Flummerfelt v. City of Taylor et al

Filing 201

OPINION and ORDER Granting 171 The Awad Defendants' Motion for Summary Judgment and Denying 173 Motion to Strike Expert as Moot. Signed by District Judge F. Kay Behm. (KCol)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JUDY FLUMMERFELT, et al.,
v.

Case No. 22-10067
F. Kay Behm
United States District Judge

Plaintiffs,

CITY OF TAYLOR, et al.,
Defendants.
___________________________ /
OPINION AND ORDER GRANTING THE AWAD DEFENDANTS’
MOTION FOR SUMMARY JUDGMENT (ECF No. 171) AND
DENYING MOTION TO STRIKE EXPERT AS MOOT (ECF No. 173)
I.

PROCEDURAL HISTORY
Defendants Shady Awad, Realty Transition LLC and Taylor Rehab Two, LLC

(the Awad Defendants), bring their motion for summary judgment on the RICO
claims asserted against them. (ECF No. 171). Plaintiffs filed a response and the
Awad Defendants filed a reply. (ECF Nos. 185, 195). The Awad Defendants also
filed a motion to strike expert reports and preclude the testimony of Kurt
Salvatore. (ECF No. 173). The court held a hearing on February 26, 2025. For the
reasons set forth below, the court GRANTS the Awad Defendants’ motion for
summary judgment. Given the court’s decision on the motion for summary

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judgment in the Awad Defendants’ favor, it DENIES the motion to strike expert
reports and preclude testimony as MOOT.
II.

FACTUAL BACKGROUND
Defendant Awad was working as an automotive engineer when, while still

