Chambers v. King Buick GMC, LLC
Latechia CHAMBERS v. KING BUICK GMC, LLC
Attorneys
Staci F. Dubnow, Richard S. Gordon, Gordon and Wolf Chtd, Towson, MD, for Plaintiff., Paul J. Maloney, Andrew M. Williamson, Carr Maloney PC, Washington, DC, Steven M. Nemeroff, Wortman and Nemeroff, Bethesda, MD, for Defendants.
Full Opinion (html_with_citations)
MEMORANDUM OPINION
Numerous motions are pending and ready for resolution in this putative class action civil RICO case, including: (1) a motion to dismiss the federal claims or to abstain filed by Defendants King Auto of Silver Spring LLC; King Buick GMC, LLC (âKing Buick GMCâ); King Hagers-town Motors LLC; King Lincoln, Inc.; King Vehicles, LLC; and King Volkswagen, LLC (ECF No. 34); (2) a separate motion filed by King Buick GMC, LLC to dismiss the claims in Counts I through VII of the amended complaint (ECF No. 36); (3) a motion to dismiss or, in the alternative, for summary judgment on Counts I through VII, filed by King Auto of Silver Spring, LLC; King Hagerstown Motors LLC; King Lincoln, Inc.; King Vehicles, LLC; and King Volkswagen, LLC (ECF No. 37); (4) a motion to consolidate cases filed by Plaintiff Latechia Chambers (ECF No. 63); (5) a motion for leave to file surreply and supplemental Rule 56(d) Declaration filed by Plaintiff (ECF No. 68); and (6) a motion to strike three notices of supplemental authority filed by Defendants (ECF No. 73). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Defendantsâ motion to dismiss federal claims or to abstain will be granted in part. King Buick GMCâs motion to dismiss will be granted in part, and the other Defendantsâ motion to dismiss or for summary judgment will be granted. Plaintiffs motion for leave to file surreply and supplemental Rule 56(d) Affidavit and motion to consolidate cases will be denied. Defen
I. Background
This case traces its origin to March 17, 2011 and February 18, 2012, when Comfort Kaakyire and Latechia Chambers purchased, respectively, a used 2008 Saturn Outlook and 2010 Dodge Caliber from King Buick GMC. (ECF No. 22 ¶ 18). Ms. Kaakyire and Ms. Chambers each executed a Buyerâs Order with King Buick GMC, which did not indicate that these vehicles were prior short-term rentals. (See ECF No. 22-2). Ms. Kaakyire instituted a putative class action lawsuit in the Circuit Court for Howard County on January 13, 2013, and later transferred the case to the Circuit Court for Montgomery County. On May 14, 2013, Ms. Kaakyire filed a first amended class action complaint in the Circuit Court for Montgomery County, on behalf of herself and a class of similarly situated consumers, alleging violations' of COMAR 11.12.01.14(M)(1) due to King Buick GMCâs failure to disclose the prior use of sold vehicles as short-term rental vehicles. This provision governs disclosure of former vehicle use:
(1) Vehicles formerly used for a purpose other than a consumer good shall be clearly and conspicuously identified! as to their former use. This includes, but is not limited to, vehicles formerly used:
(f) As short-term rental vehicles.
COMAR 11.12.01.14(M)(l)(f).
On August 2, 2013, Ms. Kaakyireâs counsel filed a notice of voluntary dismissal in the state court action, and subsequently filed a class action complaint in this court on August 12, 2013 against the following Defendants: King Buick GMC; and King Lincoln, Inc., King Auto of Silver Spring, LLC, King Vehicles, LLC, King Hagers-town Motors LLC, and King Volkswagen, LLC (âthe Other Dealer Defendantsâ). (ECF No. 1). The Defendants filed separate motions to dismiss, but before the motions were adjudicated, Plaintiff filed an amended complaint on October 17, 2013, adding Latechia Chambers as a Named Plaintiff. (ECF No. 22). On October 22, 2013, Defendants tendered a Rule 68 Offer of Judgment to Ms. Kaakyire, which she accepted. (ECF No. 24). On December 13, 2013, the undersigned entered judgment against Defendants as to Ms. Kaaky-ireâs claims, and she was dismissed from the lawsuit. (ECF No. 45). Thus, Latec-hia Chambers remains the only putative Named Plaintiff here.
The amended complaint by Ms. Chambers against all of the Defendants states that Defendants misrepresented the prior short-term rental use of the vehicles sold to Plaintiff and members of the putative class in a pre-printed space on the Buyerâs Order specifically designed for the disclosure of this information. Although Defendants argue that Plaintiff was provided with a CarFax Report that revealed that the vehicle was a prior short-term rental, there is a dispute about whether the Car-Fax Report was provided to Plaintiff before she executed the purchase documents and whether Plaintiff initialed the CarFax Report as Defendants indicate. (See ECF No. 34-5, at 2).
[a]s the Maryland Motor Vehicle Administration (âMVAâ) recognized when it enacted COMAR regulations requiring disclosure of prior short-term rental use, [ ] buyers seek to avoid vehicles used for short-term rentals because of the perception and expectation that these vehicles are driven hard by drivers who care little about them, may not have been well or consistently maintained, and more often are involved in accidents than vehicles uses for personal, family, and household purposes.
(ECF No. 22 ¶ 3). In Plaintiffs view, this omission was intentional and part of a fraudulent scheme by King Buick and the Other Dealer Defendantsâto whom she refers collectively as the âKing Auto Groupââof selling used short-term rental cars without disclosing their origins in the Buyerâs Order or elsewhere clearly and conspicuously. Plaintiff asserts that Defendants consistently failed to make the requisite disclosures before consummating the sale transactions with car purchasers. COMAR 11.12.01.14(A)(2) defines âclear and conspicuousâ as:
a statement, representation, or term different from other statements, representations or terms being made so as to be readily noticeable to the person to whom it is being disclosed either by its size, sound, length of time, color, placement in the advertisement, or the like.
Plaintiff maintains that âDefendants deliberately designed their standard sales agreements in a manner calculated to not draw attention to any disclosure of prior rental or other commercial use.â (ECF No. 22 ¶ 36).
Plaintiff asserts that the King Auto Group Defendants are all separately incorporated businesses that associate together as âKing Auto Group,â as an association-in-fact, although there is no formal, legal entity with that name. These dealerships jointly market and sell vehicles and develop form documents such as the Buyerâs Orders used at each dealership. Plaintiff asserts:
Defendants have an agreement to work together to market and sell used vehicles and actively are doing so. Defendantsâ cross-marketing and commingling and/or sharing of inventory and Carfax reports is evidence of their cooperation, joint agreements, and use of common procedures and documents to unlawfully sell such used vehicles without the disclosure required by Maryland law.
(ECF No. 22 ¶ 49). Plaintiff believes that all of the Defendants conspired to market and sell used vehicles without disclosing to consumers that the vehicles were previously used as short-term rentals. (Id. ¶ 45). Plaintiff states that Defendants King Lincoln, Inc. and King Vehicles, Inc. did not sell prior short-term rental vehicles in their own name but routinely sold these vehicles through âtheir King Auto Group coconspiratorsâKing Buick, King Volkswagen, LLC, King Hagerstown Motors, LLC or King Auto of Silver Spring, LLC.â (Id. ¶ 44). Plaintiff further contends:
[a]s part of its scheme to mislead customers into believing that vehicles used for prior short-term rentals were never put to such use, King Auto Group dealerships further agreed to employ, and from time to time did employ, a form entitled âDisclosure of Prior Vehicle Use for Dealership or Commercial Pur*585 poses[.]â [ ] This form ... is provided to buyers only after they have signed the' sales agreement and thus become legally bound to purchase a vehicle, does not provide the âclear and conspicuousâ disclosure of prior non-consumer use required by law.
(Id. ¶ 39). The amended complaint identifies fifteen additional vehicle sale transactions over a two-year period in which Defendants King Volkswagen LLC, King Hagerstown Motors, LLC, and King Auto of Silver Spring, LLC allegedly perpetrated the same fraudulent scheme to induce consumers into purchasing prior short-term rental vehicles. (Id. ¶ 43). Plaintiff alleges that she paid significantly more for her vehicle than it was worth and was overcharged as a result of the scheme.
The amended complaint asserts the following counts: implied warranty of merchantability (count I); violations of the Magnuson-Moss Warranty Act (âMMWAâ), 15 U.S.C. §§ 2301 et seq. (count II) and the Maryland Consumer Protect Act (âMCPAâ) (count III); deceit by non-disclosure or concealment (count IV); unjust enrichment (count V); negligent misrepresentation (Count VI); breach of contract (count VII); and violations of the Federal Racketeer Influence and Corrupt Organizations Act (âRICOâ), 18 U.S.C. §§ 1962(a), (c), and (d) (counts VIII, IX, and X). Defendants filed separate motions to dismiss. All of the Defendants filed a motion to dismiss the federal claims (RICO and the MMWA) or, in the alternative, for abstention (ECF No. 34). King Buick GMC filed a separate motion to dismiss addressing the non-RICO claims. (ECF No. 36). The Other Dealer Defendants filed a separate motion to dismiss or for summary judgment on the non-RICO claims. (ECF No. 37). All the motions have been fully briefed.
II. Standards of Review
A. Motion to Dismiss
All of the Defendants move to dismiss Plaintiffs RICO claims. King Buick GMC also filed a separate motion to dismiss the non-RICO claims. A motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) tests the sufficiency of the complaint. Presley v. City of Charlottesville, 464 F.3d 480, 483
At this stage, the court must consider all well-pleaded allegations in a complaint as true, Albright v. Oliver, 510 U.S. 266, 268, 114 S.Ct. 807, 127 L.Ed.2d 114 (1994), and must construe all factual allegations in the light most favorable to the plaintiff, see Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 783 (4th Cir.1999) (citing Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir.1993)). In evaluating the complaint, the court need not accept unsupported legal allegations. Revene v. Charles Cnty. Commârs, 882 F.2d 870, 873 (4th Cir.1989). Nor must it agree with legal conclusions couched as factual allegations, Iqbal, 556 U.S. at 678, 129 S.Ct. 1937, or conclusory factual allegations devoid of any reference to actual events, United Black Firefighters v. Hirst, 604 F.2d 844 (4th Cir.1979); see also Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir.2009). â[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged, but it has not âshow[n] ... that the pleader is entitled to relief.â â Iqbal, 556 U.S. at 679, 129 S.Ct. 1937 (quoting Fed.R.Civ.P. 8(a)(2)). Thus, â[djetermining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.â Id.
Moreover, allegations of fraudâ-which Plaintiff raises in both her RICO and state law claimsâare subject to a heightened pleading standard under Rule 9(b). Harrison, 176 F.3d at 783. Rule 9(b) states that âin alleging a fraud or mistake, a party must state with particularity the circumstances constituting the fraud or mistake. Malice, intent, knowledge, and other conditions of a personâs mind may be alleged generally.â Such allegations typically âinclude the âtime, place and contents of the false representation, as well as the identity of the person making the misrepresentation and what [was] obtained thereby.â â Superior Bank, F.S.B. v. Tandem Natâl Mortg., Inc., 197 F.Supp.2d 298, 313-14 (D.Md.2000) (quoting Windsor Assocs., Inc. v. Greenfeld, 564 F.Supp. 273, 280 (D.Md.1983)). In cases involving concealment or omissions of material facts, however, meeting Rule 9(b)âs particularity requirement will likely take a different form. See Shaw v. Brown & Williamson Tobacco Corp., 973 F.Supp. 539, 552 (D.Md.1997) (recognizing that an omission likely âcannot be described in terms of the time, place, and contents of the misrepresentation or the identity of the person making the misrepresentationâ (internal quotations omitted)). The purposes of Rule 9(b) are to provide the defendant with sufficient notice of the basis for the plaintiffs claim, to protect the defendant against frivolous suits, to eliminate fraud actions where all of the facts are learned only after discovery, and to safeguard the defendantâs reputation. See Harrison, 176 F.3d at 784. In keeping with these objectives, â[a] court should hesitate to dismiss a complaint under Rule 9(b) if the court is satisfied (1) that the defendants were] made aware of the particular circumstances for which
B. Summary Judgment Standard
The Other Dealer Defendants move to dismiss or, in the alternative, for summary judgment on the non-RICO counts. Summary judgment may be entered only if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Emmett v. Johnson, 532 F.3d 291, 297 (4th Cir.2008). Summary judgment is inappropriate if any material factual issue âmay reasonably be resolved in favor of either party.â Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); JKC Holding Co. LLC v. Wash. Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir.2001).
âA party opposing a properly supported motion for summary judgment âmay not rest upon the mere allegations or denials of [his] pleadings,â but rather must âset forth specific facts showing that there is a genuine issue for trial.â â Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 522 (4th Cir.2003) (quoting former Fed. R.Civ.P. 56(e)). âA mere scintilla of proof -... will not suffice to prevent summary judgment.â Peters v. Jenney, 327 F.3d 307, 314 (4th Cir.2003). âIf the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.â Liberty Lobby, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted). At the same time, the facts that are presented must be construed in the light most favorable to the party opposing the motion. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007); Emmett, 532 F.3d at 297.
III. Analysis
A. RICO Claims
Plaintiff asserts three claims for racketeering pursuant to RICOâs civil provision, 18 U.S.C. § 1964, which provides a cause of action to â[a]ny person injured in his business or property by reason of a violation of [18 U.S.C. § 1962].â
1. RICO Enterprise
Defendants argue that Plaintiff has not properly alleged the existence of a RICO enterprise. Under 18 U.S.C. § 1962(c), it is 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 enterpriseâs affairs through a pattern of racketeering activity or collection of unlawful debt.
â[T]o establish liability under § 1962(c) one must allege and prove the existence of two distinct entities: (1) a âpersonâ; and (2) an âenterpriseâ that is not simply the same âpersonâ referred to by a different name.â Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001). There must be a âperson,â alleged to have violated Section 1962(c) and to be hable to the claimant for damages, who is separate and distinct from the âenterprise,â or tool, through which the RICO violation occurred. See Busby, 896 F.2d at 840-41. A âpersonâ can be an individual or corporate entity. 18 U.S.C. § 1961(3). There may be multiple persons whose association with the same RICO enterprise gives rise to multiple violations of Section 1962(c). âEnterprise,â as set forth in 18 U.S.C. § 1961(4), âincludes any individual, partnership, cor
Plaintiff argues that the King Auto Group constitutes an association-in-fact enterprise. (ECF No. 48, at 76). An association-in-fact enterprise is not defined by a formal legal structure, but is instead characterized by the association of its members âfor a common purpose of engaging in a course of conduct.â United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). Unlike Section 1962(a), Section 1962(c) âenvisions the enterprise as being different from, not the same as or part of, the personâ against whom recovery is sought. New Beckley Mining Corp. v. Intâl Union, United Mine Workers, 18 F.3d 1161, 1163 (4th Cir.1994) (internal citations omitted).
