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Myles v. Rent-A-Center Inc.

United States District Court, D. Maryland

July 19, 2016

CRAIG MYLES, Individually and as Parent and Next Friend of K.M. and A.M., minors, Plaintiffs
v.
RENT-A-CENTER, INC., et al., Defendants

          MEMORANDUM

          James K. Bredar United States District Judge.

         Craig Myles brought an action on behalf of himself and his minor children, K.M. and A.M. (collectively, “Plaintiffs”), in the Circuit Court of Maryland for Baltimore County, accusing Rent-A-Center, Inc. (“RAC”) and Rent-A-Center East, Inc. (“RAC East”) (together, “Defendants”) of negligence (Count I); breach of warranty (Count II); violation of the Maryland Consumer Protection Act (“MCPA”), Md. Code Ann., Com. Law §§ 13-101 et seq. (Count III); and common-law fraud (Count IV). Plaintiffs’ claims arise from a rental-purchase agreement that Myles executed at a Towson, Maryland, Rent-A-Center store: Plaintiffs allege that (1) Myles leased a purportedly merchantable couch at the store but (2) the couch was in fact infested with bed bugs and (3) the infestation spread into Plaintiffs’ apartment, causing them physical and emotional distress. On February 3, 2015, Defendants removed the action to this Court on diversity grounds. (ECF No. 1.)

         Now pending before the Court is Plaintiffs’ Motion for Partial Summary Judgment (ECF No. 88) as to Defendants’ liability on Counts II and III. Also pending is Defendants’ Motion for Summary Judgment (ECF No. 89) on all counts. The issues have been briefed, and no hearing is required, see Local Rule 105.6 (D. Md. 2014). For the reasons explained below, Plaintiffs’ motion will be DENIED, and Defendants’ motion will be GRANTED IN PART and DENIED IN PART.

         I. Factual Background[1]

         On November 4, 2014, Plaintiff Myles visited a Rent-A-Center store, operated by RAC East, located at 6969 Loch Raven Boulevard in Towson, Maryland. (ECF No. 89-3 at 1-2.) Having recently moved into a new apartment, Myles found himself in need of a couch. (ECF No. 92-2 at 7.) He had visited another furniture store and was feeling “a little sticker shocked.” (Id.) While driving home, he noticed an Aaron’s rental store and a Rent-A-CDated: he mentally “[f]lipped a coin” and decided to stop by the Rent-A-Center. (Id.) Myles recalled that, once inside, he met with a salesman named “Mike.” (Id.) Defendants have confirmed that a Mike Boyd worked at the Loch Raven store in November 2014; although Boyd testified that he had no recollection of assisting Myles on November 4 (ECF No. 92-3 at 4-5), the store manager, David Johnston, testified that Boyd “very likely” assisted with the transaction (ECF No. 92-4 at 13).

         According to Myles, “Mike” showed him the couch that he eventually agreed to lease-a brown sectional sofa with three cushions, including a chaise. (ECF No. 92-2 at 8.) Myles testified that the couch “looked nice” and appeared new, but for a small burn mark on the back of one cushion; he added that “Mike” told him the couch was “really nice, in great condition, ” and that he would “probably love it.” (Id.) Myles signed a rental-purchase agreement, which provided for weekly payments of $29.99 with an early purchase option: the agreement further specified that Myles could terminate without penalty at the end of any weekly rental term simply by returning the couch to Rent-A-Center. (ECF No. 88-5.)

         Myles took delivery of the couch on November 8, 2014. (ECF No. 92-2 at 9.) Within two hours after the delivery, Myles spotted an insect crawling on the couch. (Id. at 14.) Through Internet research, Myles concluded that the insect was a bed bug. (Id. at 11.) He attempted several times that evening to call the Rent-A-Center store, but no one answered the phone. (Id. at 12.) He then undertook self-help treatment measures: he sprayed his living room with a retail bed-bug spray; he sprinkled diatomaceous earth on the couch cushions; and he set two chemical foggers (“bug bombs”). (Id. at 14.) Fearful of spreading the infestation throughout his apartment, Myles set up his “pallet” (a “comforter or several comforters [that] simulate a bed”) “right in front of the couch, ” and he slept there that night. (Id.) He received approximately ten bites. (Id. at 18.)[2]

         The following Monday, Myles contacted “Mike” at the Loch Raven store; “Mike” expressed “disbelief” at the situation and indicated that Rent-A-Center would “send somebody out to pick up the couch and come check it out.” (Id. at 19.) Later that day, a “lady and a gentleman” visited Myles’s apartment; according to Myles, they “saw bed bugs on the couch. (Id. at 20.)[3] Myles claims he then spoke with “Mike” on the phone and that “Mike” told him a third-party pest-control company, Terminix, would need to verify whether the bugs were attributable to Rent-A-Center. (Id.) Myles claims he “got a little bit nervous, ” concerned that Rent-A-Center would retrieve the sofa only to disclaim any liability: therefore, he told the store employees to “just leave it here until Terminix comes.” (Id.)[4]

         While Myles waited on Terminix, he hired a separate company-Home Paramount Pest Control-to inspect his apartment. In a report dated November 11, 2014, Home Paramount inspector Lewis Bellamy, Jr., noted that a “full bedbug inspection was done throughout the house” and that “bedbugs were found only on the couch that was purchased from the rental company.” (ECF No. 88-7 at 2.) Three days later, Terminix’s technician, Sonny Hall, inspected the apartment; he found four adult bed bugs, seven eggs, and three nymphs on the “sofa/loveseat, ” but he found no further evidence of bed bugs in the apartment. (ECF No. 88-8 at 2.)

