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Batchelor v. Alexis Properties, LLC

Superior Court of Delaware, Kent

November 13, 2018


          Submitted: November 2, 2018



         Before the Court are Defendants John Welcome (hereinafter "Welcome"), Alexis Properties (hereinafter "Alexis"),, Inc. (hereinafter ""), and BB Properties of Delaware, LLC's (hereinafter "BB Properties" and collectively with Welcome, Alexis, and, "Defendants") Motion to Dismiss Plaintiffs Amended Complaint. The motion requests dismissal of all or, in the alternative, part of the counts of the amended complaint filed by Ms. Janet Batchelor (hereinafter "Plaintiff), who seeks damages relating to a rental agreement (hereinafter the "Rental Agreement") of a property located at 5099 N. Dupont Hwy. Ste B, Dover, DE 19901 (hereinafter the "Property"). For the reasons set forth below, Defendants' motion is DENIED in part and GRANTED in part.

         I. Factual Background and Procedural History

         The Court has addressed the background facts and procedural history in its February 23, 2018, and April 3, 2018, rulings on motions to dismiss and motions for reargument previously filed in this case. The Court refers to those rulings for a more complete recitation of the facts of the case, and shall here only briefly recite the allegations of the complaint for context.[1]

         On May 4, 2016, Plaintiff signed the Rental Agreement, which would lease the Property, owned by BB Properties, to "Dance Energy"[2] for the term of June 1, 2016, to May 31, 2017. Defendants later allegedly committed breaches of the Rental Agreement that caused Plaintiff damages and forced her to vacate the Property.

         Several motions to dismiss were filed before the Court, which were ultimately denied. On August 30, 2018, Plaintiff was granted leave to amend her complaint, which was subsequently filed on September 11, 2018. The motion to dismiss presently before the Court was filed on October 11, 2018.[3]

         Defendants move to dismiss Plaintiffs amended complaint on the following grounds: (1) Plaintiff lacks standing; and Plaintiff has failed to plead facts sufficient to support claims for (2) abuse of process, (3) the Uniform Deceptive Trade Practices Act, (4) the Federal Fair Debt Collection Practices Act, and (5) misappropriation of escrow funds.

         II. Discussion

         On a motion to dismiss, the moving party bears the burden of demonstrating that "there are no material issues of fact and that he is entitled to judgment as a matter of law."[4] Upon this Court's review of a motion to dismiss, "(i) all well-pleaded factual allegations are accepted as true; (ii) even vague allegations are well-pleaded if they give the opposing party notice of the claim; (iii) the Court must draw all reasonable inferences in favor of the non-moving party; and (iv) dismissal is inappropriate unless the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof."[5] Additionally, "a pro se pleading is judged by a 'less stringent standard' than a pleading or document filed by an attorney."[6]

         A. Plaintiffs Alleged Lack of Standing

         Defendants argue that dismissal is warranted for lack of standing. Alexis and Welcome have previously sought dismissal of Plaintiff s claims based on lack of standing because Plaintiff is suing for breach of a rental agreement even though she is not the tenant named in the agreement: as mentioned previously, the Rental Agreement names "Dance Energy" as the tenant, with Plaintiff merely signing the agreement. Defendants have also previously argued that Plaintiffs claims should be dismissed because Dancenergy is the real part in interest and, as an alleged "artificial entity," must be represented by an attorney in this action. Defendants, as before, cite to Rule 57 of the Delaware Supreme Court, which provides that in the context of proceedings before the Justice of the Peace Court, persons "transacting business in Delaware that have or should have filed a certificate with the Prothonotary's office designating a trade name" are to be considered artificial entities.[7] Under Delaware law, artificial entities can only act before a court "through an agent duly licensed to practice law."[8] However, as was previously held by this Court, Rule 57 does not apply to proceedings before the Superior Court.[9]

         Plaintiff previously responded to these arguments by arguing that she does have standing to bring suit: while the lessee was named as "Dance Energy" in the Rental Agreement, she asserts that she was the "sole proprietor" of the dance studio and that "Dancenergy" is a fictitious name for which a proper application had been filed.

