Dc2ny, Inc. v. Academy Bus, LLC

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DC2NY, INC., :
:
Plaintiff, : Civil Action No.: 18-2127 (RC)
:
v. : Re Document No.: 6
:
ACADEMY BUS, LLC, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING DEFENDANT’S MOTION TO DISMISS
I. INTRODUCTION
DC2NY, Inc., which does business under the trade name BestBus, filed this lawsuit
against Academy Bus, LLC, asserting a claim under the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. §§ 1961–68, as well as contract and tort claims. As the
Court will explain below, though, BestBus’s complaint is deficient in a number of ways: the
complaint fails to allege the pattern of activity required for a RICO claim; its contract claims are
asserted against the wrong party; its tortious interference claims do not identify specific business
opportunities that were impeded; and its conversion claim merely alleges the failure to repay a
debt. Because none of BestBus’s claims survive these defects, the Court grants Academy Bus’s
motion to dismiss.
II. BACKGROUND 1
BestBus is a D.C. corporation that provides express bus services to a number of locations
in the mid-Atlantic area between D.C. and New York City. See Compl. ¶ 1, ECF No. 1.
BestBus does not, however, own its own buses or employ its own drivers, so until 2011, it used a
Virginia company named New World Tours to provide buses and drivers. Id. ¶ 15. In 2011,
New World Tours was bought by Academy Bus, a limited liability company organized under the
laws of New Jersey. Id. ¶¶ 9, 16. In the aftermath of that sale, Academy Bus expressed interest
in acquiring BestBus, and the two companies were in negotiations for about a year. Id. ¶ 17.
During those discussions, BestBus provided Academy Bus with certain “confidential proprietary
financial information” and the parties entered into a “Confidential and Non-Disclosure
Agreement” (“NDA”). Id. ¶ 18.
When the parties were ultimately unable to reach a sale agreement, BestBus opted to
pursue an alternative plan. Id. ¶ 19. In June 2013, it negotiated an exclusivity arrangement with
Academy Bus that was memorialized in a Transportation Service Agreement (“TSA”). Id. ¶¶ 2,
20. As a formal matter, Academy Bus, LLC was not a party to that Agreement, though. See
Def.’s Mot. to Dismiss, Ex. 1 at 1–6, ECF No. 6–2. The contracting parties were instead
BestBus (using its legal name, DC2NY, Inc.) and Academy Express LLC, which the Agreement
referred to simply as “Academy,” see id., and which BestBus now claims is merely an alter ego
of Academy Bus, see Pl.’s Opp’n to Def.’s Mot. to Dismiss at 5, ECF No. 7.
The TSA stated that BestBus “desire[d] to utilize Academy as [its] sole and exclusive
transportation provider for motor transportation services between the points, places and locations
1
At the motion to dismiss stage, the Court accepts the plaintiff’s factual allegations as
true. See, e.g., United States v. Philip Morris, Inc., 116 F. Supp. 2d 131, 135 (D.D.C. 2000).
2
described in Schedule A” of the Agreement, and that “Academy wishe[d] to provide such
services exclusively to” BestBus. Def.’s Mot. to Dismiss, Ex. 1 at 1; Compl. ¶ 22. Schedule A
in turn listed six different routes, which together involved eight different locations: Vienna,
Virginia; Springfield, Virginia; DuPont Circle in D.C.; Union Station in D.C.; Wilmington,
Delaware; Rehoboth Beach, Delaware; Dewey Beach, Delaware; and Penn Station in New York
City. Def.’s Mot. to Dismiss, Ex. 1 at 7.
The TSA further provided that “Academy . . . shall not operate any other ‘line run’ motor
coach business in competition with any existing or future [BestBus] line run during the term of
th[e] Agreement,” which was five years. Compl. ¶¶ 21, 24; see also Def’s Mot. to Dismiss, Ex.
1 at 1. The Agreement also required “Academy . . . to provide professional, experienced and
qualified licensed drivers consistent with federal motor carrier regulations” and to “direct its
driver employees to adhere to [a] level of professionalism, courtesy and respect in dealings with
the public.” Def.’s Mot. to Dismiss, Ex. 1 at 2. And the Agreement stated that “Academy
[would] pay [BestBus]” an annual “service rebate,” to be calculated based on “the total annual
revenue . . . paid to Academy by [BestBus] in connection with” the Agreement. Id. at 7–8; see
also id. at 2; Compl. ¶ 26. Either party could terminate the TSA “for any reason upon 90 days
written Notice to the other Party.” Def.’s Mot. to Dismiss, Ex. 1 at 5. Any disputes, the
Agreement stated, would be governed by New Jersey law. Id.
