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Williams v. Federal National Mortgage Association

June 26, 2006

MARIALICE BATHRUS WILLIAMS, PLAINTIFF,
v.
FEDERAL NATIONAL MORTGAGE ASSOCIATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: John D. Bates United States District Judge

MEMORANDUM OPINION

Plaintiff, an African-American woman and former employee of the Federal National Mortgage Association ("Fannie Mae"), brings this action against defendants Fannie Mae and two of its vice-presidents, Richard Lawch and Grace Huebscher. She alleges that, after her departure from Fannie Mae, defendants discriminated against her by denying her subsequent potential business contracts on the basis of her race and prior protected civil rights activity and also interfered with her business relationships with other entities.*fn1 Plaintiff seeks damages pursuant to federal civil rights laws, 42 U.S.C. §§ 1981 and 1985(3) (Counts I through III), and District of Columbia tort law (Counts IV and V).*fn2

Defendants move to dismiss all claims for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6), and in the alternative, move for summary judgment on the ground that the three-year statute of limitations has expired for each claim. Plaintiff has moved for a continuance to permit discovery in aid of her opposition to summary judgment pursuant to Fed. R. Civ. P. 56(f). The Court held a hearing on the motions on June 5, 2006. For the reasons explained below, the Court concludes that the amended complaint states a claim for relief as to race discrimination in violation of § 1981 with respect to the rejection of her May 2001 contract proposal and also states a claim for tortious interference with business relationships. The remainder of the claims will be dismissed for failure to state a claim upon which relief can be granted. The Court also concludes that full discovery should proceed in this matter, and thus grants plaintiff's motion for a continuance under Rule 56(f).

BACKGROUND

The following facts are alleged in plaintiff's complaint, and are taken as true for purposes of resolving defendants' motion to dismiss. Plaintiff worked in various capacities at Fannie Mae's Multifamily Division from January 1990 to June 1998. See Am. Compl. ¶ 11. Plaintiff developed securities and other insurance products while working with Fannie Mae customers under the supervision of defendant Richard Lawch. Id. ¶¶ 13, 17. Plaintiff left Fannie Mae in June 1998 after a negotiated settlement agreement resolving allegations of race and sex discrimination as well as retaliation. Id. ¶ 19.

Both before and immediately after plaintiff left her position, Fannie Mae promised her a continuing post-departure business relationship, consistent with its common business practice of maintaining commercial relationships with former employees. Id. ¶¶ 20, 21, 24. Lou Hoyes, Senior Vice President of Fannie Mae's Multifamily Division, assured plaintiff in writing that Fannie Mae would "do at least $1 billion of insurance-based business in the next year through her, as a broker, and would utilize her services in the years following in addressing components of a yearly total market of approximately $10 billion." Id. ¶ 22 .

In reliance on Hoyes's written statement as well as other "promises and assurances" by defendants to do business with her, plaintiff started her own firm in October 1998 ("Risk Mitigation Strategists, LLC") and obtained a broker's license. Id. ¶¶ 27, 33. Plaintiff also developed a business plan which included the use of risk transfer products through Fannie Mae, another common practice among former employees. Id. ¶ 28. In developing her firm, plaintiff incurred financial obligations of over $500,000 in reliance on the promises to do business with her. Id. ¶ 31. Furthermore, plaintiff's firm entered a joint venture with CAM Financial, another firm with which she hoped to do business utilizing Fannie Mae insurance products. Id. ¶ 32.

During this time and up until October 2003, defendants continued to promise plaintiff a business relationship, although no contracts were consummated despite plaintiff's business development efforts. Id. ¶¶ 36, 41-42. In May 2001, plaintiff discussed with Fannie Mae a specific proposal reflecting her ongoing and exhaustive work in refining her business products. In that proposal, plaintiff and CAM Financial "secured the interest of several A-plus rated insurance companies and brought an additional and significant proposal to [Fannie Mae] for doing specific mortgage-related business," which defendants rejected. Id. ¶ 42. During this time, defendants instead directed "all such business and accompanying financial remuneration" to Craig Ott, a white male without a history of protected EEO activities and whose credentials, expertise, and experience in the relevant business were "demonstrably inferior" to those of plaintiff. Id. ¶¶ 45, 59.

On May 31, 2001, defendant Huebscher forwarded an e-mail to defendant Lawch which considered assigning the project to Ott. Id. ¶ 46. In the e-mail, defendant Huebscher wrote:

"Richard, Marialice [Williams] wants to pursue the credit risk insurance for DUS risk. Do you want to pursue with her? MY GUT IS NO but if you think it is worth continuing discussions, I will focus on her questions?"

Id. Defendant Lawch then responded by e-mail:

"If Ofheo comes back with bad RBC rules we may be interested. Are these different players than Craig [Ott] is showing us?"

Id. Defendant Huebscher then replied:

"Probably not so if we want to engage Craig [Ott] on this project, that might be a better choice. If you like that plan then let's discuss what we want to ask Craig to find for us . . . ."

Id. At some point in the next month, June 2001, plaintiff received the e-mail from a former colleague. Id. ¶ 47. Plaintiff states that she did not understand the full meaning of the conduct reflected in the e-mail until October 2003, over two years later. Id.

Despite the sentiment of the e-mail, plaintiff continued to propose projects and work assiduously on developing a business relationship with defendants based on their assurances of prospective business. Id. ¶ 48. Plaintiff also alleges that from July 1998 to October 2003, defendants conspired to deny her the promised business relationships because of her race, sex, and former protected EEO activities, and defamed her to other potential clients in order to destroy her business reputation and relationships with other lenders and customers of Fannie Mae. Id. ¶ 62. As part of defendants' alleged campaign to destroy plaintiff's business relationships, plaintiff alleges that defendants "purposefully discouraged" CAM Financial from entering into a co-brokerage agreement with plaintiff, causing her over $35,000,000 in lost co-brokerage fees. Id. ¶¶ 61, 67.

In October 2003, plaintiff attended a meeting with Fannie Mae officials, including defendant Huebscher, on the use of Captive Insurance Companies by Fannie Mae's Multifamily Division. Id. ¶ 51. After the meeting, Fannie Mae stopped all contact with plaintiff, and refused to respond to her calls. Id. ¶ 53. Plaintiff alleges that, because of defendants' refusal to do business with her and her resultant bankruptcy, she suffered severe emotional distress, pain and suffering. Id. ¶¶ 66, 69.

Plaintiff filed suit on July 28, 2005. Her original complaint alleged that defendants unlawfully denied her the opportunity to make and enforce contracts and interfered with contractual relationships based on her race and sex, and in retaliation against her former EEO activities, and unlawfully conspired to do the same in violation of federal laws 42 U.S.C. §§ 1981 and 1985(3). She also raised four claims based on District of Columbia common law (breach of contractual relations, tortious interference with business relations, intentional infliction of emotional distress, and defamation). See Compl. ¶¶ 61-82. In response to defendants' first motion to dismiss, plaintiff filed an amended complaint dropping the counts related to breach of contract, contractual interference, and defamation but continuing to pursue the other claims. See Am. Compl. ¶¶ 70-84.

ANALYSIS

I. Defendants' Motion to Dismiss Under ...


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