Zibalstar et al v. Conte et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM and Memorandum in Support

D. UtahOctober 6, 2017

ANDERSON & KARRENBERG Heather M. Sneddon (#9520) Jason E. Greene (#13990) 50 West Broadway, Suite 700 Salt Lake City, Utah 84101 Tel: (801) 534-1700 Fax: (801) 364-7697 hsneddon@aklawfirm.com jgreene@aklawfirm.com Attorneys for Defendant David Odenath IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION ZIBALSTAR, L.C., a Utah limited liability company; et al., Plaintiffs, vs. ROBERT CONTE, an individual, et al., Defendants. DEFENDANT DAVID ODENATH’S MOTION TO DISMISS FOR: (1) FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED; AND (2) LACK OF SUBJECT-MATTER AND PERSONAL JURISDICTION Case No. 2:17-cv-563 Judge Jill N. Parrish Defendant David Odenath, by and through his undersigned counsel of record, and pursuant to Rules 12(b)(1), 12(b)(2), and 12(b)(6) of the Federal Rules of Civil Procedure, hereby moves the Court to dismiss Plaintiffs’ First Amended Complaint against him for failure to state a claim upon relief can be granted, and for lack of subject-matter and personal jurisdiction. Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 1 of 31 TABLE OF CONTENTS Page INTRODUCTION .......................................................................................................................... 1 STATEMENT OF MATERIAL FACTS ....................................................................................... 3 I. The Alleged “Forthcoming Real Estate Transaction” ........................................................ 3 II. Plaintiffs’ General Allegations Concerning Mr. Odenath .................................................. 3 III. Plaintiffs’ Civil RICO Claims Against Mr. Odenath .......................................................... 6 IV. Plaintiffs’ Jurisdictional Allegations Against Mr. Odenath ................................................ 8 ARGUMENT .................................................................................................................................. 9 PLAINTIFFS’ AMENDED COMPLAINT AGAINST MR. ODENATH SHOULD BE DISMISSED ................................................................................................................................... 9 I. Plaintiffs’ Generalized and Conclusory Assertions Fail to State a Claim for Relief ................................................................................................................................... 9 II. Plaintiffs Fail to State a Viable Civil RICO Claim Against Mr. Odenath Under Any Subsection of 18 U.S.C.A. § 1962 ............................................................................. 12 A. Plaintiffs Have Not Alleged that Mr. Odenath Engaged in a Pattern of Racketeering Activity ........................................................................................... 13 B. Plaintiffs Have Not Alleged the Existence of a RICO Enterprise ........................ 15 C. Plaintiffs Have Not Alleged that Mr. Odenath Received Any Racketeering Income ............................................................................................ 16 D. Plaintiffs Have Not Alleged that Mr. Odenath Acquired an Interest in an Enterprise ......................................................................................................... 17 E. Plaintiffs Have Not Alleged that Mr. Odenath Was Associated with an Enterprise or Conducted the Affrairs of An Enterprise ........................................ 18 F. Plaintiffs Have Not Sufficiently Alleged that Mr. Odenath Conspired To Commit a RICO Violation............................................................................... 19 i Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 2 of 31 G. Plaintiffs Have Not Alleged Any Use of the Mails by Mr. Odenath .................... 22 III. The Court Should Also Dismiss Plaintiffs’ Remaining Claims for Lack of Jurisdiction ........................................................................................................................ 22 A. The Court Should Decline to Exercise Supplemental Subject-Matter Jurisdiction Over Plaintiffs’ State Law Claims .................................................... 22 B. Absent the Nationwide Service of Process Permitted for RICO Claims, This Court Lacks Personal Jurisdiction Over Mr. Odenath .................................. 24 1. There Is No Independent Basis for Exercising Personal Jurisdiction Over Mr. Odenath with Respect to Plaintiffs’ Supplemental State Law Claims ............................................................................................... 25 2. The Court Should Not Exercise Pendent Personal Jurisdiction Over Mr. Odenath ..................................................................................... 27 CONCLUSION ............................................................................................................................. 28 ii Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 3 of 31 INTRODUCTION A reading of the Amended Complaint suggests that, after Plaintiffs’ substantial real estate investments supposedly failed, Plaintiff Brinton seeks to lay blame anywhere he can. He, and what appear to be over a dozen of his entities, assert civil claims for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) against eighteen Individual Defendants, and many more state law claims against those same defendants and thirteen “Entity Defendants,” based upon a convoluted theory of racketeering and conspiracy across state lines regarding over two dozen real property holdings and the promised, yet elusive, “Forthcoming Real Estate Transaction.” However, Defendant David Odenath’s connection to this morass is, at best, miniscule. The singular factual basis upon which he has been dragged into this lawsuit is Plaintiffs’ allegation that he received a phone call in September 2016 and supposedly made representations to Plaintiffs during that brief call that he was working on this “Forthcoming Real Estate Transaction.” To be blunt, that is far from enough to state a claim. Any claim. Even so, in their Amended Complaint, Plaintiffs attempt to allege every possible outlandish variation of a civil RICO claim against Mr. Odenath. In virtually every conceivable way, however, Plaintiffs’ pleading fails. Under settled U.S. Supreme Court precedent, to meet even the general pleading requirements of Fed. R. Civ. P. 8, a plaintiff must allege sufficient facts to state a claim against a defendant that is plausible on its face. Mere recitals of the elements of a cause of action, and generalized, conclusory allegations, do not suffice. Further, it is well-established that civil RICO claims must be pleaded with particularity under Fed. R. Civ. P. 9(b). And in fact, the Tenth Circuit requires that every single element of a RICO claim meet that heightened pleading standard. Plaintiffs’ RICO claims against Mr. Odenath are deficient in every respect under either pleading standard. 1 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 4 of 31 To wit, and most significantly, Plaintiffs have not alleged that Mr. Odenath engaged in a “pattern” of racketeering activity, which is absolutely critical to sufficiently plead (and prove) a violation of subsections (a), (b), and (c) of 18 U.S.C.A. § 1962, and also by necessity, subsection (d) (i.e., a conspiracy to commit a violation of subsections (a), (b), or (c)). A “pattern” requires at least two acts of racketing activity, whereas Plaintiffs’ Amended Complaint alleges only one purported “act” by Mr. Odenath: his participation in one phone call. This pleading failure alone dooms Plaintiffs’ RICO claims against Mr. Odenath. But in addition to that substantial deficiency, Plaintiffs have failed to allege any facts concerning Mr. Odenath that would otherwise support the exacting requirements of each and every subsection of § 1962 that Plaintiffs accuse Mr. Odenath of violating. And if the Court concludes that Plaintiffs’ civil RICO claims against Mr. Odenath do not state a claim upon which relief can be granted (which Mr. Odenath submits it should), the Court should also dismiss the remainder of Plaintiffs’ claims for lack of jurisdiction. Not only would the Court lack subject-matter jurisdiction over Plaintiffs’ remaining state law claims, but absent the nationwide service of process permitted for federal RICO claims, the Court would lack personal jurisdiction over Mr. Odenath. As a Florida resident, Mr. Odenath’s receipt of a phone call that purportedly originated from Utah is not nearly enough to establish an independent basis for this Court to exercise specific personal jurisdiction over him. And there is no reason for this Court to consider exercising pendent personal jurisdiction with respect to Plaintiffs’ state law claims when the federal RICO claims are so incredibly deficient and the case is in its infancy. Mr. Odenath respectfully requests that the Court grant his motion, and dismiss the Amended Complaint against him in its entirety. 