According to BestBus, the execution of the TSA was the first step in Academy Bus’s
“plan to drive BestBus out of business and enter the D.C.-New York market for express bus
services.” Compl. ¶ 19. In furtherance of that goal, Academy Bus did not make the vast
majority of the rebate payments that it owed under the TSA. See id. ¶ 57–59. It also refused to
repay BestBus a $40,000 loan obligation it had inherited through its purchase of New World
3
Tours. See id. ¶¶ 60–61. Eventually, Academy Bus informed BestBus that it considered the
$40,000 a security deposit that it would hold “against potential default by BestBus in future
payments” under the TSA. Id. ¶ 61.
The second step of Academy Bus’s plan allegedly took place in 2014, when it purchased
Go Bus, a New York company that “provided buses to Vamoose Bus, a direct competitor of
BestBus in the D.C.-New York market.” Compl. ¶¶ 31–32. BestBus claims that Academy Bus
“used the proprietary information it had obtained from BestBus” during the parties’ prior
purchase negotiations in order “to facilitate its acquisition and subsequent operation of Go Bus,”
in violation of the parties’ NDA. Id. ¶ 45. Then following its purchase of Go Bus, Academy
Bus “used Go Bus’s existing relationship with Vamoose to begin supplying buses to Vamoose,
on the same D.C.-New York route for which it was supplying buses to BestBus.” Id. ¶ 32. And
Academy Bus provided Vamoose with “newer models and better buses than the ones [it]
supplied to BestBus for the same routes.” Id. Limited to the older buses, “BestBus suffered . . .
numerous bus breakdowns and passenger service problems”—far more “than it would have
experienced had it received [the] newer bus models.” Id. ¶ 34.
These problems were exacerbated by the fact that the drivers whom Academy Bus
assigned to BestBus routes “regularly failed to exhibit . . . professionalism, decorum, courtesy,
and respect.” Id. ¶ 39. “On many occasions, the drivers did not know the routes to which they
were assigned.” Id. A number of them “were surly and uncommunicative with passengers.” Id.
And “[s]ome . . . did not clean their buses between runs” or “help passengers load their luggage.”
Id.
As one would expect, these problems with the buses and drivers “diminish[ed] BestBus’s
public reputation.” Id. ¶ 34. The company had to “regularly reimburse[] passengers who had . . .
4
complaints,” which led to increased business losses. Id. BestBus complained to Academy Bus
about these issues multiple times, and Academy Bus repeatedly indicated that it would make
improvements. See id. ¶¶ 38, 40. Such promises ultimately proved empty, though. See id.
While all of this was going on, BestBus was also trying to expand into the New York to
Boston market. See id. ¶ 43. And “BestBus made clear to Academy [Bus] that it needed and
expected [Academy Bus’s] continued support for [this] venture, given [Academy Bus’s]
obligations under the TSA.” Id. In response, Academy Bus “officials represented that they
would help BestBus.” Id. But “[t]hrough emails, telephone calls, and meetings with BestBus
executives,” those officials “deliberately misled BestBus into believing that [Academy Bus] was
doing everything it could to help BestBus obtain a New York-Boston route.” Id. ¶ 44. In reality,
Academy Bus was focused on its recent purchase of Go Bus, which already had its own
established New York to Boston route. Id. ¶ 45. Academy Bus took over that route, thereby
“positioning itself as a competitor in the very market” that BestBus was seeking to enter. Id.
¶ 47.
Eventually, BestBus decided to terminate the TSA, consistent with the Agreement’s
ninety-day notice provision. See id. ¶¶ 50–51. During the ensuing ninety-day period, Go Bus
announced that it would begin servicing its own D.C. to New York routes, see id. ¶ 52, and
Academy Bus allegedly put “Go Bus flyers on the seats of the buses that it provided for BestBus,
advertising its own [forthcoming] service at a lower rate than the rate being offered by BestBus.”
Id. ¶ 53. Then after the ninety-day period passed, BestBus negotiated an agreement with
Panorama Bus Tours for the supply of buses on BestBus’s D.C. to New York route. Id. ¶ 56.
But “[o]n the eve of finalizing this arrangement,” an Academy Bus representative called
Panorama with a threat: “if Panorama did business with BestBus,” the representative said,
5
Panorama “would never do business with Academy [Bus] again.” Id. “Panorama suddenly
hesitated and stopped returning BestBus’s calls and emails.” Id.