         On November 18, 2014, following the Terminix inspection, Myles returned to the Loch Raven store. He testified that “Mike” gave him a refund and told him that Rent-A-Center could retrieve the couch; however, the store would not pay for pest treatment unless Myles executed a release. (ECF No. 92-2 at 29.) Myles thought this proposition was “ludicrous, ” and he told “Mike” he would “just think about it.” (Id. at 30.) Myles further testified that (1) “Mike” told him someone would be out to retrieve the couch within a couple of days but (2) no one from Rent-A-Center ever collected the couch or otherwise contacted him. (Id.) David Johnston, however, testified that his team attempted at least four times to retrieve the couch but that Myles refused their assistance. (ECF No. 92-4 at 6-7.)

         The ultimate disposition of the couch is somewhat unclear. Myles recalled that he arranged for a “gentleman in [his] neighborhood that picks up things on eviction day” to remove the couch. (ECF No. 92-2 at 30, 33.) Mike Boyd, however, testified that he and another Rent-A-Center employee called “Darnell” eventually retrieved the couch and “dumped it.” (ECF No. 92-3 at 6.) Whatever became of the couch, it is evidently no longer in Plaintiffs’ apartment-and by February 2015, after Myles hired a company called ABC Pest to steam-clean the apartment, the infestation was seemingly resolved. (ECF No. 92-2 at 37.)

         Myles brought suit in state court on December 22, 2014. (ECF No. 3.) Defendants removed the action to this Court on February 3, 2015 (ECF No. 1), and they thereafter moved to dismiss Counts III and IV (ECF No. 12). The Court denied that motion in an Order dated July 7, 2015 (ECF No. 19), and the case proceeded to discovery. Following the close of discovery, Plaintiffs filed the pending Motion for Partial Summary Judgment (ECF No. 88); shortly thereafter, Defendants filed their Motion for Summary Judgment (ECF No. 89). Both motions are fully briefed and are ripe for decision.

         II. Standard of Review

         When faced with cross-motions for summary judgment, the Court must consider each motion separately on its own merits. Rossignol v. Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003). The Court will grant summary judgment to a party who demonstrates that (1) there is no genuine dispute as to any material fact and (2) that party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing predecessor to current Rule 56(a)). No genuine issue of material fact exists if the opposing party fails to make a sufficient showing on an essential element of its case as to which it would have the burden of proof. Celotex Corp., 477 U.S. at 322-23. Moreover, the “mere existence of a scintilla of evidence in support of the [opposing party’s] position” is insufficient to defeat a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).

         The facts themselves, and the inferences to be drawn therefrom, must be viewed in the light most favorable to the party opposing summary judgment. Scott v. Harris, 550 U.S. 372, 378 (2007); Iko v. Shreve, 535 F.3d 225, 230 (4th Cir. 2008). Even so, the opponent may not rest upon the mere allegations or denials of its pleading but must instead, by affidavit or other evidentiary showing, set out specific facts showing a genuine dispute for trial. Fed.R.Civ.P. 56(c)(1). Supporting and opposing affidavits must be made on personal knowledge with such facts as would be admissible in evidence and must affirmatively show the competence of the affiant to testify to the matters stated therein. Fed.R.Civ.P. 56(c)(4).

         III. Plaintiffs’ Claims as Against RAC

         Defendants argue that RAC is entitled to summary judgment on all counts because Myles entered a rental-purchase agreement with RAC East (a RAC subsidiary) but not with RAC itself. (See ECF No. 89 at 26-27.) Appended to Defendants’ Motion for Summary Judgment is an affidavit by Anthony Wagstaff, district manager for RAC East, in which Wagstaff avers that (1) RAC East owned the couch at issue in this case; (2) RAC East operates the Loch Raven store, while RAC has never operated that store; (3) RAC East employed the employees who worked at the Loch Raven store during the relevant time period; and (4) RAC East (but not RAC) was party to the rental-purchase agreement. (ECF No. 89-3 at 2.)

         “It is well settled that ‘[a] corporation exists as a legal entity separate and distinct from its corporate shareholders.’” Ademiluyi v. PennyMac Mortg. Inv. Tr. Holdings I, LLC, 929 F.Supp.2d 502, 515 (D. Md. 2013) (alteration in original) (quoting Cancun Adventure Tours, Inc. v. Underwater Designer Co., 862 F.2d 1044, 1047 (4th Cir. 1988)). “Therefore, ‘[u]nder the doctrine of limited liability, a shareholder-including a corporate parent-may not be held liable for the acts of a corporation.’” Id. (alteration in original) (emphasis added) (quoting Allen v. Bank of Am. Corp., Civ. No. CCB-11-33, 2011 WL 3654451, at *4 (D. Md. Aug. 18, 2011)); see also United States v. Bestfoods, 524 U.S. 51, 61 (1998) (“It is a general principle of corporate law deeply ‘ingrained in our economic and legal systems’ that a parent corporation . . . is not liable for the acts of its subsidiaries.” (citation omitted)). Of course, there are analytical mechanisms through which a tort plaintiff can attempt to pin liability on a parent corporation, e.g., through veil piercing or by establishing the existence of an actual-agency relationship with respect to the allegedly tortious conduct. However, Plaintiffs here advance no such argument: rather, they contend that RAC, “regardless of actual ownership or operation of the Towson RAC store, could be found liable to Plaintiffs on an apparent agency theory.” (ECF No. 94 at 17.)

         Under Maryland law, the “doctrine of apparent agency can be expressed in three elements”: (1) the apparent principal must have created or acquiesced in “the appearance that an agency relationship existed”; (2) the plaintiff must have “believe[d] that an agency relationship existed and rel[ied] on that belief in seeking the services of the apparent agent”; and (3) the plaintiff’s “belief and reliance” must have been “reasonable.” Bradford v. Jai Med. Sys. ...


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