2 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 5 of 31 STATEMENT OF MATERIAL FACTS I. The Alleged “Forthcoming Real Estate Transaction.” The crux of Plaintiffs’ First Amended Complaint (the “Amended Complaint”) is their allegation that “Defendants conspired to fraudulently induce Plaintiff Brinton into entering a series of real property transactions over the course of a year that have depleted Plaintiff Brinton’s estate by tens of millions of dollars.” (Am. Compl. ¶ 62, Dkt. 15.)1 To accomplish this purported scheme, Plaintiffs allege that “Defendant Ted Hansen induced Plaintiff Brinton into entering into the Transactions by promising him that Plaintiffs’ participation in these Transactions would lead to Plaintiffs having the opportunity to participate in a forthcoming real estate transaction (‘Forthcoming Real Estate Transaction’).” (Id. ¶ 65.) According to Plaintiffs, the alleged “Forthcoming Real Estate Transaction” was a proposed transaction “involving financing to rehabilitate and stabilize these newly acquired properties which Plaintiffs could then sell to a new group or entity (‘Purported Buyer’), which would purchase these properties for double their cost to Plaintiffs.” (Id. ¶ 65.) Plaintiffs contend that, “[a]ccording to Defendant Ted Hansen, this Forthcoming Real Estate Transaction was being assembled by Defendant Odenath, with assistance by Defendant Fairchild, and financing to rehabilitate and stabilize the properties was being provided by Defendant Halliday, and would also be participated in by Defendant Conte.” (Id. ¶ 65.) II. Plaintiffs’ General Allegations Concerning Mr. Odenath. Although Mr. Odenath is lumped into generalized references to all “Defendants” throughout the Amended Complaint (see id., generally), and characterized as the subject of other Defendants’ representations to Plaintiffs (see, e.g., id. ¶¶ 65, 41, 81, 94, 108, 118, 123, 234, 243, 1 The real property transactions are identified (and defined as the “Transactions”) in paragraph 64 of the Amended Complaint, and further described in paragraphs 77 through 182 therein. 3 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 6 of 31 281, 294, 312), Plaintiffs’ allegations concerning exactly what Mr. Odenath did, or what he represented to Plaintiffs, are scarce. They include only the following: • “Defendant David Odenath (‘Odenath’) is a citizen of the state of Florida. Defendant Odenath, personally and as part of an enterprise, has conspired with the other Defendants to defraud Plaintiff Brinton. Defendant Odenath held himself out as assembling a lucrative real estate transaction, whereby Plaintiffs, once they owned 10,000 doors [fn], could sell their property portfolio to a large entity controlled by John Hantz. According to Defendant Odenath, Mr. Hantz’s organization had set aside $750,000,000 of a $1,000,000,000 investment round to purchase these properties at favorable values at least double what Plaintiffs were paying.” (Id. ¶ 31.) • “In or around September 2016, Defendant Ted Hansen placed a telephone call from Utah to Defendant Odenath with Plaintiff Brinton, Bryan Brinton, Scott Brinton, and Tom Meyer participating. Defendant Odenath made the false representation that he was working with Defendant Ted Hansen on putting together the Forthcoming Real Estate Transaction and that he had extensive experience putting together real estate transactions of this type. Defendant Odenath stated he specifically apportioned $750,000,000 of a $1,000,000,000 fund to purchase properties from Plaintiffs. Defendant Odenath made these representations knowing that they were false or with a reckless disregard for their truthfulness.” (Id. ¶ 70.) The phone call described in paragraph 70 of the Amended Complaint is the only purported act committed by Mr. Odenath, and the only communication he allegedly participated in, that is identified in the entire Amended Complaint. (See generally, id.) In all other 4 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 7 of 31 allegations concerning Mr. Odenath, he is merely the subject of a representation by other Defendants. Specifically, Plaintiffs allege that Ted Hansen made representations to Plaintiff Brinton regarding Mr. Odenath: • “Defendant Ted Hansen induced Plaintiff Brinton into entering into the Transactions by promising him that Plaintiffs’ participation in these Transactions would lead to Plaintiffs having the opportunity to participate in a forthcoming real estate transaction (‘Forthcoming Real Estate Transaction’) involving financing to rehabilitate and stabilize these newly acquired properties which Plaintiffs could then sell to a new group or entity (‘Purported Buyer’), which would purchase these properties for double their cost to Plaintiffs. According to Defendant Ted Hansen, this Forthcoming Real Estate Transaction was being assembled by Defendant Odenath, with assistance by Defendant Fairchild, and financing to rehabilitate and stabilize the properties was being provided by Defendant Halliday, and would also be participated in by Defendant Conte.” (Id. ¶ 65; second emphasis added.) • “Defendant Ted Hansen told Plaintiff Brinton that the Forthcoming Real Estate Transaction was being assembled by Defendant Odenath, assisted by Defendant Fairchild, and that it would at least double Plaintiff Brinton’s money. Defendant Ted Hansen made this statement to Plaintiff Brinton in April or May of 2016 while driving in a car in or around Rochester. Wayne Ross, Tom Meyer, Munoz, Bryan Brinton, and Mark Jensen were also in the car at the time this statement was made.” (Id. ¶ 81; emphasis added. See also id. ¶¶ 94, 108, 118, 123, 243 (similarly alleging that Defendant Ted Hansen represented to Plaintiff Brinton “that the Forthcoming Real Estate Transaction was being assembled by David 5 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 8 of 31 Odenath, with the assistance of Defendant Fairchild,” and that it would “double” Plaintiff Brinton’s money). Plaintiffs likewise allege that Defendant Fairchild made representations regarding Mr. Odenath during one phone conversation: • “Defendant Fairchild held himself out as assisting Defendant Odenath in assembling a lucrative real estate transaction, whereby Plaintiffs, once they owned 10,000 doors, could sell their property portfolio to a large entity controlled by John Hantz. According to Defendant Fairchild, Mr. Hantz’s organization had set aside $750,000,000 of a $1,000,000,000 investment round to purchase these properties at favorable values at least double what Plaintiffs were paying.” (Id. ¶ 41; emphasis added.) • “In or around September/October of 2016, over the telephone, Defendant Fairchild represented that he was assisting Defendant Odenath in assembling the Forthcoming Real Estate Transaction and that Defendant Odenath had funding and purchasers available, but Defendant Odenath had no such funding or purchasers and made no efforts to assemble the Forthcoming Real Estate Transaction.” (Id. ¶¶ 281, 294; emphasis added.) III. Plaintiffs’ Civil RICO Claims Against Mr. Odenath. Plaintiffs have asserted two claims against all Defendants for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), premised upon alleged mail fraud (see id. ¶¶ 222-231) and wire fraud (see id. ¶¶ 232-241). Other than the predicate acts of “mail fraud” versus “wire fraud,” the alleged bases for the claims are identical. (See generally, id. ¶¶ 222- 241.) To support their claims under RICO, Plaintiffs generally allege that all of the Individual Defendants (including Mr. Odenath) “used the Entity Defendants to further their enterprise 6 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 9 of 31 (‘Conte-Hansen Enterprise’), which constituted a pattern of racketeering activity aimed at inducing Plaintiff Brinton into engaging in the Transactions