Defendants argue that Plaintiffs RICO allegations fail to differentiate between the âpersonâ and the âenterprise,â and thus cannot show distinctiveness under Section 1962(c). Defendants contend that Plaintiff has alleged an enterprise that is ânothing more than the Defendants by a different name (âKing Auto Groupâ).â (ECF No. 34, at 20). Defendants essentially argue that because the âKing Auto Groupâ is comprised of the individual dealership Defendants, Plaintiff merely attempts to refer to the âpersonsâ by a different name. As Judge Garbis recently observed, however, in Bailey v. Atl. Automotive Corp., 992 F.Supp.2d 560, 582 (D.Md.2014), âthere is certainly judicial recognition that âa defendant may be both a person and a member of a collective RICO enterpriseâ without negating the distinctiveness requirement.â (citing In re Lupron Mktg. & Sales Practices Litig., 295 F.Supp.2d' 148, 173 (D.Mass.2003)); see also' United States v. Urban, 404 F.3d 754, 782 (3d Cir.2005) (noting that a RICO enterprise âmay be comprised only of defendants, or of defendants and non-defendants.â). As explained in Lupron, â[t]he basic idea is that while one basketball player does not constitute a team, an association of five players does, without each losing his identity as a dis
Defendantsâ reliance on Gondel v. PMIG 1020, LLC, Civ. Action No. CCB-08-1768, 2009 WL 248681 (D.Md. Jan. 22, 2009), and Myers v. Lee, No. 1:10cv131 (AJT/JFA), 2010 WL 3745632 (E.D.Va. Sept. 21, 2010) is misplaced. In Gondel, 2009 WL 248681, at *4, Judge Blake held that plaintiffs had not pled distinctiveness under Section 1962(c) because, unlike here, â[njowhere in [the] complaint d[id] plaintiffs [even] mention a distinct enterprise with which the corporate defendants associated in order to carry out their alleged racketeering scheme.â In Gondel, plaintiffs did not sufficiently differentiate between the individual defendants named in the complaint and the enterprise, comprised of the individual defendants and its agents. See also Riverwoods Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d 339, 344 (2d Cir.1994) (âby alleging a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant, the distinctness requirement may not be circumvented.â). Plaintiff in Myers, 2010 WL 3745632, at *3, alleged that the âenterpriseâ was .the âDahn Organization,â an association in fact among individuals and corporations âacting in .concert to target, control, and defraud its victims of their health, liberty, and property for the financial benefit of the Dahn Organization and its leader, Ilehi Lee.â Importantly, in deciding that plaintiff did not adequately distinguish between the âpersonsâ and the âenterprise,â the court noted that ânowhere in the [a]mended [c]omplaint are there any allegations that the affairs of the enterprise are any different from the affairs of the defendants.â Id. at *4.
Here, the amended complaint states that each Defendant is a separately incorporated entity, has its own business location and employees, and that through âcontractual arrangement and joint management activity, formed an association-in-fact with each other.â (ECF No. 22 ¶ 253). Plaintiff avers that âthe function of the King Auto Group association-in-fact enterprise is to facilitate a fraudulent scheme of selling prior short-term rental vehicles to consumers without the disclosures required by Maryland law,â whereas each dealership Defendant is also engaged in legitimate vehicle sale transactions. (ECF No. 48, at 49). Myers, 2010 WL 3745632, at *5, further noted that â[w]hile the Dahn Organization may qualify as an association-in-fact enterprise, [plaintiff] must still prove these defendants participated in the conduct of enterpriseâs affairs, not just their own affairs.â (internal citations omitted). The amended complaint delineates, to some extent, the roles played by different dealership Defendants in the association-in-fact enterprise. For instance, Plaintiff avers that Defendant King Vehicles, Inc. and King Lincoln Inc. advertised prior rentals for the other Defendants on its website-which the other Defendants allegedly sold without the requisite prior short-term rental disclosure-but did not sell the vehicles directly. Defendant King Hagerstown allegedly furnishes CarFax Reports which contradict the representations made in the sales
Bailey, 992 F.Supp.2d 560, also addressed the question of distinctiveness of the âpersonsâ and âenterpriseâ in the context of Section 1962(e). Bailey involved a putative class action lawsuit by consumers against a used car seller, its parent corporation, and the parentâs other subsidiaries, alleging that the sellerâs failure to identify cars as having been prior short-term rentals violated, inter alia, RICO. Unlike here, however, the dealer defendants in Bailey were wholly owned subsidiaries of Atlantic Automotive Corporation (âAtlanticâ), also a named defendant. Plaintiff in Bailey alleged that the dealer defendants formed the MileOne Automotive enterprise, consisting of the parent company, Atlantic, and all of its subsidiaries. Under those facts, Judge Garbis reasoned that âjust as adequate distinctiveness may be missing between a parent-person and a wholly owned subsidiary-enterprise (or vice ver-sa), it may also be lacking where the parent and its wholly owned subsidiaries are both the âalleged personsâ and the sole members of the association-in-fact enterprise.â 992 F.Supp.2d at 582 (emphasis added). Judge Garbis found the allegations in the second amended complaint inadequate to plead distinctiveness under Section 1964(c). He explained:
Heritage and the Other Dealer Defendants are wholly owned subsidiaries of Atlantic. Plaintiff alleges that Heritage and the Other Dealer Defendants are all used car dealerships under the operation and ownership of Atlantic and that these commonly owned entities operate jointly and associate together as MileOne Automotive to sell used vehicles legitimately, as well as fraudulently.
Unlike in Myers and Bailey, Plaintiff has made the requisite showing here. First, the Defendants are not subsidiaries of a single dealership; according to the amended complaint, each Defendant is an independent car dealership. Moreover, as Plaintiff explains, â[i]n contrast to the lack of distinction between the âpersonsâ and âenterpriseâ in [] Myers, the King corporate Defendants joined together to form the King Auto Group association-in-fact not just to conduct their own separate affairs as individual car dealerships, but to facilitate a fraudulent scheme involving their co-conspirators.â (ECF No. 48, at 53-54). Plaintiffs allege in the amended complaint that each Defendant owned and operated its own dealership, but also associated together under the non-incorporated âKing Auto Group.â (ECF No. 22 ¶ 6). The amended complaint states that â[a]ll of the Defendants share the moniker âKingâ in their corporate names and jointly hold themselves out to the general public under the name King Auto Group.â (ECF No. 22 ¶ 6). Plaintiff further states that âDefendants conduct business using [the King Auto Group] name and have established a central website, http://www.King Auto.com.â (Id. ¶ 7). Plaintiff maintains that:
Through their association, Defendants developed and agreed upon the uniform and systematic scheme described herein to acquire and sell prior short-term rental vehicles to consumers without the disclosures required by Maryland law, with misleading and fraudulent omissions and representations concerning the history of the used vehicles being sold, and with the specific intent to deceive and defraud [ ] Plaintiff[ ] and members of the Class.
Although â[a]n organization cannot join with its own members to undertake regular corporate activity and thereby become an enterprise distinct from itself,â this is not the case here. Begala v. PNC Bank, Ohio, N.A, 214 F.3d 776, 781 (6th Cir. 2000). Here, Plaintiff alleges that the âKing Auto Groupâ is comprised of six different Defendant dealerships and performs functions beyond its ordinary business of selling cars. Defendantsâ argument that the amended complaint fails to allege that the RICO enterprise has an existence separate and apart from the pattern of racketeering activity in which it was engaged is belied by Plaintiffs assertion that the enterprise also engages in legitimate vehicles sales transactions. (ECF No. 22 ¶ 126). Plaintiff similarly alleges that aside from engaging in a scheme to conceal prior short-term rental use of the vehicles each dealership sold, âthe enterprise developed forms and marketing campaigns for legitimate vehicle sales transactions.â (Id. ¶ 126 (emphasis added)); see Proctor, 645 F.Supp.2d at 480 (finding that the complaint alleged a pattern of racketeering activity separate from the enterprise where the complaint alleged that the enterprise âdid not exist solely for the purpose of engaging in predicate acts violative of RICO, but the enterprises also engaged in legitimate real estate transactions over the same period of timeâ). In Mitchell Tracey, 935 F.Supp.2d at 844, Judge Quarles found sufficient plaintiffsâ allegation that defendant and its title agents âdeliberately overcharged and misappropriated amounts due for the purchase of title insurance, in violation of Maryland law.... Such unlawful acts are not conducted in the ordinary course of business.â Plaintiff similarly alleges that deceiving car buyers is ânot a part of any of the Defendantsâ normal business functions.â (ECF No. 48, at 52). Thus, viewing the pleadings in the light most favorable to Plaintiff, she has alleged an enterprise separate and distinct from the âpersonâ and from the racketeering activity.
2. Pattern of Racketeering Activity
To show a âpattern of racketeering activity,â a plaintiff must âadequately plead at least two predicate acts of racketeering activity!.]â Am. Chiropractic Assoc., Inc. v. Trigon Healthcare, Inc., 367 F.3d 212, 233 (4th Cir .2004) (citing 18 U.S.C. § 1961(5)). Racketeering activity is defined under 18 U.S.C. § 1961(1), as âany act which is indictableâ under a number of enumerated criminal provisions, which include violations of 18 U.S.C. §§ 1341 (mail fraud), 1343 (wire fraud), and 2314 (interstate transport of money converted or fraudulently obtained). Plaintiff cites these three sections as Defendantsâ predicate acts.
a. Predicate Acts
Defendants argue that Plaintiff fails sufficiently to plead mail and wire fraud because she cannot show that any Defendant other than King Buick GMC owed a legal duty to Plaintiff and the complaint also fails to identify any predicate acts of criminal wire and mail fraud committed by each of these Other Dealer Defendants.
Defendants further argue that Plaintiff fails to specify each Defendantâs role in the mail and wire fraud. Fed. R.Civ.P 9(b) states that â[i]n alleging fraud ... a party must state with particularity the circumstances constituting fraud.â Thus, when mail and wire fraud are asserted as predicate acts in a civil RICO claim, each must be pled with particularity required by Rule 9(b). See WW, LLC v. Coffee Beanery, Ltd., Civ. Action No. WMN-05-3360, 2012 WL 3728184, at *10 (D.Md. Aug. 27, 2012). Defendants state that Plaintiffs ârepeated reference, in bare and .conelusory fashion, to the âdefendantsâ generally refers to all,of the different Defendants, without identifying which Defendant allegedly committed any act of mail or wire fraud, or made any fraudulent] misrepresentation, or to whom.â (ECF
âA scheme to defraud means any deliberate plan of action or course of conduct by which someone intends to deceive or cheat another or by which someone intends to deprive another of something of value.â Levine v. First Am. Title Ins. Co., 682 F.Supp.2d 442, 462 (E.D.Pa. 2010). Here, the [plaintiffs allege that First Americanâs title agents made the initial contact with the consumer, and each time, they âfalsely and intentionally misrepresented to their customers that they would pay only the filed or best rate for title insurance.... The [plaintiffs further allege that First American and its title agents acted with the intent to defraud: specifically, to overcharge borrowers for title insurance, âguaran-teefing] a stream of businessâ for First American.
935 F.Supp.2d at 845. Based on these allegations, Judge Quarles concluded that plaintiffs in Mitchell Tracey had shown a scheme to defraud.
Much like in Mitchell Tracey, at this juncture, Plaintiffs allegations are sufficient to survive a motion to dismiss. Plaintiff alleges that âDefendants failed to disclose and intentionally concealed from Named Plaintiffs and the Class the material fact that vehicles sold to them previously were used as short-term rentals.â (ECF No. 22 ¶ 4). Plaintiff asserts that âDefendants all used the identical form vehicle sales agreements[, which] included a space specifically designated for the disclosure of the prior non-consumer use of the vehicles being sold.â (Id. ¶ 54). Plaintiff asserts that despite this disclosure built into the form, âeach Defendant routinely failed to use this space to identify the prior short-term rental use of the vehicles it sold to retail buyers and knew the other King Auto Group Defendants failed to do so as well.â (Id. ¶ 55). In addition to the sale transaction on February 18, 2012, when King Buick GMC allegedly failed to disclose to Ms. Chambers that the vehicle she purchased was a prior short-term rental, the amended complaint identifies fifteen (15) additional transactions
Defendants also argue that the amended complaint âfails to identify any fraudulent mail or wire sent allegedly by the Unrelated Defendants to Plaintiffs or anyone else in connection with the purchase of their vehicles.â (ECF No. 34-1, at 28). Defendants argue that âthe Complaint fails to identify how the Unrelated Defendants allegedly used generic mail or wire to further the alleged fraudulent scheme against the Plaintiffi] (who they did not know and had no involvement) so as to constitute criminal mail and wire fraud under RICO.â (ECF No. 34-1, at 28). They argue that â[e]very commercial transaction will inevitably require using the mail or wire system as part of its ordinary business, but this does not establish criminal mail fraud or the requisite pattern of racketeering activity.â (Id.). As explained above, however, â[t]o be part of the execution of the fraud ... the use of the mails need not be an essential element of the scheme.â Schmuck v. United States, 489 U.S. 705, 710, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989). Instead, they need only be âincident to an essential part of the scheme.â Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 98 L.Ed. 435 (1954); see also In re Am. Honda Motor Co. Dealerships Litig., 941 F.Supp. 528, 546 n. 19 (D.Md.1996) (stating that âa mailing need only be a necessary step in furtherance of a scheme, and need not be fraudulent in and of itself.â). Moreover, despite the high standard demanded by the Rule 9(b) particularity requirement, in the context of RICO mail fraud, the court may also consider the interplay of the more liberal notice pleading standard of Rule 8, which simply requires âa short and plain statement.â Kerby v. Mortg. Funding Corp., 992 F.Supp: 787, 799 (D.Md. 1998); Coffee Beanery, 2012 WL 3728184, at *10. Courts have acknowledged the difficulty that arises in pleading a RICO suit against multiple defendantsâsuch as the case hereâand have determined that it is ânot necessary that a plaintiff eluci
[t]he most basic consideration in making a judgment as to sufficiency of a pleading is the determination of how much detail is necessary to give adequate notice to an adverse party and enable him to prepare a responsive pleading.
