Civil No. JFM 08-1924.
February 13, 2009
Plaintiffs George Porreca ("G. Porreca"), Jean Porreca ("J. Porreca"), Demetrik K. Hall ("Hall"), and Carol J. Allen Pinter ("Pinter") were residents of properties in Baltimore County managed by Pennsylvania corporation Mitchell L. Morgan Management, Inc. ("Morgan Management"). Pinter was also employed by Morgan Management. In June 2008, Plaintiffs filed suit in the Circuit Court for Baltimore County against Morgan Management and its president and founder, Mitchell L. Morgan ("Morgan"), a Pennsylvania resident, for violation of Baltimore County's Livability Code, breach of contract, and negligence. Defendants removed the case to this court on the basis of diversity jurisdiction. Plaintiffs' claims are based on injuries and illnesses allegedly sustained due to the conditions of the Morgan Management properties. As there is complete diversity between the parties, and Plaintiffs seek compensatory and punitive damages in excess of $75,000 (Compl. 8), this court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332.
George Porreca is suing individually and on behalf of Demetrik Hall, the minor son of George and Jean Porreca.
Four other plaintiffs involved in this lawsuit have settled their claims.
Plaintiffs erroneously refer to Mitchell L. Morgan Management, Inc. as Morgan Properties, Inc. in their complaint and other filings. They filed a praecipe on October 4, 2008, in lieu of an earlier filed amended complaint to correct this error.
Defendants have moved for judgment on the pleadings as to employment-related claims brought by Plaintiff Pinter and another employee plaintiff who has settled her claim. Defendants argue that the Maryland Workers' Compensation Act provides an exclusive remedy for such claims brought by employees against an employer. However, since Pinter's claims are dismissed herein as a sanction for discovery failure and since the other employee plaintiff has settled, this motion is dismissed as moot.
Now pending are Defendants' motions for judgment on the pleadings and for sanctions. The issues have been fully briefed and no hearing is deemed necessary. Local Rule 105.6 (D. Md. 2008). For the reasons that follow, Defendants' motion for sanctions is granted in part and denied in part, and Defendant Morgan's motion for judgment on the pleadings is granted.
Defendants have also filed a motion in limine to bar the testimony of Plaintiffs' experts. No response to this motion has been filed by Plaintiffs. Plaintiffs have not filed any expert witness designation as required under Federal Rule of Civil Procedure 26(a)(2), nor have Plaintiffs sought an extension beyond the November 17, 2008 deadline for such filing. (Defs.' Mot. in Limine 3.) Defendants allege that the only information provided to them by Plaintiffs' counsel regarding experts is an email dated November 18, 2008, stating that Plaintiffs plan to retain the services of Ross S. Myerson, M.D. "within the next week or two if it still appears as though the case is not going to settle." ( Id. at Ex. B). Rule 37(c) provides that "[i]f a party fails to provide information or identify a witness as required by Rule 26(a) . . ., the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless." Fed.R.Civ.P. 37(c)(1). As Plaintiffs' did not file any expert witness designation or oppose Defendants' motion in limine, Plaintiffs' failure to satisfy the requirements of Rule 26(a) was not substantially justified or harmless. I will therefore grant the motion and bar the testimony of Plaintiffs' experts.
At this stage of the litigation, "[t]he factual allegations in Plaintiff[s'] complaint must be accepted as true and those facts must be construed in the light most favorable to the plaintiff[s]." Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). Plaintiffs allege that during the course of their tenancies, they suffered from "severely inhabitable living conditions," including but not limited to: "leaking and standing water, excessive moisture, severe mold growth, relentless rodent infestation, insect infestation, malfunctioning fixtures and plumbing, and substandard infrastructure." (Compl. ¶ 7.) Each plaintiff claims to have notified Defendants in writing and orally of these problems on several occasions. ( Id. ¶ 9.) Plaintiffs also allege that Defendants were cited by the Office of Permits and Development Management for numerous violations of the Baltimore County Code. ( Id. ¶¶ 13-14.) Plaintiffs allege that they continued to pay rent to Defendants despite Defendants' failure to make necessary repairs. ( Id. ¶¶ 15-16.)