at issue by making the following false representations, and by each taking actions to convince Plaintiff Brinton to believe and trust in . . . false representations.” (Id. ¶ 224.) Among the false representations that could possibly relate to Mr. Odenath (at least according to Plaintiffs), Plaintiffs allege the following: • “Plaintiff Brinton’s participation in the transactions at issue would result in an opportunity to participate in the Forthcoming Real Estate Transaction;” and • “Defendant Odenath, with the assistance of Defendant Fairchild, was actively working to assemble the Forthcoming Real Estate Transaction.” (Id.) Plaintiffs also allege that, “[i]n furtherance of their scheme to defraud, and with the purpose of executing their scheme to defraud, Defendants Conte, Ted Hansen, Branden Hansen, Munoz, Turner, Halliday, Odenath, and Fairchild used mail [and electronic mail and telephone] to correspond with Plaintiff Brinton and each other, solicit information from Plaintiff Brinton and each other, run the day-to-day operations of the Conte Hansen Enterprise, induce Plaintiff Brinton to enter into the defrauding transactions at issue, and share and execute the agreements that led to Plaintiff Brinton being defrauded.” (Id. ¶¶ 226, 236.) Plaintiffs then claim that all Individual Defendants, including Mr. Odenath, have violated all four subsections of 18 U.S.C. § 1962 because, allegedly, they: • “have received income derived from the pattern of racketeering activity of multiple predicate acts of mail fraud [and wire fraud] and were principals in this pattern of racketeering activity within the meaning of 18 U.S.C. § 2 because they either committed the offense in question or aided, abetted, counseled, commanded, induced, or procured its commission. They also used such income to acquire, establish, or operate the Conte-Hansen enterprise, and each of their own 7 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 10 of 31 respective legal entity enterprises, all of which are involved in interstate commerce (18 U.S.C. § 1962(a));” • “have used the pattern of racketeering activity of multiple predicate acts of mail fraud [and wire fraud] to acquire or maintain control of many enterprises previously held by Plaintiff Brinton (18 U.S.C. § 1962(b));” • “have, in their association with the Conte-Hansen enterprise and their own legal- entity enterprises, conducted such enterprises’ affairs through the above described pattern of racketeering activity involving multiple predicate acts of mail fraud [and wire fraud] (18 U.S.C. § 1962(c));” and • “have conspired to violate subsections (a), (b), and (c) of 18 U.S.C. § 1962 (18 U.S.C. § 1962(d)).” (Id. ¶ 229; see id. ¶ 239.) IV. Plaintiffs’ Jurisdictional Allegations Against Mr. Odenath. Plaintiffs assert that the Court has personal jurisdiction over Mr. Odenath, and other Defendants that are not citizens of Utah, under 18 U.S.C. § 1965(b) because: the ends of justice require that all Defendants be brought before this Court to answer for their fraud, and because each of these above-listed defendants has conspired and joined an enterprise with Utah-based defendants to intentionally commit fraud in the State of Utah against Plaintiffs that these defendants knew to be in Utah, and therefore each of these defendants has minimum contacts with the forum state of Utah. As to Defendants Conte, Munoz, Odenath, Grande, Manriquez, and Garcia, these defendants worked and conspired with Utah-based Defendants including Ted Hansen, Branden Hansen, Munoz, and/or Turner to defraud Plaintiff Brinton in Utah. (Id. ¶ 58.) Although not specifically labeled as a fact supporting personal jurisdiction, the Amended Complaint only identifies one other contact between Mr. Odenath and Utah-his receipt of the September telephone call described above. 8 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 11 of 31 ARGUMENT PLAINTIFFS’ AMENDED COMPLAINT AGAINST MR. ODENATH SHOULD BE DISMISSED. I. Plaintiffs’ Generalized and Conclusory Assertions Fail to State a Claim for Relief. To survive a motion to dismiss under Rule 12(b)(6), a complaint “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 677 (2009). The facts alleged must “give the defendant fair notice of what the claim is and the grounds upon which it rests[,] . . . raise a right to relief above the speculative level[,] . . . [and] raise a reasonable expectation that discovery will reveal evidence” to support the claim. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 677. While a court must accept a plaintiff’s factual allegations as true when considering a motion to dismiss brought under Rule 12(b)(6), that tenet does not apply to legal conclusions. See Bixler v. Foster, 596 F.3d 751, 756 (10th Cir. 2010). Indeed, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to state a valid claim for relief. See Iqbal, 556 U.S. at 677. Such conclusory assertions can, and should, be disregarded by this Court when evaluating the sufficiency of Plaintiffs’ Amended Complaint here. See Kansas Penn Gaming, LLC v. Collins, 656 F.3d 1210, 1214 (10th Cir. 2011) (“[I]n ruling on a motion to dismiss, a court should disregard all conclusory statements of law and consider whether the remaining specific factual allegations, if assumed to be true, plausibly suggest the defendant is liable.”); Oppenheim v. Sterling, 368 F.2d 516, 519 (10th Cir. 1966) (“While, for the purpose of a motion to dismiss, facts well pleaded must be taken as true, unsupported conclusions of the pleader may be disregarded, especially when limited or negated by the substance of facts pleaded.”). 9 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 12 of 31 The Tenth Circuit’s decision in Kansas Penn Gaming is particularly informative here with respect to the types of conclusory allegations the Court may disregard entirely. In that case, the Tenth Circuit considered the sufficiency under Rule 12(b)(6) of conclusory allegations quite similar to those that appear repeatedly throughout Plaintiffs’ Amended Complaint. In Kansas Penn Gaming, the plaintiff brought claims against several government officials, alleging that such officials had violated the plaintiff’s equal protection rights by selectively enforcing state and local nuisance regulations. Id. at 1212-1214. Relying heavily on Twombly and Iqbal, the Tenth Circuit affirmed the district court’s dismissal of the plaintiff’s complaint on the grounds that the plaintiff had not adequately alleged sufficient facts to state a claim for relief. Three particular allegations were at issue in the case: First, in an attempt to demonstrate that it did not violate the regulations, the plaintiff asserted that the condition of its property did not “amount to a public nuisance or otherwise violate applicable environmental laws or regulations.” Id. at 1220 (quoting the complaint). The Tenth Circuit held that this was “merely a conclusion of law” that was insufficient under Twombly and Iqbal and “not entitled to a presumption of truth.” Id. Because the complaint did not offer any factual content to support this conclusory allegation, the court held that the complaint inadequately alleged that the plaintiff had complied with nuisance regulations. Second, turning to the plaintiff’s contention that it had been singled out for selective enforcement, the court considered the plaintiff’s assertion that “numerous parcels of land in Cherokee County exist in conditions comparable to the Subject Property or exhibit conditions similar to and in many cases much worse than those alleged by the [CCHD] to exist on the Subject Property.” Id. at 1220 (quoting the complaint). As with the allegation discussed in the previous paragraph, the Tenth Circuit held that this “broad allegation is merely a ‘formulaic recitation’ of a legal conclusion, and is inadequate to show that other properties . . . have somehow gotten a pass from CCHD officials.” Id. (emphasis added). Thus, the court 10 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 13 of 31 disregarded this conclusory allegation as well and affirmed the district court’s dismissal on Rule 12(b)(6) grounds. Finally, the court considered the plaintiff’s claim that individual county commissioners should be held liable for the violation. The only allegation offered to support a claim against the individual commissioners was that “the individual commissioners and Hayes acted in concert in sending the CCHD