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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 12-CV-749
APRIL J. WARD and JAMES L. SCALES, APPELLANTS,
V.
WELLS FARGO BANK, N.A., APPELLEE,
and
No. 12-CV-1626
JAMES L. SCALES and APRIL J. WARD, APPELLANTS,
V.
WACHOVIA MORTGAGE PRENTICE HALL CORPORATION SYSTEM, ET AL., APPELLEES.
Appeals from the Superior Court
of the District of Columbia
(LTB-11922-10 and CAB-5029-10)
(Hon. Robert I. Richter, Hon. Anita Josey-Herring, Hon. Anthony Epstein, Hon.
Natalia M. Combs Greene, Hon. A. Franklin Burgess, Jr., and Hon. Stephanie
Duncan-Peters, Trial Judges)
(Argued September 11, 2013 Decided April 17, 2014)
Ian Stumpf for appellants.
Azer Akhtar for appellee Wells Fargo Bank, N.A. in No. 12-CV-749.
2
Michael S. Barranco, with whom Sarah E. Meyer was on the brief, for
appellee Wells Fargo Bank, N.A., in No. 12-CV-1626.
Azer Akhtar for appellee Rosenberg & Associates, LLC in No. 12-CV-1626.
Before EASTERLY and MCLEESE, Associate Judges, and PRYOR, Senior
Judge.
MCLEESE, Associate Judge: Appellants James L. Scales and April J. Ward,
who are married, purchased a residence together. After they defaulted on two
loans, appellee Wells Fargo Bank, N.A. foreclosed on the residence. Wells Fargo
also filed an action for possession of the residence. Mr. Scales and Ms. Ward filed
a separate action challenging the foreclosure in Superior Court, alleging numerous
claims against Wells Fargo and appellee Rosenberg & Associates, LLC (“R&A”),
a law firm that participated in the foreclosure. The trial court denied relief to Mr.
Scales and Ms. Ward and entered a non-redeemable judgment of possession to
Wells Fargo. We affirm.
I.
Except as noted, the following facts are undisputed. In April 2004, Mr.
Scales and Ms. Ward purchased as tenants by the entirety a property located at 400
Orange Street, S.E., Washington, D.C. By 2006, they had two outstanding loans
on the property: a $216,000 mortgage relating to the purchase of the property and
3
an equity line of credit (“ELOC”) with a limit of $27,000. Mr. Scales and Ms.
Ward obtained both loans from World Savings Bank, F.S.B. -- a predecessor in
interest to Wells Fargo.1
Mr. Scales and Ms. Ward subsequently moved to 5907 Herring Court,
Waldorf, Maryland. Mr. Scales and Ms. Ward notified Wells Fargo of their new
address with respect to the mortgage, but the parties dispute whether Mr. Scales
and Ms. Ward properly notified Wells Fargo of their new address with respect to
the ELOC. From 2006 to 2012, Mr. Scales and Ms. Ward rented the Orange Street
property to a tenant who paid them approximately $1700 per month.
In 2009, Mr. Scales and Ms. Ward defaulted on both loans. As a result,
Wells Fargo took steps to foreclose on the property, relying solely on the default
with respect to the ELOC. Wells Fargo hired R&A to initiate foreclosure
proceedings. On December 8, 2009, R&A sent a notice of intent to foreclose to
Mr. Scales and Ms. Ward at the Orange Street address. The 2009 notice stated that
the foreclosure sale would occur on January 12, 2010.
1
We hereinafter use “Wells Fargo” to also refer to Wells Fargo’s
predecessors in interest.
4
In January 2010, Mr. Scales filed a complaint in Superior Court and moved
for a temporary restraining order (“TRO”) and preliminary injunction to prevent
foreclosure, alleging that Wells Fargo was not the proper holder of the ELOC note.
Mr. Scales’s TRO motion listed Orange Street as Mr. Scales’s home address.
The trial court granted a TRO and cancelled the foreclosure sale, based on
Mr. Scales’s promise to cure the default within two days. The trial court gave Mr.
Scales’s case priority because the court understood from Mr. Scales that the
foreclosure action involved Mr. Scales’s home.
Mr. Scales failed to cure the default. As a result, the trial court granted
Wells Fargo’s motion to dismiss the TRO action and re-scheduled the foreclosure
sale for March 23, 2010. R&A again sent notice of intent to foreclose to the
Orange Street address.
On March 23, 2010, Wells Fargo purchased the property at the foreclosure
sale. On March 30, 2010, Wells Fargo served a thirty-day notice to quit on Mr.
Scales and Ms. Ward at the Orange Street address. The deed of sale reflecting
Wells Fargo’s purchase was executed on May 7, 2010, and recorded on June 30,
2010.
