UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

INOVA HEALTH CARE SERVICES, FOR INOVA FAIRFAX HOSPITAL AND ITS DEPARTMENT, LIFE WITH CANCER, et al.,

Plaintiffs, v. Civil Action No. 20-784 (JDB)

OMNI SHOREHAM CORP.,

Defendant.

MEMORANDUM OPINION

This case arises from a contract between Inova Health Care Services, for Inova Fairfax

Hospital and its Department, Life with Cancer (“Inova”), and Omni Shoreham Corporation

(“Omni”), in which the parties agreed that Omni would host Inova’s annual fundraising gala at the

Omni Shoreham Hotel (“Hotel”) on September 21, 2019. 1 The facts of the underlying case are set

forth in detail in this Court’s Memorandum Opinion denying Omni’s motion to dismiss. See Mem.

Op., July 22, 2020 [ECF No. 13] at 1–4. Plaintiff (and counter-defendant) Inova now seeks to

dismiss defendant (and counter-plaintiff) Omni’s counterclaim for breach of contract. See

generally Mem. of L. in Supp. of Mot. to Dismiss Countercl. Against Inova [ECF No. 50-1] (“Mot.

to Dismiss”). For the following reasons, the Court will deny Inova’s motion.

1 Although Smith Center for Healing and the Arts is also a plaintiff in this action, see Mem. Op. & Order Apr. 14, 2021 [ECF No. 41] at 11 (denying Omni’s motion to dismiss Smith Center); cf. Stipulation of Dismissal [ECF No. 61] at 1 (dismissing a third plaintiff), Omni raises its counterclaim against only Inova, see Omni’s Answer to Pls.’ First Am. Compl. & Countercl. Against Pl. Inova [ECF No. 46] at 16. The Court will refer to Inova and Smith Center collectively as “plaintiffs.”

1 Background

The following factual background is based on the allegations set forth in Omni’s

counterclaim; for purposes of evaluating the present motion to dismiss, the Court must accept those

allegations as true. See Ashcroft v. Iqbal,

(2009); Harford Mut. Ins. Co. v. New

Ledroit Park Bldg. Co.,

(D.D.C. 2018) (applying the same standard in

considering a motion to dismiss a counterclaim). On December 14, 2018, Inova contracted with

Omni to host its annual charity fundraising gala (“Event”) at the Hotel on September 21, 2019.

Omni’s Answer to Pls.’ First Am. Compl. & Countercl. against Pl. Inova [ECF No. 46]

(“Countercl.”) ¶¶ 6, 8–9. 2 The written agreement, appended as Exhibit A to Inova’s First

Amended Complaint, see First Am. Compl. Ex. A [ECF No. 26] (“Agreement”) at 19–26, 3

provides that the Event would take place in the Ambassador and Regency Ballrooms of the Hotel,

Agreement at 21.

Inova paid a $10,000 “non-refundable deposit” to secure those spaces, and the parties

agreed that, if Inova “for any reason cancel[ed] any event and/or part of this agreement” between

June 23, 2019 and July 22, 2019, Inova would pay Omni $29,000 “as liquidated damages.”

Agreement at 22. If Omni were able to “book another function” of equal or greater value in the

Regency Ballroom on September 21, Inova would receive a credit of its liquidated damage toward

the replacement event.

The parties also agreed that “[a]ny changes” to the Agreement would

“not be considered agreed to or binding” unless they were “initialed or otherwise approved in

writing by both parties.” Id. at 25. Finally, each party agreed to “indemnify, defend and hold the

2 Omni’s answer and counterclaim appear in the same document, and the paragraph numbering restarts in the portion of the filing that comprises the counterclaim. The Court will cite paragraphs from the counterclaim using its internal numbering. 3 Plaintiffs’ First Amended Complaint and the exhibits thereto appear in a single document. The Court will use the electronically generated CM/ECF page numbers to refer to the Amended Complaint and its exhibits.

2 other harmless from any loss, liability, cost or damages (including reasonable attorneys’ fees and

disbursements) arising from . . . [a]ny breach of th[e] agreement by the indemnitor in the

performance of its obligations.” Id. at 26.