Plaintiff Pinter, a tenant and employee of Morgan Management, was responsible for accepting maintenance requests on behalf of Morgan Management. ( Id. ¶ 10.) She claims to have personal knowledge of maintenance requests that were never properly or timely addressed, as well as personal knowledge of tenants who frequented the management office due to various illnesses and personal injuries. ( Id.) However, Plaintiff Pinter is now homeless (allegedly due to Defendants' actions that are the subject of this litigation), and Plaintiffs' counsel has been unable to contact her. (Pls.' Opp'n to Defs.' Mot. for Sanctions ¶ 9.)
Count One of Plaintiffs' complaint alleges a violation of Baltimore County's Livability Code. (Compl. ¶ 17.) The Livability Code establishes maintenance requirements and safety and sanitation standards for residential structures and premises. Balt. Co. Code § 35-5-102. Plaintiffs allege that Defendants violated the Livability Code "by jeopardizing the health and safety of the tenants with the unsanitary conditions of the dwellings," and that Defendants' violation was the proximate cause of Plaintiffs' medical conditions. (Compl. ¶¶ 19, 20.) A violation of the Livability Code may be considered by a court as evidence of a breach of the lease agreement between a landlord and tenant. Balt. Co. Code § 35-5-215(b). Plaintiffs seek damages for the harms they claim to have suffered as a result of Defendants' alleged violation of the Livability Code. (Compl. ¶ 20.)
In referencing the Livability Code, Plaintiffs cite to Title 18, Housing Article III. (Compl. ¶ 17.) However, the Baltimore County Code was revised in 2003, effective July 1, 2004, relocating the Livability Code to Article 35, Title 5. See Balt. Co. Code § 35-5.
In Count Two, Plaintiffs bring a claim for breach of contract based on Defendants' alleged violation of the Lease Agreements signed by Defendants and Plaintiffs. (Compl. ¶ 22.) Plaintiffs assert that the lease terms required Defendants to perform necessary repairs with reasonable promptness upon receiving written notice from tenants, but that Defendants failed to do so. ( Id. ¶¶ 23-24.) Plaintiffs G. Porreca, J. Porreca, and Hall allege that as a direct result of Defendants' breach, they suffered from severe medical conditions caused by toxic mold exposure. ( Id. ¶ 26.) Plaintiff Pinter alleges that, as a result of Defendants' breach of contract, she "suffered from depression, severe chest pains, and other severe medical conditions as well as economic damages including personal property damage due to mold, infestation of rats, mice, foreign insects and roaches." ( Id. ¶ 30.)
Count Three states a claim of negligence based on Defendants' alleged refusal to correct defects after being notified several times by tenants that such defects existed, as well as Defendants' alleged failure to comply with their duties in their company policy manual (e.g., policies for responding to maintenance requests), and their alleged failure to provide habitable living conditions for their tenants. ( Id. ¶ 49.)
Defendants seek sanctions under Rule 37(b) and (d) of the Federal Rules of Civil Procedure on the basis of Plaintiffs' failure to provide executed answers to interrogatories and Plaintiffs' inadequate response to Defendants' request for production of documents. (Defs'. Mot. for Sanctions 2.)
A party may be sanctioned for failure to attend its own deposition or for failure to serve answers to interrogatories. Fed R. Civ. P. 37(d)(1)(A). The sanctions available for violations of Rule 37(d) include those listed in Rule 37(b)(2)(A)(i)-(vi). Fed.R.Civ.P. 37(d)(3). In addition to sanctions, the court must order the failing party, or its attorney, or both, "to pay the reasonable expenses, including attorney's fees, caused by the failure, unless the failure was substantially justified or other circumstances make an award of expenses unjust." Fed.R.Civ.P. 37(d)(3).
