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Holland v. Cerberus Capital Management

United States District Court, Northern District of Indiana, Hammond Division

November 18, 2014

ROBERT HOLLAND Plaintiff,
v.
CERBERUS CAPITAL MANAGEMENT, et al., Defendants.

OPINION AND ORDER

Rudy Lozano United States District Judge

This matter is before the Court on the: (1) Defendants’ Cerberus Capital Management, LP, Stephen Feinberg, and Robert Nardelli’s Motion to Dismiss Plaintiff’s Verified Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) and (b)(2), filed by Defendants, Cerberus Capital Management, LP, Stephen Feinberg, and Robert Nardelli, on June 17, 2014 (DE #28); (2) Motion for Oral Argument on Cerberus Defendants’ Motion to Dismiss Plaintiff’s Verified Complaint Pursuant to Fed.R.Civ.P. 12(B)(6) and (B)(2), filed by Cerberus Capital Management, LP, Robert Nardelli, and Stephen Feinberg, on July 23, 2014 (DE #65); (3) Defendants, Bosak Motors Auto Dealership, et al.’s Motion to Dismiss, filed by Defendants, Bosak Motors Auto Dealership, Mr. & Mrs. Skip Bosak, John Schultheis, Jonathan Jeffries, and Mike Grzbowski, on July 14, 2014 (DE #57); (4) Defendants’ Motion to Dismiss, filed by Defendants, Kimberly Johnson and TD Auto Finance LLC, Successor in interest to Chrysler Financial LLC, on July 24, 2014 (DE #69); (5) Defendants’ Motion to Dismiss, filed by Defendants, Kimberly Johnson and TD Auto Finance LLC, Successor in interest to Chrysler Financial LLC, on July 24, 2014 (DE #70); (6) “Request for Default Judgment Sum Certain by the Clerk of the Court, ” filed by Plaintiff, Robert Holland, on July 29, 2014 (DE #71); (7) “Request for Clerk’s Entry of Default Judgment, ” filed by Plaintiff, Robert Holland, on June 19, 2014 (DE #37); (8) “Application for Judgment by Default Sum Certain, ” filed by Plaintiff, Robert Holland, on November 10, 2014 (DE #99); (9) “Request for the Court to Issue an Order for the Defendants to Remove Damaging Credit Information From the Credit Reporting Agencies, ” filed by Plaintiff, Robert Holland, on November 10, 2014 (DE #100); and (10) “Brief on Treble Damages Pursuant to State Law, ” filed by Plaintiff, Robert Holland, on November 10, 2014 (DE #101).

For the reasons set forth below: (1) Defendants’ Cerberus Capital Management, LP, Stephen Feinberg, and Robert Nardelli’s Motion to Dismiss Plaintiff’s Verified Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) and (b)(2) (DE #28), is GRANTED. The Clerk is ORDERED to DISMISS the federal claims against these defendants, Cerberus Capital Management, LP, Stephen Feinberg, and Robert Nardelli, WITH PREJUDICE and the state claims are DISMISSED WITHOUT PREJUDICE. (2) The Motion for Oral Argument on Cerberus Defendants’ Motion to Dismiss Plaintiff’s Verified Complaint Pursuant to Fed.R.Civ.P. 12(B)(6) and (B)(2) (DE #65) is DENIED. (3) Defendants, Bosak Motors Auto Dealership, et al.’s Motion to Dismiss (DE #57) is GRANTED. The Clerk is ORDERED to DISMISS the federal claims against these defendants, Bosak Motors Auto Dealership, Mr. and Mrs. Skip Bosak, John Schultheis, Jonathan Jeffries, and Mike Grzbowski WITH PREJUDICE and the state claims are DISMISSED WITHOUT PREJUDICE. (4) Defendants’ Motion to Dismiss (DE #69) is GRANTED. The Clerk is ORDERED to DISMISS the federal claims against these Defendants, Kimberly Johnson and TD Auto Finance LLC, Successor in interest to Chrysler Financial LLC, WITH PREJUDICE and the state claims are DISMISSED WITHOUT PREJUDICE. (5) Defendants’ Motion to Dismiss (DE #70), is duplicative and therefore DENIED AS MOOT; (6) The “Request for Default Judgment Sum Certain by the Clerk of the Court, ” (DE #71), is DENIED. (7) The “Request for Clerk’s Entry of Default Judgment, ” (DE #37), is DENIED. The Clerk is ALSO ORDERED to DISMISS the federal claims against these defendants, Paul Davis, Bull Dog Towing, and the CEO of Bull Dog Towing, WITH PREJUDICE and DISMISS the state claims WITHOUT PREJUDICE. (8) The “Application for Judgment by Default Sum Certain” (DE #99), is DENIED. (9) The “Request for the Court to Issue an Order for the Defendants to Remove Damaging Credit Information From the Credit Reporting Agencies, ” (DE #100), is DENIED. (10) The relief requested in the “Brief on Treble Damages Pursuant to State Law, ” (DE #101), is DENIED. Finally, the Clerk is ORDERED to CLOSE THIS CASE.

