That tenants may choose to exercise rights conferred to them under consumer protection laws must be factored into the developers' decisions. For tenants to pursue these rights is entirely foreseeable and it would defeat these worthwhile consumer protection laws to permit disappointed developers to assert RICO claims against tenants who aggressively seek to exercise these important rights conferred upon them. RICO simply has no office in cases of this kind.
III. COMMON LAW CLAIMS
What remains, then, are Plaintiff's claims for tortious interference with contractual relations, abuse of process and malicious prosecution.
As with respect to the RICO allegations, Plaintiff's common law claims are based on the attempts of ATTA, Vera Ruser, and Richard Gross to exercise the tenants' rights to purchase Alban Towers through the ensuing three-year litigation.
Though unsuccessful, the tenants' attempt to purchase Alban Towers was through rights conferred under D.C. law. There is no suggestion that when ATTA entered into negotiations with Georgetown to purchase Alban Towers it did not intend to complete the purchase. The crux of Plaintiff's complaint is that the deposit made on ATTA's behalf to meet its contractual rights with Georgetown had no funds behind it. While not salutary, this act alone does not give rise to the multiple causes of action asserted by E&G. Nor do Defendants' subsequent efforts to defend themselves and assert a counterclaim in the litigation initiated by Georgetown provide a basis for Plaintiff's common law claims.
First, the Plaintiff is barred from pursuing these claims at this juncture under the doctrine of laches and in the interest of finality of judgment. The gravamen of Plaintiff's common law claims is that ATTA had no legitimate basis on which to defend the first lawsuit or assert counterclaims and that it did so only to prevent the E&G-Georgetown deal from proceeding.
If ATTA's defense was as frivolous as Plaintiff suggests, E&G should have pursued its claims in that suit. Litigation must come to an end. Should this Courts disposition of Plaintiff's RICO claim give rise to another lawsuit alleging that Plaintiff's claim was frivolous? If the answer is yes, then of course this litigation would continue for years to come and could possibly spawn further litigation. Without particularized and discrete circumstances, parties cannot be permitted to piggyback one lawsuit on another in an endless series of litigation. Such "parasitic" lawsuits must be foreclosed.
There is no reason for Plaintiff to be asserting its common law claims in the instant lawsuit. It knew of its rights at the time of the original action initiated by Georgetown against ATTA. Indeed, E&G filed third-party claims against ATTA, specifically asserting tortious interference with its contractual and business relations. Since Judge Greene's decision did not address those claims, Plaintiff had the opportunity to subsequently pursue them in that litigation. Plaintiff deliberately chose not to go forward with that litigation. Rather, Plaintiff attempted to negotiate a cash settlement with ATTA so that it could proceed with its development. Indeed, Plaintiff offered ATTA $ 1.6 million to give up its rights in the project. It is ironic that if ATTA had accepted Plaintiff's offer of $ 1.6 million, E&G would not now be suing Defendants for $ 26 million.
There is little excuse in E&G's failure to pursue its claims in the first lawsuit. E&G made a strategic business decision to negotiate rather than pursue its tort claims in court. That E&G's strategy failed does not give it the right to reassert the same tort claims in a second suit some six years later.
Plaintiff's claims are also suspect because of Plaintiff's lack of privity with the Defendants. Georgetown is the real party in interest in the case. The District of Columbia's Rental Housing Conversion and Sale Act provides that a tenant organization shall have at least 120 days to negotiate a contract with a building owner, D.C. Code § 45-1631. If Georgetown wished to extend the negotiation period, it could have done so. E&G had no rights in the negotiation between Georgetown and ATTA and could not have compelled Georgetown to terminate negotiations with ATTA. Thus, if any party has suffered clear, direct injury in the case, it is Georgetown. Yet Georgetown has chosen not to file suit and there is nothing in the record indicating that Georgetown has assigned any of its rights to E&G.
The ensuing lawsuit between Georgetown and ATTA did not make E&G a third party beneficiary of the outcome of that lawsuit. Since E&G intervened in the lawsuit, it is difficult to understand how E&G now has the right to assert tort claims based on the original lawsuit. In short, E&G is now impermissibly attempting to exercise rights it never had and was never assigned.
Defendants actions in defending their rights are protected by the First Amendment to the U.S. Constitution which protects the rights of citizens to petition the government to seek redress of grievances. Thus, a person cannot be held liable as a result of his or her filing a good-faith lawsuit or administrative claim or otherwise seeking governmental redress. See Eastern R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 5 L. Ed. 2d 464, 81 S. Ct. 523 (1961); accord, Mine Workers v. Pennington, 381 U.S. 657, 14 L. Ed. 2d 626, 85 S. Ct. 1585 (1965). This principle has become known as the Noerr-Pennington Doctrine.