Kerby, 992 F.Supp. at 800.
Plaintiff has alleged the predicate acts of mail and wire fraud with sufficient particularity at this juncture. Plaintiff asserts that the mailings in furtherance of the fraudulent scheme included: the mailing and distribution among Defendants of contracts, form sale and credit agreements, and other documents used in the transactions of Plaintiff and members of the putative class. (ECF No. 22 T 102). Plaintiff further contends that:
Defendants and their co-conspirators on hundreds if not thousands of occasions used, and caused to be used, telephone, Internet and other wire transmissions including, but not limited to, use of the wires in the sale of vehicles previously used as prior short-term rental vehicles to Named Plaintiffi ] and members of the Class; in the emailing, faxing and transmission by wire of documents such as loan applications, vehicles sale and financing contracts and other documents related to the sale and financing of vehicles by Defendants to potential assignees in the transactions of Named Plaintiff[] and Class members who financed their vehicles with Defendants; in the electronic registration and titling system established with the MVA; and in the marketing of their enterprise âKing Auto Groupâ and its vehicles on the Internetâwith the intent to defraud and in furtherance of their scheme to defraud.
(Id. ¶ 103).
In Coffee Beanery, 2012 WL 3728184, at *11, Judge Nickerson found persuasive that â[p]laintiffs have outlined the alleged scheme to defraud, a time frame for the scheme, who was targeted by the scheme, the contents of the allegedly fraudulent communications that were sent using the mails and wires, and what [defendants hoped to obtain through the scheme.â Judge Nickerson held that â[cjoupling these specific allegations with the broader allegations that the [defendants used the mails as part of the scheme to defraud other unnamed potential franchisees is sufficient to meet the requirements of Rule 9(b).â Here too, Plaintiff has outlined the alleged scheme to defraud consumers by failing to disclose the prior short-term rental use of vehicles sold by the Defendants, a time frame for the alleged scheme, and the role of mail and wires in the scheme. See, e.g., Mitchell Tracey, 935 F.Supp.2d at 845 (finding sufficient allegations of mail and wire fraud where the complaint alleged âspecific dates when [defendant] used the mail and electronic communication to further its schemeâ and stated that distributions of the profits were sent interstate).
Plaintiff further asserts that âon or before February 18, 2012, Defendants used the wires to advertise the vehicle sold to Ms. Chambers on the Internet, âwithout the required clear and conspicuous disclosure of this vehicleâs prior use as a short-term rental required by Maryland law.â (Id. ¶ 106). Plaintiff avers that in February 2012, âDefendants used the wires and/or U.S. mail to submit a loan application, contract of sale, and other documents related to the sale to a potential assignee for the financing of Ms. [Chambersâs] prior but undisclosed short term rental vehicleâ
Plaintiff contends that Defendants used the wires to âregister and title Ms. Chambersâs] vehicle through an electronic registration and titling system.â (Id. ¶ 113). Specifically, Defendants allegedly used the wires electronically to transfer $587.95 of funds to the MVA in connection with Ms. Chambersâs transaction on February 18, 2012, for payment of sales tax, titling and registration fees. Defendants also allegedly used mails and wires to advertise and sell to putative class members the vehicles previously used as short-term rentals without the requisite disclosure in the fifteen additional transactions Plaintiff has identified in the complaint, including the date of the transaction. (Id. ¶¶ 108, 114; see also ¶ 104 (âDefendants used the Internet and the wires in connection with the sale of hundreds if not thousands, of vehicles sold to members of the class by providing a forum in which customers could search for and receive information regarding vehicles offered for sale by Defendants, including the prior rental vehicles sold by Defendants.â)). Plaintiff also avers that:
Defendants further used the wires to send and receive purchase orders, retail installment contracts, and other documents among their co-conspirators, funding lenders, and other entities; to distribute money among those entities; to transmit to the MVA information related to the registration and titling of motor vehicles purchased and sold by Defendants to Named Plaintiff! ] and members of the Class; to transmit among the Defendants forms and other documents used in the sale of vehicles.
(Id. ¶ 109). Finally, according to Plaintiff, âDefendants further used the wires to facilitate the operation of and to operate the fraudulent scheme- described herein, and to communicate with each [other] during the course of the scheme through telephone calls, facsimiles, e-mail transmissions, and wire transfers of money resulting from and in furtherance of the fraudulent scheme.â (Id. ¶ 116); see, e.g., Proctor, 645 F.Supp.2d at 474 (â[plaintiffs have pleaded the predicate acts of mail and wire fraud with particularity against the background of a grand mortgage foreclosure rescue scam that involved the sale and leaseback of [plaintiffsâ properties from which [two settlement agents] among others would siphon off and transfer the equity illegally.â).
In Coffee Beanery, 2012 WL 3728184, Judge Nickerson found sufficient the allegations supporting mail and wire fraud because plaintiffs specifically alleged the circumstances surrounding the use of the mails with regard to fraudulent statements and listed the material factsâthey believed were fraudulently omitted. Coffee Bean-ery, 2012 WL 3728184, at *11. Judge Nickerson observed: [look to see if repetitive with prior]
Plaintiffs further provide the names of seven other individuals who received through the mails or wires copies of allegedly fraudulently UFOCs dated from 2002 and 2003.[ ] Plaintiffs then allege with particularity the fraudulent misrepresentations and omissions contained in Coffee Beaneryâs UFOCs issued annually from September 2003 to October 2011.[ ] Making all inferences in favor of Plaintiffs, the Court can construe these allegations to suggest that every potential franchisee from 2002 until at least 2011 was provided with a fraudulent UFOC, and that the majority*598 of the fraudulent UFOCs were transmitted through the mail or wires.
Id. Although the facts are less compelling here, Plaintiff identifies fifteen additional transactions between 2010 and 2011, in which consumers entered into sales agreements for vehicles as a result of Defendantsâ fraudulent scheme to sell prior short-term rental vehicles without the requisite disclosures. For these fifteen transactions, Plaintiff identifies the approximate vehicle sale date, the vehicle description, VIN, and the Defendant dealership that consummated the transaction. (See ECF No. 48, at 41). Plaintiff asserts that mail and wire were used to send the loan documents and financing contracts in connection with the fraudulent transactions, to register and title the sold vehicles, and to wire funds to the MVA in connection with the vehicle sale transactions. (ECF No. 22 ¶¶. 111-114). These acts involving mail and wire use were allegedly made in connection with consummating the fraudulent sale of -the vehicles to induce unaware consumers into purchasing prior short-term rentals. See VNA Plus, Inc. v. Apria Healthcare Grp., Inc., 29 F.Supp.2d 1253, 1263 (D.Kan.1998) (noting that the requirements to plead specific instances of mail or wire fraud is ârelaxed where there are ânumerous mailings of standardized documents containing identical false representations.â â). Plaintiff points out that â[alb-sent their use of the mails and/or wires in connection with the financing, registration and titling of the prior short-term rentals they sold pursuant [to] their fraudulent scheme, Defendants would not have been able to consummate this scheme.â (ECF No. 48, at 62 n. 46).
Defendants also challenge Plaintiffs RICO allegations insofar as they fail to demonstrate that the conduct of the enterprise affected interstate commerce. Defendants assert that âthe gravamen of Plaintiffsâ claim is that the âenterpriseâ consists of Maryland-automobile dealers, licensed by the Maryland MVA to sell cars in Maryland to two Maryland residents in a manner that does not comply with the Maryland law applicable to automobiles sales occurring solely in Maryland.â (ECF No. 34-1, at 44). Defendants are correct that Plaintiff must plead the existence of a RICO enterprise whose activities affected interstate commerce. See DB Capital Group, 2011 WL 887554, at *13. The allegations in the amended complaint concerning interstate commerce are sufficient at this stage of the proceedings. As Plaintiff summarizes in the opposition, she âalleges the King Auto Group purchased previously used rental vehicles out-of-state for sale in Maryland, wired and mailed monies from Maryland to lenders outside of Maryland in connection with financing of such vehicles, and uses the wires and mails to forward loan applications, contracts and other documents from Maryland to persons outside of Maryland in connection with the sales of such vehicles.â (ECF No. 48, at 78 n. 67) (emphasis in original). Specifically, Plaintiff alleges that âDefendants and King Auto Group were engaged in, and affected interstate commerce in that, inter alia, the vehicle sales that are the subject of the scheme to defraud were consummated in Maryland using vehicles that in many circumstances were purchased out-of-state for sale in Maryland.â (ECF No. 22 ¶ 101). Plaintiff asserts that âDefendants wired funds or mailed checks from Maryland to persons outside of Maryland to pay for prior short-term rentals later sold within Maryland.â (Id.). Plaintiff further avers that in February 2012, King Buick GMC used mails and/or wires to submit a loan application, contract of sale, and other documents related âto the sale to a potential assignee for the financing of Ms. Chamber[sâs] prior but undisclosed prior
b. Pattern of Racketeering Activity
To state a plausible claim of a pattern of racketeering activity, the plaintiff must allege facts establishing âthat the racketeering predicates are related and' that they amount to or pose a threat of continued criminal activity.â Cf. H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) (reversing a 12(b)(6) dismissal of a RICO complaint and discussing what a plaintiff in a RICO case must show to prove a pattern of racketeering activity). With respect to the requirement that the predicate acts be ârelated,â the Fourth Circuit has explained that â[t]he relationship criterion may be satisfied by showing that the criminal acts âhave the same or similar purposes, victims, or methods of commission, or are otherwise interrelated by distinguishing characteristics and are not isolated events.â â Anderson v. Found. for Advancement, Educ. & Empât of Am. Indians, 155 F.3d 500, 505-06 (4th Cir.1998) (quoting H.J. Inc., 492 U.S. at 240, 109 S.Ct. 2893). Plaintiff alleges that Defendantsâ acts were ârelated, as they had the similar purpose of concealing and affirmatively misrepresenting the prior rental history of vehicles sold to Defendantsâ customers, and they used the same methods of commission by concealment and affirmative misrepresentation.â (ECF No. 22 ¶ 124). Plaintiff identifies fifteen other vehicle sale transactions. In Coffee Beanery, 2012 WL 3728184, at *12, Judge Nickerson found sufficient to satisfy the relationship requirement the following allegations:
Plaintiffs allege that all of the representations were made for the express purpose of inducing [plaintiffs, and other potential franchisees, to investee in Coffee Beanery café franchises, and that the scheme involved providing the same fraudulent UFOCs and making the same false representations to franchisees in support of this end. Essentially, as alleged, the predicate acts of mail and wire fraud were perpetrated an uncounted number of times against the same type of victim in a nearly identical manner. In the context of a motion to dismiss, the Court finds these allegations sufficient to satisfy the relationship requirement.
Plaintiff here also alleges that the predicate acts of mail and wire fraud were perpetrated on at least fifteen other occasions with separate consumers in an effort to induce them to purchase vehicles that dealership Defendants did not disclose were previously used as prior short-term rentals. Accordingly, the relatedness element is satisfied.
Defendants also argue that Plaintiffs allegations are insufficient to meet the continuity-of-activity requirement. A plaintiff can fulfill the continuity-of-activity requirement by establishing either a closed or open-ended pattern. H.J. Inc., 492 U.S. at 241, 109 S.Ct. 2893. A âclosed-endedâ pattern of racketeering activity involves a
Plaintiffs amended complaint suggests that she attempts to establish an open-ended pattern. Specifically, Plaintiff asserts that King Auto Group is an association-in-fact that âhas continued as a unit, with a core membership, over a substantial period of time, exceeding five years, and is an ongoing organization established for an economic motive.â (ECF No. 22 ¶ 231). Defendants assert that the amended complaint fails to plead facts demonstrating a threat of continuing future criminal conduct for essentially two reasons. First, Defendants argue that there is no criminal activity at all because the prior short-term rental disclosure was made in the CarFax Report, which Defendants maintain Plaintiff received along with the Buyerâs Order and which indicated that the vehicle she bought was previously used as a short-term rental. (ECF No. 34-1, at 38). This argument is unpersuasive at this point because whether Plaintiff received the Car-Fax Report before she consummated the transaction is a disputed fact, and inappropriate to resolve on a motion to dismiss. (See ECF No. 48-2, at 33, Declaration of Latechia Chambers (âI do not recall anyone at the dealership showing me a Carfax report or asking me to sign or initial it, though I do recall signing quite a few documents wherever the King rep put an âxâ mark next to a line for my signature, but the Carfax report was NOT one of those documentsâ (emphasis in original))).
Second, Defendants argue that there is no threat of continuing future criminal conduct or that the pattern of racketeering activity is open and ongoing because on May 14, 2013, the State of Maryland promulgated its own disclosure form to be used by motor vehicle dealers-Disclosure of Former Vehicle Use Form, VR-460. (See ECF No. 34-7). Defendants argue that:
[i]n so doing, the MVA conclusively put. an end to Plaintiff[âs] erroneous theory that disclosure of a vehicleâs prior rental history on a âseparate document!,]â signed by the customer, somehow violates COMAR, or that Maryland law requires that the prior use disclosure must be on the Buyerâs Order, or sales agreement, or in bold, or in super large print as alleged in their Complaint.
