Direct Construction Services v. City of Detroit, Mich. ( 2020 )

NOT RECOMMENDED FOR PUBLICATION
File Name: 20a0428n.06
Case No. 19-1808
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Jul 23, 2020
DIRECT CONSTRUCTION SERVICES, ) DEBORAH S. HUNT, Clerk
LLC; TIMOTHY DRAKEFORD, )
)
Plaintiffs-Appellants, ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR
v. ) THE EASTERN DISTRICT OF
) MICHIGAN
CITY OF DETROIT, MICHIGAN; DETROIT )
LAND BANK AUTHORITY; DETROIT )
BUILDING AUTHORITY; TAMMY )
DANIELS; IRENE TUCKER; BOYSIE )
JACKSON; RON CRAWFORD; TIMOTHY )
PALAZZOLO; BRIAN FARKAS; MICHAEL )
EDWARD DUGGAN, )
)
Defendants-Appellees.
____________________________________/
Before: MERRITT, GUY, and STRANCH, Circuit Judges.
MERRITT, Circuit Judge. This is an appeal from the dismissal, pursuant to Federal Rule
of Civil Procedure 12(b)(6), of a civil rights action bringing claims under federal and state law.
Plaintiffs are an African-American individual, Timothy Drakeford, and his company, Direct
Construction Services. Defendants are the City of Detroit, a municipal entity, the Detroit Building
Authority, a public-private corporation, and the Detroit Land Bank Authority, also a public-private
corporation. Multiple individuals employed by these entities were also sued exclusively in their
official capacities.
Case No. 19-1808, Direct Constr. Servs., LLC, et al. v. City of Detroit, et al.
The Land Bank administers and oversees a program that distributes federal funds to demolish
and clean up abandoned properties in Detroit. Plaintiffs participated in this program by bidding
on and being awarded a number of demolition contracts by the Land Bank. The Office of the
Inspector General for the City of Detroit determined that plaintiffs had altered photographs of
properties they demolished in breach of the terms of their contracts. The crux of plaintiffs’
complaint stems from the fact that the Land Bank barred plaintiffs from continued participation in
the demolition program.
Plaintiffs allege that they were suspended and later barred from further demolition work, and
did not receive payment for completed work, on the basis of race. They also claim that defendants
retaliated against them because plaintiff Drakeford refused to alter bid numbers for the demolition
work, and because Drakeford allegedly cooperated with the FBI during a federal investigation into
the Land Bank’s administration of the demolition program. Plaintiffs provide neither dates nor
identities of individuals that would support these allegations, and plaintiffs fail to connect
Drakeford’s alleged actions to the claimed retaliation. The complaint relies on speculation and
legal conclusions framed as “allegations.” Plaintiffs’ complaint fails adequately to allege facts
supporting any cognizable constitutional violations, and fails to allege facts that, if proved, would
show that any similarly situated company was treated differently. The claims against the
individuals sued exclusively in their official capacities were properly dismissed because they are
duplicative of the claims against the entities for which the individuals work. The district court did
not exercise supplemental jurisdiction over the state-law claims, including breach of contract, and
it dismissed those claims without prejudice.
Plaintiffs argue on appeal that if they were able to conduct discovery they would find factual
support for their claims of race discrimination, retaliation, or other unjust treatment. But even with
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a generous reading of the complaint and its many attachments, plaintiffs have not set forth
allegations sufficient to raise their claims of race discrimination and retaliation above a speculative
level. We therefore affirm the judgment of the district court.
