Edmondson & Gallagher v. Alban Towers Tenants Ass'n
| Decision Date | 10 March 1995 |
| Docket Number | 94-7064,Nos. 93-7146,s. 93-7146 |
| Citation | 48 F.3d 1260,310 U.S. App. D.C. 409 |
| Parties | , RICO Bus.Disp.Guide 8843 EDMONDSON & GALLAGHER, Thomas Gallagher and James Edmondson, Appellants, v. ALBAN TOWERS TENANTS ASSOCIATION; Vera Ruser; Richard A. Gross; Charles J. Beard; Richard W. Benka; Stanley B. Bernstein; Robert L. Birnbaum; Deborah B. Breznay; James K. Brown; John L. Burke, Jr.; Philip Burling; Laurie Burt; Stefanie D. Cantor; William J. Cheesman; Mark F. Clark; Peter W. Coogan; Stephen B. Deutsch; David B. Ellis; Peter B. Ellis; H. Kenneth Fish; Kevin J. Fitzgerald; Edward N. Gadsby, Jr.; Louis P. Georgantas; David R. Geiger; Kenneth L. Grinnell; Dean F. Hanley; Thomas M.S. Hemnes; John H. Henn; Christian M. Hoffman; Wendy B. Jacobs; Dennis R. Kanin; Michael B. Keating; Henry M. Kelleher; Bruce A. Kinn; William B. Koffel; Sandra L. Lynch; Paul V. Lyons; Paul Randolph Murphy; John D. Patterson, Jr.; Steven W. Phillips; David R. Rosenblum; Robert S. Sanoff; Leonard Schneidman; Sandra Shapiro; James A. Smith; Adam Sonnenschein; Sandra L. Spalletta; John M. Stevens, Jr.; Cathleen Douglas Stone; Robert W. Sweet, Jr.; Arthur G. Telegan; Marc K. Temin; Paul Robert W. Sweet, Jr.; Donald R. Tsongas; Verne W. Vance, Jr.; David W. Walker; Donald R. Ware; David L. Weltman; Barry B. White; Brandon F. White; Deborah A. Willard; Toni G. Wolfman; Arnold M. Zaff, Appellees. James P. BYRD, Appellant, v. ALBAN TOWERS TENANTS ASSOCIATION; Vera Ruser; Richard A. Gross; Charles J. Beard; Richard W. Benka; Stanley B. Bernstein; Robert L. Birnbaum; Deborah B. Breznay; James K. Brown; John L. Burke, Jr.; Philip Burling; Laurie Burt; Stefanie D. Cantor; William J. Cheesman; Mark F. Clark; Peter W. Coogan; Stephen B. Deutsch; David B. Ellis; Peter B. Ellis; H. Kenneth Fish; Kevin J. Fitzgerald; Edward N. Gadsby, Jr.; Louis P. Georgantas; David R. Geiger; Kenneth L. Grinnell; Dean F. Hanley; Thomas M.S. Hemnes; John H. Henn; Christian M. Hoffman; Wendy B. Jacobs; Dennis R. Kanin; Michael B. Keating; Henry M. Kelleher; Bruce A. Kinn; William B. Koffel; Sandra L. Lynch; Pau |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeals from the United States District Court for the District of Columbia (93cv01090).
David J. Branson, Washington, DC, argued the cause, for appellants. With him on the briefs was Daniel J. Culhane, Washington, DC.
Rodney F. Page, Washington, DC, argued the cause, and filed the brief, for appellees. James B. Rosenthal, Cleveland, OH, entered an appearance, for appellees.
Before: EDWARDS, Chief Judge; WILLIAMS and GINSBURG, Circuit Judges.
Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.
These consolidated cases arise from Edmondson & Gallagher's failed attempt to purchase the Alban Towers apartment building from Georgetown University. Edmondson & Gallagher and its real estate broker, James Byrd, brought separate suits in D.C. Superior Court against Alban Towers Tenants Association, its president, Vera Ruser, and its lawyers, Richard Gross and the law firm at which he was then a partner, Foley, Hoag & Eliot. The plaintiffs alleged tortious interference with contract, abuse of process, malicious prosecution, and conspiracy to violate and violation of RICO, the Racketeer Influenced and Corrupt Organizations statutes, 18 U.S.C. Secs. 1961, 1962(c) & (d) (1988 & Supp.1993).
