Cronin v. Adam A. Weschler & Son, Inc.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ANNE CRONIN,
Plaintiff,
v. Civil Action No. 12-1463 (JEB)
ADAM A. WESCHLER & SON, INC.,
Defendant.
MEMORANDUM OPINION
While Plaintiff Anne Cronin was renovating her house, she placed various furnishings in
storage with the Prosperi Company. Believing Cronin had failed to pay its fee, Prosperi at some
point sent the items to Defendant Adam A. Weschler & Son, Inc., to be auctioned. Upon
learning of the pending auction, Plaintiff contacted Prosperi and Weschler’s to block the sale.
Despite her payment of outstanding storage fees and assurances by both Prosperi and Weschler’s
that the sale would not proceed, 37 lots of her items did end up being auctioned, yielding far less
than their true value.
Plaintiff has thus brought this diversity action against Weschler’s only, alleging
conversion, negligence, fraud, and a violation of the D.C. Consumer Protection Procedures Act
(CPPA), D.C. Code § 28-3901 et seq. Defendant now moves to dismiss much of the case,
arguing both that Prosperi is a necessary party and that several of the causes of action are infirm.
Because the Court finds that Plaintiff cannot allege a sufficient merchant-consumer relationship
to invoke the CPPA, it will grant Defendant’s Motion as to that claim (Count IV). The
remaining counts (I, II & III), however, may proceed since Prosperi is not a required party, and
the fraud and conversion causes of action have been adequately pled.
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I. Background
According to the Complaint, which must be presumed true at this stage, Plaintiff had long
used the services of Prosperi to store personal property. See Compl., ¶ 8. During the renovation
of her house, she stored over $100,000 worth of Ralph Lauren home furnishings there, and fees
were routinely paid by Ralph Lauren using Plaintiff’s credit card. Id., ¶¶ 9-11. On
August 13, 2012, Prosperi informed Plaintiff that the property would be auctioned the next day
by Weschler’s because of unpaid storage fees. Id., ¶¶ 13-14. Plaintiff immediately authorized
Prosperi to charge her credit card for the outstanding fees of $8,913.62, which it did. Id., ¶ 15.
Plaintiff then called Weschler’s and spoke to Tom Weschler, the company president, to tell him
that the storage-fee dispute had been resolved and that the property should not be auctioned. Id.,
¶ 16. Weschler informed her that he required confirmation of payment from Prosperi, in which
event he would call off the auction. Id.Plaintiff right away told Prosperi, which then contacted Weschler that same afternoon to
confirm payment and the cancellation of the auction. Id., ¶ 17. Weschler agreed, but indicated
that a fee of $3,500 would be charged for the canceled auction, which Prosperi told him Plaintiff
would pay. Id. Prosperi then contacted Plaintiff to assure her that no auction would proceed.
Id., ¶ 18. In this exchange of information, however, some directive apparently went awry
because Plaintiff learned the next afternoon that the auction had in fact proceeded, and
approximately 37 lots of her items had been sold for a total of $14,760, an amount far less than
what Plaintiff had paid. Id., ¶¶ 19-20.
Plaintiff then brought this suit, and Defendant has now moved to dismiss.
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II. Legal Standard
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a
complaint fails to “state a claim upon which relief can be granted.” When the sufficiency of a
complaint is challenged under Rule 12(b)(6), the factual allegations presented in it must be
presumed true and should be liberally construed in plaintiff’s favor. Leatherman v. Tarrant Cty.
Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993). Although the notice-pleading rules
are “not meant to impose a great burden on a plaintiff,” Dura Pharm., Inc. v. Broudo, 544 U.S.
336, 347 (2005), and “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6)
motion, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), “a complaint must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation omitted). Plaintiff must put
forth “factual content that allows the court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id. Though a plaintiff may survive a 12(b)(6) motion even if
“recovery is very remote and unlikely,” Twombly, 550 U.S. at 555 (citing Scheuer v. Rhodes,
416 U.S. 232, 236 (1974)), the facts alleged in the complaint “must be enough to raise a right to
relief above the speculative level.” Id. at 555.
