Mariah Wall v. Michigan Rental
852 F.3d 492
6th Cir.2017Background
- Three tenants (Wall, Boston, Mulhinich) rented rooms from Zaki Jamil Alawi and his companies and paid security deposits totaling about $2,550.
- Upon move-out, each received their deposit back minus small, uncontested deductions for damages.
- Plaintiffs alleged Alawi violated Michigan landlord-tenant statutes by not depositing security funds at a properly regulated bank and by failing to list the bank's address on leases.
- Plaintiffs brought a putative class RICO action claiming wire, mail, and bank fraud based on the alleged mishandling of deposits, plus various state-law claims.
- District court gave plaintiffs a supplemental RICO statement, then dismissed the RICO claim with prejudice for lack of Article III standing and failure to plead fraud with particularity under Fed. R. Civ. P. 9(b), and declined supplemental jurisdiction over state claims.
- Plaintiffs appealed the RICO dismissal and sought attorneys’ fees for the district court’s denial of defendants’ sanctions motion; the Sixth Circuit affirmed and declined to impose appellate sanctions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing — injury in fact | Plaintiffs contend statutory violations of Michigan law caused injury (loss of right to hold deposit; lost use/time value) | Defendants argue plaintiffs suffered no concrete injury because deposits were returned (net of agreed deductions) | No standing: no concrete injury in fact; statutory violation alone insufficient per Spokeo |
| RICO injury — "injury to business or property" | Plaintiffs claim state-law violations and alleged fraud satisfy RICO injury | Defendants say absent any actual loss or deprivation, plaintiffs cannot show RICO injury | Dismissed: plaintiffs failed to allege injury under 18 U.S.C. §1964(c) |
| Rule 9(b) particularity for fraud predicates | Plaintiffs allege mail, wire, and bank fraud based on misrepresentations about deposit location | Defendants argue plaintiffs failed to plead the who/what/when/where/how of any misrepresentation or scheme | Dismissed: complaint lacks a specific misrepresentation and fails to plead a plausible fraudulent scheme |
| Request for attorneys’ fees after denial of sanctions | Plaintiffs sought fees based on the court denying sanctions motion (they prevailed on that point) | Defendants opposed fees; also sought sanctions on appeal for frivolous appeal | Fees denied; no appellate sanctions imposed, but counsel cautioned |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (standing requires injury in fact, causation, and redressability)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (statutory violations must also cause a concrete injury to satisfy Article III)
- Jackson v. Sedgwick Claims Mgmt. Servs., 731 F.3d 556 (6th Cir. 2013) (civil RICO requires injury to business or property)
- In re Wingerter, 594 F.3d 931 (6th Cir. 2010) (bare-bones allegations insufficient for standing)
- United States ex rel. Bledsoe v. Community Health Sys., 501 F.3d 493 (6th Cir. 2007) (Rule 9(b) requires time, place, content, scheme, intent, and injury for fraud)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleading)
- Williams v. Lew, 819 F.3d 466 (D.C. Cir. 2016) (complaint must plausibly allege injury in fact)
- United States ex rel. Hirt v. Walgreen Co., 846 F.3d 879 (6th Cir. 2017) (discussing 9(b) particularity in qui tam/fraud contexts)