West Congress Street Partners v. Rivertown Development

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 18a0316n.06
No. 17-1941
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
WEST CONGRESS STREET PARTNERS, LLC, ) FILED
) Jun 26, 2018
Plaintiff-Appellant, ) DEBORAH S. HUNT, Clerk
)
v. )
)
RIVERTOWN DEVELOPMENT, LLC; )
RIVERTOWN HOLDINGS, LLC; RIVERTOWN ) ON APPEAL FROM THE
DEVELOPMENT GROUP, LLC; MARK RIETH; ) UNITED STATES DISTRICT
CITY OF DETROIT; IVAN LUCKEY; JUSTIN ) COURT FOR THE EASTERN
TAITE; AUSTIN HUNTER; DENNIS SMITH; ) DISTRICT OF MICHIGAN
RANDY MCGHEE; AUSTON CARR; WILLIE )
ROBINSON; WAYNE COUNTY; JOHN DOE of )
the Wayne County Sheriff’s Department, )
)
Defendants-Appellees. )
Before: GIBBONS, THAPAR, and LARSEN, Circuit Judges.
LARSEN, Circuit Judge. This is a landlord-tenant dispute concerning a Detroit property
that West Congress Street Partners, LLC (“West Congress”), leased from Rivertown Development,
LLC (“Rivertown”). Following a bitterly contested eviction action in state court, West Congress
sued its former landlord in federal court. West Congress alleged that Rivertown’s pursuit of the
eviction breached the parties’ settlement agreement in the state-court proceedings, constituted
racial discrimination, and was the product of a conspiracy between Rivertown and various local
officials. The district court dismissed the case for failure to state a claim. We AFFIRM.
No. 17-1941
West Congress Street Partners, LLC v. Rivertown Development, LLC
I.
West Congress operated a bar on a property it leased from Rivertown. Without the latter’s
permission, West Congress made alterations to the property and began using it as a cabaret in
violation of the lease, Detroit zoning ordinances, and Michigan liquor laws. Rivertown eventually
sued for possession in Wayne County Circuit Court, and West Congress brought counterclaims
for, inter alia, retaliatory eviction.
After a bench trial, the state court awarded possession to Rivertown, expressly granting it
the right to seek a writ of eviction. The court subsequently ordered “that any and all proceedings
to enforce the Corrected Judgment of Possession in this matter be stayed subject to [West
Congress] perfecting its appeal to the Michigan Court of Appeals.” In March 2015, that court
concluded it lacked jurisdiction because none of the trial court’s orders finally disposed of West
Congress’s counterclaims, and accordingly dismissed West Congress’s motion for appeal as of
right. The court of appeals instructed West Congress to file a delayed application for leave to
appeal if it desired review of those orders. West Congress did so on March 31, 2015.
Meanwhile, because West Congress was still in possession of the property and “continue[d]
to operate as a cabaret in violation of the Lease, City of Detroit Zoning ordinances, and State
Liquor Control Laws,” the state trial court appointed a receiver to operate West Congress’s
business while the parties continued to litigate their respective claims for money damages. The
receiver doubled as the court’s appointed facilitator and, failing facilitation, as the “case evaluator”
tasked with suggesting a settlement amount.1 See Mich. Ct. Rule 2.403.
1
Case evaluation is a Michigan method of alternative dispute resolution pursuant to which the
appointed case evaluator proposes an award to resolve the case. The court enters judgment “in
accordance with the evaluation” if all parties accept the proposed award. Mich. Ct. Rule 2.403
(M)(1).
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No. 17-1941
West Congress Street Partners, LLC v. Rivertown Development, LLC
On April 13, 2015, the receiver proposed the following case-evaluation award: “West
Congress . . . shall receive the sum of One [Hundred] Twenty-Five Thousand ($125,000.00)
Dollars from . . . Rivertown.” In the award’s “comments” section, the receiver added: “West
Congress . . . shall vacate the premises within 90 days of acceptance of the award by both parties.”
In early May 2015, the parties agreed to the case-evaluation award.
But, as the district court put it, “[s]omething went awry.” On April 24, 2015, after the
receiver had filed his case evaluation but before the parties had agreed to it, Rivertown sought an
immediate eviction order. Rivertown alleged that West Congress had secretly operated the
property as a cabaret on three occasions after the receiver filed the case-evaluation award, in
violation of the court’s and the receiver’s outstanding operating conditions. Rivertown indicated
that the Michigan Court of Appeals had dismissed or found defective all of West Congress’s
attempts at appeal, and as such the trial court’s stay of the judgment of possession was no longer
effective, permitting enforcement. On May 15, 2015, the trial court issued an eviction order, and
a court officer executed it the same day.
