Nell C. Dysart v. Banktrust ( 2013 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-13653
Non-Argument Calendar
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D.C. Docket No. 2:11-cv-01917-LSC
NELL C. DYSART,
Plaintiff - Appellant,
versus
BANKTRUST,
f.k.a. The Peoples Bank and Trust of Selma
W. BIBB LAMAR, JR.,
EDWARD T. LIVINGSTON,
ELAM P. HOLLEY, JR.,
MAC MARTIN,
RYAN K. COCHRAN, et al.,
Defendants - Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
________________________
(April 16, 2013)
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Before MARCUS, MARTIN and KRAVITCH, Circuit Judges.
PER CURIAM:
Nell Dysart, proceeding pro se, appeals the district court’s dismissal of her
complaint against BankTrust and certain named individuals alleging violations of
the Racketeer Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C.
§ 1962, fraud, breach of contract, trespass, and intentional infliction of emotional
distress. Dysart’s allegations stem from BankTrust’s foreclosure on her home after
she defaulted on her mortgage.
I.
The operative facts are as follows 1: in August 2002, Dysart purchased a
home in Vestavia Hills, Alabama, with a mortgage from defendant BankTrust. In
April 2004, Dysart filed for Chapter 7 bankruptcy relief, but continued to pay her
mortgage outside the bankruptcy schedule. Later that year, after her Chapter 7
proceedings were discharged, Dysart filed for Chapter 13 bankruptcy relief.
Chapter 13 relief was conditioned on “Dysart . . . refinanc[ing] her home in order
to completely pay all [her] debts.” Her BankTrust mortgage was included among
the debts she would pay off. Dysart failed to refinance, however, and, eventually,
BankTrust was authorized to foreclose its mortgage against Dysart’s home. In
1
The Magistrate Judge’s Report and Recommendation, Doc. 63, provides a complete version of
the facts underlying this case.
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October 2007, BankTrust held a foreclosure sale on the residence, which it
advertised in the Alabama Messenger.
Proceeding pro se, Dysart sued BankTrust and various named individuals
employed by or affiliated with BankTrust (the Defendants) alleging: (1) a
substantive violation of the RICO Act, 18 U.S.C. § 1962(c); (2) conspiracy to
violate the RICO Act, id. § 1962(d); (3) “fraud on the court”; (4) “extrinsic fraud”;
(5) breach of contract; (6) trespass; and (7) intentional infliction of emotional
distress. The district court dismissed Dysart’s RICO allegations without prejudice
for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Then,
exercising its discretion under 28 U.S.C. § 1367(c)(3), the district court dismissed
Dysart’s remaining claims because they were “state law causes of action” over
which the court lacked original jurisdiction. Id.; see also United Mine Workers of
Am. v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139 (1966). This pro se appeal
followed.
II.
“We read liberally briefs filed pro se.” Lorisme v. I.N.S., 129 F.3d 1441,
1444 n.3 (11th Cir. 1997). Liberally construed, Dysart raises two issues on appeal:
(1) whether the district court erred when it dismissed her RICO claims 2; and (2)
2
Dysart’s brief suggests that she also intends to challenge the district court’s dismissal of her
state law claims on jurisdictional grounds. She failed to brief this issue, however, and therefore
it is abandoned. Timson v. Sampson, 518 F.3d 870, 874 (11th Cir. 2008).
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whether the district court erred in dismissing her complaint without first granting
her leave to amend. 3
A.
“We review de novo the district court’s grant of a motion to dismiss under
Rule 12(b)(6) for failure to state a claim, accepting the allegations in the complaint
as true and construing them in the light most favorable to the plaintiff.”
Am. Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1288 (11th Cir. 2010) (quotation
marks omitted). “In the case of a pro se action, moreover, [we] construe the
complaint more liberally than [we] would formal pleadings drafted by lawyers.”
Powell v. Lennon, 914 F.2d 1459, 1463 (11th Cir. 1990). “To survive a motion to
dismiss, 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,
678, 129 S. Ct. 1937, 1949 (2009) (quotation marks omitted).
