Yerrell v. EMJ Realty Co., AKA CCP, LLC ( 2022 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 19-CV-1160
VAN YERRELL, APPELLANT,
V.
EMJ REALTY COMPANY, T/A FRED A. SMITH COMPANY, AKA CCP, LLC,
APPELLEE. *
Appeals from the Superior Court of the
District of Columbia
(CAB-7333-17)
(Hon. Kelly A. Higashi, Trial Judge)
(Argued May 26, 2021 Decided September 1, 2022)
Christopher G. Hoge for appellant
Sarah W. Conkright for appellee
Before BLACKBURNE-RIGSBY, Chief Judge, MCLEESE and DEAHL, Associate
Judges.
BLACKBURNE-RIGSBY, Chief Judge: This appeal arises from a general
contract dispute between property owner appellant Van Yerrell and property
*
Appellee asserts that its correct legal name is CCP, LLC. As appellant does
not contest this fact, the case caption has been changed to include appellee’s legal
name. However, this opinion continues to refer to appellee as EMJ Realty for
consistency with the Superior Court’s order.
2
management company appellee EMJ Realty Company, LLC. The issues raised on
appeal are whether the trial court erred in 1) dismissing his negligence claim as
duplicative of the breach of contract claim, and 2) finding that the three-year statute
of limitations barred appellant from pursuing his breach of contract claim, D.C. Code
§ 12-301(7). We affirm.
I. Facts
Yerrell and EMJ’s predecessor, Capitol City Properties, Inc., (“Capitol City”)
entered into a contract, which stated that Capitol City would manage a small
apartment building located at 2820 Pennsylvania Avenue, Southeast. On July 18,
2003, Yerrell and Capitol City entered into a second contract for the management of
another small apartment building at 5503 Nannie Helen Burroughs Avenue,
Northeast. On June 11, 2011, Capitol City assigned all leases and management
agreements to EMJ, which then assumed responsibility for performance of the two
contracts with Yerrell. 1
EMJ’s responsibilities under the contracts included collecting rents,
advertising available rental properties, executing and renewing leases, making
1
Yerrell does not dispute that Capitol City had authority under the contract to
make this assignment to EMJ.
3
repairs, supervising the maintenance and operations employees, and handling
tenants’ security deposits. EMJ was also required to “render monthly statements of
receipts, expenses, and charges” to Yerrell. In exchange, EMJ received six percent
of all gross receipts collected. Both contracts included an identical disclaimer
clause, which stated that the property manager “shall not be liable for any errors of
judgment, mistake of fact or law, or anything which the Agent may do or refrain
from doing, except in cases of willful misconduct or gross negligence.” Both
contracts automatically renewed on an annual basis, unless either party terminated
the agreement by giving the other party written notice.
Yerrell stated in response to interrogatories that, in 2012, he began noticing
“numerous failures and deficiencies regarding both properties” based on his review
of the monthly ownership statements. Yerrell asserted that he noticed uncollected
fees, delinquent repairs, and high vacancy rates. In 2012 and 2013, Yerrell made
multiple phone calls and sent multiple emails to two of EMJ’s representatives
complaining about these issues. In some instances, Yerrell stated that he received
responses from EMJ’s representatives regarding his suggestions for corrective
action. In those instances, EMJ’s representatives expressed agreement with Yerrell
and promised corrective actions, but ultimately did not implement any of his
suggestions. In other instances, Yerrell stated that his emails and follow-up phone
4
calls went unanswered or ignored. As a result, Yerrell stated that he began
personally managing contractors to correct delinquent repairs for both properties and
re-rented apartments himself, with the help of his resident manager, to mitigate high
vacancy rates.
In 2014, a representative of EMJ notified Yerrell that they intended to
terminate the contracts on September 30, 2014. However, Yerrell indicated that he
wanted to continue the contractual relationship. EMJ therefore sent Yerrell a new
contract on September 15, 2014, which removed certain provisions that required
them to share late fees with Yerrell. Yerrell declined to sign the new agreement, and
on October 31, 2014, the parties mutually terminated their contractual relationship.