         With the instant motion, Defendants repeat the same arguments from the previous proceedings. Defendants argue that Dancenergy signed the Rental Agreement through its agent Janet Batchelor, and that Dancenergy is the real party in interest. Defendants further argue that Plaintiff engaged in business under the trade name Dancenergy and that Plaintiff is not the same legal entity as Dancenergy for the purposes of these proceedings.

         The Court finds that Defendants have cited to no new authority to indicate that Dancenergy is the real party in interest or that Plaintiff, trading as Dancenergy, is an artificial entity, nor have Defendants cited to any authority for the proposition that Rule 57 applies to the case at hand. Consequently, Defendants' motion to deny Plaintiffs amended complaint in its entirety for lack of standing is denied. Additionally, the Court notes that Superior Court Civil Rule 12(f) empowers the Court to strike from pleadings any "insufficient defense or any redundant, immaterial, impertinent or scandalous matter." The Court reminds Defendants that it has already made a decision as to the applicability, or lack thereof, of Rule 57 to the current proceedings, and that the Court has previously rejected the argument that Plaintiff lacks standing because the Rental Agreement names Dance Energy, not Plaintiff, as the tenant. The Court admonishes Defendants not to raise these arguments again.

         B. Plaintiffs Abuse of Process Claim

         Defendants next argue that Plaintiff has failed to plead facts sufficient to support a claim for abuse of process. To establish such a claim, two elements must be present:" '(1) an ulterior purpose; and (2) a willful act in the use of the process not proper in the regular conduct of the proceedings.' "[10] While satisfaction of the first element may be inferred if the second element is established, in order to establish the second element there must be a "definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process."[11] Thus, some overt act must be performed in addition to the initiating of the suit, not simply filing or maintaining a lawsuit.[12] "Some form of coercion to obtain collateral advantage, not properly involved in the proceeding itself, must be shown, such as obtaining the surrender of property or the payment of money by the use of the process as a threat or club."[13]

         Plaintiff alleges in her amended complaint that Welcome, on behalf of Alexis, filed a summary possession action against her months after she had vacated the premises, as well as a debt action six days later for monies not actually owed. According to Plaintiff, "Defendants' ulterior purpose in filing both the summary possession and debt action was to retaliate against and harm Plaintiff, and not to use the processes for the intended purpose." Plaintiff also alleges that the purpose of the summary possession and debt actions was not to regain possession and collect a valid debt, but rather to harm Plaintiffs record and collect on an illegitimate debt. Defendants, in response, allege that Plaintiffs allegations do not meet the elements of abuse of process, as Plaintiff cannot point to any factual basis for a "form of coercion to obtain collateral advantage not properly involved in the proceeding itself." Moreover, Defendants argue that Plaintiffs claim for abuse of process is legally indistinguishable from Plaintiffs previous claim for malicious prosecution, which this Court dismissed.

         It is worth noting that a claim for abuse of process, while similar, is not identical to a claim for malicious prosecution. In order to make out a claim for malicious prosecution, a plaintiff must show that (1) defendant instituted civil or criminal proceedings against plaintiff, (2) no probable cause existed to support the charge or claim, (3) the proceedings were instituted and pursued with malice, (4) the proceedings were terminated in plaintiffs favor, and (5) plaintiff suffered damages as a result.[14]

         In contrast and as mentioned above, under a claim for abuse of process, a plaintiff need not plead damages or malice, but rather must show (1) an improper or wrongful purpose of the defendant in using the legal process and (2) a willful act not proper in the regular conduct of legal proceedings. This Court earlier dismissed Plaintiffs malicious prosecution claim because it found that she had not sufficiently pled damages. Thus, it would be improper for this Court to dismiss Plaintiffs abuse of process claim simply because her malicious prosecution claim failed based on the damages element.