The defendants removed the cases to federal district court and there filed motions to dismiss or, in the alternative, for summary judgment. The district court granted these motions (without distinguishing between the two) in two memorandum opinions. Edmondson & Gallagher v. Alban Towers Tenants Ass'n, 829 F.Supp. 420 (D.D.C.1993); Byrd v. Alban Towers Tenants Ass'n, Civ. No. 93-1611 (D.D.C. Feb. 28, 1994). The court found that the predicate acts alleged under RICO did not constitute a "pattern of racketeering activity" and failed to meet RICO's continuity requirement. Having dismissed the federal claims, the district court exercised its supplemental jurisdiction over the state claims and dismissed them as well, invoking such grounds as laches, the Noerr-Pennington doctrine, and an unnamed principle that appears somewhat akin to claim or issue preclusion. 829 F.Supp. at 425-29.
We affirm the district court's dismissal of plaintiffs' RICO claims, because we find that the single scheme alleged--designed to frustrate one transaction and inflicting a single, discrete injury on a small number of victims--fails to meet RICO's requirement of a "pattern of racketeering activity". After the district court dismissed the federal claims, however, it abused its discretion by reaching the merits of the local-law claims. We therefore vacate that portion of the judgment and remand the case to the district court with instructions that it either remand the case to D.C. Superior Court, or dismiss without prejudice so that Edmondson & Gallagher may refile its claims there. See Carnegie-Mellon University v. Cohill, 484 U.S. 343, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988) (); 28 U.S.C. Secs. 1367(c), (d) (Supp.1993).
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In reviewing the grant of the motion to dismiss, we accept as true the allegations of the two complaints, which are substantially identical. See Whitacre v. Davey, 890 F.2d 1168, 1168 (D.C.Cir.1989). According to them, Edmondson & Gallagher, with Byrd as its broker, agreed in July 1986 to purchase Alban Towers from Georgetown University for an initial purchase price of $16 million, to be increased by $35,000 every month until closing. Edmondson & Gallagher tendered a $650,000 letter of credit as an earnest money deposit. As in any sale of a "housing accommodation" with five or more units in the District of Columbia, the tenants of Alban Towers enjoyed a statutory right of first refusal; they could purchase the building themselves if they could match Edmondson & Gallagher's contract terms, including the $650,000 earnest money deposit in cash or a letter of credit, by December 30, 1986. See D.C.Code Secs. 45-1631 et seq. (1981).
The tenants formed the Alban Towers Tenants Association and retained Richard Gross and Foley, Hoag & Eliot as counsel. To raise the money to match Edmondson & Gallagher's $650,000 deposit, as well as the $16 million purchase price, they turned to a small development company called HDS and its co-venturer, George Van Wagner.
On December 30, 1986, the last day the tenants could exercise their statutory right of first refusal, Gross tendered a signed purchase agreement on their behalf to Georgetown's escrow agent, but no deposit. According to the complaints, then, the tenants failed to exercise their rights, and those rights expired. Nevertheless, on December 31, defendants had Van Wagner send the escrow agent a $650,000 personal check drawn on Van Wagner's account. Plaintiffs allege that the check was not only untimely, but worthless: Van Wagner's bank account contained only $433.16 on the date the check was tendered, it had been overdrawn several times in that period, and its balance had never exceeded $2300. Despite the tenants' failure to satisfy the conditions for exercising their right of first refusal, Gross filed a "Notice of Exercise of Rights of First Refusal" with the D.C. Recorder of Deeds on January 5, 1987. The document clouded title to the building; to obtain the title insurance required by the contract of sale, Georgetown had to file a lawsuit to clear title.
According to the complaints, the tenants exploited this quiet-title action, holding the building sale hostage and thereby attempting to force Edmondson & Gallagher or Georgetown to pay them off. They pursued an objectively baseless defense by means of perjury, fraud, and bribery, solely to stall summary judgment, demanding $2,000,000 to settle. In particular, they stalled by filing an answer falsely stating that Georgetown prevented Van Wagner's check from being funded, by repeatedly concealing Van Wagner's whereabouts, and by deliberately submitting false statements by Gross, Van Wagner, and others.
For example, the complaints state that although Gross knew that Van Wagner's check was both a day late and worthless, he opposed Georgetown's summary judgment motion with false affidavits from Van Wagner and two of his associates swearing (1) that Van Wagner's check had been delivered on December 30, within the statutory time period, and (2) that Van Wagner had adequate funds to cover the check. They allege that the affidavits, besides being perjured, were secured by bribery and fraud--by false promises of millions of dollars of business for Van Wagner.
Throughout the litigation, title to Alban Towers remained clouded. When the D.C. Court of Appeals finally decided that the sale to Edmondson & Gallagher could go forward in December 1989, nearly three years after the expiration of the tenants' right to purchase, market conditions had changed substantially and made the contract, in plaintiffs' words, "unperformable".
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RICO authorizes civil suits by "[a]ny person injured in his business or property by reason of a violation of [18 U.S.C. Sec. 1962]." 18 U.S.C. Sec. 1964(c) (1988). Section 1962 contains four separate subsections, each addressing a different problem....
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