In the Fourth Circuit, a district court considers the following four factors in determining the appropriate sanction under Rule 37: (1) whether the non-complying party acted in bad faith; (2) the prejudice suffered by the other party; (3) the need for deterrence; and (4) the effectiveness of less drastic sanctions. Anderson v. Found. for Advancement, Educ. Empl. of Am. Indians, 155 F.3d 500, 504 (4th Cir. 1998) ( citing Wilson v. Volkswagen of Am., Inc., 561 F.2d 494, 503-05 (4th Cir. 1977)). "Any use of Rule 37 sanctions must rest in the sound discretion of the district court. . . ." Taylor v. Specialty Marketing, Inc., No. 91-3053, 1993 U.S. App. LEXIS 1924, at *4 (4th Cir. Feb. 2, 1993) (unpublished).
Despite Defendants' requests, Plaintiffs have not produced any medical expenses or wage loss documentation in support of their claims. (Defs'. Mem. Supp. Mot. for Sanctions 5.) Plaintiff Pinter failed to appear for her deposition or to contact Defendants to reschedule. ( Id. 12.) Defendants claim to have made good faith efforts to obtain this discovery and to depose Plaintiff Pinter, including writing several letters and making several calls to Plaintiffs' counsel, holding a formal good-faith meeting on October 14, 2008, and providing Plaintiffs' counsel with a draft of this motion and an opportunity to cure the deficiencies one week prior to Defendants' filing of the motion. ( Id.) Defendants now request that the court dismiss the claims of Plaintiff Pinter and limit the claims of Plaintiffs G. Porreca, J. Porreca, and Hall to the documents produced as of October 30, 2008, the date Defendants' motion was filed. ( Id.) Defendants' supporting memorandum details several alleged delays, postponements, and inadequacies in the discovery provided by Plaintiffs. Defendants certify that they attempted in good faith to obtain the discovery without court intervention. ( Id. 3.)
According to Defendants, they issued interrogatories and requests for production of documents to Plaintiffs on August 15, 2008, the day after the initial scheduling conference in this case. (Defs.' Mem. Supp. Mot. for Sanctions 4.) On September 15, Plaintiffs requested and received an extension to respond to Defendants' written discovery until October 1, 2008. ( Id. 5.) On September 16, Defendants requested that each Plaintiff sign a HIPAA-compliant medical authorization so that Defendants could attempt to obtain Plaintiffs' medical records directly. ( Id.) Defendants claim that on September 18, Plaintiffs' counsel informed Defendants that she had obtained Plaintiffs' medical documentation and thus would not have her clients execute the authorizations. ( Id.)
Defendants state that on October 1, 2008, they received "documents purporting to be Plaintiffs' discovery responses," but that these documents "were in complete disarray. None of the documents were marked as exhibits or Bates stamped. Documents were upside down and were not organized by document response or even by Plaintiff. There were also numerous duplicates. Most notably, there were no medical bills or wage loss documentation." ( Id.) Defendants set forth the deficiencies of Plaintiffs' response in a letter to Plaintiffs' counsel dated October 2, 2008, to which Plaintiffs' counsel allegedly responded she would do her best to provide Defendants with revised discovery prior to October 9, 2008. ( Id. 5-6.) Defendants allege that no such documents have been provided. ( Id. 6.) Defendants further allege that Plaintiffs then promised to bring the documents to depositions to be held October 14, 2008, but failed to do so. ( Id.) Rather, Plaintiffs' counsel allegedly admitted that her clients had never seen the draft discovery responses, but promised on the record to produce the outstanding discovery by October 17, 2008. ( Id.)