notice.” Id. at 1221. The court stated that “this allegation is precisely the sort of ‘naked assertion[ ] devoid of factual enhancement’ that Iqbal instructs us to disregard.” Id. (emphasis added). The allegation “offers nothing to support the notion that the commissioners were involved.” Id. Accordingly, the court held that the complaint failed to state a claim against the individual commissioners. As will be demonstrated herein, Plaintiffs’ Amended Complaint is filled with generalized and conclusory assertions regarding Mr. Odenath similar to those that were emphatically rejected by the Tenth Circuit in Kansas Penn Gaming. They do not provide Mr. Odenath with sufficient notice to be able to defend himself against the serious claims that have been asserted against him. Nor do they show that Plaintiffs have a plausible chance of succeeding on the merits of their claims. It is evident from the conclusory nature of Plaintiffs’ assertions that their claims do not rise above the speculative level. Thus, they should not be permitted to use the powerful tools of federal discovery to engage in a fishing expedition for the purpose of drumming up evidence for claims that they do not currently have sufficient knowledge to support.2 2 Another serious problem with the nature of Plaintiffs’ allegations is their habit of alleging facts against all 30+ Defendants generally. This Court recently addressed a similar problem in Warnick v. Cooley, No. 2:14-cv-00486-JNP-PMW, 2017 WL 1184017 at *7 (D. Utah Mar. 229, 2017) (unpublished). In Warnick, the Court held that the plaintiff failed to state a claim for relief where he stated “in conclusory fashion that all of the County Defendants violated his constitutional rights,” but failed to “differentiate[] between any of the County Defendants.” Id. Instead, the complaint “simply allege[d] without elaboration that each and every defendant was somehow involved in each and every alleged deprivation.” Id. (emphasis added). The complaint was therefore deficient because it failed to “make clear exactly who is alleged to have done what to whom.” Id. (citation omitted). As a result, the individual 11 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 14 of 31 II. Plaintiffs Fail to State a Viable Civil RICO Claim Against Mr. Odenath Under Any Subsection of 18 U.S.C.A § 1962. In their first and second claims for relief, Plaintiffs allege that Mr. Odenath should be held civilly liable under RICO for engaging in a pattern of racketeering activity, or conspiring to do so, through acts that constitute wire and mail fraud. (See Am. Compl. ¶¶ 222-241, Dkt. 15.) Despite its 330 paragraphs, Plaintiffs’ Amended Complaint still falls far short of pleading facts sufficient to state a plausible civil RICO claim against Mr. Odenath under 18 U.S.C.A. § 1962. Section 1962 sets forth four substantially different types of “prohibited activities” that constitute RICO violations. Nevertheless, Plaintiffs incredibly contend that each of the Defendants, including Mr. Odenath, engaged in all four of these prohibited activities. Yet to sufficiently plead a RICO claim for any one of these “prohibited activities,” a plaintiff “must plead and ultimately prove: (1) that the defendant violated [18 U.S.C.A.] § 1962, (2) that the plaintiff’s business or property was injured, and (3) that the defendant’s violation is the cause of that injury.” Safe Streets Alliance v. Hickenlooper, 859 F.3d 85, 881 (10th Cir. 2017) (citing 18 U.S.C.A. § 1964(c)) (other citation omitted). And given the threat of treble damages and the significant risk of injury to reputation that goes along with being a defendant in a civil RICO action, “[P]laintiffs must sufficiently allege each element of a RICO violation and its predicate acts of racketeering with particularity.” Farlow v. Peat, Marwick, Mitchell & Co., 956 F.2d 982, 989 (10th Cir. 1992) (emphasis added) (citing Fed. R. Civ. P. 9(b)).3 With respect to their defendants were not provided with “fair notice as to the basis of the claims against him or her.” Id. (citation omitted). As discussed in more detail below, Plaintiffs’ Amended Complaint is replete with similar kinds of assertions against Defendants generally. Such allegations do not give Mr. Odenath sufficient notice of what he is alleged to have done. 3 See also Arena Land & Inv. Co. v. Petty, 906 F. Supp. 1470, 1475-76 (D. Utah 1994) (“The requirement of rule 9(b), that allegations of fraud be pled with particularity, also applies to each element of a RICO violation, as well as the predicate fraud allegations of RICO claims.”); Aldridge v. Aleritas Capital Corp., No. 09-2178-CM-KGS, 2009 WL 2475252, at *5 (D. Kan. Aug. 12, 2009) (“Under Rule 9(b), plaintiffs must allege with particularity not only each element of a RICO violation, but also the predicate acts of racketeering.”); Brannon v. Boatmen's 12 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 15 of 31 RICO claims, then, Plaintiffs must “set forth the who, what, when, where and how” of the circumstances giving rise to Mr. Odenath’s alleged RICO violations in order to state a valid claim for relief under Fed. R. Civ. P. 12(b)(6). See United States ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 726-27 (10th Cir. 2006) (emphasis added).4 Plaintiffs’ Amended Complaint plainly fails to meet this standard with respect to Mr. Odenath. It does not specifically describe any conduct by Mr. Odenath that would qualify as a violation of any part of section 1962. Accordingly, the Amended Complaint fails to state a valid civil RICO claim against Mr. Odenath and, therefore, Plaintiffs’ first and second claims for relief should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6). A. Plaintiffs Have Not Alleged that Mr. Odenath Engaged in a Pattern of Racketeering Activity. Subsections (a), (b), and (c) of section 1962 each require Plaintiffs to plead, and ultimately prove, that Mr. Odenath engaged in a “pattern of racketeering activity.” And 18 U.S.C.A. § 1961(5) provides that a “pattern of racketeering activity,” for purposes of RICO, requires “at least two acts of racketeering activity” within a ten-year period. Section 1961(1) enumerates, among other things, various federal criminal offenses that qualify as “racketeering activity” for purposes of RICO. Plaintiffs’ Amended Complaint alleges that Defendants, including Mr. Odenath, engaged in racketeering activity by committing mail fraud, in violation of 18 U.S.C.A. § 1341, and wire fraud, in violation of 18 U.S.C.A. § 1343. (See Am. Compl. ¶¶ 229, 239, Dkt. 15.) Bancshares, Inc., 952 F. Supp. 1478, 1481-82 (W.D. Okla. 1997) (“Within the RICO context, the Tenth Circuit has also ruled that Fed. R. Civ. P. 9(b) requiring fraud to be averred with particularity also applies to ‘each element of a RICO violation and its predicate acts of racketeering.’”). 4 In Robbins v. Wilkie, 300 F.3d 1208, 2122 (10th Cir. 2002), the Tenth Circuit held that RICO plaintiffs were not required to plead damages with particularity; instead, Rule 8’s more general pleading requirements apply to damages. In doing so, Robbins explicitly distinguished Farlow. This distinction does not impact the analysis of this motion as Mr. Odenath is not challenging the particularity with which Plaintiffs have pled their damages. 13 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 16 of 31 Plaintiffs’ Amended Complaint, however, identifies only one act engaged in by Mr. Odenath-his participation in a phone call initiated by Defendant Ted Hansen in September 2016 regarding what Plaintiffs refer to as a “Forthcoming Real Estate Transaction.” (Id. at ¶ 70.) According to the Amended Complaint, during this single phone call, Mr. Odenath “made the false representation that he was working with Defendant Ted Hansen on putting together the Forthcoming Real Estate Transaction and that he had extensive experience putting together real estate transactions of this type.” (Id.) On the same call, Mr. Odenath allegedly said that he had “specially apportioned $750,000,000 of a $1,000,000,000 fund to purchase properties from Plaintiffs.” (Id.) Plaintiffs’ Amended Complaint does not allege any other specific conduct by Mr. Odenath. Even assuming Plaintiffs’ allegations about Mr. Odenath’s participation in the September 2016 phone call are true,5 Plaintiffs’ Amended Complaint fails to allege that Mr. Odenath engaged in a pattern of racketeering activity. By definition, a “pattern of racketeering activity” requires at least two predicate acts.6 Participation in a single phone call is not enough. Accordingly, Mr. Odenath cannot have violated subsections (a), (b), or (c) of section 1962 as a matter of law. 5 Of course, Plaintiffs’ description of this phone call is patently false. Should Plaintiffs’ claims survive this motion to dismiss, Mr. Odenath intends to vigorously defend against Plaintiffs’ fabrications. 