Gabovitch v. Shear ( 1995 )


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    November 21, 1995 [NOT FOR PUBLICATION]

    UNITED STATES COURT OF APPEALS
    FOR THE FIRST CIRCUIT


    ____________________


    No. 95-1055

    WILLIAM GABOVITCH, ETC.,

    Plaintiff, Appellant,

    v.

    MAURICE SHEAR, ET AL.,

    Defendants, Appellees.


    ____________________

    APPEAL FROM THE UNITED STATES DISTRICT COURT

    FOR THE DISTRICT OF MASSACHUSETTS

    [Hon. William G. Young, U.S. District Judge] ___________________

    ____________________

    Before

    Torruella, Chief Judge, ___________
    Stahl and Lynch, Circuit Judges. ______________

    ____________________

    William Gabovitch on brief pro se. _________________
    Brian A. Davis, Julie B. Brennan, and Choate, Hall & Stewart on ______________ ________________ _______________________
    brief for appellees.


    ____________________


    ____________________


















































































    Per Curiam. Pro se plaintiff William Gabovitch, a ___________

    certified public accountant and non-practicing attorney,

    served for nearly eighteen years as a co-trustee of two

    irrevocable inter vivos trusts created by Maurice Shear. In

    1992, in connection with litigation filed in 1987 by Gertrude

    Shear (Maurice's wife and the contingent life beneficiary of

    the trusts), a state court judge removed plaintiff from his

    position as trustee and ordered him to pay substantial

    damages because of his mismanagement of the trusts.

    Plaintiff's appeal from that decision remains pending in

    state appellate court. Claiming that the allegations of

    mismanagement were frivolous and that his removal had been

    fraudulently obtained, plaintiff pursued various collateral

    actions in state court--all without avail. He then turned to

    federal court, filing the instant civil RICO action against

    the Shears (and others), seeking injunctive relief and

    damages on behalf of both himself and the trusts. See 18 ___

    U.S.C. 1964(c). The district court, following a hearing,

    dismissed the complaint for failure to state a claim. Having

    reviewed the record in full, and having construed the

    complaint in the light most favorable to plaintiff, see, ___

    e.g., Feinstein v. Resolution Trust Corp., 942 F.2d 34, 37 ____ _________ ______________________

    (1st Cir. 1991), we now affirm.1

    ____________________

    1. While we have accepted all well-pled allegations in the
    complaint as true and drawn all reasonable inferences in
    plaintiff's favor, there is an inconsistency in his

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    Extended discussion is unnecessary. To state a RICO

    claim, plaintiff was required to allege that defendants

    conducted an enterprise through a pattern of racketeering

    activity. See, e.g., Libertad v. Welch, 53 F.3d 428, 441 ___ ____ ________ _____

    (1st Cir. 1995). As well, he was required to allege that he

    suffered injury in his business or property "by reason of" a

    RICO violation. 18 U.S.C. 1964(c); see, e.g., Sedima, ___ ____ _______

    S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985) ("the ________ __________

    plaintiff has standing if, and can only recover to the extent

    that, he has been injured in his business or property by the

    conduct constituting the [RICO] violation"); see also Holmes ________ ______

    v. Securities Investor Protection Corp., 503 U.S. 258, 268 ______________________________________

    (1992) (RICO plaintiff must allege, not only "but for"

    causation, but also proximate causation requiring "some

    direct relation between the injury asserted and the injurious

    conduct alleged").

    This causation requirement enables us, at the outset, to

    put to the side vast portions of plaintiff's voluminous

    complaint. For example, plaintiff has detailed numerous

    instances of criminal and fraudulent activity allegedly

    undertaken by various of the defendants during the 1970's and

    ____________________

    narrative. The Shears' principal motivation for filing the
    1987 lawsuit, plaintiff contends, was to remove him as
    trustee and thereby gain control of the trusts' primary
    asset--the Mount Pleasant Hospital. Yet plaintiff elsewhere
    explains that the trusts had sold their interest in the
    hospital the previous year (and only reacquired ownership
    thereof in 1991).

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    1980's. Yet no contention is made that such conduct resulted

    in injury to plaintiff's business or property. In turn,

    plaintiff charges that defendants have engaged in various

    misdeeds following his ouster as trustee in January 1992.

