Court Opinion

ID: 4515486
Source: CourtListenerOpinion
Date Created: 2020-03-12 16:00:53.767299+00
Date Added: 2024-06-11T09:54:05.820447
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

 JOSEPH C. REISINGER,

         Plaintiff,
                v.                                         Civil Action No. 19-1358 (JEB)
 DISTRICT BUILDERS OF SOUTHERN
 MARYLAND, LLC, et al.,

         Defendants.

                                  MEMORANDUM OPINION

       On May 10, 2019, Plaintiff Joseph C. Reisinger filed a Complaint against Defendants

District Builders of Southern Maryland, LLC and Samuel B. Purll, Jr. for improperly taking

money on a canceled construction project. When Defendants failed to appear, the Clerk of the

Court entered default, and Plaintiff now moves for a default judgment of $164,927.52. The

Court will grant Plaintiff’s Motion in part and enter judgment in the amount of $47,463.97.

I.   Background

       Reisinger invests in real property to take advantage of Internal Revenue Code § 1031

exchanges. See ECF No. 12 (Pl. Mot. Default J.), Exh. 2 (Aff. of Joseph C. Reisinger), ¶¶ 3–4.

This section permits individuals to defer paying taxes on the realized gain from the sale of real

property held for investment purposes, as long as they timely reinvest the proceeds of the sale

into a similar property. Id., ¶ 4; 26 U.S.C. § 1031. Plaintiff’s daughter, Lauren Serrano, lives in

the District of Columbia and manages the properties. Id., ¶ 6. At the time in question, Serrano

also had power of attorney to act on her father’s behalf for matters related to the § 1031

exchanges. Id., ¶ 7.

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       In March of 2017, Reisinger entered into negotiations to buy real property located at

1662 R Street in Southeast Washington, D.C., which he planned to use for investment through a

§ 1031 exchange. Id., ¶ 9. Plaintiff then entered into a contract with Defendant District

Builders. Id., ¶ 10. The contract was prepared by the owner of District Builders, Samuel Purll,

and was executed on March 17. Id. It stated that District Builders would renovate the R Street

Property; in exchange, Plaintiff would pay a deposit of $47,463.93 and then a total price of

$189,855.70 once the renovations were completed. See Pl. Mot. Default J. at 3. The contract

also contained a provision that stated, “Customer has seventy-two hours (72) to rescind this

contract from signing.” Pl. Mot. Default J., Exh. 4 (Contract), ¶ 4.7.

       Shortly after executing the contract, Plaintiff discovered that he would be unable to

purchase the R Street Property, and he subsequently notified Purll within the 72-hour window

that the contract would be rescinded. See Reisinger Aff., ¶ 12. Although Plaintiff had not paid

the deposit to District Builders, Purll had already purchased the materials needed to conduct the

renovations on the property. See Pl. Mot. Default J. at 4. Despite rescinding the contract for R

Street, Reisinger still wanted to hire Purll and District Builders to renovate another property

located at 1300 U Street, S.E. Id. Purll assured Serrano that the same materials purchased to

renovate R Street could be used at the U Street property. Id.

       On March 30, Purll called Serrano and demanded that she pay $28,000 for the materials

purchased for the renovations of R Street. See Pl. Mot. Default J., Exh. 3 (Aff. of Lauren

Serrano), ¶ 7. As Serrano was in labor during their call, she advised Purll to contact her father to

discuss the payment. Id. Purll immediately called Reisinger and demanded the $28,000

payment, which he claimed that Serrano had authorized. See Reisinger Aff., ¶ 17. Plaintiff then

permitted Purll to withdraw that sum from his “qualified intermediary” account held by Old

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Republic Exchange. Id. As prescribed by the IRC and Treasury regulations, the proceeds of

such renovations must be held by a “qualified intermediary,” which is only authorized to make

payments on the taxpayer’s behalf in connection with a property to be acquired as part of the

exchange. Id., ¶¶ 18–20. Old Republic, without knowledge that the contract between Plaintiff

and District Builders had been rescinded, made the funds available to Purll. Id., ¶ 21. Purll,

however, withdrew the full $47,463.97, rather than the $28,000 he had discussed with Reisinger.