I. Facts and Procedural History
The facts related below are taken from the complaint and its attached exhibits.1 Plaintiff
Timothy Drakeford and his company, plaintiff Direct Construction Services, participated in a
program in Detroit called “Hardest Hit Funds,” which permitted local municipalities to receive
and distribute funding from the U.S. Treasury pursuant to the Emergency Economic Stabilization
Act of 2008. A number of state, federal, municipal and quasi-public organizations and agencies
are involved in the program. The Detroit Land Bank Authority, a quasi-governmental entity, was
formed to administer federal funds from the Hardest Hit program in Detroit. As part of the Hardest
Hit program, the Land Bank may utilize federal funds for the demolition of residential housing
that poses a safety and/or health risk. Complaint ¶ 21; Ex. 1. The Detroit Building Authority, also
a quasi-public entity, contracted with the City of Detroit to coordinate and implement a demolition
program, which terms are set forth in the Demolition Management Agreement. Complaint at Ex.
2. The Land Bank, as the distributor of the federal funds, is the entity that contracts with the
demolition companies. See Id. ¶¶ 22; Ex. 11. Minority contractors were solicited and encouraged
to bid on demolition contracts. Direct Construction, a licensed and certified residential builder,
bid on and was awarded contracts for demolition work on approximately 48 properties. Complaint
Ex. 11. Plaintiffs allege that the demolition contracts were not awarded and administered in a fair
1
In ruling on a motion to dismiss, the court may consider the complaint as well as (1) documents that are referenced
in the plaintiff’s complaint and that are central to plaintiff’s claims, (2) matters of which a court may take judicial
notice, (3) documents that are a matter of public record, and (4) letters that constitute decisions of a governmental
agency. Thomas v. Noder-Love, 621 F. App’x 825, 829 (6th Cir. 2015).
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and nondiscriminatory manner, “as reflected in the numerous news articles as well as personal
experiences of many minority contractors.” Id. ¶ 23. None of the “numerous news articles” or
“many minority contractors” are specifically identified in the complaint.
Plaintiffs also claim that “some contractors including Plaintiffs were asked to change bidding
and cost numbers after the initial invoicing to reflect compliance under the Hardest Hit
Homeowners guidelines.” Id. ¶ 24. This allegation apparently relates to an interview Drakeford
gave to the Detroit News where he said he was approached and refused to “change numbers.” Id.
¶ 25; Ex. 3 (news article dated Nov. 3, 2016). The date of the request and the individual who asked
Drakeford to change bid numbers are not identified. The news article explains that the Land Bank
and the Detroit Building Authority “commissioned an independent audit of the federally funded
program” in the summer of 2016. The audit revealed that certain demolition costs had exceeded
the federal cap, and that a former Building Authority employee, Aradondo Haskins, had
improperly asked some of the demolition contractors to change their bid sheets after the work had
been completed and invoiced in order to redistribute the excessive costs. Id. Ex. 3.2 The news
article concludes by saying that, in light of the audit, the Land Bank and the U.S Treasury came
up with new procedures that went into effect in October 2016. Neither the Land Bank nor Direct
Construction were accused of wrongdoing arising from the audit.
The complaint then alleges that plaintiffs “notice[d] that its payments were delayed and much
more difficult to obtain from the [Land Bank] than larger white companies, such as Adamo and
Homrich.” Complaint ¶ 35. Plaintiffs also allege that minority contractors like them were “forced
to do work outside the scope of the contract including cleaning trash from previous [sic] cleared
2
According to a separate news article submitted by plaintiffs as an exhibit to their motion for reconsideration of the
order granting the motion to dismiss, Haskins was later indicted by federal authorities for unauthorized use of
federal funds.
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properties.” Id. Plaintiffs allege that this “unfair treatment” became “very noticeable” and “an
investigation into the hefty payments to white companies began.” This allegation lacks basic
information, including which contracts resulted in delayed payments, who “forced” plaintiffs to
clean trash from properties, and when the incidents occurred.
Plaintiffs then allege that they received an immediate “Stop Work Order” in a letter from the
Land Bank dated December 19, 2016. Id. ¶ 37. Plaintiffs allege that the letter contained no
explanation for the Stop Work Order, but the letter itself, which is attached to the complaint, states
that it is being issued due to “an ongoing investigation by the Office of the Inspector General of
the City of Detroit into work performed by Direct Construction Services, LLC.” Id. Ex. 12.3 An
investigation by the Detroit Inspector General into plaintiffs’ performance of its contract began on
December 1, 2016, and arose from routine monitoring of the contracts receiving federal funding.
