Lead Opinion
Appellant Maia Falconi-Sachs appeals from an order dismissing her complaint pursuant to Superior Court Rule of Civil Procedure 12(b)(6) for fáilure to state a claim. Having paid a late rent fee of $249.85, she alleges that this fee — assessed and collected by appellees, apartment
I. Facts
On August 24, 2011, appellant and another person (both recent law school graduates) signed a one-year lease agreement — with a term beginning on that date — for a Senate Square apartment at 201.1 Street Northeast, Washington, D.C. 20002. The lease named appellant and the other person as the “Lessee,” Senate Square as the “Lessor,” Bozzuto as the lessor’s “Agent,” and set the monthly rent amount at $2,499.00. The lease section entitled “Rent Payments” included a clause (in capital letters) as follows:
RENT PAYMENTS NOT RECEIVED BY THE FIFTH (5TH) DAY OF THE MONTH FOR WHICH SAID PAYMENT IS DUE SHALL BE SUBJECT TO A LATE PAYMENT CHARGE OF TEN PERCENT (10%) OF THE MONTHLY RENT AND SUCH LATE CHARGE WILL BE IMMEDIATELY DUE AND PAYABLE AS ADDITIONAL RENT PURSUANT TO THE TERMS OF THE LEASE. PROVIDED, HOWEVER, IN THE EVENT LESSEE FAILS TO PAY THE RENT WITHIN FIVE (5) DAYS AFTER THE DUE DATE, SUCH FAILURE SHALL BE CONSIDERED A WILLFUL NON-COMPLIANCE AND THE LESSOR OR ITS AGENTS MAY PROCEED WITH LEGAL ACTION PURSUANT TO STATE LAW. THE LESSEE SHALL BE RESPONSIBLE FOR ALL COSTS, INCLUDING ATTORNEY’S FEES, EXPENDED BY THE LESSOR OR HIS AGENT, IN ENFORCING THE COLLECTION OF ANY DELINQUENT RENT AND/OR LATE CHARGES AS PERMITTED BY STATE LAW. [Emphasis in original]
On April 6, 2012, appellees placed a “Final. Notice Letter” under appellant's door, informing her that her April rent had not been received, and that a late feé' in the amount of $249.85 was due immediately. Appellant gave appellees a check for $249.85 on April 21, 2012.
II. Procedural History
On June 27, 2012, appellant filed a- class action complaint in the District of Column bia Superior Court, alleging violations of the Consumer Protection Procedure Act (“CPPA”), fraud, negligent misrepresentation, unconscionability, and'restitution/unjust enrichment. She amended the complaint on July 12, 2012, in order to add appellees’ addresses for service of process. On August 16, 2012, the case was removed to the United States District Court for the District of Columbia, but later was remanded and appellees were ordered to pay appellant’s attorneys’ fees. Falconi-Sachs v. LPF Senate Square, LLC, 963 F.Supp.2d 1, 3 (D.D.C.2013). On February 14, 2013, the case was ré-opened in Superior Court, and appellant filed a motion for class certification. Appellant later orally requested without opposition that the motion for class certification be stayed, and the trial court granted her request. On June 21, 2013, appellant filed a subsequent amended complaint. Appellees then filed a motion to dismiss on July 12, 2013, and the motion was granted on February 7, 2014.
The trial court dismissed appellant’s CPPA cause of action, holding that it “falls within the realm of landlord-tenant relations and thus outside the scope of the
III. Analysis
A. Scope of Review
This court reviews de novo the dismissal of a complaint under Superior Court Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief can be granted. Tingling-Clemmons v. District of Columbia, 133 A.3d 241, 245 (D.C.2016). “In so doing, we apply the same standard the trial court was required to apply, accepting the [factual] allegations in the complaint as true and viewing all facts and drawing all reasonable inferences in favor of the plaintiff[ ].” Id, (quoting Hillbroom v. PricewaterhouseCoopers LLP, 17 A.3d 566, 572 (D.C.2011)). “To pass muster,” a complaint must “allege the elements of a legally viable claim, and its factual allegations must be enough to raise a right to relief above the speculative level.” Id, (quoting OneWest Bank, FSB v. Marshall, 18 A.3d 715, 721 (D.C.2011)); see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)).
