Gil Ramirez Grp., LLC v. Houston Indep. Sch. Dist.
| Decision Date | 15 November 2012 |
| Docket Number | Case No. 4:10-cv-4872 |
| Parties | THE GIL RAMIREZ GROUP, LLC, et al., Plaintiffs, v. HOUSTON INDEPENDENT SCHOOL DISTRICT, Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Pending before the Court is Defendants Fort Bend Mechanical, Ltd.'s ("FBM"), David Medford's ("Medford"), and Fort Bend Management, LLC's ("FBM Management") (collectively "the FBM Defendants") Motion to Dismiss Plaintiffs' Third Amended Complaint. (Doc. No. 135.) After considering the parties' filings, all responses and replies thereto, and the applicable law, the Court finds that the FBM Defendants' Motion should be GRANTED IN PART and DENIED IN PART.
Plaintiffs The Gil Ramirez Group ("GRG") and Gil Ramirez, Jr. ("Ramirez") bring this suit against Houston Independent School District ("HISD"), several construction businesses, and various individuals and entities affiliated with those businesses. (Compl. ¶¶ 3-12.) GRG is a commercial construction and repair business founded and principally owned by Ramirez. (Compl. ¶ 15.) GRG and several of the defendants, including FBM, compete for government construction contracts. The claims in this lawsuit arise out of alleged improprieties in the awarding of HISD's construction and repair contracts.
Several years ago, voters approved a new bond issue by HISD, with the proceeds to be used for school district construction. (Compl. ¶ 16.) HISD adopted a bidding system to award contracts for completing construction and repairs. (Compl. ¶ 17.) HISD first selected three contractors for the northern region of the school district and three contractors for the southern region of the school district. (Compl. ¶¶ 18, 22, 95.) In November 2008, GRG was one of the contractors selected by HISD, as was FBM. (Compl. ¶¶ 21-22.) HISD signed Job Order Construction ("JOC") contracts with approved contractors, enabling the companies to bid on projects. (Compl. ¶¶ 27, 95.)
The bidding process worked as follows: When HISD became aware of a needed repair, it sent out notice to the three approved contractors in the region. (Compl. ¶ 28.) The contractors then assessed the scope of work, coordinated with subcontractors, and submitted their proposals. (Compl. ¶¶ 26, 28.) Proposals were evaluated by a third party that would make recommendations to HISD as to which contractor's proposal was the best value. (Compl. ¶ 29.) Initially, Plaintiffs allege that GRG frequently won bids based on this recommendation, and routinely received praise for the quality and timeliness of its work. (Compl. ¶¶ 29-30.)
In January 2009, after GRG had been selected as an approved contractor for HISD, Defendant Lawrence Marshall ("Marshall"), a longtime member of the Board of Trustees, became its President. (Compl. ¶ 32.) Plaintiffs allege that, upon becoming President, Marshall began to take steps to award contracts to his political donors. (Compl. ¶¶ 41, 49.)
The FBM Defendants are among Marshall's political donors. (Compl. ¶¶ 34-37.) Marshall's campaign reported that Medford, who runs FBM, individually donated $11,000 to Marshall's campaigns between 2008 and 2011. (Compl. ¶¶ 23, 35.) Medford also wrote a $25,000 check to Marshall on November 7, 2008, five days before FBM was approved as acontractor for HISD. (Compl. ¶ 35.)1 Defendant Eva Jackson ("Jackson") is another of Marshall's political donors. (Compl. ¶ 33.) Jackson owns Defendant RHJ-JOC, Inc. ("RHJ"), a business that, like GRG, competes directly for government construction and repair jobs. (Compl. ¶ 39.)
Plaintiffs allege that Marshall began to seek favors for his political donors early in his presidency. Under HISD's customs, if the President and Superintendent of HISD could agree on a contractor, that contractor could be selected without a board vote. (Compl. ¶ 42.) Marshall initially attempted convince then-Superintendent Dr. Abe Saavedra ("Saavedra") that RHJ should be awarded a contract with HISD. (Compl. ¶¶ 41, 43.) Saavedra refused to agree with Marshall, and sometime thereafter, Marshall informed Saavedra that he had lost confidence in him and informed him that he would seek an agreement from the school board removing him. (Compl. ¶¶ 45-48.) Saavedra resigned in February 2009. (Compl. ¶ 101.) Plaintiffs allege that the principal reason Saavedra was "pushed out" was in order to enable Marshall to award contracts to his political contributors. (Compl. ¶ 48.)
Later that year, at a board meeting in August of 2009, RHJ was approved as a seventh contractor and awarded a JOC contract. (Compl. ¶ 102.) This approval contravened HISD's policies because it was not effectuated through a selection committee. (Compl. ¶ 103.)2 Shortly after RHJ was approved, opportunities for GRG to bid ended. (Compl. ¶ 104.)