III. Analysis
In moving to dismiss, Defendant makes four discrete arguments, the first relating to
Plaintiff’s alleged failure to join Prosperi as a necessary party and the others concerning putative
defects in certain causes of action. Specifically, Defendant challenges the conversion claim
(Count I), the fraud claim (Count III), and the CPPA claim (Count IV). Weschler’s does not
seek to dismiss the negligence claim (Count II). The Court will first analyze Defendant’s joinder
argument and then proceed to separately address the arguments specific to each cause of action.
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A. Required Party
Defendant first argues that this case should be dismissed under Federal Rule of Civil
Procedure 12(b)(7) for Plaintiff’s failure to join Prosperi as a necessary party under Rule 19. See
Mot. at 3-5. Prosperi is required, Defendant asserts, because the “case will necessarily involve
factual determinations” concerning Prosperi’s role in the sale of Plaintiff’s property, such that
“Prosperi’s central involvement and interests in the subject matter of this case cannot be
ignored.” Id. at 5. Plaintiff responds that Prosperi is merely a “potential third-party defendant in
an indemnity or contribution claim by Weschler’s arising from the transactions or occurrences at
issue in this case.” Opp. at 2. Cronin contends that she has a cause of action against Weschler’s
“regardless of whether or not Prosperi is potentially at fault” and “need not add Prosperi as a
defendant in order to fully pursue relief from Weschler’s tort.” Id. at 3. The Court agrees.
Prosperi is not a required party under Rule 19, and the Court will thus deny Defendant’s Motion
pursuant to Fed. R. Civ. P. 12(b)(7). 1
Rule 12(b)(7) provides that a complaint may be dismissed for “failure to join a party
under Rule 19.” Courts are generally reluctant to grant Rule 12(b)(7) motions, and “dismissal is
warranted only when the defect is serious and cannot be cured.” 5C Charles Alan Wright, Arthur
R. Miller, Mary Kay Kane & Richard L. Marcus, Federal Practice & Procedure, § 1359 (3d ed.
2004). As with other Rule 12 motions, a court must accept the complaint’s allegations as true for
the purposes of a Rule 12(b)(7) motion to dismiss. 16th & K Hotel, LP v. Commonwealth Land
Title Ins. Co., 276 F.R.D. 8, 12 (D.D.C. 2011).
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As noted by this Circuit in Vann v. Kempthorne, 534 F.3d 741 (D.C. Cir. 2008), “The words ‘necessary’ and
‘indispensable’ have become obsolete in the Rule 19 context as a result of stylistic changes to the Rule.” Id. at 745
n.1 (citing Republic of Philippines v. Pimentel, 553 U.S. 851, 855-56 (2008)). The Court’s analysis will,
accordingly, use language contained in the current rule.
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Rule 19 “establishes a two-step procedure for determining whether an action must be
dismissed because of the absence of a party needed for a just adjudication.” Cherokee Nation of
Okla. v. Babbitt, 117 F.3d 1489, 1495-96 (D.C. Cir. 1997). First, the Court must determine
whether Prosperi is required to be joined. If the Court determines that Prosperi is not required
under Rule 19(a), it need not proceed to the second step of the test, which provides that if a party
deemed required under Rule 19(a) cannot be joined, “the court must determine whether, in equity
and good conscience, the action should proceed among the existing parties or should be
dismissed.” Fed. R. Civ. P. 19(b). In this case, the Court reaches only the first step.
Under the first step of the test, a party is required to be joined if: (a) in that party’s
absence, the Court cannot accord complete relief among existing parties; or (b) disposing of the
action in the party’s absence may either (i) impede its ability to protect its interest or (ii) would
put an existing party at risk of incurring double, multiple, or otherwise inconsistent obligations.
