); Harrington v. Trotman, 983 A.2d 342, 347
(D.C. 2009) (explaining that the existence of a contract bars an unjust enrichment
claim, “[u]nless there is a basis to set aside a contract as unenforceable”).
The viability, and ultimately the success, of appellant‟s unjust enrichment
claim thus depends on whether the late-fee provision in appellant‟s lease is
legitimate and enforceable. Appellant claims it is not; she alleges that the late-fee
provision constitutes an invalid penalty provision under the common law, not a
valid liquidated damages clause. In other words, appellant asserts that the alleged
illegitimacy of the late-fee provision creates the equitable circumstance that
supports her claim of unjust enrichment and her plea for restitution.
Liquidated damages clauses in contracts deserve special scrutiny. As we
explained in District Cablevision Ltd. Partnership v. Bassin, 828 A.2d 714 (D.C.
2003): “The common law views liquidated damages clauses with a gimlet eye.
Such clauses may serve valuable purposes, as where actual damages are likely to
13
be difficult to quantify in the event that the contract is breached.” Id. at 724.4 But
“[w]hen a contract specifies a single sum in damages for any and all breaches even
though it is apparent that all are not of the same gravity, the specification is not a
reasonable effort to estimate damages; and when in addition the fixed sum greatly
exceeds the actual damages likely to be inflicted by a minor breach, its character as
a penalty becomes unmistakable.” Id. (quoting Lake River Corp. v. Carborundum
Co., 769 F.2d 1284, 1290 (7th Cir. 1985)). “Agreements to pay fixed sums plainly
without reasonable relation to any probable damage which may follow a breach
will not be enforced.” Id. (quoting Order of AHEPA v. Travel Consultants, Inc.
367 A.2d 119, 126 (D.C. 1976)). In other words, where a liquidated damages
provision is “disproportionate to the level of damages reasonably foreseeable at the
time of the making of the contract,” it will be “void as a penalty.” Id.
Here, appellant pled detailed facts to support the assertion that her fixed late
fee was an unenforceable penalty under District Cablevision. She alleged that the
4
We are more accepting of liquidated damages provisions when they are
the product of “fair arm‟s length bargaining” between parties of equal
sophistication in the negotiated transaction. 828 A.2d at 724. “But where there is
a disparity of bargaining power and one party unilaterally imposes a liquidated
damages provision in an adhesive contract, the skepticism (bordering, it has been
suggested, on outright hostility) shown by the common law to liquidated damages
is at its height.” Id.
14
late fee was based on a percentage of the monthly rent and was “not calculated
based on a reasonable estimation of anticipated or actual harm caused by a breach
of contract,” and that the $249.85 fee demanded on April 6, 2012, in fact far
exceeded “a reasonable forecast of damages flowing from the breach of the
covenant to pay rent” by April 5, 2012. More particularly, appellant alleged that
all residents in her apartment building have the same 10% late fee provision in
their leases; “[t]he late fee is calculated as a percentage of the total monthly rent,
not the net amount of rent due”; “[t]he late fee is the same regardless of how late
the payment is made, so long as it is after the 5th of the month”; appellant‟s “breach
of her obligation to pay rent by April 5, 2012 [the due date] was nominal” and cost
the landlords “far less than $249.90,” i.e. the 10% late fee assessed; the landlords
could calculate the “cost . . . for any particular payment of late rent . . . with
reasonable certainty” and “[t]he late fee of 10 percent charged . . . is far higher than
a reasonable forecast of damages flowing from a breach of the covenant to pay rent
on time”; the lease is a standard form; tenants must take or leave it and cannot
negotiate the late fee provision; the late fees are not “valid liquidated damages
clauses” because, again, they “are not a reasonable estimate of actual damages
caused by any tenant‟s breach.”