B. CPPA
With respect to appellant’s CPPA claims, this court has previously addressed the question whether the CPPA applies to landlord-tenant relations. See Gomez v. Independence Mgmt. of Delaware, Inc., 967 A.2d 1276, 1286 (D.C.2009) (holding that the CPPA does not apply to landlord-tenant relations). In Gomez, we found that although the Council of the District of Columbia amended the enforcement provisions of the CPPA to no longer limit the CPPA’s private right of action contained in D.C.Code § 28-3905 to the jurisdictional boundaries of the Department of Consumer and Regulatory Affairs (“DCRA”)— which “may not ... apply the provisions of section 28-3905 to ... landlord-tenant relations” — this limitation had been deleted only for budgetary reasons to remove the DCRA’s under-funded role. Id. at 1287. In other words, the Council had no intention of “expanding] the reach of the CPPA,” id. at 1287, and “did not intend by that amendment to extend the private right of action created by the CPPA into the realm of landlord-tenant relations.” Id. at 1286.
C.Fraud
The elements of fraud are “(1) a false representation, (2) made in reference to a material fact, (3) with knowledge of its falsity, (4) with the intent to deceive, and (5) an action that is taken in reliance upon the representation.” In re Estate of Nethken, 978 A.2d 603, 607 (D.C.2009) (emphasis added). Here, appellant alleges that appellees, committed fraud by falsely representing “that [appellant] had the obligation to pay late fees and attorney’s fees.” Appellant’s claim fails, however, because the alleged misrepresentation is in essence an alleged misrepresentation of law, not a misrepresentation of fact. Thus, even when we accept appellant’s allegations as true, she fails to allege the second element of fraud, which is material fact. Accordingly, appellant’s fraud claim was appropriately dismissed.
D.Negligent Misrepresentation
To prevail, on this claim, appellant must show that appellees (1) “made a false statement or omitted a fact that he had a duty to disclose; (2) .that it involved a material issue; and (3) that [appellant] reasonably relied upo.n the false statement or omission to [her] detriment.” Sundberg v. TTR Realty, LLC, 109 A.3d 1123, 1131 (D.C.2015) (citation omitted, emphasis added).
Here, unlike in the fraud context, a plaintiff alleging negligent misrepresentation “need not allege that the defendant had knowledge of the falsity of. the representation or the intent to deceive.” Id, However, she must still show that the appellees falsely stated (or omitted) a material fact. Thus, as we have already discussed in the fraud context, appellant’s negligent misrepresentation claim fails because they only amount to an allegation that appellees misrepresented the law— not that they misrepresented the facts. Accordingly, the trial court did not err in dismissing appellant’s claim for negligent misrepresentation.
E.Unconscionability
The doctrine of unconscionability is generally applied as an affirmative defense, not a cause of action. Williams v. Cent. Money Co., 974 F.Supp. 22, 28 (D.D.C.1997) (“The claim of common law unconscionability appears to apply only defensively, for example, as a response to an attempt to enforce a contract.”) (citing Restatement (Second) of Contracts § 208 comment g); see also Findlay v. CitiMortgage, Inc., 813 F.Supp.2d 108, 122 (D.D.C.2011) (“At common law ... unconscionability was used as a defense in contract actions, not as a basis for obtaining damages in tort.”) (citing Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449 (D.C.Cir.1965)). For this reason, we do not reach the merits of the parties’ arguments regarding the sufficiency of appellant’s unconscionability claim and affirm the trial court dismissal of this .claim.
The doctrine of unjust enrichment applies “when a person retains a benefit (usually money) which in justice and equity belongs to another.” -Jordan Keys & Jessamy, LLP v. St. Paul Fire & Marine Ins. Co., 870 A.2d 58, 63 (D.C.2005). The recipient of such a benefit has “a duty to make restitution to the other person ‘if the circumstances of its receipt or retention are such that, as between the two persons, it is unjust for [the recipient] to retain it.’ ” Id. (quoting Restatement of Restitution § 1 cmt. c (Am. Law Inst. 1937)). The elements of an unjust enrichment claim are “(1) the plaintiff conferred a benefit on the defendant; (2) the defendant retains the benefit; and (3) under the circumstances, the defendant’s retention of the benefit is unjust.” News World Communications, Inc. v. Thompsen, 878 A.2d 1218, 1222 (D.C.2005). Here, there is no dispute that appellant adequately pled the first two elerhents of an unjust enrichment claim: her complaint alleges that she conferred a benefit on appellees by giving them her late-fee payment and that appellees retained the payment. The issue before us is whether the third element of the action was adequately pled:
Appellant acknowledged in her amended complaint that she paid the late fee pursuant to a provision in her lease. Unjust enrichment claims typically lie in the . absence of a contractual arrangement — they provide relief in equity where “circumstances are such that justice warrants a recovery as though there had been a promise.” 4934, Inc. v. District of Columbia Dep’t of Emp’t Servs., 605 A.2d 50, 55 (D.C.1992). But the existence of a contract does not automatically foreclose an unjust enrichment claim. As the authors of .the Restatement (ThiRd) of Restitution and Unjust EnRIChment § 2 cmt. c (Am. Law Inst. 2011) explain:
Judicial statements to the effect that “there can be no unjust enrichment in contract cases” can be misleading if taken casually. Restitution claims of great practical significance arise in a contractual context, but they occur at the margins, when a valuable performance'has been rendered under a contract that is invalid, or subject to avoidance, or otherwise ineffective to regulate the parties’ obligations. Applied to any such circumstance, the statement that there can be no unjust enrichment in contract cases is plainly erroneous.
