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Cheeks v. Fort Myer Construction Corp.

United States District Court, District of Columbia

November 1, 2016

JOHN C. CHEEKS, et al. Plaintiffs,
v.
FORT MYER CONSTRUCTION CORPORATION, et al. Defendants.

          MEMORANDUM OPINION

          Royce C. Lamberth United States District Judge.

         I. INTRODUCTION

         This case concerns allegations brought by plaintiffs John C. Cheeks, Cheeks of North America, Inc. (“CNA”), [1] and Juanita Gallardo of a vast bid rigging conspiracy undertaken by numerous defendants participating in a Racketeer Influenced and Corrupt Organizations Act (“RICO”) enterprise. On October 17, 2014, this Court granted several motions to dismiss, thereby dismissing nineteen defendants from this action, and ordered plaintiffs' to file a motion for leave to amend their Complaint in response to the remaining defendants' motions for a more definite statement. Plaintiffs have now moved three times for leave to amend their already amended complaint. Currently pending before this Court are plaintiffs' Motion for Leave to File a Third Amended Complaint, ECF No. 103, plaintiffs' Motion for Leave to File a Fourth Amended Complaint, ECF No. 118, and plaintiffs' Cross Motion for Order to Show Cause as to Evidence Adduced Supporting RICO Existence and Violations of Law, ECF No. 127. Due to the existence of plaintiffs' Motion for Leave to File a Fourth Amended Complaint, plaintiffs' Motion for Leave to File a Third Amended Complaint will be denied as moot. For the reasons stated below, plaintiffs' Motion for Leave to File a Fourth Amended Complaint will be denied. In addition, the Court finds that plaintiffs have failed to show cause as to why defendant CNA Surety should not be dismissed, and has not shown why previously dismissed insurance defendants should be added back in to this action. Plaintiffs' Motion for Order to Show Cause will also be denied.

         Accordingly, the Court looks back to plaintiff's First Amended Complaint. The Court's dismissal of nineteen defendants remains intact, leaving those defendants who filed motions for a more definite statement. Because plaintiffs' have failed to adequately respond to this Court's Order granting defendants' motions for a more definite statement, and its instructions to file a motion for leave to file a second amended complaint that complied with the requirements noted by the Court, this Court concludes that this action should be dismissed.

         II. BACKGROUND

         This case is brought by three plaintiffs: John Cheeks, CNA, and Juanita Gallardo. Plaintiffs Cheeks and CNA (of which John Cheeks is the principal owner) allege that they are the targets of a vast bid rigging conspiracy in which dozens of defendants-namely, other construction companies, their principals, and insurance entities-have engaged in antitrust and RICO violations. Plaintiffs claim that the “Rodriguez(s)-Shrensky Family Rico Enterprise, ” along with an insurance carrier CNA Surety/CNA Financial, “unlawfully collude[ed] over the last 20 years in the District of Columbia[] to monopolize District of Columbia infrastructure cont[r]acts.”[2] Fourth Am. Compl. ¶ 1, ECF. No. 118-1. According to plaintiffs' Complaint, the members of the alleged enterprise have engaged in “attempted murder, death threats[, ] at least 2 likely murders, obstruction of justice, witness intimidation, [and] malicious prosecution” in order to continue monopolizing long-term contracts to the exclusion of minority business like CNA. Id. at ¶ 1-2. The insurance carrier is alleged to have been “a willing accomplice because of multiple rake-offs received from insurance underwriting of each single contract.” Id. at ¶ 2. Plaintiff Gallardo alleges that she was once employed by a member of the alleged RICO enterprise, and that after witnessing collusion among members of the enterprise, she was targeted and framed for embezzlement, was denied her civil rights, and was prevented from testifying against the enterprise. Id. at ¶ 28.

