Banneker Ventures, LLC v. Graham

• Citation: 19 F.Supp.3d 231
• Decision Date: 06 February 2014
• Docket Number: Civil Action No. 13–391 RMC
• Court: U.S. District Court — District of Columbia
• Parties: Banneker Ventures, LLC, Plaintiff, v. Jim Graham, et al., Defendants.

19 F.Supp.3d 231

Banneker Ventures, LLC, Plaintiff
v.
Jim Graham, et al., Defendants.

Civil Action No. 13–391 RMC

United States District Court, District of Columbia.

February 6, 2014

19 F.Supp.3d 237

Jerry L. Malone, Law Offices of Jerry L. Malone, Rockville, MD, Brian Keith McDaniel, McDaniel & Associates, Washington, DC, for Plaintiff.

John R. Hoellen, Vladlen David Zvenyach, Council of the District of Columbia, Washington, DC, Abbe David Lowell, Chadbourne & Parke LLP, Brian L. Schwalb, Moxila A. Upadhyaya,

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Seth A. Rosenthal, Venable, LLP, Washington, DC, for Defendants.

OPINION

ROSEMARY M. COLLYER, United States District Judge

Banneker Ventures, LLC, is a developer that had an exclusive right to negotiate with Washington Metropolitan Area Transit Authority for the lease and development of certain real property, but failed to reach a final agreement. In this lawsuit, Banneker alleges tortious interference with contract and business expectancy, violation of local and federal antitrust law, and civil conspiracy. Defendants Jim Graham, Joshua Adler, Robb LaKritz, and LaKritz Adler Development, LLC move to dismiss. The motions will be granted.

I. FACTS

The Amended Complaint sets forth more than fifty pages of alleged facts, summarized here. Washington Metropolitan Area Transit Authority (WMATA) sought to improve certain real property located above the Shaw–Howard/Florida Avenue Metrorail Station (the Site), consisting of three lots located in the 700 and 800 blocks of Florida Avenue, N.W., in Washington, D.C. Am. Compl. [Dkt. 18] ¶¶ 1, 22. In the spring of 2007, WMATA issued a Request for Expressions of Interest for development of the Site. Id. ¶ 22.

Banneker Ventures, LLC, (Banneker) is a firm that specializes in construction and property development. Banneker and eleven other developers separately submitted responses to the Request for Expressions of Interest. Id. ¶ 23. In August 2007, WMATA issued a Joint Development Solicitation to six developers, including Banneker and LaKritz Adler Development, LLC (LAD),¹ requesting more detailed proposals. The Joint Development Solicitation provided that a developer would be selected, a term sheet would be negotiated, and a Joint Development Agreement would be negotiated and completed within 150 days after the WMATA Board's approval of the selected developer and the term sheet. Id. ¶ 28; see Joint Development Solicitation [Dkt. 22–4].

Banneker proposed a project that would be known as “The Jazz at Florida Avenue” (Project), id. ¶ 50, and Banneker and WMATA staff negotiated a draft term sheet for presentation to the WMATA Board. Id. ¶ 59. On June 26, 2008, the WMATA Board chose Banneker as the “Selected Developer” for the Site. Id. ¶¶ 2, 92, 115. The Board simultaneously directed its staff to negotiate an affordable housing set-aside as part of the Project. Id. ¶ 89.

On July 17, 2008, WMATA and Banneker signed a Term Sheet, which provided that Banneker had the exclusive right, for a limited period of time, to negotiate a Joint Development Agreement with WMATA for development of the Site. Id. ¶¶ 2, 18, 116; see also WMATA Mot. [Dkt. 22], Ex. 3 [Dkt. 22–5] (Term Sheet). The Term Sheet provided: “This Term Sheet will have no binding effect on the parties except that [Banneker] shall have the exclusive right to negotiate a Definitive Agreement with WMATA for a period of five (5) months from the date of this Term Sheet.” Term Sheet at 11. Through March 2010, Banneker and WMATA staff continued to negotiate and revise the Term Sheet, but the WMATA Board did not approve a revised Term Sheet and the

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parties never agreed on a final Joint Development Agreement. Am. Compl. ¶¶ 3, 154–176. Despite three extensions of time, Banneker's exclusive right to negotiate expired on March 31, 2010. Id. ¶¶ 12, 18, 176.

Banneker alleges that Jim Graham, a District of Columbia Council Member and a WMATA Board of Directors Member at that time,² engaged in “bid suppression and bid rigging,” i.e. , he objected to the choice of Banneker as the Selected Developer and interfered with Banneker's attempts to finalize the Term Sheet and a Joint Development Agreement. Id. ¶¶ 4–11, 127. Mr. Graham's alleged goal was to designate LAD, a major contributor to Mr. Graham's campaign and constituent services fund, as the Selected Developer for the Site. Id. ¶¶ 5, 7, 26.