The rule is thus more nuanced: “Considerations of both justice and efficiency require that private transfers be made pursuant to contract whenever reasonably possible, and that the parties’ own definition of their respective obligations — assuming the validity of their agreement by all pertinent tests — take precedence over the obligations that the- law would impose in the absence of agreement.” Id. (emphasis added); accord Jordan Keys & Jessamy, 870 A.2d at 64 (“One who has entered into a valid contract cannot be heard to complain that the contract is .unjust, or that it unjustly enriches the party with whom he or she has reached agreement.” (emphasis added) (footnóte omitted)); Harrington v. Trotman, 983 A.2d 342, 347 (D.C.2009) (explaining that the existence of a contract bars an unjust enrichment cláim, “[u]nless there is a basis to set aside a contract as unenforceable”).
The viability, and ultimately the success, of appellant’s unjust enrichment claim thus depends on whether the late-fee provision in appellant’s lease is legitimate and enforceable. Appellant claims it is not; she alleges that the late-fee provision constitutes an invalid penalty provision under the common law, not a valid liquidated damages clause. - In other words, appellant asserts that the alleged' illegitimacy of the
Liquidated damages clauses in contracts deserve special scrutiny. As we explained in District Cablevision Ltd. Partnership v. Bassin, 828 A.2d 714 (D.C.2003): “The common law views liquidated damages clauses with a gimlet eye. Such clauses may serve valuable purposes, as where actual damages are likely to be difficult to quantify in the event that the contract is breached.” Id. at 724.
Here, appellant pled detailed facts to support the assertion that her fixed late fee was an unenforceable penalty under District Cablevision. She alleged that the late fee was based on a percentage of the monthly rent and was “not calculated based on a reasonable estimation of anticipated or actual harm caused by a breach of contract,” and that. the $249.85 fee demanded on April 6, 2012, in fact far exceeded “a reasonable forecast of damages flowing from the breach of the covenant to pay rent” by April 5, 2012. More particularly, appellant alleged that all residents in her apartment building have the same 10% late fee provision in , their leases; “[t]he late fee is calculated as a percentage of the total monthly rent, not the net amount of rent due”;, “[tjhe late fee is the same regardless of how late the payment is made, so long as it is after the 5th of the month”; appellant’s “breach of her obligation to pay rent by April 5, 2012 [the due date] whs nominal” and cost the landlords “far less than $249.90,” i.e. the 10% late fee assessed; the landlords could calculate the “cost ... for any particular payment of late rent ... with reasonable certainty” and “[t]he late fee of 10 percent charged ■... is far higher than a reasonable forecast of damages flowing from a breach of the covenant to pay rent On time”; the lease is a standard form; tenants must take or leave it and cannot negotiáte the late fee provision; and the late fees are' not “valid liquidated damages clauses”1 because, again, they “are not a reasonable estimate of actual damages caused by any tenant’s breach.”
These allegations were sufficient to support appellant’s unjust enrichment claim challenging the landlord’s retention of her late fee. See Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (holding that to survive a motion to dismiss, a complaint must contain
The trial court determined, however, that appellant’s claim should be dismissed pursuant to “the voluntary payment doctrine.” Quoting this court’s decision in Eagle Maintenance Services, Inc. v. D.C. Contract Appeals Board, 893 A.2d 569 (D.C.2006), the trial court stated that this doctrine provides that “money voluntarily paid under a claim of right to the payment ... cannot be recovered by the payor solely because the claim was illegal.” Id. at 582 (quoting Smith v. Prime Cable of Chicago, 276 Ill.App.3d 843, 213 Ill.Dec. 304, 658 N.E.2d 1325, 1329 (1995)). We conclude that dismissal was not proper on this basis: we question the trial court’s reliance on this doctrine, but in any event conclude that the trial court improperly considered this affirmative defense in considering whether appellant had failed to state a claim.