6 Even if Plaintiffs had alleged that Mr. Odenath engaged in two or more acts of racketeering activity, that alone would not be sufficient to establish a pattern of racketeering activity. See H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 238 (1989) (“Section 1961(5) concerns only the minimum number of predicates necessary to establish a pattern; and it assumes that there is something to a RICO pattern beyond simply the number of predicate acts involved.”) (emphasis in original). To establish a pattern of racketeering, Plaintiffs would have to plead facts sufficient to show “that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity.’ Id. at 239. Plaintiffs have alleged no such facts. 14 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 17 of 31 B. Plaintiffs Have Not Alleged the Existence of a RICO Enterprise. Subsections (a), (b), and (c) also require Plaintiffs to plead, and ultimately prove, the existence of a RICO “enterprise.” For purposes of RICO, an enterprise is defined to be “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C.A. § 1961(4) (emphasis added). The Supreme Court has held that, for purposes of RICO, an association-in-fact enterprise must have “at least three structural features: a purpose, relationships among those associated with the enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose.” Boyle v. United States, 556 U.S. 938, 946 (2009). An association-in-fact enterprise is “a group of persons associated together for a common purpose of engaging in a course of conduct.” Id. (citation omitted). Here, Plaintiffs assert, in a conclusory manner and without any supporting factual allegations, that an association-in-fact enterprise existed among all the Individual and Entity Defendants that Plaintiffs refer to as the “Conte-Hansen Enterprise.” (See Am. Compl. ¶¶ 227, 237, Dkt. 15.) Yet Plaintiffs’ bare assertion that the Conte-Hansen Enterprise existed is nowhere near sufficient to allege a plausible RICO enterprise with the required level of particularity. Plaintiffs’ Amended Complaint does not identify any particular common purpose to be carried out by the alleged enterprise beyond the vague allegation that the enterprise was established to “defraud Plaintiffs.” Nor does it allege facts sufficient to demonstrate how the various members of the alleged enterprise were associated with each other. In particular, the Amended Complaint is devoid of any facts that would explain Mr. Odenath’s role in the enterprise or his relationship to the other Defendants. Instead, it merely asserts, without explanation, that Mr. Odenath is a member of the enterprise. The Amended Complaint also fails to allege any facts to demonstrate the alleged enterprise’s longevity. Without any of these facts, Plaintiffs’ RICO causes of action 15 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 18 of 31 against Mr. Odenath based upon purported violations of subsections (a), (b), or (c) of section 1962 should be dismissed. C. Plaintiffs Have Not Alleged that Mr. Odenath Received Any Racketeering Income. To state a claim against Mr. Odenath based on a violation of section 1962(a),7 Plaintiffs must allege facts sufficient to show that Mr. Odenath “received . . . income derived, directly or indirectly, from a pattern of racketeering activity.” The Amended Complaint does not allege any facts suggesting that Mr. Odenath received any income at all, let alone any income derived from a pattern of racketeering activity.8 Accordingly, the Amended Complaint fails to state a plausible RICO claim against Mr. Odenath based on a violation of section 1962(a). 7 Plaintiffs also fail to demonstrate that they even have standing to bring a claim against Mr. Odenath for violating section 1962(a). To show standing, Plaintiffs must “plead facts tending to show that [they] were injured by the use or investment of racketeering income.” Grider v. Texas Oil & Gas Corp., 868 F.2d 1147, 1149 (10th Cir. 1989) (emphasis added). Importantly, it is not enough to merely allege an injury from the racketeering acts themselves because section 1962(a) does not prohibit those acts. Id. Plaintiffs do not allege any facts to show that they experienced an “investment injury.” Accordingly, their section 1962(a) claims against Mr. Odenath should also be dismissed for lack of standing. See also Wood v. World Wide Ass’n of Specialty Programs & Sch., Inc., No. 2:06-CV-708 CW, 2011 WL 3328931 at *3 (D. Utah Aug. 2, 2011) (unpublished); NL Indus., Inc. v. Gulf & W. Indus., Inc., 650 F. Supp. 1115, 1127-28 (D. Kan. 1986). 8 Although the Amended Complaint alleges that the “Individual Defendants” have all “received income derived from the pattern of racketeering activity of multiple predicate acts of mail fraud . . . .” (see Am. Compl. ¶¶ 229, 239, Dkt. 15), this general and conclusory allegation provides no specific facts about Mr. Odenath and therefore does not meet the particularity requirements of Rule 9(b). It’s merely a recitation of one of the elements of section 1962(a). As such, it does not even satisfy the lower Rule 8 general pleading standard and can thus be disregarded by the Court for purposes of this motion. See Kansas Penn Gaming, 656 F.3d at 1214; Oppenheim, 368 F.2d at 519. 16 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 19 of 31 D. Plaintiffs Have Not Alleged that Mr. Odenath Acquired an Interest in an Enterprise. To state a claim against Mr. Odenath based on a violation of section 1962(b),9 Plaintiffs must allege facts to show that Mr. Odenath “acquire[d] or maintain[ed], directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce” through a “pattern of racketeering activity.” The Amended Complaint alleges no facts showing that Mr. Odenath acquired or maintained any interest or control in a RICO enterprise.10 Indeed, it fails to even identify an enterprise with property interests that Mr. Odenath could have acquired.11 Accordingly, 9 As was the case with Plaintiffs’ section 1962(a) claim, Plaintiffs have likewise failed to demonstrate that they have standing to pursue a section 1962(b) claim against Mr. Odenath. To establish standing to bring a section 1962(b) claim, Plaintiffs must plead facts sufficient to show “injury from the defendant’s acquisition or control of an interest in a RICO enterprise, in addition to injury from the predicate acts.” Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1189-90 (3d Cir. 1993). See also Advocacy Org. for Patients & Providers v. Auto Club Ins. Ass'n, 176 F.3d 315, 329-30 (6th Cir. 1999); Compagnie De Reassurance D'Ile de France v. New England Reinsurance Corp., 57 F.3d 56, 92 (1st Cir. 1995), as amended on denial of reh'g (July 12, 1995); Danielsen v. Burnside-Ott Aviation Training Ctr., Inc., 941 F.2d 1220, 1230-31 (D.C. Cir. 1991); United States Fire Ins. Co. v. United Limousine Serv., Inc., 303 F. Supp. 2d 432, 450-51 (S.D.N.Y. 2004); Wood, 2011 WL 3328931 at *4. Plaintiffs have not alleged any facts to show an “acquisition injury.” Accordingly, their section 1962(b) claims against Mr. Odenath should also be dismissed for lack of standing. 10 Again, although Plaintiff alleges that the “Individual Defendants” used a pattern of racketeering activity to “acquire or maintain control of many enterprises” (see Am. Compl. ¶¶ 229, 239, Dkt. 15), these conclusory allegations that merely recite an element of a section 1962(b) claim, and do not include any information about Mr. Odenath spefically, are plainly insufficient to meet the particularity requirements of Rule 9(b), or even the general Rule 8 pleading standard. See Kansas Penn Gaming, 656 F.3d at 1214; Oppenheim, 368 F.2d at 519. 