The Third Circuit recently affirmed the dismissal of a RICO suit brought by a disgruntled residential tenant against a residential landlord. See, Bolmer v. Connolly Properties, Inc., 2012 U.S. App. LEXIS 3698. The Court held that this suit was an “everyday landlord-tenant dispute adorned as a racketeering claim complete with the obligatory treble damage request that is both the sine qua non and irresistible impulse of so many civil actions under RICO.” See, Bolmer at 31. This federal case is an example of the frivolous lawsuits commercial and residential landlords face when tenants find “creative ways” to hinder landlords by making a “federal case” of state court landlord/tenant disputes, when no true federal action exists.
In Bolmer, the tenant alleged that the landlord conspired to harbor illegal aliens and induce illegal aliens to reside in the United States as part of a conspiracy to deny Bolmer and other tenants the full value of their leasehold. Bolmer claimed that as a result of these actions, the apartment complex fell into “slum-like conditions” with unclean commons areas, infestation of bugs and rodents, mold and criminal activities.
In support of his position, Bolmer cited a number of other RICO cases where courts have granted such claims. However, the Third Circuit distinguished these other cases by illustrating that the defendants in cases cited by Bolmer were involved in employment-related disputes or smuggling undocumented individuals. The Third Circuit held that in the matter before the court, the landlord merely rented apartments and was not required to conduct background checks, disclose identities or follow-up on immigration status. Further, the landlord did not bring the tenants into the country or serve as a catalyst for aliens to reside in the U.S.
In Bolmber, the court stated:
"We cannot imagine that Congress contemplated that our nation’s landlords (not to mention our hotel and motel operators, innkeepers, and others who are in the business of providing accommodations) would be tasked with making complex legal determinations about who is permitted to live in this country, much less that they would be criminalized for an error in so doing."
Other landlord/tenant cases also deal with issues whereby a disgruntled tenant attempts to bring a state landlord/tenant dispute before the federal courts. Often, this tactic is used in removal actions. See 2009 U.S. Dist Lexis 62655 Millville Housing Authority v. Mary Thomas. In Millville, an angry tenant sought for removal to federal court her state court landlord-tenant dispute. The court held that a landlord-tenant dispute is a state law issue that does not concern substantial federal interest. Further, the District Court, citing the Supreme Court, emphasized that a “case may not be removed to federal court on the basis of a federal defense . . . even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue”. See Id. (citing, Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S. Ct. 2425, 96 L. Ed. 2d 318 ).
Whether you are a commercial or residential landlord, it is important to address frivolous lawsuits - especially where a tenant tries to make their matter a “federal case”. If not dealt with properly and immediately, such tactics can cause unnecessary delay and drive up expenses. If presented with such a complaint, it is imperative for a landlord to address the matter “head-on” and attempt to have the case dismissed or, in the removal context, remanded back to state court as quickly and efficiently as possible. Having counsel that knows how to handle such issues is crucial for any residential or commercial landlord.
For my information on commercial/residential landlord’s rights and how to address disgruntled tenant disputes like this or other issues, please contact Thomas Onder at Stark & Stark in the Bankruptcy & Creditor’s Rights Group at (609) 219-7458 or firstname.lastname@example.org.