Suddath v. Oklahome Homebuilders, LLC

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JACOB SUDDATH and ELIZABETH SUDDATH, Plaintiffs, v. OKLAHOME HOMEBUILDERS, LLC, et al., Defendants.

No. CIV-24-745-SLP

United States District Court, W.D. Oklahoma

November 8, 2024

ORDER

SCOTT L. PALK, UNITED STATES DISTRICT JUDGE

Before the Court is Defendants' Motion to Dismiss [Doc. No. 17]. Plaintiffs have filed their Response [Doc. No. 21] and the matter, therefore, is at issue and ready for determination. Also before the Court is Defendants' Motion for Temporary Restraining Order and Permanent Injunction with Brief in Support [Doc. No. 19] which is also at issue. See Plaintiffs' Response [Doc. No. 22]. For the reasons set forth below, Defendants' Motion to Dismiss, construed as a motion for judgment on the pleadings, is GRANTED as to Plaintiffs' sole federal claim and the Court DECLINES to exercise supplemental jurisdiction over Plaintiffs' remaining state-law claims. Additionally, the Court DISCHARGES Plaintiffs' Notice of Lis Pendens [Doc. No. 5] and DENIES as MOOT Defendants' Motion for Temporary Restraining Order and Permanent Injunction.

I. Background

This action arises out of a failed agreement for the purchase and sale of a lot and construction of a home. Plaintiffs, Jacob Suddath and Elizabeth Suddath (Plaintiffs), wanted to purchase a lot and build a home on property owned by one or more of the Defendants. Ultimately, the parties' agreement was not consummated. Plaintiffs allege Defendants breached the agreement, and engaged in fraudulent and other wrongful conduct. Plaintiffs invoke this Court's federal question subject matter jurisdiction alleging the Defendants' conduct violated the Racketeer Influenced and Corrupt Organization Act (RICO).

Although entitled a “Motion to Dismiss”, Defendants move pursuant to Rule 12(c) of the Federal Rules of Civil Procedure for judgment on the pleadings on grounds Plaintiffs' Complaint does not plausibly allege a RICO violation. As no other federal claim has been asserted Defendants further request the Court to decline to exercise supplemental jurisdiction over Plaintiffs' remaining state-law claims. Defendants also move for injunctive relief arising from Plaintiffs' filing of a notice of lis pendens against the property with the Clerk of Court of Oklahoma County, where the real property is located.

II. Governing Standard

Rule 12(c) of the Federal Rules of Civil Procedure governs the Court's analysis.^[1]Rule 12(c) provides that a party may move for judgment on the pleadings “[a]fter pleadings are closed - but early enough not to delay trial[.]” Fed.R.Civ.P. 12(c).

“A motion for judgment on the pleadings under Rule 12(c) is treated as a motion to dismiss under Rule 12(b)(6).” Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1160 (10th Cir. 2000). The court applies the same standards under either rule. Brown v. Montoya, 662 F.3d 1152, 1160 n. 4 (10th Cir. 2011). The court accepts as true the complaint's well-pleaded factual allegations and views them in the light most favorable to the plaintiff. Schrock v. Wyeth Inc., 727 F.3d 1273, 1280 (10th Cir. 2013). But the court need not accept as true legal conclusions, and “naked assertions devoid of further factual enhancement” will not suffice. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted).

III. Relevant Facts

The Court addresses the facts central to Plaintiff's RICO claim, alleged in Count I of the Complaint.^[2] For the reasons discussed infra, the Court finds Plaintiffs have failed to allege plausible allegations of a pattern of racketeering activity. The Court's recitation of the relevant facts is directed primarily to this issue.

In November 2023, Plaintiffs executed a Buyer Broker Services Agreement (Agreement) with Defendant OklaHome Real Estate Services, LLC (Okla Real Estate) as broker, and non-party Jesse Blanton (Mr. Blanton), as Plaintiffs' agent. Compl., ¶ 34; see also Agreement [Doc. No. 1-1]. Additionally, the parties entered into a Supplement. Id., ¶ 35; see also Supplement [Doc. No. 1-2]. The Agreement and Supplement consummated negotiations between the parties for Plaintiffs to purchase land from Defendant OklaHome Homebuilders, LLC (Okla Homebuilders) and to have Okla Homebuilders build their home. Compl. [Doc. No. 1], ¶¶ 11-36.

Defendant Hodgens is the registered agent for Okla Real Estate. Id., ¶ 6. He was present at initial meetings with Okla Homebuilders and Plaintiffs to discuss the design and build of the home. Id., ¶¶ 16-17, 19-27. In the Supplement, Mr. Hodgens individually agreed to: (1) provide Plaintiffs with a discount of $50,000.00 off the final purchase price so that their home could be used as a “Parade Home” in 2024; and (2) sell the lot to Plaintiffs for $175,000.00. Id., ¶ 36; see also Doc. No. 1-2. The Supplement provides that Plaintiffs were to make a $25,000.00 down payment which would include a $2500.00 design deposit. Id. On November 7, 2023, Plaintiffs tendered the $25,000.00 deposit to Okla Homebuilders. Id., ¶ 37.

