Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca6-16-01988/USCOURTS-ca6-16-01988-1/pdf.json

Parties Involved:
Zaki Jamil Alawi
Appellee
Christopher Boston
Appellant
Michigan Rental
Appellee
Craig Mulhinch
Appellant
Mariah Wall
Appellant
ZA Holding Company, LLC

Document Text:

RECOMMENDED FOR FULL-TEXT PUBLICATION 

Pursuant to Sixth Circuit I.O.P. 32.1(b) 

File Name: 17a0054p.06 

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT 

MARIAH WALL; CHRISTOPHER BOSTON; CRAIG 

MULHINCH, 

Plaintiffs-Appellants, 

v. 

MICHIGAN RENTAL; ZAKI JAMIL ALAWI; ZA HOLDING 

COMPANY, LLC, 

Defendants-Appellees. 

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No. 16-1988 

Appeal from the United States District Court 

for the Eastern District of Michigan at Detroit. 

No. 2:15-cv-13254—Avern Cohn, District Judge. 

Decided and Filed: March 6, 2017*

 Before: DAUGHTREY, SUTTON, and DONALD, Circuit Judges. 

_________________ 

COUNSEL 

ON BRIEF: Daniel E. Chapman, Kimberly A. Cochrane, THE TROY LAW FIRM, Troy, 

Michigan, John J. Cooper, COOPER LAW FIRM, PLLC, Troy, Michigan, for Appellants. Mark 

A. Hopper, DELOOF, HOPPER, DEVER, WRIGHT & MILLIMAN, PLLC, Ann Arbor, 

Michigan, for Appellees. 

 *

This decision was originally filed as an unpublished opinion on March 6, 2017. The court has now 

designated the opinion for full-text publication. 

>

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No. 16-1988 Wall, et al. v. Mich. Rental, et al. Page 2

_________________ 

OPINION 

_________________ 

 SUTTON, Circuit Judge. What started out as a landlord-tenant dispute has become a 

lawsuit under the Racketeer Influenced and Corrupt Organizations Act (RICO). Mariah Wall, 

Christopher Boston, and Craig Mulhinch allege that Zaki Jamil Alawi and his companies 

committed federal wire, mail, and bank fraud by mishandling the security deposits the plaintiffs 

provided for their rental units. Because the plaintiffs did not allege a cognizable injury and 

because the complaint does not contain the “particularity” needed to allege fraud, Fed. R. Civ. P. 

9(b), the district court dismissed the federal claims with prejudice. It opted not to exercise its 

discretionary jurisdiction over the state law claims and dismissed them without prejudice. 

We affirm. 

 Between 2012 and 2014, Wall, Boston, and Mulhinch rented rooms from Alawi and his 

companies: ZA Holding Company and Michigan Rental. Alawi and his companies (together, 

Alawi), collected roughly $2550 in security deposits from the three plaintiffs when they agreed 

to lease rooms in his buildings. The plaintiffs lived in Alawi’s properties while attending the 

University of Michigan. When they moved out, they received their security deposits back, minus 

small deductions—uncontested by the plaintiffs—that Alawi withheld to cover minor damages to 

the properties. 

What seemed to be an unexceptional, indeed pedestrian, landlord-tenant relationship had 

a potential wart, say the plaintiffs. Michigan law requires landlords to handle security deposits 

in certain ways, including by depositing them in a properly regulated financial institution and by 

providing the address of that institution to the tenant. The plaintiffs came to believe that Alawi 

did not comply with these requirements. 

The plaintiffs sued Alawi on behalf of a putative class of six years’ worth of tenants, 

alleging violations of RICO and Michigan state law to the tune of $6.6 million. The crux of the 

complaint is that Alawi violated two requirements of Michigan landlord-tenant law: He failed to 

place the security deposits in a properly regulated bank, and he failed to include the address of 

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No. 16-1988 Wall, et al. v. Mich. Rental, et al. Page 3

the Michigan Commerce Bank on the lease. The complaint pleads a RICO violation on the 

grounds that Alawi was not entitled to hold security deposits at all (given these alleged breaches 

of Michigan law), and that knowingly taking security deposits anyway constituted a pattern of 

federal wire, mail, and bank fraud. The state-law claims alleged violations of Michigan’s 

Landlord and Tenant Relationships Act, statutory conversion, common law conversion, 

violations of Michigan’s Consumer Protection Act, and unjust enrichment. 