Three years later, on October 27, 2017, Yerrell filed a complaint against EMJ
for breach of contract and negligence. Yerrell alleged several contractual breaches
that occurred prior to October 31, 2014, including that EMJ failed to 1) collect the
appropriate amounts of rent from tenants, 2) properly assess, collect, and remit to
appellant certain fees, 3) properly assess and collect rental increases, 4) properly
disburse collected security deposits, and 5) timely pay utility bills and other building
expenses. Yerrell did not allege specific examples of harms on specific dates.
5
Rather, he alleged that harm occurred generally during his contractual relationship
with EMJ.
EMJ moved for summary judgment, arguing that 1) the claims were barred by
both the statute of limitations, D.C. Code § 12-301(7), and the exculpatory clauses
in the contracts, and 2) Yerrell failed to offer evidence of damages. With respect to
the statute of limitations defense, EMJ asserted that Yerrell’s cause of action accrued
in 2012, when Yerrell became aware of the alleged conduct constituting breach of
contract and/or duty. EMJ therefore contended that Yerrell’s suit was barred by the
three-year statute of limitations. Yerrell contended that the general accrual rule
applicable to breach of contract cases did not apply because EMJ was still providing
uninterrupted services to him until the termination of the contract on October 31,
2014. In support of this position, Yerrell sought to invoke the “continuation of
services” doctrine, which is a Maryland common law principle.
The trial court granted summary judgment for EMJ. First, the trial court sua
sponte dismissed Yerrell’s negligence claim as duplicative of the breach of contract
claim. Second, the trial court rejected Yerrell’s argument that his breach of contract
claim did not accrue until his contractual relationship with EMJ ended, and therefore
concluded that his breach of contract suit was barred by the three-year statute of
6
limitations. The trial court declined to apply the Maryland “continuation of
services” doctrine and noted, sua sponte, that the District of Columbia recognizes a
similar tolling rule, but only in the limited context of legal and medical malpractice
claims. The trial court did not address the merits of EMJ’s remaining arguments.
This timely appealed followed.
II. Analysis
We review the trial court’s grant of summary judgment de novo. Newmyer v.
Sidwell Friends Sch., 128 A.3d 1023, 1033 (D.C. 2015). Summary judgment is
proper if “there is no genuine issue of material fact and that the moving party is
entitled to judgment as a matter of law.” Tiger Steel Eng’g, LLC v. Symbion Power,
LLC, 195 A.3d 793, 797 (D.C. 2018) (citations omitted). “In the absence of material
issues of fact, expiration of the statute of limitations is a question of law, which we
review de novo.” Id. (internal quotations, brackets, and citations omitted).
On appeal, Yerrell argues that the trial court erred by 1) dismissing his
negligence claim, and 2) concluding that his breach of contract claim was time-
barred by the statute of limitations. With respect to Yerrell’s latter argument, there
is no dispute that he filed his claim more than three years after he became aware of
7
the conduct constituting the alleged breaches. Therefore, the issue left for us to
decide is whether the trial court failed to apply a rule that would toll the statute of
limitations. For the reasons discussed below, we affirm the trial court’s conclusions
that Yerrell’s negligence claim is duplicative of his breach of contract claim and that
no discernible exception applies to toll the three-year statute of limitations in this
case. As a result, Yerrell’s breach of contract claim was untimely filed, and the trial
court did not err in granting summary judgment.
A. Appellant’s Negligence Claim is Duplicative of his Breach of
Contract Claim
We begin by addressing Yerrell’s argument that the trial court erroneously
dismissed his negligence claim as duplicative of his claims for breach of contract.