15
These allegations were sufficient to support appellant‟s unjust enrichment
claim challenging the landlord‟s retention of her late fee. See Iqbal, 556 U.S. at
678 (holding that to survive a motion to dismiss, a complaint must contain “more
than an unadorned, the-defendant-unlawfully-harmed-me accusation”; it must set
forth “sufficient factual matter, accepted as true, to „state a claim to relief that is
plausible on its face‟” (quoting Twombly, 550 U.S. at 570)); Potomac Dev. Corp.,
28 A.3d at 544 (interpreting Super. Ct. Civ. R. 8 (a) using the Iqbal-Twombly
pleading standard); see also Super. Ct. Civ. R. 8 (a) (requiring “a short and plain
statement of the claim showing that the pleader is entitled to relief”). In short, we
conclude that appellant, pursuant to Rule 12 (b)(6), has duly stated a claim for
unjust enrichment.
The trial court determined, however, that appellant‟s claim should be
dismissed pursuant to “the voluntary payment doctrine.” Quoting this court‟s
decision in Eagle Maintenance Services, Inc. v. D.C. Contract Appeals Board, 893
A.2d 569 (D.C. 2006), the trial court stated that this doctrine provides that “money
voluntarily paid under a claim of right to the payment . . . cannot be recovered by
the payor solely because the claim was illegal.” Id. at 582 (quoting Smith v. Prime
Cable of Chicago, 658 N.E.2d 1325, 1329 (Ill. App. Ct. 1995)). We conclude that
dismissal was not proper on this basis: we question the trial court‟s reliance on this
16
doctrine, but in any event conclude that the trial court improperly considered this
affirmative defense in considering whether appellant had failed to state a claim.
In Eagle Maintenance Services, we referred in passing to the voluntary
payment doctrine as an “old common law doctrine rarely cited by courts in
modern, complex transactions.” Id. (quoting Avianca, Inc. v. Corriea, No. 85-CV-
3277, 1992 WL 93128, at *6 (D.D.C. April 13, 1992)). But we limited our
discussion of this common law rule and did not explain its operation, ultimately
concluding that it (and several other common law doctrines) did not apply. To
discern what we meant by the “voluntary payment doctrine,” we look to the cases
we cited in that opinion: Avianca and Smith v. Prime Cable of Chicago, 658
N.E.2d 1325 (Ill. App. 1995). Only Avianca provides a detailed explanation5:
The doctrine might be best thought of as a corollary to
the general rule about contracts without consideration:
while such a contract is not enforceable, once completed
it is generally irrevocable; one cannot take a “gift” back
once given. The voluntary payment doctrine is thus a
rule against welshing. . . . The doctrine is most
commonly applied in situations where the terms of an
5
The court in Smith briefly acknowledged that voluntary payment could
function in some cases as a waiver of rights, but then held that any assertion of
voluntary payment could not serve as the foundation for a determination that a
plaintiff had failed to state a claim. 658 N.E.2d at 1329; see infra pages 18-20.
17
initial contract have not been fulfilled by a seller/payee
(for whatever reason) and a subsequent agreement, one
that decreases the burden or increases the compensation
to the seller/payee without consideration, replaces it . . . .
Once the subsequent agreement has been performed, a
payor cannot then sue on the initial contract to get his
payments back; the payor is deemed to have waived its
rights.
