Scott v. Reif, 090216 FED6, 15-1859

Docket Nº:15-1859
Opinion Judge:HELENE N. WHITE, CIRCUIT JUDGE.
Party Name:JAMES SCOTT; HELEN SCOTT; JAMES SCOTT d/b/a BEST WAY AUTO SALES, Plaintiffs-Appellants, v. OFFICER KEVIN REIF; LIEUTENANT RAY COLLINS; CITY OF REDFORD POLICE DEPARTMENT; GENE'S TOWING, INC.; CITY OF REDFORD, [1] Defendants-Appellees.
Judge Panel:BEFORE: GILMAN, WHITE, and STRANCH, Circuit Judges.
Case Date:September 02, 2016
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit
 
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JAMES SCOTT; HELEN SCOTT; JAMES SCOTT d/b/a BEST WAY AUTO SALES, Plaintiffs-Appellants,

v.

OFFICER KEVIN REIF; LIEUTENANT RAY COLLINS; CITY OF REDFORD POLICE DEPARTMENT; GENE'S TOWING, INC.; CITY OF REDFORD, 1 Defendants-Appellees.

No. 15-1859

United States Court of Appeals, Sixth Circuit

September 2, 2016

NOT RECOMMENDED FOR PUBLICATION

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

BEFORE: GILMAN, WHITE, and STRANCH, Circuit Judges.

HELENE N. WHITE, CIRCUIT JUDGE.

James and Helen Scott, owners of Best Way Auto Sales (Best Way), brought this action against a number of parties, alleging violations of 42 U.S.C. § 1983, the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. § 1962, and Michigan law. Defendants City of Redford, Officer Kevin Reif, and Lieutenant Ray Collins moved to dismiss, arguing these claims are barred by res judicata. The district court granted the motion, concluding, inter alia, that the Scotts could have but did not raise the instant claims in an earlier state-court mandamus action arising out of the same incident. We AFFIRM.

I.

A. Allegations

Best Way, a business licensed to sell used cars, scrapped automobiles, and auto parts, purchases junk cars from independent-contractor tow-truck drivers and other sources. On February 2, 2012, officers from the Western Wayne Auto Theft Unit (WWATU)2 executed a search warrant at Best Way, and at the home of James and Helen Scott, Best Way's owners. The warrant was issued based on an affidavit by WWATU member and Redford Police Officer Defendant Kevin Reif (Reif), attesting, among other things, that Best Way had sold stolen vehicles for scrap money. The Scotts contend that the warrant contained material omissions and misrepresentations, that police purposely searched their home when the Scotts were not there, and that, although the warrant did not mention a safe or authorize the seizure of cash, police seized $180, 000 from the Scotts' safe but reported the amount of cash seized from the safe as only $100. During the search, Lieutenant Ray Collins (Collins), a Michigan State Police Officer and Reif's supervisor on the task force, allegedly said, "Let's take everything so we can make sure he won't be able to open for business on Monday." (Compl., PID 3-4, 9.)

Following the search and seizure, the Wayne County Prosecutor's Office denied the WWATU's request for an arrest warrant for James Scott. The Scotts allege that WWATU officers thereafter continued to investigate "in a way that would harass and damage" the Scotts, specifically by soliciting tow-truck drivers to testify against the Scotts, and offering the drivers immunity in an effort to fabricate evidence. The State Attorney General's Office then also declined to prosecute.

The Scotts allege that their business has suffered as a result of these actions because tow-truck drivers "will no longer do business with [Best Way] for fear of arrest, prosecution or retaliation by the officers." (Id., PID 10.) The Scotts also contend police have refused to return the property seized during the raid, including sixteen luxury vehicles, six trucks, and the alleged $180, 000 cash. They also allege they cannot retrieve the vehicles unless they pay storage fees in excess of $50, 000.3

B. State Mandamus Action

On April 20, 2012, the Scotts filed a petition for a writ of mandamus in the Wayne County Circuit Court against Reif, Collins, unnamed police officers, the State of Michigan, and the Michigan State Police Department, seeking the return of property seized during the execution of the search warrants, punitive damages for Reif's material omissions and misrepresentations in the warrant affidavit, and further "damages for intentional infliction of emotional and financial distress and interference with contractual relations resulting from" the searches and seizures. (Mandamus Pet., PID 482-502.) Following a hearing on July 10th, the court ruled in the defendants' favor from the bench, orally granting the motion for summary disposition because the case involved disputed facts-including that the police claimed to have returned all the items and not to have taken $180, 000 in the first instance-and thus the defendants had no clear legal duty to act, which precluded granting the writ. On July 17, 2012, the court issued an order granting the motion, dismissing the complaint with prejudice, and "dispos[ing] of all pending claims and clos[ing] the case." (Order, PID 505-06.)

On August 6, 2012, the Scotts filed motions for reconsideration and to amend their complaint to add claims for violations of § 1983 and state law. The Scotts sought reconsideration on the basis that they had not had an opportunity to amend their pleadings, noting that their additional claims potentially could be barred by res judicata in a future action.

The court denied the motion for reconsideration without a hearing. Scott v. Mich. State Police Dep't, No. 312378, 2013 WL 6670855, at *2 (Mich. Ct. App. Dec. 17, 2013) (per curiam). At a hearing on the motion to amend, the Scotts argued, inter alia, that the parties had acknowledged at the prior hearing that the plaintiffs had other claims, and that refusal to allow amendment could result in a "substantial possibility" that their claims would be barred by res judicata in a future action. (Sept. 14 Hr'g, PID 960, 965-66.) The court, noting that plaintiffs had "stipulated to the entry of an order dismissing the case with prejudice and stipulated that the order [would] dispose of all pending claims and close the case, " concluded there was nothing to amend and denied the motion.4 (Id., PID 966-70.)

The Michigan Court of Appeals affirmed the denial of mandamus and of the motions. See generally Scott, 2013 WL 6670855. With respect to the motions, the court held that the trial court's...

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