Defendants also allege that on October 14, 2008, Plaintiffs' counsel informed Defendants that three of the four plaintiffs scheduled to appear for depositions the following day would not appear. ( Id.) Defendants state that while they did not agree to release Plaintiffs from their obligation to appear, they did defer filing a motion for sanctions on the condition that Plaintiffs provided complete executed answers to interrogatories, supplemented their document responses, and appeared for depositions by October 23, 2008. ( Id. 6-7.) On October 23, Plaintiffs' counsel contacted Defendants' counsel via email to request an indefinite extension because she was suffering from stress-related chest pains. ( Id. 7.) Defendants then provided Plaintiffs' counsel with a draft of their motion for sanctions and set a final deadline of October 29, 2008 for Plaintiffs' discovery responses, which Plaintiffs' counsel allegedly agreed to meet. ( Id.) Defendants state that Plaintiffs provided three packets of documents on October 29, none of which purported to relate to the claims of Plaintiffs Pinter, G. Porreca, J. Porreca, or Hall. ( Id. 7-8.)
Plaintiffs oppose Defendants' motion for sanctions. They allege that all plaintiffs have provided responses to Requests for Admissions, Interrogatories, and Production of Documents and that such responses were responsive to Defendants' requests. (Pls.' Opp'n to Defs.' Mot. for Sanctions 1.) Plaintiffs further allege that they have submitted all medical records in their possession that they plan to produce at trial, and that those Plaintiffs claiming wage loss have requested documentation of such from their employers, but have not yet received the documentation. ( Id.) Plaintiffs contest Defendants' claim that Defendants have made good faith efforts to resolve these discovery disputes before filing their motion for sanctions. (Pls.' Mem. in Opp'n to Defs.' Mot. for Sanctions 6-7.)
The document filed by Plaintiffs in opposition to Defendants' motion for sanctions consists of (1) "Plaintiffs' Motion [sic] in Opposition to Defendants' Motion for Sanctions" ("Pls.' Opp'n to Defs.' Mot. for Sanctions"), and (2) "Defendants' [sic] Memorandum in Opposition to Defendants' Motion for Sanctions" ("Pls.' Mem. in Opp'n to Defs.' Mot. for Sanctions"). As Plaintiffs failed to include page numbers on the document, the page numbers cited to herein are the numbers assigned to the electronically filed document by the ECF (Electronic Case Filing) system.
Plaintiffs also contend that because the discovery deadline is not until April 1, 2009, they may reserve the right to supplement discovery if they receive additional documentation responsive to Defendants' discovery requests before that date. (Pls.' Opp'n to Defs.' Mot. for Sanctions 1.) They claim that Defendants' motion for sanctions is therefore premature. (Pls.' Mem. in Opp'n to Defs.' Mot. for Sanctions 7.) This argument is, however, disingenuous. The April 1, 2009 deadline is for the completion of all discovery and does not alter Plaintiffs' responsibility to timely respond to Defendants' interrogatories and requests for admission and document production. The Federal Rules of Civil Procedure set thirty day limits on the time permitted for a party to respond to such discovery requests unless the parties stipulate or the court orders otherwise. See Fed.R.Civ.P. 33(b)(2) (interrogatories); Fed.R.Civ.P. 34(b)(2)(a) (document production); Fed.R.Civ.P. 36(a)(3) (requests for admission). The individual claims are discussed below.
(A) Plaintiff Carol J. Allen Pinter
Defendants allege that in the nearly two years Plaintiff Pinter has been represented by Plaintiffs' counsel, she has failed to provide executed Answers to Interrogatories, medical records, medical bills, property damage documentation, or documentation of wage loss. (Defs.' Mem. Supp. Mot. for Sanctions 12.) She also failed to appear for her duly-noted deposition on October 15, 2008, and has not offered any alternative dates. ( Id.) Plaintiffs note that Plaintiff Pinter is homeless and "Plaintiffs' counsel has no way of contacting her at the present time, but is confident that she will make contact with her counsel soon." (Pls.' Mem. in Opp'n to Defs.' Mot. for Sanctions 6.)