This lawsuit, which asserts six claims, followed. BestBus’s first claim is a civil RICO
claim premised on the allegation that Academy Bus committed multiple acts of wire fraud in
furtherance of its scheme to drive BestBus out of business. See id. ¶¶ 65–75. Its next two claims
are contract claims: One alleges breaches of a number of the TSA’s provisions. See id. ¶¶ 76–
79. The other alleges that Academy Bus violated its contractual duty of good faith and fair
dealing. See id. ¶¶ 96–99. The final three claims are tort claims. The first alleges tortious
inference with business relations, the second alleges tortious interference with prospective
business relations, and the third alleges that Academy Bus unlawfully converted the proceeds of
the $40,000 loan it inherited from New World Tours. See id. ¶¶ 80–95. BestBus ultimately
deducted the $40,000 principal from the final payment it made to Academy Bus when it
terminated the TSA, but BestBus argues that it is still entitled to interest that accrued during the
time that the loan went unpaid. Id. ¶¶ 63–64. Academy Bus responded to BestBus’s complaint
by filing a motion to dismiss for failure to state a claim. That motion is now ripe for disposition.
III. ANALYSIS
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that a complaint contain “a
short and plain statement of the claim” in order to give the defendant fair notice of the claim and
the grounds upon which it rests. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A
motion to dismiss under Rule 12(b)(6) “tests the legal sufficiency of a complaint” under that
standard; it asks whether the plaintiff has properly stated a claim. Browning v. Clinton, 292 F.3d
235, 242 (D.C. Cir. 2002). To defeat such a motion, the “complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
6
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). This means that there
must be “factual content that allows the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Id. The factual allegations, in other words, “must be
enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555–56.
In light of these standards, a Rule 12(b)(6) motion “must rely solely on matters within the
pleadings.” Pernice v. Bovim, 183 F. Supp. 3d 84, 87 (D.D.C. 2016) (citing Fed. R. Civ. P.
12(d)). This includes “the facts alleged in the complaint, any documents either attached to or
incorporated in the complaint,” and materials suitable for judicial notice, EEOC v. St. Francis
Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997), as well as “[d]ocuments that a
defendant attaches to [its] motion to dismiss . . . if they are integral to [the plaintiff’s] claim[s],
they are referred to in the complaint, and their authenticity is undisputed,” Pernice, 183 F. Supp.
3d at 87. Thus, here, the Court may consider the copy of the TSA that Academy has attached to
its motion, even though the Agreement was not attached as an exhibit to the complaint. Before
getting to the TSA, however, the Court begins its analysis below with BestBus’s RICO claim.
The Court then turns to the two contract claims and closes with the three tort claims. As the
Court will explain, all six claims must be dismissed.
A. The RICO Claim
Among other things, “RICO makes it ‘unlawful for any person employed by or associated
with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce,
to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through
a pattern of racketeering activity or collection of unlawful debt.’” Cheeks v. Fort Myer Constr.
Corp., 216 F. Supp. 3d 146, 153 (D.D.C. 2016) (quoting 18 U.S.C. § 1962(c)). The Act then
“provides a ‘private right of action for treble damages to any person injured in his business by
7
reason” of such conduct. Leonard v. George Washington Univ. Hosp., 273 F. Supp. 3d 247, 257
(D.D.C. 2017) (quoting Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 647 (2008)); see
also 18 U.S.C. § 1964(c). To assert a civil RICO claim, a plaintiff must allege four elements:
“(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Zernik v.
U.S. Dep’t of Justice, 630 F. Supp. 2d 24, 27 (D.D.C. 2009) (quoting Pyramid Sec. Ltd. v. IB
Resolution, Inc., 924 F.2d 1114, 1117 (D.C. Cir. 1991)). Together, the latter two elements
“requir[e] the commission of at least two predicate racketeering offenses over a ten year period.”
W. Assocs. Ltd. P’ship ex rel. Ave. Assocs. Ltd. P’Ship v. Mkt. Square. Assocs., 235 F.3d 629,
633 (D.C. Cir. 2001) (citing 18 U.S.C. § 1961(5)). “These predicate offenses are acts punishable
under certain state and federal criminal laws, including mail and wire fraud.” Id. (citing 18
U.S.C. § 1961(1)(B)).
Here, BestBus’s RICO claim is grounded in the notion that Academy Bus used Go Bus
(the alleged RICO “enterprise”) to engage in a scheme aimed at driving BestBus out of business
and accumulating its own share of the bus services market. See Compl. ¶¶ 65–70. In pursuit of
that scheme, BestBus says, Academy made multiple false communications that amounted to wire
fraud and constituted RICO predicates. See id. ¶¶ 71–72. In its motion to dismiss, Academy Bus
argues that BestBus’s claim does not satisfy any of the four RICO elements. The Court,
however, need address only one of Academy Bus’s arguments—the one concerning the third
“pattern” element. The requisite pattern of activity is not alleged in the complaint, so BestBus’s
RICO claim must be dismissed.
The pattern requirement includes two sub-elements: relatedness and continuity. E.g.,
Watson v. Faris, 139 F. Supp. 3d 456, 460 (D.D.C. 2015) (citing H.J. Inc. v. Nw. Bell Tel. Co.,
492 U.S. 229, 239 (1989)). These sub-elements require a plaintiff to allege “that the racketeering
8
predicates are related, and that they amount to or pose a threat of continued criminal activity.”