Contrary to their allegation, plaintiffs knew the reason for the Inspector General’s investigation
into their contract performance on December 19 when they received the stop-work letter because
plaintiff Drakeford had been interviewed by the Inspector General on December 8. Because the
Report is attached to the complaint, and was issued by a governmental agency, we may consider
the facts in the Report.
According to the Report, the Inspector General received a complaint from the Land Bank on
December 1, 2016, pursuant to routine monitoring of its demolition contracts. The Land Bank told
the Inspector General that it suspected that plaintiffs had submitted altered photographs of the
3
The complaint omits many facts concerning the investigation into plaintiffs’ performance under its contracts. A full
recitation of the facts can be found in the Inspector General’s Report, which was issued on February 1, 2017, and is
attached to the complaint. Ex. 21.
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sidewalks adjacent to five of the properties plaintiffs had demolished. See Complaint ¶ 44; Ex.
21.4
According to the Inspector General’s Report, one of its investigators interviewed plaintiff
Drakeford on December 8, 2016, and Drakeford explained that he takes before and after
photographs with his phone and that his company, Direct Construction, hires subcontractors to
repair sidewalks. Drakeford subsequently identified the subcontractor as a Dan Daville or Dan
Danville. On January 5, 2017, Drakeford provided the investigator with a photocopy of a cancelled
check from May 2016 made out to a Dan Danvillarreal [sic] for $ 2,200 with a notation that it was
for “Refund/Sidewalk Repair.” Report at 4. The Inspector General contacted Dan Villarreal, who
said he had not done any work for plaintiffs recently and had never altered photographs. Villarreal
said the May 2016 check was a refund from plaintiffs for a demolition job plaintiffs were supposed
to do for a private customer of Villarreal’s. Report at 5. Drakeford stated that he did not verify
that the subcontractor repaired the sidewalks on the five properties at issue, relying instead on the
fact that the subcontractor had pulled the sidewalk permits. Drakeford was unable to provide
evidence of the permits to the investigator.
According to the Inspector General Report, Drakeford was shown the photographs of the five
properties and agreed that they looked altered but stated that the subcontractor took the
photographs and was responsible for forwarding the photos to Drakeford. Drakeford explained to
the investigator that he broke his phone and was unable to produce the photographs he received
from the subcontractor. Drakeford admitted to adding some “green spots” to at least one of the
photographs in an effort to conceal tires that were on the property. Drakeford justified the
4
The demolition contractors are required by the terms of their contracts with the Land Bank to submit “before and
after” photographs of sidewalks, drive approaches, neighboring residences and/or structures, near properties to be
demolished. The contractors are required to protect sidewalks from damage or pay to repair or replace any damage
resulting from the demolition work.
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alterations by stating that contractors were told to “brush out the tires” at a meeting with the
Michigan State Housing Development Authority in the spring of 2016. Id. Plaintiffs also allege
that a Land Bank employee advised Drakeford that if he had problems “cropping” the photos of
the sites, she would assist him. Complaint ¶ 43. In emails attached to the complaint, the instruction
by the Land Bank related only to cropping photos in order to fit the site within the photograph.
The emails do not instruct contractors to alter photographs to erase tires. See Complaint Ex. 20.
The Inspector General’s forensic analysis of the photographs determined that plaintiffs had
submitted falsified photographs for payment, that Drakeford admitted to altering at least one of
the photographs, and that he tried to shift blame to a subcontractor who could not corroborate
Drakeford’s version of events. The Report concluded that all the falsified photographs were taken
with a Samsung phone like the one owned by Drakeford. Report at 8. The Inspector General’s
“Conclusion” in the Report states:
The [Land Bank] should be credited with discovering issues with the five properties
in question through its normal review process. The [Inspector General] is aware
that Direct Construction has demolished other properties for [the Land Bank].