A number of Detroit police officers were present when the court officer served the eviction
order at the bar. According to the Detroit police, they dispatched officers to the property after a 9-
1-1 call reported a large crowd at the scene of an eviction. West Congress acknowledges that there
was a large crowd outside, due to a race in downtown Detroit. West Congress alleges that several
unnamed Wayne County sheriff’s deputies assisted the officers, which Wayne County denies.
After the eviction, West Congress brought an emergency motion in state court to enforce
the parties’ case-evaluation settlement and to hold Rivertown in contempt of court. West Congress
claimed that Rivertown had obtained the eviction order under false pretenses, as West Congress’s
delayed application for leave to appeal, filed about six weeks before, remained pending in the
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No. 17-1941
West Congress Street Partners, LLC v. Rivertown Development, LLC
Michigan Court of Appeals. West Congress contended further that the eviction directly conflicted
with the parties’ settlement agreement, which, on West Congress’s reading, allowed it to remain
on the property for ninety days.
After a hearing, the state court enforced the settlement agreement. Specifically, it ordered
Rivertown to return the property’s keys to the receiver and provided that West Congress did not
have to vacate the property until August 2, 2015, ninety days after the parties had accepted the
case-evaluation award. The receiver did not allow West Congress’s owner on the property by
himself for the remainder of the ninety-day period and, on the court’s order, made the owner’s
wife responsible for the keys. The court further ordered Rivertown to pay West Congress $125,000
when West Congress moved out and ordered West Congress to dismiss its pending application for
leave to appeal the judgment of possession in the state court of appeals. West Congress eventually
moved out, the court discharged the receiver, and Rivertown paid its former tenant $125,000.2
II.
Later that year, West Congress initiated the instant action in the Eastern District of
Michigan, naming as defendants Rivertown, the Detroit Police Department, and an unnamed
individual police officer. As relevant to this appeal, West Congress alleged that Rivertown had
breached the parties’ settlement agreement by evicting West Congress and had conspired with the
other defendants to do so, in violation of 42 U.S.C. §§ 1985 and 1986. West Congress also claimed
that Rivertown had violated Michigan’s Elliott-Larsen Civil Rights Act (ELCRA), Mich. Comp.
2
The Michigan Court of Appeals denied West Congress’s delayed application for leave to appeal
on October 2, 2015, “since, per [West Congress’s] representation to the Court, the matter has been
settled.” Rivertown Dev. Grp. LLC v. W. Cong. St. Partners LLC, No. 326686 (Mich. Ct. App.
Oct. 2, 2015) (order).
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No. 17-1941
West Congress Street Partners, LLC v. Rivertown Development, LLC
Laws § 37.2502. The district court dismissed the complaint against Rivertown for failure to state
a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure.
West Congress then amended its complaint to name seven Detroit police officers, who
West Congress claimed were present for the eviction, and added as defendants Wayne County and
an unnamed sheriff’s deputy, who West Congress alleged had also attended the eviction. West
Congress alleged that the City of Detroit, Wayne County, and the individual officers and deputy
(hereinafter “the public defendants”) had engaged in a conspiracy to effect a fraudulent eviction,
in violation of 42 U.S.C. §§ 1985 and 1986, resulting in property damage and loss of earnings
before West Congress was allowed to return to the premises. The district court dismissed the
complaint against the public defendants for failure to state a claim under Rule 12(b)(6). West
Congress timely appealed, arguing that the district court had erred in dismissing its breach-of-
contract and ELCRA claims against Rivertown, as well as its conspiracy claims against the public
defendants.
III.
Take the breach claim first. The case-evaluation award provided that West Congress “shall
receive . . . $125,000.00” and “shall vacate the premises within 90 days of acceptance of the award
by both parties.” By May 5, 2015, the parties had agreed to this award, and the state court deemed
the case settled on May 6. On May 15, the court ordered the eviction, which Rivertown had been
seeking for several weeks preceding the parties’ acceptance of the settlement.
In its emergency motion to undo the eviction, West Congress contended that the eviction
contradicted the terms of the case-evaluation award. West Congress asked the court to enforce the
settlement, return possession of the bar to West Congress, hold Rivertown in contempt, and award
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No. 17-1941
West Congress Street Partners, LLC v. Rivertown Development, LLC
West Congress “sanctions . . . for all costs and lost profits from the wrongful eviction.”3 West
Congress specifically alleged that the eviction resulted in loss of earnings, as the bar was forcibly
closed at what likely would have been a profitable time, and West Congress was forced to cancel
and refund several private events.
West Congress secured some, but not all, of the relief it sought. The state court reversed
the eviction. It ordered that West Congress have the benefit of the rest of the ninety-day period
provided for in the settlement and that Rivertown pay the previously agreed-upon sum when West
Congress moved out. The court did not hold Rivertown in contempt, however, nor award any kind
of damages for the eviction’s effects on West Congress.