H.J. Inc., 492 U.S at 239. To determine whether this kind of pattern has been established, the
D.C. Circuit has provided six factors that courts should consider: “the number of unlawful acts,
the length of time over which the acts were committed, the similarity of the acts, the number of
victims, the number of perpetrators, and the character of the unlawful activity.” W. Assocs., 235
F.3d at 633 (quoting Edmonson & Gallagher v. Alban Towers Tenants Ass’n, 48 F.3d 1260,
1265 (D.C. Cir. 1995)). These factors “do[] not establish a rigid test, but rather present[] a
flexible guide for analyzing RICO allegations on a case by case basis.” Id. That said, “[i]n some
cases . . . some factors will weigh so strongly in one direction as to be dispositive.” Edmonson,
48 F.3d at 1265. And as a result, at least one near bright-line rule has emerged: “if a plaintiff
alleges only a single scheme, a single injury, and few victims, it is ‘virtually impossible’” for the
plaintiff to state a RICO claim. W. Assocs., 235 F.3d at 634 (quoting Edmonson, 48 F.3d at
1265).
That is the problem with BestBus’s claim here. The complaint alleges only one scheme:
“to drive BestBus out of business and . . . gain access to the market for express bus services”
from D.C. to New York, and from New York to Boston. Compl. ¶ 70. It names only one victim:
BestBus. Id. ¶ 74 (“BestBus was the ultimate and intended victim of Academy’s unlawful
scheme.”). And it identifies only one injury—to BestBus’s “business and property.” Id. As a
matter of law, this limited range of activity does not constitute a pattern within the meaning of
RICO. See, e.g., W. Assocs., 235 F.3d at 634–35; E. Sav. Bank, FSB v. Papageorge, 31 F. Supp.
3d 1, 13 (D.D.C. 2014); Busby v. Capitol One, N.A., 772 F. Supp. 2d 268, 282 (D.D.C. 2011);
Zernik, 630 F. Supp. 2d at 27.
9
BestBus nonetheless argues that, “given how readily Academy [Bus] resorted to threats
and fraudulent misrepresentation to solidify its foothold in the D.C.-New York market, it is
entirely possible that Academy [Bus] . . . engaged in such behavior in other markets” as well.
Pl.’s Opp’n at 14. BestBus therefore says it should be given the opportunity to pursue discovery
to uncover further misconduct. See id. All this amounts to, however, is unsupported speculation,
which is insufficient to defeat a motion to dismiss. See, e.g., Twombly, 550 U.S. at 555–56. And
indeed, “RICO claims premised on mail or wire fraud must be particularly scrutinized because of
the relative ease with which a plaintiff may mold a RICO pattern from allegations that, upon
closer scrutiny, do not support it.” Watson, 139 F. Supp. 3d at 460 (quoting W. Assocs., 235 F.3d
at 634). “This caution stems from the fact that ‘[i]t will be the unusual fraud that does not enlist
the mails and wires in its service at least twice.’” W. Assocs., 235 F.3d at 637 (alteration in
original) (quoting Al-Abood ex rel. Al-Abood v. El-Shamari, 217 F.3d 225, 238 (4th Cir. 2000)).
“[I]f the pattern requirement has any force whatsoever,” then, “it is to prevent . . . ordinary
commercial fraud from being transformed into a federal RICO claim.” Id. (omission in original)
(quoting Menasco, Inc. v. Wasserman, 886 F.2d 681, 685 (4th Cir. 1989)).
Here, BestBus has not adequately distinguished this case from the ordinary business
dispute, and as far as specific factual allegations go, it has alleged actions in furtherance of only
a “single discrete goal.” E. Sav. Bank, 31 F. Supp. 3d at 13 (quoting Edmonson, 48 F.3d at
1265). Thus, even if BestBus has alleged predicate acts that amount to “racketeering activity,” it
has not alleged a pattern of such activity. The Court therefore must dismiss its RICO claim.
10
B. The Contract Claims 2
BestBus’s next two claims are grounded in contract, and, given the TSA’s choice-of-law
clause, the parties agree that they are governed by New Jersey law. The first claim alleges that
Academy Bus breached several provisions of the TSA, see Compl. ¶¶ 76–79, and the second
alleges that Academy Bus breached its contractually implied duty of good faith and fair dealing,
see id. ¶¶ 96–99; Sons of Thunder, Inc. v. Borden, Inc., 690 A.2d 575, 587 (N.J. 1997) (“[E]very
contract in New Jersey contains an implied covenant of good faith and fair dealing.”).
