Hall American Center Associates v. Dick

• Decision Date: 19 December 1989
• Docket Number: Civ. A. No. 89-1018.
• Parties: HALL AMERICAN CENTER ASSOCIATES LIMITED PARTNERSHIP, American Center Properties Limited Partnership, Michigan limited partnerships, and Hall Financial Group, Inc., a Delaware corporation, Plaintiffs, v. Leslie DICK, L. Stanford Evans, Individuals, American Town Center Associates Limited Partnership, a Michigan limited partnership, American Investment Properties, Inc., a Michigan corporation, Vestevich, Dritsas, McManus, Evans, Payne & Vlcko, a Michigan corporation, and Barbier & Tolleson, a Michigan corporation, Defendants.
• Court: U.S. District Court — Western District of Michigan

726 F. Supp. 1083

HALL AMERICAN CENTER ASSOCIATES LIMITED PARTNERSHIP, American Center Properties Limited Partnership, Michigan limited partnerships, and Hall Financial Group, Inc., a Delaware corporation, Plaintiffs, v. Leslie DICK, L. Stanford Evans, Individuals, American Town Center Associates Limited Partnership, a Michigan limited partnership, American Investment Properties, Inc., a Michigan corporation, Vestevich, Dritsas, McManus, Evans, Payne & Vlcko, a Michigan corporation, and Barbier & Tolleson, a Michigan corporation, Defendants.

Civ. A. No. 89-1018.

United States District Court, E.D. Michigan, S.D.

December 19, 1989.

James E. Romzek, James A. Simpson, Simpson & Moran, Birmingham, Mich., for plaintiffs.

Stanford Evans, Vestevich, Dritsas, McManus, Evans, Payne & Vlcko, Bloomfield Hills, Mich., Michael Schwartz, Charfoos & Christensen, William Thorpe, Detroit, Mich., for defendants.

MEMORANDUM OPINION

RALPH M. FREEMAN, Senior District Judge.

This action revolves around the American Center Building (Building) and approximately 40 of its 70 surrounding acres of undeveloped property (Land) in Southfield, Michigan.¹ The court will review the background facts and then address the various motions to dismiss filed by the defendants.² The court will dismiss the RICO claim if the plaintiffs do not cure certain pleading deficiencies within 30 days and will dismiss the state law claims against defendants Evans, the Vestevich firm, and the Barbier firm, as to whom no independent basis for federal jurisdiction exists.

I. BACKGROUND

Plaintiff Hall American Center Associates Limited Partnership (Building Partnership) is a limited partnership organized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. Plaintiff American Center Properties Limited Partnership (Land Partnership) is a limited partnership organized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. Plaintiff Hall Financial Group, Inc. (Hall Financial) is a corporation organized under the laws of the State of Delaware, with its principal place of business in Dallas, Texas.

The American Center Building (Building) is a major metropolitan office complex, with a total gross square footage in excess of 579,000, comprised of a 25-story office building, a two-story commercial mall, and a two-level underground parking structure located on approximately 30 acres of real property in Southfield, Michigan. The Building is owned by the Building Partnership, itself comprised of three general partners and 175 limited partners located in various states. Approximately 70 acres of undeveloped real estate (Land) located immediately adjacent to the Building³ is owned by the Land Partnership, itself comprised of three general partners and 87 limited partners located in various states. The three general partners of the Building Partnership and the Land Partnership (collectively, the Partnerships) are common to those Partnerships, as is Craig Hall, their managing general partner.

Hall Financial provides day-to-day management services to the Partnerships, coordinates communications with them, and gives them advice in connection with their assets and properties. Neither Hall Financial nor any of its employees or affiliates has any authority to agree to sell the Property or to accept any terms relative to any sale. Decisions regarding the sale of the Property can only be made by Craig Hall on behalf of the Partnerships, after which there must be formal approval of a majority in interest of the Partnerships' respective limited partners.

Defendant Leslie Dick (Dick) is a citizen of the State of Michigan, a resident of the Eastern District of Michigan, and the defendant to whom most of the allegations in the complaint point. Defendant L. Stanford Evans (Evans) is a lawyer and a member of the defendant law firm Vestevich, Dritsas, McManus, Evans, Payne & Vlcko (Vestevich). Defendant American Town Center Associates Limited Partnership (ATCA) is a limited partnership organized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. Defendant American Investment Properties, Inc. (AIP) is a corporation organized under the laws of the State of Michigan, with its principal place of business in the Eastern District of Michigan. According to the complaint, "Dick owns and controls ATCA and AIP and at all times relevant to the allegations herein, ATCA was acting on the express and/or implied authority of Dick and/or AIP, and AIP was acting on the express and/or implied authority of Dick." Complaint, ¶ 21. Defendants Vestevich, a Michigan law firm, and Barbier & Tolleson (Barbier), also a Michigan law firm, have acted as legal counsel for Dick, ATCA, and AIP in matters concerning the Property.