working his full-time job, he decided to go into real estate, starting with the
purchase, rehabilitation, and lease of a single house in the City of Dearborn in
2002. (ECF No. 180-1, Ex. A, Awad Dep., at 7-8). Between 2009 and 2014,
he purchased approximately 75 homes in Taylor, Allen Park, Dearborn, Dearborn
Heights and Southgate. Id. at 12-13. Defendant Awad is the owner of Defendant
Realty Transition LLC and Defendant Taylor Rehab Two, LLC.
Plaintiff Flummerfelt inherited property in the City of Taylor in 2003. (ECF
No. 180-2, Ex. B, at 41). She started falling behind on real estate taxes in the 2006
tax year, and was nearly foreclosed for nonpayment of both 2010 and 2011 taxes,
each time redeeming the property before title vested in the County. (ECF No.
180-3, Ex. C). However, she did not pay her 2012 or 2013 taxes, and on June 9,
2015 Wayne County foreclosed and took title to the property. (ECF No. 180-4, Ex.
D, Foreclosure Judgment).
Plaintiff Ridenour inherited property in Taylor in 1990. (ECF No. 180-5, Ex.
E, at 8). The property had tax problems nearly every year between 2001 and
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2015. (ECF No. 180-6, Ex. F). It was redeemed from foreclosure in six different
years, before a foreclosure judgment was entered and title vested in Wayne
County on March 31, 2015. (ECF No. 180-7, Ex. G, Foreclosure Judgment).
The Hamilton Plaintiffs purchased a home in Taylor in 2007. (ECF No. 1808, Ex. H at 7). They first got behind on taxes in 2014, but redeemed the property
before title transferred to Wayne County. (ECF No. 180-9, Ex. I). 2015 taxes were
not paid, and a foreclosure judgment vesting title in Wayne County was entered
in June 2018. (ECF No. 180-10, Ex. J).
According to Defendants, the properties were in poor condition at the time
of foreclosure. The Flummerfelt home was essentially gutted, including stripping
and replacing the faux brick siding, replacing doors and windows, and tearing out
and replacing most of the interior. (ECF Nos. 180-17, 180-18; Exs. Q, R). The
Hamilton property was also in poor condition. (ECF No. 180-19, Ex. S). The
Ridenour property was ultimately demolished. (ECF No. 180-1, Ex. A, Awad at
103) (“The city notified me to tear down the house…. [the] building inspectors
said [it] had to come down.”).
The City of Taylor had a number of tax foreclosures in 2013 and 2014. (ECF
No. 180-11, 180-12, Exs. K, L). In 2013, only 30% of foreclosed properties were
auctioned for more than the taxes owed. Id. In 2014, the number was 41%. Id.
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Taylor started its Right of First Refusal (ROFR) program in 2015. (ECF No. 180-13,
Ex. M, Council Minutes). Accordingly to Mr. Awad, based on his reputation for he
had already done in Taylor and surrounding communities, he was “asked to look
at” the program. (ECF No. 180-1, Ex. A at 21). City officials asked Mr. Awad to
give them a tour of homes that he had rehabilitated in Taylor and other
communities. Id. at 25. Mr. Awad then received an invitation to present and
interview to be selected as the developer for the 2015 program. (ECF No. 180-14,
Ex. N). On July 8, 2015, he and his attorney presented to a committee of 15
individuals from the City, including Taylor’s Mayor and many department heads.
(ECF No. 180-1, Ex. A at 30). This was the first time he met Mayor Sollars. Id. at
31-32. Mr. Awad was not the only developer asked to interview. Another
developer, James Budziak, also presented. (ECF No. 180-20, Ex. T, Interrogatory
Response ¶ 6). According to Awad, by the time he was involved, Taylor had
already selected the properties for the program. (ECF No. 180-1, Ex. A, at 114) (In
2015 they asked me if I was interested, they sent me properties to look at and
make a proposal…. [I]t was a lot of properties that we had to look at …”).
Taylor City Council approved the purchase of the properties in its 2015
ROFR program (including the Flummerfelt and Ridenour properties), and also
voted to select Realty Transition as developer, at its public meeting on July 20,
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2015. (ECF No. 180-13, Ex. M). Awad negotiated a development agreement with
Taylor’s City Attorney. (ECF No. 180-1, Ex. A at 67). Realty Transition was
responsible under the agreement for “the rehabilitation and maintenance of the
Homes” under a “rehabilitation plan” approved by the City. (ECF No. 180-15, Ex.
O at § 1.2, 2015 Agreement). Realty Transition could not receive title to the
properties until it had rehabilitated them and obtained a certificate of occupancy.
Id. at § 1.3. Realty Transition had to post $500,000 in escrow to secure its
obligations. (ECF No. 180-15, Ex. O, Escrow Agreement).
Wayne County deeded the Flummerfelt and Ridenour properties to Taylor
on August 26, 2015. (ECF No. 180-30, 31, 32; Exs. W1-W3, Deeds). Taylor deeded
them to Realty Transition in January, 2016. Id. The Flummerfelt property was
subsequently deeded to Defendant Taylor Rehab Two LLC in February, 2017. Id.
The Ridenour property was deeded to non-party Taylor Rehab Six, LLC around the
same time. Id.
As the U.S. Attorney put it in her Sentencing Memorandum in the
underlying criminal case, in the second half of 2016 Shady Awad “found himself
between a rock and a hard place. He had walked away from his career as an
engineer to become a real estate developer…. [He] had invested millions of
dollars … but faced many issues with the City.” (Case No. 2:19-20836, ECF No.
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173, PageID.2268). Facing financial ruin, Awad decided that he could gain an
“easier path” by “giving into Mayor Sollars’ repeated solicitations for … items of
value.” Id. at PageID.2269. Awad testified that the City started to squeeze him as
he was trying to perform the ROFR contract. “[W]e were heavily invested in the
city, and we were in dire straits.” (ECF No. 180-1, Ex. A at 56). “Once we started
rehab, we had lots of failed inspections, lots of ordinance tickets, and anything –
any eviction … every sale … every escrow had to be signed off by the mayor.
Everything in the program had to be signed off by the mayor.” Id. Awad
explained that “I asked [Sollars] if they could please just follow the contract … [In]
the third or fourth quarter [of 2016] … he asked … if I could recommend a
contractor … to do his hardwood floors.” Id. at 56-57. “Nowhere did I know any
of this was going to be any different that referring a contractor like I’ve done to
many people.” Id. at 60. However, “eventually … I came to realize [sometime in
December, 2016] that I’m not getting paid for any of this stuff….[H]e doesn’t have
any intent to pay this back.” Id. at 60-61. “I didn’t know what to do, and I should
have contacted the FBI.” Id. at 61. Instead, Mr. Awad chose to continue giving in
to Sollars requests so that he would “remove the artificial roadblocks that
[Sollars] was putting into place and … to be able to stay in the program and to
have an advantage over other companies … that the city already had and was
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putting it out for bid.” Id. at 62. Awad pleaded guilty to bribery and took
responsibility for his conduct. The Government’s sentencing memorandum
acknowledges that “Mr. Awad consistently expressed sincere remorse for his
conduct and provided the Government with important information and
documents that substantially assisted their investigations … [and] directly led to
other defendants accepting plea deals.” (Case 2:19-20836, ECF No. 172,
PageID.2191).
Defendants maintain that there is no evidence that the bribery occurred
before July 2016 and there is no evidence that Defendants were complicit in any
illegal conduct with regard to the 2015 Taylor ROFR program. Mr. Awad testified
that in “2015, we received that contract on our own.” (ECF No. 180-1, Ex. A, p.
62). Plaintiffs dispute this and point to the following evidence. Prior to Taylor
obtaining title to Plaintiffs’ properties, Taylor and/or Sollars entered into
agreements with the Awad Defendants to rehabilitate the properties, and pay all
fees associated with the rehabilitation. (ECF No. 185, Exhibit A – Escrow
Agreement, Exhibit B - Development Agreement). Prior to the acts of bribery in
2016, Awad and Sollars were actively negotiating the development and escrow
agreement. (ECF No. 185, Exhibit C – First Amended Development Agreement,
Exhibit D – Second Amended Development Agreement). Plaintiffs claim that
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Awad pleaded that the RICO scheme occurred between 2015 - 2019. (ECF No.
Exhibit E - Shady Awad Plea Agreement at p. 3). However, the plea agreement
specifically says that the other participants in the conspiracy (Sollars, Baum, and
Sollars campaign fund) participated between 2015 and 2019. It further states
that Mr. Awad “joined the conspiracy” “beginning in 2016.” Id. at p. 4. It also
provides that on July 20, 2015, in furtherance of the conspiracy, Sollars
recommended that Awad’s company be awarded all of the tax-foreclosed
properties that Taylor had or would acquire under its ROFR program. Id. at p. 6.
Awad also pleaded that Sollars recommended to the City of Taylor, “without a
legitimate bid process[,]” that Awad be awarded the properties. Id. at 6.
Additionally, Awad agreed to advance Taylor’s purchase price for the properties.
(ECF No. 185-6, Ex. F – Awad Deposition pp. 65-66). Lastly, Plaintiffs maintain that
Awad and Sollars were negotiating the development agreement prior to July 20,
2015. Id. at 67-68. 1
The only property in this case foreclosed and sold after the onset of the
1 Plaintiffs point to the following testimony from Mr. Awad:

Q: So you were negotiation this [the development agreement]
with the mayor prior to July 20th, 2015?
A: The City of Taylor had Howard & Howard representing them,
Gus Andreasen, and that’s who we spoke with in regards to the
contract.
(ECF No. 185-6, p. 67).

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bribery is the Hamilton property. In 2018, the City solicited bids for the ROFR
program, and at least eight interested developers responded. (ECF No. 180-22,
23, 24 25, 26, 27, 38, 29; Exs. V1-V8 (Proposal Cover Pages Only). The proposals
were evaluated and interviews of qualified responders were conducted. (ECF No.
180-20, Ex. T, ¶ 6). Realty Transition (and its affiliates, including Taylor
Rehab Six, LLC) was awarded a contract by unanimous vote of Taylor City
Council. (ECF No. 180-13, Ex. M, 2018 Minutes). The Hamilton property was
included in the 2018 ROFR program. (ECF No. 180-15, Ex. O). Taylor obtained
title to the Hamilton property on August 10, 2018. (ECF No. 180-30, 31, 32; Exs.
W1-W3). It transferred the property to non-party Taylor Rehab Six, LLC (another
of Mr. Awad’s entities) on August 21, 2018. Id. Defendant Realty Transition LLC is
not in the chain of title for this property.
III.

ANALYSIS
A.