Academy Bus contends that each of these claims should be dismissed for a variety of
reasons. But before getting to those arguments, Academy Bus makes a threshold challenge that
applies to both claims: it contends that BestBus sued the wrong party. Recall that the sole named
Defendant in this case is Academy Bus, LLC. The TSA, however, on its face, does not name
Academy Bus, LLC as one of the contracting entities. Instead, the document memorializes an
agreement with “Academy Express LLC,” Mot. to Dismiss, Ex. 1 at 1, 6, an entity that BestBus
has not served and does not mention in the complaint. Academy Bus acknowledges that it is
associated with Academy Express; in fact, Academy Bus is apparently Academy Express’s sole
2
Having dismissed the only federal question raised in BestBus’s complaint, the Court is
obligated to ensure that it has jurisdiction over the remaining common law claims. According to
BestBus, those claims fall within the Court’s diversity jurisdiction, see 28 U.S.C. § 1332—the
theory being that BestBus is a citizen of D.C., Academy Bus is a citizen of New Jersey, and
greater than $75,000 is in dispute. See Compl. ¶¶ 8–9, 11. To demonstrate Academy Bus’s
citizenship, BestBus submitted New Jersey state records indicating that the initial members of
“Academy Bus, L.L.C.” were all residents of New Jersey. See Pl.’s Opp’n, Ex. 2 at 3, ECF No.
7-4; see also CostCommand, LLC v. WH Admin’rs, Inc., 820 F.3d 19, 21 (D.C. Cir. 2016)
(“Unincorporated associations, including LLCs, have the citizenship of each of their members.”).
For jurisdictional purposes, the Court may consider these records without even determining
whether they are suitable for judicial notice. See, e.g., Akpan v. Cissna, 288 F. Supp. 3d 155,
160 (D.D.C. 2018) (citing Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir.
2005)). And because Academy Bus neither challenges the records’ accuracy, nor claims to now
have a member that is a citizen of D.C., the Court is satisfied that diversity jurisdiction is proper.
11
member. See Def.’s Mem. Supp. Mot. to Dismiss at 3, ECF No. 6-1. But the argument is that “a
contract between the parties” is an essential element of any breach of contract claim. Newark
Cab Ass’n v. City of Newark, 901 F.3d 146, 160 (3d Cir. 2018) (emphasis added). And here, it
seems no contract existed between BestBus and Academy Bus.
For its part, BestBus does not dispute the basic facts underlying this argument, but it
contends that “there is a very strong likelihood” that Academy Bus and Academy Express are
alter egos, which would permit the Court to pierce the corporate veil and hold Academy Bus
liable for Academy Express’s alleged breaches of the TSA. Pl.’s Opp’n at 5. This alter ego
issue, BestBus says, is a question of fact that should not be resolved at the motion to dismiss
stage. See id.
As an abstract matter, that may be correct, but BestBus’s problem is that the complaint
alleges no facts that could support an alter ego finding. Indeed, as the Court already noted, the
complaint never references Academy Express. BestBus’s opposition to the motion to dismiss
addresses the subject, but a plaintiff “cannot overcome a 12(b)(6) motion by adding new
information . . . in a brief.” Hawkins v. Wash. Metro. Area Transit Auth., 311 F. Supp. 3d 94,
109 (D.D.C. 2018); see also Coyer v. Hemmer, 901 F. Supp. 872, 883–84 (D.N.J. 1995)
(dismissing breach of contract claim grounded in alter ego theory under New Jersey law because
complaint included no relevant factual allegations beyond conclusory statements).
In any event, even if the Court were to take into account BestBus’s new factual
allegations (some of which are supported by public records of which the Court could take
judicial notice), those new facts would still fall far short of supporting an alter ego theory of
liability. Under New Jersey law, “[t]o pierce the corporate veil of a parent corporation, a party
must establish two elements: (1) the subsidiary was dominated by the parent corporation, and (2)
12
adherence to the fiction of separate corporate existence would perpetrate a fraud or injustice, or
otherwise circumvent the law.” FDASmart, Inc. v. Dishman Pharms. & Chems. Ltd., 152 A.3d
948, 953 (N.J. Super. Ct. App. Div. 2016) (citing State, Dep’t of Envtl. Prot. v. Ventron Corp.,
468 A.2d 150 (N.J. 1983)). At most, BestBus addresses only the first of these elements. Citing
New Jersey Treasury Department records, BestBus contends that Academy Bus and Academy
Express “have an ‘identity of interest.’” Pl.’s Opp’n at 5 (quoting Bazarian Int’l Fin. Assocs.,
LLC v. Desarrollos Hotelco, C.A., 342 F. Supp. 3d 1, 16 (D.D.C. 2018)). BestBus’s new facts
do not, however, go to the second element, which requires that the parent entity “abuse[] the
privilege of incorporation by using the subsidiary to perpetrate a fraud or injustice, or otherwise
to circumvent the law.” Ventron, 468 A.2d at 164. Here, BestBus alleges that Academy Bus
made fraudulent statements, but there are no allegations of fraud in the use of the corporate form.