Under 18 U.S.C. § 1962(c), it is illegal “for any person employed by or
associated with any enterprise engaged in, or the activities of which affect,
interstate or foreign commerce, to conduct or participate, directly or indirectly, in
the conduct of such enterprise’s affairs through a pattern of racketeering activity.”
18 U.S.C. § 1962(c). “Thus, in order to establish a federal civil RICO violation
3
Dysart also argues that the district court erred when it assessed costs to her upon dismissal of
her complaint because her lawsuit was not “unreasonable, frivolous, meritless, or vexatious.”
Each of the Defendants has conceded that they did not pursue recovery of costs, and that the time
limit for claiming costs has passed. Therefore this issue is moot. Flast v. Cohen, 392 U.S. 83,
95, 88 S. Ct. 1942, 1950 (1968).
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under § 1962(c), the plaintiff[] must satisfy four elements of proof: (1) conduct (2)
of an enterprise (3) through a pattern (4) of racketeering activity.”
Williams v. Mohawk Indus., Inc., 465 F.3d 1277, 1282 (11th Cir. 2006) (quotation
marks omitted). Moreover, civil RICO claimants must show: “(1) [an] injury to
‘business or property,’ and (2) that such injury was ‘by reason of’ the substantive
RICO violation.” Id. at 1283 (quoting 18 U.S.C. § 1964(c)).
Dysart’s argument that she pleaded sufficient facts to avoid dismissal of her
RICO claims is not born out by our review of her complaint. First, Dysart failed to
plead facts sufficient to prove the existence of an enterprise. An enterprise
requires proof of “an ongoing organization, formal or informal, and . . . evidence
that the various associates function as a continuing unit.” Mohawk Indus., 465
F.3d at 1284 (quotation marks omitted) (emphasis added). Here, however, Dysart
alleged only that the Defendants “operated together for the common purpose of . . .
divest[ing] Dysart of her home and equity therein.” Even accepting as true that the
Defendants acted in concert to divest Dysart of her home, this was a discrete goal
accomplished in 2007 and therefore not the work of “an ongoing organization . . .
function[ing] as a continuing unit.” See id.
Second, Dysart failed to plead a pattern of racketeering activity. To allege a
pattern of racketeering activity, “[a] plaintiff[] must charge that . . . the defendants
committed two or more predicate acts within a ten-year time span.” Jackson v.
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BellSouth Telecomm., 372 F.3d 1250, 1264 (11th Cir. 2004). Dysart alleged in her
complaint that the Defendants committed the predicate acts of mail fraud under 18
U.S.C. § 1341, wire fraud under § 1343, bank fraud under § 1344, and obstruction
of court orders under § 1509. The district court determined, however, that Dysart
failed to plead the mail fraud, wire fraud, or bank fraud predicates with sufficient
specificity. Dysart has not meaningfully challenged this determination in her brief
to this Court. Therefore, Dysart has abandoned any challenge to the district court’s
determination that she failed to establish two RICO predicates. Timson, 518 F.3d
at 874.
Also, on a related point, Dysart has failed to sufficiently allege a pattern of
racketeering activity because her complaint did not “show that the racketeering
predicates are related, and that they amount to or pose a threat of continued
criminal activity.” H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239, 109 S. Ct.
2893, 2900 (1989) (emphasis added); see also Jones v. Childers, 18 F.3d 899, 912
(11th Cir. 1994) (same). “‘Continuity’ is both a closed- and open-ended concept,
referring either to a closed period of repeated conduct, or to past conduct that by its
nature projects into the future with a threat of repetition.” Jackson, 372 F.3d at
1265 (quotation marks and alterations omitted). Here, Dysart failed to establish
open-ended continuity because the scheme she alleged—to divest her of her
home—cannot be repeated. See id. Likewise, she failed to establish close-ended
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continuity because “the alleged racketeering activity was related to the settlement
of a single [foreclosure], and, notably, was not designed to perpetrate racketeering
with respect to a series of [foreclosures].” See id. at 1267.