On July 12, 2019, Inova informed Omni, by a letter from Inova’s lawyer, “that Inova was

backing out of the Agreement, and that Inova would not conduct the Event at the Hotel.”

Countercl. ¶ 13; see id. ¶ 25 (citing First Am. Compl. Ex. E [ECF No. 26] (“July 12 Letter”) at

44). Although Omni’s counterclaim does not allege a reason for Inova’s decision, Omni does not

dispute that it had previously informed Inova that the Event would have to take place in rooms at

the Hotel other than the Ambassador and Regency Ballrooms. See Omni’s Opp’n to Mot. to

Dismiss [ECF No. 53] (“Opp’n”) at 16–17; July 12 Letter at 42. Omni provides three alternative

interpretations of what happened next: either the parties “voluntarily agreed to rescind [the

Agreement], by Inova canceling its event and Omni refunding to Inova the deposit that Inova had

paid,” Countercl. ¶ 14; the parties “reached an accord and satisfaction of their dispute by Inova

canceling the event and Omni agreeing to refund the deposit,” id. ¶ 15; or, if “there is a finding . . .

that there was neither a voluntary rescission of the Agreement, a waiver by Inova of [its]

rights under the Agreement, nor an accord-and-satisfaction . . . , then Omni did not agree to release

Inova from its obligation . . . to conduct the Event at the Hotel,” id. ¶ 16. Under that third scenario,

Omni alleges that it “did not agree to relieve Inova of its obligation under the Agreement to pay . . .

liquidated damages” of $29,000, and Inova is liable for liquidated damages. Id. ¶¶ 17–18. Omni

claims that Inova’s failure to pay the liquidated damages was a “material[] breach” of the

Agreement, so Omni is entitled to damages. Id. ¶ 29.

Inova now moves to dismiss Omni’s counterclaim for three reasons. First, Inova contends

that the claim is implausible because it is based on factual allegations that are “contradicted by

3 controlling documents”—the Agreement and the July 12 Letter—“incorporated within and central

to the counterclaim.” Mot. to Dismiss at 7 (cleaned up). Inova next argues that the counterclaim

is implausible because “controlling facts” show that Omni, and not Inova, breached the

Agreement. Id. at 16 (cleaned up). Finally, Inova asserts that the counterclaim must be dismissed

because it pleads inconsistent facts within a single claim. Id. at 19. Omni responds that the

counterclaim rests on only one extrinsic document—the Agreement, Opp’n at 6–15—but, even if

the Court considers the July 12 Letter, it has plausibly stated a claim that Inova breached the

Agreement, id. at 15–20. Omni also disputes Inova’s claim regarding inconsistent pleading,

arguing that the only inconsistencies are between its affirmative defenses and its counterclaim and

that those inconsistencies are legal, not factual. Id. at 20–25.

Analysis

To survive a motion to dismiss for failure to state a claim under Federal Rule of Civil

Procedure 12(b)(6), a complaint must contain enough factual matter to “state a claim to relief that

is plausible on its face.” Bell Atl. Corp. v. Twombly,

(2007). “A facially

plausible claim is one that ‘allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Moore v. U.S. Dep’t of State,

(D.D.C.

2019) (quoting Iqbal,

). “A complaint need not contain ‘detailed factual

allegations,’ but alleging facts that are ‘merely consistent with a defendant’s liability . . . stops

short of the line between possibility and plausibility.’”

(alteration in original) (quoting Iqbal,

).

When considering a Rule 12(b)(6) motion, a court “must construe the complaint ‘in favor

of the plaintiff, who must be granted the benefit of all inferences that can be derived from the facts

alleged.’” Hettinga v. United States,

(D.C. Cir. 2012) (quoting Schuler v.

