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State ex rel. County of Cuyahoga v. Jones Lang Lasalle Great Lakes Corporate Real Estate Partners LLC

Court of Appeals of Ohio, Eighth District, Cuyahoga

June 1, 2017

State ex rel. County of Cuyahoga Appellant
v.
Jones Lang LaSalle Great Lakes Corporate Real Estate Partners LLC, et al. Appellees

         Trial Court No. CV-14-827651

          Robert J. Triozzi, Director, Cuyahoga County Department of Law, Robin M. Wilson and Joseph W. Boatwright, IV, Assistant Directors of Law, for appellant.

          James R. Wooley, Justin E. Herdman, Michael S. Quinlan and Stephen G. Sozio, for appellee Jones Lang LaSalle Great Lakes Corporate Real Estate Partners.

          Ross M. Babbitt, for appellees Midwestern Entertainment Venture, LLC and its d/b/a Anatomy Nightclub.

          Richard T. Hamilton, Jr., for appellees Harvey G. Oppmann and 944 Prospect Avenue LLC.

          John J. Spellacy, for appellee M2J1, LLC.

          Roger M. Synenberg, Dominic J. Coletta and Clare C. Moran, for Appellees Vincent A. Russo, Vincore, LLC and Garibaldi Holdings.

          DECISION AND JUDGMENT

          PIETRYKOWSKI, J.

         {¶ 1} Appellant, Cuyahoga County ("the County"), appeals the judgment of the Cuyahoga County Court of Common Pleas, dismissing its complaint. For the reasons that follow, we affirm.

         I. Facts and Procedural Background

         {¶ 2} The facts in this matter are taken from the County's complaint, filed on May 30, 2014, which asserted 13 counts against ten different defendants stemming from fraudulent and corrupt dealings regarding two separate but related transactions.

         {¶ 3} The first transaction concerned the County's purchase of the Ameritrust building site.

         {¶ 4} In its complaint, the County alleged that Great Lakes[1] desired to provide real estate services for the County but had been unsuccessful in getting the business. In January 2003, Great Lakes hired Anthony Calabrese, III, and his law firm to represent it. Shortly thereafter, Calabrese began arranging meetings between Great Lakes and County officials.

         {¶ 5} In November 2003, the County issued a request for proposal for real estate services related to the consolidation of the County's agencies into one building or campus. Great Lakes submitted a proposal, which indicated that its fee would range between two and four percent of the gross aggregate value of the lease if the County leased the property, or between $5 and $7 per square foot of the gross building area if the County purchased the property. In April 2004, Great Lakes was selected as one of five finalists. The other four finalists proposed a fixed fee of between $300, 000 and $400, 000 for consulting and strategic planning services on Phases I and II of the project. In July 2004, Great Lakes clarified its proposal such that it would be paid a lump sum of $396, 000 for the services provided on Phases I and II, with that amount to be credited back to the County once the County entered into a lease or purchase agreement under Phase III. As to Phase III, Great Lakes proposed that it receive a fee of $5.85 per gross building square foot regardless of whether the County leased or purchased the building.

         {¶ 6} While the County was going through the selection process, Great Lakes hired Vincore, LLC, to provide "certain government relations and similar consulting services." Great Lakes paid Vincore, LLC, $2, 000 in June 2004 and $2, 000 in July 2004. Great Lakes and Calabrese had additional meetings with County officials during this time.

         {¶ 7} In September 2004, Great Lakes' proposal was selected, and Calabrese began negotiating the contract between Great Lakes and the County (the "Cuyahoga County Contract"). The Cuyahoga County Contract was not signed until October 5, 2004.

         {¶ 8} On October 1, 2004, Great Lakes entered into a contract with Garibaldi Holdings pursuant to which Garibaldi Holdings would provide government relations work relative to the Cuyahoga County Contract in exchange for $150, 000. On November 1, 2004, Great Lakes entered into another agreement with Garibaldi Holdings, this time agreeing to pay $140, 000 for governmental and marketing services in "regard to assisting, advising and counseling [Great Lakes] in regard to any of its contracts with Cuyahoga County, Ohio."