Fed. R. Civ. P. 19(a)(1). Defendant, as the moving party, bears the burden to demonstrate that an
absent party is required under Rule 19. Ilan-Gat Engineers, Ltd. v. Antigua Int’l Bank, 659 F.2d
234, 242 (D.C. Cir. 1981).
Plaintiff’s claims here sound in tort, rather than contract. Rule 19 does not require the
joinder of joint tortfeasors such as Prosperi. See 7 Charles A. Wright, Arthur R. Miller, & Mary
K. Kane, Federal Practice and Procedure, § 1623 (3d ed. 2001); Temple v. Synthes Corp., Ltd.,
498 U.S. 5, 7 (1990) (citing Lawlor v. Nat’l Screen Serv. Corp., 349 U.S. 322, 329-30 (1955));
Krieger v. Trane Co., 765 F. Supp. 756, 763 (D.D.C. 1991) (noting that it is well settled “that
joint tortfeasors are not indispensable parties”). They are not required parties because “joint and
several liability permits the plaintiff to recover full relief from any one of the responsible parties,
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which party then has the option of suing for contribution or indemnity.” City of New York v.
Waterfront Airways, Inc., 620 F. Supp. 411, 413 (S.D.N.Y. 1985).
Weschler’s potential right to contribution or indemnity from Prosperi, consequently, does
not make the latter a required party under Rule 19. See Gen. Refactories Co. v. First State Ins.
Co., 500 F.3d 306, 320 (3d Cir. 2007) (citing Janney Montgomery Scott, Inc. v. Shepard Niles,
Inc., 11 F.3d 399, 412 (3d Cir. 1993)); Bank of America Nat’l Trust and Sa. Assoc. v. Hotel
Rittenhouse Assoc., 844 F.2d 1050, 1054 (3d Cir. 1988); Morgan Guara. Trust Co. of New York
v. Martin, 466 F.2d 593, 597 (7th Cir. 1972). As the Third Circuit noted in Gen. Refactories Co.,
“[D]efendants are free to pursue any claim for contribution or indemnification they might have
against the absent insurers in a separate action. While ‘[w]e recognize that this is a less
convenient remedy for [defendant],’ it is nonetheless ‘a means of resolving [defendant’s] claim
of the risk of inconsistent obligations.’” Id. (citing Gardiner v. Virgin Islands Water & Power
Auth., 145 F.3d 635, 642 (3d Cir. 1998)); see also Pasco Int’l (London) Ltd. v. Stenograph
Corp., 637 F.2d 496, 503 (7th Cir. 1980) (“Potential indemnitors have never been considered
indispensable parties . . . . [A defendant] can always protect itself from the possibility of
inconsistent verdicts by impleading [the absent party] under Rule 14.”).
This analysis is not altered by Defendant’s argument that this case
will necessarily involve factual determinations such as whether
payments were received by Prosperi as alleged in the Complaint,
whether Prosperi communicated with Cronin as alleged in the
Complaint, whether Prosperi communicated with Weschler’s as
alleged in the Complaint, whether Prosperi had the right to proceed
with the auction in the first instance, whether Prosperi acted in
compliance with D.C. Code § 28:7-210 in sending Cronin’s
property to Weschler’s for auction and whether Prosperi had the
right to receive proceeds from the sale of the auctioned property as
alleged in the Complaint.
See Mot. at 5. This Circuit rejected a similar argument in Costello Publ’g Co. v. Rotelle, 670
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F.2d 1035 (D.C. Cir. 1981). There, the court determined that an absent party was not required
for purposes of Rule 19 where the party seeking joinder needed evidence from the absent party to
support its defense: “[T]he question of whether or not an entity or individual should be a party to
an action is something quite different from the questions and problems associated with obtaining
evidence from such an entity or individual. Rule 19 . . . does not list the need to obtain evidence
from an entity or individual as a factor bearing upon whether or not a party is necessary or
indispensable to a just adjudication.” Id. at 1044.
