Marriott Bros. v. Gage
Opinion of the Court
Disappointed prospective purchasers of a ranch brought an action against various persons involved in attempting to obtain financing for the purchase, alleging violation of the federal Racketeer Influenced and Corrupt Organizations Act (RICO)
I.
The facts of this case are fully set out in
Though the Marriotts claimed that Gage had told them that a real estate appraisal would not be necessary, the deal fell through at the last minute when BancTex-as refused to make the loan without an appraisal. The Marriotts were unable to obtain the required appraisal. They had already obtained several extensions on their assignment option, and the sellers refused to grant a further extension. Less than two weeks later, Gage arranged for other investors to purchase the Yates Ranch.
The essence of the plaintiffs’ RICO complaint is that Gage and other defendants operated BancTexas so as to fraudulently obtain ownership interests in various ventures, and that the Marriotts were cheated out of a chance to purchase the ranch as a result of this pattern of activity. There is no suggestion, however, that the Bank’s requirement of an appraisal was itself unusual or that it was motivated by aught but commercial practice and proper banking concerns. After discovery was completed and some of the defendants had moved for summary judgment, the district court stayed the motions and ordered the plaintiffs to file a “RICO case statement.” This order, which required the plaintiffs to state the facts upon which they would rely and specify the specific predicate acts and RICO violations they would seek to prove, is set forth as an appendix.
Upon consideration of the motions, responses, and the case statement, the court granted summary judgment in favor of all the defendants on the plaintiffs’ RICO claim, dismissing the pendent state law claims without prejudice. In response to plaintiffs’ motion to reconsider, the district court issued a supplemental opinion discussing the standard of review for summary judgment and its authority to enter summary judgment in favor of non-moving parties, as well as the legal requirements of a RICO claim. Marriott Brothers, J.R. Marriott, and L & R Development and Marock, Inc., entities controlled by the Marriott Brothers partners, appeal, asserting both procedural and substantive errors. Because we affirm the district court’s dismissal of the case, we do not reach the question, raised by the appellees, whether each of these appellants could successfully assert an independent RICO claim. Other plaintiffs in the district court action have not appealed.
II.
The Marriotts’ procedural claims are not substantial. First, they challenge the district court’s RICO-case-statement order, claiming that the lower court incorrectly assumed an independent duty to determine the adequacy of plaintiffs’ case. The propriety of a district court’s requirement of a case statement to summarize the nature of RICO claims is, however, well-established in this circuit.
The Marriotts also challenge the grant of summary judgment to non-moving defendants. It is settled that the district court has authority to grant summary judgment in favor of non-moving defendants, provided that the plaintiff has had adequate notice and opportunity to present
The Marriotts also contend that the district court applied the wrong standard of proof in granting summary judgment on the RICO claim. We consider this issue in our substantive review of the district court’s judgment.
III.
The federal racketeering statute imposes civil and criminal liability on persons who use or invest income derived from, acquire or maintain control of, or engage in the conduct of an enterprise through a pattern of racketeering activity, or who conspire to do any of these acts.
The causal nexus between the alleged predicate acts and the defendant’s injury must be direct: it is not sufficient that the injury alleged is simply the result of an unlawful act connected to the operation of the alleged RICO enterprise, or in further-anee of its goals. For example, in Cullom v. Hibernia National Bank,
Here, the only connection between the Marriotts and the defendants concerned the negotiations for the Yates Ranch. The Marriotts were therefore required to adduce with specificity evidence that their lost opportunity to purchase the ranch flowed from the commission of a predicate act. The Marriotts argue that they have met this requirement because Gage’s conduct in regard to the ranch purchase constituted ma.il fraud, theft of fiduciary property, and commercial bribery, which are claimed to be predicate acts within the scope of the RICO statute.
Considered solely in relation to the aborted effort to purchase the Yates Ranch, each of these arguments fails as a matter of law. The Marriotts’ claim that Gage stole fiduciary property
The Marriotts’ charge of commercial bribery
The Marriotts’ other allegations concern either loan-point arrangements for the Marriott loan, financing for the eventual purchase of the ranch after the Marriotts’ option had expired, or other transactions not involving the Marriotts or the Yates Ranch. None of these is relevant to the Marriotts’ standing to allege a RICO violation because none of these could have been the cause of the Marriotts’ lost opportunity to purchase the ranch. Similarly, none of the alleged violations of 18 U.S.C. § 1962 itself contributed to the Marriotts’ inability to purchase the ranch, which ultimately was caused by their inability to provide the appraisal required by the bank.
Finally, the Marriotts do not argue that, in the absence of a viable RICO claim, the district court abused its discretion in dismissing the pendent state law claims without prejudice. The judgment of the district court is therefore AFFIRMED.
APPENDIX
In the United States District Court
for the Northern District of Texas
Dallas Division
Civil Action No. CA 3-86-0335-G
Filed May 13, 1988
Marriott Brothers, et al., Plaintiffs,
vs.
H.D. Boswell, et al., Plaintiffs/Intervenors,
vs.
Coke L. Gage, et al., Defendants.
ORDER
This case is before the court on the motions of defendants Steve Collins, Mega Resources, Inc., Norman G. Harnage, and Bennett-Carder & Assoc., Inc. for summary judgment, and the motion of Gage Resources for dismissal. The arguments set forth in the various motions concern in large part whether the plaintiffs have adequately stated a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq. After reviewing all the motions and responses, the court concludes that disposition of defendants’ motions should be STAYED pending submission by plaintiffs of a RICO case statement. Upon timely filing of the case statement, the defendants will have twenty (20) days to file any responses.
