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Sherman v. Main Event, Inc.

United States District Court, N.D. Texas, Dallas Division
Feb 3, 2003
No. 3:02-CV-1314-G (N.D. Tex. Feb. 3, 2003)

Opinion

No. 3:02-CV-1314-G

February 3, 2003


MEMORANDUM ORDER


Before the court are (1) the motion to dismiss of the defendant Abrams Centre National Bank ("Abrams") and (2) the motion to dismiss, or in the alternative for more definite statement, of the defendants Main Event, Inc. ("Main Event"), Harborage International, Inc. ("Harborage"), Charles William Greener Insurance Trust ("Greener Insurance Trust"), Joyce Oteka McReynolds ("McReynolds"), Michael Alan Byers ("Byers"), Greener Family Trust, Lawrence E. Fiedler ("Fiedler"), JM Trust, JMC Success Investments, L.P., JMC Success Management, Inc., and BAM Investments, Inc. For the reasons stated below, the motions to dismiss are granted.

I. BACKGROUND

Plaintiff Daniel J. Sherman ("the plaintiff," "Sherman", or "the trustee") is trustee of the bankruptcy estate of Charles William Greener ("Greener"). Second Amended Complaint and Jury Demand ("Complaint") ¶ 4.

Main Event is a Delaware corporation with its principal place of business in Dallas County, Texas. Id. ¶ 5.1.

The Greener Insurance Trust is a Texas trust with its principal place of business in Dallas County, Texas. Id. ¶ 5.2. Fiedler serves as trustee of the Greener Insurance Trust. Id.

Harborage is a Texas corporation with its principal place of business in Dallas County, Texas. Id. ¶ 5.3.

McReynolds, individually and as a trustee of the JM Trust, is a citizen of Texas who resides in Dallas County, Texas. Id. ¶ 5.4.

Byers is a citizen of Texas who resides in Dallas County, Texas. Id. ¶ 5.5.

Fiedler, individually and as trustee of the Greener Insurance Trust and the Greener Family Trust, is a citizen of New York who conducted business in Dallas County, Texas. Id. ¶ 5.7.

JM Trust is a Texas trust which conducts business in Dallas County, Texas. Id. ¶ 5.8. McReynolds is the trustee of the JM Trust. Id.

JMC Success Management, Inc. and BAM Investments, Inc. are Texas corporations which conduct business in Dallas County, Texas. Id. ¶¶ 5.10, 5.11.

Abrams is a federally chartered bank with its principal place of business in Dallas County, Texas. Id. ¶ 5.12.

In 1972, Greener hired McReynolds as a bookkeeper. Id. ¶ 12. From 1975 until 1985, Greener taught McReynolds the real estate business. Id. In 1985, McReynolds became president of Greener's real estate development company. Id.

On December 4, 1980, Greener established the Greener Family Trust with Fielder as trustee. Id. ¶ 8. The Greener Family Trust is a Texas trust with its principal place of business in Dallas County, Texas. Id. ¶ 5.6. The beneficiaries of the Greener Family Trust are Greener's two daughters and his stepdaughter, all citizens of Texas. Id. ¶ 8. The initial corpus of the Greener Family Trust was a $500,000 life insurance policy on Greener's life. Id.

According to a financial statement dated December 31, 1984, Greener had total assets of $83,989,075, with a net worth of $82,647,683. Id. ¶ 7. Prior to 1986, companies owned by Greener were involved in the design, development, ownership, management and franchising of restaurants and night clubs owned and controlled by Greener. Id. ¶¶ 7, 14. After this time, however, new companies were held in the name of McReynolds and others, but were still "controlled behind the scenes by Greener." Id. ¶ 14. For example, in April 1986, Greener formed Harborage, a Texas corporation, which managed and developed restaurants and night clubs throughout the United States. Id. ¶ 15. Sherman maintains that "in the mid-1980s Greener started to take affirmative steps to shield his current and future assets from the claims of his creditors." Id. ¶ 9.

In 1985, Greener transferred over $586,500 worth of real estate and personal property to the Greener Insurance Trust. Id. ¶ 31. On July 3, 1986, Greener withdrew the cash value of his whole-life insurance policy, which had been transferred to the Greener Family Trust, in order to provide additional funding for Harborage. Id. ¶ 15. From 1986 through 1990, Harborage's stock was issued in McReynold's name. Id. ¶¶ 15, 16. Harborage grew from one sports bar in Houston in 1986 to more than 20 national outlets and over $30 million in annual sales. Id. ¶ 18. Sherman avers that "[i]n economic reality, Greener owned and controlled Harborage and Main Event, and Greener was the equitable owner of the restaurant and night club business that had been held in the names of McReynolds and Harborage." Id.; see also id. ¶ 19, 22.