         On May 19, 2014, plaintiffs filed their First Amended Complaint. See Court's Oct. 17, 2014 Mem. Op. 3, ECF No. 67. The following defendants filed motions to dismiss: Western Surety Company, Paul T. Bruflat (the “Western Surety defendants”); Committee on Transportation and the Environment, Phillip Mendelson, Mary M. Cheh, Jim Graham, David Grosso, Kenyan McDuffie, Tommy Wells (the “Council defendants”); and the Government of the District of Columbia, Mayor Vincent Gray, the Executive Office of the Mayor, the D.C. Department of Small and Local Business Development, Robert N. Summers, Harold B. Pettigrew Jr., the District of Columbia, James D. Staton, the Department of Transportation, and Terry Bellamy (the “District defendants”). Id. at 2. The other defendants filed motions for a more definite statement: Fort Myer Construction Corp., Francisco Rodrigues Neto, Jose Rodrigues(z), Lewis Shrensky, Anchor Construction Corporation, Florentino Gregorio, Cristina Rodrigues Minton, Dora Rodrigues Cooper, Civil Construction, and Capitol Paving of D.C. Id. at 2. This Court granted those motions and dismissed nineteen defendants from this case (the Western Surety defendants, the Council defendants, and the District defendants). Id. at 13. In response to various defendants' motions for a more definite statement, this Court ordered plaintiffs to file a motion for leave to file a second amended complaint. Id. It specifically ordered plaintiffs to “provide[] a complete list of statutory violations alleged and which defendant(s) engaged in each violation, in an orderly, clear, and non-repetitive arrangement, ” and to “identif[y] all known defendants and plaintiffs and how each individual or entity named in the Second Amended Complaint and attached exhibits is involved in the violations raised by plaintiffs.” Id. at 7-8.

         Plaintiffs filed a Motion for Leave to file a Second Amended Complaint, ECF No. 72, but before the Court ruled on that motion, filed a Motion for Leave to file a Third Amended Complaint, and again, before the Court ruled, filed a Motion for Leave to File a Fourth Amended Complaint. Thus, the Court previously found that the Motion for Leave to file a Second Amended Complaint was moot, ECF No. 104, and now finds that the Motion for Leave to file a Third Amended Complaint is also moot. The Court now examines plaintiffs' Motion for Leave to File a Fourth Amended Complaint and the proposed Fourth Amended Complaint attached to that motion, as well as plaintiffs' attempts to bring claims against the insurance defendants, and plaintiffs' request for an order to show cause as to why a RICO entity should not be found to exist.

         III. LEGAL STANDARDS

         Parties have a right to amend their pleadings once as a matter of course. Fed.R.Civ.P. 15(a)(1). After this, a party may amend if the opposing party consents, or if the court grants leave. Fed.R.Civ.P. 15(a)(2). Courts “should freely give leave when justice so requires.” Id. Whether to grant leave is within the discretion of the District Court. Foman v. Davis, 371 U.S. 178, 182 (1962). Reasons for denying leave to amend include “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment.” Id. “An amendment would be futile if it merely restates the same facts as the or i ginal complaint in different terms, reasserts a claim on which the court previously ruled, fails to state a legal theory, or could not withstand a motion to dismiss.” Robinson v. Detroit News, Inc., 211 F.Supp.2d 101, 114 (D.D.C. 2002).

         If a party alleges that amendment would be futile because the amended complaint could not withstand a motion to dismiss, the court's “review . . . is, for practical purposes, identical to review of a Rule 12(b)(6) dismissal based on the allegations in the amended complaint.” In re Interbank Funding Corp. Sec. Litig., 629 F.3d 213, 216 (D.C. Cir. 2010) (internal quotation marks omitted). To survive a 12(b)(b) motion to dismiss “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and quotation marks omitted). Plaintiffs must provide more than labels, conclusions, or “formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “Factual allegations must be enough to raise a right to relief above the speculative level.” Id.

         Plaintiffs bring claims for violations of RICO, 18 U.S.C. § 1962(c), for a RICO conspiracy, 18 U.S.C. § 1962(d), and for violations of the Sherman Antitrust Act and the Clayton Antitrust Act. To have standing under RICO, a plaintiff must claim that “he has been injured in his business or property by the conduct constituting the violation.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985); see also Hourani v. Mirtchev, 796 F.3d 1, 11 (D.C. Cir. 2015). RICO makes it “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), and to conspire to commit the above offense, 18 U.S.C. § 1962(d). The elements of a civil RICO violation are “(1) the conduct (2) of an enterprise (3) through a pattern of racketeering activity.” Salinas v. United States, 522 U.S. 52, 62 (1997). “Racketeering activity, ” also known as “predicate acts” or “predicate offenses, ” is defined in a lengthy statutory provision which enumerates various criminal acts under both state and federal law. See 18 U.S.C. § 1961(1). Thus, plaintiffs must allege that the defendants committed predicate acts to state a civil RICO claim. In addition, to succeed on a civil RICO claim, plaintiffs must also show proximate cause-“that a RICO predicate offense ‘not only was a “but for” cause of his injury, but was the proximate cause as well.'” Hemi Grp., LLC v. City of N.Y., N.Y., 559 U.S. 1, 9 (2010). There must be “some direct relation between the injury asserted and the injurious conduct alleged. A link that is too remote, purely contingent, or indirect[t] is insufficient.” Id. (internal citations and quotation marks omitted).