While “a cause of action that could be considered a tort independent of contract
performance is a viable claim,” the “injury to the plaintiff must be an independent
injury over and above the mere disappointment of plaintiff’s hope to receive his
contracted-for benefit.” Choharis v. State Farm Fire & Cas. Co., 961 A.2d 1080,
1089 (D.C. 2008) (internal quotation and citation omitted); see also Ludwig &
Robinson, PLLC v. BiotechPharma, LLC, 186 A.3d 105, 110 (D.C. 2018). In other
words, “the tort must exist in its own right independent of the contract, and any duty
8
upon which the tort is based must flow from considerations other than the contractual
relationship.” Choharis, 961 A.2d at 1089. “The tort must stand as a tort even if the
contractual relationship did not exist,” id., and “a breach of contract claim may not
be recast as a tort claim.” EDCare Mgmt. v. Delisi, 50 A.3d 448, 449 (D.C. 2012)
(citing Choharis, 961 A.2d at 1089). 2
The trial court found that Yerrell’s negligence claim asserted that “[EMJ]’s
breaches of its duties as set forth in paragraph 10, [which is a recitation of EMJ’s
contractual duties] constituted breaches of its duty of care.” The trial court therefore
concluded that Yerrell’s “negligence claim is entirely duplicative of [his] contract
claims and entirely dependent on the contract.” On appeal, Yerrell asserts that EMJ
acted as his agent and fiduciary, and the trial court erred by failing to consider
2
Yerrell takes issue with the trial court’s reliance on Choharis and Ludwig,
arguing that they are “inapposite and do not support the dismissal” because “there
was no element of fiduciary duty involved” in Choharis and the defendant in Ludwig
“was not an agent” of the plaintiff and “had no fiduciary duty.” We, like the trial
court, rely on these cases for the general principle that a tort claim must be
independent of a breach of contract. As this court made clear in Choharis, to state a
viable tort claim, in addition to a breach of contract, there must be “facts separable
from the terms of the contract upon which the tort may independently rest.” 961
A.2d at 1089. “The fact, for example, that an insured alleges that the insurance
company was negligent in the handling of a claim does not mean that there is a
separate cause of action sounding in tort for negligence, but rather that the insured
may recover damages therefor under a breach of contract theory.” Id. at 1089 n.12.
9
whether there was an independent tort claim based on a fiduciary relationship
between the parties. Yerrell argues that this fiduciary relationship is based on the
agency relationship between a property manager and property owner, as recognized
by 17 D.C.M.R. § 2699.1 (defining property manager as “an agent for the owner of
real estate in all matters pertaining to the operation of the property or properties
which are under his or her direction . . . .”). Assuming, arguendo, that EMJ had an
independent duty of care based on its provision of property management services,
Yerrell’s complaint does not allege a breach of that independent duty. Yerrell’s
negligence claim explicitly alleges that EMJ’s breaches of its contractual duties
“constituted breaches of its duty of care.” The alleged tort, as claimed by Yerrell,
therefore does not “exist in its own right independent of the contract,” and we affirm
the trial court’s dismissal of his negligence claim, as it was duplicative of his contract
claim. See Choharis, 961 A.2d at 1089. 3
3
We note Yerrell’s assertion that the trial court “sua sponte dismissed” his
claim for negligence because EMJ never argued, in its summary judgment motion,
that the negligence claim was duplicative of the contract claim. However, Yerrell
does not challenge the trial court’s decision on procedural grounds, and we therefore
do not consider whether the trial court erred by granting summary judgment on a
ground it raised sua sponte. See Rose v. United States, 629 A.2d 526, 535 (D.C.
1993) (“It is a basic principle of appellate jurisprudence that points not urged on
appeal are deemed to be waived.”).
10
B. Statute of Limitations
“Except as otherwise specifically provided by law,” an action may not be
brought with respect to a simple contract after the expiration of three years from the
time the right to maintain the action accrues. D.C. Code § 12-301(7). “A cause of
action for breach of contract accrues, and the statute of limitations begins to run, at
the time of the breach.” Eastbanc, Inc. v. Georgetown Park Assocs. II, L.P., 940
A.2d 996, 1004 (D.C. 2008) (ellipses omitted) (quoting 1 CALVIN W. CORMAN,
LIMITATION OF ACTIONS, § 7.2.1, at 482 (1991)). “A contract is breached if a party
fails to perform when performance is due, i.e., upon a party’s unjustified failure to
perform all or any part of what is promised in a contract entitling the injured party
to damages.” Medhin v. Hailu, 26 A.3d 307, 310 (D.C. 2011) (internal quotations
and citations omitted).
“Under the ‘discovery rule,’ however, a breach of contract claim does not
accrue, and the statute of limitations period does not begin to run, until the plaintiff
knows, or in the exercise of reasonable diligence should know, of the injury.”