11 In Nat'l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 259 (1994), the Supreme Court explained that the “enterprise” at issue in sections 1962(a) and (b) “is the victim of unlawful activity and may very well be a ‘profit-seeking’ entity that represents a property interest and may be acquired.” (emphasis added). See also Neiman Marcus Grp., Inc. v. Dispatch Transp. Corp., No. 09 CV 6861 NRB, 2011 WL 1142922 at *8 (S.D.N.Y. Mar. 17, 2011) (unpublished); Dent Mfg., Inc. v. Zafir, No. CIV. A. 94-2532, 1995 WL 605501 at *7 (E.D. Pa. Oct. 12, 1995) (unpublished). As another court put it, “section 1962(b) was aimed primarily at the situation in which criminal methods were employed to take control of legitimate businesses. To cite Mario Puzo, The Godfather depicts a violation of § 1962(b) when Michael Corleone obtained an interest in a Las Vegas gambling casino by means of murder and extortion, both predicate 17 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 20 of 31 Plaintiffs fail to state a plausible RICO claim against Mr. Odenath based on a violation of section 1962(b). E. Plaintiffs Have Not Alleged that Mr. Odenath Was Associated with an Enterprise or Conducted the Affairs of an Enterprise. To state a claim against Mr. Odenath for violating section 1962(c), Plaintiffs must allege with particularity that Mr. Odenath “(1) conducted the affairs (2) of an enterprise (3) through a pattern (4) of racketeering activity.” Safe Streets Alliance, 859 F.3d at 882 (citations omitted). As explained above, Plaintiffs have alleged absolutely no facts to demonstrate that Mr. Odenath somehow engaged in a pattern of racketeering activity. Nor have they alleged the existence of a RICO enterprise. These failures alone are sufficient to warrant dismissal of Plaintiffs’ section 1962(c) claims against Mr. Odenath. In addition, however, Plaintiffs have failed to allege particularized facts to demonstrate that Mr. Odenath “conducted the affairs” of an enterprise. To do so, Plaintiffs’ Amended Complaint must allege with particularity that Mr. Odenath “participated in the operation or management of the enterprise itself.” Id. at 883 (citation omitted). In other words, Plaintiffs must show that Mr. Odenath had “some part in directing the enterprise’s affairs.” Id. The only factual allegation that has even arguably been made with particularity against Mr. Odenath is that he participated in a telephone call initiated by Defendant Ted Hansen and allegedly made representations about a “Forthcoming Real Estate Transaction” that Plaintiffs claim were false. Plaintiffs’ conclusory assertion that Mr. Odenath was a member of the Conte- Hansen Enterprise is woefully insufficient, under both Rule 9(b)’s particularity requirement and the heightened federal pleading standard set forth in Twombly and Iqbal, to plausibly show that offenses under the RICO Act.” Flores v. Emerich & Fike, No. 1:05-CV-0291 AWI DLB, 2009 WL 900738 at *7 (E.D. Cal. Mar. 31, 2009) (unpublished) (internal alterations omitted). Here, the only RICO enterprise identified by Plaintiffs-the Conte-Hansen Enterprise-is alleged to be the perpetrator of racketeering activity, not a victim. Accordingly, Plaintiffs’ claims against Mr. Odenath for violations of sections 1962(a) and (b) fail for this reason as well. 18 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 21 of 31 Mr. Odenath participated in the operation or management of the alleged Conte-Hansen Enterprise. Indeed, such assertions can be completely disregarded by the Court when considering this motion. See Kansas Penn Gaming, 656 F.3d at 1214; Oppenheim, 368 F.2d at 519. Accordingly, Plaintiffs’ Amended Complaint fails to state a claim for relief under section 1962(c). F. Plaintiffs Have Not Sufficiently Alleged that Mr. Odenath Conspired to Commit a RICO Violation. Plaintiffs have also failed to allege that Mr. Odenath violated section 1962(d), which prohibits participation in a conspiracy to violate subsections (a), (b), or (c). As with all of the other elements of a civil RICO claim, Plaintiffs are required to plead their section 1962(d) claim with particularity. See Brooks v. Bank of Boulder, 891 F. Supp. 1469, 1479 (D. Colo. 1995) (citing Farlow, 956 F.2d at 990 n.11). Thus, to state a viable claim against Mr. Odenath for violating section 1962(d), plaintiffs must plead facts showing that (1) “a conspiracy or agreement . . . existed between two or more persons to [engage in conduct prohibited by subsections (a), (b), or (c)];” (2) “[Mr. Odenath] deliberately joined or became a member of the conspiracy or agreement with knowledge of its purpose;” and (3) “[Mr. Odenath] agreed that someone, not necessarily himself, would commit at least two [racketeering acts].” United States v. Harris, 695 F.3d 1125, 1131 (10th Cir. 2012). Moreover, “§ 1962(d) requires that a plaintiff must first allege an independent violation of subsections (a), (b), or (c), in order to plead a conspiracy claim under subsection (d).” Tal v. Hogan, 453 F.3d 1244, 1270 (10th Cir. 2006).12 12 In their opposition to a similar motion to dismiss filed by the Hansen Defendants, Plaintiffs suggest that Tal v. Hogan “may have been superseded.” (See Mem. Opp. Hansen Defs.’ Mot. to Dismiss ¶ 82, Dkt. 124.) Not so. Each of the cases cited by Plaintiffs for the proposition that a section 1962(d) claim for civil conspiracy can be established without proof of an independent violation of section (a), (b), or (c) are criminal cases that do not require a showing of standing. In Beck v. Prupis, 529 U.S. 494, 504-505 (2000), the Supreme Court held that to have standing to bring a civil conspiracy claim pursuant to section 1962(d), plaintiffs must show that they were injured by an overt act that is “an act of racketeering or otherwise wrongful under RICO.” In contrast, in a criminal case, proof of an underlying violation of section (a), (b), 19 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 22 of 31 Here again, Plaintiffs fail to sufficiently plead their purported RICO claim under section 1962(d). As an initial matter, and as discussed in more detail above, Plaintiffs’ section 1962(d) conspiracy claim against Mr. Odenath fails because no RICO enterprise has been pleaded with particularity. Given that subsections (a), (b), and (c) each require the existence of a RICO enterprise, and a section 1962(d) civil conspiracy claim requires a showing of an independent violation of subsections (a), (b), or (c), Plaintiffs’ failure to adequately allege a RICO enterprise dooms their section 1962(d) claim against Mr. Odenath. Dismissal of Plaintiffs’ section 1962(d) claim is also warranted because Plaintiffs have not alleged (1) the existence of a conspiracy or agreement with particularity, (2) a deliberate decision by Mr. Odenath to join or become a member of such a conspiracy with knowledge of its purpose, or (3) that Mr. Odenath agreed that someone (not necessarily himself) would commit at least two racketeering acts. First, the Amended Complaint’s conclusory assertions regarding Defendants’ alleged conspiracy does not meet even a Rule 8 pleading standard, let alone the heightened pleading standard of Rule 9(b). In several places throughout the Amended Complaint, Plaintiffs assert, without any detail, that “Defendants” (generally) conspired to defraud Plaintiff Brinton. (See, e.g., Am. Compl. ¶¶ 62, 223, 233, Dkt. 15.) There is no allegation of when, where, or how this conspiracy or agreement was formed. No allegation regarding the terms of this supposed conspiratorial agreement. And nothing that identifies the purported purpose of the conspiracy, other than the general assertion that it was designed to “defraud Plaintiff Brinton.” The complete lack of any factual support for Plaintiffs’ bare assertion that some conspiracy existed demonstrates that Plaintiffs have met neither the heightened pleading requirements of Rule 9(b), nor the plausibility standard set forth in Twombly and Iqbal. Indeed, those cases instruct that the or (c) is not required to obtain a conviction under section 1962(d). See Salinas v. United States, 522 U.S. 52, 65 (1997). Because Tal addressed a civil, rather than criminal, claim under section 1962(d), Beck rather than Salinas applies and Tal remains good law in the Tenth Circuit. 