United States District Court, W.D. Kentucky, Paducah Division
THOMAS B. RUSSELL, Senior District Judge.
This matter comes before the Court upon several Motions to Dismiss filed by Counterclaim Defendant David Griffin and Third-Party Defendants John Farris, Commonwealth Economics, LLC, John Wittman, and Joe Pat Cohoon (collectively, "the Defendants"). (Docket Nos. 49, 56, 61, and 63.) Fully briefed, these matters are ripe for adjudication. The Court will consider each Motion in turn.
This matter concerns the Counterclaim raised by Jones, which asserts that Defendants violated Section 1964(c) of the Racketeer Influenced and Corrupt Organizations Act and various state law claims. (Docket No. 44.) As required when deciding a motion to dismiss, the Court presumes that the counterclaim's allegations are true. Total Benefits Planning Agency v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008). Taking them as true, the relevant facts are as follows.
This action arises from a soured business relationship between David Griffin and Charles Jones. Jones founded a number of businesses, several of which have allegedly become extraordinarily successful and some of which are at the heart of this lawsuit. In June 2008, Jones formed CA Jones Management Group, LLC, ("CAJM"), to manage some of these companies. The Third-Party Defendants include John Farris, a principal of Commonwealth Economics, LLC ("Commonwealth"), a business advisory and consulting firm; Commonwealth itself; John Wittman, an employee of CAJM, who served as vice-president of College Book Rental Company, LLC ("CBR"); and Joe Pat Cohoon, a former contractor for CAJM.
Griffin became involved in several of these businesses in 2008, first purchasing a fifty percent interest in Integrated Computer Solutions, Inc., ("ICS"). Griffin and Jones formed Blackrock Investments, LLC, ("Blackrock"), as a holding company for their investments. In July 2008, Blackrock formed a subsidiary, SE Book Company, LLC, ("SE Book"), for the purpose of acquiring a textbook company in Murray, Kentucky. Although SE Book was initially wholly owned and managed by Blackrock, its operating agreement was amended in July 2008 to add ICS as a member. In March 2009, CBR was formed; later, CAJM was installed as the manager of both SE Book and CBR. With Griffin serving as the "chairman of the board of directors" of CBR, he and Jones spoke regularly about the financial outlook for Blackrock, ICS, SE Book, and CBR (collectively, "the Joint Companies").
Jones asserts that in light of the Joint Companies' success, in April 2010, Griffin sought to alter the parties' agreement such that Griffin would own 90% of the Joint Companies. In September 2011, Farris, a business adviser with Commonwealth, valued CBR between $191 and $319 million to Metropolitan Life Insurance Company in an effort to secure various loans. (Docket No. 44 at 18.) Jones alleges that Griffin and Farris falsely represented the portion of the Joint Companies that Griffin owned, exaggerating his ownership stake. (Docket No. 44 at 18.) In the same month, Griffin allegedly confronted Jones, threatening that if Jones failed to cede 90% of the equity in CBR, Griffin would destroy both the business and Jones himself. When Jones refused, Griffin caused CBR, SE Book, and Blackrock to transfer $1.7 million to Griffin; in December 2011, Griffin forced an additional $1, 070, 000 transfer. In Jones's telling, these funds had been loaned to the Joint Companies to finance their continued operation and expansion.
Jones further alleges that in October 2011, Griffin and Farris "forced" him to agree to forfeit half of his interest in CBR, with no consideration paid, leaving Griffin with 75% ownership of the company. This agreement, however, was ultimately revoked.
In February 2012, Griffin sued Jones, CAJM, and Jones's wife, Sarah, in this Court. ( See Griffin v. Jones, Civil Action No. 5:12-cv-00033-TBR.) He also sued the Joint Companies. Jones alleges that this litigation played into Griffin's scheme to make the Joint Companies impossible to either operate or sell, leaving banks and buyers alike reluctant to do business with them. As a result, the once-successful businesses struggled. In August 2012, Griffin dismissed his February 2012 lawsuit, having agreed with Jones that Myles MacDonald, a neutral third-party, would be installed as receiver to operate the Joint Companies. Jones alleges that the Defendants gave MacDonald false information in an effort to harm Jones. (Docket No. 44 at 20.) Jones further contends that the Defendants offered false information to law enforcement personnel and prosecutors in an effort to convince them to prosecute Jones. (Docket No. 44 at 20.)
Jones contends that in July 2012, Griffin persuaded both Security Bank and Planters Bank to alter their agreements with the companies at issue to the companies' detriment. (Docket No. 44 at 20.) Jones further claims that Griffin caused an involuntary bankruptcy petition to be filed against CBR on October 4, 2012, "falsely claiming that Griffin had loaned CBR $15, 000, 000 although he had in other legal pleadings claimed that these funds had been used to purchase his equity interest in the Joint Companies." (Docket No. 44 at 20.)
Finally, Jones points to a series of allegedly vexatious lawsuits that Griffin brought or joined against Jones, members of the Jones family, the Joint Companies, and/or other businesses owned by Jones. (Docket No. 44 at 21-22.) Jones urges that Griffin levied these lawsuits as part of a "racketeering scheme to punish Jones for failing to agree to turn over his interest in CBR, to deprive him of that interest, and to drain him of assets" to prevent him from either operating competing businesses or defending the lawsuits. (Docket No. 44 at 22.) Jones alleges that Griffin knowingly or recklessly included a number of false and misleading allegations in the Complaints and other docket filings. (Docket No. 44 at 22-23.)
The Federal Rules of Civil Procedure require that pleadings, including complaints, contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a) (2). A complaint may be attacked for failure "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6) motion to dismiss, a court will presume that all the factual allegations in the complaint are true and will draw all reasonable inferences in favor of the nonmoving party. Total Benefits, 552 F.3d at 434 (citing Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983)). "The court need not, however, accept unwarranted factual inferences." Id. (citing Morgan v. Church's Fried Chicken, 829 F.2d 10, 12 (6th Cir. 1987)).
Even though a "complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). Instead, the plaintiff's "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). That is, a complaint must contain enough facts "to state a claim to relief that is plausible on its face." Id. at 570. A claim becomes plausible "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) (citing Twombly, 550 U.S. at 556). If from the well-pleaded facts the court cannot "infer more than the mere possibility of misconduct, the complaint has alleged-but has not show[n]'-that the pleader is entitled to relief.'" Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)). "[O]nly a complaint that states a plausible claim for relief survives a motion to dismiss." Id.
I. Because Jones has failed to adequately allege a claim under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), this claim will be dismissed.
On October 25, 2013, Jones commenced a civil action pursuant to Section 1964(c) of RICO, which authorizes a civil cause of action for any person injured in his business or property by reason of a violation of 18 U.S.C. § 1962. 18 U.S.C. §§ 1961 et seq. Section 1962 provides a list of prohibited "racketeering activities." Jones relies upon § 1962(c), which provides:
It shall be 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.
Therefore, to allege a violation of the statute, Jones must point to "(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." Heinrich v. Waiting Angels Adoption Services, Inc., 668 F.3d 393, 404 (6th Cir. 2012) (quoting Sedima, S.P.R.L . v. Imrex Co., 473 U.S. 479, 496 (1985)). Jones contends that Defendants violated the Hobbs Act and committed wire fraud in an effort to deprive Jones of his ownership interest in the Joint Companies, to ...