Otworth v. Fifth Third Bank

• Decision Date: 29 January 2020
• Docket Number: Case No. 1:19-cv-55
• Parties: CLARENCE OTWORTH, Plaintiff, v. FIFTH THIRD BANK, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

CLARENCE OTWORTH, Plaintiff, v. FIFTH THIRD BANK, et al., Defendants.

Case No. 1:19-cv-55

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

January 29, 2020

Hon. Paul L. Maloney

REPORT AND RECOMMENDATION

Pro se plaintiff Clarence Otworth does not want to pay taxes assessed by the Village of Lakewood Club. To accomplish this goal, he contends that the Village does not exist, is an ongoing criminal organization or criminal enterprise under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961, et seq., and has engaged in a scheme with others to collect illegal property taxes in violation of RICO. The Sixth Circuit Court of Appeals has rejected this claim, observing that, "Of all the tax avoidance schemes, this case almost certainly involves one of the strangest." Otworth v. Budnik, 594 Fed. Appx. 859, 860 (6th Cir. 2014). In the present case, plaintiff re-asserts this theory and has expanded his tax avoidance scheme to include taxes assessed by Dalton Township.

The present lawsuit is directed at 19 defendants, many of whom he has sued in the past: Fifth Third Bank (sometimes referred to as the "bank"); Fifth Third Bank vice-presidents Paul Allen Bixler, F.E. Troncone, P. Brian Moore, Phillip C. Bodle, Barbara A. Ibold, and, Jonathon Meade;¹ the Village of Lakewood Club (sometimes referred to as the "Village); DaltonTownship (sometimes referred to as the "Township"); Williams and Hughes (presently known as Williams Hughes, PLLC, and sometimes referred to as the "law firm"); Attorney Shon Anne Cook; Muskegon County; Muskegon County Board of Supervisors; Muskegon County Board of Commissioners;² Former Michigan Attorney General William Duncan Schuette; Muskegon County prosecutor D.J. Hilson; Township Treasurer Tammy Stephenson; Village Treasurer Lisa Swanson; and, Township Deputy Clerk Lori K. Hayes.

This matter is now before the Court on seven dispositive motions: a Motion to dismiss filed by defendant Schuette (ECF No. 11); a Motion to dismiss filed by defendants Muskegon County, Muskegon County Board of Supervisors, Muskegon County Board of Commissioners, and Muskegon County Prosecutor DJ Hilson (ECF No. 16); a Motion to dismiss filed by defendants Village and Lisa Swanson (ECF No. 26); a Motion to dismiss filed by defendants Williams Hughes, PLLC, and Shon Anne Cook (ECF No. 39); a Motion to dismiss filed by defendants Township, Stephenson, and Lori K. Hayes (ECF No. 84); Motion for summary judgment or for judgment on the pleadings filed by the Fifth Third Bank defendants (ECF No. 55); and a Motion for summary judgment filed by plaintiff (ECF No. 56).

I. Background

A. Summary of plaintiff's claim

Federal jurisdiction in this case is based upon plaintiff's allegation that defendants Village and Township are enterprises ("ongoing criminal organizations") which have engaged in a scheme to collect illegal property taxes in violation of RICO. Plaintiff claims that defendants Fifth Third Bank, Bixler, Troncone, Moore, Bodle, Ibold, Meade, Swanson, Stephenson, Hayes, the law firm, and Sharon Anne Cook perform criminal acts in furtherance of the enterprise. Theother defendants have engaged in various state law torts over the years, including nonfeasance, embezzlement, and perjury.

The gist of plaintiff's claim is set forth in ¶ 55 of his amended complaint:

Plaintiff Otworth has spent the last 14 years, and approximately $100,000, trying to obtain an opportunity for justice, but as a pro se litigant he was deprived of a fair trial in both State and Federal Courts, and despite of what opposing attorneys always claim the issue of the unconstitutional compulsory incorporation of the Village of Lakewood Club has never been litigated.

Amended Compl. (ECF No. 21, PageID.125). Assuming that there was a flaw in the creation of the Village, plaintiff cannot re-litigate that issue in this lawsuit. See discussion, infra. In 2014, the Sixth Circuit rejected plaintiff's RICO theory and held that "regardless of any alleged irregularities in Lakewood Club's initial incorporation, Otworth cannot now challenge its existence, because the community's residents and the State of Michigan have acquiesced in its existence for decades." Budnik, 594 Fed. Appx. at 862, citing Stuart v. School District No. 1 of the Village of Kalamazoo, 30 Mich. 69 (1874).