In this federal case, West Congress asserts the same claim: that the eviction before
expiration of the ninety-day period violated the parties’ agreement and that West Congress is
entitled to resulting damages, as well as interest, costs, and fees. But having made the same
argument and the same request before the state trial court, West Congress cannot now relitigate its
entitlement to damages for the same conduct. We give state-court judgments the same preclusive
effect that the state’s courts would. 28 U.S.C. § 1738; Ohio ex rel. Boggs v. City of Cleveland,
655 F.3d 516, 519 (6th Cir. 2011). In Michigan, a party is estopped from relitigating a question
of fact essential to the judgment if that question was already litigated and determined in an earlier
proceeding, provided that the same parties had a full and fair opportunity to litigate the issue and
there is mutuality of estoppel; that is, the party taking advantage of the earlier judgment would be
3
West Congress also contended that Rivertown had misled the court in seeking the eviction,
because Rivertown had represented that West Congress’s pending appeal of the judgment of
possession had been resolved. West Congress argued that, because the appeal was in fact still
pending, the eviction violated not only the terms of the parties’ settlement agreement but also the
trial court’s outstanding stay of enforcement of the judgment of possession. In federal court, West
Congress claims only breach of the settlement agreement.
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West Congress Street Partners, LLC v. Rivertown Development, LLC
bound by it if the parties’ fortunes were reversed. Monat v. State Farm Ins. Co., 677 N.W.2d 843,
845–47 (Mich. 2004).
Here, West Congress argued in state court that Rivertown’s conduct violated the settlement
agreement. The state court apparently agreed because it enforced the settlement. West Congress
also sought damages for the violation, but the state court refused them. Michigan law precludes
West Congress from recycling its earlier claim for violation of the settlement, as well as trying
again to win damages for that violation. 4 The district court accordingly did not err in dismissing
West Congress’s breach claim.5
4
In the district court and in this court, Rivertown has argued that the Rooker–Feldman doctrine
precludes federal jurisdiction over this case. We disagree. The Rooker–Feldman doctrine
concerns situations where plaintiffs “complain[] of an injury caused by the state-court judgment
and seek[] review and rejection of that judgment.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp.,
544 U.S. 280, 291 (2005). On the other hand, where a plaintiff complains of “some other source
of injury, such as a third party’s actions, then the plaintiff asserts an independent claim” that does
not implicate Rooker–Feldman. McCormick v. Braverman, 451 F.3d 382, 392–93 (6th Cir. 2006).
Here, like the plaintiff in McCormick, West Congress alleges injury from Rivertown’s actions in
evicting West Congress just a week after it had contracted to settle the case. For claims like this,
which assert a source of injury independent of the state court’s judgment itself, “the Supreme Court
has instructed that preclusion law is the appropriate solution.” Id. at 392.
West Congress does not ask us to “overturn” the state court’s eviction order or any aspect of the
court’s later reversal of that order and enforcement of the settlement agreement. Exxon Mobil,
544 U.S. at 292. Certainly, the state court did not choose to award West Congress damages when
the court enforced the agreement, but the fact that a plaintiff did not win everything it wanted in
state court does not reassign the source of the injury from the defendant to the state-court judgment
itself. See McCormick, 451 F.3d at 394 (“The fact that the state court chose not to remedy the
injury does not transform the subsequent federal suit on the same matter into an appeal, forbidden
by Rooker-Feldman, of the state-court judgment.” (quoting Hoblock v. Albany Cty. Bd. of
Elections, 422 F.3d 77, 88 (2d Cir. 2005))). It is accordingly preclusion law, not an absence of
federal jurisdiction, that dispatches West Congress’s claim.
5
Rivertown properly raised collateral estoppel as a defense, both before the district court and on
appeal. See Smith v. Sushka, 117 F.3d 965, 969 (6th Cir. 1997). Although the district court did
not dismiss the breach claim on preclusion grounds, “we ‘may affirm for any reason presented in
the record.’” Clark v. United States, 764 F.3d 653, 660–61 (6th Cir. 2014) (quoting Loftis v. United
Parcel Serv., Inc., 342 F.3d 509, 514 (6th Cir. 2003)).
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No. 17-1941
West Congress Street Partners, LLC v. Rivertown Development, LLC
IV.