(ECF No. 34-1, at 40). As Plaintiff points out, though, her RICO claims are based on Defendantsâ alleged scheme to defraud, not just an alleged violation of COMAR or an MVA bulletin. Furthermore, Defendantsâ argument assumes that the dealership Defendants accused of fraudulent misrepresentations and concealment will cease this alleged conduct and use this new form. Defendants further argue that the conduct attributed to the RICO enterprise lasted less than eighteen months, which is insuffi-. cient to establish continuity for RICO pattern purposes. Although Defendants are correct to note that the Fourth Circuit has expressed reservations about RICO claims where the predicate acts are mail and wire fraud, see GE Inv. Private Placement Partners II v. Parker, 247 F.3d 543, 549 (4th Cir.2001), as Judge Blake explained in Friedler, M.D., et al. v. Cole, Jr., et al., No. Civ.A. CCB-04-1983, 2005 WL 465089, at *9 (D.Md. Feb. 28, 2005), âdetermining whether a pattern exists is a commonsensical, fact-specific inquiry, not a mechanical one determined solely by the number of predicate acts over a given time period.â (internal citations omitted). Rather, the critical inquiry is whether the predicate
The Fourth Circuit has identified several factors to consider when determining whether a RICO pattern exists. These factors, including, âthe number and variety of predicate acts and the length of time over which they were committed, the number of putative victims, the presence of separate schemes, and the potential for multiple distinct injuries,â should be considered along with âall the facts and circumstances of the particular caseâwith special attention to the context in which the predicate acts occurred.â Brandenburg v. Seidel, 859 F.2d 1179, 1185 (4th Cir.1988), overruled on other grounds by Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996). The facts as pled in the amended complaint are readily distinguishable from cases where courts have found the alleged pattern of racketeering activity-consisting only of acts of mail and wire fraudâinsufficient to present the sort of âongoing unlawful activities whose scope and persistence pose a special threat to social well-being.â For instance, in Menasco, Inc. v. Wasserman, 886 F.2d 681, 684 (4th Cir. 1989), the court found that plaintiffsâ allegations failed to satisfy the continuity prong' of RICOâs pattern requirement. The court noted:
Defendantsâ actions were narrowly directed towards a single fraudulent goal. They involved a limited purpose: to defraud Menasco, Inc. and Lucky Two, Inc. with respect to their oil interests. They involved but one perpetrator: Wasserman. They involved but one set of victims: Menasco and Lucky Two. Finally, the transaction took place over approximately one year. Clearly, these acts do not constitute âongoing lawful activities whose scope and persistence pose a special threat to social well-being.â [International Data Bank, Ltd. v. Zepkin, 812 F.2d 149, 155 (4th Cir. 1987).]
(emphasis added). Here, unlike in Menas-co, Plaintiff does not allege that the fraudulent scheme was only directed at her. Instead, Plaintiff alleges that King Auto Group enterprise undertook a scheme to defraud consumers into purchasing vehicles that were previously used as short-term rentals, but which disclosure was not made clearly and conspicuously as required under Maryland law.
In Bailey, 992 F.Supp.2d at 584, Judge Garbis held that there was no viable claim of a pattern of racketeering activity because Plaintiff âalleged only one instance of specific fraudulent conduct directed at her.â
In Friedler, 2005 WL 465089, at *12, Judge Blake determined that the predicate acts, consisting mainly of mail and wire fraud, failed to establish a RICO pattern. Unlike here, the complaint in Friedler described a fraudulent scheme spearheaded by a single defendant and ânarrowly targeted to misappropriate the plaintiffsâ investments.â Judge Blake noted that â[i]f plaintiffs had alleged a more widespread scheme, involving various predicate acts and other offenders and victims, then the fraud they suffered would more closely resemble the kind that ârises above the routineâ and âposes a threat to social well-being.â Id. Here, Plaintiff has alleged a widespread fraud scheme involving various victims, whichâat this stageâsuggests a continuing pattern of racketeering activity. See, e.g., Superior Bank, 197 F.Supp.2d at 324 (finding the RICO pattern requirement satisfied where over thirty defendants coordinated a mortgage flipping scheme involving twenty-three transactions); Thomas v. Ross & Hardies, 9 F.Supp.2d 547, 555 (D.Md.1998) (finding a RICO pattern existed where defendants directed a broad, open-ended scheme to recruit and defraud homeowners through a mortgage scheme). Ultimately, Plaintiff will need significantly more proof to establish RICO violations, but viewing the pleadings in the light most favorable to her, she has pled adequate facts for the Section 1962(c) claims to proceed based on a pattern of racketeering activity.
3. Proximate Cause
The parties also disagree over the means by which Plaintiff may satisfy RICOâs proximate cause requirement in a class action. To state a claim under civil RICO, a plaintiff is required to show that a RICO predicate offense ânot only was a
The fraudulent conduct alleged here is the misrepresentation and concealment of the rental history of the vehicles sold to Plaintiff and other consumers in violation of Maryland law. Plaintiffs alleged injury was that she was overcharged for the vehicle because the vehicle was sold falsely as a former consumer car. (ECF No. 22 ¶ 249); Bailey, 992 F.Supp.2d at 581 (holding that plaintiff has alleged a cognizable RICO injury where plaintiff alleged that âshe suffered the claimed loss at the moment of purchase in reliance upon the false representation that she was not buying a former short-term rental vehicle.â). Plaintiff asserts that:
[a]s a direct and proximate result of Defendantsâ negligent statements, representations, and omissions of material fact ... Plaintiff[ ] and Class members were induced, ab initio, to enter into sales agreements for vehicles with Defendants, paid significantly more for their vehicles than these vehicles were worth, and otherwise were harmed.
(ECF No. 22 ¶ 209). Unlike in Hemi, where the Supreme Court found that âMultiple steps [] separate the alleged fraud from the asserted injury,â there is a sufficiently direct relationship between the wrongful conduct here and the alleged injury. Hemi, 559 U.S. 1, 130 S.Ct. 983, involved a lawsuit by the City of New York against out-of-state cigarette retailers and affiliated individuals. The United States Supreme Court heldâon readily distinguishable factsâthat the city failed to establish the proximate cause element of a civil RICO claim. According to the City, Hemi committed fraud by selling cigarettes to city residents and failing to submit the required customer information to the State. Without the reports from Hemi, the State could not pass on the information to the City. Some of the customers legally obligated to pay the cigarette tax to the City failed to do so. Because the City did not receive the customer information, the City could not determine which customers had failed to pay the tax. Thus, plaintiff argued that the City was injured in the amount of the portion of back taxes that were never collected. On these facts, the Supreme Court concluded that the Cityâs theory of causation was far too indirect. The Court noted that:
the conduct directly responsible for the Cityâs harm was the customersâ failure to pay their taxes. And the conduct constituting the alleged fraud was Hemiâs failure to file Jenkins Act reports. Thus, [], the conduct directly causing the harm was distinct from the conduct giving rise to the fraud.
559 U.S. at 11, 130 S.Ct. 983 (emphasis added). Unlike in Hemi, the conduct giving rise to the harm here (failure to dis
Defendants assert that Plaintiff fails to allege that she detrimentally relied on any fraudulent mail or wire sent by the Unrelated Defendants, âor the specific harm directly caused to them as a result of the predicate acts allegedly committed by each Unrelated Defendant.â (Id. at 32). Defendants essentially argue that because Plaintiff only dealt with King Buick GMC, she cannot show reliance in connection with the Other Dealer Defendants with which she did not transact business. As Judge Nickerson stated in Robinson v. Fountainhead Title Grp. Corp., Civ. No. WMN-03-3106, 2009 WL 539882, at *2 (D.Md. Mar. 3, 2009), âa RICO claim predicated on mail fraud is based on the fraudulent scheme rather than on a particular fraudulent mailing.â See also Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639, 648, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008) (â[u]sing the mail to execute or attempt to execute a scheme to defraud is indictable as mail fraud, and hence a predicate act of racketeering under RICO, even if no one relied on any misrepresentation.â). Plaintiff alleges that the Other Dealer Defendants are participants in the fraudulent scheme to defraud her and other consumers. Thus, Plaintiff need not have relied on any specific fraudulent mailing or wire by the Other Dealer Defendants in order to assert a civil RICO claim in a putative class action predicated on mail and wire fraud. Defendants maintain that â[t]here is no direct relationship between the Plaintiff[âs] alleged injury and any alleged fraudulent mail or wire sent by the Unrelated Defendants,â thus Plaintiff cannot show reliance. (Id.) (emphasis added). But â[pjlaintiff need only show reliance on the scheme, not necessarily on any particular fraudulent mailing or misrepresentation.â Robinson v. Fountainhead Title Grp. Corp., 257 F.R.D. 92, 95 (D.Md. 2009). Here, the injury as alleged by Plaintiff, was caused by the fraudulent schemeâthat all of the Defendants allegedly facilitated-of concealing prior short-term rental use of the vehicles they were selling.
Judge Messitteâs reasoning in Biggs v. Eaglewood Mortg. LLC, 636 F.Supp.2d 477, 479 (D.Md.2009), applies here:
Bridge did not eliminate reliance as an element of a RICO claim predicated on mail fraud. The Supreme Court was presented with a situation where the plaintiffs themselves had not received or relied upon misrepresentations made by defendants, but had relied on misrepresentations defendants made to others. See Bridge, 128 S.Ct. at 2139. What the Court held was that, even though plaintiffs had not themselves relied on the misrepresentations made by defendants, they properly asserted a claim because first-party reliance is not a required element of a RICO claim predicated on mail fraud. See Id. at 2145. The Court was careful to note, however, that ânone of this is to say that a RICO plaintiff who alleges injury by reason of a pattern of mail fraud can prevail without showing that someone relied on the defendantâs misrepresentations.â Id. at 2144 (internal quotations omitted),
(emphasis added). Here, Plaintiff has alleged that she justifiably relied on the misrepresentation made in the Buyerâs Order, which encompassed the alleged scheme involving âDefendantsâ conceal-ments, failures to disclose and affirmative misrepresentations concerning the prior rental use of the used vehicles they purchased when they consummated their transactions.â (ECF No. 22 ¶ 176); Busby v. Crown Supply, Inc., 896 F.2d 833, 840 (4th Cir.1990) (âWe think the plaintiff has alleged causation. Whether he will be able to prove it at trial is not a question on
Defendantsâ argument that Plaintiffâs alleged injuries were caused by her own conduct is also unpersuasive. Defendants argue that âPlaintiff[âs] alleged injury occurred either because [she] ignored or failed to read the CarFax Report [she] signed which clearly discloses five times that it was a prior rental vehicle.â (ECF No. 34-1, at 34). Thus, the argument goes:
Plaintiff[ ] here cannot logically or legally contend that the absence of the âxâ on the line on the Buyerâs Order fraudulently induced [her] to buy the vehicle, but that the presence of this fact disclosed five times in the Carfax Report [she] received and signed at the same time, acknowledging that [she] knew the very fact [she] claimfs] was omitted, does not negate this inducement.
(Id. at 35). As explained supra, the Car-fax Report was not attached to the complaint, but to Defendantsâ motion to dismiss the federal claims. Although as a general rule extrinsic evidence should not be considered at the 12(b)(6) stage, the Fourth Circuit has held that when a defendant attaches a document to its motion to dismiss, âa court may consider it in determining whether to dismiss the complaint [if] it was integral to and explicitly relied on in the complaint and [if] the plaintiffs do not challenge its authenticity.â Phillips v. LCI Intâl Inc., 190 F.3d 609, 618 (4th Cir.1999) (emphasis added). Here, Plaintiff challenges the authenticity of the CarFax Report and disputes ever having received or signed the version Defendants provide. She states in an affidavit that she âdo[es] not recall anyone at the dealership showing [her] a Carfax report or asking [her] to sign or initial it.â (ECF No. 48-2, at 33). She further avers that she does not recall seeing the word ârentalâ circled âor any blue highlighting on any document received at the King dealership.â (Id.). Defendants cite American Chiropractic Assân, 367 F.3d at 234, as holding that âplaintiffâs allegations of mail and wire fraud were insufficient as a matter of law because he could not have justifiably relied on an isolated omission in the agreement where he received another document attached to the agreement that disclosed the very fact he claims was misrepresented.â (ECF No. 34-1, at 35). In that case, however,, plaintiff did not contest the authenticity of the additional documents that defendant included with the motion. Such is not the case here.
Accordingly, drawing all inferences in favor of Plaintiff, the proximate cause element is met at this stage.
4. Section 1962(a) Claim
Defendants argue that Plaintiff has not pled a violation of Section 1962(a). To allege a violation of Section 1962(a), a plaintiff must show: (a) receipt of income from a pattern of racketeering activity, and (b) the use or investment of this income in an enterprise. See Busby, 896 F.2d at 837.
Plaintiff asserts that â[t]hrough the use of this illegal and fraudulent scheme, and through their efforts to operate and maintain the enterprise ... and to facilitate the sale of prior short-term rental vehicles without the disclosures required by Maryland law, Defendants have been able to retain money that is rightfully payable to [ ] Plaintiffi ] and Class members.â (ECF No. 22 ¶ 245). Plaintiff further alleges that Defendants have retained these illegally gained funds and reinvested and used those funds in their operations in violation of 18 U.S.C. § 1962(a). (Id. ¶ 246). Plain
These conclusory allegations are insufficient to assert a RICO violation under Section 1962(a). Section 1962(a) prohibits a person from receiving income from a pattern of racketeering activity and then using that income in the operation of an enterprise engaged in commerce. See New Beckley Mining Corp., 18 F.3d at 1165. Plaintiff asserts 'that the King Auto Group is an association-in-fact. Defendants argue that âPlaintiff! ] make[s] no allegation about the manner in which the alleged enterprise received money or how they used it ... [t]he Complaint is devoid of any factual allegations showing the manner in which profits allegedly received by the Defendants were then used to acquire any interest or invest in the [King Auto Group].â (ECF No. 34-1, at 42). Plaintiff alleges that she and other consumers were significantly overcharged for the vehicles sold to them, and that the money from the alleged fraudulent scheme to sell the vehicles without proper disclosure was invested in the enterprise. She also states that â[e]ach of the Defendants used proceeds derived from a pattern of racketeering activity under 18 U.S.C. §§ 1961(1) and (5) to acquire an interest in, establish, and operate the enterprise.â (ECF No. 22 ¶ 226).
Without any factual support to buttress these legal conclusions, the allegations are insufficient to survive a motion to dismiss. Plaintiff does not allege how much was invested or the contours of the reinvestment of the funds into the King Auto Group operation. Section 1962(a) applies only in situations where an enterprise is an object or goal of the racketeering activity, not a tool to carry out the racketeering activity. See Eason, 2004 WL 903756, at *1. In In re Am. Honda Motor Co., Inc. Dealerships Relations Litig., 941 F.Supp. 528, 548-49 (D.Md.1996), plaintiff offered two allegations of âuse or investmentâ of racketeering proceeds, including: â(1) that corrupt Honda executives used the bribes and kickbacks they received to obtain ownership interests in existing or new dealerships, and (2) that Honda received income in that it was able to pay its executives substantially less than other manufacturers, and that Honda used this income, directly or indirectly to finance its sales and allocation network.â Id. at 548-49. Judge Motz found the allegations sufficient to sustain a claim under Section 1962(a). He reasoned that the âinvestment useâ injury pleading requirement
[r]equires allegations under section 1962(a) to be supported by distinct allegations of how the use or investment of illicit income played a causative role. Similarly, the rule against âreinvestmentâ allegations is not a per se rule that the use of proceeds from predicate acts chargeable under section 1962(c) can never support a separate claim under section 1962(a). Instead, this rule requires only that plaintiffs do more than allege that income received from one predicate act was used in the operation of an enterprise.
