Durham v. Home Partners Holdings, LLC

1

AYOKA DURHAM, et al., Plaintiffs, v. HOME PARTNERS HOLDINGS LLC, et al., Defendants.

Civil Action No. 23-cv-03490-LKG

United States District Court, D. Maryland

December 3, 2024

MEMORANDUM OPINION

LYDIA KAY GRIGGSBY UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

In this putative class action, the Plaintiffs, Ayoka and Marcus Durham, bring claims, on behalf of themselves and similarly situated individuals, against the Defendants, Home Partners Holdings, LLC (“Home Partners”), OPVHHJV, LLC d/b/a Pathlight Property Management (“Pathlight”), SFR Borrower 2022-1, LLC (“SFR”) and HP Maryland I, LLC (“HP Maryland I”), arising from their rental of certain property owned, leased and/or managed by the Defendants, for violations of the Maryland Consumer Protection Act (the “MCPA”), Md. Code Ann., Com. Law § 13-102; Md. Code Ann., Real Prop. § 8-208 (“Section 8-208”); Md. Code Ann., Real Prop. § 8-211 (“Section 8-211”); and breach of the duty of good faith and fair dealing; rescission; unjust enrichment declaratory relief; and injunctive relief. See generally ECF No. 1. The Defendants have moved to dismiss the complaint, pursuant to Fed.R.Civ.P. 12(b)(6). ECF No. 27. This motion is fully briefed. ECF Nos. 27, 45, 51, 53, 55, 56, 57 and 58. No hearing is necessary to resolve the motion. See L.R. 105.6 (D. Md. 2023). For the reasons that follow, the Court: (1) GRANTS the Defendants' motion to dismiss and (2) DISMISSES the complaint.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY^[1]

A. Factual Background

In this putative class action, the Plaintiffs bring claims against the Defendants arising from their rental of property owned, leased and/or managed by the Defendants for: (1) violations of the MCPA (Count I); (2) violations of Section 8-208 (Count II); (3) violations of Section 8211 (Count III); (4) breach of the duty of good faith and fair dealing (Count IV); (5) rescission (Count V); (6) unjust enrichment (Count VI); (7) declaratory relief (Count VII); and (8) injunctive relief (Count VIII). See generally ECF No. 1. As relief, the Plaintiffs seek, among other things, certain declaratory and injunctive relief, and to recover monetary damages and attorneys' fees and costs from the Defendants. Id. at Prayer for Relief.

The Parties

The Plaintiffs, Ayoka and Marcus Durham, are citizens of Maryland. ECF No. 1 at ¶ 13.

Defendant Home Partners is a limited liability company organized in Delaware, with its principal place of business located in Chicago, Illinois. Id. at ¶ 14.

Defendant Pathlight is a limited liability company organized in Texas, with its principal place of business located in Plano, Texas. Id. at ¶ 15.

Defendant HP Maryland I is a limited liability company organized in Delaware, with its principal place of business in Chicago, Illinois. Id. at ¶ 16.

Defendant SFR is a limited liability company organized in Delaware, with its principal place of business located in Chicago, Illinois. Id. at ¶ 19.

Defendants Pathlight, HP Maryland I, LLC and SFR are affiliates of Defendant Home Partners. See ECF No. 1 at ¶¶ 15-20.

The Defendants' “Right-To-Purchase” Program

As background, the Defendants are landlords who own, lease and/or manage approximately 17,000 homes in over 80 markets across the United States. Id. at ¶ 1. The Defendants provide individuals who are not yet ready to purchase a home with the opportunity to live in a home, pursuant to a “right-to-purchase” program (the “Right-to-Purchase Program”). Id. at ¶ 3. As part of the Right-to-Purchase Program, the Defendants agree to handle large service maintenance requests for the homes that they lease. Id. at ¶¶ 4, 43 and 47.

The Plaintiffs allege in the complaint that the Defendants violated the MCPA and other state laws each time they used a form lease agreement to rent homes in Maryland pursuant to the Right-to-Purchase Program. See generally ECF No. 1. And so, the Plaintiffs seek to recover damages from the Defendants for their alleged unfair and misleading trade practices and use of illegal lease provisions. Id. at Prayer for Relief.

The Lease

The Plaintiffs have entered into a lease agreement with Defendants (the “Lease”) to rent a property located at 6290 Cracklingtown Road, Hughesville, Maryland. ECF No. 1-6. This Lease governs the rental of the Plaintiffs' home under the Right-to-Purchase Program. Id.