1992 WL 93128, at *6 (citations omitted).
Relatedly, the Restatement (Third) of Restitution & Unjust Enrichment has
recognized that voluntary payment may potentially bar a claim to recoup payments
that are made with full knowledge of the uncertainty as to the amount actually
owed. See RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT § 6
cmt. e (AM. LAW INST. 2011) The Restatement explains that it is “at least
paradoxical to suppose that the overpayment of an asserted (or any payment of a
non-existent) liability could ever be voluntary, and it is important to bear in mind
that the proper operation of the voluntary payment rule must be realistic rather than
artificial.” Id. Accordingly, “judicial statements to the effect that „money
voluntarily paid with knowledge of the facts cannot be recovered back[]‟. . . . must
be treated with caution.” A better articulation of the rule is: “[M]oney voluntarily
paid in the face of a recognized uncertainty as to the existence or extent of the
payor’s obligation to the recipient may not be recovered, on the ground of
„mistake,‟ merely because the payment is subsequently revealed to have exceeded
18
the true amount of the underlying obligation.” Id.6 The Restatement views this as
nothing more than proper allocation of risk: “[One] form of risk allocation takes
place when a payor assumes unilaterally the risk of uncertainty—electing to satisfy
a demand, even without compromise as to amount, in the face of recognized
uncertainty about the payor‟s underlying liability.” Id. at § 6 cmt. d.
But we need not definitively resolve how the above-described principles
apply in this case. Voluntary payment is an affirmative defense, see Eagle Maint.
Servs., 893 A.2d at 582, and a plaintiff‟s failure to anticipate and rebut affirmative
defenses in her complaint is not a sufficient basis for a Rule 12 (b)(6) dismissal.
See Flying Food Grp., Inc. v. N.L.R.B., 471 F.3d 178, 183 (D.C. Cir. 2006); see
also Super. Ct. R. Civ. P. 8 (a) (containing no requirement that a complaint
anticipate and rebut affirmative defenses); 5 CHARLES ALAN WRIGHT ET AL.,
FEDERAL PRACTICE AND PROCEDURE § 1276 (3d ed. 2004) (“[A]llegations that
6
The Restatement (Third) correspondingly advocates discarding the
distinction between mistakes of law and mistakes of fact. RESTATEMENT (THIRD)
OF RESTITUTION & UNJUST ENRICHMENT § 6 cmt. c (“[A] mistake as to liability
concerns the existence of an obligation, contractual or otherwise; the extent of a
valid obligation; or the existence of a defense to an obligation that is otherwise
valid. Relief is available in all of these cases without regard to whether the
mistake might be characterized as mutual or unilateral, a mistake of fact or a
mistake of law.”); see also Time Warner Ent. Co. v. Whiteman, 802 N.E.2d 886,
891 & n.6 (Ind. 2004).
19
seek to avoid or defeat a potential affirmative defense . . . are not an integral part of
the plaintiff‟s claim for relief and lie outside his or her burden of pleading.”).
Rather, the application of this affirmative defense is “a question of fact, to be
judged in light of all the circumstances surrounding a given transaction.” Shaw v.
Marriott Intern., Inc., 474 F. Supp. 2d 141, 150-51 (D.D.C. 2007) (quoting
Randazzo v. Harris Bank Palatine, N.A., 262 F.3d 663, 669 n.1 (7th Cir.
2001)) (concluding that “[w]hatever the merits of” the voluntary payment defense,
appellant was “certainly correct that it raises factual issues that cannot be resolved
in the context of a motion to dismiss”).
To be sure, this court has acknowledged that a complaint may nonetheless be
dismissed when affirmative defenses are “established on the face of the
complaint.” Francis v. Rehman, 110 A.3d 615, 621 (D.C. 2015) (quoting Hafley v.
Lohman, 90 F.3d 264, 266 (8th Cir. 1996)). But nothing in the Amended
Complaint supports a determination that appellant pled herself out of court in this
case. She did not concede voluntary payment under the rule described above.
Rather, appellant alleged in her Amended Complaint that appellees caused the late
fee provision to be placed in the standard form lease, and that they “knew, or
should have known, they had no right to collect these late fees” that they
represented this “illegal clause[] as being legal” that they were the more
20
sophisticated parties in negotiating residential lease terms; and that appellants
reasonably relied on their expertise. Nor did appellant concede voluntariness even
in the colloquial sense; rather, she alleged facts suggesting that, in addition to
being ignorant of the late fee‟s illegality, she was coerced into paying this fee.7
Thus, the trial court should not have relied on the voluntary payment doctrine to
justify dismissal of appellant‟s unjust enrichment claim.
