Lee v. Foxpointe Condominium Association et al

Filing 53

OPINION and ORDER Granting In Part Defendants' 12 Motion to Dismiss, as to the Federal Claims Only; and Dismissing the State Law Claims Without Prejudice Pursuant to 28 U.S.C. 1367(c)(3). Signed by District Judge Linda V. Parker. (Loury, R)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
F.O. LEE,
Plaintiff,

Civil Case No. 14-11216
Honorable Linda V. Parker

v.
FOXPOINTE CONDOMINIUM
ASSOCIATION et al.,
Defendants.
_______________________________/
OPINION AND ORDER GRANTING IN PART DEFENDANTS’ MOTION
TO DISMISS (ECF NO. 12) AS TO THE FEDERAL CLAIMS ONLY;
DISMISSING THE STATE LAW CLAIMS WITHOUT PREJUDICE
PURSUANT TO 28 U.S.C. § 1367(c)(3)
Plaintiff F.O. Lee (“Plaintiff”), who has filed his complaint in pro per, is a
co-owner of the Defendant Foxpointe Condominium Association (the
“Association”), located in Oakland County, Michigan. Defendants Makower
Abbate PLLC and Kelly Belcher are a law firm and paralegal at the law firm,
respectively, who represent the Association in various matters, including collection
of unpaid condominium assessments. Plaintiff filed this lawsuit on March 24, 2014,
alleging violations of the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. § 1961 et seq.; the Fair Debt Collection Practices Act
(FDCPA), 15 U.S.C. 1692 et seq.; and Michigan state law claims of breach of
fiduciary duty, fraud, deceit, constructive fraud, negligent misrepresentation, and
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negligence. (ECF No. 1.) On June 12, 2014, Defendants Makower Abbate PLLC
and Kelly Belcher filed their motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). (ECF No. 12.) Thereafter, the Association, as well as
Defendants Rita Folbe, Ralph Marcus, Marcus Management, Inc., Marv Perlin,
Raymond Silverman, and Murray Slomovitz joined in the motion to dismiss and
filed a motion for judgment on the pleadings, filed pursuant to Federal Rule of
Civil Procedure 12(c). (ECF No. 18.) The motion for judgment on the pleadings
asserts the identical arguments raised in the motion to dismiss, and the Court will
therefore address the motion to dismiss solely. For reasons that follow, the motion
to dismiss is GRANTED IN PART as to the federal claims, and the state claims
are DISMISSED without prejudice pursuant to 28 U.S.C. § 1367(c)(3).
I.
Plaintiff alleges that the developer of the Association represented that the
Association would be “managed professionally in the interests of each unit owner.”
(Compl., ECF No. 1 at Pg. ID 4.) Plaintiff, in reliance of the developer’s
representations, bought a condominium, and now believes that the purchase “was a
product of fraud by Defendants, as part of the schemes to inflict improper,
unnecessary or excessive fees, charges and levies to enrich management…” (Id.)
Plaintiff further states:
Defendants, acting in concert with other co-Defendants, have over the
years employed various schemes and acts, e.g., (i) willfully and
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maliciously harassing and abusing Plaintiff with threats and frivolous
actions to collect illegal debts from Plaintiff, (ii) inflating monthly
condo fees to exact undue fees from Plaintiff through unnecessary and
improper installation of meters, fraudulent billings and impermissible
reselling of water at a substantial markup from the source billing, and
(iii) undertaking a road repair project at [the] excessive price of $2.5
Million, and (iv) incurring unnecessary and excessive engineering
fees of $260,000 for the road repair project, among others, absent
notice and hearing, violating RICO, FDCPA and Michigan law,
causing injuries and damages to the property or business of Plaintiff
and other unit owners.
(Id. at Pg. ID 4–5.)
In the complaint, Plaintiff explains that he was out of the country from
September 1, 2011 to December 9, 2012; that while he was away, management for
the association installed a new water meter at Plaintiff’s condominium, and
charged Plaintiff for “reselling the water usage at a substantial mark-up from the
cost of purchase from the public water company,” in addition to charging Plaintiff
for “normal and sewage usages that had otherwise been included in monthly condo
fees.” (Id. at Pg. ID 5.) Plaintiff further asserts that “Defendant management
further acted in concert with Defendant Water Watch creating fraudulent billings
resulting in overly inflated usage of water” while he was out of the country. (Id. at
Pg. ID 5–6.)
On March 24, 2014, Plaintiff filed his lawsuit. (ECF No. 1.) Shortly
thereafter, Defendants filed their motion to dismiss. (ECF No. 12.)