Dismissal without prejudice is an appropriate sanction in these circumstances. Plaintiff Pinter has repeatedly failed to participate in the discovery process and is currently and indefinitely out of contact with Plaintiffs' counsel. "Especially in cases of delay to the orderly progression of the litigation process, the fundamental concern of avoiding the squandering of scarce judicial resources (and the resources of other litigants) . . . is highly germane to whether a District Court should dismiss a case." Founding Church of Scientology, Inc. v. Webster, 802 F.2d 1448, 1458 (D.C. Cir. 1986). The Fourth Circuit's four-factor analysis for determining the appropriateness of a sanction supports this conclusion.
The first of the four factors this court must consider is whether Plaintiff Pinter acted in bad faith. Courts have had "little trouble in finding the requisite bad faith or fault where the party has failed to respond to interrogatories or failed to appear at depositions without an attempt at explanation." Id. (internal citations omitted). Despite Plaintiffs' counsel's expectation that Plaintiff Pinter will reinitiate contact, Plaintiff Pinter herself has provided no explanation for her absence and has not sought to rectify this failure. Her failure to appear at her deposition or respond to other discovery requests therefore constitutes sufficient bad faith to impose the sanction of dismissal without prejudice.
As to the second of the four factors to be considered, there is no question that the Defendants are prejudiced in preparing their defense by Plaintiff Pinter's failure to participate in discovery and her lack of contact with her attorney. The third factor, the need for deterrence, is not as significant in this case as it would be in a case of willful evasion. If, as Plaintiffs' counsel contends, Plaintiff Pinter had previously been in contact and involved in the preparation of her case, it is likely that external circumstances not susceptible to deterrence are now contributing to Plaintiff Pinter's nonparticipation in the litigation.
The fourth factor calls for the court to consider the effectiveness of less drastic sanctions. A lesser sanction than dismissal, such as imposition of costs and attorney's fees or staying the proceeding, is unlikely to be effective since Plaintiff Pinter is homeless and there is no way to know if or when she will contact her attorney. Dismissal without prejudice may in fact be a less severe sanction than imposition of costs in this instance. See Tim Cheng-Chien Chang v. Burford, 803 F.2d 714, 1986 WL 17844, at *2 (4th Cir. 1986) (unpublished table opinion) (noting that in light of the limited financial means of a plaintiff filing in forma pauperis, "sanctions such as the imposition of costs and attorney's fees likely would have been more severe than dismissal without prejudice").
The more severe sanction of dismissal with prejudice, however, "is ordinarily reserved for the most egregious cases." Sadler v. Dimensions Health Corp., 178 F.R.D. 56, 59 (D. Md. 1998). For example, in Founding Church of Scientology, the court dismissed the case only after the plaintiff organization's founder and alleged managing agent failed to appear for two depositions, the second of which was noticed with a court order warning that if he did not appear, the case would be dismissed. 802 F.2d at 1450. The court determined that "ample advance notice was given of the importance of the deposition and the consequence that would attach from failure to attend it." Id. at 1458. In the present case, there has been no such court order or warning given to Plaintiff Pinter. However, a court order requiring her to appear for a deposition would be futile since Plaintiffs' counsel has no way of contacting her. In the face of Plaintiff Pinter's absence, dismissal without prejudice is warranted. This sanction will allow her to refile her claim should she reestablish contact with her attorney.
It is unclear from the limited record provided to the court precisely when Plaintiff Pinter's claims accrued. The applicable statute of limitations is three years. Md. Code Ann., Cts. Jud. Proc. § 5-101. If the statute of limitations on Plaintiff Pinter's claims has expired, she would be precluded from refiling her claims. However, in any event, such consideration does not affect my ruling because any statute of limitations issue that may arise would be due to Plaintiff Pinter's own failure to make herself available.
