Property Bid Spat With D.C. Councilman Fails
(CN) - D.C. Councilman Jim Graham need not face claims that he interfered in a property-revitalization plan to help a contributor, a federal judge ruled.
The dismissal comes two months after U.S. District Judge Rosemary Collyer tossed breach-of-contract claims against the Washington Metropolitan Area Transit Authority (WMATA) in the same case.
In 2008, the authority entered into an agreement Banneker Ventures, a developer, to negotiate the development of three lots next to the Shaw-Howard/Florida Avenue Metrorail Station in northwest Washington.
Banneker submitted a $40 million proposal for a multiuse development called The Jazz at Florida Ave, which would include 130 apartments, 20,000 square feet of retail space, and underground parking.
Despite three time extensions, however, Banneker's exclusive right to negotiate expired in March 2010 without reaching an agreement with WMATA.
Banneker claimed in court that councilman Graham, who was then a voting member of the WMATA board of directors, engaged in "bid suppression and bid rigging," with the aim of selecting a major campaign contributor, LaKritz Adler Development, as the developer for the project.
In its 50-plus page complaint, Banneker claimed that the councilman had offered to vote for a D.C. lottery contract that would benefit one of Banneker's then principals, Warren Williams, if the firm would withdraw as the developer for the project.
Banneker also accused Graham of convincing the WMATA Board to add affordable housing requirements, thereby decreasing the value of the project for Banneker; and it said the WMATA had conspired with LaKritz Adler to interfere with Banneker's exclusive negotiation rights.
In the end, WMATA did not sell or lease the site to LaKritz Adler Development, whose officers are also named as defendants in the case, but instead sold the site to a third developer, JBG Construction, for $10.2 million in July 2011.
Judge Collyer found in December 2013 that WMATA had sovereign immunity as to its actions because choosing a developer for the project required it to weigh the possible social, political, and economic repercussions - the kind of discretionary judgment immunity is intended to protect.
Meanwhile, the D.C. Board of Ethics and Government conducted an investigation of the matter and concluded Graham had violated the city's Code of Conduct by inappropriately favoring LaKritz Adler in the negotiation for development of the site.
The D.C. Council subsequently reprimanded Graham for improperly offering to support Williams' bid for the D.C. lottery contract in exchange for Banneker's withdrawal from the project.
Judge Collyer dismissed the claims against Graham on Thursday as barred by sovereign and absolute immunity. Graham and the LaKritz Adler defendants also proved that Banneker had failed to state a valid claim under the Federal Rule of Civil Procedure.
"The court previously held that Banneker's tort and quasi-contract claims against WMATA were barred by sovereign immunity because the critical decisions challenged here, such as for how long to negotiate a final contract and what terms to include, were discretionary," the 26-page ruling states.
"Because WMATA and the cistrict are immune from liability for certain claims where the act complained of was done in an official capacity and was discretionary, Mr. Graham, in his official capacity, also is immune from liability," Collyer added.
Fatal to Banneker's argument was its misinterpretation of the district's Standard of Conduct.
"The Standards of Conduct do not compel a WMATA Board Member to take any particular action with regard to a real estate deal," Collyer wrote. "In fact, the WMATA Standards of Conduct describe how not to act, not how to act. Mr. Graham's actions were discretionary. He exercised discretion in deciding whether to vote for an extension of Banneker's exclusivity period; he exercised discretion in deciding whether, and on what terms, to vote for a final contract with Banneker. Accordingly, Mr. Graham, in his official capacity, is immune from the claims set forth against him in the Amended Complaint."
With sovereign immunity barring the claims against Graham in his official capacity, the allegations fail for lack of subject matter jurisdiction.
Collyer applied the same rationale to Graham's motion for protection by absolute immunity.
"The argument again misses the mark," she wrote. "The Standards of Conduct describe ethical considerations, but do not define the duties of WMATA board members. Mr. Graham's conduct was within the perimeter of his official duties - that is, Mr. Graham's alleged conduct regarding Banneker and the negotiation of the proposed development contract was related to the general matters committed to his control and supervision.
"Because Mr. Graham's actions relating to the negotiation for development of the Project were discretionary and related to his duties as a member of the WMATA Board of Directors ... Banneker's claims against him will be dismissed," she said.
Collyer went on to toss the Banneker's claim for tortious interference "because it has not alleged a valid business expectancy."
"Banneker alleges that the 'failed business expectancy' at issue was the failure to reach a final contract for the Project," she wrote. "But Banneker only hoped to enter into a final contract with WMATA. Any final contract was contingent upon approval and execution by the WMATA Board of Directors, a possibility that was too remote to establish a valid business expectancy. Moreover, Banneker has not alleged that the interference by the LaKritz Adler Defendants actually caused termination of the business relationship/expectancy or actually caused a failure of performance by WMATA."
The antitrust claim meanwhile failed for not alleging injury to competition or an agreement among individuals who were competitors in the real estate development market.
"Banneker alleges that the LaKritz Adler Defendants petitioned Graham to involve them in the project, even though Banneker had the exclusive right to negotiate a deal to develop the site," the opinion states. "This conduct may have harmed one competitor (Banneker), but it cannot be said to have harmed the marketplace competition. Without an allegation that competition itself was harmed, no actionable antitrust injury is alleged."