BACKGROUND

Pro se Plaintiff, Robert Holland, filed his complaint against multiple defendants on December 30, 2013 (DE #1). In his difficult to read and rambling 35- page complaint, he sets forth several different allegations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) violations. Holland is no stranger to the Court and has been accused by this Court before of filing cases that are “fantastic, ” “delusional, ” and “malicious.” See, e.g., Holland v. City of Gary, No. 2:12-CV-62-TS, 2012 WL 974882, at *3 (N.D. Ind. Mar. 21, 2012).

In a nutshell, the allegations of the complaint are as follows. In October 2007, Holland purchased a 2006 Chrysler 300 plus an extended warranty from Defendant, Bosak Motors in Merrillville, Indiana, and obtained financing for the purchase through Defendant, Chrysler Financial, LLC. (Compl. ¶¶ 53, 61.) Holland alleges he relied on “express representations and warranties” made by Defendant, Mike Grzbowski (a Bosak salesman) about the financial condition of Chrysler and the dependability of the Chrysler 300 and that it did not have any problems and/or major manufacturing defects. (Id. ¶¶ 54-55, 61.) Plaintiff alleges that Bosak knew at the time of sale that the vehicle “had numerous repeated mechanical problems under normal driving conditions . . . .” (Id. ¶ 62.)

Holland claims on February 27, 2009, his Chrysler 300 was towed to Bosak for repair to its ignition switch, and after Bosak’s repair department was unable to secure a new ignition switch part after the car had been in the shop for a month, one was retrieved from the junk yard and used to fix his car on March 27, 2009. (Id. ¶¶ 81, 105-06.) Plaintiff alleges he was “not compensated for the manufacturing problems and had to pay for the repairs.” (Id. ¶ 113.) He also alleges that on July 3, 2010, Chrysler Financial directed that his Chrysler 300 be repossessed by Defendant, Bull Dog Towing, despite Plaintiff’s claim that he made his monthly car payment the day before his car was towed. (Id. ¶¶ 125, 129.) Finally, he alleges the Chrysler 300 was sold at auction without compensation to him. (Id. ¶¶ 146-47.) These facts basically comprise Plaintiff’s claim that he financed the purchase of a car, the car had mechanical problems, and it was repossessed for nonpayment despite the fact that he allegedly made payment the day before his car was towed. (Id. ¶¶ 61, 78, 131.)

Plaintiff’s theory of recovery is much more convoluted. To support his RICO claims, Plaintiff has alleged that in May 2007, Cerberus acquired a majority stake in Chrysler, an investment he conclusorily asserts was made to “establish . . . illegal fraudulent strong arm policies and practices with [Chrysler’s] customers, dealers and suppliers, etc. in order to increase cash flows and reduce expenses.” (Id. ¶¶ 28, 31.) Plaintiff also alleges that the $7.4 billion acquisition was not for any legitimate business purpose, but “to establish and/or maintain[] an entirely new business with new aggressive illegal operational policies and procedures” and that Cerberus “used the Chrysler and Chrysler Financial Enterprises (and their appearance of legitimacy to perpetrate more, and less easily discovered, criminal acts than it could do on it[s] own) to obtain money, property and other assets generated by a pattern of racketeering activity.” (Id. ¶¶ 37-38.)

