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Fakhoury v. O'Reilly

United States District Court, E.D. Michigan, Southern Division

October 24, 2017

Hakim Fakhoury, April Lynn Fakhoury, Michael Fakhoury, and Ray Fakhoury Plaintiffs,
v.
John B. O'Reilly, Jr., William Debiasi, Andreas Barnette, Ron Haddad, Debra Walling, and the City of Dearborn Defendants.

          R. Steven Whalen United States Magistrate Judge

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTIONS TO DISMISS [15, 16]

          GERSHWIN A. DRAIN United States District Judge

         I. Introduction

         Plaintiffs are family members residing in the City of Dearborn. Plaintiffs' Amended Complaint alleges that the Defendants, officials of the City of Dearborn, unlawfully harassed, prosecuted, and conspired against them with the goal of divesting the family of its commercial properties in the City. Pending before the Court are two Motions to Dismiss filed by the Defendants. A hearing on these matters was held on May 22, 2017. For the reasons that follow, the Court will GRANT IN PART and DENY IN PART the Motions to Dismiss [15, 16].

         II. Facts

         This case involves four Plaintiffs (hereinafter “April, ” “Hakim, ” “Michael, ” and “Ray”), all members of the Fakhoury family. Dkt. No. 3 at Pg ID 165. April and Hakim are married; Michael and Ray are their sons. Id. The Fakhoury family resides in the City, where they own and operate various businesses in the West District of the City. Id. at Pg ID 168-69. Hakim was vocally critical of the Mayor of Dearborn, Defendant John B. O'Reilly, Jr. (hereinafter “O'Reilly”). Id. at Pg ID 169. Hakim would criticize O'Reilly on matters that he believed were inappropriate or not lawfully being done within the City. Id. O'Reilly would often become upset after Hakim voiced his criticisms. Id. at Pg ID 170.

         Another source of contention between Hakim and O'Reilly involved the Brownfield Credit. Id. Hakim qualified for this credit which allows a property developer to obtain millions of dollars in state tax credit so long as the owner builds adjacent to properties that are blighted. Id. O'Reilly demanded repeatedly that Hakim sell the Brownfield Credit to the City, which Hakim rejected. Id. Eventually, Hakim filed a lawsuit against the City alleging a due process violation concerning the City's efforts to take the Brownfield Credit away from the Fakhoury family. Id. at Pg ID 170. This caused further strained relations between Plaintiffs and O'Reilly. Id. Another source of contention between the Plaintiffs and O'Reilly was the issue of paid parking. Id. Under the City's parking ordinance, tenants and customers were repeatedly ticketed, which affected the Plaintiffs' businesses and their tenants. Id. O'Reilly and the City refused the Plaintiffs repeated requests to remove paid parking to make the West District more business friendly. Id. at Pg ID 171.

         During the paid parking dispute, Plaintiffs partnered with Mike Hamame. Id. Under the business partnership, Hamame and the Fakhoury family assumed equal ownership interests within the West District of Dearborn. Id. According to the Plaintiffs, unbeknownst to them at the time, Hamame collaborated with O'Reilly to divest the Fakhoury family of its properties within the City. Id.

         On February 15, 2013, O'Reilly and Defendant Debra Walling, the City's Chief of Staff for the Mayor (hereinafter “Walling”), met with Hamame to discuss the issue of paid parking. Id. At this meeting, O'Reilly advised Hamame that if his family wanted to do business in the City, they must dissolve their partnership with the Fakhoury family. Id. at Pg ID 172. O'Reilly indicated that once Hamame fulfills the objective of divesting the Plaintiffs of their properties, O'Reilly would make the West District more business friendly, including with respect to paid parking. Id. The relationship between the Fakhoury family and the Hamame family soon deteriorated resulting in thirteen lawsuits regarding ownership of properties within the City. Id. at Pg. ID 172-73.

         Following this, Plaintiffs allege that O'Reilly used his office to: (1) order police to target and harass the Fakhoury family; (2) order police and City attorneys to prevent the Fakhoury family from entering their own business properties; and (3) instruct prosecutors to charge the Fakhoury family without probable cause. Id., p. 10-11 (Pg. ID 173-74). It is alleged that O'Reilly orchestrated his plan to deprive the Fakhoury family of their properties by stating publicly that he had a meeting with Hamame and that “Mike Hamame has taken . . . and begun the eviction process on the property.” Also, in February of 2013, in an open session before the public, in order to further his scheme to oust the Plaintiffs from the City, O'Reilly stated that “Hakim Fakhoury no longer owns property in the District. Mike Hamame owns the notes.” Consequently, O'Reilly explained “[t]his is a new day in the District and the future is bright.”

         Plaintiffs also allege that Defendant Ron Haddad, the Chief of Police for the City, encouraged harassment of the Fakhoury family by ratifying his officers numerous arrests, condoning their unlawful actions towards the Fakhoury family and allowing the Hamame family to threaten and keep the Fakhoury family from entering their jointly owned properties. Id., p. 3, 11 (Pg. ID 166, 174). Haddad and O'Reilly issued a Special Intelligence Bulletin to other police officers which casted the Fakhoury family as “threats to business” and “suspects”. Id., p. 14-15 (Pg. ID 177-78). The Bulletin stated that “court proceedings and evictions are imminent” and “Hamame feels that the possibility for violence will escalate[, ]” thus officers were “asked to give special attention and extra patrols” of the jointly owned properties in the West District during February of 2013. According to the Plaintiffs, the Bulletin subjected the Fakhoury family to arbitrary arrests and caused extreme embarrassment. On one occasion, before the Bulletin was even issued, Plaintiffs claim that at least five police officers (some with weapons drawn), circled Hakim's car to show force and intimidate him. During this altercation, Defendant Andreas Barnette, a Sergeant in the Dearborn Police Department, was one of the officers present. Id., p. 15 (Pg. ID 178).