In 1989, Greener formed Main Event as a holding company to hold title to the various businesses involved with the restaurants and night clubs owned by Greener. Id. ¶ 16. In 1990, Greener transferred Harborage stock to Main Event and caused Main Event's stock to be issued to the Greener Insurance Trust. Id. ¶¶ 17, 31. Sherman alleges that Greener continued to manage and control Harborage, Main Event, and the Greener Insurance Trust "for Greener's personal financial benefit." Id. par 17; see also id. ¶ 32.

Sherman urges that from 1995 through September 24, 1999, Greener, McReynolds, Byers, Harborage, and Abrams acted together to shield Greener's cash from his creditors. Id. ¶¶ 24, 25; see also id. ¶ 28. First, a Harborage employee would cash Greener's monthly salary check at Abrams. Id. ¶ 24. The Harborage employee would then deliver the cash to a Harborage bookkeeper. Id. The Harborage bookkeeper placed the cash in a file cabinet at the Harborage headquarters in Dallas. Id. Greener wrote checks on his Abrams checking account with the knowledge that he did not have sufficient funds to cover the checks. Id. ¶ 25. Rather than return Greener's checks for insufficient funds, Abrams agreed with Greener and Harborage to call Harborage's bookkeeper with the amount due on an overdrawn check. Id. ¶ 26. A Harborage employee would then deliver just enough cash to Abrams to cover the outstanding check. Id. This scheme left Greener with a zero balance in his checking account in order to deceive his creditors. Id. ¶¶ 25-28.

On May 12, 1998, Main Event's restaurant and night club businesses were sold to Jillian's Entertainment Corporation for $6,300,000. Id. ¶ 20.

On September 24, 1999, Greener filed for relief under Chapter 7 of the United States Bankruptcy Code, claiming that he had no assets which were subject to the claims of his creditors. Id. ¶ 36. Sherman was appointed as the Chapter 7 bankruptcy trustee. Brief in Support of Motion to Dismiss Amended Complaint ("Main Event Motion") at 1. Sherman contends that Greener knowingly made "numerous misrepresentations in his verified bankruptcy schedules; during his ¶ 341 meeting of creditors; and during his Rule 2004 examination." Complaint ¶ 36; see also id. ¶¶ 37, 38. After filing for bankruptcy, Greener had the Greener Insurance Trust sell him the life insurance policy in the Greener Insurance Trust for a nominal amount. Id. ¶ 43.

Cause Number 99-36767-RCM-7.

Sherman maintains that in November 2000, after a Greener creditor deposed McReynolds and Byers in the presence of Greener, Main Event paid McReynolds and Byers "hush money." Id. ¶ 40. Specifically, McReynolds was paid $1,700,000, and Byers was paid $100,000 "to continue their cooperation in perpetuating the fiction that Greener does not, in reality, in control Harborage, Main Event and the Greener Insurance Trust." Id. Greener, McReynolds, and Byers placed McReynolds's funds in the names of JM Trust, JMC Success Investments, L.P., and/or JMC Success Management, Inc. Id. ¶ 41. Greener, McReynolds, and Byers placed Byers's funds in the name of BAM Investments, Inc. Id. Additionally, in November 2000, Harborage paid Fiedler $10,000 in "hush money" with a promise to pay him $2,500 annually thereafter. Id. ¶ 42. From 1980 through 2000, Fiedler had never been paid for serving as trustee of the Greener Insurance Trust. Id.

On May 13, 2002, Sherman filed his complaint in the United States Bankruptcy Court, Northern District of Texas, Dallas Division, and on May 14, 2002, Sherman filed an amended complaint. On July 10, 2002, Sherman filed his second amended complaint. In his complaint, Sherman alleges that the defendants are jointly and severally liable for knowingly and fraudulently transferring Greener's funds with the intent to defraud Greener's creditors. Id. ¶¶ 44-45. Sherman brings claims against all of the defendants under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. ¶ 1961, et seq., and also makes claims for relief under state law for unjust enrichment and conversion. Additionally, Sherman seeks consequential damages, exemplary damages, statutory damages pursuant to 18 U.S.C. ¶ 1964(c), pre- and post-judgment interest, and attorney's fees.

Adversary Proceeding Number 02-3139.