4 United States,

(D.C. Cir. 1979)). A court “need not accept inferences . . . if

[they] are unsupported by the facts set out in the complaint,” G’Sell v. Carven,

(D.D.C. 2010) (citation omitted), nor must it accept a “legal conclusion couched as a

factual allegation,” Moore,

(quoting Iqbal,

). All of these

“standards govern a motion to dismiss with respect to an opposing party’s counterclaims.” Harford

Mut. Ins. Co.,

(quoting Wharf, Inc. v. Dist. of Columbia,

(D.D.C. 2017)).

I. Plausibility

Inova argues that Omni’s counterclaim is implausible because it is based on factual

allegations “contradicted by controlling documents incorporated within and central to the

complaint” and by “controlling facts.” Mot. to Dismiss at 7 (cleaned up); see

at 7–19. Omni

responds that the only document incorporated within and central to its claim is the Agreement,

Opp’n at 6–15, and, in any event, it has successfully stated a claim for breach of contract by Inova,

at 15–20.

To determine whether a complaint—or, as here, a counterclaim—states a plausible claim

for relief, “courts may consider ‘the facts alleged in the complaint, documents attached as exhibits

or incorporated by reference in the complaint’ or ‘documents upon which the plaintiff’s complaint

necessarily relies even if the document is produced not by the plaintiff in the complaint but by the

defendant in a motion to dismiss.” Chien v. United States, Civ. A. No. 17-2334 (CKK),

, at *4 (D.D.C. Sept. 23, 2019) (quoting Ward v. D.C. Dep’t of Youth Rehab. Servs.,

(D.D.C. 2011)). The parties vigorously dispute whether Omni’s counterclaim

incorporates the July 12 Letter from Inova’s counsel to Omni. See Mot. to Dismiss at 9, 12; Opp’n

at 12–15. Although the counterclaim cites and refers to the July 12 Letter, see Countercl. ¶¶ 13,

5 25, Omni argues that those references “do nothing more than allege that Inova notified Omni that

it was reneging on the Agreement,” Opp’n at 13. Inova, on the other hand, argues that the

counterclaim must fail because it contradicts the contents of the July 12 Letter. See Mot. to

Dismiss at 12–15.

But ultimately, the Court need not decide the issue because, even assuming that it

incorporates the July 12 Letter, 4 Omni’s counterclaim is plausible. Inova’s assertion of

implausibility relies on the contradiction between its allegation—that the relocation was a “clear

and absolute breach of the Agreement,” July 12 Letter at 42—and Omni’s allegation that it “stood

ready at all times . . . to perform as required under the Agreement’s material terms,” Countercl.

¶ 12. At this stage, the Court must construe factual allegations in the counterclaim in the light

most favorable to Omni. The July 12 Letter simply contains Inova’s spin on its interactions with

Omni; that the Counterclaim contradicts Inova’s characterization of the events in dispute does not

render it implausible. Cf. Hurd v. Dist. of Columbia,

(D.C. Cir. 2017)

(“[A]quiescing to the authenticity of documents introduced in an earlier case is a far cry from

agreeing that those documents present a full or fair picture of a matter a party has a right to

dispute . . . .”).

Thus, the Court will move on to consider Inova’s arguments that Omni’s counterclaim is

implausible in light of the documents incorporated in it and the “controlling facts” in this case.

See Mot. to Dismiss at 7, 16. To state a claim for breach of contract under District of Columbia

law, “a party must establish (1) a valid contract between the parties; (2) an obligation or duty

4 See Ward,

n.2 (noting that, because an external document was “referred to in the complaint,” both that document itself and a collateral document “resulting from” it were “necessarily incorporat[ed]” in the complaint); N.Y. State Bar Ass’n v. FTC,

, 114 n.6 (D.D.C. 2003) (“A document is not ‘outside’ the complaint if the complaint specifically refers to the document and if its authenticity is not questioned.” (cleaned up) (citation omitted)).

6 arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach.” Zaccari

v. Apprio, Inc.,

(D.D.C. 2019) (quoting Francis v. Rehman,

(D.C. 2015)). But to survive a motion to dismiss, a party need only “describe the terms

of the alleged contract and the nature of the defendant’s breach.”