    Again, such actions are not linked to any business or

    property loss suffered by plaintiff. We note that plaintiff

    lacks standing to complain of injury to the trusts

    themselves, having been removed as trustee by the time the

    instant suit was filed. And the suggestion that his status

    as a potential creditor of the trusts grants him standing to

    sue on his own behalf is misplaced. See, e.g., id. at 271; ___ ____ ___

    National Enterprises v. Mellon Financial Services, 847 F.2d ____________________ __________________________

    251, 254 (5th Cir. 1988).

    The only business or property injury alleged in the

    complaint is that stemming from the state court judgment--

    i.e., plaintiff's loss of his position as trustee; the

    accompanying monetary damages; the resulting harm to his

    reputation and client base; and the legal expenses incurred

    in litigating that action. The question thus becomes whether

    plaintiff has set forth a predicate act of racketeering that

    has proximately caused such injury. Plaintiff insists he has

    done so in two respects. He argues that the filing by

    defendants of the state court suit (as part of a broader,

    unlawful scheme) constituted attempted extortion in violation

    of the Hobbs Act, 18 U.S.C. 1951. And he argues that



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    Gertrude Shear, by proffering false affidavits and testimony

    to the state court (allegedly at the behest of her husband),

    committed mail fraud in violation of 18 U.S.C. 1341. We

    disagree that such claims establish the necessary predicate

    act.

    Numerous courts have held that the filing of litigation-

    -no matter how lacking in merit--does not constitute a

    predicate racketeering act of extortion. "If a suit is

    groundless or filed in bad faith, the law of torts may

    provide a remedy. Resort to a federal criminal statute is

    unnecessary." I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d _______________ ________________

    265, 267-68 (8th Cir. 1984); accord, e.g., First Pacific ______ ____ ______________

    Bancorp, Inc. v. BRO, 847 F.2d 542, 545 (9th Cir. 1988); von _____________ ___ ___

    Bulow by Auersperg v. von Bulow, 657 F. Supp. 1134, 1143-45 __________________ _________

    (S.D.N.Y. 1987) (holding that malicious prosecution claim

    does not constitute predicate act of racketeering).

    Plaintiff's reliance on Hall American Center Assocs. v. Dick, ____________________________ ____

    726 F. Supp. 1083 (E.D. Mich. 1989), proves unavailing. The

    defendants there had engaged in spurious litigation described

    by the district court as a "clear abuse of process." Id. at ___

    1086. The defendants here prevailed in the state court suit.

    And Lemelson v. Wang Laboratories, Inc., 874 F. Supp. 430 (D. ________ _______________________

    Mass. 1994), offers minimal succor to plaintiff, since the

    court there was addressing the subject of RICO injury rather

    than predicate acts.



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    Plaintiff's mail fraud claim likewise proves deficient.

    For one thing, it lacks the specificity required by Fed. R.

    Civ. P. 9(b). See, e.g., New England Data Services, Inc. v. ___ ____ _______________________________

    Becher, 829 F.2d 286, 290 (1st Cir. 1987).2 Moreover, to ______

    the extent his argument amounts to the allegation that

    Gertrude Shear committed perjury, his cause would not be

    advanced; perjury does not constitute an act of racketeering.

    See, e.g., Pyramid Securities, Ltd. v. IB Resolution, Inc., ___ ____ ________________________ ___________________

    924 F.2d 1114, 1118-19 (D.C. Cir.), cert. denied, 502 U.S. ____________

    822 (1991); United States v. Williams, 874 F.2d 968, 973 n.17 _____________ ________

    (5th Cir. 1989).

    To be sure, as plaintiff observes, several courts have

    indicated that a mail fraud claim premised largely on charges

    of perjury can suffice as a predicate act. See, e.g., United ___ ____ ______

    States v. Eisen, 974 F.2d 246, 254 (2d Cir. 1992) ("use of ______ _____

    the mail fraud offense as a RICO predicate act cannot be

    suspended simply because perjury is part of the means for

    perpetrating the fraud"), cert. denied, 113 S. Ct. 1840 _____________


    ____________________

    2. The suggestion that the information concerning
    defendants' use of the mails was in their exclusive control--
    such that plaintiff should be allowed to amend his complaint
    following further discovery, see, e.g., Becher, 829 F.2d at ___ ____ ______
    290--falls short. As a party to the state court suit,
    plaintiff obviously was (or should have been) aware of the
    circumstances surrounding the defendants' submission of
    allegedly fraudulent affidavits to the court. See, e.g., ___ ____
    Feinstein, 942 F.2d at 44 ("Although Becher may in certain _________ ______
    circumstances give a plaintiff a second bite at the apple,
    its generous formulation is not automatically bestowed on
    every litigant.").