5. Section 1962(d)
Plaintiff also alleges a violation of Section 1962(d), which states, in relevant part, that â[i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.â Defendants argue that â[s]ince the Complaint fails to allege any substantive RICO claim under 1962(c), Plaintiffsâ conspiracy claim under 18 U.S.C. § 1962(d) alleged in Count X fails as a matter of law.â (ECF No. 34-1, at 43). See also Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012). As discussed supra, Plaintiffs claims for substantive RICO violations under Section 1962(c) can proceed at this stage, thus this argument is without foundation.
Plaintiffs Section 1962(d) claim fails for a different reason, however. A RICO conspiracy claim ârequires that the plaintiff allege and later prove that the defendants knew of the RICO violations of the enterprise and agreed to facilitate those activities.â Proctor, 645 F.Supp.2d at 483. Judge Titus reasoned in Proctor, 645 F.Supp.2d at 483, also a class action alleging civil RICO violations: â[l]ike other conspiracies, a defendant who agrees to do something illegal and opts into or participates in a conspiracy is liable for the acts of his coconspirators even if the defendant did not agree to do or conspire with respect to a particular act.â However, â[b]e-cause the core of a RICO civil conspiracy is an agreement to commit predicate acts, a RICO civil conspiracy complaint, at the very least, must allege specifically such an agreement.â Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 25 (2d Cir.1990).
The amended complaint contains the following allegations:
Defendants associated together under the King Auto Group moniker to advertise and jointly market themselves, purchased used vehicles that previously had been used as rental vehicles, used and agreed to use misleading form documents in the course of their sales of used vehicles, and agreed to conceal from, and not to disclose to, purchasers the prior rental use of vehicles to advance each Defendantâs independent personal gain and individual financial stake in its respective corporation and in the conspiracy.
(ECF No. 22 ¶ 160). Plaintiff further asserts that âDefendants reached an agreement or understanding to conceal from, and fail to disclose to, [ ] Plaintiff! ] and the Class material facts concerning the prior short-term rental use of the vehicles sold.â {Id. ¶ 177). Plaintiff avers that âDefendants participated in this fraudulent scheme- and worked in combination with each other ... to facilitate and engage in a conspiracy to deceive and defraudâ Plaintiff and members of the class. {Id.). Plaintiff also alleges that âDefendants conspired with each other to engage in the various activities set forth herein, agreed to participate in the operation of the conspiracy and scheme to defraud Named Plaintiff! ] and Class members, and aided and abetted one another in these activities, all as proscribed by Maryland law.â {Id. ¶ 79).
These allegations are insufficient to show a violation of Section 1962(d). âAs compared with an allegation under general conspiracy law, the objective of a RICO conspiracy is the violation of a sub
B. Abstention
Defendants argue, in the alternative, that the court should abstain from exercising jurisdiction pursuant to the doctrine set forth in Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943). As the Fourth Circuit explained in Martin v. Stewart, 499 F.3d 360, 364 (4th Cir.2007):
Burford permits abstention when federal adjudication would unduly intrude upon complex state administrative processes because either: (1) there are difficult questions of state law ... whose importance transcends the result in the case then at bar; or (2) federal review would disrupt state efforts to establish a coherent policy with respect to a matter of substantial public concern.
(internal marks omitted). Defendants argue that- the State of Maryland has a strong interest in having the issues decided in state court. Defendants explain that â[ijor more than 50 years, the Maryland legislature has set forth a comprehensive scheme with detailed provisions regulating the sale of automobiles, which requires restrictive licensing from the state in order to do business.â (ECF No. 34-1, at 45-46). Defendants contend that Marylandâs legislature has developed a comprehensive legislative and regulatory scheme involving the disclosure requirements for automobile dealers selling cars in the State of Maryland. Thus, Defendants believe that âthe Maryland legislature and the MVA have a strong interest in retaining the power to govern the types of disclosure required to comply with COMAR to ensure dealer accountability in the context of consumer transactions.â (Id. at 46-47) (internal citations omitted).
Defendants do not offer compelling reasons to support abstention. Plaintiff alleges that Defendants engaged in a fraudulent scheme by failing to disclose to consumers the prior short-term rental history of the vehicles that they were systematically selling, in violation of Maryland law. Although Plaintiff disputes this point, Defendants maintain that the prior short-term rental history of the vehicle was disclosed to Plaintiff in a separate
C. Standing to Sue the Other Dealer Defendants for the Non-Rico Claims
The Other Dealer Defendants argue that Plaintiff lacks standing to sue them. (ECF No. 37-1, at 32).
Standing is a threshold jurisdictional requirement. See Central Wesleyan College v. W.B. Grace & Co., 6 F.3d 177, 188 (4th Cir.1993) (âstanding is a jurisdictional issue, and courts should attempt to resolve such issues as soon as possible.â). The Supreme Court has consistently required that a litigant have âstandingâ to challenge the action sought to be adjudicated in federal court. Valley Forge Christian Coll. v. Americans United for Separation of Church and State, Inc.,
That a suit may be a class action ... adds nothing to the question of standing, for even named plaintiffs who represent a class âmust allege and show that they personally have been injured, not that injury has been suffered by other unidentified members of the class to which they belong and which they purport to represent.â
Lewis v. Casey, 518 U.S. 343, 357, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996) (alteration in original) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n. 20, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976)). Judge Garbis reasoned in Bailey, 992 F.Supp.2d at 566, that â[t]he United States Court of Appeals for the Fourth Circuit has echoed this outlook, stating that in the class action context, it âis essential that named class representatives demonstrate standing through a requisite case or controversy between themselves personally andâ each defendant.â (emphasis added) (quoting Cent. Wesleyan Coll. v. W.R. Grace & Co., 6 F.3d 177, 188 (4th Cir. 1993)); Lieberson v. Johnson & Johnson Consumer Co., Inc., 865 F.Supp.2d 529, 537 (D.N.J.2011) (holding that the plaintiff lacked standing to pursue putative class action claims of consumer fraud against a baby bath product manufacturer as to any products the named plaintiff did not allege she used or purchased). The fact that members of the putative class may assert claims against the Other Dealer Defendants does not confer standing on Plaintiff to sue the Other Dealer Defendants. As noted in Miller v. Pacific Shore Funding, 224 F.Supp.2d 977, 995-96 (D.Md.2002), â[a]bsent a contractual relationship with any of these defendants, the plaintiffs cannot possibly show that their injuries, such as they have suffered, are traceable to the conduct of any of these defendants.... Their categorization of their suit as a putative class action in no way cures this defect.â
Plaintiff argues that âa conspiracy [among all of the Defendants] confers standing with respect to each Defendant.â (ECF No. 48, at 107). Her theory is that the Other Dealer Defendants are liable as co-conspirators with King Buick GMC because all of the Defendants reached an agreement and/or understanding concerning the written disclosures to be made to Named Plaintiff and members of the putative class and regularly concealed the fact that the vehicles they sold were prior short-term rentals, in violation of Maryland law. In a situation where a named plaintiff did not deal directly with the named defendants, âa plaintiff may be able to satisfy the injury aspect of standing through sufficient allegations of conspiracy.â See Cent. Wesleyan Coll, 6 F.3d at 188 (â[w]hile allegations of conspiracy among parties with whom a plaintiff did not directly deal may confer standing upon the plaintiff to sue the non-dealing parties,[ ], the Supreme Court has emphasized that indirectness of injury, though not fatal to standing, âmay make it substantially
Plaintiff has not adequately pled the existence of a conspiracy. A civil conspiracy is â âa combination of two or more persons by an agreement or understanding to accomplish an unlawful act or to use unlawful means to accomplish an act not in itself illegal, with the further requirement that the act or the means employed must result in damages to the plaintiff.â â Hoffman v. Stamper, 385 Md. 1, 24, 867 A.2d 276 (2005) (citation omitted) (emphasis added). The key question in assessing whether a conspiracy theory has been adequately pled is whether there is adequate factual support for the existence of an agreement to conspire. DB Capital Grp., 2011 WL 887554, at *6; Brady v. Livingood, 360 F.Supp.2d 94, 104 (D.D.C. 2004). A clear agreement to conspire is necessary because the â[i]ndependent acts of two wrongdoers do not make a conspiracy.â Murdaugh Volkswagen, Inc. v. First Nat. Bank of South Carolina, 639 F.2d 1073, 1076 (4th Cir.1981). Detrimental to Plaintiffs conspiracy claim here is the requirement that âplaintiff must set forth more than just conclusory allegations of [the] agreement.â Brady, 360 F.Supp.2d at 104. The complaint should include factual allegations that provide an indication of when and how the agreement was brokered and how each of the defendants specifically were parties to the agreement. DB Capital Group, 2011 WL 887554, at *6; Acosta Orellana v. CropLife Intâl, 711 F.Supp.2d 81, 113-14 (D.D.C.2010).
Here, the dealerships Defendants are separate businesses. Plaintiff asserts that:
Defendants reached an agreement and/or understanding concerning the written disclosures to be made to Named Plaintiff ] and the Class in connection with their vehicle purchases and failed to make the written disclosures required by Maryland law in furtherance of their conspiracy for their own personal gain, advantage and profit, resulting in legal damage to Named Plaintiff ] and Class.
(ECF No. 22 ¶ 208). She further asserts that âDefendants conspired among themselves, by agreement and understanding, to engage in the unlawful acts and omissions described herein.â (Id. ¶ 5). Plaintiff provides no details as to when such an agreement was reached or the contours of the agreement. Furthermore, Plaintiff does not reference when King Buick GMC met or communicated with other members of the alleged conspiracy. Cf. DB Capital Grp., 2011 WL 887554, at *7 (finding conspiracy allegations sufficient where plaintiffs complaint referenced specific instances when alleged co-conspirators met and engaged in acts to defraud plaintiff). Plaintiff attempts to show standing over the Other Dealer Defendants on the premise that the Other Dealer Defendants similarly defrauded other consumers who are members of the putative class. This is not a true conspiracy. Plaintiffâs allegations supporting a conspiracy among the Defendants include: (1) the dealerships jointly marketing and selling vehicles and developing form documents such as the Buyerâs Order used at each dealership; (2) using the same forms and same allegedly deceptive practices to misrepresent the prior rental use of the vehicles sold to consum
The analysis in Herlihy, 752 F.Supp. at 1290, is instructive. That case involved a putative class action by a group of homeowners against manufacturers of fire retardant plywood products, âą alleging that the products were defective. The court reasoned:
Nowhere in the complaint is there an allegation that a named plaintiff suffered any injury or damage because of the wrongful act or conduct of a named defendant. Rather than relying on any allegation in the complaint of a specific injury [caused by a named defendant], plaintiffs contend that they have standing to sue under a so-called âconcert of actionâ theory. Plaintiffs argue that a defendant may be liable for an injury caused by the product of another if the plaintiff can prove that multiple defendants acted tortuously pursuant to a common plan or design. [] Plaintiffs contends that they have sufficiently alleged in this case a concert of action and that therefore they have standing to sue the six named defendants.
Id. The court rejected this argument, noting that Maryland law does not recognize a cause of action based upon an alleged concert of action. Here, although Plaintiff uses the word âconspiracyâ in the amended complaint, the factual allegations support the inference of concerted action among the Defendants, 'which does not confer standing. Indeed, the amended complaint alleges that âwhen King Buick failed to disclose and concealed from [ ] Ms. Chambers the prior rental use of the vehicle[ ] [she was] purchasing, it did so as part of a conspiracy, scheme and concerted action in which all of the Defendants participated with their knowledge and consent, as well as with the aid and encouragement of one another.â (ECF No. 22 ¶ 60; see also ¶ 16 (âThe King Auto Group entities named as Defendants acted in concert to accomplish, and jointly benefitted from, the scheme described herein.â)); Sprint Nextel Corp. v. Simple Cell, Inc., Civil No. CCB-13-617, 2013 WL 3776933, at *5 (D.Md. July 17, 2013) (â[t]he mere involvement or encouragement of lies made by others is neither sufficient to maintain a fraud action under Maryland law, ... nor specific enough to maintain a claim under Rule 9(b).â).
The allegations are insufficient to show a conspiracy among all of the Defendants. In Acosta, 711 F.Supp.2d at 114, the court dismissed a civil conspiracy claim because the plaintiff failed to provide any factual support that the defendant CropLife had an agreement with- the other defendants and found that it was just as likely that they were acting independently with a common motivation or goal. This is the case here. Moreover, the Other Dealer Defendants submit an affidavit from Gerard Ceresini, the Controller of King Buick
Defendants assert that this court lacks subject matter jurisdiction over the MMWA claim because the amended complaint fails to allege any amount of damages and, even if it did, Plaintiff and members of the class still could not plausibly allege $50,000 in damages under their separate MMWA claims. (ECF No. 34-1, at 16-17). Defendants further argue that Plaintiff cannot meet the jurisdictional â100-named plaintiffâ requirement under 15 U.S.C. § 2301(d)(3)(C).
A plaintiff may file a MMWA suit for damages for certain breach of warranty obligations in either state or federal court. 15 U.S.C. § 2301(d)(1). Such a suit, however, is not appropriately brought in a United States district court:
(A) If the amount in controversy of any individual claim is less than the sum or value of $25;
(B) If the amount in controversy is less than the sum or value of $50,000 (exclusive of interests and costs) computed on the basis of all claims to be determined in this suit; or
(C) If the action is brought as a class action, and the number of named plaintiffs is less than one hundred.
15 U.S.C. § 2310(d)(3); Misel v. Mazda Motor of Am., Inc., 420 Fed.Appx. 272, 273-73 (4th Cir.2011). Here, Latechia Chambers is the only putative Named Plaintiff and it does not appear that the jurisdictional requirement is met. Plaintiff maintains that âwhere an alternate basis for federal jurisdiction existsâas where violations of a federal statute such as RICO have been allegedâfederal jurisdiction may be maintained over a Magnuson-Moss claim, irrespective of the number of named plaintiffs and the jurisdictional amount at issue in the Magnuson-Moss claims.â (ECF No. 48, at 82).