On December 13, 2023, Plaintiffs finalized the home design with Mr. Hodgens and others. Id., ¶ 52. Plaintiffs then signed a Real Estate Purchase and Construction Contract (Contract). Id., ¶ 55; see also Doc. No. 1-3. Ultimately, the Contract was never completed. And Plaintiffs did not receive their deposit back. Although, as discussed below, a contract with different terms was discussed, no such contract was ever entered into amongst the parties.

Alleged RICO First Predicate Act^[3]

On March 1, 2024, Mr. Blanton told Plaintiff, Ms. Suddath, that Mr. Hodgens had been denied a construction loan on two occasions and that he was trying to establish a new relationship with a new lender. Id., ¶ 108. The lender told Mr. Hodgens that “Defendant was not charging Plaintiffs enough for the home and that the margins were not correct.” Id., ¶ 109.^[4]

Mr. Blanton advised Plaintiffs that Defendant “needed to get a new loan with a better rate that was $60,000.00 higher than the original contract so that it appeared to the new lender that Mr. Hodgens was making a larger profit on the home.” Id., ¶ 110. “In exchange for executing a new contract, Defendant would give Plaintiffs a $60,000.00 ‘coupon' off the final cost of the project in an addendum.” Id.

Alleged RICO Second Predicate Act

Later in the evening on March 1, 2024, Mr. Blanton called Plaintiffs and “indicated that he had the [new] contract at his house ready to sign and that Mr. Hodgens was pushing Mr. Blanton to get the contract signed that day.” Id., ¶ 113.

Alleged RICO Third Predicate Act

The next day, on March 2, 2024, Mr. Michael called Ms. Suddath to discuss “moving forward with items associated with the house” and during that call, Ms. Suddath told Mr. Michael “that she was frustrated most with the request for Plaintiffs to sign the new contract” but Mr. Michael “feigned ignorance of the contract.” Id., ¶¶ 115-117.^[5] Two days later, on March 4, 2024, “Mr. Michael admitted that his phone call to Ms. Suddath two days earlier was a result of Mr. Hodgens' pressure on Mr. Michael to get Plaintiffs to sign the new agreement.” Id., ¶ 120.

IV. Discussion

RICO provides a civil cause of action for treble damages to anyone injured “by reason of” certain racketeering activity. 18 U.S.C. §§ 1964(c), 1962. “To plead a valid RICO claim, a plaintiff must plausibly allege that a defendant (1) conducted the affairs (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Johnson v. Heath, 56 F.4th 851, 858 (10th Cir. 2022) (internal quotation marks and citation omitted). Defendants challenge, inter alia, the sufficiency of Plaintiffs' allegations with respect to the third element - a “pattern” of racketeering activity.^[6]

“A ‘pattern' requires at least two predicate acts.” Bixler v. Foster, 596 F.3d 751, 761 (10th Cir. 2010) (citing 18 U.S.C. § 1961(5)). And those predicate acts themselves must amount to or otherwise constitute a threat of continuing racketeering activity. Id. This continuity requirement expresses congressional intent that “RICO reach activities that amount to or threaten long-term criminal activity.” Id. (citing H.J., Inc. v. Northwestern Bell Tele. Co., 492 U.S. 229, 243 n. 4 (1989)).

“‘Continuity' is both a closed-and open-ended concept: closed-ended referring to a closed period of repeated conduct and open-ended referring to conduct that by its nature projects into the future with a threat of repetition.” Resol. Tr. Corp. v. Stone, 998 F.2d 1534, 1543 (10th Cir. 1993). “A party alleging a RICO violation may demonstrate continuity over a closed period by proving a series of related predicates extending over a substantial period of time.” Id. A closed-ended series of predicate acts is not sufficient to support a finding of a pattern of racketeering activity, however, where those acts “constitute[ ] a single scheme to accomplish ‘one discrete goal,' directed at one individual with no potential to extend to other persons or entities.” SIL-FLO, Inc. v. SFHC, Inc., 917 F.2d 1507, 1516 (10th Cir. 1990).

Open-ended continuity “may be established by showing that the predicates themselves involve a distinct threat of long-term racketeering activity, either implicit or explicit, or that the predicates are a regular way of conducting the defendant's ongoing legitimate business or the RICO enterprise.” Resol. Tr., 998 F.2d at 1543. “Open-ended continuity requires a clear threat of future criminal conduct related to past criminal conduct.” Phelps v. Wichita Eagle-Beacon, 886 F.2d 1262, 1273 (10th Cir. 1989).

Plaintiffs' Complaint alleges a single scheme pursuant to which one or more Defendants intended to coerce Plaintiffs into signing a new agreement, the terms of which would not be disclosed to the new lender who would be providing the...