Id., ¶ 22.

        When Plaintiff realized that this had occurred, he demanded that Purll and District

Builders return the money. They refused. See Pl. Mot. Default J. at 5. Purll later responded that

the money had been spent on materials for R Street, and that Reisinger would need to pay an

additional deposit for the work to be done on U Street. Id. Defendants, however, never

performed work on R Street, nor did they submit any receipts, invoices, or order forms showing

that materials were purchased for those renovations. See Pl. Mot. Default J., Exh. 4 (Aff. of

Terry L. Satterfield), ¶¶ 3–4. In any event, Reisinger had not authorized any work given that he

never purchased the property. See Pl. Mot. Default J. at 5-6

        On May 10, 2019, Reisinger filed a Complaint in this Court against Defendants alleging

conversion and fraud. See ECF No. 1. He sought economic, non-economic, and punitive

damages. Id., ¶¶ 26-43. Plaintiff achieved service on both Defendants on September 7, 2019.

See ECF No. 7 (Service Affidavit). Twenty-one days passed, and Defendants failed to plead or

otherwise defend, as required by the Federal Rules of Civil Procedure. See Fed. R. Civ. Proc.

12(a)(1)(A). On October 8, Plaintiff sought default against Defendants, which the Clerk entered

on October 9. Reisinger next moved for default judgment. See Pl. Mot. Default J. at 1. After

the Court set a hearing regarding the extent of the non-economic damages sought, Plaintiff filed

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a Notice, see ECF No. 15, withdrawing such request. The Court thus canceled the hearing and

now issues its Opinion.

II.    Legal Standard

       Obtaining a “[d]efault judgment is a two-step procedure.” Ventura v. L.A. Howard

Constr. Co., 134 F. Supp. 3d 99, 102 (D.D.C. 2015) (citing Lanny J. Davis & Assocs., LLC v.

Republic of Equatorial Guinea, 962 F. Supp. 2d 152, 161 (D.D.C. 2013)). A plaintiff must first

request that the Clerk of the Court enter default against a party who has “failed to plead or

otherwise defend” an action. Id. at 102-03 (quoting Fed. R. Civ. P. 55(a)). When the Clerk

enters default, it establishes the defaulting party’s liability for the well-pleaded allegations in the

complaint. Id. at 103. The plaintiff must then move the court for a default judgment. See Fed.

R. Civ. P. 55(b).

       Determining if a default judgment is appropriate is “committed to the sound discretion of

the trial court.” Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980). When a defendant is

unresponsive, and his default is clearly willful, as shown by his failure to respond to the

summons and complaint, the entry of default, or the motion for default judgment, then default

judgment may be entered. Hanley-Wood LLC v. Hanley Wood LLC, 783 F. Supp. 2d 147, 150

(D.D.C. 2011). A reviewing district court, however, may still deny an application for default

judgment if the allegations of the complaint are legally insufficient to articulate a valid claim.

Saint-Jean v. D.C. Pub. Sch. Div. of Transp., 815 F. Supp. 2d 1, 4 (D.D.C. 2011).

       To guarantee that there is an adequate basis for damages, a plaintiff “must prove his

entitlement to the relief requested using detailed affidavits or documentary evidence on which

the court may rely.” Bricklayers & Trowel Trades Int’l Pension Fund v. Miami Valley Masonry,

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Inc., 288 F. Supp. 3d 257, 259 (D.D.C. 2018) (quoting Ventura, 134 F. Supp. 3d at 103). A

district court may conduct hearings to determine the amount of damages to award. Id.