         {¶ 9} Similarly, on October 1, 2004, Great Lakes entered into a contract with the R.P. Carbone Company ("R.P. Carbone") pursuant to which R.P. Carbone would provide government relations work relative to the Cuyahoga County Contract in exchange for a percentage of the amount made by Great Lakes. Vincent Carbone is alleged to be the president of R.P. Carbone. On November 1, 2004, Great Lakes entered into a second contract with R.P. Carbone, agreeing to pay it $30, 000 for its time and services in relation to Phase I and II of the Cuyahoga County Contract.

         {¶ 10} By November 19, 2004, Great Lakes had completed the initial phase of the work under the Cuyahoga County Contract, and presented its results to the County. In the report, Great Lakes ranked the Ameritrust property as the fourth best option as a potential location for the consolidated county offices.

         {¶ 11} On January 21, 2005, Great Lakes, Calabrese, and Cuyahoga County Commissioner Jimmy Dimora met at a Holiday Inn on Rockside Road. On January 25, 2005, Great Lakes reported that it had completed Phases I and II, and recommended that the County proceed with the Ameritrust site.

         {¶ 12} On March 31, 2005, Great Lakes sought the county commissioners' approval to move into Phase III of the Cuyahoga County Contract. Great Lakes never received such approval. Instead, the County and Great Lakes executed a second contract ("Cease Work Contract"), under which Great Lakes would cease work under the Cuyahoga County Contract. The parties agreed that Great Lakes would be entitled to keep the $385, 000 retainer, and that Great Lakes would receive an additional $2, 615, 000. The County paid Great Lakes upon the County's purchase of the Ameritrust site as required by the Cease Work Contract.

         {¶ 13} In October 2005, Vincent Carbone formed M2J1, LLC ("M2J1"). Great Lakes was requested to pay, and did pay, its obligation to R.P. Carbone for a percentage of the money made by Great Lakes on the Cuyahoga County Contract to M2J1. This amount totaled $324, 800. From that amount, M2J1 made three distributions: it distributed $99, 000 to Burlwood Holdings, LLC, an entity owned by Calabrese; it distributed $70, 000 to a Calabrese friend; and it indirectly distributed $70, 000 to J. Kevin Kelley, an employee in the Cuyahoga County Treasurer's Office and a member of Dimora's inner circle.

         {¶ 14} The County alleged that Great Lakes has no records of what services Garibaldi Holdings or R.P. Carbone provided under the agreements. Further, the amounts paid to Garibaldi Holdings and R.P. Carbone were charged as a cost to the Cuyahoga County Contract. Vincent Russo, the owner of Vincore, LLC and Garibaldi Holdings, was later indicted and pled guilty to bribery, aiding and abetting, conspiracy to commit bribery, and HOBBS Act conspiracy charges related to federal funds. Vincent Carbone was indicted and pled guilty to conspiracy and money laundering related to bribery to gain governmental contracts. Great Lakes, Vincore, LLC, Garibaldi Holdings, and R.P. Carbone were all represented by Calabrese.

         {¶ 15} On July 16, 2013, Calabrese was indicted based on his actions relative to the Ameritrust site and the $99, 000 payment from Great Lakes through M2J1. Calabrese pled guilty to federal charges, including multiple counts of RICO conspiracy, bribery and conspiracy to commit bribery concerning programs receiving federal funds, Hobbs Act conspiracy, mail fraud, and conspiracy to commit mail fraud. As part of his plea, Calabrese admitted that the payment to J. Kevin Kelley was an unlawful bribe related to the Ameritrust project. Notably, the County alleged that it did not become aware of the fraud and corruption until Calabrese was indicted.