In sum, we hold that the trial court erred by dismissing appellant‟s unjust
enrichment claim. Whether appellant‟s late fee was, in fact, disproportionate to the
landlord‟s reasonably anticipated damages and thus an improper penalty is a
factual question that was not properly resolved at the motion to dismiss stage.
Likewise the trial court‟s ruling on the affirmative defense of voluntary payment
was possibly incorrect and at the very least premature. Thus, we vacate the
dismissal of the unjust enrichment claim and remand to give appellant the
opportunity to prove her claim.
7
That appellant may have alleged these facts in anticipation of a voluntary-
payment argument by appellees does not open the door to a ruling on this issue at
the motion-to-dismiss stage. See 5 FED. PRAC. & PROC. CIV. § 1276 (“[I]f the
plaintiff purports to negative an affirmative defense by way of anticipation but
does not admit the effectiveness of the defense in his pleading, the [trial] court
should treat the plaintiff‟s references to the defense as surplusage.”).
21
For the foregoing reasons, the trial court‟s decision is affirmed in part and
reversed and remanded in part.
So ordered.
EASTERLY, Associate Judge, concurring: I agree that Ms. Falconi-Sachs
adequately pled a claim of unjust enrichment and that the trial court‟s 12 (b)(6)
dismissal was thus in error. Moreover, I share the court‟s skepticism that the
voluntary payment doctrine has any application to this case. Particularly in the
landlord-tenant context, it seems inappropriate to endorse the legal fiction that a
tenant “knowingly” waives her rights to challenge illegal fees or assumes the risk
of paying illegal fees when she signs a standard form contract, drafted by a
landlord, that contains unenforceable penalty provisions. Instead it seems
advisable to follow the Restatement rule that “a person who renders performance
under an agreement that cannot be enforced against the recipient . . . has a claim in
restitution against the recipient as necessary to prevent unjust enrichment.” See
RESTATEMENT (THIRD) OF RESTITUTION & UNJUST ENRICHMENT § 31 (1); see, e.g.,
Time Warner Ent. Co. v. Whiteman, 802 N.E.2d 886, 893 (Ind. 2004) (following
the Restatement (Third) and rejecting application of voluntary payment doctrine to
bar plaintiffs‟ unjust enrichment challenge to unlawful late fee provision and
22
noting that it would be absurd to allow the commercial defendant “to take financial
advantage of its own wrongdoing”).8 I agree we need not definitively decide this
question, but our forbearance should not be mistaken for agreement with the trial
court‟s premature conclusion that voluntary payment barred Ms. Falconi-Sachs‟s
unjust enrichment claim.
8
The trial court cited two cases to the contrary, BMG Direct Marketing, Inc.
v. Peake, 178 S.W.3d 763 (Tex. 2005), and Putnam v. Time Warner Cable of Se.
Wisc., Ltd., 649 N.W.2d 626 (Wisc. 2002), but there is reason to question the
analysis in these decisions. In BMG Direct Marketing, the court purported to agree
with the Restatement (Third) (it was reviewing a draft of the edition eventually
published in 2011), but then endorsed an artificial awareness-of-risk rule of the
exact sort the Restatement disapproved. It opined that “when a person pays a late
fee knowing its amount and the circumstances under which it would be
imposed”—but not how it is calculated or whether it is legal—“that person pays in
the face of a recognized uncertainty sufficient to satisfy the voluntary-payment
rule‟s full-knowledge requirement.” 178 S.W.3d at 774. In Putnam, the court
cited only to the RESTATEMENT (FIRST) OF RESTITUTION (AM. LAW INST. 1937) and
grounded its conclusion that voluntary payment of late fees could bar a claim for
restitution in a mistake-of-law analysis that the Restatement (Third) has since
disapproved. 649 N.W.2d at 631-37.