On August 26, 2002, this court granted Sherman's motion to withdraw his amended complaint filed on May 14, 2002 and granted Sherman's motion for leave to file his second amended complaint nunc pro tunc as of July 10, 2002.

Sherman also named Does 1-10 as defendants. See Complaint ¶ 5.13. These defendants are unknown "individuals, corporations, trusts, partnerships or other entities that conspired with Greener to fraudulently transfer his assets in an effort to defeat the judgment claims of Greener's creditors and the claims of the Bankruptcy Estate." Id.

On July 29, 2002, this court granted Sherman's motion to withdraw the automatic reference to the bankruptcy court of this adversary proceeding.

Main Event, Harborage, Greener Insurance Trust, McReynolds, Byers, Greener Family Trust, Fiedler, JM Trust, JMC Success Investments, L.P., JMC Success Management, Inc., and BAM Investments, Inc. now move to dismiss Sherman's claims on the ground that this court lacks subject matter jurisdiction over the case because Sherman has no standing to file a civil RICO action. Main Event Motion at 7. Main Event, Harborage, Greener Insurance Trust, McReynolds, Byers, Greener Family Trust, Fiedler, JM Trust, JMC Success Investments, L.P., JMC Success Management, Inc., and BAM Investments, Inc. also assert that Sherman fails to state a claim upon which relief can be granted because the RICO claim is barred by the statute of limitations and because the RICO claim fails to meet the heightened pleading requirements of Rule 9(b). Id. at 10-23. Alternatively, Main Event, Harborage, Greener Insurance Trust, McReynolds, Byers, Greener Family Trust, Fiedler, JM Trust, JMC Success Investments, L.P., JMC Success Management, Inc., and BAM Investments, Inc. move for a more definite statement. Id. at 23.

Abrams moves to dismiss Sherman's claims for failure to state a claim for which relief can be granted. See generally Abram Centre National Bank's Motion to Dismiss Pursuant to F.R.Civ.P. 12(b)(6) ("Abram's Motion"). Sherman, however, does not assert an unjust enrichment claim against Abrams. Plaintiffs Response to Defendants' Motions to Dismiss at 26-27.

Sherman filed a RICO case statement, pursuant to this court's order, on September 26, 2002.

"The propriety of a district court's requirement of a case statement to summarize the nature of RICO claims is . . . well established in this circuit. . . . [I]t is a useful, sometimes indispensable, means to understand the nature of the claims asserted and how the allegations satisfy the RICO statute." Marriott Brothers v. Gage, 911 F.2d 1105, 1107 (5th Cir. 1990).

II. ANALYSIS A. Standard for Dismissal Under Rule 12(b)(6)

FED. R. CIV. P. 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." A motion under Rule 12(b)(6) should be granted only if it appears beyond doubt that the plaintiff could prove no set of facts in support of his claim that would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Leffall v. Dallas Independent School District, 28 F.3d 521, 524 (5th Cir. 1994) (citations omitted).

The motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted. Kaiser Aluminum Chemical Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982) (quoting CHARLES A. WRIGHT ARTHUR MILLER, FEDERAL PRACTICE AND PROCEDURE ¶ 1357), cert. denied, 459 U.S. 1105 (1983). Granting such a motion "is a `precarious disposition with a high mortality rate.'" Id. (quoting Barber v. Motor Vessel "Blue Cat," 372 F.2d 626, 627 (5th Cir. 1967)).

In determining whether dismissal should be granted, the court must accept all well-pleaded facts as true and view them in the light most favorable to the plaintiff. Capital Parks, Inc. v. Southeastern Advertising and Sales System, Inc., 30 F.3d 627, 629 (5th Cir. 1994) (citation omitted); Norman v. Apache Corporation, 19 F.3d 1017, 1021 (5th Cir. 1994) (citations omitted); Chrissy F. by Medley v. Mississippi Department of Public Welfare, 925 F.2d 844, 846 (5th Cir. 1991).

B. RICO Claims

In a civil RICO suit, "the plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property. . . ." Sedima S.P.R.L. v. Imrex Company, Inc., 473 U.S. 479, 496 (1985). Thus, "[t]o prevail in a RICO suit, a plaintiff must demonstrate an injury to business or property." Hughes v. Tobacco Institute, Inc., 278 F.3d 417, 422 (5th Cir. 2001) (citing 18 U.S.C. ¶ 1964(c)).