5
In May 2010, Wells Fargo filed a complaint against Mr. Scales and Ms.
Ward in the Landlord-Tenant Branch of the Superior Court for possession of the
Orange Street property. In July 2010, Mr. Scales and Ms. Ward filed suit against
R&A and Wells Fargo in the Civil Division of the Superior Court, alleging among
other things wrongful foreclosure and breach of contract. 2 Mr. Scales and Ms.
Ward sought damages as well as equitable relief including set-aside of the
foreclosure sale and an injunction preventing the eviction proceedings. The trial
court initially consolidated the two cases.
The trial court subsequently determined that Mr. Scales and Ms. Ward had
effectively asserted a plea-of-title defense in the possession action, by challenging
the foreclosure in the wrongful-foreclosure action. Under the Landlord & Tenant
2
As amended, the complaint alleged claims against Wells Fargo for
fraudulent inducement (Count 1); fraud (Count 2); breach of contract (Count 3);
intentional violation of the duty of good faith (Count 5); wrongful foreclosure
(Count 6); abuse of process (Count 7); tortious interference with a contract
(Count 8); violation of the D.C. Consumer Protection Act, D.C. Code § 28-3901 et
seq. (2012 Repl.) (Count 9); violation of the D.C. Human Rights Act, D.C. Code
§ 2-1401 et seq. (2012 Repl.) (Count 10); violation of the federal Fair Housing Act,
42 U.S.C. § 3601 et seq. (2006) (Count 11); and violation of the federal Equal
Credit Opportunity Act, 15 U.S.C. § 1691 et seq. (2006) (Count 12). The
complaint alleged claims against R&A for breach of contract (Count 3); gross
negligence (Count 4); intentional violation of the duty of good faith (Count 5);
wrongful foreclosure (Count 6); abuse of process (Count 7); tortious interference
with a contract (Count 8); and violations of the federal Fair Housing Act and the
D.C. Human Rights Act (Counts 13 and 14).
6
Rules, a defendant who asserts a plea-of-title defense to an action for possession
must do so in writing and must make appropriate arrangements for an
“undertaking,” Super. Ct. L&T R. 5 (c) (2014), which “is a form of bond used
. . . to assure compensation of the plaintiff not only for lost rent during the period
of litigation while the defendant occupies the premises but also for the cloud on the
title and related damages and cost.” Lindsey v. Prillman, 921 A.2d 782, 785 (D.C.
2007) (internal quotation marks omitted). The trial court ordered Mr. Ward and
Ms. Scales to comply with Rule 5, but they refused to do so. The trial court
therefore struck the request for an equitable set-aside of the foreclosure and
severed the possession action from the wrongful-foreclosure action.
In April 2012, the trial court entered a non-redeemable judgment for
possession in favor of Wells Fargo in the possession action, holding among other
things that Mr. Scales and Ms. Ward did not have standing to challenge the
possession action because they had not filed a plea of title and thus were
“stranger[s] to the [Orange Street] property[.]”
During the pendency of the possession action, the trial court entered a
protective order requiring Mr. Scales and Ms. Ward to pay $1700 per month into
the court’s registry. The trial court subsequently reduced the payments to $850 per
7
month. The trial court eventually vacated the protective order, concluding that
such an order was more appropriate in a suit based on possession for non-payment
of rent. By that time, Mr. Scales and Ms. Ward had paid $7015 into the court’s
registry. The trial court subsequently disbursed the funds to Wells Fargo.
In the wrongful-foreclosure action, the trial court first dismissed a number of
the claims as barred by the statute of limitations or for failure to state a claim upon
which relief could be granted. The trial court later granted summary judgment to
R&A and Wells Fargo on the remaining claims.
II.
Mr. Scales and Ms. Ward raise three challenges to the trial court’s handling
of the possession action. We see no basis for reversal.
A.
First, Mr. Scales and Ms. Ward argue that the trial court should have
8
dismissed them as defendants in the possession action.3 Specifically, they argue
that they were not proper defendants in that action, because they did not occupy the
Orange Street property or lease it from Wells Fargo and because the trial court
found that they were not challenging Wells Fargo’s title to that property. We
conclude that Mr. Scales and Ms. Ward were proper defendants in the possession
action.
The defendants in an action for possession must be “detain[ing] possession
of real property without right, or after [their] right to possession has ceased . . . .”
D.C. Code § 16-1501 (2012 Repl.). This court does not appear to have squarely
addressed the meaning of the phrase “detains possession” under § 16-1501. It is
clear, however, that an action for possession may be brought against a defendant
who is not currently occupying the property at issue. See D.C. Code § 16-1502
(2012 Repl.) (where defendant in action for possession cannot be found in District
of Columbia, summons may be served on tenant or on person over age of sixteen
residing on or in possession of premises, and “if no one is in actual possession”
summons may be served by posting on property).