Neither the [Land Bank] nor [the Inspector General] have specific information at
this point indicating that Direct Construction failed to perform its work on other
projects in a manner consistent with its contractual obligation. No issues were
detected in earlier reviews. But given the false information submitted regarding the
five properties, the [Inspector General] is concerned about the accuracy of all of the
information submitted by Direct Construction. Direct Construction should not be
paid for completed work until [the Land Bank] verifies through appropriate means
that the work has in fact been done satisfactorily. Once the [Land Bank] is satisfied
that all work has been completed as contractually specified, the [Land Bank] should
evaluate whether payment is warranted.
...
The[Land Bank] should reevaluate its relationship with Direct Construction
moving forward. Direct Construction submitted falsified photo for payment. Mr.
Drakeford admitted to removing tires and other debris out of a photo . . . because
he knew the property in its current condition would not be acceptable to [the
Michigan State Housing Development Authority.] However, he did not take
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responsibility for the other four properties [where falsified photos were submitted].
Instead, Mr. Drakeford blamed a subcontractor. The [Inspector General] attempted
to verify Mr. Drakeford’s assertion but the subcontractor denied ever doing work
for Direct Construction. . . . [T]he City of Detroit Department of Public Works . .
. indicated that no sidewalk permits existed for the 5 properties. Additionally, Mr.
Drakeford was unable to provide documentation to suggest that a subcontractor was
indeed responsible.
...
Based on Mr. Drakeford’s actions, the [Land Bank] should not allow Direct
Construction to do work for the City of Detroit’s demolition program. . . . At best,
Direct Construction was negligent . . . . At worst, the firm acted in a purposely
deceitful manner. In the future, the [Land Bank] and the City of Detroit should not
continue its relationship with such contractors.
Id. at 7-8 (footnotes omitted).
The complaint narrative omits most of the information from the Inspector General’s Report.
Instead, plaintiffs allege simply that they received a letter from the Land Bank dated February 17,
2017, refusing to pay plaintiffs for work at five properties based on the Inspector General’s Report.
Complaint ¶ 38; Ex. 14. Plaintiffs then allege that instead of being allowed to complete the work,
plaintiff Drakeford was called into a meeting with the Land Bank and told he was indefinitely
suspended. Id. ¶ 39; Exs. 15, 16. Plaintiffs try to frame the suspension as retaliatory by alleging
that Drakeford was questioned by the FBI regarding “issues” at the Land Bank, but the complaint
gives no indication of the subject matter or the timeframe of any FBI questioning of Drakeford.
Id. ¶ 40. Plaintiffs were later removed from the list of suspended contractors. Id. ¶ 41; Ex. 17.
Plaintiffs allege that they were unable to get paid by the Land Bank during this time, causing
several vendors to call in their bonds. Id. ¶ 42; Ex. 19. Plaintiffs allege that the Land Bank,
“through Tammy Daniels, Irene Tucker, Boysie Jackson, Ron Crawford, Timothy Palazzolo, and
Brian Farkas,” acted in concert to allege and create a bogus picture of fraud by plaintiffs. Plaintiffs
allege that this was “outrageous” because the conduct that Drakeford was accused of, and his
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company suspended for—altering photos of sidewalks—was directed by the Land Bank and the
Building Authority. Id. ¶ 43. Plaintiffs continued to try to get paid for work already performed,
but were unsuccessful. Id. ¶¶ 45-46; Exs. 24-27. Plaintiffs allege that the Land Bank, the Building
Authority and the City of Detroit “collude[d] and retaliate[d] against contractors such as
Plaintiffs.” Id. ¶ 47. Plaintiffs allege that they were “suspended not because of work quality but
because of a refusal to change numbers in bid packages.” Id. Plaintiffs also allege that defendants
Ron Crawford, Tim Palazzolo, and Tammy Daniels suspended plaintiffs without due process and
created a disciplinary policy that they applied retroactively. Id.