20 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 23 of 31 Court may ignore Plaintiffs’ conclusory conspiracy assertions when considering this motion. See Kansas Penn Gaming, 656 F.3d at 1214; Oppenheim, 368 F.2d at 519. Second, nowhere in the Amended Complaint is there any allegation that Mr. Odenath deliberately joined or became a member of the conspiracy or agreement with knowledge of its purpose.13 Even supposing that such a conspiracy existed, the only particular allegation against Mr. Odenath is that he received a phone call and made representations about a “Forthcoming Real Estate Transaction” that Plaintiffs claim were false. (See Am. Compl. at ¶ 70, Dkt. 15.) Plaintiffs have alleged nothing that would suggest that Mr. Odenath even knew the other Defendants identified in the Amended Complaint beyond Defendant Hansen, let alone deliberately agreed to conspire with them to defraud Mr. Brinton. Plaintiffs’ allegations are not sufficient, under either a Rule 9(b) or Rule 8 standard, to satisfy the second element of a section 1962(c) civil conspiracy claim. Finally, there is absolutely no allegation in the Amended Complaint that Mr. Odenath specifically agreed that he would, or that any of the other Defendants in this action should, engage in a single act of racketeering activity, let alone a pattern of such activity as required to establish a civil conspiracy claim under section 1962(d). Plaintiffs cannot simply assert, without any factual detail, that Mr. Odenath was a member of a RICO conspiracy and expect their claims to survive a motion to dismiss brought under Rule 12(b)(6). Mr. Odenath’s motion should be granted and Plaintiffs’ first and second claims for relief should be dismissed. 13 As discussed in the previous paragraph, Plaintiffs assert, in a general and conclusory manner, that Mr. Odenath was part of a conspiracy. This does not satisfy the requirement to allege facts sufficient to show that Mr. Odenath deliberately joined such a conspiracy with knowledge of its purpose. 21 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 24 of 31 G. Plaintiffs Have Not Alleged Any Use of the Mails by Mr. Odenath. In their first claim for relief, Defendants alleged that Mr. Odenath engaged in a pattern of racketeering by engaging in mail fraud. To demonstrate that a defendant engaged in mail fraud, a plaintiff must plead facts sufficient to show (1) “a scheme or artifice to defraud or obtain money or property by false pretenses, representations, or promises” and (2) “the use of the United States mails for the purpose of executing the scheme.” Brooks, 891 F. Supp. at 1477 (citation omitted). Each element must be pled with particularity. See Farlow, 956 F.2d at 989. In the complaint, Plaintiffs allege generally, and in a conclusory manner, that Defendants (including Mr. Odenath) “used mail to correspond with Plaintiff Brinton and each other . . . .” (See Am. Compl. ¶ 226. Dkt. 15.) This general allegation is not sufficient to establish mail fraud under either a Rule 9(b) or Rule 8 pleading standard. The complaint does not identify any particular instance when Mr. Odenath used the mail for any purpose, let alone to further a scheme to defraud Mr. Brinton. Thus, Plaintiffs first cause of action should be dismissed for failure to adequately allege a use of the United States mails by Mr. Odenath. III. The Court Should Also Dismiss Plaintiffs’ Remaining Claims for Lack of Jurisdiction. Having dismissed Plaintiffs’ RICO claims against Mr. Odenath, the Court should also exercise its discretion and dismiss Plaintiffs’ state law claims for lack of subject-matter and personal jurisdiction. A. The Court Should Decline to Exercise Supplemental Subject-Matter Jurisdiction Over Plaintiffs’ State Law Claims. Plaintiffs allege that the Court has supplemental subject-matter jurisdiction over their state law claims pursuant to 28 U.S.C.A. § 1367. (See Am. Compl. ¶ 60, Dkt. 15.) Section 1367(a) provides that in civil actions where a federal district court has original jurisdiction, the court shall also have “supplemental jurisdiction” over other claims that are “so related to claims 22 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 25 of 31 in the action within such original jurisdiction that they form a part of the same case or controversy under Article 3 of the United States Constitution.” Even assuming arguendo that Plaintiffs’ state law claims are part of the same case or controversy that Plaintiffs’ RICO claims arise out of, the Court can (and should) decline to exercise supplemental subject-matter jurisdiction over Plaintiffs’ state law claims if one of the conditions set forth in Section 1367(c) is met. Importantly for this motion, Section 1367(c) permits the Court to decline to exercise such jurisdiction where it has “dismissed all claims over which it has original jurisdiction.” Assuming the Court dismisses Plaintiffs’ RICO claims against Mr. Odenath, the Court should exercise its discretion to also dismiss Plaintiffs’ state law claims against him. The Tenth Circuit has instructed that “a district court should normally dismiss supplemental state law claims after all federal claims have been dismissed, particularly when the federal claims are dismissed before trial.” United States v. Botefuhr, 309 F.3d 1263, 1273 (10th Cir. 2002). See also Smith v. City of Enid, 149 F.3d 1151, 1156 (10th Cir. 1998) (“When all federal claims have been dismissed, the court may, and usually should decline to exercise jurisdictions over any remaining state claims.”). This action is in its infancy. Discovery has not even begun. And, perhaps most significantly, only one of the thirty-two Defendants named in Plaintiffs’ Amended Complaint has filed an Answer. (See Def. Parker Enloe’s Ans. to Am. Compl., Dkt. 80.) The Court has not made a substantial investment of time or effort in considering Plaintiffs’ state law claims, and it would not be unjust to require Plaintiffs to pursue those claims in Utah state court where they belong. Accordingly, Mr. Odenath respectfully requests that should the Court dismiss Plaintiffs’ 23 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 26 of 31 federal RICO claims against him, it should also exercise its discretion to decline to exercise subject-matter jurisdiction over Plaintiffs’ state law claims.14 B. Absent the Nationwide Service of Process Permitted for RICO Claims, This Court Lacks Personal Jurisdiction Over Mr. Odenath. Plaintiffs claim that the Court can exercise personal jurisdiction over Mr. Odenath pursuant to 18 U.S.C.A. § 1965(b), which allows parties asserting claims under the federal RICO statute to serve process on parties that reside in “any judicial district of the United States.” (See Am. Compl. ¶ 58, Dkt. 15.) This nationwide service of process provision significantly expands the personal jurisdiction of federal courts over defendants that are alleged to have committed a RICO violation. See Cory v. Aztec Steel Bldg., Inc., 468 F.3d 1226, 1229-33 (10th Cir. 2006). As this Court recently recognized in Kindig It Design, Inc. v. Creative Controls, Inc., however, while the Court may have personal jurisdiction to hear one claim, it does not necessarily follow that the Court has personal jurisdiction over the same defendant with respect to all claims asserted in a case. 157 F. Supp. 3d 1167, 1171 (D. Utah 2016) (“[T]he court must consider each of Kindig’s claims separately to determine whether they arise from any of Creative Controls’ contacts with Utah.”) (emphasis in original). Here, there is no independent basis for the Court to exercise personal jurisdiction over Mr. Odenath with respect to Plaintiffs’ supplemental state law claims. Upon dismissing the RICO Claims against Mr. Odenath, the Court should decline to retain pendent personal jurisdiction over Mr. Odenath with respect to Plaintiffs’ remaining state law claims. 14 In their opposition to the Hansen Defendants’ motion to dismiss, Plaintiffs apparently concede that the Court would lack subject-matter jurisdiction over their supplemental state law claims should the Court dismiss Plaintiffs’ federal RICO claims. (See Mem. Opp. Mot. to Hansen Defs.’ Mot. to Dismiss ¶ 85, Dkt. 124 (“[I]f the Court were to dismiss Plaintiffs’ federal RICO claims, the Court no longer would have federal question jurisdiction and could not decide a matter of Utah state law.”).) 