3
Mr. Scales and Ms. Ward were named defendants in the action that
resulted in the non-redeemable judgment for possession, and the writ of restitution
names Mr. Scales and Ms. Ward as defendants.
9
We take guidance from the law applicable to ejectment actions, because the
action for possession was created to provide for “summary relief in those cases
where . . . the action of ejectment would lie.” Pernell v. Southall Realty, 416 U.S.
363, 375 (1974) (internal quotation marks omitted; ellipses in Pernell); Service
Parking Corp. v. Trans-Lux Radio City Corp., 47 A.2d 400, 403 (D.C. 1946)
(“statutory [action for possession] proceeding substituted for the ancient remedy of
ejectment”). Under District of Columbia law, an ejectment action may be brought
against defendants who are not occupying or in actual possession of the property.
See, e.g., D.C. Code § 16-1101 (a)(1) (2012 Repl.) (actions in ejectment may be
brought against person “actually occupying the premises claimed, either in person
or by tenant”) (emphasis added); Spruill v. Brooks, 68 A.2d 204, 205-06 (D.C.
1949) (action for ejectment may be brought “against anyone occupying the
premises, either in person or by tenant or against any person exercising acts of
ownership adversely to the plaintiff”) (discussing D.C. Code § 16-501 (1940)).
See generally, e.g., 28A C.J.S. Ejectment § 48 (2014) (“Actual or personal
possession or an actual occupancy or residence [by the defendant in an ejectment
action] is unnecessary . . . .”); cf. Dun-Donnelly Publ’g Corp. v. Kenvic Assocs.,
639 N.Y.S.2d 42, 42-43 (App. Div. 1996) (primary tenant who sublet premises was
in possession of property, and thus was subject to action for non-payment of rent,
even though primary tenant was “not presently in physical possession of the
10
premises”).
Under these principles, Mr. Ward and Ms. Scales were “detaining
possession” of the property for purposes of Wells Fargo’s action for possession.
They were renting the property to a third party for $1700 a month, and thus were
“occupying the premises . . . by tenant.” D.C. Code § 16-1101 (a)(1). Moreover,
they were prior occupants and prior title owners of the property, and in the
wrongful-foreclosure action they sought to regain ownership of the property.
Finally, they have repeatedly acknowledged that they were asserting a “possessory
interest” in the property. We conclude that Mr. Scales and Ms. Ward were proper
defendants in the action for possession.4
B.
Second, Mr. Scales and Ms. Ward contend that the possession case should
4
The trial court denied the motion to dismiss on the ground that Mr. Scales
and Ms. Ward lacked standing, because they had failed to enter a plea of title and
therefore were “stranger[s]” to the Orange Street property. We affirm on the
alternative ground that Mr. Scales and Ms. Ward were proper defendants in the
possession case. See, e.g., Obelisk Corp. v. Riggs Nat’l Bank, 668 A.2d 847, 852-
53 (D.C. 1995) (“We are not . . . limited to reviewing the legal adequacy of the
grounds the trial court relied on for its ruling; if there is an alternative basis that
dictates the same result, a correct judgment must be affirmed on appeal.”).
11
have been dismissed because Wells Fargo did not have legal title when it served
the notice to quit and filed the complaint. We conclude that Wells Fargo had
equitable title at the time it served the notice to quit and filed its complaint, and
that such title sufficed to permit Wells Fargo to take those steps.
Wells Fargo purchased the property at a foreclosure sale, and the
memorandum of purchase is dated March 23, 2010. The parties do not dispute that
the memorandum of purchase is a valid, enforceable contract that affects real
property. Under the doctrine of equitable conversion, Wells Fargo therefore
obtained equitable title to the property on March 23, 2010. See generally Lindsey,
921 A.2d at 786 & n.4 (valid, enforceable contract affecting real property
immediately vests equitable title in purchaser). Thus, Wells Fargo had equitable
title when it served the notice to quit on March 30, 2010, and when it filed the
complaint for possession on May 13, 2010.5
5
In arguing that Wells Fargo did not obtain equitable title, Mr. Scales and
Ms. Ward rely solely on HSBC Bank USA, N.A. v. Mendoza, 11 A.3d 229 (D.C.
2010). HSBC, however, involves the doctrine of equitable subrogation, not
equitable conversion. Id. at 235. The two doctrines are “distinct.” United Cmty.