(B) Plaintiffs George Porreca, Jean Porreca, and Demetrik Hall
Defendants allege that Plaintiffs G. Porreca, J. Porreca, and Hall have failed to provide executed Answers to Interrogatories, and that their document responses do not contain any medical bills or, for the two adult plaintiffs, documentation of property damage or wage loss. (Defs.' Mem. Supp. Mot. for Sanctions 13.) During their depositions, Plaintiffs G. Porreca and J. Porreca identified documents in support of their claims and one document (a medical record) in support of Hall's claims, all of which were marked as exhibits. ( Id. 13-14.) Defendants request that these plaintiffs be barred from introducing at trial any documents that were not marked as exhibits during the depositions of Plaintiffs G. Porreca and J. Porreca. ( Id. 14.)
Plaintiffs claim that they have been responsive to Defendants' discovery requests and have provided all relevant documents and information currently available to them. However, Defendants note several examples of the non-responsive and incomplete nature of the materials provided by Plaintiffs. In Plaintiffs' response to Defendants' requests for document production, rather than organizing and labeling the documents to correspond to the categories in the request as required by Rule 34(b)(2)(E)(I) of the Federal Rules of Civil Procedure, they merely respond "see attached documents" for every request, even when there are no corresponding documents attached. (Defs.' Mot. for Sanctions Ex. F.) Plaintiffs' unexecuted answers to Defendants' interrogatories are also deficient in that many of them merely incorporate by reference Plaintiffs' deficient response to Defendants' request for document production and others contain baseless objections. ( Id.) Plaintiffs' contention that the discovery deadline is not until April 1, 2009, and that they may supplement their responses until then does not excuse their current deficiencies.
Upon consideration of the four pertinent factors, this court determines that the appropriate sanction for Plaintiffs G. Porreca, J. Porreca, and Hall's discovery deficiencies is a court order instructing Plaintiffs to provide full and complete answers to interrogatories and responses to document requests within thirty days of the issuance of this order. Should Defendants' counsel notify the court that Plaintiffs have failed to comply with this order, I will enter an order precluding any such evidence at trial.
Plaintiffs' bad faith is evident from their failure to comply with their discovery obligations despite numerous attempts by opposing counsel to acquire appropriate responses. If Plaintiffs found their discovery obligations to be unduly burdensome, they could have sought an extension of time to answer the interrogatories or produce the requested documents or other relief from the court, but at no time did Plaintiffs seek such relief. See Al Barnett Son, Inc. v. Outboard Marine Corp., 611 F.2d 32, 35 (3d Cir. 1979) ("Litigants may oppose discovery requests by seeking a protective order from the court . . . they cannot be permitted to frustrate discovery by refusing to comply with a proper request.").
Defendants have undoubtedly been prejudiced in preparing for this litigation as a result of the deficiencies in Plaintiffs' discovery responses. Their interrogatories seek, inter alia, information about the damages suffered by Plaintiffs and the nature and extent of the uninhabitable conditions that form the basis of Plaintiffs' claims. (Defs.' Mot. for Sanctions Ex. F.) Plaintiffs' failure to provide specific and informative responses hinders Defendants' ability to prepare their defense to Plaintiffs' claims.
There is a substantial need for deterrence in this case. Plaintiffs' incomplete and unexecuted answers to interrogatories and their nonresponsive and disorganized responses to document production requests "frustrate the fundamental purpose underlying the discovery rules to provide adequate information to litigants in civil trials." Al Barnett Son, Inc., 611 F.2d at 36 ( citing Schlagenhauf v. Holder, 379 U.S. 104, 114-15 (1964)).
I find, however, that any discovery sanction limiting the admissibility of evidence at trial, as requested by Defendants, would be too severe at this point. Defendants have not filed a motion to compel, nor has the court issued any previous warnings or orders. Furthermore, despite Plaintiffs' dilatory and deficient responses, any prejudice to Defendants can still be cured by Plaintiffs' timely production of any medical, wage loss, or other documentation they plan to introduce at trial. However, should Plaintiffs fail to provide full and complete responses to Defendants' discovery requests in the face of this court order, such sanction will be imposed.