Radbod v. Moghim, 269 A.3d 1035, 1044 (D.C. 2022) (internal quotation and
citation omitted). But the limitation period “is not delayed simply because the
claimant does not know (or cannot be charged with knowledge of) the full ‘breadth
11
or nature’ of the defendant’s wrongdoing.” Medhin, 26 A.3d at 310 (quoting Brin
v. S.E.W. Invs., 902 A.2d 784, 792 (D.C. 2006)). “The question turns on when the
claimant had ‘inquiry notice that she might have suffered an actionable injury.’” Id.(quoting Bussineau v. President & Dirs. of Georgetown Coll., 518 A.2d 423, 428
(D.C. 1986)).
The trial court found that Yerrell conceded his awareness of EMJ’s conduct
that allegedly constituted a breach of contract before October 2014. The trial court
further found that Yerrell failed to dispute EMJ’s assertion that he recognized the
alleged lack of performance by 2012. Additionally, Yerrell admitted to noticing
“issues” with EMJ’s management of the properties beginning in 2012, and
continuing through 2013-2014. In light of these concessions, the trial court found
no dispute that Yerrell filed his complaint against EMJ more than three years after
his cause of action accrued, and concluded that no exception applied to toll the
statute of limitations.
On appeal, Yerrell does not dispute the trial court’s findings or argue that any
other material fact is in dispute. For example, he does not identify any specific
instance of a breach of contract that occurred within the three years before he filed
12
his complaint. 4 Instead, he urges this court to apply the “continuous representation”
rule to toll the statute of limitations until the parties’ contractual relationship
terminated.
Although Yerrell did not make this precise argument below, the trial court
considered the issue, sua sponte, in an effort to determine “whether any rule would
apply to toll the statute of limitations in this case,” and concluded that the continuous
representation doctrine did not apply. EMJ contends that Yerrell’s continuous
representation argument should not be considered on appeal because “arguments not
raised in the trial court are not usually considered on appeal.” Fleet v. Fleet, 137
A.3d 983, 992 (D.C. 2016) (quoting Jordan v. Jordan, 14 A.3d 1136, 1153 (D.C.
2011)). However, Yerrell’s central argument before the trial court was substantially
similar; there, he also argued that the statute of limitations period should not begin
to run until the parties’ contract was terminated, albeit based on a different legal
theory, which we briefly discuss below. Moreover, we see no reason to avoid
4
Such an instance would have had to occur in the four-day window before the
parties terminated their contract, since the contract was terminated on October 31,
2014, and Yerrell filed his complaint on October 27, 2017. Yerrell’s complaint
alleges that EMJ “failed to perform its contractual duties” “[d]uring its contractual
relationship with” him. However, Yerrell does not specifically argue that this
allegation should be construed to mean that breaches were occurring constantly on
each day the contractual relationship was in place.
13
addressing this argument in these circumstances, where the trial court reached the
issue and both parties have briefed the issue on appeal. 5
1. Tolling Rules
In his opposition to summary judgment, Yerrell argued that the statute of
limitations period did not begin until October 31, 2014, when the parties terminated
their contract. In support of that argument, Yerrell relied on the “continuation of
services” theory, as articulated by the Maryland Court of Appeals in Booth Glass v.
Huntingfield Corp., 500 A.2d 641, 643-44 (Md. 1985). In Booth Glass, the
Maryland Court of Appeals recognized that “in cases where there is an undertaking
which requires a continuation of services[,] . . . the statute begins to run only from
the time the services can be completed.” Id. at 644 (citing Wash., B. & A. Elec. R.R.
v. Moss, 100 A. 86, 89 (Md. 1917)). The Booth Glass court also acknowledged that
“if the subject of a suit is an undertaking or event that is continuing in nature, the
time of accrual of the cause of action will be the date upon which the continuing
event is completed.” Id. More recently, Maryland courts have described this rule as
5
“It would have been preferable for the [trial] court to defer ruling on the
motion for summary judgment, raise the issue with both parties, and give them
adequate time to respond before deciding the motion.” Night & Day Mgmt., LLC v.
Butler, 101 A.3d 1033, 1038 (D.C. 2014).
14
the “continuation of events” theory, “a corollary accrual doctrine, which serves to
toll the statute of limitations where a continuous relationship exists between the
parties.” Frederick Rd. Ltd. P’ship v. Brown & Sturm, 756 A.2d 963, 974 (Md.