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    (1993); see also Midwest Grinding Co. v. Spitz, 976 F.2d _________ _____________________ _____

    1016, 1022-23 (7th Cir. 1992) (leaving question open). Here,

    however, perjury is said to constitute the entire means for

    perpetrating the fraud. As well, the Midwest Grinding court ________________

    noted that in cases "allowing perjury to serve as a predicate

    act [by way of a mail fraud or obstruction of justice

    allegation], ... the defendant had either been convicted of

    perjury before the civil RICO action commenced or had perjury

    established as a matter of record in a separate proceeding."

    Id. at 1022 n.3 (citations omitted). Nothing of the sort has ___

    occurred here; quite to the contrary, the state court deemed

    Gertrude Shear's evidence credible.

    In essence, simply by alleging that defendants'

    litigation stance in the state court case was "fraudulent,"

    plaintiff is insisting upon a right to relitigate that entire

    case in federal court (while the case remains pending in the

    state appellate court). The RICO statute obviously was not

    meant to endorse any such occurrence. Cf. Willis v. Lipton, ___ ______ ______

    947 F.2d 998, 1001 (1st Cir. 1991) ("An extension of RICO

    standing in these circumstances would serve to 'federalize' a

    substantial volume of common law fraud litigation

    traditionally left to state courts.").3

    ____________________

    3. Plaintiff's two remaining arguments can be readily
    rejected. The district court was not required to convert
    defendants' motion to dismiss into one for summary judgment
    before taking judicial notice of court papers from the state
    court litigation. See, e.g., Edward v. John Hancock Mutual ___ ____ ______ ___________________

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    Affirmed. _________








































    ____________________

    Life Ins. Co., 973 F.2d 1027, 1030 n.1 (1st Cir. 1992); Mack _____________ ____
    v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 1282 __________________________________
    (9th Cir. 1986). Nor did it abuse its discretion in denying
    plaintiff's post-judgment request to amend his complaint
    (following further discovery), where any such amendment would
    have been futile. See, e.g., Arzuaga-Collazo v. Oriental ___ ____ _______________ ________
    Federal Sav. Bank, 913 F.2d 5, 7 (1st Cir. 1990); Nodine v. _________________ ______
    Textron, Inc., 819 F.2d 347, 349 (1st Cir. 1987). _____________

    -9-






Document Info

Docket Number: 95-1055

Filed Date: 11/21/1995

Precedential Status: Precedential

Modified Date: 3/3/2016

Authorities (18)

A. Greer Edwards, Jr. v. John Hancock Mutual Life Insurance ... , 973 F.2d 1027 ( 1992 )

united-states-v-douglas-williams-aka-doug-buford-salter-aka , 874 F.2d 968 ( 1989 )

National Enterprises, Inc. v. Mellon Financial Services ... , 847 F.2d 251 ( 1988 )

midwest-grinding-company-inc-an-illinois-corporation-cross-appellee-v , 976 F.2d 1016 ( 1992 )

Hall American Center Associates Ltd. Partnership v. Dick , 726 F. Supp. 1083 ( 1989 )

Dana Willis v. Kevin Lipton , 947 F.2d 998 ( 1991 )

Von Bulow Ex Rel. Auersperg v. Von Bulow , 657 F. Supp. 1134 ( 1987 )

William C. Feinstein v. Resolution Trust Corporation, Etc. , 942 F.2d 34 ( 1991 )

Henry G. Mack v. South Bay Beer Distributors, Inc., Dba Bay ... , 798 F.2d 1279 ( 1986 )

Lydia Libertad v. Father Patrick Welch , 53 F.3d 428 ( 1995 )

Lemelson v. Wang Laboratories, Inc. , 874 F. Supp. 430 ( 1994 )

William R. Nodine v. Textron, Inc. , 819 F.2d 347 ( 1987 )

Jose Lorenzo Arzuaga-Collazo v. Oriental Federal Savings ... , 913 F.2d 5 ( 1990 )

Pyramid Securities Limited v. Ib Resolution, Inc , 924 F.2d 1114 ( 1991 )

Sedima, S. P. R. L. v. Imrex Co. , 105 S. Ct. 3275 ( 1985 )

united-states-v-morris-j-eisen-joseph-p-napoli-harold-m-fishman , 974 F.2d 246 ( 1992 )

New England Data Services, Inc. v. Barry Becher , 829 F.2d 286 ( 1987 )

is-joseph-company-inc-a-minnesota-corporation-v-j-lauritzen-as-a , 751 F.2d 265 ( 1984 )

View All Authorities »