Bank v. Prairie State Bank & Trust, 972 N.E.2d 324, 336 (Ill. App. Ct. 2012); see
also HSBC, 11 A.3d at 235 (“Under the doctrine of equitable subrogation, a lender
who pays off a pre-existing mortgage and takes a new mortgage as security for the
loan will be subrogated to the rights of the first mortgagee as against any
intervening lienholders, even if the lender is on constructive notice of the existence
(continued…)
12
In the District of Columbia, equitable title is sufficient to maintain an action
for possession. See Fiske v. Bigelow, 9 D.C. (2 MacArth.) 427, 433-34 (1876)
(“The objection that the plaintiff is vested only with the equitable title to the
property does not lie to an action [for possession] of this kind.”). 6 It follows
logically that equitable title would be sufficient to take the steps prerequisite to
maintaining such an action, such as serving a notice to quit where one is required.
Grimes v. Newsome, 780 A.2d 1119, 1121 (D.C. 2001) (describing service of
notice to quit as “condition precedent” to landlord’s possession action) (internal
quotation marks omitted). Wells Fargo thus properly initiated the action for
possession.
(…continued)
of the junior liens. In other words, the lender steps into the shoes of the mortgagee
whom it has paid off and receives that mortgagee’s priority over subsequent liens.
The subrogation extends to the amount paid to satisfy the earlier indebtedness.”)
(footnotes omitted).
6
Mr. Scales and Ms. Ward contend that Fiske establishes that legal title
rather than equitable title is required to maintain an action for possession. The
passage they quote from Fiske, however, is taken in part from the portion of the
opinion in which the court describes the arguments of counsel. 9 D.C. at 430. The
remainder of the quote reflects the court’s holding that although legal title is
required in order to bring an action in ejectment, equitable title suffices to bring an
action for possession, because the action for possession was intended to be “a more
speedy remedy” free from some of the “technical rules” that govern the action for
ejectment. Id. at 433-34.
13
C.
Finally, Mr. Scales and Ms. Ward allege that the funds they deposited in the
court’s registry pursuant to the protective order should have been returned to them
rather than released, because the trial court should not have imposed a protective
order in the first instance. We review the entry of the protective order for abuse of
discretion. Lindsey, 921 A.2d at 785.
Courts have broad powers to fashion equitable remedies. See Owen v.
Board of Dirs. of Wash. City Orphan Asylum, 888 A.2d 255, 270 (D.C. 2005). “A
protective order is . . . an equitable remedy designed to ensure that the landlord is
not exposed to a prolonged period of litigation without rental income while the
tenant remains in possession pending the outcome of a suit for possession.” Mullin
v. N St. Follies Ltd. P’ship, 712 A.2d 487, 493 (D.C. 1998) (internal quotation
marks omitted). The protective order requires tenants “to deposit disputed rental
payments into the registry of the court until the conclusion of the litigation.” Stets
v. Featherstone, 754 A.2d 292, 295 (D.C. 2000). The purpose of the protective
order is to “preserve[] the status quo in a contested suit for possession until [the
suit] can be determined on the merits.” Mullin, 712 A.2d at 493 (internal quotation
marks and alterations omitted). “Such a protective order . . . requir[es] the exercise
14
of sound discretion on a case-by-case basis.” Stets, 754 A.2d at 296 (internal
quotation marks omitted).
Although courts typically enter protective orders in suits for non-payment of
rent where the parties have a contractual landlord-tenant relationship, we have
never held that a trial court’s authority to enter a protective order is limited to that
context. See Crockett v. Deutsche Bank Nat’l Trust, 16 A.3d 949, 952-53 (D.C.
2011) (“[W]e have left open the possibility that protective orders may be
appropriate in some circumstances outside of the landlord-tenant context, and have
occasionally implicitly endorsed them.”); Lindsey, 921 A.2d at 785 (“[W]e decline
to say that a periodic-payment protective order can never be contemplated for use
outside the typical landlord-tenant context . . . .”).
We find no abuse of discretion with respect to the trial court’s entry of the
protective order in this case. Mr. Scales and Ms. Ward were acting as landlords,
collecting approximately $1700 in rent per month from a tenant who occupied the
property, but had not made payments since 2009 towards either of the two loans
relating to the property. Moreover, we agree with the trial court that Mr. Scales
and Ms. Ward were in substance asserting a plea of title by suing in the wrongful-
foreclosure action to regain ownership of the property. The trial court therefore
15
could have required Mr. Scales and Ms. Ward to make payments into the court’s
registry as part of an undertaking pursuant to Super. Ct. L&T R. 5 (c). See Penny
v. Penny, 565 A.2d 587, 590 (D.C. 1989) (noting “close analogy” between
protective order and undertaking under L&T R. 5 (c)). Finally, for most of the
duration of the protective order, Mr. Scales and Ms. Ward were only required to
pay into the court’s registry half the amount that they were collecting in rent from
the tenant. Taken together, these circumstances provide adequate support for the
trial court’s decision to enter a protective order.