(quoting Francis,

). Courts in the District of Columbia interpret contracts objectively, considering “what a

reasonable person in the position of the parties would have thought the disputed language meant.”

Adler v. Abramson,

(D.C. 1999) (quoting Sagalyn v. Found. for Preservation of

Historic Georgetown,

(D.C. 1997)). And a court must “interpret a contract as

a whole, giving effective meaning to all of its terms.” Wilson v. Hayes,

(D.C.

2013).

There is no dispute that the Agreement was a valid contract. See Countercl. ¶ 6; Mot. to

Dismiss at 1. Omni alleges that, under the Agreement, Inova was obligated to hold the Event at

Omni’s Hotel on September 21, 2019, Countercl. ¶¶ 8–9, or, “if Inova backed out of the contract

between June 23, 2019, and July 22, 2019,” to “pay Omni liquidated damages in the amount of

$29,000.00,” id. ¶ 10. Because “Inova canceled the Event by its” July 12 Letter, id. ¶ 25, and then

failed to “tender the agreed-upon . . . liquidated damages,” id. ¶ 26, Omni claims that “Inova

breached the Cancellation provision of the Agreement,” id. ¶ 28. 5 Inova contends that this version

of events is “implausible as it is based on frivolous allegations that . . . are contradicted by” the

July 12 Letter, the terms of the Agreement itself, and “controlling facts.” Mot. to Dismiss at 9, 16.

The Court will first consider the plausibility of Omni’s claims as compared to “the plain

terms of the Agreement.” Mot. to Dismiss at 9. Under the section entitled “Event Details,” the

5 This pleading is in the alternative to two other suggested interpretations—that the parties “voluntarily agreed to rescind” the Agreement, Countercl. ¶ 14, or that they “reached an accord and satisfaction of their dispute,” id. ¶ 15. The Court will address the effect of these alternative pleadings in more depth below.

7 Agreement provides that Inova would use five rooms at the Hotel beginning at 8:00 a.m. on

September 21, 2019, including the Ambassador and Regency Ballrooms. Agreement at 21. If

Inova canceled the Event between June 23 and July 22, 2019, Inova would pay Omni $29,000.00

“as liquidated damages.” Id. at 22. The Agreement also provides that “[a]ny changes” to its terms

would “not be considered agreed to or binding unless such modifications have been . . . approved

in writing by both parties.” Id. at 25.

The heart of this dispute is whether the precise location of the Event—in the Ambassador

and Regency Ballrooms, see Agreement at 21, or elsewhere “at Omni’s hotel facility,” Countercl.

¶ 8—is a material term of the Agreement. Omni alleges that it undertook “preparations in good

faith to host the Event according to the Agreement’s material terms” and “stood ready at all

times . . . to perform as required under the Agreement’s material terms,” although in different

rooms than those specified in the Agreement. Countercl. ¶¶ 11–12. In Inova’s view, on the other

hand, “it is obvious that the specific requirement that the Event be held in the Ambassador and

Regency Ballrooms was a material requirement of the Agreement.” Mot. to Dismiss at 18–19.

But as the Court explained in denying Omni’s motion to dismiss Inova’s complaint, “‘[t]he

determination whether a material breach has occurred is generally a question of fact’ except in the

extreme circumstance where ‘there is only one reasonable conclusion’ on materiality, in which

case ‘a court must address what is ordinarily a factual question as a question of law.’” Mem. Op.

& Order, Apr. 14, 2021 [ECF No. 41] (“April 14 Mem. Op.”) at 12 (alteration in original) (quoting

America v. Preston,

(D.D.C. 2006)). And, as the Court explained, this

is not a case where there is only one reasonable conclusion as to materiality.