West Congress next contends that the district court erred in dismissing its state-law
discrimination claim against Rivertown, as well as its federal conspiracy claims against the City
of Detroit, Wayne County, and the individual police officers and sheriff’s deputy. We review de
novo a district court’s ruling on a 12(b)(6) motion to dismiss. Kaminski v. Coulter, 865 F.3d 339,
344 (6th Cir. 2017). While we accept the complaint’s allegations as true, id., “[t]o survive a motion
to dismiss, a complaint must contain sufficient factual matter . . . to ‘state a claim to relief that is
plausible on its face,’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (emphasis added) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). And while we draw all reasonable inferences
in the plaintiff’s favor, Kaminski, 865 F.3d at 344, the plaintiff must plead “factual content that
allows [us] to draw the reasonable inference that the defendant is liable for the misconduct
alleged,” Iqbal, 556 U.S. at 678.
Here, no plausible claim to relief emerges from West Congress’s complaint. It contains no
factual content permitting a reasonable inference that Rivertown discriminated against West
Congress on account of race, in violation of state law; or that local officials conspired to deprive
West Congress of its rights, in violation of federal law.
A.
Michigan’s Elliott-Larsen Civil Rights Act prohibits race discrimination in real estate
transactions. Mich. Comp. Laws § 37.2502(1). But West Congress alleges no facts that give rise
to an inference of discrimination on the part of Rivertown. Indeed, all the complaint offers in the
way of facts is that West Congress’s owner is black, his wife is white, and the court put the bar
keys in the charge of the owner’s wife during the ninety-day period preceding moveout. To this
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No. 17-1941
West Congress Street Partners, LLC v. Rivertown Development, LLC
West Congress adds a conclusory statement to the effect that Rivertown schemed to end the lease
on account of the owner’s race.
The state court and the receiver found, however, that even during the litigation of this case
West Congress was altering the property and operating it as a cabaret without permission and in
defiance of the court’s orders—claims West Congress does not dispute. And the receiver
explained in his report to the court that West Congress’s owner’s wife had been made responsible
for the keys “because of the difficult relationship between the parties.” There is no plausible claim
of discrimination here, and the district court did not err in dismissing it.
B.
So too with West Congress’s federal conspiracy claims against the City of Detroit, Wayne
County, and the individual police officers and sheriff’s deputy. To state a claim under 42 U.S.C.
§ 1985, a plaintiff must allege (1) that a conspiracy existed; (2) for the purpose of depriving any
person of the equal protection of or equal privileges and immunities under the laws; (3) that there
was an act in furtherance of the conspiracy; and (4) that the act injured a person or deprived him
of his rights. United Bhd. of Carpenters & Joiners of Am. v. Scott, 463 U.S. 825, 828–29 (1983).
Where the wrongful act occurs, 42 U.S.C. § 1986 creates liability for those who, “having
knowledge that any of [these] wrongs conspired to be done . . . are about to be committed,” and
“having power to prevent or aid in preventing” them, do nothing.
“[W]e are not bound to accept as true a legal conclusion couched as a factual allegation,”
but that is all West Congress has given us. Papasan v. Allain, 478 U.S. 265, 286 (1986). West
Congress alleges that the public defendants participated in a “concerted effort” to deprive West
Congress of its property through a fraudulent eviction. West Congress asserts that this “effort”
was “part of a long and voluminous history of abuses and civil rights violations”—a “complex
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West Congress Street Partners, LLC v. Rivertown Development, LLC
conspiracy to evict an African-American Tenant and replace Plaintiff with a Caucasian-owned and
operated bar/restaurant/brewery,” in which the defendants “played a substantial role.” According
to West Congress, the public defendants had direct knowledge of the settlement agreement, but
nonetheless “prepar[ed] and plann[ed] to enlist approximately thirty (30) officers of the court” to
aid in the eviction on the same day the order was fraudulently obtained, “reveal[ing] that a
concerted effort aided in the conspiracy to wrongfully evict and lock out Plaintiff.”
There is no factual content here sufficient to state with any plausibility the elements of
42 U.S.C. §§ 1985 and 1986. West Congress offers “nothing more than the conclusory allegation
that the defendants acted in concert and, without more, fail[s] to allege a sufficient factual basis to
establish any sort of ‘meeting of the minds’ or to link any of the alleged conspirators in a
conspiracy to deprive [it] of [its] civil rights.” Amadasu v. Christ Hosp., 514 F.3d 504, 507 (6th
Cir. 2008). As the district court rightly observed, West Congress does not connect the individual
officers and deputy to any particular conduct. Nor does West Congress link the asserted injury to
any action or policy of Wayne County or the City of Detroit. See Smith v. City of Troy, 874 F.3d
938, 946–47 (6th Cir. 2017). The district court did not err in dismissing the claims against the
public defendants.
***
Because Michigan preclusion law bars West Congress’s first claim, and its second and
third claims fail the Rule 12(b)(6) standard, we AFFIRM the district court’s judgment.
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