III.
Mr. Scales and Ms. Ward raised fourteen claims against R&A and Wells
Fargo in the amended complaint in the wrongful-foreclosure action. The trial court
dismissed some claims as time-barred and some claims for failure to state a claim.
The trial court granted summary judgment in favor of R&A and Wells Fargo on
the remaining claims. We affirm.7
7
In the trial court, Mr. Scales and Ms. Ward moved to strike the affirmative
defenses as insufficiently pleaded. The trial court denied their motion, and Mr.
Scales and Ms. Ward challenge that decision on appeal. We see no basis for relief,
because Mr. Scales and Ms. Ward had adequate notice of the affirmative defenses
and a full opportunity to respond before the trial court ruled on the merits. Cf.
Word v. Ham, 495 A.2d 748, 751 (D.C. 1985) (rejecting claim that affirmative
(continued…)
16
A.
The trial court dismissed as time-barred the claims against Wells Fargo
alleging fraudulent inducement (Count 1), fraud (Count 2), and
consumer-protection violations (Count 9). We uphold that ruling.
The trial court concluded that the claims alleged in these counts accrued on
June 26, 2006, the date on which the loans were made. Mr. Scales and Ms. Ward
do not contest that ruling on appeal. The trial court further concluded that these
claims “substantively state TILA [Truth-In-Lending Act] claims[,]” and Mr. Scales
and Ms. Ward also do not contest that ruling on appeal.” The statute of limitations
for TILA claims runs “one year from the date of the occurrence of the violation.”
15 U.S.C. § 1640 (e) (2012); see, e.g., Logan v. LaSalle Bank Nat’l Ass’n, 80 A.3d
1014, 1020 (D.C. 2013). Mr. Scales and Ms. Ward filed the complaint on July 9,
2010 -- more than one year after the alleged violations. These alleged violations
thus would appear to be time-barred.
(…continued)
defense was waived because not pleaded in answer or cross-claim, where
“[a]ppellees were put on notice of the defense by appellants’ opposition to their
motion for summary judgment and had the opportunity to respond”).
17
On appeal, however, Mr. Scales and Ms. Ward argue that the filing of a
class-action complaint in August 2007 in the Northern District of California tolled
the statute of limitations. Mr. Scales’s and Ms. Ward’s TILA claims, however,
were time-barred as of June 2007. Thus, even if the August 2007 class action
would otherwise have tolled the statute of limitations, the limitations period had
already run, because class-action tolling “does not resurrect expired claims[.]”
Beavers v. Metropolitan Life Ins. Co., 566 F.3d 436, 441 (5th Cir. 2009).
B.
The trial court also dismissed as untimely the disparate-impact claims
against Wells Fargo under the D.C. Human Rights Act (Count 10), federal Fair
Housing Act (Count 11), and federal Equal Credit Opportunity Act (Count 12).
We affirm that ruling.
Disparate-impact claims under the D.C. Human Rights Act, federal Fair
Housing Act, and federal Equal Credit Opportunity Act are subject to a two-year
statute of limitations. D.C. Code § 2-1403.16 (D.C. Human Rights Act) (2012
Repl.); 42 U.S.C. § 3613 (a)(1)(A) (Fair Housing Act) (2006); 15 U.S.C.
18
§ 1691e (f) (Equal Credit Opportunity Act) (2006).8 The trial court ruled that the
disparate-impact claims against Wells Fargo accrued on June 26, 2006, when the
loans at issue were obtained. Because Mr. Scales and Ms. Ward did not file their
complaint until July 9, 2010 -- more than two years after obtaining the ELOC --
their disparate-impact claims appear to be time barred on the face of the complaint.
Logan, 80 A.3d at 1020 (“[A] court should not dismiss on statute of limitations
grounds unless the claim is time-barred on the face of the complaint.”).
Mr. Scales and Ms. Ward argue, however, that the limitations period was
tolled under what they refer to as the “critical mass doctrine.” Under that doctrine,
which this court has not previously had occasion to consider, some courts have
tolled the statute of limitations for discrimination claims if the alleged
discrimination “could only manifest itself after a critical mass of similarly situated
people experienced it, so as to bring an over-arching pattern to life.” Ramirez v.
GreenPoint Mortg. Funding, Inc., 633 F. Supp. 2d 922, 930 (N.D. Cal. 2008); see
also Davis v. General Motors Acceptance Corp., 406 F. Supp. 2d 698, 706 (N.D.