See also In re Taxable Municipal Bond Securities Litigation, 51 F.3d 518, 521 (5th Cir. 1995) ("The standing provision of civil RICO provides that `[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor . . .'. (Plaintiff and the class he purports to represent] have not been `injured' as a result of the RICO violation, a necessity for standing under RICO.").

The "property" alleged to have been injured in this case is the bankruptcy estate. When Greener filed for relief under Chapter 7 of the Bankruptcy Code, a bankruptcy estate was created. That estate was comprised of all the property listed under section 541, wherever located and by whomever held, including "all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. ¶ 541(a)(1). Section 541(a)(1)'s reference to "all legal or equitable interests of the debtor in property" includes causes of action belonging to Greener at the time the Chapter 7 proceeding was commenced. Matter of Equinox Oil Company, Inc., 300 F.3d 614, 618 (5th Cir. 2002); Matter of Educators Group Health Trust, 25 F.3d 1281, 1283-84 (5th Cir. 1994); see also United States v. Whiting Pools, Inc., 462 U.S. 198, 205 n. 9 (1983) (quoting the House and Senate Reports on the Bankruptcy Code).

See, e.g., Complaint ¶ 1 ("This suit involves a fraudulent conspiracy among Greener, his business associates, and numerous of Greener's controlled trusts, corporations and limited partnerships to transfer, hide and otherwise shield the substantial assets of Greener from the claims of his creditors, and from the claims of his bankruptcy estate."); ¶ 5.13 ("Defendant Does 1-10 are individuals, corporations, trusts, partnerships or other entities that conspired with Greener to fraudulently transfer his trusts, partnerships or other entitles that conspired with Greener to fraudulently transfer his assets in an effort to defeat the judgment claims of Greener's creditors and the claims of the Bankruptcy Estate."); ¶ 53 ("The victims of the Defendants' fraudulent scheme are the Bankruptcy Estate, Greener's creditors and the I.R.S.").

When a trustee prosecutes a right of action derived from the debtor, the trustee stands in the shoes of the debtor. In other words, the trustee must prove all elements of the cause of action that the debtor himself would be required to prove. Matter of Segerstrom, 247 F.3d 218, 224 (5th Cir. 2001). See also Matter of Armstrong, 206 F.3d 465, 472 (5th Cir. 2000) ("Generally, the trustee acquires the same right to file a refund claim that the debtor had.") (citing Hays Co. v. Merrill Lynch Pierce Fenner Smith, 885 F.2d 1149, 1154 (3d Cir. 1989)); Educators Group Health Trust, 25 F.3d at 1286 ("It is well-established that the bankruptcy estate succeeds to the causes of action which the debtor could have brought as of the commencement of the case, subject to any defenses the debtor may have faced."); Century Hotels v. United States, 952 F.2d 107, 113 n.h (5th Cir. 1992) ("Similar statements to the effect that ¶ 541(a)(1) does not expand the rights of the debtor in the hands of the estate were made in the context of describing the principle that the estate succeeds to no more or greater causes of action against third parties than those held by the debtor.") (citing HR. Rep. No. 95-595, pp. 367-368 (1977)). Cf. Wieburg v. GTE Southwest Incorporated, 272 F.3d 302, 303-09 (5th Cir. 2001) (implicitly recognizing that, in an employment discrimination case, the same facts would have to be proved whether the case was prosecuted by the debtor or her trustee in bankruptcy).

The trustee in this case is alleging a RICO injury caused by predicate acts of bankruptcy fraud, mail fraud, and wire fraud. See Complaint ¶¶ 50.1-50.3; RICO Case Statement ¶¶ 5(A)(i)-5(A)(iii). In civil RICO claims in which fraud is alleged as a predicate act, reliance on the fraud must be shown: "[W]hen civil RICO damages are sought for injuries resulting from fraud, a general requirement of reliance by the plaintiff is a commonsense liability limitation." Procter Gamble Company v. Amway Corporation, 242 F.3d 539, 564 (5th Cir.) (quoting Summit Properties, Inc. v. Hoechst Celanese Corp., 214 F.3d 556 (5th Cir. 2000), cert. denied, 531 U.S. 1132 (2001)), cert. denied, 534 U.S. 945 (2001).

The defendants correctly point out, however, that bankruptcy fraud as defined in 18 U.S.C. ¶ 157 is not a predicate offense under RICO. Main Event Motion at 16 (citing 18 U.S.C. ¶ 1961(1)(D)).

