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F & J Apartments, LLC v. Hall

United States District Court, S.D. Indiana, New Albany Division

March 15, 2019

F & J APARTMENTS, LLC, et al. Plaintiffs,
v.
G. ROBERT HALL Individually and in his Official Capacity as Mayor of the City of Charlestown, Indiana, et al. Defendants. MICHAEL A GILLENWATER, Interested Party.

          ORDER GRANTING DEFENDANTS' MOTIONS FOR PARTIAL JUDGMENT ON THE PLEADINGS

          SARAH EVANS BARKER, JUDGE

         Now before the Court are the following motions: (1) Motion for Judgment on the Pleadings [Dkt. 24] filed by Defendants G. Robert Hall, M. Anthony Jackson, Eric Vaughn, Ted Little, Mike Vaughn, Brian Hester, George Roberts, and Ben Ledbetter (“the City Officials”) in their official capacities; The City of Charlestown, Indiana; The Charlestown Board of Public Works and Safety; and The Charlestown, Indiana, Redevelopment Commission (collectively, “the City Defendants”); (2) Motion for Judgment on the Pleadings [Dkt. 28] filed by Defendants Pleasant Ridge Redevelopment, LLC, Neace Ventures, LLC, Neace Enterprises, LLC, John Neace, and John Hampton (collectively, “PRR Defendants”); and (3) Motion to Join PRR Defendants' Ripeness Defense [Dkt. 32] filed by the City Defendants. Each of these motions is filed pursuant to Rule 12(c) of the Federal Rules of Civil Procedure and seeks judgment on the pleadings as to Count 3 of Plaintiffs' Second Amended Complaint, which alleges a civil RICO violation. For the reasons detailed below, we GRANT Defendants' Motions.

         Factual Background

         Plaintiffs are residents of Indiana and Kentucky who are current and former owners of rental properties in the Pleasant Ridge neighborhood located within the City of Charlestown, Indiana. Plaintiffs allege in this action that the City of Charlestown (“the City”) believed that Pleasant Ridge was in dire need of redevelopment and, to that end, beginning in 2016, conspired with a private development company, Pleasant Ridge Redevelopment, LLC (“PRR”), and its representatives to coerce through extortion Plaintiffs into selling their real estate to the PRR Defendants below market value at a price of no more than $10, 000.00 per property.

         Specifically, Plaintiffs allege that the City Defendants forced them to sell by imposing significant and punitive fines against them for various code violations-up to $5, 600 per day-and then agreeing to waive the fines if Plaintiffs sold their properties to the PRR Defendants. According to Plaintiffs, although PRR theoretically assumed responsibility for the daily accumulating fines after the sales, the City agreed to waive all such fines if PRR agreed to demolish the homes on the properties at some undetermined point in the future. Plaintiffs allege that, although most of the homes had not yet been demolished at the time this action was filed and the daily fines were continuing to accrue, the City Defendants had not collected on any of the fines against PRR nor required PRR to make any of the repairs previously identified by the City as necessary for the properties to comply with the City's property maintenance code. Plaintiffs allege that Defendants conspired and “associated together for the common purpose of using extortion to acquire all 354 homes located in Pleasant Ridge and redevelop Pleasant Ridge for the private enrichment of some or all Defendants.” Sec. Am. Compl. ¶ 168.

         Plaintiffs filed this action on January 19, 2018, alleging that Defendants' conduct violated Plaintiffs' rights guaranteed by the United States Constitution and also constituted illegal racketeering activity under RICO. Plaintiffs amended their complaint on February 9, 2018 and again on July 13, 2018. Defendants have all moved for partial judgment on the pleadings as to Plaintiffs' civil RICO claim.

         Legal Analysis

         I. Applicable Legal Standard

          Federal Rule of Civil Procedure 12(c) permits a party to move for judgment after the pleadings are closed, but early enough not to delay trial. We review motions for judgment on the pleadings under the same standard by which we review motions to dismiss for failure to state a claim under Rule 12(b)(6). Buchanan-Moore v. County of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009); Pisciotta v. Old Nat'l Bancorp, 499 F.3d 629, 633 (7th Cir. 2007). “Like Rule 12(b) motions, courts grant a Rule 12(c) motion only if ‘it appears beyond doubt that the plaintiff cannot prove any facts that would support his claim for relief.'” N. Indiana Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 452 (7th Cir. 1998) (quoting Craigs, Inc. v. General Elec. Capital Corp., 12 F.3d 686, 688 (7th Cir. 1993)). In determining the sufficiency of a claim under this standard, the court considers all allegations in the nonmovant's pleading to be true and draws such reasonable inferences as required in the nonmovant's favor. Jacobs v. City of Chi., 215 F.3d 758, 765 (7th Cir. 2000).

         II. Discussion

         A. The City Defendants' Motion for Judgment on the Pleadings [Dkt. 24]

         The City Defendants (the municipal defendants and the City Officials in their official capacities) have moved for partial judgment on the pleadings on Plaintiffs' civil RICO claim as set forth in Count 3 of the Second Amended Complaint on the ground that municipalities cannot be held liable for such claims. Although the parties have not cited, and we have not found Seventh Circuit authority directly on point, Plaintiffs do not dispute that the prevailing position of other circuit courts as well as district courts in this circuit support a holding that municipalities are not subject to liability for civil RICO claims. See, e.g., Reyes v. City of Chi., 585 F.Supp.2d 1010, 1014 (N.D. Ill. 2008) (“Defendants are correct in that municipalities are not liable for civil RICO claims.”) (collecting cases, including Third and Ninth Circuit authority); Lathrop v. Juneau & Assocs., Inc. P.C., 220 F.R.D. 330, 334 (S.D. Ill. 2004) (“[M]unicipalities are not liable for civil RICO claims.”).

         Plaintiffs cursorily argue that, because the Seventh Circuit has held that corporations can be held liable for civil RICO violations, it would be “logically consistent” to conclude that a municipality could also be liable for civil RICO violations. Dkt. 36 at 3. However, tenuous as this argument appears to be on its face, it has not been sufficiently developed by Plaintiffs. Accordingly, we GRANT the City Defendant's Motion for Judgment on the Pleadings as to Count 3 of Plaintiffs' Complaint. All civil RICO claims against the City of Charlestown, Indiana, the Charlestown Board of Public Works and Safety, and the Charlestown, Indiana Redevelopment Commission, as well as the civil RICO claims brought against Defendants G. Robert Hall, M. Anthony Jackson, Eric Vaughn, Ted Little, Mike Vaughn, Brian Hester, George Roberts, and Ben Ledbetter in their official capacities are hereby dismissed.

         B. The PRR Defendants' Motion for Judgment on the Pleadings, Joined by the ...


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