Holland also alleges that after it acquired Chrysler, Cerberus, along with all the other Defendants, comprised an unlawful association-in-fact and “seized influence and/or control of Chrysler and Chrysler Financial Assets and utilized the companies as a criminal enterprise to further its criminal objectives.” (Id. ¶ 42.) In furtherance of the supposed scheme, Plaintiff suggests that Defendant Stephen Feinberg, the CEO of Cerberus, installed Defendant Robert Nardelli “to head Chrysler . . . and implement Cerberus’ new policies and practices” and that those policies and practices led to “considerable pressure from Chrysler and Chrysler Financial CEO Robert Nardelli through . . . Cerberus to increase performance through its illegal collections activities, cost reductions, through directives to its dealerships to help increase revenues, decrease expenses (and costs) and efforts to obtain favorable financing for operations.” (Id. ¶¶ 44, 50.)

Supposedly acting in concert, Plaintiff claims Defendants committed the following alleged predicate acts of racketeering activity giving his to his RICO claims: (1) making “materially false deceptive misrepresentations” to induce Plaintiff to buy a car (id. ¶ 52); (2) holding his car hostage, in bad faith, for a month to make repairs to his ignition switch (id. ¶¶ 68, 106-07); (3) committing extortionate trespass, wrongful repossession and theft/conversion by repossessing the car despite Plaintiff’s assurances he was not delinquent in his payment (id. ¶¶ 119, 132); and (4) unlawful collection of a debt, defamation and damage to credit resulting from the repossession (id. ¶ 155). Plaintiff further asserts Defendants participated in a wide-ranging conspiracy because they “were NOT acting in the course and scope of their employment in the traditional rendering of their services but were acting in concert committing predicate acts of racketeering that all occurred in a related concerted fashion in connection to the Chrysler 300, its repairs and warranties.” Id. ¶ 179 (emphasis in original).

The instant motions to dismiss were filed by Defendants, Cerberus Capital Management, LP, Stephen Feinberg, and Robert Nardelli (hereinafter “Cerberus Defendants”) (DE #28) pursuant to Federal Rule of Civil Procedure 12(b)(6) and (b)(2)[1]; Defendants, Bosak Motors Auto Dealership, Mr. and Mrs. Skip Bosak, John Schultheis, Jonathan Jeffries, and Mike Grzbowski (hereinafter “Bosak Defendants”) (DE #57) pursuant to Rule 12(b)(6); and Defendants, Kimberly Johnson and TD Auto Finance, LLC, Successor in interest to Chrysler Financial LLC (hereinafter “TDAF”) (DE #69) pursuant to Rule 12(b)(6).[2] They move to dismiss all the claims in the complaint: Count I for violation of RICO, 18 U.S.C. § 1962(a) and Indiana Civil Rico; Count II for violation of RICO, 18 U.S.C. § 1962(c) and Indiana Civil RICO; and Count III for violation of RICO 18 U.S.C. § 1962(d) and Indiana Civil RICO. The motions to dismiss are fully briefed and ready for adjudication.[3]

Three parties in this case have not appeared. Defendants, Paul Davis, “CEO Bull Dog Towing, ” and Bull Dog Towing. The Clerk made an entry of default as to Paul Davis. (DE #60.) Additionally, this Court made an entry of default as to the CEO of Bull Dog Towing and Bull Dog Towing on October 8, 2014 (DE #94). Plaintiff filed a motion for default judgment as to Defendants, the CEO of Bull Dog Towing and Bull Dog Towing on June 19, 2014 (DE #37). He also filed a motion for default judgment against Paul Davis on July 29, 2014 (DE #71). In support of these motions, Plaintiff filed a lengthy affidavit with attachments detailing his alleged damages. (DE #32.) Plaintiff stated he was seeking $41, 833, 455 in total punitive damages against the various defendants. Id. On November 4, 2014, this Court held a hearing that was set aside for Plaintiff to prove his damages for the defaulted defendants, at which Plaintiff appeared but Paul Davis, the CEO of Bull Dog Towing, and Bull Dog Towing did not appear. However, the Court informed Plaintiff at this hearing that it believed the allegations of the complaint were not sufficient to establish legal claims. Plaintiff then filed another application for default judgment on November 10, 2014, this time seeking damages in the amount of $66, 123, 878.90. (DE #99.)

DISCUSSION

Motion to Dismiss for Failure to State a ...


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