While this right was first recognized by the Supreme Court in the context of anti-trust litigation, it has been extended beyond that context. "If a person has a protected right to bring an objectively-based antitrust claim against a competitor, the same protection must be afforded to others who bring other such objectively-based claims and allegations before a government agency or court." Whalen, at 6. See also Havoco of America, Ltd. v. Hollobow, 702 F.2d 643, 649 (7th Cir. 1983).
In addition, while Noerr-Pennington is generally applied to protect plaintiffs who have petitioned the government for redress, there is no reason the doctrine should not be extended to protect a party who attempts to exercise a statutory right and then must defend that right in subsequent litigation filed against it.
The immunity provided under Noerr-Pennington is qualified by a so-called "sham exception." Under the sham exception, otherwise protected activity does not qualify for Noerr-Pennington immunity 'if it is a mere sham to cover an attempt to interfere directly with the business relationships of a competitor." Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, 123 L. Ed. 2d 611, 113 S. Ct. 1920, 1928 (1993), Whalen v. Abell, Nos. 87-0442, 87-1763, slip op. at 5 (D.D.C. 1993).
In Professional Real Estate Investors, the Supreme Court articulated a two-prong test to determine whether the "sham exception" applies:
First, the lawsuit must be objectively baseless in the sense that no reasonable litigant could realistically expect success on the merits. If an objective litigant could conclude that the suit is reasonably calculated to elicit a favorable outcome, the suit is immunized . . . Only if challenged litigation is objectively meritless may a court examine the litigant's subjective motivation. Under this second part of our definition of sham, the court should focus on whether the baseless lawsuit conceals an attempt to interfere directly with the business relationships of a competitor through the use of the governmental process -- as opposed to the outcome of that process -- as an anticompetitive weapon.
Professional Real Estate Investors, 113 S. Ct. at 1928.
In this case, Defendants pursued their right to purchase Alban Towers. When Georgetown sued to clear title, ATTA defended itself. Though they may have made mistakes during the litigation, the tenants had the right to defend the suit in pursuit of their intent to purchase the building. This Court does not find that ATTA's counterclaim against Georgetown can in anyway be considered a "sham action" against Plaintiff, who was not a named party in the counterclaim.
While the Court is ruling in favor of Defendants, the behavior of ATTA and its counsel is far from exemplary. Judge Greene found that ATTA tendered an unfunded check to Georgetown. Alban Towers Limited Partnership v. Alban Towers Tenants Association, No. 87-822, (D.C. Oct. 7, 1988). In addition, some of Plaintiff's allegations about the conduct of Mr. Gross are troublesome. In rendering its decision today, this Court is in no way condoning such behavior if the allegations are in fact true.
However, to permit this lawsuit to proceed would be a severe blow to the rights created by the District of Columbia Rental Housing Conversion and Sale Act of 1980, the purpose of which is to strengthen "the legal rights of tenants or tenant organizations to the maximum extent permissible under the law." D.C. Code § 45-1661. Tenants' associations seeking to exercise the rights provided by the Act will undoubtedly falter and misstep. Such groups often are put together quickly on a reactive ad hoc basis by tenants unsophisticated in commercial real estate transactions. These highly vulnerable persons should not be punished if they err or are represented by overly zealous counsel. Whether or not E&G were ultimately successful, if this suit is permitted to go forward, it will have a chilling effect on future tenants associations' pursuit of their rights. Indeed, this case resembles a so-called "SLAPP" -- "strategic lawsuits against public participation"--suit in which parties attempt to use litigation as a weapon to punish community activists for exercising their rights.
E&G, if it could meet the appropriate standing requirements, had ample opportunity to challenge the arguments and conduct of ATTA during the first litigation filed by Georgetown in 1987. To permit E&G to pursue this action where it seeks $ 26 million against a tenants association for exercising rights conferred by law would ironically be a greater abuse of process than the one Plaintiff claims it has been subjected to in this case. Accordingly, Defendants' Motion to Dismiss is granted. An appropriate order accompanies this opinion.
United States District Court
ORDER - July 30, 1993, Filed
Presently before the Court is Defendants' Motion to Dismiss, or in the Alternative, for Summary Judgement. Upon consideration of Defendants' motion and Plaintiff's opposition thereto, and after conducting a hearing on the matter on July 21, 1993, for the reasons stated in the foregoing Memorandum opinion, it is this 30 day of July, 1993 hereby
ORDERED that Defendants' Motion is granted. It is FURTHER ORDERED that this matter is dismissed with prejudice.
United States District Court