III.   Analysis

       Reisinger asserts that Defendants committed the intentional torts of conversion and

intentional misrepresentation. See Pl. Mot. Default J. at 7. As relief, he first requests that the

Court award him $47,463.97 in economic damages for the total amount Defendants withdrew

from his Old Republic account. Id. at 9. (As the number of cents changes in different pleadings,

the Court will apply the figure used most often — viz., $47,463.97.) He also asserts that because

Defendants committed fraud, he is entitled to $82,463.79 in punitive damages. Id. at 10–11. The

Court will look at each category separately.

       A. Economic Damages

       As a threshold matter, Plaintiff maintains that Defendants’ actions satisfy the elements of

conversion and fraudulent misrepresentation. See Pl. Mot. Default J. at 9. This is because they

improperly took $47,463.97 of his money. Id. In the District of Columbia, conversion is an

unlawful exercise of ownership, dominion, and control over the property of another and the

denial or repudiation of his right to such property. Cong. Hunger Ctr. v. Gurey, 308 F. Supp. 3d
223, 228–29 (D.D.C. 2018) (quoting Dukore v. Dist. of Columbia, 970 F. Supp. 2d 23, 34

(D.D.C. 2013)). Similarly, the elements of fraudulent misrepresentation are “(1) a false

representation or willful omission of a material fact; (2) knowledge of the falsity; (3) an intention

to induce reliance; and (4) action taken in reliance on the representation.” Howard v. Riggs Nat’l

Bank, 432 A.2d 701, 706 (D.C. 1981).

       As stated in Reisinger’s affidavit, on March 30, 2017, Purll called him and not only

improperly demanded $28,000 but also intentionally mispresented his previous conversation

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with Serrano. See Reisinger Aff., ¶ 17. Defendants then withdrew the $28,000 they had

fraudulently induced Plaintiff into agreeing to, as well as an additional $19,463.97, from his Old

Republic account. Id., ¶ 22. This Court, consequently, will award Plaintiff $47,463.97 in

economic damages.

       B. Punitive Damages

       Plaintiff also believes that he is entitled to recover punitive damages for Defendants’

fraudulent misrepresentation. He asserts that “[u]nder D.C. law, punitive damages can be

awarded if the defendant’s actions are accompanied by ‘fraud, ill will, reckless, wantonness,

oppressiveness, willful disregard of the plaintiff’s rights, or other circumstances tending to

aggravate the injury.’” Pl. Mot. Default J. at 10 (citing Remeikis v. Boss & Phelps, Inc., 419
A.2d 986, 992 (D.C. 1980)). The standard that Plaintiff cites here, however, is not complete.

       In the District of Columbia, to recover punitive damages for intentional

misrepresentation, there is a more stringent standard, and a plaintiff is required to show

aggravating circumstances beyond mere fraud. See Essroc Cement Corp. v. CTI/D.C., Inc., 740
F. Supp. 2d 131, 147 (D.D.C. 2010) (citing BWX Elecs. Inc. v. Control Data Corp., 929 F.2d
707, 713 (D.C. Cir. 1991)). Fraud by itself is insufficient to yield an award of punitive damages.

Id.; see Dist. Cablevision L.P. v. Bassin, 828 A.2d 714, 725–26 (D.C. 2003) (“[I]n the absence of

‘gross fraud’ or comparable wrongdoing, proof of even intentional misrepresentation may not

suffice to justify punitive damages.”).

       In this case, Reisinger has shown that Defendants intentionally misrepresented their

previous phone conversation with Serrano and then fraudulently took out $47,463.97 from his

Old Republic account. See Reisinger Aff., ¶ 22. What Plaintiff has failed to do, however, is to

show that Defendants’ actions rise to the level of “gross fraud” or comparable wrongdoing to

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sufficiently justify awarding punitive damages. The Court will thus deny this category of

damages.

IV.   Conclusion

      The Court accordingly, will grant Plaintiff’s Motion for Default Judgment in part and

award him $47,463.97. A contemporaneous Order so stating will issue this day.

                                                            /s/ James E. Boasberg
                                                            JAMES E. BOASBERG
                                                            United States District Judge
Date: March 12, 2020

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