Relevant to the pending motion to dismiss, paragraph 3 of the Lease addresses the term of the Plaintiffs' Lease and provides in relevant part, that:

LEASE TERM. Subject to the terms and conditions of this Lease, the Right to Purchase Agreement, any other written agreements among the parties pertaining to the Premises, Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, for use as a private, single family dwelling/residence only, the Premises commencing on the Commencement Date and ending on the Expiration Date.

Id. at 9. Paragraph 4 of the Lease, which is entitled “Rent And Late Charges,” addresses the payment of rent and provides, in relevant part:

RENT AND LATE CHARGES. Tenant agrees to pay to Landlord the Monthly Base Rent together with any Additional Rent in advance, and without demand, on or before 11:59 p.m. on the first day of every month during the Term at the address contained herein for payment of Rent (or such other address as Landlord may designate in writing to Tenant) or pursuant to an online rent payment system designated by Landlord or Landlord's Agents).

[. . . ]

If any portion of any required Rent payment is not received by Landlord on or before five (5) days from the date when due including any Returned Payment (each such unpaid amount, an “Overdue Payment Amount”), then Tenant shall pay to Landlord, in addition to such Overdue Payment Amount, a “late fee” in the amount of five percent (5%) of the applicable Overdue Payment Amount (not to exceed the maximum late fee permitted by Applicable Law) (each, a “Late Payment Fee”) to cover administrative expenses for the late payment.

[. . . ]

Timely payment of all sums due under this Lease by Tenant is an independent covenant of each and every other covenant of this Lease. Tenant agrees that it shall not have the right to deduct, withhold or offset any portion of the Rent from any claim it may have against Landlord, in any action by Tenant, except to the extent expressly authorized by Applicable Laws. Regardless of any notation or restrictions on a check or money order, all sums received by Landlord from Tenant shall be applied to the oldest outstanding monetary obligation owed by Tenant to Landlord (except if Applicable Law requires that it be applied in a different order).

Id. at 10-11.

The Lease also contains provisions regarding the condition of the rental property. In this regard, paragraph 10 of the Lease, which is entitled “Move-In Condition Of Premises,” provides, in relevant part, that:

Except for the covenants of Landlord expressly contained in this Lease or other documents executed by Landlord, or as otherwise required or specified by Applicable Laws, Tenant agrees that (a) it is leasing the Premises in its “AS-IS, WHERE-IS, WITH ALL FAULTS” condition as of the Effective Date and specifically and expressly without any warranties, representations or guarantees, either express or implied, as to its condition, fitness for any particular purpose, merchantability or any other warranty of any kind, nature, or type whatsoever from or on behalf of Landlord, and (b) except as may be required by Applicable Laws, Landlord has no obligation to perform any work, supply any materials, incur any expense or make any alterations or improvements to any portion of the Premises.

Id. at 14. In this regard, paragraph 2 of the Lease defines “Applicable Laws” to mean “statutes, rules, regulations and orders of any and all governmental or quasi-governmental authorities or bodies applicable to the Premises.” Id. at 8. The Lease also defines “Premises” to mean “the real property . . . having a street address as 6290 Cracklingtown Road, Hughesville, MD[.]” Id.

In addition, paragraph 16 of the Lease addresses the maintenance and repair of the rental property and provides, in relevant part, that:

MAINTENANCE AND REPAIR. Subject to the terms of this Section . . ., Landlord shall use reasonable efforts to maintain, at its cost . . . (2) any items which are required by Applicable Laws to be maintained by Landlord .

Tenant shall, at Tenant's expense, maintain the Premises (including all appliances, systems and fixtures located thereon but excluding only those items which are required to be maintained by Landlord) and keep same in a clean, safe and healthy condition and in good working order, at all times during the Term, and shall suffer no waste therein, and shall be responsible for payment of the cost of (a) all repairs, maintenance or replacement required to the Premises, including the walls, windows, storms doors/windows and screens, ceilings, paint, plastering, plumbing work, pipes, appliances and fixtures belonging to the Premises, whenever such damage or injury to the same shall have resulted from misuse, waste or neglect by any Occupant, and (b) any and all repairs, maintenance or replacement required to the Premises that shall be necessary to restore the Premises to the same condition as when Tenant took possession of the Premises (including any work performed by Landlord thereafter), normal wear and tear excepted.

[. . .]

The amount of Rent was agreed upon based on the express understanding that Tenant will be responsible for the maintenance needs of the Premises as provided in this Lease and in the absence of Tenant's agreement to maintain the Premises at its cost in accordance with the terms of this Lease, Landlord would have charged a higher rent

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