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II.
Only a complaint that states a plausible claim for relief survives a Rule 12
(b)(6) motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Courts must
construe the complaint in the light most favorable to the plaintiff and draw all
reasonable inferences in the plaintiff's favor. Ohio Police & Fire Pension Fund v.
Standard & Poor's Fin. Servs. LLC, 700 F.3d 829, 835 (6th Cir. 2012). Further, the
complaint must plead factual content that allows the court to draw a reasonable
inference that the defendant is liable for the misconduct alleged. Iqbal, 556 U.S. at
678 (2009). A complaint does not “suffice if it tenders ‘naked assertions’ devoid of
‘further factual enhancement.’ ” Id. (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 557 (2007)). To survive a motion to dismiss, a complaint need not
contain “detailed factual allegations,” but it must contain more than “labels and
conclusions” or “a formulaic recitation of the elements of a cause of action . . .”
Twombly, 550 U.S. at 555. A pro se complaint is entitled to a liberal construction
and “must be held to less stringent standards than formal pleadings drafted by
lawyers[.]” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (citation omitted).

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III.
Defendants assert that Plaintiff has failed to adequately plead the RICO
claim against them. (Defs.’ Mot., ECF No. 12 at Pg. ID 59.) The Court agrees.
Section 1962(c) of Title 18 of the United States Code provides that:
It shall be 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 or collection of unlawful debt.
18 U.S.C. § 1962(c). To prevail on a RICO cause of action, Plaintiff must establish
“(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.
“Moon v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006) (quoting
Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985)). Because the
complaint lacks facts establishing a “pattern of racketeering activity,” and thus
fails to state a RICO claim, it is therefore unnecessary to address any of the other
RICO elements.
To establish a RICO violation under § 1962(c), a plaintiff must allege that
the RICO enterprise engaged in a “pattern of racketeering activity” consisting of at
least two predicate acts of racketeering activity occurring within a ten-year period.
18 U.S.C. § 1961(5). The alleged predicate acts may consist of offenses “which are
indictable” under any of a number of federal statutes, including the mail (18 U.S.C.
§ 1341) and wire fraud statutes (18 U.S.C. § 1343). 18 U.S.C. § 1961(1).

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In Plaintiff’s complaint, he states “Defendants are the ever evolving teams of
players, using the US mail through various entities and schemes over and over to
inflict damages and injuries to the property of business of Plaintiff and other unit
owners violating RICO…” (Compl., ECF No. 1 at Pg. ID 4.) In Count 1 of
Plaintiff’s complaint, Plaintiff further asserts that:
Defendant[s] acted in concert with each other forming an enterprise to
collect, on many occasions and through U.S. mail, illegal, excessive
and wrongful water bills by changing the water billing system and
installing water meters that failed to comply with the code, extracting
exploiting and collecting illegal income from Plaintiff.
Defendants chose to commit such wrongful acts against Plaintiff
knowingly, willfully, recklessly and maliciously, notwithstanding
Plaintiff’s repeated requests to cease and desist such wrongful acts.
(Compl., ECF No. 1 at Pg. ID 7.)
To the extent the Court is able to understand Plaintiff’s allegations, Plaintiff
appears to be asserting that as a result of a dispute in billing, Defendants have
engaged in a pattern of racketeering activity involving mail fraud. Again, Plaintiff
must allege that the RICO enterprise engaged in a pattern of racketeering activity
consisting of at least two predicate acts of racketeering activity occurring within a
ten-year period, and the alleged predicate acts may consist of offenses “which are
indictable” under any of a number of federal statutes, including the mail (18 U.S.C.
§ 1341). 18 U.S.C. 1961 (1) and (5). Further, “[c]onsistent with Rule 9(b), RICO
plaintiffs must allege the time, place and contents of the misrepresentations.” Moon