Thus, even if the Court were to set aside the fact that the issue was not raised until the
opposition brief, the Court would still hold that BestBus had not properly stated a claim for relief
under an alter ego theory. And without alter ego, BestBus cannot prevail on either the breach of
contract claim or the duty of good faith and fair dealing claim. Because no contract appears to
have existed between BestBus and Academy Bus, both of those claims must be dismissed. 3
C. The Tort Claims
BestBus’s final three claims are tort claims. The first alleges tortious interference with
business relations, the second alleges tortious interference with prospective business relations,
and the third is a claim for conversion. For each of these claims, the Court must first make a
3
As a last resort, BestBus requests leave to amend the complaint and add Academy
Express LLC as a defendant. See Pl.’s Opp’n at 15. Under Local Civil Rules 7(i) and 15.1,
however, a motion for leave to file an amended pleading in this district must “be accompanied by
an original of the proposed pleading as amended.” Because BestBus has not yet complied with
this requirement, it would be premature for the Court to grant leave at this time.
13
choice-of-law determination. See Long v. Sears Roebuck & Co., 877 F. Supp. 8, 11 (D.D.C.
1995) (“Under proper conflict of laws principles, the Court is to conduct the choice of law
analysis for each distinct issue being adjudicated.”). BestBus argues that all three claims should
be governed by D.C. law, while Academy Bus says that New Jersey law should apply.
In diversity cases, these determinations are governed by the “the choice-of-law rules of
the forum state—here, the District of Columbia.” In re APA Assessment Fee Litig., 766 F.3d 39,
51 (D.C. Cir. 2014). Under D.C. rules, “the first step in a choice-of-law analysis is determining
whether a true conflict exists between the laws of the [competing] jurisdictions—that is, whether
more than one jurisdiction has a potential interest in having its law applied, and if so, whether the
law of the competing jurisdictions is different.” Krukas v. AARP, Inc., 376 F. Supp. 3d 1, 27
(D.D.C. 2019) (alteration in original) (internal quotation marks omitted) (quoting In re APA, 766
F.3d at 51–52). When no conflict exists, D.C. law applies by default. See, e.g., Sharpe v. Am.
Acad. of Actuaries, 285 F. Supp. 3d 285, 288 (D.D.C. 2018). If there is a conflict, however,
courts apply a “modified governmental interest analysis which seeks to identify the jurisdiction
with the most significant relationship to the dispute.” Krukas, 376 F. Supp. 3d at 27 (quoting
Washkoviak v. Student Loan Mktg. Ass’n, 900 A.2d 168, 180 (D.C. 2006)). As part of that
analysis, courts are to consider (1) where the injury occurred, (2) where the conduct causing the
injury occurred, (3) where the parties reside or are incorporated, and (4) where the parties’
relationship is centered. See Washkoviak, 900 A.2d at 180. Where those factors do not “clearly
favor either jurisdiction,” courts apply “the law of the forum state (D.C.) as a tie-breaker.” In re
APA, 766 F.3d at 51 (citing Washkoviak, 900 A.2d at 182); see also id. at 55.
14
1. Tortious Interference
Applying these principles to BestBus’s tortious interference claims, the Court first
concludes that there is a true conflict between D.C. and New Jersey law. Although the elements
are similar in each jurisdiction, compare Whitt v. Am. Prop. Constr. Co., 157 A.3d 196, 202
(D.C. 2017), with Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1167 (3d Cir. 1993), there is
one critical difference. In New Jersey, it is the plaintiff’s burden to prove that the defendant’s
interference was not only intentional, but also wrongful and without justification. See, e.g.,
Printing Mart-Morristown v. Sharp Elecs. Corp., 56 A.2d 31, 39 (N.J. 1989). In D.C., by
contrast, “[i]nstead of the plaintiff bearing the burden of proving that the defendant’s conduct
was wrongful, it is the defendant who bears the burden of proving that it was not.” NCRIC, Inc.
v. Columbia Hosp. for Women Med. Ctr., Inc., 957 A.2d 890, 901 (D.C. 2008).