Finally, Dysart did not plead facts sufficient to establish § 1964(c)’s
requirement that she suffered an injury to business or property caused by the RICO
violation. See Mohawk Indus., 465 F.3d at 1283. Dysart alleged that she suffered
“mental anguish, emotional distress, stress, physical discomfort and associated
illnesses,” as well as the loss of her home. However, personal injuries of the type
Dysart alleged are not a basis for a civil RICO action. See id. at 1286–87.
Moreover, Dysart concedes that BankTrust was entitled to foreclose on her home;
thus, the alleged RICO violations did not cause this injury. Id.
In sum, Dysart failed to plead facts sufficient to prove that the Defendants
operated as an enterprise, that they engaged in a pattern of racketeering activity, or
that she suffered an injury to business or property caused by the alleged RICO
violations. Thus, the district court properly dismissed her substantive RICO claim.
Mohawk Indus., 465 F.3d at 1282–83. And since Dysart’s RICO conspiracy claim
contained no new allegations sufficient to establish “Defendants[’] agreement with
other entities or persons to engage in the ongoing criminal conduct of an
enterprise,” the district court properly dismissed that claim as well. See Am.
Dental Ass’n, 605 F.3d at 1296 & n.6.
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B.
Dysart further argues that the district court erred in dismissing her complaint
without first granting her leave to amend. 4 We review the district court’s decision
to deny Dysart’s request to amend her complaint for an abuse of discretion. Hall v.
United Ins. Co. of Am., 367 F.3d 1255, 1262 (11th Cir. 2004). Ordinarily, “[i]f the
underlying facts or circumstances relied upon by a plaintiff may be a proper
subject of relief,” Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230 (1962),
leave to amend “should be freely given,” Fed. R. Civ. P. 15(a). We have
recognized, however, that “a district court may properly deny leave to amend the
complaint under Rule 15(a) when such amendment would be futile.”
Hall, 367 F.3d at 1262–63. “[D]enial of leave to amend is justified by futility
when the complaint as amended is still subject to dismissal.” Burger King Corp. v.
Weaver, 169 F.3d 1310, 1320 (11th Cir. 1999) (quotation marks omitted).
Here, Dysart’s RICO claims would still be subject to dismissal even if she
were allowed to amend her complaint because, as explained, she complained of
only one cognizable injury—the loss of her home to one victim—herself—and thus
could not establish the pattern of racketeering activity required to sustain a RICO
claim. Jackson, 372 F.3d at 1265. Likewise, Dysart’s state law claims, even if
4
Dysart did not file a separate motion requesting leave to amend her complaint. However, in
her motion opposing the Defendants’ various motions to dismiss, she “beg[ged] th[e] Court for
Leave to Amend and/or Correct her Complaint” in the event that the “Defendants’ Motion[s] to
Dismiss [were] granted.” We are satisfied that this was a request for leave to amend under the
liberal pleading standard afforded pro se plaintiffs. Powell, 914 F.2d at 1463.
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amended, would still be based on state law, and therefore beyond the district
court’s original jurisdiction.5 See 28 U.S.C. § 1367(c)(3). Thus, the district court
did not err in denying Dysart’s request to amend her complaint because an
amendment would have been futile. Burger King Corp., 169 F.3d at 1320.
III.
For these reasons, the district court’s dismissal of Dysart’s complaint is
AFFIRMED.
5
We have indicated that where federal claims are dismissed prior to trial, it would likely be an
abuse of discretion to also dismiss pendant state law claims “[i]f the statute of limitations had run
on [the plaintiff’s] state claims while the action in federal court was pending.” L.A. Draper &
Son v. Wheelabrator-Frye, Inc., 735 F.2d 414, 428 (11th Cir. 1984). Even if it is the case that
Dysart’s state law claims are barred by statutes of limitations, she has not briefed this issue and
therefore it is abandoned as well. Timson, 518 F.3d at 874.
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