         {¶ 16} In its complaint, the County alleged that Great Lakes hired Vincore LLC, Garibaldi Holdings, Vincent Carbone, and Calabrese because it knew they could influence the decision makers in Cuyahoga County. Further, the County alleged that Great Lakes paid those entities and individuals an inflated amount of money because Great Lakes knew that they needed that money to give to public officials to influence them in Great Lakes' favor. Great Lakes benefitted from those corrupt activities by being selected for the Ameritrust project and being paid $3, 000, 000 for work worth substantially less. The County alleged that, but for the corruption in its dealings with the County, Great Lakes would not have been selected for the project and would have been paid less, and the County would not have selected the Ameritrust site, which cost the County millions of extra dollars. Based on these allegations, the County asserted the following counts:

         {¶ 17} Against Great Lakes:

• Violation of R.C. 309.12 (Count 1)
• Breach of Contract (Count 2)
• Unjust Enrichment (Count 3)
• Fraud (Count 4)
• Breach of Fiduciary Duty (Count 5)
• Fraud in the Inducement (Count 6)
• Declaratory Judgment (Count 7)
• Violation of the Ohio Corrupt Practices Act (Count 9)
• Civil Conspiracy (Count 10)
• Civil Liability for Criminal Acts (Count 13)

         {¶ 18} Against Vincent A. Russo, Vincore, LLC, and Garibaldi Holdings (collectively the "Russo" appellees):[2]

• Violation of R.C. 309.12 (Count 1)
• Unjust Enrichment (Count 3)
• Violation of the Ohio Corrupt Practices Act (Count 9)
• Civil Conspiracy (Count 10)
• Civil Liability for Criminal Acts (Count 13)

         {¶ 19} Against M2J1:

• Violation of R.C. 309.12 (Count 1)
• Unjust Enrichment (Count 3)
• Violation of the Ohio Corrupt Practices Act (Count 9)
• Civil Conspiracy (Count 10)
• Civil Liability for Criminal Acts (Count 13)

         {¶ 20} The second transaction giving rise to the complaint involved the purchase of a parking garage near the Ameritrust site. The parking garage was owned by 944 Prospect Avenue, LLC, of which Harvey G. Oppmann was allegedly a member and manager. The County alleged that Oppmann was aware that Steven Pumper was part of Dimora's inner circle. Oppmann contacted Pumper and told him that he wanted to sell the parking garage but the County was dragging its feet. Oppmann orally agreed to pay Pumper $250, 000 from the proceeds if Pumper got the County to close the sale. Pumper contacted Dimora on behalf of Oppmann, and offered to pay Dimora $35, 000 to get the deal moving. The sale of the parking garage was completed on May 29, 2007, for $5, 145, 000, which was higher than the County's appraised value of the property.

         {¶ 21} After the sale of the parking garage, Pumper requested that Oppmann pay him by distributing part of the money in three different ways. One distribution went to Pumper's father, who generated a false invoice for $50, 000 for government relations work. Another distribution went to DAS Construction Company-where Pumper worked-which did not provide any services for the payment. The final distribution went to Midwest Entertainment Venture, LLC ("MEV"), which operated Anatomy Nightclub. Pumper is alleged to be a silent partner in Anatomy Nightclub. The distribution to MEV was passed along to Anatomy Nightclub in exchange for a promissory note, which the County alleged was fake and an attempt to hide the payments to Pumper for his role in the corruption scheme.

         {¶ 22} The County alleged that as a result of the bribes paid to Pumper and others, it paid more for the parking garage than it should have. Based on these allegations, the County asserted the following counts:

         {¶ 23} Against Harvey G. Oppmann and 944 Prospect Avenue, LLC (collectively the "Oppmann" appellees):

• Violation of R.C. 309.12 (Count 1)
• Unjust Enrichment (Count 3)
• Fraud (Count 8)
• Violation of the Ohio Corrupt Practices Act (Count 11)
• Civil Conspiracy (Count 12)
• Civil Liability for Criminal Acts (Count 13)

         {¶ 24} Against Midwest Entertainment Venture, LLC, and Anatomy Nightclub (collectively the "MEV" appellees):[3]

• Violation of R.C. 309.12 (Count 1)
• Unjust Enrichment (Count 3)
• Violation of the Ohio Corrupt Practices Act (Count 11)
• Civil Conspiracy (Count 12)
• Civil Liability for Criminal Acts (Count 13)

         {¶ 25} In response to the complaint, the various groups of appellees filed Civ.R. 12(B)(6) motions to dismiss.