In light of that difference, the Court must decide which jurisdiction has the most
significant relationship to the dispute, based on the four factors mentioned earlier. But here,
those factors do not weigh strongly in favor of either jurisdiction. The first factor—where the
injury occurred—favors D.C., where BestBus is based. The second—where the conduct causing
the injury occurred—favors New Jersey, where Academy Bus is based. The third factor,
meanwhile, is of no assistance at all because BestBus is incorporated in D.C. and Academy Bus
is organized under the laws of New Jersey. And as for the fourth factor, it is not entirely clear
where the parties’ relationship was centered. On the one hand, they chose New Jersey law in the
TSA. That contract language obviously does not govern BestBus’s tort claims, but one could
argue that it “serve[s] to illustrate the parties’ expectations.” Am. Nat’l Ins. Co. v. JPMorgan
Chase & Co., 164 F. Supp. 3d 104, 110 (D.D.C. 2016). Yet on the other hand, the bus routes
within the scope of the TSA included two stops in D.C., and none in New Jersey. Indeed,
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because of the nature of the business at issue, it might be fair to say that the parties’ relationship
spanned the entire mid-Atlantic region.
More generally, it is not hard to see how both D.C. and New Jersey have an interest in
applying their law to this dispute. D.C. has an interest in protecting its corporations from out-of-
state tortfeasors doing business in D.C., while New Jersey has an interest in regulating New
Jersey corporations. As the applicable choice-of-law considerations do not “clearly favor either
jurisdiction,” the tie-breaker goes to D.C., the law of the forum state. In re APA, 766 F.3d at 51
(citing Washkoviak, 900 A.2d at 182).
With D.C. law governing, BestBus’s two tortious interference claims must each allege
four elements: “(1) the existence of a valid business relationship or expectancy, (2) knowledge of
the relationship or expectancy on the part of the interferer, (3) intentional interference inducing
or causing a breach or termination of the relationship or expectancy, and (4) resultant damage.”
Jankovic v. Int’l Crisis Grp., 593 F.3d 22, 29 (D.C. Cir. 2010) (quoting Bennett Enters. v.
Domino’s Pizza, Inc., 45 F.3d 493, 499 (D.C. Cir. 1995)). These elements focus the Court on
Academy Bus’s alleged actions in interference with BestBus’s relationships with third parties,
whereas a contract claim would focus on BestBus’s relationship with Academy Bus itself. Here,
the third parties at the center of BestBus’s tortious interference claims are its customers. The
first claim is about BestBus’s “relationship with existing and future passengers” on its D.C. to
New York routes, Compl. ¶ 84, while the second centers on “the expectation of a business
relation with future passengers” on the route that BestBus hoped to launch between New York
and Boston, id. ¶ 87.
The problem with both of these claims is the same: tortious interference’s first element—
the existence of a valid business relationship of expectancy—“require[s] rather specific business
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opportunities,” Jankovic, 593 F.3d at 29, like a prospective book deal with publishing
companies, see Browning v. Clinton, 292 F.3d 235, 242–43 (D.C. Cir. 2002), or “three
[particular] potential sources of prospective employment,” Kimmel v. Gallaudet Univ., 639 F.
Supp. 2d 34, 45 (D.D.C. 2009). Thus, it is insufficient to allege interference with the “generic
opportunities of any successful enterprise.” Jankovic, 593 F.3d at 29. Indeed, “tortious
interference claims are routinely dismissed where the plaintiff fails to name specific
. . . relationships that the defendant allegedly interfered with.” Nyambal v. Alliedbarton Sec.
Servs., LLC, 153 F. Supp. 3d 309, 316 (D.D.C. 2016), recons. granted on other grounds, 344 F.
Supp. 3d 183 (D.D.C. 2018). BestBus’s claims in this case fall in that category. Instead of
naming a relationship with a specific third party or class of third parties, the claims merely allege
lost business. Tortious interference requires more.
BestBus argues that this imposes an impossible pleading requirement, but it does not
identify a single case that endorses a tortious interference claim grounded on only the generic
loss of customers. And in attempting to distinguish the case law dismissing tortious interference
claims on this basis, BestBus only cites allegations involving Academy Bus’s specific conduct
and the effects of that conduct. Although those allegations may be relevant for the latter three
elements, they do not speak to the first one, because they do not implicate a relationship with any
specific third parties. BestBus’s emphasis on those allegations shows how its theory effectively
conflates the first and fourth elements: the “business relationship” interfered with was its
relationship with its customers; the “resultant damage” was the loss of those customers.
Plus, without addressing the other three elements, the Court cannot help but notice that
BestBus’s complaint alludes to a prospective business relationship that likely would satisfy the
first element of a tortious interference claim—which may help illustrate the inadequacies of
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BestBus’s claims as currently pled. Recall that the complaint alleges that Academy Bus
prevented BestBus from reaching a bus supply agreement with Panorama Bus Tours. The
complaint, however, does not cite that relationship with Panorama in support of either tortious
interference claim. Because both claims instead focus entirely on the loss of customers, they
must be dismissed.