In Count I, plaintiffs claim violations of 42 U.S.C. § 1981. They allege that “defendants”—
no specific defendant is mentioned in Count I—discriminated against them on the grounds of race
or color, and denied plaintiffs the rights and privileges that white citizens enjoy. They also claim
that they have performed under their contracts but have not been paid in the same way that “white
counterparts” have been paid. Complaint ¶¶ 50-53.
Count II claims due-process violations under 42 U.S.C. § 1983. Plaintiffs allege that
defendants Ron Crawford, Tim Palazzolo and Tammy Daniels “violated Plaintiffs due process
rights by suspending Plaintiff [sic] for violating a policy that had not been created . . . and failed
to apprise Plaintiffs of any appeal process. . . .” Complaint ¶ 57. Plaintiffs further claim that the
same three defendants violated due process “by improperly suspending Plaintiff Drak[e]ford, and
even more outrageous, create [sic] a disciplinary policy after the discipline, and in violation of
location ordnances [sic] and City of Detroit Charter.” Id. ¶ 58.
In Count III, captioned “Retaliation,” plaintiffs claim that “defendants” and specifically Brian
Farkas, retaliated against plaintiffs because “Plaintiff refused to change numbers in a bid package.
Defendant Brian Farkas open [sic] and publicly stated that plaintiffs would never work for the
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[Land Bank] or [Building Authority] again and within 60 days, Plaintiffs’ [sic] were suspended
and under a stop work order under [sic], although white counterparts were not suspended or
subjected to retaliation.” Id. ¶ 60. Plaintiffs further allege that “Plaintiff was singled out with
retaliation after refusing to change numbers and for cooperating with the FBI during their
investigation in the Detroit area after Plaintiff Timothy Drakeford.” [sic] Id. ¶ 61.
The remaining three counts bring claims under state law: Count IV alleges a violation of Elliot
Larsen Civil Rights Act; Count V alleges breach of contract against the Detroit Land Bank and
“all Defendants in their official capacity” for breach of the agreement by failing to perform; and
Count VI alleges a claim for “Concert of Action.”
Defendants moved to dismiss under Rule 12(b)(6). The district court granted the motions on
the federal claims as to all defendants, and it declined to exercise supplemental jurisdiction over
the state claims, dismissing them without prejudice. Direct Constr. Servs., LLC, v. City of Detroit,
No. 18-cv-12356, 2019 WL 1897128 (E.D. Mich. Apr. 29, 2019). Plaintiffs filed a motion for
reconsideration, which was denied. Direct Constr. Servs., LLC, v. City of Detroit, No. 18-cv-
12356, 2019 WL 2743533 (E.D. Mich. July 1, 2019). This appeal followed.
II. Discussion
A. Legal Standard for Reviewing Grant of Motion to Dismiss
This court reviews de novo a district court’s grant of a motion to dismiss under Federal Rule
of Civil Procedure 12(b)(6). Jones v. City of Cincinnati, 521 F.3d 555, 559 (6th Cir. 2008). Under
Federal Rule of Civil Procedure 8(a)(2), a complaint must contain “a short and plain statement of
the claim showing that the pleader is entitled to relief.” It will survive a motion to dismiss if the
plaintiff alleges facts that “state a claim to relief that is plausible on its face” and that, if accepted
as true, are sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v.
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Twombly, 550 U.S. 544, 555, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The complaint must “contain either direct or inferential allegations respecting all material elements
to sustain a recovery under some viable legal theory.” Eidson v. Tenn. Dep’t of Children’s Servs.,
510 F.3d 631, 634 (6th Cir. 2007) (citing Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005)).
When reviewing a motion to dismiss under Rule 12(b)(6), we must “construe the complaint in
the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable
inferences in favor of the plaintiff.” Handy-Clay v. City of Memphis, 695 F.3d 531, 538 (6th Cir.