This circuit has recognized a narrow exception to the rule that reliance must be shown in civil RICO claims where fraud is alleged as a predicate act. This exception applies where the plaintiff has been the target of the fraud. See Procter Gamble Company v. Amway Corporation, 242 F.3d 539, 564 (5th Cir.), cert. denied, 534 U.S. 945 (2001); Summit Properties, Inc. v. Hoechst Celanese Corp., 214 F.3d 556, 561 (5th Cir. 2000), cert. denied, 531 U.S. 1132 (2001). The court has emphasized, however, the narrowness of this exception:

The reasons for our narrow application of the target theory, and for its inapplicability in the present case, can be derived from foundational principles of RICO causation jurisprudence [which requires not mere factual, but proximate, causation].

* * *
Thus under the target wing recognized in Summit and applied in Procter Gamble, there is a narrow exception to the requirement that the plaintiff prove direct reliance on the defendant's fraudulent predicate act. This exception only comes into play when the plaintiff can demonstrate injury as a direct and contemporaneous result of fraud committed against a third party, because in this limited context there is a sufficient "direct relation between the injury asserted and the injurious conduct alleged" to comport with the RICO requirement of proximate cause.
Sandwich Chef of Texas, Inc. Reliance National Indemnity Insurance Company, F 3d ___ 2003 WL 139607 (5th Cir. January 21, 2003) at *14-*15 Here, as in Summit, the plaintiff does not contend he was "the target of a scheme to defraud accomplished by defrauding others." Sandwich Chef at *13. Nor does he contend that his RICO injury was the "contemporaneous result of a fraud committed against a third party." Id. at *15. Indeed, the defendants' conduct apparently occurred over a period of years before Greener's bankruptcy. See, e.g., Complaint ¶¶ 6-8, 12-18, 24, 31.

A person who is aware that a misrepresentation is untrue cannot show reliance. See Sandwich Chef of Texas, Inc. v. Reliance National Indemnity Insurance Company, ___ F.3d ___ 2003 WL 139607 (5th Cir. January 21, 2003) ("For a misrepresentation to cause an injury, there must be reliance. Knowledge of the truth defeats a claim of fraud because it eliminates the deceit as the `but for' cause of the damages.") (citing Summit, 214 F.3d at 560 n. 19, and Ideal Daily Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 746-47 (3d Cir. 1996)). Greener, who is the source of the fraud alleged here, is such a person. Hence, the trustee — who stands in Greener's shoes — cannot show "injury to [Greener's] business or property" in the manner required by 18 U.S.C. ¶ 1964.

This is the court's interpretation of the trustee's complaint. As pointed out by the defendants, "Rule 9(b) requires particularity in pleading the `circumstances constituting fraud.'" Main Event Motion at 16; Reply Brief in Support of Motion to Dismiss Complaint at ¶ (citing Tel-Phonic Services, Inc. v. TBS International, Inc., 975 F.2d 1134, 1138 (5th Cir. 1992)). "At a minimum, Rule 9(b) requires allegations of the particulars of `time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.'" Tel-Phonic, 975 F.2d at 1139. In the absence of the particulars required by Rule 9(b), the court can only assume that Greener, or someone at his instance, made the misrepresentations.