2000). The rule has been applied to toll a statute of limitations in cases involving “a
relationship which is built on trust and confidence” and serves to “give[] the
confiding party the right to relax his or her guard and rely on the good faith of the
other party so long as the relationship continues to exist.” Id. at 975. 6
Based on similar principles, this court has adopted a rule to toll the running of
a statute of limitations in the limited context of legal and medical malpractice claims,
which we have dubbed the “continuous representation” or “continuous treatment”
rule. See Beard v. Edmondson & Gallagher, 790 A.2d 541, 546 n.8 (D.C. 2002);
Anderson v. George, 717 A.2d 876, 877-78 (D.C. 1998); R.D.H. Commc’ns, Ltd. v.
Winston, 700 A.2d 766, 768 (D.C. 1997). In a legal malpractice action, “when the
injury to the client may have occurred during the period the attorney was retained,
the malpractice cause of action does not accrue until the attorney’s representation
6
Yerrell argued before the trial court that, under Maryland’s “continuation of
services” or “continuation of events” rule, his claim did not accrue until the contract
was terminated. However, he has not renewed this argument on appeal and we
therefore consider it waived. Rose, 629 A.2d at 535.
15
concerning the particular matter in issue is terminated.” R.D.H., 700 A.2d at 768
(citing Weisberg v. Williams, Connolly & Califano, 390 A.2d 992, 995 (D.C. 1978)).
“The rule’s primary purpose is to avoid placing a client in the untenable position of
suing his attorney while the latter continues to represent him.” Id. (quoting Williams
v. Mordkofsky, 901 F.2d 158, 163 (D.C. Cir. 1990)). Similarly, “in medical
malpractice actions involving continuing treatment for the same or related illness or
injury, the cause of action is tolled until the doctor ceases to treat the patient in the
specific matter at hand.” Anderson, 717 A.2d at 878.
“The reasoning behind the continuous representation rule is similar to that of
the continuous treatment rule in medical malpractice actions and, in fact, the
continuous representation rule is often considered an adaption of the latter doctrine.”
R.D.H., 700 A.2d at 769. “Both relationships (physician/patient and attorney/client)
are marked by trust and confidence, present an aspect not sporadic but developing,
and both the patient and the client are necessarily at a disadvantage to question the
reason for the tactics employed or the manner in which the tactics are executed.” Id.
at 770 (internal quotations and citation omitted). In the context of medical
malpractice, we have reasoned that “the statute of limitations must be tolled in such
situations because ‘it would be ludicrous to expect a patient to interrupt a course of
treatment by suing the delinquent doctor.’” Anderson, 717 A.2d at 878 (quoting
16
R.D.H., 700 A.2d at 770). Likewise, in the legal malpractice context, “the rule is
based on respect for the attorney/client relationship and the desire, if the client so
chooses, to avoid unnecessarily disrupting the representation in which the error
occurred.” R.D.H., 700 A.2d at 769.
2. Applicability of Tolling Rules to This Case
The trial court declined to apply Maryland’s “continuation of services” rule,
and Yerrell has not renewed that argument on appeal. Considering, sua sponte, the
applicability of the continuous representation and continuous treatment rules to the
present case, the trial court concluded that this is not a professional malpractice case,
and malpractice exceptions to the statute of limitations are, thus, inapplicable.
Yerrell now takes the opportunity to argue that this is a professional malpractice case
akin to legal or medical malpractice because property managers are a regulated
profession in the District of Columbia, 7 require specialized skill, and owe a fiduciary
7
Yerrell points to 17 D.C.M.R. § 2699.1 (defining a property manager as “an
agent for the owner of real estate in all matters pertaining to the operation of the
property or properties which are under his or her direction”) and id. § 2603.1
(requiring property managers to pass an exam in order to be licensed).
17
duty to property owners. 8 Yerrell argues that his relationship with EMJ (as property
owner and property manager) was therefore more similar to an attorney-client
fiduciary relationship than to a “run-of-the-mill arms’ length contract,” and urges
this court to apply the continuous representation rule as a tolling mechanism. 9
We decline to apply the continuous representation rule in this case. As a
preliminary matter, we are not aware of any binding precedents applying the
continuous representation rule to a relationship other than one between an attorney
and client or a doctor and patient, let alone a contractual relationship between two
business entities. And while we do not foreclose the possibility that the doctrine
might extend to other relationships, 10 we conclude that the reasons supporting the
application of the continuous representation rule in the limited contexts of legal and
medical malpractice are not present here.