The Court, therefore, concludes that Prosperi is not required for the adjudication of this
case. Weschler’s Motion to Dismiss under Rule 12(b)(7) for failure to join a party will be
denied, and Plaintiff’s suit may proceed without Prosperi. Having rejected Defendant’s joinder
argument, the Court will now turn to Defendant’s specific challenges to Counts I, III & IV.
B. Conversion
Defendant argues that Plaintiff’s conversion claim (Count I) should be dismissed under
Rule 12(b)(6) because she has failed to allege the necessary elements, including that “Weschler’s
initial possession of the property was anything other than lawful” or that “she made any demand
upon Weschler’s for the return of her property at any time sufficient to establish a claim for
conversion.” Mot. at 7. Cronin responds that Count I is properly pleaded as she was not
required to make such allegations where “there are sufficient, and indeed ample ‘other facts and
circumstances independently establishing a conversion.’” Opp. at 7 (internal citations omitted).
Plaintiff is correct.
“Conversion is ‘any unlawful exercise of ownership, dominion or control over the
personal property of another in denial or repudiation of his rights thereto.’” Bucheit v. Palestine
Liberation Org., 388 F.3d 346, 349 (D.C. Cir. 2004) (quoting Duggan v. Keto, 554 A.2d 1126,
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1137 (D.C. 1989)). When asserting a conversion claim, an individual is required to make a
demand for the return of his property “when there are no ‘other facts and circumstances
independently establishing a conversion.’” Bowler v. Joyner, 562 A.2d 1210, 1212 (D.C. 1989)
(quoting Shea v. Fridley, 123 A.2d 358, 361 (D.C.1956)). The Court finds that the facts and
circumstances alleged here establish a conversion – and, in any event, Plaintiff did demand the
return of her property.
Upon learning of the pending auction of her property, Plaintiff spoke directly with Tom
Weschler, the president of the auction house, and “informed Mr. Weschler that The Property
must not be auctioned as she had resolved the storage fee matter with Prosperi.” Compl, ¶ 16.
Weschler instructed her that he would stop the auction when he received confirmation that the
storage-fee issue with Prosperi was resolved. See id. Such confirmation was received later that
afternoon. See id., ¶ 17. Defendant was thus “provided with both constructive and actual notice
that The Property rightfully belonged to the Plaintiff and that the auction of The Property set for
August 14, 2012 should be cancelled.” Id., ¶ 25. These facts independently establish a
conversion, and, even if they did not, Cronin’s call to Tom Weschler to block the sale constitutes
a demand for her property’s return. Defendant’s decision to conduct the auction of Plaintiff’s
property, “without proper claim or authority to do so,” may constitute a conversion. Id. Count I,
accordingly, may proceed.
C. Fraud
Defendant next challenges Plaintiff’s “failure to allege facts sufficient to show that she
detrimentally relied upon any alleged false representation of Weschler’s in order to establish a
fraud claim [Count III] under District of Columbia law.” Mot. at 8-9. Plaintiff maintains that the
heightened pleading requirements for fraud do not apply to allegations of detrimental reliance,
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and, even if they did, she contends that she has properly pleaded such reliance here. See Opp. at
8-9. As the Court finds that Plaintiff alleges facts sufficient to meet a heightened standard, it
need not address her alternate argument regarding whether such standard is even required.
“The essential elements of common law fraud are: (1) a false representation (2) in
reference to material fact, (3) made with knowledge of its falsity, (4) with the intent to deceive,
and (5) action is taken in reliance upon the representation.” Caulfield v. Stark, 893 A.2d 970,
974 (D.C. 2006) (citing Virginia Acad. of Clinical Psychologists v. Group Hospitalization &
Med. Servs., Inc., 878 A.2d 1226, 1233 (D.C. 2005) (internal quotations and citations omitted)).
Plaintiff here alleges that she “relied upon Defendant’s false representation of material fact that
the auction for The Property would not proceed. In reliance on Defendant’s statements, Plaintiff
took no further action to protect The Property because she was under the false impression the
auction would not proceed and her property would be returned to her.” Compl., ¶ 38. Defendant
contends that this allegation is insufficient, as Plaintiff “does not allege what action she would
have taken or could have taken had the alleged representations not been made by Weschler’s.”