8
When Mr. Scales and Ms. Ward obtained the mortgages at issue in 2006,
the applicable statute of limitations for the Equal Credit Opportunity Act was two
years. In 2010, after the statute of limitations had run with respect to the Equal
Credit Opportunity Act claim, Congress amended the statute to provide for a five-
year limitations period. 15 U.S.C. § 1691e (f) (2012). Mr. Scales and Ms. Ward
have not argued that the 2010 amendment revived their Equal Credit Opportunity
Act claims.
19
Miss. 2005). We conclude that Mr. Scales and Ms. Ward have not adequately
invoked the critical-mass doctrine. Neither in the complaint nor in their
subsequent pleadings did Mr. Scales and Ms. Ward provide concrete support for
the suggestion that they lacked information reasonably necessary to file their
disparate-impact claim within two years after they obtained the loans at issue. To
the extent the complaint contained concrete information on that question, that
information points in the opposite direction. See Compl. ¶ 42 (citing statistics from
2006 in support of disparate-impact claim).
More generally, the critical-mass doctrine has been treated as an aspect of
the continuing-violation doctrine. See, e.g., Ramirez, 633 F. Supp. 2d at 930.
Under the continuing-violation doctrine, the statute of limitations does not run with
respect to a “continuing pattern” of alleged discrimination that involves at least
some conduct falling within the limitations period. Havens Realty Corp. v.
Coleman, 455 U.S. 363, 381 (1982). To the extent that Mr. Scales and Ms. Ward
attempt to invoke the continuing-violation doctrine more broadly, as opposed to
relying solely on the critical-mass doctrine, Mr. Scales and Ms. Ward have not
identified any specific discriminatory conduct by Wells Fargo that extended into
the limitations period. To the contrary, they conceded in the trial court that they
have “no information as to when the practices last occurred . . . .” See Pls.’ Br. in
20
Opp’n to Def.’s Mot. to Dismiss 4 n.1.
In sum, Mr. Scales and Ms. Ward’s conclusory references to the critical-
mass doctrine were not sufficient to defeat Wells Fargo’s motion to dismiss. Cf.,
e.g., Lingad v. Indymac Fed. Bank, 682 F. Supp. 2d 1142, 1148 (E.D. Cal. 2010)
(dismissing claim as time-barred; “conclusory” allegations were “insufficient to
invoke the doctrine of equitable tolling”); Alcena v. Raine, 692 F. Supp. 261, 270
(S.D.N.Y. 1988) (dismissing discrimination complaint as time-barred; “A
conclusory allegation of a continuing violation is insufficient.”); cf. generally
E-Fab, Inc. v. Accountants, Inc. Servs., 64 Cal. Rptr. 3d 9, 17 (Ct. App. 2007)
(where claims in complaint otherwise would be time-barred, “conclusory
allegation” that claims could not reasonably have been discovered earlier “will not
withstand demurrer”).9
9
The two cases upon which Mr. Scales and Ms. Ward principally rely are
not inconsistent with our holding in this case. See Ramirez, 633 F. Supp. 2d at
929-30; Davis, 406 F. Supp. 2d at 703-07. In both cases, the trial court denied a
motion to dismiss a disparate-impact claim as time-barred, relying on the
critical-mass doctrine. Ramirez, 633 F. Supp. 2d at 929-30; Davis, 406 F. Supp. 2d
at 703-07. Both courts noted that the plaintiffs alleged that the defendant’s
discriminatory practices continued into the limitations period, and both courts
stated that a pattern of discrimination can be detected only after “a critical mass of
similarly situated people experience it.” Ramirez, 633 F. Supp. 2d at 930 (internal
quotation marks omitted); Davis, 406 F. Supp. 2d at 706. In both cases, the court’s
discussion does not make clear what specific allegations were made by the
plaintiffs. Ramirez, 633 F. Supp. 2d at 929-30; Davis, 406 F. Supp. 2d at 698.
(continued…)
21
C.
We affirm the order granting summary judgment for Wells Fargo and R&A
on the wrongful-foreclosure claim and breach-of-contract claims (Counts 3 and 6).
We review de novo the trial court’s grant of summary judgment. See, e.g., Trustee
1245 13th St., NW No. 608 Trust v. Anderson, 905 A.2d 181, 183 (D.C. 2006).
“Summary judgment is only appropriate where there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law.” Id.
at 183-84 (internal quotation marks and brackets omitted). “In considering
summary judgment, we view the facts in the light most favorable to the non-
moving party.” Id. at 184.
Mr. Scales and Ms. Ward allege that the foreclosure sale was illegal because
Wells Fargo and R&A did not mail the 2010 notice of intent to foreclose to Mr.