The original six JOC contracts came up for renewal in January of 2010. (Compl. ¶ 105.) Plaintiffs were allegedly informed that there would be no problem with renewal. (Compl. ¶106.)3 However, mere hours before the board meeting at which renewals of JOC contracts were to be discussed, the meeting agenda was changed and the renewals were no longer listed. (Compl. ¶ 108.) A new selection committee was formed to select contractors to whom to award JOC contracts. (Compl. ¶ 111.) Plaintiffs allege that this was done so that RHJ could be approved in accordance with HISD's policies. (Compl. ¶ 112.) Ultimately, the selection committee awarded JOC contracts to RHJ and FBM. (Compl. ¶ 115.)
Plaintiffs allege that, every month, FBM and RHJ each paid $3,000 and $2,500 respectively to Defendant JM Clay and Associates ("JM Clay") for consulting services. (Compl. ¶¶ 60-62.) JM Clay is operated by Defendant Joyce Moss Clay ("Clay"), Marshall's friend and campaign treasurer. (Compl. ¶ 59.) FBM began making these payments in 2009 and continues to do so today. (Compl. ¶ 83.) RHJ made these payments from March 2004 through November 2008, resumed making them in May 2010, and continues to make them today. (Compl. ¶ 83.)4 Plaintiffs allege that no record of any work product by JM Clay and Associates has been discovered, and that none exists. (Compl. ¶¶ 63, 85.)
Plaintiffs allege that, in fact, Clay simply transferred all or some of these payments to Marshall or Marshall & Associates, a business entity owned by Marshall. (Compl. ¶¶ 67, 86.)5 Clay's payments to Marshall or Marshall & Associates ranged from $39,000 and $59,000 annually. (Compl. ¶ 87.) Plaintiffs allege that no evidence has been produced indicating that Marshall performed any work for these payments, and, even if he did perform work, that work would have been an improper use of his elected authority to steer contracts to particularcompanies. (Compl. ¶¶ 88, 89.) Plaintiffs claim that the purpose of these payments was to secure multi-million dollar contracts for Defendants RHJ and FBM. (Compl. ¶¶ 92, 93.) Furthermore, Plaintiffs allege that Marshall & Associates is itself a "mere front for receipt of bribes paid by HISD contractors," and that Marshall pays personal financial obligations from this business account. (Compl. ¶¶ 130, 131.) Plaintiffs allege that both Marshall and Clay's businesses were created entirely to conceal the illegal bribes from FBM and RHJ. (Compl. ¶ 132.)
Plaintiffs also allege that FBM installed an expensive stand-by generator in Clay's home. (Compl. ¶¶ 64, 118.) FBM's records reveal numerous invoices it received from other companies it apparently hired to assist in the installation of this generator. (Compl. ¶¶ 118-119.) However, no records exist indicating an invoice from FBM to Clay for the generator. (Compl. ¶¶ 65, 120.) Plaintiffs allege, based on the dates of the invoices FBM received from others, that the installation of this generator occurred shortly before FBM was awarded a million dollar contract by HISD. (Compl. ¶ 121.)
Plaintiffs also charge HISD with inappropriately siphoning purpose-specific bond money to use for general operating expenses. (Compl. ¶ 69.) Bonds issued by HISD are required by law to describe specifically the intended use of the funds, and the funds must then be used for those purposes. (Compl. ¶ 76.) HISD has, for over ten years, required all contractors who received payment for completing a project to return two percent to HISD. (Compl. ¶¶ 70-71.) Although the payments were made from purpose-specific bond funds, HISD put the two percent return into a general fund for operating expenses. (Compl. ¶ 72.) FBM records reveal that it has paid this two percent fee to HISD. (Compl. ¶ 74.)6
Plaintiffs allege numerous violations of law by HISD, Marshall and his company, the FBM Defendants, Jackson, RHJ, and Clay and her company. The claims brought against the FMB Defendants include violations of 18 U.S.C. § 1962 (b), (c) and (d) of the Racketeer Influenced Corrupt Organizations Act ("RICO Act"), tortious interference with an existing contract, and tortious interference with a prospective contract. (Compl. ¶¶ 162-187, 207-217.) Also included are allegations of conspiring to commit an unlawful act. (Compl. ¶¶ 221-226.)
A court may dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "To survive a Rule 12(b)(6) motion to dismiss, a complaint 'does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief—including factual allegations that when assumed to be true 'raise a right to relief above the speculative level.'" Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)); see also Twombly, 550 U.S. at 556 n.3 (). That is, a complaint must "contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A claim has facial...
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