24 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 27 of 31 1. There Is No Independent Basis for Exercising Personal Jurisdiction Over Mr. Odenath with Respect to Plaintiffs’ Supplemental State Law Claims. Plaintiffs bear the burden of establishing personal jurisdiction over Mr. Odenath with respect to each of the claims asserted against him. See Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011). Where, as here, a defendant challenges personal jurisdiction at the early stages of the litigation, it is incumbent on Plaintiffs to make a prima facie showing, based on its pleadings and affidavits, that the Court may exercise personal jurisdiction over a particular defendant with respect to a particular claim. Id. See also Kindig, 157 F. Supp. 3d at 1172. Plaintiffs allege that the Court has personal jurisdiction over Mr. Odenath under 18 U.S.C. § 1965(b) because the ends of justice require that all Defendants be brought before this Court to answer for their fraud, and because each of these above-listed defendants has conspired and joined an enterprise with Utah-based defendants to intentionally commit fraud in the State of Utah against Plaintiffs that these defendants knew to be in Utah, and therefore each of these defendants has minimum contacts with the forum state of Utah. As to Defendants Conte, Munoz, Odenath, Grande, Manriquez, and Garcia, these defendants worked and conspired with Utah-based Defendants including Ted Hansen, Branden Hansen, Munoz, and/or Turner to defraud Plaintiff Brinton in Utah. (Am. Compl. ¶ 68, Dkt. 15.) It is evident from these allegations that Plaintiffs do not contend Mr. Odenath is subject to general personal jurisdiction in Utah.15 And, as explained above, while 18 U.S.C.A. § 1965(b) may give the Court personal jurisdiction over a particular defendant with respect to RICO claims, the statute does not automatically grant the Court personal jurisdiction over the same defendant for other claims brought in the same suit. Thus, determining whether the Court has an independent basis for exercising personal jurisdiction over Mr. Odenath with respect to Plaintiffs’ state law claims turns on whether Plaintiffs have alleged 15 This makes sense. A defendant is subject to general personal jurisdiction when its “affiliations with the forum State are so continuous and systematic as to render them essentially at home in the forum State.” Kindig, 157 F. Supp. 3d at 1171 (citation in internal alterations omitted). As Plaintiffs plainly recognize, Mr. Odenath is not a resident of Utah and does not do extensive business in Utah. 25 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 28 of 31 facts sufficient to demonstrate that Mr. Odenath would be subject to specific personal jurisdiction in Utah with respect to those claims. “Specific personal jurisdiction exists only when the plaintiff’s claims arise out of the defendant’s contacts with the forum.” Kindig, 157 F. Supp. 3d at 1172. “[W]here, as in Utah, the state long arm statute supports personal jurisdiction to the full extent constitutionally permitted, due process principles govern the inquiry.” Id. at 1172 (citation and internal quotation marks omitted). In the Tenth Circuit, a Plaintiff can make a prima facie showing of personal jurisdiction by showing “that (1) the defendant has purposefully availed [him]self of the privilege of conducting activities or consummating a transaction in the forum state; and (2) the litigation results from alleged injuries that arise out of or relate to those activities.” Id. at 1178 (citation omitted). “The purposeful availment requirement ensures that a defendant will not be subject to the laws of a jurisdiction solely as a result of random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or third person.” Id. (citation and internal quotation marks omitted). It requires a showing that the defendant “purposefully targeted [his] activities toward a particular forum, such that [he] should reasonably anticipate being haled into court there.” Id. at 1176 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). Here, Plaintiffs make only one factual allegation about a single contact that Mr. Odenath had with Utah-his receipt of a phone call from Mr. Ted Hansen that allegedly originated in Utah. (See Am. Compl. ¶ 70, Dkt. 15.) This single phone call is not sufficient to show that Mr. Odenath is subject to specific personal jurisdiction in Utah. He did not initiate the call and, therefore, cannot be said to have directed his activities towards Utah. And he certainly cannot have reasonably expected to be haled into state or federal court in Utah by merely answering a 26 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 29 of 31 call from Mr. Hansen-a call that could have been placed from anywhere.16 Accordingly, Plaintiffs have failed to allege facts sufficient to demonstrate that Mr. Odenath is subject to specific personal jurisdiction in Utah with respect to Plaintiffs’ state law claims. 2. The Court Should Not Exercise Pendent Personal Jurisdiction over Mr. Odenath. Given Plaintiffs’ failure to state a civil RICO claim against Mr. Odenath, and the lack of any independent basis to exercise personal jurisdiction over him with respect to Plaintiffs’ remaining state law claims, the Court should refuse to exercise pendent personal jurisdiction over Mr. Odenath with respect to Plaintiffs’ state law claims. Pendent personal jurisdiction, which is analogous to supplemental subject-matter jurisdiction, “exists when a court possesses personal jurisdiction over a defendant for one claim, lacks an independent basis for personal jurisdiction over the defendant for another claim that arises out of the same nucleus of operative fact, and then, because it possesses personal jurisdiction over the first claim, asserts personal jurisdiction over the second claim.” Botefuhr, 309 F.3d at 1272 (citing 4A Charles Alan Wright & Arthur A. Miller, Federal Practice & Procedure § 1069.7 (3d ed. 2002)) (other citation omitted). “In essence, once a district court has personal jurisdiction over a defendant for one claim, it may ‘piggyback’ onto that claim other claims over which it lacks independent personal jurisdiction, provided that all the claims arise from the same facts as the claim over which it has proper personal jurisdiction.” Id. (citation omitted). 16 There is no allegation in the Amended Complaint that Mr. Odenath knew that any of the parties on the alleged September 2016 call were Utah residents or even that the call originated from Utah. Even if the Court were to assume that Mr. Odenath knew that at least some of the other participants on the call resided in Utah, that would not be sufficient to justify exercising personal jurisdiction either. It is Mr. Odenath’s contacts with Utah, not Utah residents, that matter. See Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014) (“‘[M]inimum contacts’ analysis looks to the defendant’s contacts with the forum State itself, not the defendant’s contacts with persons who reside there.”). 27 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 30 of 31 As is the case with supplemental subject-matter jurisdiction, however, the Court can, and should, decline to exercise pendent personal jurisdiction once all claims that provide the Court with an independent basis for exercising personal jurisdiction over a party have been dismissed. The Tenth Circuit has held that a district court abuses its discretion to continue to exercise pendent personal jurisdiction over a defendant where an “anchor claim” providing independent personal jurisdiction has been dismissed and no “persuasive reason for retaining personal jurisdiction” with respect to the remaining claims exists. Id. at 1273-74. There is no independent basis for exercising general or specific personal jurisdiction over Mr. Odenath with respect to Plaintiffs’ supplemental state law claims. Thus, the only basis for retaining personal jurisdiction over him would be under a theory of pendent personal jurisdiction, with Plaintiffs’ RICO claims providing the “anchor” for exercising such jurisdiction. Once Plaintiffs’ RICO claims are dismissed, however, it would be an abuse of discretion for the Court to continue to retain pendent personal jurisdiction over Mr. Odenath with respect to Plaintiffs’ supplemental state law claims, especially given that the case is still in its preliminary stage. Accordingly, Mr. Odenath respectfully requests that the Court exercise its discretion and dismiss Plaintiffs’ state law claims for lack of personal jurisdiction. CONCLUSION For the reasons stated herein, Mr. Odenath respectfully requests that the Court grant this motion and dismiss all claims asserted by Plaintiffs against him in the Amended Complaint. DATED: October 6, 2017. ANDERSON & KARRENBERG /s/ Heather M. Sneddon Heather M. Sneddon Jason E. Greene Attorneys for Defendant David Odenath 28 Case 2:17-cv-00563-JNP-EJF Document 140 Filed 10/06/17 Page 31 of 31