8
Yerrell relies on 17 D.C.M.R. § 2609.11, which provides that property
managers “shall exercise fidelity and good faith to a client in all matters within the
scope of the licensee’s employment.”
9
For simplicity, we use the term “continuous representation” to collectively
describe the tolling rules applied in the legal and medical malpractice contexts.
10
See De May v. Moore & Bruce, LLP, 584 F. Supp. 2d 170, 185 (D.D.C.
2008) (concluding that the continuous representation rule applied to a
trustee/beneficiary relationship).
18
A property owner is not “necessarily at a disadvantage to question the reason
for the tactics employed or the manner in which the tactics are executed” by a
property manager, Anderson, 717 A.2d at 878, especially where, as here, the dispute
is between two sophisticated business parties and concerns the breach of a
commercial contract. Indeed, Yerrell repeatedly questioned EMJ’s tactics in
managing his properties and eventually took it upon himself to correct delinquent
repairs and re-rent vacant apartments. By contrast, in an attorney-client and doctor-
patient relationship, the client or patient is not typically positioned to step into the
shoes of their attorney or doctor if they are dissatisfied with the services they are
receiving, and are therefore reliant on the ongoing relationship. The continuous
representation rule ensures that clients and patients are not disadvantaged by their
reliance on an attorney or doctor by allowing them to preserve an avenue to redress
their legal rights.
Furthermore, any harm or disruption associated with a property owner
terminating his relationship with a property manager is minimal compared to the
harm that could arise from prematurely ending an attorney-client or doctor-patient
relationship. We have explained that, without the continuous representation in the
legal malpractice context,
we would force the client into one of two scenarios. If the
client chooses to retain his attorney, he risks the possibility
19
that during such representation the statute of limitations
would expire (because the client “discovered” the alleged
negligence and three years passed) and thus he risks
foregoing redress of his legal rights. If the client chooses
not to stay with his original attorney he must sue that
attorney for malpractice (and presumably hire a new
attorney to remedy the error in the underlying case thus
causing a major disruption to the underlying case).
R.D.H., 700 A.2d at 773. The rule is equally important in many medical malpractice
scenarios because a patient might risk their health if they sued their doctor in the
midst of medical treatment and had to find a new doctor. While we do not doubt
that it would have been inconvenient if the parties’ contractual relationship ended
and Yerrell was compelled to find a new property manager, we have no reason to
believe that any associated disruption would rise to the level of forgoing one’s legal
rights or risking one’s health.
Yerrell also argues, as a matter of policy, that imposing the statute of
limitations on disputes that arise during an ongoing services agreement would
“encourage a rush to file suit” and would discourage parties from attempting to
resolve disagreements on their own. We do not see such a risk. The statute of
limitations for breach of contract claims is three years. This period gives parties
time to discern whether their issues are likely to be resolved without litigation before
resorting to the courts.
20
III. Conclusion
Having discerned no applicable rule that would toll the statute of limitations
for Yerrell’s breach of contract action, 11 we conclude that his breach of contract
claim was untimely filed. We reiterate that Yerrell has never disputed that he was
on notice of EMJ’s alleged lack of performance under the contract more than three
years before he filed his complaint. Due to his concession and failure to assert a
viable legal exception that would toll the statute of limitations for breach of contract,
we hold that the trial court’s grant of summary judgment was proper.
Therefore, based on the foregoing, the judgment of the trial court is hereby
Affirmed.
11
Yerrell also argues that the statute of limitations should be tolled because
he suffered a “continuing tort.” This argument was not raised before the trial court,
nor did the trial court reach the issue. As stated above, such claims are generally not
addressed on appeal. See Thornton v. Norwest Bank of Minn., 860 A.2d 838, 842
(D.C. 2004). In any event, because we conclude that the negligence claim was
properly dismissed, there is no basis for Yerrell’s argument that he suffered a
“continuing tort.”