Lathrop v. Juneau & Associates, Inc. P.C.

Citations: 220 F.R.D. 330; 2004 U.S. Dist. LEXIS 1818; 2004 WL 288635Docket: No. 03-CV-0194-DRH

Court: District Court, S.D. Illinois; February 10, 2004; Federal District Court

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The Court is considering a motion to dismiss a complaint filed by pro se Plaintiff Stephen Lathrop, a contractor whose construction project was allegedly thwarted by Defendants, including Dan Brown, Ronald Selph, Mark Spengler, and the City of Granite City, due to conflicts with another project managed by Juneau Associates. Lathrop claims that Juneau Associates, led by Joe, Ed, and Charlie Juneau, engaged in a kickback scheme with city officials, resulting in inflated project costs and interference with his Dobrey Slough project, which aimed to provide flood control.

Lathrop's claims include multiple violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, citing federal and state predicate acts such as bribery, wire fraud, mail fraud, and tortious interference with prospective business relations. He also alleges civil conspiracy and violations of federal and state freedom of information and anti-trust laws. His proposed project was discussed with city officials, highlighting concerns that Juneau Associates' nearby development exacerbated flooding issues. Ultimately, the U.S. Army Corps of Engineers found Juneau Associates' drainage plan inadequate, prompting Granite City to undertake costly infrastructure improvements. The complaint points to a pre-existing agreement between Mayor Selph and Juneau Associates that limited the Aldermen's involvement in approving Lathrop's project.

Plaintiff alleges that the Aldermen relied on the Mayor’s false claim that funds for the DonnaLynne project would be repaid within seven years, despite the actual agreement indicating an $800,000 cost with no reimbursement to the city. It is asserted that Keith Jensen, the city attorney, was absent from critical meetings and lacked knowledge of the subdivision plan, being denied access to the agreement by Mark Spengler, another city attorney. The complaint states that various state laws and local ordinances were violated during the approval and implementation of the DonnaLynne project. 

In September 2000, Plaintiff and financial backer Don Balsters sought approval for the Dobrey Slough project but faced withdrawal from Balsters due to negative comments made by Defendants Dan Brown and Joe Juneau. Witness accounts suggest that Brown expressed intent to undermine Plaintiff's project to protect the DonnaLynne subdivision. Plaintiff claims Defendants disseminated false statements about him, labeling him "shady," inexperienced, and a "substandard builder" to hinder his project's acceptance. 

On September 10, 2001, Plaintiff secured another backer, Kent Kehr, after forming a pre-annexation agreement with Granite City in January 1998. Despite initial approval from the Granite City Economic Committee in March 2002, Dan Brown later informed Kehr that the project would not proceed, without providing reasons for the decision. Plaintiff believes Brown boasted about thwarting his financial backing to safeguard the DonnaLynne project.

After commencing an investigation into the DonnaLynne project on April 9, 2001, Plaintiff requested documents, receiving some but not all. During a finance committee meeting on April 16, 2002, Plaintiff accused Defendants of obstructing the Dobrey Slough project. The committee subsequently questioned Brown about his interference and passed a resolution to negotiate a settlement to circumvent litigation. Plaintiff also highlighted that the contract for the DonnaLynne project did not stipulate repayment of the reported costs, contradicting prior claims made to the committee.

Plaintiff alleges that the title for the DonnaLynne project, previously held by Defendant City Attorney Spengler, was not disclosed despite requests for information, as Spengler claimed it was protected due to pending litigation, which was untrue. Two RICO enterprises were identified: the "Juneau-Granite City Engineering Enterprise," including all defendants, and the "Juneau Enterprise," consisting of Juneau Associates and its employees. The Granite City Defendants (City of Granite City, Dan Brown, Ronald Selph, and Mark Spengler) seek dismissal of Lathrop’s claims under Rule 9(b), Rule 12(b)(6), and for lack of subject matter jurisdiction. The motions to dismiss are evaluated under Rule 12(b)(6), which requires accepting the complaint's well-pled allegations as true and viewing them favorably toward the plaintiff. The complaint must present sufficient material elements for recovery under a legal theory. Rule 9(b) pertains to fraud claims needing particularity, but the Seventh Circuit allows flexibility in information access pre-discovery. The Granite City Defendants assert that RICO claims against the City should be dismissed, arguing that municipalities cannot possess the necessary intent for RICO liability, citing relevant case law. The Court agrees, dismissing Lathrop’s civil RICO claims against the City of Granite City, affirming that municipalities are not liable under RICO.

The Granite City Defendants contend that civil RICO claims against city employees Dan Brown, Ronald Selph, and Mark Spengler should be dismissed due to government immunity. They reference Frooks v. Town of Cortlandt to argue that these officials acted in their official capacities, leading the Court to dismiss the RICO claims linked to those actions, as such claims against officials in their official capacity equate to claims against the government itself. Since the City of Granite City cannot be held liable under RICO, claims against the officials in their official capacities are also untenable. However, the Court declines to dismiss the RICO claims against the officials in their individual capacities, allowing the plaintiff to amend the complaint to substantiate these claims. 