         The elements of a RICO conspiracy claim are “that (1) two or more people agreed to commit a [18 U.S.C. § 1962(c)] offense, and (2) a defendant agreed to further that endeavor.” RSM Prod. Corp. v. Freshfields Bruckhaus Deringer U.S. LLP, 682 F.3d 1043, 1048 (D.C. Cir. 2012). A court need not find that a defendant is liable for underlying RICO violations in order to find that he is liable for a RICO conspiracy. See United States v. Philip Morris USA, Inc., 327 F.Supp.2d 13, 18 (D.D.C. 2004) (citing Salinas, 522 U.S. at 66). To be liable for conspiracy, “[a] conspirator must intend to further an endeavor which, if completed, would satisfy all of the elements of a substantive criminal offense, but it suffices that he adopt the goal of furthering or facilitating the criminal endeavor.” Salinas, 522 U.S. at 65.

         It is unclear what provisions of the Sherman Act and the Clayton Act that plaintiffs allege violations of; their Complaint merely mentions the Acts in their entirety. The Clayton Act allows “any person injured in his business or property by reason of anything forbidden in the antitrust laws, ” which include both the Sherman Act and the Clayton Act, to recover damages. See 15 U.S.C. § 15(a). It appears that plaintiffs may be alleging general antitrust/monopolization violations under these Acts, see 15 U.S.C. § 1-2, or violations of the prohibition on interlocking directorates and officers, see 15 U.S.C. § 19.

         IV. ANALYSIS

         The major issue before this Court, which is analyzed first, is whether to grant leave to file a fourth amended complaint. The Court first finds that granting leave to file a fourth amendment complaint would be futile because plaintiffs' claims are unable to survive a motion to dismiss, and that plaintiffs have repeatedly failed to cure the deficiencies in their complaints. Second, the Court finds plaintiffs have failed to show cause as to why defendant CNA Surety should not be dismissed and that the insurance defendants should remain dismissed from this action. Third, the Court finds that plaintiffs' request for an order to show cause as to why a RICO entity should not be found to exist is inappropriate. Finally, the Court concludes that this action should be dismissed with prejudice.

         A. Futility of Amendment for Failure to State a Claim

         Defendants Dora Monica Rodrigues, Cristina Rodrigues Minton, Capitol Paving of D.C., Inc., Francisco Rodrigues Neto, Fort Myer Construction Corp., Jose Rodriguez, Lewis Shrensky, and Civil Construction LLC have filed oppositions to plaintiffs' motion for leave to amend. See ECF Nos. 120, 122, 123, 124. They all argue that amendment would be futile because the allegations in the amended complaint do not survive a Rule 12(b)(6) analysis. Defendants Dora Monica Rodrigues and Cristina Rodrigues Minton argue that the allegations against them “are utterly conclusory and lack any specific facts linking [them] to any actual wrongdoing.” Defs. Dora Monica Rodrigues & Cristina Rodrigues Minton's Opp'n 2, ECF No. 120. Defendants Capitol Paving of D.C., Inc. and Francisco Rodrigues Neto argue that plaintiffs have “continued to assert broad outlandish legal conclusions rather than pleading specific allegations of fact.” Defs. Capitol Paving of D.C., Inc. & Francisco Rodrigues Neto's Opp'n 2, ECF No. 122. Defendants Fort Myer Construction Corp., Jose Rodriguez, and Lewis Shrensky argue that “[p]laintiffs remain unable to connect any of the unsubstantiated actions imputed to the [d]efendants to a specific harm that has befallen them” and that “[i]t is abundantly clear that the failure of [p]laintiffs to be awarded public procurement contracts is solely the result of [p]laintiffs own actions, and therefore, any RICO claim is improper.” Defs. Fort Myer Construction Corp., Jose Rodriguez, & Lewis Shrensky's Opp'n 3, ECF No. 123. Finally, defendant Civil Construction argues that “[p]laintiffs still have failed to allege any facts about what Civil purportedly did to cause injury to them, ” and that “[p]laintiffs fail to allege that Civil had anything to do with any of their other outrageous claims concerning alleged wrongful conduct by purported (and often unnamed) members of the RICO Enterprise.” Def. Civil Construction's Opp'n 2-3, ECF No. 124.