Alawi moved to dismiss. Before ruling on the motion, the district court (generously) 

gave the plaintiffs an opportunity to file a supplemental “RICO Case Statement”—a fill-in-theblank outline of each element of a RICO claim. 

But their response did not quell the district court’s concerns about the complaint. The 

court held that the plaintiffs lacked Article III standing to file the complaint because they failed 

to articulate any concrete injury. It held that the absence of any “injury to business or property” 

precluded the plaintiffs from stating a civil RICO claim. R. 26 at 10. And it held that the 

allegations in the complaint were too vague to meet the particularity requirement of fraud 

allegations under Civil Rule 9(b). The court dismissed the RICO claim with prejudice and 

declined to exercise supplemental jurisdiction over the state law claims. It also rejected the 

defendants’ motion for sanctions as well as the plaintiffs’ request for attorney’s fees due to the 

burden of having to defend the motion for sanctions. 

Plaintiffs appeal two rulings: the dismissal of their RICO claim and the denial of their 

request for attorney’s fees. 

The district court was correct on each front. 

The district court had ample grounds for rejecting the RICO claim as a matter of law. 

First of all, the plaintiffs lack standing to bring the claim. To cross the gateway to an Article III 

court, a plaintiff must allege: (1) “an injury in fact”; (2) “a causal connection” between the 

alleged injury and the defendants’ conduct—that “the injury . . . [is] fairly traceable to the 

challenged action . . . and not the result of the independent action of some third party not before 

the court”; and (3) redressability—that the injury will “likely . . . be redressed by a favorable 

decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (quotations omitted). 

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Bare-bone allegations by themselves will not suffice. See In re Wingerter, 594 F.3d 931, 945 

(6th Cir. 2010). “[A] complaint must state a plausible claim that the plaintiff has suffered an 

injury in fact” and that the other elements of standing are satisfied. Williams v. Lew, 819 F.3d 

466, 472 (D.C. Cir. 2016). 

Measured by these requirements, the plaintiffs come up short—in particular because they 

cannot satisfy the injury-in-fact requirement. They gave Alawi a security deposit before moving 

in and received the security deposit back upon moving out, minus some unchallenged deductions 

for damages. That sequence of events does not establish an injury in fact. The plaintiffs got just 

what Alawi promised in terms of dollars and cents. Nor may one establish an injury in fact 

merely by identifying a violation of state landlord-tenant law in the absence of actual damage. 

See Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016). The claimant must connect the 

violation to a concrete injury in fact. Notably, the Michigan law does not even purport to 

identify any injury flowing from the alleged violations. 

Plaintiffs’ theories of injury, now offered on appeal, confirm this conclusion. 

One theory: If Alawi was not entitled to take a security deposit, as the complaint alleges, each 

plaintiff is entitled to a full refund without any deductions for damage. The other theory: 

The plaintiffs lost the time value of the security deposits, as they could have spent or invested the 

$800+ that each of them gave to Alawi during the tenancy. But they ignore the reality that they 

still received back just what they gave, consistent with the rental agreement. The idea that a 

tenant—least of all a college student—could move into a rental apartment without paying a 

security deposit is quite implausible. And plaintiffs point to no case law suggesting that they 

could have lived in these apartments without paying a security deposit. All of this takes us back 

to where we and Judge Cohn started: Plaintiffs have not identified any injury in fact that arose 

from these allegations. 

Second, for comparable reasons, there is no RICO injury either. In order to bring a RICO 

claim, plaintiffs must show that illegal racketeering activities “injured [them] in [their] business 

or property.” 18 U.S.C. § 1964(c); see id. § 1962; Jackson v. Sedgwick Claims Mgmt. Servs., 

Inc., 731 F.3d 556, 558–59 (6th Cir. 2013) (en banc). In the absence of an injury of any kind, the 

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plaintiffs cannot show an injury within the meaning of the statute. The district court correctly 

dismissed the claim for this reason too. 

Third, the complaint does not satisfy the pleading requirements of Civil Rule 9(b). 

