Banneker Ventures, LLC v. Graham

• Decision Date: 18 August 2015
• Docket Number: No. 14–7030.,14–7030.
• Citation: Banneker Ventures, LLC v. Graham, 798 F.3d 1119 (D.C. Cir. 2015)
• Parties: BANNEKER VENTURES, LLC, Appellant v. Jim GRAHAM, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

798 F.3d 1119

BANNEKER VENTURES, LLC, Appellant

v.Jim GRAHAM, et al., Appellees.

No. 14–7030.

United States Court of Appeals, District of Columbia Circuit.

Argued April 21, 2015.

Decided Aug. 18, 2015.

Mark A. Grannis argued the cause for appellant.With him on the briefs were Mark D. Davis and Anne K. Langer.Brian K. McDaniel entered an appearance.

Douglas M. Bregman argued the cause for appellee Washington Metropolitan Area Transit Authority.Daniel P. Golden, Assistant General Counsel, Office of the General Counsel for the Council of the District of Columbia, argued the cause for appelleeJim Graham.With them on the joint brief were Geoffrey T. Hervey, Gerard J. Stief, V. David Zvenyach, General Counsel, Office of the General Counsel for the Council of the District of Columbia, John R. Hoellen, Deputy General Counsel, and Manasi Venkatesh, Assistant General Counsel, Brian L. Schwalb, Seth A. Rosenthal, and Moxila A. Upadhyaya.Bruce P. Heppen entered an appearance.

Before: MILLETT and PILLARD, Circuit Judges, and SENTELLE, Senior Circuit Judge.

Opinion

Opinion for the Court filed by Circuit Judge PILLARD.

PILLARD, Circuit Judge:

The Washington Metropolitan Area Transit Authority (WMATA), like many transit authorities across the country, does more than build and run transit systems.WMATA is empowered to acquire, own, and convey real property to promote transit-oriented development.One way it does so is through a program that invites developers to submit proposals to develop WMATA property, and then grants the competitively selected developer an exclusive period during which to negotiate for a final development contract to carry out its proposal.

Plaintiff in this case, real estate developer Banneker Ventures, LLC, alleges that WMATA signed a contractually binding Term Sheet preliminarily selecting Banneker to develop property above a Metrorail station and giving Banneker the exclusive right to negotiate a final development agreement.Banneker further alleges that one of WMATA's Board Members, Jim Graham, abused his Board position and his seat on the Council of the District of Columbia to work behind the scenes with one of Banneker's rival bidders, LaKritz Adler Development, to derail WMATA's negotiations with Banneker.According to Banneker, Graham sought to steer the development job to LaKritz Adler, a Graham supporter and campaign contributor.WMATA dragged out its negotiating period with Banneker for many months during which, the complaint alleges, Banneker met WMATA's every shifting demand.WMATA then let the Term Sheet expire without consummating a final development agreement.WMATA eventually sold the property to another developer.

Banneker raises several distinct claims arising from its dashed opportunity.It asserts that WMATA, through Graham, breached the Term Sheet's exclusivity provision and obligation to negotiate in good faith, and that Graham and LaKritz Adler conspired to interfere with Banneker's contract (the Term Sheet) and prospective business advantage.The complaint exhaustively chronicles the facts underlying those claims and, for the reasons discussed below, we conclude that the district court erred in dismissing them.

Banneker also asserted tort claims against WMATA and Graham.We affirm the district court's dismissal of Banneker's fraud claim against WMATA as barred by sovereign immunity.Graham's asserted absolute official immunity from suit for tortious interference requires further consideration.The district court evaluated the complaint at too high a level of generality and failed to place the burden on Graham to establish his entitlement to official immunity.Because the absolute official immunity questions have yet to be analyzed by the district court at the requisite level of factual specificity, we vacate the dismissal of the tort claims against Graham and remand for further proceedings consistent with this opinion.

I.Background

A.Allegations¹

In the spring of 2007, WMATA invited bids to redevelop its property above the Shaw–Howard/Florida Avenue Metrorail station.Banneker, DefendantLaKritz Adler Development, and ten other developers submitted bids.Banneker proposed building “The Jazz at Florida Avenue,” a mixed-use development that would include 103 new residential units and 11,750 square feet of retail space.At first, things seemed to go Banneker's way.Its bid received the support of the local neighborhood commission, investors expressed interest, and Banneker's presentation to WMATA staff was well received.WMATA made its initial selection of Banneker to develop the site, and the parties negotiated a Term Sheet that contained many of the material terms of the deal and a contractually guaranteed, exclusive, five-month negotiating period for Banneker and WMATA to arrive at a final development agreement.SeeTerm Sheet, J.A. 111 §§ 4, 7, 12.Banneker paid WMATA $100,000 in exchange for the exclusive negotiation right, which fee was in addition to the $100,000 it had already paid as a “proposal deposit.”