The court has subject matter jurisdiction over the MMWA claim because one of the RICO counts will not be dismissed at this time. As Judge Ellis reasoned in Barnes v. West, Inc., 249 F.Supp.2d 737, 739 (E.D.Va.2003), âMMWA claims that cannot independently be heard in federal court owing to the absence of the requisite amount in controversy, can still be heard in federal court in circumstances where supplemental jurisdiction is properly exercised under 28 U.S.C. § 1367.â- In such circumstancesâ as hereâthe amount in controversy and â100 named plaintiffâ requirements are no obstacles to the claim being heard in federal court because the court can exercise supplemental jurisdiction over the MMWA claim provided another jurisdictional basis exists. See Chavis v. Fidelity Warranty Servs., Inc., 415 F.supp.2d 620, 623 (D.S.C. 2006) (âmany courts have allowed federal jurisdiction to be maintained over Magnuson-Moss claims that fail to conform to the strict limitations of § 2301(d)(3) when an alternate basis for federal jurisdiction exists.â). Defendantsâ argument assumes
E. The 1V1MWA and Implied Warranty of Merchantability Claims (Counts I & II)
Plaintiff asserts a claim for breach of implied warranty of merchantability and seeks relief under both federal law, the MMWA, and state law: Section 2-314 of the Uniform Commercial Code, as codified at Md.Code Ann. § 2-314. Resolution of Plaintiffs claims for breach of implied warranty of merchantability and violation of the MMWA turns largely on principles of state law. Carlson v. Gen. Motors Corp., 883 F.2d 287, 291 (4th Cir.1989); Laing v. Volkswagen of Am., Inc., 180 Md.App. 136, 949 A.2d 26 (2008); Ingram v. Auto Palace, Inc., No. BPG-09-2660, 2012 WL 5077633, at *4 (D.Md. Oct. 17, 2012) (â[t]he Fourth Circuit has recognized that the Magnuson-Moss Warranty Act operates in conjunction with state law to regulate the warranting of consumer products.â). In a Maryland warranty action, the plaintiff must show that a warranty existed, that the product did not conform to the warranty, and that the breach proximately caused the injury or damage. Lloyd v. Gen. Motors Corp., 397 Md. 108, 916 A.2d 257 (2007). The Maryland Uniform Commercial Code governs actions asserting breaches of express or implied warranties for transactions in goods. See Md.Code Ann., Com. Law § 2-102. Section 2-314(1) states that âa warranty that the goods shall be merchantable is implied in a contract for their sale if the seller is a merchant with respect to goods of that kind.â The code further explains that âgoods to be merchantable must be at least such as (a) pass without objection in the trade under the contract description; ... and (c) are fit for the ordinary purposes for which such goods are used.â § 2-314(2).
Here, Plaintiff invokes Section 2-314(2)(a), alleging that:
[u]nder both a consumerâs reasonable expectations as well as trade quality standards, a vehicle with a prior rental history that is not clearly and conspicuously disclosed cannot pass without objection in the trade under the contract description and simply is not merchantable under Maryland law. A significant segment of the buying public would object to purchasing a used vehicle previously used as a short-term rental vehicle.
(ECF No. 22 ¶ 134). Defendants argue that absent allegations of any physical defect in the vehicle sold to Plaintiff, there can be no cause of action for breach of implied warranty of merchantability or violation of the MMWA. (ECF No. 36, at 15).
There is a long history of applying the implied warranty of merchantability in the used car context. Jones v. Koons Automotive, Inc., 752 F.Supp.2d 670, 685 (D.Md.2010). Even so, mostâif not allâ of these cases contemplate physical defects in automobiles that offend the expectations of reasonable consumers. Indeed, the Fourth Circuit has construed the implied warranty to reach only those defects:
The difficulty is that, so far as these plaintiffs are concerned, GMâs dieselâ equipped cars have served the traditionally recognized purpose for which automobiles are used. Since cars are designed to provide transportation, the implied warranty of merchantability is simply a guarantee that they will operate in a safe condition and substantially free of defects. Thus, where a car can*616 provide safe, reliable transportation, it is generally considered merchantable.
Carlson v. Gen. Motors Corp., 883 F.2d 287, 297 (4th Cir.1989). Carlson rejects the argument that the implied warranty of merchantability is meant to protect mere consumer expectations that a product holds its value, absent some tangible defect so substantial as to render the automobile virtually useless. Carlson, 883 F.2d at 298; Ingram, 2012 WL 5077633, at *9 (â[t]he implied warranty of merchantability warrants both that the vehicle will operate effectively and will provide reasonably safe transportation____ There is no evidence, however, establishing that a vehicleâs inability to pass state inspection is equivalent to a finding of a vehicleâs inop-erability.â).
In Koons, 752 F.Supp.2d at 685, plaintiffs claim for breach of the implied warranty of merchantability was dismissed on nearly identical facts as here. Plaintiff argues that â[i]n Koons, this Court concluded a buyer did not state a claim for breach of the Implied Warranty of Merchantability where the buyer alleged the dealer failed to disclose the vehicleâs rental history because the vehicle was not âunfit for use.â â (ECF No. 48, at 89). Plaintiff mischaracterizes the holding in Koons. To the contrary, the plaintiff in Koons, 752 F.Supp.2d at 685, alleged a breach of the implied warranty of merchantability, âas the 2007 Pontiac G6 would not pass without objection in the trade because the contract description [did not] include a clear and conspicuous disclosure that [the Pontiac G6] had previously been used as a short-term rental.â (internal citations omitted). This argument was rejected, however, because there was no suggestion that the car had any physical defect or was otherwise functionally useless. Plaintiff argues that the fact that âa dealer will not accept a trade-in vehicle from a buyer without first obtaining a signed statement from the buyer certifying, among other things, the existence of any former rental use of a trade-in establishes that accurate disclosure of prior use is needed for a vehicle to âpass without objection in the trade.â â (ECF No. 48, at 88). Plaintiff asserts that â[ jotherwise, it would not be common practice in the automobile industry for car dealers to require buyers trading in their used vehicles to provide such information.â (Id. at 89). Plaintiff cites no case law from this district to support this contention. In Bailey, 992 F.Supp.2d at 575, Judge Garbis noted that:
[t]he Maryland appellate courts have not yet addressed directly whether a vehicle can be considered non-merchantable under § 2-314(2) in the absence of a claim that the car suffers from some tangible defects (i.e., a design or manufacturing defect) or has some concrete physical problem that renders it of a lesser quality than other cars of the same contract description.
Judge Garbis stated that â[t]he Court doubtsâin the absence of Maryland precedent supporting [plaintiffâs] positionâthat there would be a valid claim based upon a violation of an implied warranty of merchantability.â Although Judge Garbis ultimately decided not to dismiss this claim because he found viable the other claims premised on the same facts, the undersigned declines to keep the implied warranty of merchantability and MMWA claims on this basis.
Plaintiff has submitted a notice of supplemental authority, including a transcript from a proceeding before the Circuit Court for Baltimore City (Case No. 03-C-13-008147), another putative class action against dealerships. (See ECF No. 64-1). In ruling on a motion to dismiss the implied warranty of merchantability claim in that.case, Judge Stringer Jr. decided to
F. Negligent Misrepresentation (Count VI)
Plaintiff asserts a negligent misrepresentation claim. She alleges that:
Defendants negligently omitted and failed to disclose the material facts that the vehicles sold to Named Plaintiff[] and the Class previously had been used as short-term rental vehicles, negligently misrepresented that the vehicles sold to them previously were used for consumer purposes only, negligently misrepresented the condition, quality and standard of the vehicles, [and] negligently failed to disclose that the price of the vehicles did not accurately reflect their value.
(ECF No. 22 ¶ 200). To state a claim for negligent misrepresentation under Maryland law, Plaintiff must show:
(1) the defendant, owing a duty of care to the plaintiff, negligently asserts a false statement; (2) the defendant intends that his statement will be acted upon by the plaintiff; (3) the defendant has knowledge that the plaintiff will probably rely on the statement, which, if erroneous, will cause loss or injury; (4) the plaintiff, justifiably, takes action in reliance on the statement; and (5) the plaintiff suffers damage proximately caused by the defendantâs negligence.
Lloyd v. Gen. Motors Corp., 397 Md. 108, 136, 916 A.2d 257 (2007).
King Buick GMC argues that Plaintiff fails to state a negligent misrepresentation claim because King Buick GMC did not make any misrepresentations or omissions. King Buick maintains that it disclosed to Plaintiff in a CarFax Report in multiple places that the vehicle she was purchasing was a prior short-term rental. King Buick GMC further asserts that because Plaintiff received the CarFax Report which disclosed that the vehicle was previously used as a short-term rental, she could not have justifiably relied on any alleged misrepresentations in the Buyerâs Order. It includes as an exhibit to its motion to dismiss a copy of a CarFax Report allegedly furnished to Ms. Chambers, showing that the word ârentalâ is highlighted in blue and Ms. Chambersâs initials are contained next to this purported disclosure. (See ECF No. 36-5).
There are several problems with King Buick GMCâs arguments. First, King Buick GMC has moved to dismiss. As indicated above, as a general rule, extrinsic evidence should not be considered at the 12(b)(6) stage. The Fourth Circuit has held that âwhen a defendant attaches a document to its motion to dismiss, âa court may consider it in determining whether to dismiss the complaint [if] it was integral to and explicitly relied on in the complaint and [if] the plaintiffs do not challenge its authenticity.â â Phillips v. LCI Intâl Inc,., 190 F.3d 609, 618 (4th Cir.1999). Here, Plaintiff challenges the authenticity of the
I understand that King has filed a motion with the Court which tells the Court that it has a copy of a Carfax report for my car and claims that I initialed it in two places.... I do not recall anyone at the dealership showing me a Carfax report or asking me to sign or initial it, though I do recall signing quite a few documents wherever the King rep put an âxâ mark next to a line for signature, but the Carfax report was NOT one of those documents.
(ECF No. 48-2, at 33) (emphasis added). Plaintiff avers that she âfurther understand[s] that King has told the Court that the word ârentalâ was circled and highlighted in blue when the Carfax report was presented to [her]. This cannot be true.â (Id.). Accordingly, to the extent King Buick GMC maintains that Plaintiff could not have justifiably relied on any representations in the Buyerâs Order given the conflicting information in the CarFax Report, this argument is unavailing at this stage of the proceedings because Plaintiff disputes the authenticity of the CarFax Report that King Buick GMC proffers.
King Buick relies on American Chiropractic, 367 F.3d at 235, for the proposition that where plaintiff receives another document attached to the agreement that discloses the very terms she claims were misrepresented or omitted, she cannot claim negligent misrepresentation or fraud. The facts of American Chiropractic are readily distinguishable. In that case, the Fourth Circuit held that plaintiff could not have relied on a misrepresentation by defendant because, unlike here, there was no dispute that plaintiff received the second document with the pertinent disclosure. Here, Plaintiff alleges that she did not receive a document before she purchased the vehicle from King Buick GMC that disclosed that the car was a prior short-term rental. In Jones, 752 F.Supp.2d at 686, the undersigned denied defendantâs motion to dismiss the negligent misrepresentation claim where plaintiff alleged that defendant failed to disclose the prior use of a purchased vehicle as a daily rental. Accordingly, the negligent misrepresentation claim against King Buick GMC will not be dismissed at this time.
G. Deceit by Non-Disclosure or Concealment (Count IV)
Count IV of the complaint alleges deceit by non-disclosure or conceal
(1) the defendant owed a duty to the plaintiff to disclose a material fact; (2) the defendant failed to disclose that fact; (3) the defendant intended to defraud or deceive the plaintiff; (4) the plaintiff took action in justifiable reliance on the concealment; and (5) the plaintiff suffered damages as a result of the defendantâs concealment.
Blondell v. Littlepage, 413 Md. 96, 119, 991 A.2d 80 (2010). ââTo create a cause of action, concealment must have been intentional and effectiveâthe hiding of a material fact with the attained object of creating or continuing a false impression as to that fact. The affirmative suppression of the truth must have been with intent to deceive.â â Fegeas, 218 Md. at 476-77, 147 A.2d 223 (citation omitted). With respect to active suppression or concealment of facts, fraudulent concealment âis any statement or other conduct which prevents another from acquiring knowledge of a fact, such as diverting the attention of a prospective buyer from a defect which otherwise, he would have observed.â Lloyd, 397 Md. at 138, 916 A.2d 257. A claim for deceit by nondisclosure ârequires only that the defendant remain silent about, or omit, facts.â Lloyd, 397 Md. at 138 n. 11, 916 A.2d 257. The non-disclosed fact must be material, which means it must be one on which a reasonable person would rely in making a decision. Sass v. Andrew, 152 Md.App. 406, 430, 832 A.2d 247 (2003). Like a claim for fraudulent concealment, a claim for deceit by nondisclosure will only lie if âthe defendant had a duty to disclose.â Id.; Bourgeois, 3 F.Supp.3d at 459-60. Maryland ordinarily does not impose a general duty on every party to a transaction to disclose facts to the other party. Sass, 152 Md.App. at 430, 832 A.2d 247. Maryland law also recognizes that, though, even where there is no duty to disclose, a person who suppresses or conceals facts that materially qualify other representations that person has made may be found liable for fraud. Hogan v. Maryland State Dental Assân, 155 Md.App. 556, 567, 843 A.2d 902 (2004). Claims of fraud must be pled with particularity, as noted above.