Scales’s and Ms. Ward’s correct “last known address,” as required by D.C. Code
§ 42-815 (b)(1)(A) (2012 Repl.). R&A sent the notice to the Orange Street
(…continued)
Neither case holds or implies that a plaintiff can properly avoid dismissal of an
otherwise time-barred claim simply by making conclusory references to the
critical-mass doctrine. To the contrary, the court in Davis emphasized that its
denial of the motion to dismiss was subject to reconsideration if further pleadings
demonstrated that “plaintiffs cannot or do not challenge an over-arching practice to
which the continuing violation doctrine would apply.” 406 F. Supp. 2d at 707.
22
address, but Mr. Scales and Ms. Ward contend that the notice should have been
sent to the residence in Maryland where they claim that they resided at the time of
the foreclosure. They further allege that sending the notice to the Orange Street
address was a breach of Wells Fargo’s obligations under the deed of trust.
We agree with the trial court that Mr. Scales is judicially estopped from
challenging the service of notice at the Orange Street property, because Mr. Scales
represented during the TRO proceeding that the Orange Street property was his
home.
Under the doctrine of judicial estoppel, “[i]f a party has taken a position
before a court of law, . . . that party . . . [may be barred] from contradicting his
earlier position [in a later proceeding].” Brown v. M St. Five, LLC, 56 A.3d 765,
780 (D.C. 2012) (internal quotation marks omitted). The purpose of judicial
estoppel is to “[preclude] a litigant from playing fast and loose with a court of
justice by changing his position according to the vicissitudes of self-interest.” Id.
(internal quotation marks and brackets omitted). We generally consider three
factors in deciding whether to apply judicial estoppel:
First, [whether] a party’s later position . . . [is] clearly
inconsistent with its earlier position. Second,
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. . . whether the party has succeeded in persuading a court
to accept the party’s earlier position, so that judicial
acceptance of an inconsistent position in a later
proceeding would create the perception that either the
first or the second court was misled . . . . [T]hird[,]
. . . whether the party seeking to assert an inconsistent
position would derive an unfair advantage or impose an
unfair detriment on the opposing party if not estopped.
Mason v. United States, 956 A.2d 63, 66 (D.C. 2008) (quoting New Hampshire v.
Maine, 532 U.S. 742, 750-51 (2001)).
In this case, these factors weigh in favor of finding that Mr. Scales is
judicially estopped from denying that the Orange Street property was his home.
First, Mr. Scales’s current claim that the Maryland property was his home in
February 2010 directly conflicts with Mr. Scales’s testimony during the January
2010 TRO proceeding, where Mr. Scales testified under oath that the Orange Street
property was his home.10 Mr. Scales also identified Orange Street as his address in
his request for a TRO. Second, Judge Mencher’s decision to grant the TRO was
based, in part, on Mr. Scales’s testimony that the Orange Street property was his
10
Mr. Scales contends that the trial court incorrectly applied the doctrine of
judicial estoppel, because Mr. Scales’s statement during the TRO proceeding that
the Orange Street property was his home was not a “position” that Judge Mencher
“adopted.” We disagree. During the TRO proceeding, Mr. Scales answered
“[y]es” when asked by Judge Mencher whether the Orange Street property was his
home. Judge Mencher further noted: “[t]his is your home. It’s important.”
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home. Third, allowing Mr. Scales to change his position on appeal would impose
an unfair detriment on Wells Fargo and R&A, which appropriately could rely on
Mr. Scales’s testimony in January 2010 when serving the foreclosure notice in
February 2010. We therefore uphold the trial court’s ruling that judicial estoppel
foreclosed Mr. Scales’s wrongful-foreclosure and breach-of-contract claims.
Furthermore, we agree with the trial court that Mr. Scales’s testimony should
judicially estop Ms. Ward even though she did not give that testimony and was not
a party to the TRO proceedings. Mr. Scales and Ms. Ward owned the Orange
Street property as tenants by the entireties, and under the circumstances Ms. Ward
was in privity with Mr. Scales with respect to the property. David v. Nemerofsky,
41 A.2d 838, 840 (D.C. 1945) (noting that where husband and wife owned
property as tenants by the entireties, the wife should be regarded as in “privity”
with her husband). Judicial estoppel can apply to one who was not a party to the
earlier proceeding but who is in privity with a party. See, e.g., Milton H. Green
Archives, Inc. v. Marilyn Monroe LLC, 692 F.3d 983, 998 (9th Cir. 2012)
(beneficiary was judicially estopped by representation made by executor, because
beneficiary and executor were in privity); Stansbury v. Chemical Servs. Div. of
Brown-Ferris Indus., 702 S.W.2d 758, 759 (Tex. App. 1986) (wife judicially
estopped, because she was in privity with her husband).