Defendant Morgan moves to dismiss Plaintiffs' claims against him individually on the grounds that Plaintiffs have stated no basis for a direct action against Morgan in his capacity as president and founder of Morgan Management. (Def. Morgan's Mot. for J. on the Pleadings and for Sanctions ("Def.'s Mot. for J. on the Pleadings") ¶ 7.) He also requests sanctions against Plaintiffs as recompense for the costs and fees involved in defending against their allegedly groundless claims.
A district court applies the same standard in evaluating a Rule 12(c) motion for judgment on the pleadings as it applies in evaluating a motion to dismiss pursuant to Rule 12(b)(6). Burbach Broad. Co. v. Elkins Radio Corp., 278 F.3d 401, 405 (4th Cir. 2002). This standard requires the court to assume that the facts alleged in the complaint are true and draw all reasonable factual inferences in the nonmoving party's favor. Id. The purpose of a Rule 12(b)(6) or 12(c) motion is to test the sufficiency of a complaint, not to "resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party v. Martin, 980 F.2d 943, 952 (4th Cir. 1992).
Rule 8(a) of the Federal Rules of Civil Procedure requires that a complaint contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). The Supreme Court elaborated in Twombly that the complaint must contain enough facts to state a claim that is plausible on its face, not merely conceivable. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974 (2007). Although a complaint "does not need detailed factual allegations, a plaintiff's obligation to provide the `grounds' of his entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 1964-65 (internal citations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level. . . ." Id. at 1965. (internal citations omitted.) "Judgment should be entered when the pleadings, construing the facts in the light most favorable to the non-moving party, fail to state any cognizable claim for relief, and the matter can, therefore, be decided as a matter of law." O'Ryan v. Dehler Mfg. Co., 99 F. Supp. 2d 714, 717-718 (E.D. Va. 2000) ( citing Zeran v. America Online, Inc., 129 F.3d 327, 329 (4th Cir. 1997)).
As this is a diversity action, Maryland's choice of law provisions apply. See Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). In tort actions, Maryland applies the substantive law of the state where the wrong occurred. Rockstroh v. A.H. Robins, Co., 602 F. Supp. 1259, 1262 (D. Md. 1985). In contract actions, Maryland courts generally apply the law of the jurisdiction where the contract was made. See, e.g., Allstate Ins. Co. v. Hart., 611 A.2d 100, 101 (Md. 1992). The parties do not dispute that Plaintiffs' claims arise from torts allegedly committed and contracts created in Maryland. Therefore, Maryland law applies.
Plaintiffs fail to plead facts sufficient to support a plausible claim against Defendant Morgan individually. As an officer of a corporation, Defendant Morgan may not be held personally liable on a corporate contract, absent the existence of fraud. A.B. Corporation v. Futrovsky, 267 A.2d 130, 137 (Md. 1970). Nor may he be held personally liable for torts committed by the corporation unless he specifically directed the tortious act or participated or cooperated therein. Tedrow v. Deskin, 290 A.2d 799, 802 (Md. 1972) ("The general rule is that the corporate officers or agents are personally liable for those torts which they personally commit, or which they inspire or participate in, even though they performed in the name of an artificial body. Of course, participation in the tort is essential to liability.") (internal citations and quotations omitted). Morgan argues that Plaintiffs failed to specifically allege in their complaint any fraud on the part of Defendants or any direction or participation by Morgan in the acts or omissions alleged in the complaint. (Def.'s Mot. for J. on the Pleadings ¶ 6.) Morgan therefore contends that Plaintiffs' action against him is groundless and must be dismissed.