2012). We need not accept as true “a legal conclusion couched as a factual allegation,” Twombly,
550 U.S. at 555 (citation and internal quotation marks omitted), or an “unwarranted factual
inference.” Directv v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007) (citation and internal quotation
marks omitted). We have reiterated that “[t]o survive a motion to dismiss, a litigant must allege
enough facts to make it plausible that the defendant bears legal liability. The facts cannot make it
merely possible that the defendant is liable; they must make it plausible.” Agema v. City of
Allegan, 826 F.3d 326, 331 (6th Cir. 2016) (citing Iqbal, 556 U.S. at 678) (internal citation
omitted); see League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007)
(“The factual allegations, assumed to be true, must do more than create speculation or suspicion
of a legally cognizable cause of action; they must show entitlement to relief.”) (emphasis in
original).
B. The Individual Defendants Are Named Only in Their Official Capacities
“An individual-capacity claim is distinct from a claim against a defendant in his official
capacity. The former claim may attach personal liability to the government official, whereas the
latter may attach liability only to the governmental entity.” Essex v. Cty. of Livingston, 518 F.
App’x 351, 354 (6th Cir. 2013) (citing Kentucky v. Graham, 473 U.S. 159, 165–67 (1985))
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(internal citation omitted). “In other words, an official-capacity claim is merely another name for
a claim against the municipality.” Id. (citing Cady v. Arenac Cty., 574 F.3d 334, 342 (6th Cir.
2009)); see also Will v. Mich. Dep’t of State Police, 491 U.S. 58, 71 (1989) (An action premised
on an official-capacity claim “is not a suit against the official but rather is a suit against the
official’s office.”).
Plaintiffs sued three entities, the City of Detroit, the Detroit Building Authority, and the Detroit
Land Bank Authority, along with multiple officers and employees of those entities expressly in
their official capacities only. The caption of the complaint expressly designates that each of the
individual defendants is being sued “in his [or her] official capacity,” and the allegations in the
complaint defining these individuals reiterates that each is named “in his [or her] official capacity.”
Complaint ¶¶ 7-12. Nothing in the complaint suggests individual capacity claims against any of
the individual defendants. Given plaintiffs’ unambiguous reference to the individual defendants
only in their official capacities, the plaintiffs’ claims against each individual defendant were
properly dismissed.
C. Plaintiffs Fail to State a Municipal Liability Claim Under § 1983 Against the City
of Detroit, the Detroit Building Authority, and the Detroit Land Bank
To succeed on their § 1983 federal constitutional claims in Count II (due process) and Count
III (retaliation), plaintiffs must allege that a policy or custom of the entity is responsible for their
injuries. A local government entity violates § 1983 when an official policy or custom deprives an
individual of her constitutional rights. Monell v. New York Dept of Soc. Servs., 436 U.S. 658(1978); Leach v. Shelby Cty. Sheriff, 891 F.2d 1241, 1245 (6th Cir. 1989) (“[B]efore a local
government can be held liable for injuries under section 1983, whether the suit is pleaded as an
official capacity suit or a suit against the local government, a plaintiff must show that his injuries
were the result of some ‘policy or custom’ attributable to the governmental entity.”).
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A municipality “may not be sued under § 1983 for an injury inflicted solely by its employees or
agents.” Monell, 436 U.S. at 694. We have recognized specific parameters for establishing a
Monell claim. A plaintiff can make a showing of an illegal policy or custom by demonstrating one
of the following: (1) the existence of an illegal official policy or legislative enactment; (2) that an
official with final decision making authority ratified illegal actions; (3) the existence of a policy
of inadequate training or supervision; or (4) the existence of a custom of tolerance or acquiescence
of federal rights violations. See Thomas v. City of Chattanooga, 398 F.3d 426, 429 (6th Cir. 2005).