         In reply to the defendants' oppositions, plaintiffs argue that they have obtained new facts and added them to the complaint regarding witness/potential plaintiff Juanita Gallardo which “state more detail which links named Defendants, through the common ownership and/or management of the Enterprise to the obstruction of justice regarding Gallardo, her malicious prosecution and incarceration.” Pls.' Reply to Defs.' Opp'n 2, ECF No. 126. They argue that some of the defendants are incorrect in arguing that plaintiffs would have never have received a contract award, stating that “if the alleged RICO family were disqualified for their actual illegal monopolistic collusive bidding and perjured Non Collusion Affidavits, Plaintiff would have been the only bidder remaining and be entitled to the award.” Id. at 5. Plaintiffs further contend that they have complied with this Court's Opinion and Order of October 17, 2014 because they “specified and corrected charges against all RICO members and entities known to exist at this time, ” and “provided specificity as to dates, locations, events and persons in Exhibit K and body of the Proposed Third and Fourth Amended Complaints and stated claims upon which relief can be sought.” Id. at 6. In response to the defendants' arguments that the complaint contains no allegations that the defendants directly committed RICO violations, plaintiffs rely on the Pinkerton doctrine, which provides for “co-conspiratorial liability premised upon the defendants' facilitation and furtherance of the conduct of co-conspirators' engaging in the participation and conducting the affairs of the RICO enterprises.” Id. at 7-8. Finally, plaintiffs argue that the defendants failed to address claims independent of the RICO claims, citing the underlying illegal “predicate acts, ” and state law violations including “attempted murder, perjury, intimidation of witness, stalking and obstruction of justice.” Id. at 9-10.

         The Court finds that amendment here would be futile because plaintiffs have failed to sufficiently state claims for relief, and nothing indicates that they would be able to state claims for relief if allowed to amend in the future. Plaintiffs have not sufficiently pleaded two elements of civil RICO claims: predicate acts and proximate cause. With respect to their RICO conspiracy claims, plaintiffs have not sufficiently alleged the existence of any agreement, nor have they shown proximate cause. Finally, plaintiffs have alleged virtually no facts supporting their Sherman and Clayton Act claims.

         1. Civil RICO

         Amendment would be futile because plaintiffs have failed to establish with particularity that the defendants committed the underlying predicate acts alleged, an essential element of RICO claims. Plaintiffs generally allege the following categories of predicate acts: 1) violent criminal acts directed towards plaintiff Cheeks; 2) fraud committed in the course of submitting non-collusion affidavits as part of contract solicitations; 3) various violations in connection with the incarceration of plaintiff Gallardo; and 4) other criminal acts. The Court will take each of these categories in turn. In addition, plaintiffs have failed to allege proximate cause.

         a) Predicate Acts

         i. Violent Criminal Acts towards Plaintiff Cheeks

         With regard to the violent criminal acts directed towards plaintiff Cheeks-including death threats, attempted murder, destruction of property, theft, stalking (in the name of witness intimidation), and witness retaliation (by doing the aforementioned acts)-the Complaint only alleges that an “unknown associate” of the alleged enterprise committed each of these crimes. Plaintiffs rely on the allegation that plaintiff Cheeks has “no other known enemies” to draw this conclusion. Not a single defendant is named as the perpetrator of these crimes, and there are absolutely no facts supporting the inference that any of the defendants committed the crimes or directed others to do so. These allegations fail to plausibly show that any defendant committed a necessary predicate act under RICO.