         In March of 2013, the City, at the direction of O'Reilly, falsely informed tenants of Plaintiffs' properties that they had been defrauded by the Plaintiffs and the Hamames were the rightful owners of the properties. Id. at Pg ID 176; Ex D. The City instructed at least one tenant to contact the police and file a police report concerning the purported fraud. Id. This tenant met with Barnette and filed the police report. Id., Ex. D. Sergeant Barnette also contacted the realtor involved with leasing the subject property and informed the realtor that if he did not come down to the station and provide a statement that he would be considered a suspect in a potential fraud. Id.

         In June 2013, April reported to police that Hamame threatened her life. Id. Instead of investigating Hamame, Defendant Barnette brought criminal charges against April, for allegedly filing a false police report. Id. at Pg ID 179. A jury acquitted April. Id. This was one of many criminal charges brought against the Fakhoury family.

         According to the Fakhoury family, as of June 2013, they had legal control to manage all of their properties, which was granted by a court. Id. at Pg ID 180. However, on August 16, 2013, Hamame wrongfully obtained an injunction from the state court banning the Fakhoury family from entering their properties to collect rent and manage the properties. Id. After the injunction order was entered, Plaintiffs pleaded with Defendants Haddad and Walling to stop harassing them and to allow them to have full access to their properties. Id. at Pg. ID 181. However, under threats of arrest, the Fakhoury family was barred from entering their property and collecting rent, which averaged in excess of $500, 000 per month. Id.

         Defendant William Debiasi is the City of Dearborn's Assistant Prosecutor. Id., p. 3 (Pg. ID 166). According to the Complaint, Debiasi issued “bogus” criminal charges targeting the Fakhoury family Id., p. 21 (Pg. ID 184). For example, the charges against April include the following:

. Filing False Police Report on March 4, 2013, Case No. 13C59570M;
. Frauds Unlawful on August l, 2013, Case No. 13 C868l0M;
. Trespassing on August 22, 2013, Case No.13C78000M;
. Frauds Unlawful on August 22, 2013, Case No.13C77980M;
. Trespassing on September 17, 2013, Case No.13C80210M; and
. Breaking and Entering, Entering Without Authority on September 17, 2013, Case No. 13C80200M.

Id. ., p. 21 (Pg. ID 184).

         The charges against Hakim include the following:

. Trespassing on September 17, 2013, Case No.13C80230M; and
. Trespassing on December 11, 2013, Case No.14C90200M.

Id. ., p. 23 (Pg. ID 186).

         The charges against Michael include the following:

. Breaking and Entering on August 24, 2013, Case No. 13C78090M.

Id. ., p. 24 (Pg. ID 187).

         The charges against Ray include the following:

. Breaking and Entering on September 17, 2013, Case No. 13C80160M; and
. Trespassing on September 17, 2013, Case No.13C80170M

Id. ., p. 25 (Pg. ID 188).

         On November 8, 2013, the Michigan state court judge who entered the injunction order denied Dearborn Ventures Capital, LLC's and West Village Common Holdings, LLC's motion to hold the Fakhoury Plaintiffs liable for trespass based on the August 16, 2013 injunction order. See Plfs.' Sur-Reply, Pg ID 802. In January of 2014, the same state court judge conducted a hearing on April's emergency motion to address the August 16, 2013 order and held:

IT IS ORDERED that the validity of the Order entered by this Court on August 16, 2013 (“Injunctive Order”) and therefore the substance and import thereof, are matters still to be determined in this Court upon further review and determination after the parties are given an opportunity at a motion and hearing to address the validity of that Order.

         On June 13, 2014, after numerous adjournments, the circuit court entered an order which rescinded the August 16, 2013 injunction against the Fakhoury family. Id. at Pg ID 180-81. The court vacated the order ab initio “for reason that the court was misled into its entry.” Id. That same month, the Fakhoury family ended their dispute with the Hamame family after a settlement, which resulted in millions of dollars lost and a loss of assets for the Plaintiffs. Id. at Pg ID 189. After the settlement, Hamame phoned O'Reilly to inform him that the Fakhoury family was divested of the property. Then, on October 21, 2014, the City voted to phase out paid parking “based on the recommendation of the Mayor.” Id. at Pg ID 190.

         According to the Plaintiffs, even armed with the knowledge that the injunction was unlawfully obtained and vacated, Defendant Debiasi, under the direction and influence of O'Reilly, Walling and the City of Dearborn, continued to prosecute the Plaintiffs absent any probable cause. Id. at Pg ID 186.

         As a result of the Defendants' conduct, Plaintiffs allege a litany of financial, personal, and emotional damages. Id. at Pg ID 191. Plaintiffs bring a total of eight counts (three counts of malicious prosecution under state and federal law, violation of the Equal Protection Clause, First Amendment Retaliation, conspiracy, undue process and gross negligence) against six different defendants. Pending before the Court are two separate Motions to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6): one on behalf of the Defendants in their individual capacities and one on behalf of the Defendant City. Both motions cross-reference each other. Accordingly, the Court will consider both motions together.

         III. Legal Standard for Motion to Dismiss Pursuant to Rule 12(B)(6)

         Federal Rule of Civil Procedure 12(b)(6) allows the court to make an assessment as to whether the plaintiff has stated a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 668 (2009). “Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.' ” Id. “[A] complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.' ” Id. The plausibility standard requires “more than a sheer possibility that a defendant has acted unlawfully.” Id. “[W]here the ...


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