In its order denying plaintiffs’ motion for reconsideration, the district court succinctly
summed up the problem with plaintiffs’ § 1983 claims and the reason they could not survive a
motion to dismiss:
Plaintiffs’ claims in this case have been a moving target of confusingly articulated
theories of liability. The Plaintiffs expressly sued only municipal Defendants and
individual Defendants in their official capacities, yet the Complaint did not assert
any type of policy claim under Monell v. Department of Social Servs., 436 U.S. 658(1978), and did not identify any policy, custom, or practice as the basis for such a
claim. Nor did Plaintiffs reference or discuss any such policy, custom, or practice
in their briefing on the motions to dismiss. The Complaint contained no factual
content plausibly suggesting a Monell claim . . . .
2019 WL 2743533, at *2. Plaintiffs argue on appeal, as they did in their motion for reconsideration
below, that the “policy” basis for their Monell claims is tolerance of or acquiescence in federal-
rights violations. This claim was not timely raised below, and, in any event, plaintiffs have not
identified facts supporting a pattern of racial intolerance or acquiescence by any of the three entity
defendants. The complaint does not distinguish the conduct of one entity from another, let alone
allege a plausible policy claim against each one of them.
Count II alleges that plaintiffs were deprived of due process because Drakeford was
improperly suspended from the contractor list based on “a disciplinary policy” that was instituted
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after the suspension had been imposed. Complaint ¶ 58; Plaintiffs’ Response to the Detroit Land
Bank’s Motion to Dismiss at 3 (“the policy Plaintiff was suspended under was not created until
after he was disciplined.”). As the alleged policy, which plaintiffs do not articulate, was created
after the suspension, it could not have caused the Inspector General’s investigation into Direct
Construction or the issuance of the stop work order to the company. Count II was properly
dismissed.
In Count III, the retaliation claim, plaintiffs allege that the motivating force behind the
suspension was either race discrimination or retaliation for plaintiffs’ cooperation with the FBI.
However, there are no dates or other facts temporally relating plaintiffs’ suspension to anything he
may have said to the FBI. Plaintiffs include no facts as to the nature of their “cooperat[ion] with
the FBI.” Plaintiffs’ complaint fails to set forth facts that, if proven, demonstrate that plaintiffs
were suspended from the demolition program in retaliation rather than as a legitimate response to
their own conduct in falsifying photographs.
As for any retaliation on the basis of race, other than invoking his African-American
ethnicity and the fact that Direct Construction is minority owned, plaintiffs offer no facts
demonstrating any discriminatory policies or customs other than a bald allegation that “white
counterparts were not suspended or subjected to retaliation.” Plaintiffs plead no facts plausibly
suggesting that the “white contractors” referred to in the complaint, “Adamo” and “Homrich,”
were “similarly situated” to the plaintiffs or were treated differently. There is no allegation or
evidence that either company submitted altered photographs pursuant to their demolition contracts
but had not been disciplined or suspended. The conclusory allegations that plaintiffs were treated
differently from two white contractors fail to state a retaliation claim “that is plausible on its face.”
Twombly, 550 U.S. at 570.
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Plaintiffs fail to meet the threshold pleading standard as to a Monell claim against the City
of Detroit, the Detroit Building Authority, or the Detroit Land Bank. None of the allegations in
the complaint plausibly suggest how any policy, custom, or practice of any of the three municipal
or quasi-municipal entity defendants could support a claim of municipal liability.
D. Plaintiffs Fail to State a Claim Under § 1981
Enacted as part of the Civil Rights Act of 1866, 42 U.S.C. § 1981 provides that “[a]ll persons
within the jurisdiction of the United States shall have the same right in every State and Territory
to make and enforce contracts” without regard to race. The statute defines the phrase “make and
enforce contracts” to include the “making, performance, modification, and termination of
contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual
relationship.” 42 U.S.C. § 1981(b). However, “§ 1983 provides the exclusive remedy for
constitutional violations.” Foster v. Michigan, 573 F. App’x 377, 391 (6th Cir. 2014). We have
held that a “plaintiff cannot use § 1981 to sue a state actor in his or her official capacity.”