Plaintiffs must file by noon, June 10, 1988, a RICO case statement. This statement must include the facts the plaintiffs are relying upon to initiate this RICO complaint as a result of the “reasonable inquiry” required by Fed.R.Civ.P. 11. In particular, this statement shall be in a form which uses the numbers and letters as set forth below, and shall state in detail and with specificity the following information.
2. List each defendant and state the alleged misconduct and basis of liability of each defendant.
3. List other alleged wrongdoers and state the alleged misconduct of each.
4. List the alleged victims and state how each victim was allegedly injured.
5. Describe the pattern of racketeering activity alleged for each RICO claim. The description of the pattern of racketeering must include the following information:
a. List the alleged predicate acts and the specific statutes which were allegedly violated;
b. Provide the dates of the predicate acts, the participants in the predicate acts, and a description of the facts surrounding the predicate acts;
c. If the RICO claim is based on the predicate offenses of wire fraud, mail fraud, or fraud in the sale of securities, the “circumstances constituting fraud or mistake shall be stated with particularity.” Fed.R.Civ.P. 9(b). Identify the time, place and contents of the alleged misrepresentations, and the identity of persons to whom and by whom the alleged misrepresentations were made;
d. State whether there has been a criminal conviction for violation of the predicate acts;
e. State whether civil litigation has resulted in a judgment in regard to the predicate acts;
f. Describe how the predicate acts form a “pattern of racketeering activity”; and
g. State whether the alleged predicate acts relate to each other as part of a common plan. If so, describe in detail.
6. Describe in detail the alleged enterprise for each RICO claim. A description of the enterprise shall include the following information:
a.State the names of the individuals, partnerships, corporations, associations, or other legal entities, which allegedly constitute the enterprise;
b. Describe the structure, purpose, function and course of conduct of the enterprise;
c. State whether any defendants are employees, officers or directors of the alleged enterprise;
d. State whether any defendants are associated with the alleged enterprise;
e. State whether you are alleging that the defendants are individuals or entities separate from the alleged enterprise, or that the defendants are the enterprise itself, or members of the enterprise; and
f. If any defendants are alleged to be the enterprise itself, or members of the enterprise, explain whether such defendants are perpetrators, passive instruments, or victims of the alleged racketeering activity.
7. State and describe in detail whether you are alleging that the pattern of racketeering activity and the enterprise are separate or have merged into one entity.
8. Describe the alleged relationship between the activities of the enterprise and the pattern of racketeering activity. Discuss how the racketeering activity differs from the usual and daily activities of the enterprise, if at all.
9. Describe what benefits, if any, the alleged enterprise receives from the alleged pattern of racketeering.
10. Describe the effect of the activities of the enterprise on interstate or foreign commerce.
11. If the complaint alleges a violation of 18 U.S.C. § 1962(a), provide the following information:
a. State who received the income derived from the pattern of racketeering activity or through the collection of an unlawful debt; and
b. Describe the use or investment of such income.
12. If the complaint alleges a violation of 18 U.S.C. § 1962(b), describe in detail the acquisition or maintenance of
13. If the complaint alleges a violation of 18 U.S.C. § 1962(c), provide the following information:
a. State who is employed by or associated with the enterprise; and
b. State whether the same entity is both the liable “person” and the “enterprise” under § 1962(c).
14. If the complaint alleges a violation of 18 U.S.C. § 1962(d), describe in detail the alleged conspiracy.
15. Describe the alleged injury to business or property.
16. Describe the direct causal relationship between the alleged injury and the violation of the RICO statute.
17. List the damages sustained for which each defendant is allegedly liable.
18. Provide any additional information that might be helpful to the court in processing the RICO claim.
Copies of this RICO case statement must be served on opposing counsel.
SO ORDERED.
(s) A. Joe Fish
A. JOE PISH
United States District Judge
. 18 U.S.C. § 1962 (1988).
. Marriott Bros. v. Gage, 704 F.Supp. 731 (N.D. Tex. 1988) (Marriott I), on motion for reconsideration, 717 F.Supp. 458 (1989) (Marriott II).
. See, e.g., Elliott v. Foufas, 867 F.2d 877, 880 (5th Cir. 1989); Old Time Enters. v. International Coffee Corp., 862 F.2d 1213 (5th Cir. 1989).
. Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986).
. Marriott II, 717 F.Supp. at 461.
. 18 U.S.C. § 1962 (1988). See Sedima, S.P.R.L., v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 3285, 87 L.Ed.2d 346 (1985).
. See 18 U.S.C. § 1961(1) (1988); Sedima, 473 U.S. at 495, 105 S.Ct. at 3284.
. Sedima, 473 U.S. at 495-97, 105 S.Ct. at 3284-85; see 18 U.S.C. § 1964(c) (1988).
. 859 F.2d 1211 (5th Cir. 1988).
. Id. at 1215 (quoting Sedima, 473 U.S. at 497, 105 S.Ct. at 3285); see id. at 1215-18.
. Texas Penal Code Ann. § 32.45 (Vernon 1974).
. See Marriott I, 704 F.Supp. at 738.
. Id. at 738 (citing authority).
. Texas Penal Code Ann. § 32.43 (Vernon 1974).
. See Marriott I, 704 F.Supp. at 739-40.
. See id. at 744-45.
Reference
- Full Case Name
- MARRIOTT BROTHERS, J.R. Marriott, L & R Development, and Marock, Inc. v. Coke L. GAGE, Gage Resources, Edward C. Nash, Jr., BancTexas Group, Inc., Federal Deposit Insurance Corporation, Mega Resources, Inc., Norman G. Harnage, as Trustee of the Collins Children's Trusts, Steve W. Collins, and Bennett-Carder & Associates, Inc.
- Cited By
- 3 cases
- Status
- Published