         Looking to Defendants' other argument, however, the Court agrees that Plaintiff has failed to show a "willful act in the use of the process not proper in the regular conduct of the proceedings."[15] An abuse of process claim "concerns 'perversion[s] of the process after it has been issued.'"[16] Here, Plaintiff has alleged the leaving of two voicemails, which she apparently perceived as threatening, before the two actions were filed, but she has alleged no other act in addition to the filing of suit that occurred after the filing of the two actions. As the Korotki Court observed,

[a]buse of process "contemplates some overt act done in addition to the initiating of the suit" such that "the mere filing or maintenance of a lawsuit, even for an improper purpose, is not a proper basis for an abuse of process action."[17]

         Because Plaintiff has failed to allege such an overt act, her claim for abuse of process must be dismissed.

         C. Plaintiffs Deceptive Trade Practices Claim

         The next issue before the Court is Defendants' argument for dismissal of Count VII, deceptive trade practices. The Uniform Deceptive Trade Practices Act (hereinafter the "DTPA") was established "to address unfair or deceptive trade practices that interfere with the promotion and conduct of another's business."[18] The DTPA prohibits conduct that, among other things, "[c]auses likelihood of confusion or of misunderstanding as to affiliation, connection, or association with, or certification by, another [and/or] [Represents that...a person has a sponsorship, approval, status, affiliation, or connection that the person does not have."[19] In order to prevail under the DTPA, a plaintiff need not prove competition between the parties or actual confusion or misunderstanding.[20]

         In this case, Plaintiff has alleged that Defendants acted deceptively by representing to Plaintiff that Welcome was managing the property "with the authority to show the commercial property, negotiate terms, draft a rental agreement, sign the agreement on behalf of the owners, collect a security deposit and collect rent." Plaintiff alleges that Welcome, on behalf of BB Properties and Alexis, was not licensed in the State of Delaware and was not authorized to act as their agent. Additionally, Plaintiff alleges that Welcome, on behalf of Alexis, falsely and deceptively indicated to Plaintiff that the Delaware Residential Landlord/Tenant Code was the controlling law for the Rental Agreement. This, in turn, forced Plaintiff to pay an additional two month's rent and utilities after the conclusion of the commercial lease term.

         Defendants respond that the DTPA is inapplicable to the case at bar, as Plaintiff was a consumer of real estate services and does not have standing under the DTPA. Pursuant to the Delaware Supreme Court, "a litigant has standing under the DTPA only when such person has a business or trade interest at stake which is the subject of interference by the unfair or deceptive trade practices of another."[21]Defendants argue that Plaintiff fails to demonstrate how her business interest was directly affected by an alleged deceptive practice by Defendants.

         The Court finds the Delaware Supreme Court's analysis in Grand Ventures v. Whaley[22] germane to the case at hand. In Whaley, the Delaware Supreme Court examined the DTPA, the legislative intent behind the statute, and the context of the DTPA with regard to its sister provision, the Consumer Fraud Act. The Court ultimately found that the Consumer Fraud Act provides for remedies for violations of the "vertical" relationship between a buyer or consumer and a producer or seller, while the DTPA provides remedies for violations of the "horizontal" relationship for unreasonable or unfair interference between business interests.[23] Moreover, an injunction is the typical remedy for the interference prescribed by the DTPA.[24]"While a fraudulent act, or a pattern of such acts, may constitute violations of both the DTPA and the Consumer Fraud Act, the interests each statute seeks to protect and the injuries they are designed to redress, are different."[25]

         In Whaley, the court found that the defendant was liable under the Consumer Fraud Act. Plaintiff had bought something from defendants which they had no right to sell, and was ultimately damaged by defendants' misrepresentations.[26] However, the plaintiff was not able to state a cause of action under the DTPA as it "had only a retail consumer relationship with the defendants. There was no horizontal business or trade interest at stake... ."[27]

         Similarly, the Court finds that Plaintiff was merely a consumer of the real estate services being offered by Defendants. ...

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