The plaintiffs point to wire, mail, and bank fraud as Alawi’s predicate acts of “racketeering 

activity” under RICO. 18 U.S.C. § 1961(1). To file a fraud claim, a plaintiff must state with 

“particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). To meet this 

requirement, the plaintiff must allege (1) “the time, place, and content of the alleged 

misrepresentation,” (2) “the fraudulent scheme,” (3) the defendant’s fraudulent intent, and (4) the 

resulting injury. United States ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 504 (6th 

Cir. 2007); see United States ex rel. Hirt v. Walgreen Co., 846 F.3d 879, 880–81 (6th Cir. 2017). 

For present purposes, the complaint has two flaws. There is no allegation of a 

misrepresentation, and the alleged “fraudulent scheme” is not “plausible.” See Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 570 (2007). The plaintiffs allege that, at some point after they signed 

the lease agreements, Alawi moved their security deposits from the Michigan Commerce Bank. 

And the plaintiffs say that Alawi represented, on the lease agreements, that the security deposits 

would be deposited at the Michigan Commerce Bank. But that would be a misrepresentation 

only if Alawi never put the deposits there, not if he moved the deposits around later (as Michigan 

law permits). See Mich. Comp. Laws § 554.604. 

The complaint and RICO case statement omit any claim that Alawi never put the deposits 

where he said he would. All that the plaintiffs say is that their security deposits “were or were 

not deposited at Michigan Commerce Bank.” R. 1 at 13. But that’s not an allegation of a 

misrepresentation. It’s not indeed a factual claim at all. It’s a statement of two contradictory 

facts, making it a statement of nothing at all under a venerable principle of logic—the law of the 

excluded middle. Aristotle, Metaphysics bk. IV, pt. 7, available at http://classics.mit.edu

/Aristotle/metaphysics.4.iv.html (“[T]here cannot be an intermediate between contradictories.”). 

In the absence of any factual assertion that Alawi did something other than what he said he 

would, the plaintiffs cannot describe the “time, place, and content of the alleged 

misrepresentation” as Civil Rule 9(b) requires. Bledsoe, 501 F.3d at 504.

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Making matters worse for the plaintiffs, the alleged “fraudulent scheme” is implausible 

on its face. Twombly, 550 U.S. at 570. The apparent idea is that Alawi knew he had not 

complied with the Michigan landlord-tenant laws, collected security deposits anyway, then 

commingled the security deposits with his own funds. What’s implausible about this is that the 

only concrete violation of the Michigan Landlord and Tenant Relationships Act that plaintiffs 

have pointed to is Alawi’s failure to include the address of the Michigan Commerce Bank on the 

lease document. Mich. Comp. Laws § 554.603 (“A landlord shall not require a security deposit 

unless he notifies the tenant . . . [of] the name and address of the financial institution” where 

he’ll place the deposit). Even if this omission violated the letter of Michigan law, it is beyond us 

how this omission could have misled anyone, much less amounted to a fraudulent scheme. It’s 

undisputed that the Michigan Commerce Bank was a properly regulated financial institution with 

only one location. 

Nor can we see what Alawi could have gained from the omission. He collected security 

deposits in permissible amounts, used them in permissible ways, and returned them on time and 

without any contested deductions. See Mich. Comp. Laws § 554.604 (“A landlord may use the 

moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash 

bond or surety bond . . . .”). That’s not much of a “scheme.” That Alawi intended to use this 

trivial omission to defraud his tenants into paying security deposits to which he was not entitled 

is not even “conceivable,” much less “plausible.” Twombly, 550 U.S. at 570.

One last thing. The plaintiffs request attorney’s fees because they prevailed in one way 

before the district court: The court (kindly) did not grant the defendants’ motion for sanctions 

against the plaintiffs. Fed. R. Civ. P. 11(c)(2). That is the one difficult issue in this case. 

It’s difficult not because of anything the district court did. It of course quite properly denied fees 

to the plaintiffs on this ground, all way within its sound discretion. B & H Med., L.L.C. v. ABP 

Admin., Inc., 526 F.3d 257, 269 (6th Cir. 2008). What’s difficult is whether we should sua 

sponte impose sanctions on the plaintiffs for bringing such a frivolous appeal. We will not 

impose such sanctions today. But plaintiffs’ counsel would be well advised to consider more 

carefully in the future what amounts to a colorable ground for appeal and what does not. 

 For these reasons, we affirm. 

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