In Eagle Maintenance Services, we referred in passing to the voluntary payment doctrine as an “old common law doctrine rarely cited by courts in modern, complex transactions.” Id. (quoting Avianca, Inc. v. Corriea, No. 85-CV-3277, 1992 WL 93128, at *6. (D.D.C. April 13, 1992)). But we limited our discussion of this common law rule and did not explain its operation, ultimately concluding that it (and several other common law doctrines) did not apply. To discern what we meant by the “voluntary payment doctrine,” we look to the cases we cited in that opinion: Avianca and Smith v. Prime Cable of Chicago, 276 Ill.App.3d 843, 213 Ill.Dec. 304, 658 N.E.2d 1325 (1995). Only Avianca provides a detailed explanation
The doctrine might be best thought of as a corollary to the general rule about contracts without consideration: while such a contract is not enforceable, once completed it is generally irrevocable; one cannot take a “gift” back once given. The voluntary payment doctrine is thus a rule against welshing.... The doctrine is most commonly applied in situations where the terms of an initial contract have not been fulfilled by a seller/payee (for whatever reason) and a subsequent agreement, one that decreases the burden or increases the compensation to the seller/payee without consideration, replaces it.... Once the subsequent agreement has been performed, a payor cannot then sue on the initial contract to get, his payments back; the payor1 is deemed to have waived its rights.
1992 WL 93128, at *6 (citations omitted).
Relatedly, the Restatement (Third) of Restitution & Unjust Enrichment has recognized that voluntary payment may potentially bar a claim to recoup payments that are made with full knowledge of the uncertainty as to the amount actually owed. See Restatement (ThiRd) of Resti
But we need not definitively resolve how the above-described principles apply in this case. Voluntary payment is an affirmative defense, see Eagle Maint. Servs., 893 A.2d at 582, and a plaintiffs failure to anticipate and rebut affirmative defenses in her complaint is not a sufficient basis for a Rule 12(b)(6) dismissal. See Flying Food Grp., Inc. v. N.L.R.B., 471 F.3d 178, 183 (D.C.Cir.2006); see also Super. Ct. R. Civ. P. 8(a) (containing no requirement that a complaint anticipate and rebut affirmative defenses); - 5 CHARLES Alan WRIght et al„ Federal Practice And Procedure § 1276 (3d ed. 2004) (“[A]llegations that seek to avoid or defeat a potential affirmative defense ... are not an integral part of the plaintiffs claim for relief and lie outside his or her burden of pleading.”). Rather, the application of this affirmative defense is “a question of fact, to be judged in light of all the circumstances surrounding a given transaction.” Shaw v. Marriott Intern., Inc., 474 F.Supp.2d 141, 150-51 (D.D.C.2007) (quoting Randazzo v. Harris Bank Palatine, N.A., 262 F.3d 663, 669 n. 1 (7th Cir.2001)) (concluding that “[w]hatever the merits of’ the voluntary payment defense, appellant was “certainly correct that it raises factual issues that cannot be resolved in the context of a motion to dismiss”).
To be sure, this ' court has acknowledged that a complaint may nonetheless be dismissed when affirmative defenses are “established on the face of the complaint.” Francis v. Rehman, 110 A.3d 615, 621 (D.C.2015) (quoting Hafley v. Lohman, 90 F.3d 264, 266 (8th Cir.1996)). But nothing in the Amended Complaint supports a determination that appellant pled herself out of court in this case. She did not concede voluntary payment under the rule described above. Rather, appellant alleged in her Amended Complaint that appellees caused the late fee provision to be placed in the standard form lease, and that they “knew, or should have known,
In sum, we hold that the trial court erred by dismissing appellant’s unjust enrichment claim. Whether appellant’s late fee was, in fact, disproportionate to the landlord’s reasonably anticipated damages and thus an improper penalty is a factual question that was not properly resolved at the motion to dismiss stage. Likewise the trial court’s ruling on the affirmative defense of voluntary payment was possibly incorrect and at the very least premature. Thus, we vacate the dismissal .of the unjust enrichment claim and remand to give appellant, the opportunity to prove her claim.
For the foregoing reasons, the trial court’s decision is affirmed in part and reversed and remanded in part.
So ordered.
. Appellant’s argument that this holding was dicta is misplaced. This court in Gomez, after deciding that the trial court had erred in granting summary judgment on appellants' Sales Act claim, affirmed the dismissal of the CPPA claim — even though the appellants had wholly premised that claim upon on the Sales Act claim — because it concluded that the CPPA does not apply to landlord-tenant relations. Gomez, supra, 967 A.2d at 1284-85.