Unlike the negligent misrepresentation claim, this claim requires Plaintiff to plead scienter. King Buick GMC argues that it did not make any intentionally false statement or conceal anything from Plaintiff because it clearly disclosed in the CarFax Report the prior short-term rental use of the vehicle it sold to Ms. Chambers. (See ECF No. 36-1, at 23-24). King Buick GMC avers that â[b]y providing Plaintiff[ ] with the CarFax Report, with the âTitle Historyâ and âOwnership Historyâ disclosing that [her] vehicle was a prior rental in five different places, King Buick GMC intended to and did in fact accurately disclose the true title history of the vehicle before it was sold.â (ECF No. 36-1, at 23-24). King Buick GMC points to guidance from the Maryland MVA stating that disclosures regarding a vehicleâs prior use do not need to be made on the Buyerâs Order and the disclosure can be made on a separate document. (See ECF No. 36-6, at 2 (MVA Bulletin, Aug. 25, 2011)); Philips v. Pitt Cnty. Memâl Hosp., 572 F.3d 176, 180 (4th Cir.2009) (in reviewing motions to dismiss, the court may consider matters of public record). The guidance from the Maryland MVA states that â[t]he MVA does not limit which document must contain the required disclosures. Best
This claim will not be dismissed at this time. The parties dispute whether Ms. Chambers received a CarFax Report in connection with her transaction and, if she did, at what point (before or after the purchase transaction was consummated) it was provided and whether Ms. Chambers signed it. On a motion to dismiss, Plaintiffs allegations in the amended complaint must be credited given that she disputes the authenticity of the CarFax Report that King Buick GMC submits. According to the amended complaint, when King Buick GMC sold to Plaintiff the used 2010 Dodge Caliber on February 18, 2012, it failed to disclose to her that this vehicle had been used as a short-term rental. She asserts that by concealing the prior short-term rental use of the vehicle, King Buick GMC intended to induce her to purchase a less desirable and less valuable vehicle and to pay more for the vehicle than it was worth. (ECF No. 22 ¶¶ 175, 182). Defendant argues that Plaintiff cannot show that King Buick GMC intended to conceal the prior short-term rental use of the vehicle as part of a scheme to defraud her. Although Plaintiff certainly has to make this showing to ultimately prevail on this claim, at this stage, âintent, knowledge, and other conditions of a personâs mind may be alleged generally.â United States ex rel. Palmieri v. Alpharma, Inc., Civ. Action No. ELH-10-1601, 2014 WL 1168953, at *7 (D.Md. Mar. 21, 2014).
King Buick GMC relies on McGraw v. Loyola Ford, Inc., 124 Md.App. 560, 579, 723 A.2d 502 (1999), to support the argument that the omission in the Buyerâs Order does not âvitiate the dealerâs affirmative act of timely disclosing that the vehicle was a prior rental in the CarFax Report.â (ECF No. 56, at 8 (internal citation omitted)). Unlike here, in McGraw, 124 Md. App. at 580, 723 A.2d 502, it was âuncon-troverted that, at the time of the transaction, [plaintiff] was expressly informed that the vehicle had been used as a âdemo.â â The court in McGraw, id., reasoned:
Indeed, during his deposition, appellant admitted that Loyola Ford told him pri- or to signing the first buyerâs order that it was a demonstrator vehicle. [Plaintiff] also knew that the car had been driven 6,161 miles, and the dealer noted the exact mileage on the same form that erroneously described the vehicle as ânew.â In addition, the first buyerâs order form was replaced with a second form a few days later, before the transaction was consummated. On the sec*621 ond form, the dealer correctly described the vehicle as a demo.
(emphasis added). Thus, the facts of McGraw are readily distinguishable, as Plaintiff alleges that King Buick GMC did not make the requisite disclosure regarding the vehicleâs prior rental use before she consummated the transactionâand Plaintiffs allegations must be accepted as true at this juncture. Plaintiff has identified the time, place, and content of the false representation, which is sufficient under Rule 9(b). Accordingly, Count IV against King Buick GMC will not be dismissed at this time.
H. Maryland Consumer Protection Act (âMCPAâ) (Count III)
Count III of the amended complaint alleges violations of the MCPA. The MCPA prohibits âunfair or deceptive trade practices.â Md.Code Ann., Com. Law, § 13-801. The MCPA proscribes fourteen categories of unfair or deceptive practices, including âany ... [fjalse ... or misleading oral or written statement, visual description, or other representation of any kind which has the capacity, tendency, or effect of deceiving or misleading consumersâ and âany ... [failure to state a material fact if the failure deceives or tends to deceive.â Private parties who bring a suit must establish that they âsuffered an identifiable loss, measured by the amount the consumer spent or lost as a result of his or her reliance on the sellersâ misrepresentation.â Green v. Wells Fargo Bank, N.A., Civ. Action No. DKC 12-1040, 2014 WL 360087, at *3 n. 3 (D.Md. Jan. 31, 2014). Plaintiffs claim alleging violations of the MCPA is also subject to the heightened pleading standard of Rule 9(b). See Green, 2014 WL 360087, at *2; Dwoskin v. Bank of Am., N.A., 850 F.Supp.2d 557, 569 (D.Md.2012).
King Buick GMC makes three arguments to contest Plaintiffs ability to plead an MCPA claim: (1) King Buick GMC did not make any false statement; (2) there was no justifiable reliance; and (3) Plaintiff fails to meet MCPAâs âactual injuryâ requirement. The first two arguments have already been addressed and rejected in the context of the negligent misrepresentation and fraud claims, and the same logic applies here. As for the third argument, King Buick GMC argues that Plaintiff has not alleged that she sold her vehicle and suffered any actual injury or loss. King Buick GMC further avers that Plaintiff has not alleged that she has âspent a dime on any repair or has been unable to use [her] vehicle at any time over the past 21/2-3 years.â (ECF No. 36-1, at 35). Plaintiff asserts that as a result of the misrepresentations regarding the vehicleâs prior short-term rental use, she suffered injury because she was overcharged and paid significantly more for the vehicle than it was worth. (ECF No. 22 ¶ 180). The amended complaint further states that Plaintiff was denied the opportunity to decline to purchase vehicles known to have been used previously for short-term rentals. (Id. ¶ 129). In the opposition, Plaintiff asserts that âMs. â Chambers [ ] suffered an actual economic loss at the time [she] paid for [her] vehiele[ ],â because she paid more for the vehicle than it was worth (ie., she was overcharged). (ECF No. 48, at 103).
Plaintiff has not adequately pled injury with respect to the MCPA violation. â[I]n order to articulate a cognizable injury under the [MCPA], the injury must be objectively identifiable.â Lloyd, 397 Md. at 143, 916 A.2d 257. A complaint adequately pleads loss, for instance, when it points to some amount that it would âtake to remedy the loss [the plaintiff] incurred as a result of the respondentsâ alleged deceptive trade practices.â Id. at 150, 916 A.2d 257. Jones, 752 F.Supp.2d at 684, is
Plaintiff argues in the opposition that she suffered an actual economic loss on the date of the transaction because she was overcharged for the vehicle and paid significantly more for her vehicle. Plaintiff specifies in the opposition that she does not assert that she suffered damages on the basis of âa diminished post-sale value of the vehicles, lost profits, or any other speculative future loss.â (Id.); Jones, 752 F.Supp.2d at 684 (â[n]or does [plaintiff] allege that the concealed fact caused any diminution in the value of the car.â). The allegations here mirror those in Jones with respect to the MCPA claim, warranting dismissal. Accordingly, the MCPA claim against King Buick GMC will be dismissed.
I. Breach of Contract (Count VII)
Plaintiff asserts that King Buick GMCâs failure to disclose the prior short-term rental use of the 2010 Dodge Caliber in the Buyerâs Order constituted a breach of contract. âTo prevail in an action for breach of contract, a plaintiff must prove that the defendant owed the plaintiff a contractual obligation and that the defendant breached that obligation.â Carroll Co. v. Sherwin-Williams Co., 848 F.Supp.2d 557, 563 (D.Md.2012). King Buick GMC argues that the breach of contract claim should be dismissed. It contends that Plaintiff fails to identify any term in the sales contract which King Buick GMC failed to perform and how it breached any contractual term.
The breach of contract claim will be dismissed. As noted in RRC Northeast, LLC v. BAA Maryland, Inc., 413 Md. 638, 655, 994 A.2d 430 (2010), â[i]t is well-established in Maryland that a complaint alleging a breach of contract âmust of necessity allege with certainty and definiteness facts showing a contractual obligation owed by the defendant to the plaintiff and a breach of that obligation by defendant.â â (quoting Continental Masonry Co., Inc. v. Verdel Constr. Co., Inc., 279 Md. 476, 480, 369 A.2d 566 (1977)) (emphasis in original). Moreover, in considering the sufficiency of a complaint alleging breach of contract, âany ambiguity or un certainty in the allegations is to be construed against the pleader.â RRC Northeast, 413 Md. at 655, 994 A.2d 430. Here, Plaintiff does not identify which contract provision Defendant purportedly breached. Instead, Plaintiff posits that the failure to identify the vehicle as a short-term rental constituted a material breach of the contract. In the opposition, Plaintiff cites no case-law to support this claim against King Buick GMC, namely that an omission on this sort in a contract can constitute a breach. The amended complaint states that King Buick GMC materially breached the contract by failing to sell the vehicle promised and selling a used vehicle that failed to comport with the description of the vehicle. The vehicle promised was a 2010 Dodge Caliber, which is what Plaintiff received. Moreover, as King Buick GMC points out, â[t]he sales contract! ] expressly state[d] the material terms agreed to by the parties including the make, model and year of the vehicles purchased, the sales price and the amount of all of the taxes, charges, etc. to be paid.â (ECF No. 36-1, at 36). Plaintiff has not explained how failure to identify in the Buyerâs Order that the 2010 Dodge Caliber was a prior short-term rental constituted a material breach of King Buick GMCâs obligation. King Buick GMC avers that Plaintiff has not alleged that the vehicle failed to operate properly or as indicated in the Buyerâs Order. The fact that the Buyerâs Order contained a space for the rental use disclosure does not necessarily make prior rental use a material term, and Plaintiff has pointed to no authority to suggest otherwise. Plaintiffs claim sounds in tort, not in contract. Moreover, the single assertion in the amended complaint that King Buick GMC did not exercise good faith in performing its contractual obligation is conclusory and insufficient for Plaintiff to satisfy its pleading burden on the breach of contract claim. See, e.g., Barry v. EMC Mortg., 2011 WL 2669436, at *7 (D.Md. July 6, 2011) (âCount III does not identify EMCâs obligations under the Deed of Trust or state when or how these obligations were breached. The vague assertion that EMCâs conduct âwas in bad faithâ is not sufficient.â). Accordingly, the breach of contract claim will be dismissed.
J. Money Had and Received/Unjust Enrichment (Count V)
Plaintiff alleges an unjust enrichment claim, stemming from King Buick GMCâs
In its motion to dismiss, King Buick includes a paragraph arguing that the unjust enrichment claim should be dismissed because there is an express contract governing this action. (ECF No. 36-1, at 37). âIn Maryland, a claim of unjust enrichment, which is a quasi-contract claim, may not be brought where the subject matter of the claim is covered by an express contract between the. parties.â Janusz v. Gilliam, 404 Md. 524, 537, 947 A.2d 560 (2008) (quotation marks omitted); see also FLF, Inc. v. World Publâns, Inc., 999 F.Supp. 640, 642 (1998) (âIt is settled law in Maryland, and elsewhere, that a claim for unjust enrichment may not be brought where the subject matter of the claim is covered by an express contract between the parties.â). âGenerally, courts are hesitant to deviate from the principle of the rule and allow unjust enrichment claims only when there is evidence of fraud or bad faith, there has been a breach of contract or a mutual rescission of the contract, when rescission is warranted, or when the express contract does not fully address a subject matter.â Cnty. Comârs of Caroline Cnty. v. J. Roland Dashiell & Sons, Inc., 358 Md. 83, 101, 747 A.2d 600 (2000).
Here, the amended complaint alleges fraud. Moreover, the Federal Rules of Civil Procedure allow parties to plead claims in the alternative. See Fed. R.Civ.P. 8(e)(2) (âA party may also state as many separate claims or defenses as the party has regardless of consistency and whether based on legal [or] equitable grounds.â). King Buick GMC has not argued that Plaintiff failed to state a claim for-unjust enrichment. Thus, dismissing the unjust enrichment claims now would be premature. See, e.g., RaceRedi Motorsports, LLC v. Dart Mach., Ltd., 640 F.Supp.2d 660, 666 (D.Md.2009) (declining to dismiss unjust enrichment claim pled in the alternative where contract terms remained in dispute).
K. Plaintiffs Motion for Leave to File Surreply and Supplemental Rule 56(d) Declaration
Plaintiff moved for leave to file a surreply and to file a supplemental Rule 56(d) Declaration. (ECF No. 68). âUnless otherwise ordered by the Court, surreply memoranda are not permitted to be filed.â Local Rule 105.2(a). Although a district court has discretion to allow a surreply, surreplies are generally disfavored. Chubb & Son v. C.C. Complete Servs., LLC, 919 F.Supp.2d 666, 679 (D.Md.2013). A surreply may be permitted âwhen the moving party would be unable to contest matters presented to the court for the first time in the opposing partyâs reply.â Khoury v. Meserve, 268 F.Supp.2d 600, 605 (D.Md.2003) (citation omitted). By contrast, â[a] motion for leave to file a surreply may be denied when the matter addressed in the reply is not new.â Marshall v. Capital View Mwt. Homes, No. RWT-12-3109, 2013 WL 3353752, at *3 (D.Md. July 2, 2013).
Here, to support her request, Plaintiff objects to the arguments made in the Other Dealer Defendantsâ motion to dismiss or for summary judgment regarding King Buick GMCâs inspection of its sales files and arguments made regarding the percentage of rental vehicles sold in the last three years and the disclosures made. (See ECF No. 55-6). The Other Dealer Defendants also submitted as exhibits to their motion to dismiss or for summary judgment, redacted versions of customer
There are several problems with Plaintiffs arguments. As an initial matter, the Other Dealer Defendantsâ motion for summary judgment only addressed the non-RICO claims, and as discussed supra, Plaintiff lacks standing to assert these claims against the Other Dealer Defendants.
Plaintiffs request to file a supplemental Rule 56(d) affidavit from Richard Gordon, counsel for Plaintiff in this matter, will also be denied. First, the Other Dealer Defendantsâ motion to dismiss or for summary judgment was granted on standing grounds, not on the merits of the claims against them. Thus, Plaintiffs initial Rule 56(d) request is moot. In any event, the information contained in this supplemental affidavit largely attempts to refute the statistics provided by the Other Dealer Defendants regarding the number of short-term rental vehicles sold and disclosures made to purchasers. For instance, Mr. Gordon states in the supplemental affidavit that:
one of the more compelling reasons why Plaintiff! ]â require[s] discovery from Defendants before responding to Defendantsâ Motion for Summary Judgment is because, based on Plaintiffs investigation, it appears that Defendants have provided this Court with materially inaccurate information about the number of prior short-term rentals they have sold.