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v. Harrison Piping Supply, 465 F.3d 719, 723 (6th Cir. 2006) (citing Bender v.
Southland Corp., 749 F.2d 1205, 1216 (1984). Plaintiff has failed to plead at least
two predicate acts of mail fraud with the requisite particularity. Specifically, he has
not alleged the time, place, or contents of any alleged acts of mail fraud.
Plaintiff fails to plead factual content that allows the Court to draw a
reasonable inference that Defendants are liable for the misconduct alleged.
Plaintiff’s complaint must contain “plausible statements as to when, where, in what,
or by whom,” Center for Bio–Ethical Reform, Inc. v. Napolitano, 648 F.3d 365,
373 (6th Cir. 2011), in order to avoid merely pleading an “unadorned, thedefendant-unlawfully-harmed me accusation,” Iqbal, 556 U.S. at 678.
Consequently, Plaintiff’s RICO claim is dismissed.
IV.
Next, Defendants contend that Plaintiff has failed to adequately plead the
FDCPA claim against them. The Court agrees. In support of his FDCPA claim,
Plaintiff states:
Defendants…over the years employed various schemes and acts, e.g.,
(i) willfully and maliciously harassing and abusing Plaintiff with
threats and frivolous actions to collect illegal debts from Plaintiff, (ii)
inflating monthly condo fees to exact undue fees from Plaintiff
through unnecessary and improper installation meters, fraudulent
billings and impermissible reselling of water at a substantial markup
from the source billing…

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(Compl., ECF No. 1 at Pg. ID 5.) Plaintiff further states that “Defendants knew that
the alleged debt against Plaintiff was a product of fraud or negligence, but chose to
collect illegally, to Plaintiff’s detriment. Defendants chose to commit such
wrongful acts against Plaintiff knowingly, willfully, recklessly and maliciously,
notwithstanding Plaintiff’s repeated requests to cease and desist such wrongful
acts.” (Id. at Pg. ID 7.)
Plaintiff does not indicate which provisions of the FDCPA he feels were
violated. Plaintiff makes general conclusions alleging harassment and false or
misleading representations on the part of Defendants (Id. at Pg. ID 5-7), which
suggests that Plaintiff may have intended to assert violations of § 1692(d)
(providing that a debt collector may not “engage in any conduct the natural
consequence of which is to harass, oppress, or abuse any person in connection with
the collection of a debt”) and § 1692(e) (prohibiting debt collectors from using
“false, deceptive, or misleading representations” or “unconscionable means” to
collect debts) of the FDCPA. However, the Court need not make a determination
as to what provisions of the FDCPA Plaintiff is alleging that Defendants violated,
given that the complaint lacks facts establishing a violation of the FDCPA.
Plaintiff asserts general legal conclusions in support of his FDCPA claim. As
previously stated, a complaint must contain more than labels and conclusions to
survive a motion to dismiss. Twombly, 550 U.S. at 555. Without adequate factual

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allegations to support each element of the claims raised, a plaintiff fails to plead
factual content that allows a court to draw a reasonable inference that a defendant
is liable for the misconduct alleged. See id.; Iqbal, 556 U.S. at 678 (2009).
Accordingly, the Plaintiff’s FDCPA claim is dismissed.
V.
“A district court has broad discretion in deciding whether to exercise
supplemental jurisdiction over state law claims.” Musson Theatrical. Inc. v.
Federal Express Corp., 89 F.3d 1244, 1254 (6th Cir.1996) (citation omitted).
“When all federal claims are dismissed before trial, the balance of considerations
usually will point to dismissing the state law claims, or remanding them to state
court if the action was removed.” Gamel v. City of Cincinnati, 625 F.3d 949, 952
(6th Cir. 2010) (quoting Musson Theatrical, Inc., 89 F.3d at 1254–1255 (6th
Cir.1996)) (quotation marks omitted). “Where, as here, the federal claims have
dropped out of the case at an early stage of the litigation, the [d]istrict [c]ourt has a
powerful reason to choose not to continue to exercise jurisdiction.” Clayton v.
Decision One Mortgage Corp., No. 09-10458, 2009 WL 1544381, at *4 (E.D.
Mich. June 2, 2009) (citing Carnegie–Mellon Univ. v. Cohill, 484 U.S. 343, 351
(1988)).
Given that a district court may decline to exercise supplemental jurisdiction
if it has “dismissed all claims over which it has original jurisdiction,” 28 U.S.C. §

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1367(c)(3), having eliminated the federal claims, this Court declines to exercise
supplemental jurisdiction over Plaintiff’s remaining state law claims, and
accordingly, the Court dismisses the state law claims.
For the foregoing reasons, Defendants' motion to dismiss is GRANTED IN
PART as to Plaintiff’s RICO and FDCPA claims. Pursuant to 28 U.S.C. §
1367(c)(3), the remaining state law claims are DISMISSED WITHOUT
PREJUDICE.
SO ORDERED.
s/ Linda V. Parker
LINDA V. PARKER
U.S. DISTRICT JUDGE
Dated: March 13, 2015
I hereby certify that a copy of the foregoing document was mailed to counsel of
record and/or pro se parties on this date, March 13, 2015, by electronic and/or U.S.
First Class mail.
s/ Richard Loury
Case Manager

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