Standard of Review

When a party files a motion for summary judgment, it must be granted “if
the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A party
asserting that a fact cannot be or is genuinely disputed must support the
assertion by: (A) citing to particular parts of materials in the record...; or (B)
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showing that the materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce admissible evidence to
support the fact.” Fed. R. Civ. P. 56(c)(1). The standard for determining whether
summary judgment is appropriate is “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that
one party must prevail as a matter of law.” State Farm Fire & Cas. Co. v.
McGowan, 421 F.3d 433, 436 (6th Cir. 2005) (quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 251-52 (1986)). Furthermore, the evidence and all reasonable
inferences must be construed in the light most favorable to the non-moving party.
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
Where the movant establishes the lack of a genuine issue of material fact,
the burden of demonstrating the existence of such an issue shifts to the nonmoving party to come forward with “specific facts showing that there is a genuine
issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). That is, the
party opposing a motion for summary judgment must make an affirmative
showing with proper evidence and must “designate specific facts in affidavits,
depositions, or other factual material showing ‘evidence on which the jury could
reasonably find for the plaintiff.’” Brown v. Scott, 329 F.Supp.2d 905, 910 (6th Cir.
2004). To fulfill this burden, the non-moving party need only demonstrate the
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minimal standard that a jury could ostensibly find in his favor. Anderson, 477 U.S.
at 248; McLean v. 988011 Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000).
However, mere allegations or denials in the non-movant’s pleadings will not
satisfy this burden, nor will a mere scintilla of evidence supporting the nonmoving party. Anderson, 477 U.S. at 248, 251.
The court’s role is limited to determining whether there is a genuine
dispute about a material fact, that is, if the evidence in the case “is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson, 477
U.S. at 248. Such a determination requires that the Court “view the evidence
presented through the prism of the substantive evidentiary burden” applicable to
the case. Id. at 254. Thus, if the plaintiff must ultimately prove its case at trial by
a preponderance of the evidence, on a motion for summary judgment the court
must determine whether a jury could reasonably find that the plaintiff’s factual
contentions are true by a preponderance of the evidence. See id. at 252-53.
Finally, if the nonmoving party fails to make a sufficient showing on an essential
element of its case with respect to which it has the burden of proof, the movant is
entitled to summary judgment. Celotex, 477 U.S. at 323. The court must construe
Rule 56 with due regard not only for the rights of those “asserting claims and
defenses that are adequately based in fact to have those claims and defenses
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tried to a jury,” but also for the rights of those “opposing such claims and
defenses to demonstrate in the manner provided by the Rule, prior to trial, that
the claims and defenses have no factual basis.” Id. at 327.
B.

Proximate Causation

Plaintiffs must be persons “injured in [their] business or property by reason
of a [RICO] violation.” 18 U.S.C. § 1964(c). The language “by reason of” makes
proximate cause “an essential ingredient” of any civil RICO claim. Wallace v.
Midwest Fin. & Mortg. Servs., Inc., 714 F.3d 414, 419 (6th Cir. 2013); see also
Holmes v. Sec. Inv. Prot. Corp., 503 U.S. 258, 267-68 (1992). The “central
question” for proximate causation is “whether the alleged violation led directly to
plaintiff’s injuries.” Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 461 (2006).
“But for” causation is insufficient. Id. at 456-57. According to the Holmes court,
“proximate cause” requires “some direct relation between the injury asserted and
the injurious conduct alleged.” Holmes, 503 U.S. at 268; see also Anza, 547 U.S. at
461 (“When a court evaluates a RICO claim for proximate causation, the central
question it must ask is whether the alleged violation led directly to the plaintiff's
injuries.”); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 497 (1985) (finding, in RICO
action based on predicate acts of mail and wire fraud, that a plaintiff’s damages
must “flow from the commission of the predicate acts.”); Trollinger v. Tyson
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Foods, Inc., 370 F.3d 602, 612–13 (6th Cir. 2004) (Standing and proximate cause
“both grow out of the ‘by reason of’ limitation in RICO—namely, the requirement
that claimants establish that their injury was ‘by reason of’ a RICO predicate act
violation.”).
Defendants argue their conduct was not the proximate cause of Plaintiffs’
injuries because the County’s foreclosures caused Plaintiffs’ injuries and thus
causation here is too attenuated. As explained in Holmes, a civil RICO plaintiff is
required to show that a RICO predicate offense “not only was a ‘but for’ cause of
his injury, but was the proximate cause as well.” Id. at 268. Proximate cause for
RICO purposes must be evaluated in light of its common-law foundations;
proximate cause thus requires “some direct relation between the injury asserted
and the injurious conduct alleged.” Hemi Grp., LLC v. City of New York, N.Y., 559
U.S. 1, 9 (2010) (quoting Holmes, at 268). A link that is “too remote,” “purely
contingent,” or “indirec[t]” is insufficient. Id. at 9 (quoting Holmes, at 271, 274).
The concept is flexible but “the causal link between the injury and the conduct
may [ ] be too weak to constitute proximate cause [if] it is insubstantial,
unforeseeable, speculative, or illogical, or because of intervening causes.”
Trollinger v. Tyson Foods, Inc., 370 F.3d 602, 614 (6th Cir. 2004).