6 The location of

6 Inova seems to read the Court’s statement—that it would be “absurd” to conclude the location of the Event at the Hotel was immaterial as a matter of law, April 14 Mem. Op. at 12—as a conclusion that the location of the Event was material as a matter of law, see Mot. to Dismiss at 11 n.3, 19 n.6. Not so. Inova’s interpretation reads “as a matter of law” out of the Court’s opinion; the only absurdity the Court identified was in taking the extreme position

8 the Event was neither material nor immaterial as a matter of law. It could be the case that the

alternative rooms Omni prepared would have been entirely sufficient for Inova’s Event. Indeed,

it could be that the proffered alternatives were better. Without engaging in a fact-specific inquiry,

the Court cannot fully assess the effect of the room change on the Agreement as a whole. See

America,

(noting that the materiality of a breach of contract “turns on the

extent to which plaintiff will be deprived of the benefit which he reasonably expected under the

contract,” among other factors). Thus, construing the facts in the light most favorable to Omni, as

the Court must at this stage of the litigation, see Iqbal,

, Omni’s claim is plausible

in light of the Agreement’s terms.

Inova’s other arguments fail for the same fundamental reason: the materiality of the

Event’s location in the Hotel is a question of fact, and the Court must construe factual allegations

in the light most favorable to Omni. “[A] party is not automatically excused from future

performance of contract obligations every time the other party commits a breach.” Landmark

Health Sols., LLC v. Not for Profit Hosp. Corp.,

(D.D.C. 2013). “Rather,

if the breach has not contributed materially to the contract being terminated, it does not excuse

performance.”

at 137–38. Here, assuming (as the Court must) that Omni’s decision to relocate

the Event to other spaces within the Hotel was not a material breach, Inova was not automatically

excused from holding its Event at the Hotel or paying liquidated damages if it canceled the Event.

See Agreement at 22. And because Inova “communicated, by word or conduct, unequivocally and

positively its intention not to perform,” Wash. Nat’ls Stadium, LLC v. Arenas, Parks, & Stadium

Sols., Inc.,

(D.C. 2018) (citation omitted); see July 12 Letter at 44, Omni has

on the term’s immateriality urged by Omni. Instead, the Court merely concluded that the question of materiality was a question of fact inappropriate for resolution on a motion to dismiss. See April 14 Mem. Op. at 12.

9 plausibly stated a claim that Inova breached the Agreement by canceling the Event and failing to

pay liquidated damages as required under the Agreement, see Countercl. ¶¶ 24–28.

II. Inconsistent Pleading

Inova also contends that the counterclaim must be dismissed because it contains

inconsistent factual allegations within a single claim. Mot. to Dismiss at 19–22. Omni responds

that Federal Rule of Civil Procedure 8 permits such inconsistent factual pleading, Opp’n at 21–22;

that any inconsistencies are between the affirmative defenses in its answer and its counterclaim,

not within the counterclaim itself,

at 22–24; and that, in any event, the inconsistencies are legal

theories rather than factual allegations,

at 24–25.

Federal Rule of Civil Procedure 8(d)(2) provides that “[a] party may set out 2 or more

statements of a claim or defense alternatively or hypothetically, either in a single count or defense

or in separate ones. If a party makes alternative statements, the pleading is sufficient if one of

them is sufficient.” And those claims may be inconsistent: “A party may state as many separate

claims or defenses as it has, regardless of consistency.” Fed. R. Civ. P. 8(d)(3); cf. Henry v. Daytop

Vill., Inc.,

(2d Cir. 1994) (construing this Rule to mean that “a plaintiff may plead

two or more statements of a claim, even within the same count, regardless of consistency,” and

permitting the inconsistency to “lie either in the statement of the facts or in the legal theories

adopted” (citation omitted)). Although some courts have stated that a party may not plead

inconsistent facts within a single claim for relief, see, e.g., Boyd v. Larregui, Civ. A. No. 3:19-cv-

579 (CSH),

, at *4 (D. Conn. Sept. 30, 2020); In re Livent, Inc. Noteholders

Sec. Litig.,

(S.D.N.Y. 2001), courts in this District have held that

alternative factual pleading is permissible “in support of inconsistent theories of recovery, so long

as [a plaintiff] is ‘legitimately in doubt as to what the evidence will show,’” Chambers v. NASA