Additionally, the defendants argue that all RICO charges should be dismissed due to insufficient specificity in the allegations as required by Federal Rule of Civil Procedure 9(b). The Court finds that Rule 9(b) does not warrant dismissal of the RICO claims against the officials in their individual capacities, recognizing that pro se complaints are judged by less stringent standards and can only be dismissed if it is clear that the plaintiff cannot prove any set of facts supporting their claim. The Court also notes that when a plaintiff has limited access to information, it is appropriate to relax the specificity requirements of Rule 9(b) and allow time for them to gather necessary facts.

Plaintiff, representing himself, claims denial of access to government documents essential for his case, leading the Court to find his complaint sufficient under Rule 9(b). The Court allows Plaintiff to file an amended complaint and recommends seeking legal counsel. Regarding the Granite City Defendants, the Court dismisses Plaintiff's Federal Freedom of Information Act (FOIA) claim because FOIA applies solely to federal entities, not state or local governments. The Court also dismisses the federal anti-trust claim against the City of Granite City, affirming that municipalities are immune from such claims when acting within their legislative authority, as established by Illinois law providing a "state action exemption" under federal anti-trust statutes. The Court further dismisses federal anti-trust claims against individual defendants Dan Brown, Ronald Selph, and Mark Spengler in their official capacities, as these claims equate to actions against the City itself, which is not liable under federal anti-trust laws. However, the Court does not dismiss the claims against these individuals in their personal capacities, noting that the Plaintiff may assert claims based on individual tortious actions independent of their official roles.

Lathrop is granted leave to amend his complaint to clarify individual capacity claims against Dan Brown, Ronald Selph, and Mark Spengler. The Granite City Defendants' request for dismissal of Lathrop’s anti-trust claims under Rule 9(b) is denied, as the Court recognizes that pro se complaints are held to less stringent standards. The Court stipulates that dismissal for failure to state a claim requires it to be "beyond doubt" that no facts would support the claim, particularly noting Lathrop's restricted access to supporting documents. The Court encourages Lathrop to seek legal counsel for the amended complaint. 

The Court also denies the Granite City Defendants' argument for dismissing all state claims due to lack of subject matter jurisdiction, as not all federal claims against them have been dismissed. It asserts supplemental jurisdiction over the state civil conspiracy claim, as it shares the same case or controversy with federal claims. 

Regarding the statute of limitations, the Court dismisses any state claims related to injuries or causes of action that arose more than one year prior to the complaint's filing date, referencing Illinois law which sets a one-year limit for such claims. Lathrop’s allegations of events occurring before March 25, 2002, are thus dismissed.

State claims against Dan Brown, Ronald Selph, and Mark Spengler remain valid if based on their individual actions or actions outside their authority. The Court dismisses Illinois anti-trust claims against the City of Granite City due to municipal immunity under the Illinois Anti-Trust Act. However, the motion to dismiss anti-trust claims against Brown, Selph, and Spengler is denied, as the plaintiff may assert claims for actions outside their official capacity. Lathrop has adequately alleged an Illinois civil conspiracy claim, showing an agreement among defendants to unlawfully interfere with his business, and has identified an independent tort of unlawful interference. The Court allows Lathrop to amend his complaint to clarify the essential elements of his remaining Illinois anti-trust claims against the individual defendants based on actions beyond their authority.

Lathrop's complaint, presumed true under Rule 12(b)(6), presents sufficient facts to potentially support Illinois anti-trust claims against the specified Defendants. The Court grants Lathrop leave to amend his complaint by April 30, 2001, addressing deficiencies under Rule 9(b). It emphasizes that a plaintiff must be allowed pretrial discovery to gather necessary facts for a fraud claim, especially when access to relevant government documents has been denied, as demonstrated in Emery v. American General Finance, Inc.

The Court partially grants and denies the Granite City Defendants' motion to dismiss. Specifically, it dismisses claims against the City of Granite City concerning RICO, federal and Illinois anti-trust laws, federal FOIA, and state claims related to events prior to March 25, 2002. However, it denies the motion regarding civil conspiracy claims against the City. Claims against individuals Dan Brown, Ronald Selph, and Mark Spengler are dismissed in their official capacities for RICO, federal and Illinois anti-trust claims, and state claims linked to actions before March 25, 2002, as well as under federal FOIA. Conversely, claims against these individuals in their personal capacities or outside their authority remain intact.

Lathrop is granted until April 30, 2001, to amend his complaint concerning claims against Brown, Selph, and Spengler that were found deficient under Rule 9(b). The Court strongly advises Lathrop to seek legal counsel. Allegations include procedural violations related to the DonnaLynne Subdivision, such as lack of Planning and Zoning review, absence of a public hearing, failure to advertise land for sale, improper handling of sewer system funds, lack of necessary notifications and inspections, improper stormwater management, and concealment of a family cemetery.