This Court stayed discovery in this case to resolve the legal sufficiency of plaintiff's complaint. See Order (ECF No. 124). At that time, the Court observed that:

This lawsuit is, in some ways, the fifth iteration of plaintiff's four previous unsuccessful lawsuits seeking to obtain damages under his theory that the Village of Lakewood Club does not exist. See Otworth v. Village of Lakewood Club, No. 1:01-cv-281 (W.D. Mich.) (village not properly incorporated in 1967); Otworth v. Vanderploeg, No. 1:01-cv-635 (W.D. Mich.) (two attorneys conspired to fraudulently incorporate the village); Otworth v. Williams, Hughes & Cook, PLLC, No. 1:11-cv-206 (W.D. Mich.) (village's incorporation was illegal and it is not authorized to collect taxes levied on plaintiff over the past 43 years); and, Otworth v. Budnik, No. 1:13-cv-129 (W.D. Mich.) (appealed in Otworth v. Budnik, No. 14-1139 (6th Cir. Nov 21,2014) (Sixth Circuit affirmed the dismissal of the case observing that "[o]f all the tax avoidance schemes, this case almost certainly involves one of the strangest").

Given the scope of plaintiff's claims and his past history of filing frivolous lawsuits in this Court, it is in the interests of both the Court and the parties to addressthe numerous preliminary matters raised in the pending dispositive motions before setting a scheduling conference.

Id.

B. Plaintiff's previous federal lawsuits

1. Otworth v. Village of Lakewood Club, 59 Fed. Appx. 785 (6th Cir. 2003)

In Otworth v. Village of Lakewood Club, plaintiff alleged that the Village violated his federal rights in denying a site plan. This Court entered judgment against plaintiff. See Otworth v. Village of Lakewood Club, No. 1:01-cv-281 (W.D. Mich. Aug. 7, 2002) (ECF No. 95). In affirming the dismissal, the Sixth Circuit held that this Court did not abuse its discretion in denying plaintiff's attempt to amend the complaint to challenge the existence of the Village:

In order to demonstrate that the denial of his site plan was unconstitutional. [sic] Otworth was required to show that the denial was an arbitrary and capricious action that lacked any rational basis. . . The record shows that his site plan was rejected because he failed to submit a photograph showing a home similar to the one he planned to build, or an elevation drawing showing how the home would appear on the lot. Otworth failed to show that this requirement was irrational. Instead, he argues that the ordinance does not apply because the village was never properly incorporated. The district court did not abuse its discretion in declining to permit Otworth to amend his complaint to raise this claim.

Otworth v. Village of Lakewood Club, 59 Fed. Appx. at 786 (emphasis added).

2. Otworth v. Vanderploeg, 61 Fed. Appx. 163 (6th Cir. 2003)

In Otworth v. Vanderploeg, plaintiff alleged that the attorneys responsible for incorporating the Village back in 1967 deprived him of his federal rights. This Court granted defendants' motion for summary judgment. Otworth v. Vanderploeg, 1:01-cv-635 (W.D. Mich. Aug. 8, 2002) (ECF Nos. 68 and 69). The Sixth Circuit affirmed on appeal, stating that plaintiff could not challenge the Village incorporation which occurred decades before the filed the lawsuit:

Seeking $200,000 in damages, Otworth sued attorneys Allan Vanderploeg and Harry Knudsen in October 2001. Otworth alleged that the defendants conspired to fraudulently incorporate the Village of Lakewood Club (Lakewood) inMuskegon County, Michigan, in 1967. Otworth, who owns property in Lakewood, claimed that the illegal incorporation subjected him to illegal property taxes and deprived him of the use of his property. . . The district court granted summary judgment in favor of the defendants. . .

Upon review, we affirm the district court's decision for the reasons stated by the district court. The essential facts are not in dispute. Otworth's father acquired eight lots of land in Muskegon County in 1950. In 1967, Defendant Vanderploeg, an attorney acting on the behalf of some residents of Muskegon County, filed documents with the county's board of supervisors to incorporate Lakewood. Defendant Knudsen, an attorney retained by the board of supervisors, advised the board on the requirements and procedures for the incorporation. Otworth inherited the property in 1994. In 1996, he sought a building permit. The Lakewood Site Plan Review Board rejected his application. Otworth alleged that, as a result of the allegedly illegal incorporation, he has been unable to build a house on his land for the last six years and is subject to illegal property taxes, ordinances, and guidelines imposed by Lakewood.

The defendants were entitled to a judgment as a matter of law. First, Otworth's complaint was barred by the statute of limitations. For civil rights suits filed in Michigan under § 1983, the statute of limitations is three years. See Mich. Comp. Laws § 600.5805(8); Carroll v. Wilkerson, 782 F.2d 44, 45 (6th Cir.1986). Otworth had reason to know that he was subject to Lakewood's building restrictions, ordinances, and taxes when he inherited the Lakewood property in 1994. See Collyer v. Darling, 98 F.3d 211, 220 (6th Cir.1996). Moreover, he first encountered difficulty acquiring a building permit in 1996, five years before he filed suit. Otworth's arguments that he "discovered" Lakewood's allegedly illegal incorporation in 2001 and was liable for taxes that year are without merit. He cannot bring suit in 2001 for acts that took place in 1967.

Otworth v. Vanderploeg, 61 Fed. Appx. at 164-66 (emphasis added).

3. Otworth v. Williams, Hughes & Cook, PPLC, No. 1:11-cv-206, 2011 WL 1542114 ...