McCormick v. Miami Univ., 693 F.3d 654, 660 (6th Cir. 2012) (citing Grinter v. Knight, 532 F.3d
567, 577 (6th Cir. 2008) (Ҥ 1983 provides an exclusive remedy for violations against state actors
sued in their official capacities. An official capacity lawsuit against . . . a state actor[ ] for
constitutional violations, such as race discrimination, cannot be brought under § 1981.”)
(alterations in original)). As the Supreme Court explained in Jett v. Dallas Independent School
District, 491 U.S. 701 (1989):
Given our repeated recognition that the Fourteenth Amendment was intended in
large part to embody and expand the protections of the 1866 Act as against state
actors, we believe that the logic of these decisions applies with equal force to
petitioner's invitation to this Court to create a damages remedy broader than § 1983
from the declaration of rights now found in § 1981. We hold that the express “action
at law” provided by § 1983 for the “deprivation of any rights, privileges, or
immunities secured by the Constitution and laws,” provides the exclusive federal
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damages remedy for the violation of the rights guaranteed by § 1981 when the claim
is pressed against a state actor. Thus to prevail on his claim for damages against the
school district, petitioner must show that the violation of his “right to make
contracts” protected by § 1981 was caused by a custom or policy within the
meaning of Monell and subsequent cases.
Id. at 735-36. Accordingly, § 1983 is the sole vehicle for plaintiffs’ damage claim, and, as
described above, plaintiffs fail to state a policy claim against the entity defendants under § 1983.
Plaintiffs’ § 1981 claim is not saved because they request injunctive relief. The remedy for past
discrimination, which is all that plaintiffs plead, is monetary damages. We affirm the dismissal of
plaintiffs’ claim under 42 U.S.C. § 1981.
E. Supplemental Jurisdiction Over Plaintiffs’ State Law Claims
Given the absence of a viable federal claim, the district court declined to exercise
supplemental jurisdiction over plaintiffs’ state law claims against all defendants under the Elliot-
Larsen Civil Rights Act, Mich. Comp. Laws § 37.2501, et seq., for breach of contract, and for
concert of action. It dismissed them without prejudice, and plaintiffs are free to file these claims
in state court.
F. Denial of Motion for Reconsideration
The district court properly denied plaintiffs’ motion for reconsideration. Under Rule 59(e),
parties cannot use a motion for reconsideration to raise new legal arguments that could have been
raised before a judgment was issued. Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146
F.3d 367, 374 (6th Cir. 1998) (stating that “[a] motion under Rule 59(e) is not an opportunity to
re-argue a case”). Rather, a motion under Rule 59(e) must either clearly establish a manifest error
of law or must present newly discovered evidence. Roger Miller Music, Inc. v. Sony/ATV Publ’g
LLC, 477 F.3d 383, 395 (6th Cir. 2007); see also Walker v. Mich. Dep’t of Corr., 128 F. App’x
441, 447 (6th Cir. 2005).
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Case No. 19-1808, Direct Constr. Servs., LLC, et al. v. City of Detroit, et al.
Plaintiffs based their motion for reconsideration on two exhibits attached to the motion.
The first was a Detroit Office of the Inspector General Report from December 2018 issued after
an investigation into “large-unit” contractor meeting. Plaintiffs were not involved in the large-unit
contractor meeting or the Inspector General’s investigation in any way. In any event, the Report
concluded, “[b]ased on our review of documents and interviews conducted for this particular
matter, we conclude the large-unit contractor meeting did not violate any existing [Land Bank]
policies pertaining to the use of the Hardest Hit Funds.” The other exhibit is an article from the
Detroit News dated April 8, 2019. It reports on the filing of federal embezzlement charges against
two men, one of whom is Aradondo Haskins, the former Detroit Building Authority employee who
was involved in the bid-altering issue. Plaintiffs do not explain how the indictment of Haskins
affects their claims. A federal audit cleared the Land Bank of any wrongdoing related to Haskins’
misconduct while he was an employee of the Detroit Building Authority. There is no information
in either exhibit that has any bearing on plaintiffs’ claims.
For the foregoing reasons, we affirm the judgment of the district court.
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