After its preliminary success, Banneker soon met resistance.DefendantJim Graham was a member of the D.C. Council and one of the District's two voting members on WMATA's Board of Directors.²LaKritz Adler and its principals Joshua Adler and Robb LaKritz(collectively, LaKritz Adler) were major contributors to Graham's campaigns and projects, whereas Graham believed that Banneker contributed to his political opponents.From the start, Graham opposed Banneker and favored LaKritz Adler for the Florida Avenue project.Graham and LaKritz Adler colluded for the next two years to engineer an opportunity for LaKritz Adler to wrest the contract or some of its benefits from Banneker.That alliance was only half successful: Banneker ultimately lost the project, but a different developer, not LaKritz Adler, took its place.

Starting while WMATA's staff was negotiating the Term Sheet with Banneker, Graham sought to derail the process.Graham told one of Banneker's principals, Warren Williams, that Graham would cast his D.C. Council vote in favor of Williams on a lottery contract he sought if Williams would pull Banneker out of the WMATA project.Graham solicited campaign contributions and substantial financial support from another Banneker principal in exchange for Graham's support of the Banneker bid.Graham also pressured two of Banneker's development partners to drop off of the project in an effort to cause WMATA staff to abandon negotiations with Banneker and give the project to LaKritz Adler instead.

Meanwhile, Banneker was in negotiations with Howard University over a parcel adjacent to the WMATA Florida Avenue property that Banneker wanted to develop at the same time as the WMATA project.LaKritz Adler falsely told Howard University that WMATA had already selected it to develop the Florida Avenue property, not Banneker.Graham also pressed Banneker at a lunch meeting to add LaKritz Adler to its development team, claiming that doing so would be a precondition of Board approval of the Term Sheet.Immediately following the lunch, Banneker received unsolicited calls and e-mail messages from LaKritz Adler proposing transfer of Banneker's option on the adjacent parcel to LaKritz Adler—timing that Banneker alleges shows Graham's collusion with LaKritz Adler.

In June 2008, WMATA's Board of Directors approved the Term Sheet and Banneker executed it.But Graham did not give up.He pressured his fellow WMATA Directors in a closed-door session to impose an affordable housing requirement on Banneker that, based on his experience, Graham anticipated would “delay, interfere with or otherwise scuttle Banneker's efforts during the” negotiation period to follow.Am. Compl. ¶ 88.Graham also directed WMATA staff to “stop or delay negotiations” so as to “delay or destroy Banneker's ability to fully realize the benefit of its period of exclusive negotiation.”Id.¶ 127.

Upon becoming Chairman of the WMATA Board in January 2009, Graham “me[t] with WMATA's staff to pressure the WMATA staff to find a way for LaKritz Adler to be included” in Banneker's development plan.Id.¶ 131.LaKritz Adler also called WMATA staff to tell them that now-Chairman Graham had asked LaKritz Adler to “make a deal” with Banneker.Id.¶ 133.During the same period, Graham shared Banneker's confidential bid information with LaKritz Adler to provide the rival firm with a competitive advantage.Graham also forced a third Banneker development partner to drop out of the deal through delay, and demanded that Banneker replace it with LaKritz Adler.

Graham used his power on the Board to delay and undermine negotiations between Banneker and WMATA staff over a final agreement.Repeatedly, when Banneker and WMATA staff reached agreement on material terms, and WMATA staff recommended that the Board approve a final agreement, Graham initiated changes or otherwise prevented closure.He delayed Board consideration of a final agreement, directed staff to stop negotiations, switched the deal from a lease to a sale and then back to a lease again, and ordered the staff to re-appraise the property, giving rise to a new round of negotiations.

It was in the midst of that extended back and forth that Banneker learned Graham had instructed the WMATA staff to “obtain Best and Final Offers from Banneker and the two other firms who WMATA [had already] considered before selecting Banneker,” including LaKritz Adler.Id.¶ 155.WMATA's General Counsel prepared a memo at Graham's request regarding whether WMATA had the authority to solicit “Best and Final” offers from other developers during the period that the Term Sheet set for exclusive negotiations between WMATA and Banneker.(The memo, however, concluded that WMATA could not do so until Banneker's exclusivity period expired.)

In January 2010, the Board instructed WMATA staff to negotiate a larger up-front fee from Banneker to develop the site, and extended the negotiation period again.Banneker agreed to the...