The trustee also stands in the shoes of the creditors for certain kinds of claims. See Matter of Zedda, 103 F.3d 1195, 1201 (5th Cir. 1997) ("In essence, [11 U.S.C.] ¶ 544 allows the trustee to step into the shoes of a creditor for the purpose of asserting causes of action under state fraudulent conveyance laws and confers on the trustee the status of a hypothetical creditor or bona fide purchaser as of the commencement of the case."); Sherk v. Texas Bankers Life Loan Insurance Co., 918 F.2d 1170, 1175 (5th Cir. 1990) ("Sherk's claim is that the property was fraudulently transferred to Texas Bankers. According to the Bankruptcy Code, the trustee has the power, under Section 548 and 550, to recover for the bankruptcy estate property which has been fraudulently transferred."); Carlton v. Baww, Inc., 751 F.2d 781, 785-86 (5th Cir. 1985) ("The [Bankruptcy] Code also gives the trustee a series of avoidance powers through which he can recapture property of the estate. Among these is section 544(b) which allows the trustee, as statutory successor to the debtor's creditors, to void fraudulent conveyances to the extent permitted by applicable non-bankruptcy law."); In re Mortgage America, 714 F.2d 1266, 1275 (5th Cir. 1983) ("The `strong arm' provision of the current [Bankruptcy] Code, 11 U.S.C. ¶ 544, allows the bankruptcy trustee to step into the shoes of a creditor for the purpose of asserting causes of action under state fraudulent conveyance acts for the benefit of all creditors . . .")
Claims of this kind are "not derivative of the bankrupt" but rather a "statutory cause of action" under the Bankruptcy Code for the benefit of the creditors. Matter of National Gypsum Company, 118 F.3d 1056, 1066 (5th Cir. 1997) (citing Hays and Co. v. Merrill Lynch, Pierce, Fenner Smith, Inc., 885 F.2d 1149, 1155 (3d Cir. 1989) (holding that a RICO claim was derivative of the debtor and must be arbitrated but a fraudulent conveyance claim was not)). Such claims, when successful, increase the size of the estate. Zedda, 103 F.3d at 1201 ("both ¶ 544 and ¶ 548 empower the trustee to increase the assets of the bankrupt estate by avoidance of transfers"); Sherk, 918 F.2d at 1176 ("A trustee may recover property fraudulently transferred by avoiding the transfer under sections 548 and 550. According to section 550(a), this recovered property is retained for the benefit of the estate. It becomes property of the estate under section 541(a)(3) which provides that any interest the trustee recovers under sections 550 becomes property of the estate.").
Unlike the RICO claim asserted by the trustee here, however, the remedy afforded a successful claimant under these avoidance powers frequently "relates entirely to the debtor's fraudulently transferred property and entails no personal liability on the part of those responsible for the transfer." Mortgage America, 714 F.2d at 1272 (discussing trustee's power under 11 U.S.C. ¶ 544 to avoid fraudulent transfer under the Texas Fraudulent Transfers Act, TEX. Bus. COM. CODE ¶¶ 24.02-.03 (Vernon 1968)).
Beyond the avoidance powers specifically conferred on the trustee by the Bankruptcy Code, the court has been unable to find any authority for the trustee to complain, under the RICO statute or otherwise, of transfers of the debtor's property occurring before the date of bankruptcy. See Kremen v. Blank, 55 B.R. 1018, 1021 (D. Md. 1985) ("trustee has no standing to sue under RICO for acts that occurred prior to the date of [the bankruptcy] filing."). Accord Hays, 885 F.2d at 1155 (trustee's RICO claim derivative of the debtor) (cited with approval in National Gypsum, 118 F.3d at 1066).

C. State Law Claims

Besides the RICO claim discussed above, Sherman asserts claims under state law — see Complaint ¶ 2 (citing 28 U.S.C. ¶ 1367 as the basis for exercising supplemental jurisdiction over the state law claims) — for unjust enrichment and conversion. Complaint ¶¶ 54-5 8. The court has subject matter jurisdiction over these claims under 28 U.S.C. ¶ 1334. See Segerstrom, 247 F.3d at 222 ("This case presents claims [under Texas law] over which the district court exercised jurisdiction pursuant to 28 U.S.C. ¶ 1334."); Carlton v. Baww, Inc., 751 F.2d 781, 787-89 (5th Cir. 1985) (recognizing subject matter jurisdiction under ¶ 1334 over trustee's suit to avoid, under Texas law, a fraudulent conveyance of real property). Nevertheless, the court in its discretion has decided to abstain from hearing these claims. See 28 U.S.C. ¶ 1334(c)(1); Matter of Gober, 100 F.3d 1195, 1206-07 (5th Cir. 1996). Accordingly, those claims will be dismissed without prejudice.

III. CONCLUSION

For the reasons set forth above, the defendants' motions to dismiss Sherman's civil RICO claims are GRANTED. The court also abstains from hearing Sherman's state law claims against Main Event, Harborage, Greener Insurance Trust, McReynolds, Byers, Greener Family Trust, Fiedler, JM Trust, JMC Success Investments, L.P., JMC Success Management, Inc., and BAM Investments, Inc., and those claims are DISMISSED without prejudice to their being refiled in an appropriate state forum.

SO ORDERED.


Summaries of

Sherman v. Main Event, Inc.

United States District Court, N.D. Texas, Dallas Division
Feb 3, 2003
No. 3:02-CV-1314-G (N.D. Tex. Feb. 3, 2003)
Case details for

Sherman v. Main Event, Inc.

Case Details

Full title:DANIEL J. SHERMAN, TRUSTEE, Plaintiff, v. MAIN EVENT, INC., ET AL.…

Court:United States District Court, N.D. Texas, Dallas Division

Date published: Feb 3, 2003

Citations

No. 3:02-CV-1314-G (N.D. Tex. Feb. 3, 2003)