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Hemi is instructive. Hemi committed fraud by selling cigarettes to city
residents and failing to submit the required customer information to the State.
Id. Without the reports from Hemi, the State could not pass on the information
to the City. Id. Some of the customers legally obligated to pay the cigarette tax to
the City failed to do so. Id. Because the City did not receive the customer
information, the City could not determine which customers had failed to pay the
tax. Id. The City thus could not pursue those customers for payment. Id. The
City was injured in the amount of the portion of back taxes that were never
collected. Id. The Court found causation “attenuated,” and “far too indirect,”
because the claim could not meet “RICO’s direct relationship requirement.” Id. at
10-11. More specifically, “the conduct directly responsible for the City’s harm
was the customers’ failure to pay their taxes. And the conduct constituting the
alleged fraud was Hemi’s failure to file … reports. Thus … the conduct directly
causing the harm was distinct from the conduct giving rise to the fraud.” Id. at 11.
Here, the conduct that caused Plaintiffs’ harm – the taking of Plaintiffs’
equity by the County – was the foreclosure conducted by Wayne County. Before
2020, the Michigan General Property Tax Act did not provide for the return of
excess proceeds or equity to foreclosed property owners. As explained in Rafaeli
v. Oakland Cty., 505 Mich. 429, 442 (2020), the GPTA did not provide for any
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disbursement of the surplus proceeds to the former property owner and did not
provide former owners a right to make a claim for these proceeds. As explained
by Michigan Court of Appeals, at the moment the County foreclosed on the
plaintiffs’ properties, by statute the plaintiffs’ equity was essentially erased, and
“[re]gardless of what occurred [afterwards], no money was ever going to be paid
to plaintiffs.” Jackson v. Southfield Neighborhood Revitalization Init., --- Mich.
App. ----; 2023 WL 6164992, at *22 (Mich. Ct. App. Sept. 21, 2023). There, no civil
conspiracy claim could lie because all the damage to Plaintiffs was done when the
County acted and that “could not have changed regardless of the subsequent
actions of the city and the corporate defendants.” Id. Similarly here, once the
County foreclosed, Plaintiffs suffered their injuries and nothing in the bribery
scheme changes that fact. And like in Hemi, the conduct that caused the harm –
the foreclosure – is conduct entirely distinct from the conduct giving rise to the
bribery.
Plaintiffs contend that the Awad Defendants’ conspiracy was to steal the
Plaintiffs’ equity and that Plaintiffs were direct victims. However, Plaintiffs’ equity
was already “stolen” at the point of foreclosure. And the Awad Defendants were
not involved in any decision to foreclose the properties. That decision rested in
the hands of Wayne County, who is not alleged to be a co-conspirator. The harm
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was done at the point of foreclosure because that is the point at which Plaintiffs
lost their equity, and subsequent events, including Taylor’s exercise of its right of
first refusal and the Awad Defendants engaging in a bribery scheme, could not be
the proximate cause of Plaintiffs’ loss of equity. Whether Wayne County
exercised its right of first refusal, sold the property at public auction, or Taylor
exercised its right of first refusal does not change the fact that Plaintiffs’ right to
the equity was extinguished by the foreclosure itself. Accordingly, causation is
too attenuated and Plaintiffs’ RICO claims must fail for lack of proximate cause.
V.

CONCLUSION
For the reasons set forth above, the court GRANTS the Awad Defendants’

motion for summary judgment and DENIES the motion to strike expert as moot.
SO ORDERED.
Date: March 6, 2025

s/F. Kay Behm
F. Kay Behm
United States District Judge

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