Plaintiffs argue in opposition that Morgan had knowledge of and consented to the acts and omissions of Morgan Management. (Pls.' Amended Mot. in Opp'n to Def.'s Mot. for J. on the Pleadings and for Sanctions ("Pls.' Opp'n") ¶ 2.) Plaintiffs also claim that Morgan breached his duty to properly supervise the employees and to fix problems of which he was aware at the properties, and that this breach "helped bring about the Plaintiffs' injuries." ( Id. ¶ 3.) Plaintiffs assert without citation that they "have already stated in the original Complaint that Defendant Morgan personally directed or actively participated or cooperated in the acts and omissions that caused the Plaintiffs [sic] injuries." ( Id. ¶ 7.) There is, however, no such statement in the complaint; rather, Plaintiffs merely state that "Defendant, Mitchell L. Morgan, as a corporate officer of Morgan Properties, Inc., may be personally liable for the torts committed by the corporation if he actually brought about, had knowledge of, or consented to the tortious acts of the corporation." (Compl. ¶ 53) (emphasis added). This statement does not amount to an allegation that Defendant Morgan actually did so.
Plaintiffs fail to allege contractual fraud or that Defendant Morgan personally directed or actively participated or cooperated in a particular act or omission that caused Plaintiffs' injuries. Plaintiffs' complaint "which consists of conclusory allegations unsupported by factual assertions fails even the liberal standard of Rule 12(b)(6)." DeJesus v. Sears, Roebuck Co., 87 F.3d 65, 70 (2d Cir. 1996). See also United Black Firefighters of Norfolk v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979) (finding that plaintiffs failed to state a claim under Rule 8 where their "conclusory allegations of discrimination were not supported by any references to particular acts, practices, or policies of the Fire Department"). Defendant Morgan's motion for judgment on the pleadings is therefore granted.
Defendant Morgan also requests sanctions under Rule 11 of the Federal Rules of Civil Procedure. However, such sanctions are not warranted in the instant case. Under Rule 11, by presenting a pleading to the court, an attorney or unrepresented party is "certif[ying] that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances," the pleading "is not . . . presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;" and that "the claims, defenses, and other legal contentions are warranted by existing law. . . ." Fed.R.Civ.P. 11(b). The Fourth Circuit has held that "where there is no factual basis for a plaintiff's allegations, the complaint violates Rule 11's factual inquiry requirement." Brubaker v. City of Richmond, 943 F.2d 1363, 1373 (4th Cir. 1991).
In the present case, given that Defendant Morgan is the president and founder of Morgan Management and that the company bears his name, Plaintiffs had some factual basis to include Defendant Morgan as a defendant in this action. See Brubaker, 943 F.2d at 1378 ("Rule 11 does not require that a judge or jury agree with a plaintiff's allegation. For Rule 11 purposes, the allegation merely must be supported by some evidence."). While their claims against him are insufficient to survive Defendant Morgan's motion for judgment on the pleadings, they are not so frivolous as to require Rule 11 sanctions.
For the reasons stated above, Defendants' motion for sanctions is granted in part and denied in part. Namely, Plaintiff Pinter's claims are dismissed without prejudice, and Plaintiffs G. Porreca, J. Porreca, and Hall are hereby ordered to provide full and complete responses to Defendants' discovery requests within thirty days. Defendant Morgan's motion for judgment on the pleadings as to Plaintiffs' claims against him individually is granted; however, his motion for Rule 11 sanctions is denied.
A separate order effecting the rulings made in this opinion is being entered herewith.
For the reasons stated in the accompanying Opinion, it is, this 13th day of February, 2009,
1. Plaintiff Pinter's claims are dismissed without prejudice;
2. Plaintiffs George Porreca, Jean Porreca, and Demetrik K. Hall are hereby ordered to provide full and complete answers to interrogatories and responses to document requests within thirty days of the entry of this order;
3. Failure by Plaintiffs George Porreca, Jean Porreca, or Demetrik K. Hall to comply with this order will result in exclusion at trial of any evidence not timely disclosed;
4. Defendant Morgan's motion for judgment on the pleadings is granted;
5. Defendant Morgan's motion for sanctions under Rule 11 is denied;
6. Defendants' motion in limine to bar the testimony of Plaintiffs' experts is granted; and
7. Defendants' motion for judgment on the pleadings as to Plaintiff Pinter's Maryland Workers' Compensation Act claim is dismissed as moot.