Wharf, Inc. v. District of Columbia
Civil Action No. 2015-1198
| D.D.C. | Dec 14, 2017Background
- Plaintiffs (three tenants at the Municipal Fish Market) sued the District and initial developer entities (HMW, WHRL, later WFMRL) alleging breaches of their leases and Fifth Amendment takings from redevelopment activities at 1100 Maine Ave SW.
- After discovery revealed a complex organizational chart, Plaintiffs amended to add four "New Developer Defendants" (WDGJV, WHR, HSW, WDJV), alleging the entities are affiliated and that some exercised operational control over Fish Market redevelopment actions harming Plaintiffs' lease rights.
- Plaintiffs' Third Amended Complaint asserts Takings and due process claims against the District and a range of contract and tort claims (including breach of lease, nuisance, trespass, tortious interference, unjust enrichment) against all developer defendants.
- New Developer Defendants moved to dismiss under Rule 12(b)(6), arguing Plaintiffs rely primarily on alter-ego or conspiracy theories and fail to plead facts sufficient to show a plausible basis for liability as to those defendants.
- Plaintiffs relied on the organizational chart and financial/contract exhibits (e.g., consolidated financial statements and LDA assignments) to allege operational authority, contractual roles (developer rights), and specific wrongful acts after 2014 by entities in the corporate chain.
- The Court accepted Plaintiffs’ factual allegations and reasonable inferences at the pleading stage and denied the New Developer Defendants’ motion to dismiss, finding the Third Amended Complaint plausibly states claims against them without requiring piercing the corporate veil at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs sufficiently plead plausible claims against newly-added developer entities | The organizational chart + exhibits and allegations show affiliation, operational control, contractual developer authority, and specific wrongful acts by entities in the chain, supporting direct liability or reasonable inference of coordination | Plaintiffs rely on bare alter-ego/conspiracy labels; overlapping ownership/officers/office-sharing is insufficient to plead alter-ego or conspiracy; dismissal required | Denied — pleading-stage factual allegations and exhibits are sufficient to permit claims to proceed; Court draws inferences for Plaintiffs |
| Whether claims rest solely on veil-piercing or satisfaction-of-judgment theory | Plaintiffs contend they assert operational and contractual roles (not just veil-piercing) supporting direct liability independent of alter-ego theory | Defendants say claims are premised on alter-ego and lack factual detail showing wrongdoing by each entity | Denied — Court finds allegations of specific roles, contracts, and acts give plausible basis for liability without relying solely on veil-piercing |
| Standard for evaluating Rule 12(b)(6) challenge | Plaintiffs invoke Twombly/Iqbal standards and ask Court to view complaint as whole and accept reasonable inferences | Defendants emphasize need for specific factual allegations showing unity of interest or conspiracy | Court applies Twombly/Iqbal two-prong approach, accepts factual allegations and reasonable inferences, and finds plausibility met |
| Role of documentary exhibits (organizational chart, financial statements, LDA) | Exhibits demonstrate chain of ownership, assignment of developer rights, guaranties, and actions after 2014 supporting claims | Defendants argue exhibits show only corporate relationships, not wrongful acts by New Defendants | Court may consider pleadings plus attached public documents and finds exhibits support plausible claims at this stage |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state a plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (two-pronged test for evaluating pleadings and reasonable inferences)
- Banneker Ventures, LLC v. Graham, 798 F.3d 1119 (D.C. Cir. 2015) (pleading-stage inferences construed in plaintiff's favor)
- DSMC, Inc. v. Convera Corp., 273 F. Supp. 2d 14 (D.D.C. 2002) (Rule 12(b)(6) tests complaint sufficiency)
- Matthews v. District of Columbia, 730 F. Supp. 2d 33 (D.D.C. 2010) (courts must consider complaint as whole when assessing plausibility)