2. Conversion
Finally, BestBus asserts a conversion claim related to the proceeds of the $40,000 loan
that Academy Bus allegedly inherited from New World Tours and then refused to repay. The
loan principal has been recovered, but BestBus alleges that it is entitled to interest that accrued
during the years that the loan went unpaid. Unlike the tortious interference claims, this claim
does not implicate a conflict between D.C. and New Jersey law, as they “would produce the
identical result on the facts presented.” Krukas, 376 F. Supp. 3d at 28 (quoting USA Waste of
Md., Inc. v. Love, 954 A.2d 1027, 1032 (D.C. 2008)). Indeed, the elements of a conversion claim
are essentially the same in each jurisdiction. In D.C., conversion requires “[1] an unlawful
exercise, [2] of ownership, dominion, and control, [3] over the personalty of another, [4] in
denial or repudiation of his right to such property.” Poola v. Howard Univ., 147 A.3d 267, 284
n.17 (D.C. 2016) (alterations in original) (quoting Blanken v. Harris, Upham & Co., 359 A.2d
281, 283 (D.C. 1976)). In New Jersey, it requires “[1] the wrongful exercise [2] of dominion and
control [3] over the property of another [4] in a manner inconsistent with the other person’s
rights in that property.” Peloro v. United States, 488 F.3d 163, 173–74 (3d Cir. 2007) (quoting
McAdam v. Dean Witter Reynolds, Inc., 896 F.2d 750, 771 (3d Cir. 1990)); see also Mueller v.
Tech. Devices Corp., 84 A.2d 620, 623 (N.J. 1951).
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Both jurisdictions permit conversion claims involving money, but only in limited
circumstances. Indeed, neither D.C. nor New Jersey recognize a conversion claim regarding a
mere debt. See Bondi v. Citigroup, Inc., 32 A.3d 1158, 1190 (N.J. Super. Ct. App. Div. 2011);
Ficken v. AMR Corp., 578 F. Supp. 2d 134, 143 (D.D.C. 2008). Rather, they each require that a
plaintiff allege “the right to a specific identifiable fund of money.” Campbell v. Nat’l Union Fire
Ins. Co. of Pittsburgh, Pa., 130 F. Supp. 3d 236, 258 (D.D.C. 2015) (quoting McNamara v.
Picken, 950 F. Supp. 2d 193, 194 (D.D.C. 2013)); see also Bondi, 32 A.3d at 1190. This is
because conversion “extend[s] only to intangible rights identified by a tangible document that is
converted.” Ficken v. AMR Corp., 578 F. Supp. 2d 134, 143 (D.D.C. 2008); see also Bondi, 32
A.3d at 1190. “[T]hus, a plaintiff may bring a suit for conversion of a promissory note, a check,
a bank book, or an insurance policy . . . but not for conversion of a debt, the good will of a
business[,] or an idea.” Ficken, 578 F. Supp. 2d at 143 (omission in original) (quoting
Primedical, Inc. v. Allied Inv. Corp., No. 90-1802, 1994 WL 149139, at *7 (D.D.C. Mar. 31,
1994)). “A cause of action for conversion,” in other words, “may not be maintained to enforce a
mere obligation to pay money.” Campbell, 130 F. Supp. 3d at 258 (quoting Curaflex Health
Servs., Inc. v. Bruni, 877 F. Supp. 30, 32 (D.D.C. 1995)).
Here, BestBus says that the original $40,000 loan “is a specific and identifiable quantity
of money” that originated in BestBus’s possession, and that the requested interest is a proper
component of the damages for Academy Bus’s refusal to return the loan. Pl.’s Opp’n at 35. This
reasoning reflects a misunderstanding of the law, though. It does not matter that the $40,000 is
an identifiable amount of money. Otherwise virtually any debt could be subject to a conversion
claim. As noted above, conversion instead requires an entitlement to a particular fund of money.
See, e.g., Campbell, 130 F. Supp. 3d at 258. BestBus has not alleged such an entitlement in this
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case. Rather, on the complaint’s telling, BestBus was simply a creditor to whom Academy Bus
failed to repay a debt. Or put differently, BestBus only claims to be owed an amount from
whatever “fungible cash” Academy Bus has in its coffers. McNamara, 950 F. Supp. 2d at 195.
Because conversion does not extend to those circumstances, BestBus is not entitled to any
interest in the form of damages. The Court thus dismisses BestBus’s conversion claim.
IV. CONCLUSION
For the foregoing reasons, Academy Bus’s motion to dismiss is GRANTED. For present
purposes, the complaint, rather than the action, is dismissed without prejudice, and BestBus may
seek leave to amend the complaint within thirty days. If no such motion is filed, the action shall
be deemed dismissed as of that date. An order consistent with this Memorandum Opinion is
separately and contemporaneously issued.
Dated: August 12, 2019 RUDOLPH CONTRERAS
United States District Judge
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