Appellant further claims that this court's decision in Brandywine Apartments, LLC v. McCaster, 964 A.2d 162, 170 (D.C.2009) supports her argument that the logic of Gomez only applies, if at all, where an existing landlord-tenant relationship is fundamental to the claim. We find this argument unpersuasive. In Brandywine, after a jury ruled for the plaintifftappellee in a case involving a rejected housing application, we upheld an award of attorneys' fees on the claim. The appellant, however, did not challenge the application of the CPPA, only the award of attorneys’ fees. Therefore, the scope of our review in Brandy-wine was limited to whether the trial court abused its discretion in determining the appropriate attorneys’ fees. We did not address the substance of the juiy’s verdict regarding
. Although the trial court did not rest its dismissal on this ground, this court may affirm for reasons other those given by the trial court. Chevalier v. Moon, 576 A.2d 722, 724 (D.C.1990) (quoting Garrett v. Washington Air Compressor Co., 466 A.2d 462, 464 n. 5 (D.C.1983)).
. We are more accepting of liquidated damages provisions when they are the product of "fair arm’s length bargaining” between parties of equal sophistication in the negotiated transaction. 828 A.2d at 724. “But .where there is a disparity of bargaining power and one party unilaterally imposes a liquidated damages provision in an adhesive contract, the skepticism (bordering, it has been suggested, on outright hostility) shown by the common law to liquidated damages is at its height.” Id.
. The court in Smith briefly acknowledged that voluntary payment could function in some cases as a waiver of rights, but then held that any assertion of voluntary payment could not serve as the foundation for a determination that a plaintiff had failed to state a claim. 213 IlLDec. 304, 658 N.E.2d at 1329; see infra pages 559-60.
. The Restatement (Third) correspondingly advocates discarding the distinction between mistakes of law and mistakes of fact. Restatement (Third) of Restitution & Unjust Enrichment § 6 cmt. c ("[A] mistake as to liability concerns the existence of an obligation, contractual or otherwise; the extent of a valid obligation; or the existence of a defense to án obligation that is otherwise valid. Relief is available in all of these cases without regard to whether the mistake might be characterized as mutual or unilateral, a mistake of fact or a mistake of law.”); see also Time Warner Ent. Co. v. Whiteman, 802 N.E.2d 886, 891 & n. 6 (Ind.2004).
. That appellant .may have alleged these facts in anticipation of a voluntary-payment argument by appellees does not open the door to a ruling on this issue at the motion-to-dismiss stage. See 5 Fed. Prac. & Proc. Civ, § 1276 (”[I]f the plaintiff purports to negative an affirmative defense by way of anticipation but does not admit the effectiveness of the defense in his pleading, the [trial] court should treat the plaintiff's references to the defense as surplusage.”).
Concurrence Opinion
concurring:
I agree that Ms. Falconi-Sachs adequately pled a claim of unjust enrichment and that the trial court’s 12(b)(6) dismissal was thus in error. Moreover, I share the court’s skepticism that the voluntary payment-doctrine has any application to this case. Particularly in the landlord-tenant context, it seems inappropriate to endorse the legal fiction that a tenant “knowingly” waives her rights to challenge illegal fees or assumes the risk of paying illegal fees when she sign's a standard form contract, drafted by a landlord, that contains unenforceable penalty' provisions. Instead it seems advisable to follow the Restatement rule that “a person who renders performance under ap agreement that cannot be enforced against the recipient ... has a claim in restitution against the recipient as necessary to prevent unjust enrichment.” See Restatement (ThiRd) op Restitution & Unjust Eneichment § 81(1); see, e.g., Time Warner Ent. Co. v. Whiteman, 802 N.E.2d 886, 893 (Ind.2004) (following the Restatement (Third) and rejecting application of voluntary payment doctrine to bar plaintiffs’ unjust enrichment challenge to unlawful late fee provision and noting that it would be absurd to allow the commercial defendant “to take financial advantage of its own wrongdoing”).
. The trial court cited two cases to the contrary, BMG Direct Marketing, Inc. v. Peake, 178 S.W.3d 763 (Tex.2005), and Putnam v. Time Warner Cable of Se. Wisc., Ltd., 235 Wis.2d 447, 649 N.W.2d 626 (2002), but there is reason to question the analysis in these decisions. In BMG Direct Marketing, the court purported to agree with the Restatement (Third) (it was reviewing a draft of the edition eventually published in 2011), but then endorsed an artificial awareness-of-risk rule of the exact sort the Restatement disap