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2217 Flagler Place, LLC v. Toorak Capital Partners, LLC
Citation: Not availableDocket: Civil Action No. 2021-0399
Court: District Court, District of Columbia; August 26, 2022; Federal District Court
Original Court Document: View Document
Plaintiff 2217 Flagler Place, LLC ("Flagler") has initiated a lawsuit against Defendants Toorak Capital Partners, LLC ("Toorak") and Flatiron Realty Capital LLC ("Flatiron") for three claims: 1) violation of D.C. Act 23-328 by both defendants; 2) violation of D.C. Code §28-3301 by Flatiron; and 3) unjust enrichment by both defendants. Toorak has filed a Motion to Dismiss, which the Court has granted after reviewing the motion, opposition, and applicable law.
The case centers on a real estate lending dispute stemming from the COVID-19 pandemic. Flagler, a local real estate purchasing company, executed a promissory note on July 12, 2019, for a property at 2217 Flagler Place, with an original principal of $892,750 and a 9.85% interest rate. Toorak later acquired this note, and by July 2020, Flagler was informed of its delinquency. Flagler requested a three-month payment extension due to pandemic-related financial difficulties, but Toorak stipulated that the two missed payments from June and July 2020 must first be covered.
Subsequently, Toorak declared Flagler in default and transferred the note to Flatiron on August 17, 2020, without notifying Flagler. On December 17, 2020, SSA, acting on behalf of Flatiron, sent a payoff quote detailing significant alleged debts, including high accrued interest and various fees. Flagler paid the claimed amounts.
Toorak filed its Motion to Dismiss on May 10, 2021, with Flagler opposing on May 24, and Toorak replying on June 1. The Court is now prepared to adjudicate the motion, noting that challenges to standing will be assessed under Federal Rule of Civil Procedure 12(b)(1).
A defect of standing is categorized as a defect in subject matter jurisdiction, requiring the court to evaluate the defendant’s motion to dismiss under Rule 12(b)(1) prior to addressing any merits under Rule 12(b)(6). The plaintiff bears the burden of proving jurisdiction by a preponderance of the evidence when faced with a Rule 12(b)(1) motion. This necessitates a closer examination of the plaintiff's allegations, accepting all factual assertions as true while disregarding unsupported inferences or legal conclusions presented as facts.
Flagler lacks standing to sue Toorak, as defined by Article III of the Constitution, which mandates that plaintiffs must demonstrate (1) an "injury in fact," (2) a sufficient "causal connection" between the injury and the defendant's conduct, and (3) a "likelihood" of redress through a favorable ruling. The party invoking federal jurisdiction must establish these elements with appropriate evidence at all litigation stages. Toorak contends that Flagler has not experienced an injury-in-fact since Flagler repaid the Note after it was transferred from Toorak to another entity. Flagler claims that the unlawful fees imposed by Toorak caused its injury, even though Toorak did not collect the fees. However, Flagler fails to provide legal support for this argument and does not demonstrate a causal link between its alleged injury—payments of unlawful fees—and Toorak's actions.
Consequently, the court grants Toorak’s Motion to Dismiss, resulting in Toorak's dismissal from the case, and does not address additional dismissal arguments made by Toorak. The ruling is finalized by Judge Emmet G. Sullivan.