10 Fed. Credit Union,

(D.D.C. 2016) (quoting Harris v. Koenig,

(D.D.C. 2010)). 7

Inova contends that Omni falls afoul of the requirements of Rule 8(d) because it pleads

three alternative factual theories—mutual rescission, accord and satisfaction, and breach of

contract—within a single claim for breach of contract. See Mot. to Dismiss at 20. Omni responds

that its claim pleads a single “legal theory, and facts, in the alternative to three of [its] affirmative

defenses.” Opp’n at 22 (cleaned up). In its answer—included in the same document as its

counterclaim—Omni does indeed argue that the parties rescinded the Agreement; that Inova

waived its rights under the Agreement by accepting a refund of its deposit from Omni; and that

the parties reached an accord and satisfaction resolving their dispute. See Omni’s Answer to Pls.’

First Am. Compl. & Countercl. Against Pl. Inova [ECF No. 46] (“Answer”) at 14–15 (Eleventh,

Twelfth, and Thirteenth Defenses). In the counterclaim portion of the document, Omni repeats

two of the alternative defenses, alleging that “[t]he parties . . . voluntarily agreed to rescind” the

Agreement, Countercl. ¶ 14, or, “[a]lternatively,” that the parties “reached an accord and

satisfaction of their dispute,” id. ¶ 15. But if “there is a finding in this action that there was neither

a voluntary rescission of the Agreement, a waiver by Inova of [its] rights under the Agreement,

nor an accord-and-satisfaction of the parties’ dispute”—i.e., if its principal arguments fail—only

7 In the District of Columbia, whether parties to a contract reached an accord and satisfaction or mutually agreed to rescind the contract are generally questions of fact. See Barrett v. Air Brakes & Controls, Inc.,

(D.C. 1957) (holding that the “existence of [an accord and satisfaction] becomes a matter of law only when the facts related thereto are not in dispute,” and that those facts include the existence of a “mutual agreement” between the parties); Rodenburg v. Dezendorf,

(D.C. 1949) (affirming verdict where jury rejected defense of mutual rescission). Omni asserts that its alternative theories of accord and satisfaction and mutual rescission “are all questions of law, or mixed questions of law and fact,” Opp’n at 24, but it cites no authority for that proposition. In this case, it is not clear whether the parties agreed to treat Omni’s return of Inova’s deposit as an accord and satisfaction, cf. Barrett,

(declining to treat existence of accord and satisfaction as a question of fact where “the evidence on this point was conflicting”), or whether they agreed to treat Inova’s cancellation of the Event as a mutual agreement to rescind the Agreement. The Court will accordingly treat the theories of mutual rescission and accord and satisfaction as questions of fact or mixed questions of law and fact.

11 then does Omni allege that it “did not agree to release Inova from its obligation under the

Agreement.” Id. ¶ 16.

Although Omni did include contradictory factual assertions in its counterclaim, it is clear

that these assertions were not intended to support its claim for relief against Inova, but instead to

reiterate and preserve its affirmative defenses. See Answer at 14–15; Countercl. ¶¶ 14–16. Omni

is “legitimately in doubt” as to whether the evidence will support its alternate theories of mutual

rescission, accord and satisfaction, or material breach by Inova. See Chambers,

(citation omitted). A party may plead inconsistent facts in support of alternative theories of

recovery, Powers–Bunce v. Dist. of Columbia,

, 163–64 (D.D.C. 2007), and

although Omni only has one “theory of recovery”—breach of contract by Inova—it does have

three alternative theories defending against Inova’s claims, theories which it did not wish to

contradict in its counterclaim. Because it is clear that Omni’s alternative factual theories are

merely restatements of its affirmative defenses to Inova’s claims, and because Omni is legitimately

uncertain which theory the evidence will support, its inconsistent pleadings are permissible under

Rule 8(d) and its counterclaim may proceed.

Conclusion

For the foregoing reasons, the Court will deny Inova’s motion to dismiss Omni’s

counterclaim. An Order to that effect will issue on this date.

/s/ JOHN D. BATES United States District Judge Dated: March 22, 2022

12