According to the "Summary of the Complaint,"⁴

Leslie Dick has, since 1986, tried every way he could apparently imagine to buy the American Center Building ... and approximately 40 of its 70 surrounding acres of undeveloped property.... He relentlessly harassed the owners of the Property with letter proposals until his proposals were flatly rejected on a number of bases, not the least of which was that the owners simply did not want to sell to Mr. Dick (judging him financially incapable of purchasing a property of this size and value) and that the owners (i) thought that the time was not right for a sale of the Building and (ii) have themselves been more interested in a joint venture for the Land with an experienced, capable and respected developer....

Instead of accepting defeat in his efforts, Mr. Dick has, through a shell partnership and a dummy corporation, launched a vicious and malicious campaign of (i) baseless litigation (he has filed two essentially identical lawsuits and has sought to intervene in yet another), (ii) threats and harassment (he has so harassed and interfered with a proposed joint venture with the Land that the joint venture has collapsed), (iii) intimidation (he unsuccessfully and wrongfully attempted to use the offices of the United States Attorney to pressure Plaintiffs into submission and has threatened the proposed joint venture partner with retaliatory litigation and scheduled a useless deposition of that individual) and (iv) clouding title to the Property through the filing of a welter of notices of lis pendens.

Mr. Dick's first lawsuit was filed in Federal District Court Zatkoff, J. and sought specific performance of what he claimed to be both written and oral contracts to purchase the Property, and included a count for damages based on the alleged fraud. That complaint was dismissed by summary judgment. However, within 24 hours and in what can only be viewed as blatant forum shopping, Mr. Dick filed a virtually identical complaint in the Oakland County Circuit Court seeking enforcement of the same alleged "contract" which was summarily rejected the day before by the Federal Court.⁵

In addition, Mr. Dick and his attorneys have relentlessly threatened all parties with whom the owners have sought to deal with respect to the Land, including joint venture partners and their counsel, and have even blanketed title companies with written claims of an interest in the Property.

Aside from the clear abuse of process, Mr. Dick's aim (and that of his affiliated parties) has been to freeze all dealings with the Property, in an attempt to squeeze and coerce Plaintiffs into selling the Property to Mr. Dick.... So far, it has worked. Plaintiffs have been rendered virtually incapable of dealing with the Property as they would otherwise have a right to do, the proposed joint venture for the Land has collapsed, the Land is now subject to a defaulted mortgage and a disappointed mortgagee, foreclosure and loss of the Land is now a real and imminent risk, and Plaintiffs are virtually isolated from any commercial dealings, except with Mr. Dick.

Importantly, this does not appear to be the first time that Mr. Dick has used these tactics to his advantage. Indeed, in 1984, Mr. Dick sought the same ends through much the same means against Pacific Mutual Life Insurance Company. However, there he succeeded in coercing Pacific Mutual into a settlement as a result of which Mr. Dick eventually received over $1 million....

Thus, Plaintiffs have filed this Complaint to attack Mr. Dick's actions for what they are: (i) commercial extortion which is actionable as a civil "RICO" violation under the Federal law; (ii) slander of title; (iii) tortious interference with business relationships; and (iv) abuse of process.

Complaint, at 2-4.

II. DEFENDANTS' MOTIONS TO DISMISS

The gist of the motions is that the RICO⁶ count (Count I) fails to state a claim upon which relief can be granted. Since the other three counts are all state-law claims, the defendants also argue that the court should not exercise pendent jurisdiction over those claims. Since the majority of the parties' submissions concern the RICO count, the court will address the motions to dismiss that count first.

A. Motions to Dismiss Count I

Under 18 U.S.C. § 1962(c),⁷ it is unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity....

The terms "racketeering activity," "person," "enterprise," and "pattern of racketeering activity" are defined in 18 U.S.C. § 1961 as follows:

(1) "racketeering activity" means ... (B) any act which is indictable under any of the following provisions of 18 U.S.C.: ... section 1341 (relating to mail fraud), section 1343 (relating to wire fraud), ... section 1951 (relating to interference with commerce, robbery, or extortion), ....

(3) "person" includes any individual or entity capable of holding

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