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We conclude that it was appropriate in the circumstances of this case for the
trial court to treat Ms. Ward as judicially estopped by her husband’s statements.
Although she was not a party to the TRO action, Ms. Ward benefited from Mr.
Ward’s statement that the Orange Street property was his home, which delayed the
foreclosure of property Mr. Scales and Ms. Ward jointly owned. We therefore
affirm the trial court’s grant of summary judgment in favor of Wells Fargo with
respect to the wrongful-foreclosure and breach-of-contract claims.
D.
Finally, we affirm the trial court’s dismissal of the disparate-impact claims
against R&A under the Fair Housing Act (Count 13) and D.C. Human Rights Act
(Count 14) for failure to state a claim.
To state a disparate-impact claim, the plaintiffs must “identify a specific
policy or practice which the defendant has used to discriminate . . . .” Garcia v.
Johanns, 370 U.S. App. D.C. 280, 288, 444 F.3d 625, 633 (2006) (assuming
arguendo that disparate-impact doctrine applies under Equal Credit Opportunity
Act). Cf. Smith v. City of Jackson, Miss., 544 U.S. 228, 241 (2005) (affirming
grant of summary judgment against plaintiff in age-discrimination case resting on
26
disparate-impact theory; “[I]t is not enough to simply allege that there is a
disparate impact on workers, or point to a generalized policy that leads to such an
impact. Rather, the employee is responsible for isolating and identifying the
specific employment practices that are allegedly responsible for any observed
statistical disparities.”) (internal quotation marks omitted); Arthur Young & Co. v.
Sutherland, 631 A.2d 354, 373 n.36 (D.C. 1993) (“Under a disparate impact
theory, . . . there is a need to show a causal connection between the disparity and
some identifiable employment practice.”). “To withstand a . . . motion [to
dismiss], a complaint must contain sufficient factual matter, accepted as true, to
state a claim to relief that is plausible on its face. Bare allegations of wrongdoing
that are no more than conclusions are not entitled to the assumption of truth, and
are insufficient to sustain a complaint. [A] formulaic recitation of the elements of
a cause of action will not do . . . .” Logan, 80 A.3d at 1019 (internal quotation
marks and citations omitted).
Mr. Scales and Ms. Ward failed to state a disparate-impact claim against
R&A under either the Fair Housing Act or the D.C. Human Rights Act. The
complaint makes a number of specific allegations about R&A’s conduct: (1) R&A
told Mr. Scales that attempting to cure the ELOC would be “futile” because R&A
would “find some other way to foreclose on the [Orange Street] property”; (2)
27
R&A lacked policies to ensure that foreclosure notices reach property owners; (3)
R&A mismanaged “essential documents”; (4) R&A sent foreclosure notices to
wrong addresses; (5) R&A failed to read promissory notes before foreclosure; and
(6) R&A relied on “unsupervised” non-lawyers. The complaint also alleges in
conclusory fashion that “the combined effect of such inexcusable failings has a
disparate impact on African-Americans in the District of Columbia.”
These allegations are not sufficient to state a disparate-impact claim. Many
of the allegations rest on the premise that R&A sent the foreclosure notice to an
incorrect address, but we have already held that Mr. Scales and Ms. Ward are
judicially estopped from claiming that they did not reside at the Orange Street
property for purposes of the wrongful-foreclosure case. The complaint does not
identify any specific support for a conclusion that any of the other specific acts
alleged had a disparate impact on African Americans. For example, the complaint
alleges that African-Americans suffer from a higher rate of foreclosure than
Caucasians in metropolitan areas “similar to the District of Columbia,” but they
provide no basis for the conclusory allegation that R&A’s specific conduct had a
disparate impact on African-Americans. Courts considering comparable
complaints have concluded that dismissal was appropriate. See Adams v. City of
Indianapolis, 742 F.3d 720, 733 (7th Cir. 2014) (dismissing complaint for failure
28
to state plausible disparate-impact claim; “[t]here are no factual allegations tending
to show a causal link between the challenged testing protocols and a statistically
significant racial imbalance” in police and fire departments); Elgaghil v. Tarrant
Cnty. Junior Coll., 45 S.W.3d 133, 143-44 (Tex. 2000) (holding employee failed to
establish prima facie case of disparate impact, because among other things
employee “offered no evidence other than his bare allegation that the business
practice in question had an adverse [e]ffect on anyone other than himself”).
In sum, we affirm the trial court’s dismissal of the disparate-impact claims
against R&A.
For the foregoing reasons, the judgment of the Superior Court is
Affirmed.
April J. Ward and James L. Scales v. Wells Fargo Bank, N.A. and James L. Scales and April J. Ward v. Wachovia Mortgage Prentice Hall Corporation System
Combined Opinion