See Mot. at 9. The Court disagrees. Defendant cites no authority for the proposition that
Plaintiff must spell out in greater detail the additional steps she would have taken had she been
informed that Weschler’s intended to proceed with the auction. She does allege that she
diligently sought to halt Defendant’s sale of her property, and it is evident from her allegations
that she would have continued to pursue such efforts had she not received assurances from
Defendant that her property was no longer in peril. Count III, therefore, sufficiently alleges
reliance and may proceed.
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D. CPPA
Defendant directs its final substantive challenge to Plaintiff’s CPPA claim (Count IV).
Weschler’s contends that Cronin failed to allege a consumer-merchant relationship, as required
by the statute. See Mot. at 9-10. Plaintiff responds that because Weschler’s “provided auction
services (albeit unwanted auction services) to Cronin as the ‘seller’ of property and as the
‘consumer’ of auction services,” she has pleaded a sufficient consumer-merchant relationship for
her CPPA claim to proceed. Opp. at 11. For a change, Defendant has the better of this dispute.
While its protections apply to a wide range of transactions, “a valid claim for relief under
the CPPA must originate out of a consumer transaction.” Ford v. ChartOne, Inc., 908 A.2d 72,
81 (D.C. 2006). Under the CPPA, the term “merchant” “means a person . . . who . . . does or
would sell, lease (to), or transfer, either directly or indirectly, consumer goods or services, or a
person who does or would supply the goods or services which are or would be the subject matter
of a trade practice.” D.C. Code § 28-3901(a)(3). It is thus clear that Weschler’s, by selling the
goods, qualifies as a merchant. “Consumer,” on the other hand, means “a person who does or
would purchase, lease (from), or receive consumer goods or services, including a co-obligor or
surety, or a person who does or would provide the economic demand for a trade practice.” Id. §
28-3901(a)(2). As Plaintiff here never obtained or sought to obtain any goods or services from
Wechsler’s, she was not a “consumer” for purposes of the CPPA; as such, she cannot allege a
claim under the statute.
Plaintiff disputes such a characterization and cites Adam A. Weschler & Son, Inc. v.
Klank, 561 A.2d 1003 (D.C. 1989), in support of her CPPA claim. See Opp. at 11. Yet that suit,
although also involving Weschler’s, involved a very different transaction. In Klank, the
purchaser of an antique chest at a public auction charged Weschler’s with an unlawful trade
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practice under the CPPA, alleging that it had misrepresented the chest in its auction catalog. The
auction house argued that the sale was not a consumer transaction because the purchaser bought
the chest as an investment and intended to resell it. See 561 A.2d at 1004. The court ultimately
rejected that argument, finding Klank was a “consumer” within the statute. See id. Here, on the
contrary, Plaintiff neither bought from nor sold – at least willingly – anything to Weschler’s.
Indeed, the crux of her conversion claim hinges on the lack of any authorized transaction.
Because Plaintiff has failed to allege the requisite consumer-merchant relationship required by
the CPPA, the Court will grant Defendant’s Motion as to Count IV.
E. Punitive Damages & Attorney Fees
In addition to the challenges discussed above, Defendant seeks to limit the remedies
Plaintiff may seek. See Mot. at 10. Defendant contends first that Cronin cannot seek punitive
damages since her conversion and fraud claims fail. The Court has already rejected that legal
position. Weschler’s next maintains that no attorney fees are available without a valid CPPA
claim, which is true. The Court will thus strike this prayer for relief.
IV. Conclusion
For the foregoing reasons, the Court will issue a contemporaneous Order that will grant
Defendant’s Motion to Dismiss Count IV, strike the prayer for attorney fees, and otherwise deny
the Motion. A separate Order consistent with this Opinion will be issued this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: November 15, 2012
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