(ECF No. 68-4 ¶ 18). Plaintiff also seeks to submit declarations from three purchasers alleging that they were unaware at the time of purchase that the vehicles they were buying were prior short-term rentals. These arguments fail for the same reason that a surreply is unnecessary. The claims addressed in the motion to dismiss or for summary judgment will be dismissed against the Other Dealer Defen
L. Plaintiffs Motion to Consolidate Cases
Fed.R.Civ.P. 42 gives the court broad discretion to make decisions about how to most efficiently and economically try cases on its docket while providing justice to the parties. The rule states that the court may consolidate actions that involve a common question of law or fact. Fed.R.Civ.P. 42(a).
1 Plaintiff urges the undersigned to consolidate the instant lawsuit with another putative class action, Michelle Clay et al. v. King Buick CMC LLC, et all, Case No. 1:14-cv-00811-DKC (âthe Clay Lawsuitâ), also pending before the undersigned. (See ECF No. 63-1). The Clay Lawsuit is a putative class action against the same dealership Defendants, alleging a fraudulent scheme among these Defendants based on their failure to disclose the prior short-term rental use of vehicles to consumers. Plaintiff asserts that the two lawsuits involve identical defendants, rely on virtually the same facts, and assert the same counts, with the exception of an additional count for express breach of warranty asserted in the Clay Lawsuit. Plaintiff further argues that the Clay Lawsuit is based on seemingly-overlapping factual and legal issues and the required document discovery from the Defendants will be virtually identical in both lawsuits. (Id. at 6). Plaintiff believes that consolidating both lawsuits will generate substantial economies for the court and the parties and prevent inconsistent factual and legal determinations in the event the two actions are separately adjudicated.
All of the Defendants filed a motion opposing the request to consolidate the two actions. Although Plaintiff cited Fed.R.Civ.P. 42 as the basis for her motion to consolidate, Defendants rely on Fed. R.Civ.P. 20-governing joinder of parties-in framing their arguments against consolidation. In any event, Defendants offer compelling arguments against consolidation. Defendants argue that:
Chambers seeks to indirectly amend her Complaint, which she cannot do without leave of court, by trying to improperly âjoinâ the individual claims of three unrelated plaintiffs[ ] against different defendants involving separate transactions occurring over a three year period in the Clay Lawsuit[], and then improperly joining them with Chambersâ claim involving her purchase of her vehicle from King Buick GMC in the Chambers Lawsuit.
(ECF No. 65, at 4). Specifically, in the Clay Lawsuit, there are three putative Named Plaintiffs. Michelle Clay alleges that in 2010, she purchased her vehicle from Hagerstown Ford for $8,000; Veronica Blake Weinberger alleges that in 2011, she purchased her vehicle from Kia of Silver Spring for $15,034.66; and Agnita Kote alleges that in 2012, she purchased her vehicle from King Volkswagen for $10,841. Defendants point out that Ms. Chambers and the three Plaintiffs in the Clay Lawsuit received different disclosures regarding the prior short-term rental use in each transaction with a different dealership Defendant. For instance, Defendants include as an exhibit to their opposition a copy of a Disclosure of Former Vehicle Use Form from King Hagers-town Motors to Michelle Clay, showing that the âshort term rental vehicleâ box is checked, highlighted, and the form is
Also compelling is Defendantsâ argument that the terms of the sales agreements with each Plaintiff differ in important respects. For instance, Agnita Koteâa Plaintiff in the Clay Lawsuitâ executed a sales contract with King Volkswagen. Her contract contains a binding arbitration clause. (See ECF No. 65-2, at 2). Moreover, the integration clause in Ms. Koteâs Buyerâs Order is different from the Buyerâs Order Ms. Chambers executed with King Buick GMC. Specifically, the integration clause in Ms. Koteâs contract states that âany other documents signed by Purchaser in connection with the transaction comprise the entire and complete agreement.â (Id). Furthermore, Ms. Koteâs contract contains a âwaiver of jury trialâ provision, not included in other agreements. The undersigned finds persuasive Defendantsâ argument that consolidation would âcreate a logistical nightmare with different plaintiffs each raising unique factual and legal issues that will have to be analyzed one at a time.â (ECF No. 65, at 31). The two lawsuits are quite obviously similar on their face, but there are important factual differences that counsel against consolidation.
Although analyzed in the context of join-der, the reasoning in Saval v. BL Ltd., 710 F.2d 1027, 1031 (4th Cir.1983), applies here. The court noted:
The cars were purchased at different times, were driven differently, and had different service histories. Quite probably, severance would have been required in order to keep straight the facts pertaining to the separate automobiles.
Moreover, Plaintiff is operating under the premise that all of the claims in the instant lawsuit will survive dismissal; but for the reasons explained supra, this is not the case. Accordingly, to consolidate the two cases where some of the claims against the Other Dealers Defendants and King Buick GMC will be dismissed here would only complicate the already involved proceedings in this action. To the extent Plaintiff is worried that maintaining two separate actions would result in inconsistent adjudication, the fact that the two cases are both before the undersigned reduces the risk that the undersigned would decide differently identical issues in the two cases. Of course, nuances in the law and facts in each proceeding may require different results.
Accordingly, the motion to consolidate the two actions will be denied at this time.
IV. Conclusion
For the foregoing reasons, the motion to dismiss the RICO claims filed by all of Defendants will be granted in part. Claims under Section 1962(a) and (d) will be dismissed. King Buick GMCâs motion to dismiss the non-RICO claims will be granted in part. The MMWA breach of the implied warranty of merchantability, MCPA, and breach of contract claims will be dismissed. The Other Dealer Defendantsâ motion to dismiss or for summary judgment on the non-RICO claims will be
. Ms. Chambers will be referred to as "Plaintiffâ throughout the memorandum opinion.
. Defendants include as an exhibit to their motion to dismiss a copy of the Carfax Report for the 2010 Dodge Caliber that Plaintiff purchased. In this document, the fact that this car was a prior rental is shown as highlighted and Ms. Chambers appears to have initialed the CarFax Report. (See ECF No. 34-5, at 2). Ms. Chambers declares in an affidavit, however, that she does "not recall anyone at the dealership showing her a Carfax report or asking her to sign or initial it.â (See ECF No.
. On October 18, 2013, Plaintiff filed a motion to certify the class, but requested that this motion be held in abeyance pending adjudication of Defendants' motion to dismiss. (ECF No. 23). The undersigned issued a paperless order on November 4, 2013, holding the motion for class certification in abeyance. (ECF No. 31).
. Plaintiff has filed four notices of supplemental authority. (ECF Nos. 50, 64, 71, 76). Defendants argue that these notices of supplemental authority are improper because they actually are surreplies consisting of addition arguments to support Plaintiff's opposition to Defendantsâ motions and concern non-bind.ing authority. Defendants dispute the applicability of the cases Plaintiff submitted as supplemental authority to the instant dispute and reargue the merits of their own position. Granting Defendants' motion to strike would not preclude the court from applying any existing precedent or considering any other authority. See Carter v. Astrue, Civ. Action No. CBD-11-2980, 2013 WL 4461579, at *3 (D.Md. Aug. 19, 2013) (denying motion to strike notice of supplemental authority). Defendants' motion to strike will be denied.
. Although the Other Dealer Defendants have raised standing as an issue in their motion to dismiss or, in the alternative, for summary judgment on the non-RICO claims, they have not briefed the argument that Plaintiff lacks standing to assert RICO claims against them in the motion to dismiss the federal claims. The sole mention of standing in Defendants' motion to dismiss the RICO counts is that Plaintiff lacks standing âto assert RICO claims against the Unrelated Defendants because they do not owe any legal duty to [her].â (ECF No. 34-1, at 6). Plaintiff need not allege that the Other Dealer Defendants owed a legal duty to Ms. Chambers in order to state a civil RICO claim, however. Furthermore, although King Buick GMC joins the Other Dealer Defendants in their motion to dismiss the RICO claims, the arguments made in the brief largely concern Plaintiff's failure to plead a civil RICO case against the Other Dealer Defendants, not King Buick GMC.
. In relevant part, Title 18, Section 1962 states:
(a) It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity ... to use or invest, directly or indirectly, any part of such income, or the proceeds of such income, in acquisition of any interest in, or the establishment or operation of, any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.
(c) It shall be 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*588 conduct of such enterprise's affairs through a pattern of racketeering activity.
(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.
. Defendants argue that Plaintiffâs claims are routine allegations of state tort law beyond the intended scope of the RICO statute. (ECF No. 34-1, at 17-18). Citing HMK Corp. v. Walsey, 828 F.2d 1071 (4th Cir.1987), Defendants assert that Plaintiff attempts to turn her dispute "over application of the MVA and COMAR regulations into a claim of ongoing criminal activity!) which] would convert ordinary contract claims into RICO actions and this is what the Fourth Circuit forbids." (ECF No. 34â1, at 18). Walsey involved alleged misconduct of developers in a land use dispute and did not amount to a pattern of racketeering activity. Notably, the court observed:
[ajlthough we hold that no pattern exists in the present case, we want to make clear that the pattern requirement certainly does not bar all RICO claims arising in the zoning context.... We note that a plaintiff who alleged pervasive involvement by a developer in the political process through widespread racketeering activity could indeed meet the pattern requirement.
Walsey, 828 F.2d at 1075. Thus, the fact that the instant dispute arises in a commercial context does not, in and of itself, take this case outside of the purview of RICO.
. The "distinctivenessâ requirement is limited to Section 1962(c) claims; Section 1962(a) does not carry this requirement. Busby v. Crown Supply, Inc., 896 F.2d 833, 841 (4th Cir.1990) (â[F]or a violation of Section 1962(a), the offender and the enterprise need not be separate. They may be identical.â).
. To state a claim for interstate transport of money converted or fraudulently obtained, she must, at a minimum, allege how or when these interstate transports occurred. See Ker-
Defendants on hundreds if not thousands of occasions transported, transmitted, and transferred in interstate or foreign commerce money of the value of $5,000 or more, knowing the same to have been obtained and/or taken by fraud, an artifice of fraud, or by means of false or fraudulent pretenses of representations in violation of 18 U.S.C. § 2314.
(ECF No. 22 ¶ 117). This conelusory allegation is insufficient to plead a predicate act. See, e.g., Robinson v. Fountainhead Title Grp. Corp., 252 F.R.D. 275, 279 n. 4 (D.Md.2008) (declining to consider predicate act premised on 18 U.S.C. § 2314 where plaintiff merely included a bare assertion that defendants engaged in multiple instances of interstate transports of money converted or fraudulently obtained in violation of 18 U.S.C. § 2314, but did not explain how or when these interstate transports occurred). Accordingly, Plaintiff fails to plead a predicate act pursuant to Section 2314.
. Defendants refer to all of the Defendants, except for King Buick GMC, as the âUnrelated Defendants.â
. Judge Garbis stated, however, that plaintiff can reinstate the RICO claim in the event that discovery as to the viable claims yields evidence adequate to support a plausible claim of a pattern of racketeering activity.
. As mentioned supra, the Other Dealer Defendants have not argued that the undersigned lacks standing over the RICO claims either in their initial motion to dismiss the federal claims or in their reply brief. They first raise standing as the very last argument in their motion to dismiss or, in the alternative, for summary judgment. (See ECF No. 37-1, at 32). They state that ââ[s]ince the Plaintiffs fail to allege any legal duty owed to them by any of the [Other Dealer] Defendants, they have no standing to assert these claims against them,â presumably referencing the state law claims briefed in the motion to dismiss or for summary judgment. Notably, the Other Dealer Defendants argue in their motion to dismiss the federal claims that the court lacks subject matter jurisdiction over the MMWA claim; they do not raise standing as an issue as to the RICO claims in the same motion.
. In Bailey, 992 F.Supp.2d at 567-68, also a putative class action against- dealership Defendants with nearly identical facts, Judge Garbis stated that the complaint included allegations "that present a plausible claim that Heritage, the Other Dealer Defendants, and Atlantic acted in concert pursuant to an agreement to accomplish an unlawful purpose of selling prior rental cars without disclosing that information to customers, one of whom was Bailey, who sustained damage as a result.â Judge Garbis thus concluded that named plaintiff would have a valid conspiracy claim against the other dealer defendants "if it were not for the fact that Heritage and each of the Other Dealer Defendants was a 100%-owned subsidiary of Atlantic.â Judge Garbis did not undertake extensive analysis as to which allegations in the complaint he found sufficient to establish the existence of an agreement among the defendants to confer standing. He did not need to because he found the intracorporate conspiracy doctrine barred the claims against the other non-dealing defendants.
Plaintiff submitted a Notice of Supplemental Authority on April 30, 2014, alerting the undersigned to an order issued in the Circuit Court for Baltimore County related to another class action, Buie v. Antwerpen Motorcars, Ltd., Case No. C-13-12341, that alleges that a group of automobile dealerships failed to disclose the prior short-term rental use of vehi
Accordingly, the undersigned does not find these decisions controlling on the issue of standing against the Other Dealer Defendants in this matter.
. In her affidavit, Ms. Chambers also states:
King put a copy of various documents in an envelope for me to take home. Upon returning home with the car, I sometime later looked at what was in the envelope. When I did, I was surprised to find a folded-up copy of a Carfax report among my documents.
(ECF No. 48-2, at 33). Plaintiff submits the CarFax Report that she allegedly received in the envelope from King Buick GMC, which is not initialed and the disclosure regarding the vehicle's prior use as a short-term rental is not highlighted (unlike the CarFax Report that Defendant proffers). (Id. at 36-38). Thus, the authenticity of the CarFax Report that King Buick GMC provides is disputed.
. Plaintiff submitted a Rule 56(d) Affidavit with its opposition. Rule 56(d) allows the court to deny summary judgment or delay ruling on the motion until discovery has occurred if the "nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition." Fed.R.Civ.P. 56(d). Here, only the Other Dealer Defendants moved for summary judgment on Counts I through VII. King Buick GMC moved to dismiss. Because the motion filed by the Other Dealer Defendants will be granted on standing grounds, Plaintiff's Rule 56(d) request will be denied as moot.
. King Buick GMC moved to dismiss, not for summary judgment.