         {¶ 26} On July 3, 2014, Great Lakes moved to dismiss the claims against it on the grounds that they (1) were barred by a contractual release contained in the Cease Work Contract, (2) were not sufficiently pled under Civ.R. 8(A) and 9(B), and (3) were outside of the statute of limitations because the County knew of, or reasonably should have discovered, the claims as early as July 29, 2008, when an article in the Cleveland Plain Dealer reported that a search warrant was executed upon Dimora, seeking in part, "For any time period, documents reflecting James 'Jimmy' Dimora's deliberative process, discussions, analysis or actions regarding the following: * * * 2. Ameritrust project (Cuyahoga County Administration Building)." Attached to Great Lakes' motion to dismiss were a copy of the Cease Work Contract and a copy of the online article from the Cleveland Plain Dealer, with an attached link to a copy of the search warrant.

         {¶ 27} The Russo appellees moved to dismiss the complaint on the grounds that the claims (1) were not sufficiently pled under Civ.R. 8(A) and 9(B), and (2) were barred by the statute of limitations. In its motion, the Russo appellees also sought to adopt the corresponding arguments raised by Great Lakes.

         {¶ 28} Likewise, M2J1 moved to dismiss the complaint on the grounds that the claims (1) were not sufficiently pled under Civ.R. 8(A) and 9(B), and (2) were barred by the statute of limitations. M2J1 sought to incorporate the arguments made by Great Lakes and the Russo appellees.

         {¶ 29} Like the other defendants, the Oppmann appellees moved to dismiss the complaint on the grounds that the claims (1) were not sufficiently pled under Civ.R. 8(A) and 9(B), and (2) were barred by the statute of limitations. As to the statute of limitations argument, the Oppmann appellees reasoned that the County's alleged discovery date of July 16, 2013, corresponding to Calabrese's indictment, was inapplicable to them because Calabrese did not represent the Oppmann appellees and had no involvement in the transaction. Thus, the Oppmann appellees concluded that the only applicable date for purposes of the statute of limitations that was alleged in the complaint was the date of the sale of the parking garage on May 29, 2007, which would result in the County's claims being time-barred.

         {¶ 30} Finally, the MEV appellees moved to dismiss the complaint, arguing that the County has not alleged any facts that would subject them to liability. In addition, the MEV appellees joined in the arguments made by Great Lakes and the Oppmann appellees relative to the statute of limitations and the sufficiency of the pleading under Civ.R. 8(A) and 9(B).

         {¶ 31} The County filed responses to each of the motions to dismiss, and each group of appellees filed replies.

         {¶ 32} On May 26, 2015, the judges of the Cuyahoga County Court of Common Pleas were recused, and the Ohio Supreme Court assigned the case to a visiting judge. In a pretrial conference held on August 18, 2015, the trial court notified the parties that it would be converting all of the motions to dismiss into motions for summary judgment since they referenced matters outside of the complaint. The court stated in its corresponding October 1, 2015 order that all of the appellees were required to refile their motions as motions for summary judgment "in order for the Court to consider the merits of the Defendants' claims."

         {¶ 33} In accordance with the trial court's order, the parties filed the motions described below.

         {¶ 34} In Great Lakes' motion for summary judgment, Great Lakes limited its argument to whether the claims were barred by the contractual release contained in the Cease Work Contract. However, Great Lakes indicated that it was reserving its right to assert any counterclaims or affirmative defenses, including the defenses of statute of limitations, estoppel, unclean hands, release, and laches. Further, Great Lakes asserted that counsel for the County agreed that the County would not argue that the motion for summary judgment waived any of Great Lakes' affirmative defenses or counterclaims. Attached to Great Lakes' motion for summary judgment was an affidavit from Robert Roe, a managing director of Great Lakes. Roe stated that under the Cuyahoga County Contract, Great Lakes was entitled to fees totaling $4, 400, 000. He testified that Great Lakes performed a substantial amount of services for the County, but that the County wished to terminate the Cuyahoga County Contract. As a result, the parties entered ...


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