         ii. Allegations Regarding Plaintiff Gallardo

         Next, plaintiffs claim that plaintiff Gallardo, who allegedly witnessed the enterprise's unlawful acts as an employee of defendant Dora Monica Rodrigues and Hawk Enterprises, “a now defunct shell company member of the RICO Enterprise, ” Fourth Am. Compl. ¶ 33, was essentially framed for embezzlement by the defendants (a charge which resulted in her conviction and incarceration) so that she would be prohibited from testifying against the defendants in an unrelated case, therefore obstructing justice and tampering with a witness. At various points throughout the Complaint, plaintiffs mention civil rights violations under 42 U.S.C. § 1983 committed by defendants against plaintiff Gallardo. To the extent that plaintiffs are relying on these violations as predicate acts, this argument fails. Section 1983 violations do not constitute racketeering activities and cannot form the basis of a RICO claim. See Taitz v. Obama, 707 F.Supp.2d 1, 6 (D.D.C. 2010). In addition, the other allegations regarding plaintiff Gallardo are factually insufficient. Plaintiffs claim that four of the defendants-Dora Monica Rodrigues, Cristina Rodrigues Minton, Christopher Kerns, and James Abely, “aided by others”-obstructed Gallardo's testimony in a different case alleging corruption and bribery against D.C. government officials and Fort Myer Construction, and framed her for false theft charges. Fourth Am. Compl. ¶¶ 128-29. They provide no additional facts beyond these conclusory statements that the defendants committed criminal acts to show how each of the defendants obstructed plaintiff Gallardo's alleged testimony or they framed her. The chart purporting to detail the crimes of these defendants is similarly of no help. It merely restates (in chart form) the conclusory allegations of obstruction of justice against these defendants. See Chart of Criminal Violations, Pls.' Fourth Am. Compl. Ex. K, ECF No. 118-20.

         Furthermore, the Complaint does not sufficiently allege that plaintiff Gallardo suffered a business injury. It appears from the Complaint that as a result of these alleged activities directed at plaintiff Gallardo, she suffered injury in the form of improper incarceration and deprivation of her civil rights. See Fourth Am. Compl. ¶¶ 129, 131. Even if plaintiffs had sufficiently alleged the existence of the predicate acts regarding plaintiff Gallardo, “mere commission of the predicate offenses” is “obviously not in itself a violation of § 1962.” Sedima, S.P.R.L., 473 U.S. at 496. Plaintiffs have failed to allege that plaintiff Gallardo suffered a business injury as a result.[3] They only allege that “Gallardo was injured by activities designed to remove her as a viable witness by obstructing justice to cover-up illegal actions of the RICO Enterprise.” Fourth Am. Compl. ¶ 35. Plaintiff Gallardo appears to be seeking to litigate a claim for wrongful conviction and/or deprivation of civil rights, both of which occurred in the state of Maryland. A RICO action revolving around a purported bid rigging scheme in the District of Columbia is clearly not the appropriate time or venue for such a claim.

         iii. Fraud

         Plaintiffs also claim that the defendants committed mail and wire fraud by signing non-collusion affidavits-defendants Jose Rodriguez(s), Francisco Rodrigues Neto, Florentino Gregorio, “and others”-or aided and abetted in the signing of the affidavits-Jason Shrensky, Lauren Shrensky, Manuel Fernandes, Anita Bonds, “and others.” Fourth Am. Compl. ¶ 115. These allegations appear to be the crux of plaintiffs' Complaint. Plaintiffs essentially claim that defendants committed fraud by signing affidavits asserting that they had not colluded with others in connection with contract solicitations, when in fact they had committed such collusion, and then submitted those affidavits along with their bid proposals. Fourth Am. Compl. ¶ 113-21. Plaintiffs Cheeks and CNA were then allegedly excluded from being awarded those contracts, despite their status as low bidder. Accordingly, plaintiffs argue that if the defendants were not engaging in illegal collusion or had been properly excluded from bidding, plaintiffs would have won the contracts.

         Specifically, plaintiffs claim that the officials who signed the affidavits “would be unable to demonstrate an absence of the intent to deceive, as to the non-collusion requirement in the face of public records of interlocking ownership and board of directors of the allegedly colluding RICO entities, ” that “[e]vidence is available from witnesses to the effect [] the preparation of bids for many year has been accomplished on a joint basis, with discussions amongst bidders preceding the submission of coordinated bids, ” and that “[d]iscovery would increase specificity.” Id. at ΒΆΒΆ 116, 120, 121. The chart attached to plaintiffs' Complaint, which purports to detail the alleged criminal violations of the enterprise, lists the individual who ...


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