Specifically, Banneker alleges that Mr. Graham interfered with Banneker's exclusive right to negotiate a Joint Development Agreement by offering his vote as a D.C. Council Member to approve a D.C. lottery contract that would benefit one of Banneker's then principals, Warren Williams, in exchange for Banneker's withdrawal as the Selected Developer for the Site. Id. ¶¶ 7, 98, 109. Mr. Williams refused. Id. ¶ 8. Mr. Graham also allegedly interfered by falsely reporting to the WMATA Board that Banneker did not have the capability to develop the Site, id. ¶ 65, and questioning whether the deal was financially viable, id. ¶¶ 93, 137. In addition, Mr. Graham allegedly convinced the WMATA Board to add affordable housing requirements to the Project, thereby decreasing the value of the Project to the detriment of Banneker. Id. ¶¶ 10, 89, 111. Further, Mr. Graham allegedly pressured Banneker to include LAD on the Project as a co-developer, id. ¶¶ 11, 70–71, 111, and to purchase a high-priced option on adjacent property from LAD, id. ¶¶ 119, 127. Also, Mr. Graham allegedly pressured Banneker to help fund a U Street Business Improvement District.³ Id. ¶¶ 111, 121.

The WMATA Board found that Mr. Graham violated the WMATA Standards of Conduct⁴ and the D.C. Board of Ethics and Government Accountability similarly determined that Mr. Graham violated the D.C.Code of Conduct. Id. ¶¶ 6, 18, 131. In February 2012, the WMATA Board launched an independent investigation into allegations that Mr. Graham had offered to support Mr. Williams's bid for the D.C. lottery contract in exchange for Banneker's withdrawal from the Project. Id. ¶¶ 181–82. A partner in the law firm of Cadwalader, Wickersham & Taft LLP, Bradley Bondi, led the investigation and issued a Report of Investigation to the WMATA Board on October 11, 2012. See id. ¶¶ 182–191; Graham Mot., Ex. 3 [Dkt. 21–3] (Cadwalader Report).⁵

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Central to the Amended Complaint is the allegation that Mr. Graham violated Article III § A of the WMATA Standards of Conduct. Am. Compl. ¶ 190. Article III § A provides:

Public funds must be expended in a manner which assures the highest degree of confidence and public trust in WMATA. It is imperative that Board Members in their private financial relationships and in their official conduct strictly avoid engaging in actions which create conflicts of interest or the appearance of a conflict of interest. It is likewise imperative that Board Members act impartially in their official conduct by avoiding any actions which might result in favored treatment or appearances thereof toward any individual, private organization, consultant, contractor or potential consultant or contractor. Each Board Member while acting in his/her capacity as a WMATA Board Member, has a duty to place the public interest foremost in any dealings involving WMATA.

Id. at 53. Mr. Bondi advised the WMATA Board that Mr. Graham violated Article III § A in two ways. First, by telling Mr. Williams that he would support his bid for the lottery contract if Banneker withdrew as Selected Developer for the Site, Mr. Graham “pitted the interests” of the D.C. Council against the interests of WMATA, thereby creating a conflict of interest, or at least the appearance of one. Id. Second, by supporting LAD's inclusion in the Project and opposing the choice of Banneker as the Selected Developer, Mr. Graham breached his duty to remain impartial. Id. ; see also Am. Compl. ¶ 190.⁶

WMATA did not sell or lease the Site to any of the LaKritz Adler Defendants. In July 2011, WMATA sold the Site to JBG Construction for $10.2 million. Cadwalader Report at 28.⁷

After the Cadwalader Report was issued, the D.C. Board of Ethics and Government Accountability initiated an investigation into Mr. Graham's conduct and issued an Ethics Report. The Ethics Report found that Mr. Graham violated the D.C.Code of Conduct by inappropriately

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favoring his campaign contributor, LAD, in the negotiation for development of the Site. Am. Compl. ¶ 195. On February 25, 2013, the D.C. Council adopted a resolution reprimanding Mr. Graham for improperly offering to support Mr. Williams's bid for the D.C. lottery contract in exchange for Banneker's withdrawal from the development of the Site. Id. ¶¶ 197–202 (citing Jim Baxter, D.C. Council Reprimands Jim Graham, The Wash. Examiner, Feb. 25, 2013).

Thereafter, Banneker filed this suit against WMATA, Mr. Graham, Mr. LaKritz, Mr. Adler, and LAD. Mr. Graham is sued in his official and personal capacities. The Amended Complaint alleges eight counts:

Count I—Breach of Contract (against WMATA);

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