Coleman v. Amer Elec Power Co ( 2002 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-41447
THOMAS A. COLEMAN, II, on behalf of himself and
all similarly situated persons and entities; ELLIS HARPER
YOUNG, on behalf of himself and all similarly situated
persons and entities,
Plaintiffs-Appellants,
versus
AMERICAN ELECTRIC POWER COMPANY, INC.;
SOUTHWESTERN ELECTRIC POWER COMPANY;
CENTRAL POWER & LIGHT COMPANY; WEST
TEXAS UTILITIES COMPANY; PUBLIC SERVICE
COMPANY OF OKLAHOMA; APPALACHIAN
POWER CO.; COLUMBUS SOUTHERN POWER
COMPANY; INDIANA MICHIGAN POWER COMPANY;
KENTUCKY POWER CO.; KINGSPORT POWER CO.;
OHIO POWER COMPANY; WHEELING POWER CO.;
AEP COMMUNICATIONS, LLC; C3 COMMUNICATIONS,
INC.; DONALD M. CLEMENTS, JR.; PETE THOMAS;
DOES 1-25; CENTRAL AND SOUTH WEST CORPORATION,
Defendants-Appellees.
Appeal from the United States District Court for
the Eastern District of Texas
(USDC No. 2:00-CV-207)
_______________________________________________________
September 20, 2002
Before REAVLEY, BARKSDALE and CLEMENT, Circuit Judges.
REAVLEY, Circuit Judge:*
The narrow issue presented is whether defendants’ alleged misuse of easements
granted by plaintiffs, which resulted in payments from third parties to defendants for the
use of a fiber optic network, amounted to the “conversion” of “money” constituting
predicate criminal acts which will support a civil action brought by plaintiffs under the
Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. We
essentially agree with the district court’s analysis of this question and affirm its dismissal
of the complaint.
Plaintiffs (the landowners) do not appeal the dismissal of the federal claim under
42 U.S.C. § 1983. The only remaining federal claim asserted in their complaint is the
RICO claim. The landowners argue that the RICO requirement of a pattern of
racketeering activity, see 18 U.S.C. § 1962(a), is satisfied because the conduct of the
defendants (the electric utilities) alleged in the complaint constitutes criminal conduct
included in the list of predicate acts found in § 1961(1). Specifically, the landowners
argue that the electric utilities exceeded the scope of the easements the landowners had
granted to them when the electric utilities placed fiber optic cables along the easements,
creating a fiber optic network, and then sold or leased network capacity to third parties
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth in
5TH CIR. R. 47.5.4.
2
for telecommunications. The landowners argue that this alleged conduct constitutes the
transportation in interstate commerce of stolen or converted money under 18 U.S.C. §
2314, or the receipt of stolen or converted money under 18 U.S.C. § 2315, both of which
are included in the list of RICO predicate acts.
We agree with the district court that the conduct alleged does not fall under § 2314
or § 2313. Section 2314, the National Stolen Property Act, provides:
Whoever transports, transmits, or transfers in interstate or foreign commerce any
goods, wares, merchandise, securities or money, of the value of $5,000 or more,
knowing the same to have been stolen, converted or taken by fraud . . . Shall be
fined under this title or imprisoned not more than ten years, or both.
Section 2315 provides:
Whoever receives, possesses, conceals, stores, barters, sells, or disposes of any
goods, wares, or merchandise, securities, or money of the value of $5,000 or more
. . . which have crossed a State or United States boundary after being stolen,
unlawfully converted, or taken, knowing the same to have been stolen, unlawfully
converted, or taken . . . Shall be fined under this title or imprisoned not more than
ten years, or both.
Reviewing the district court’s judgment on the pleadings de novo, St. Paul Ins. Co.
of Bellaire, Tex. v. AFIA Worldwide Ins. Co., 937 F.2d 274, 279 (5th Cir. 1991), and
assuming that all allegations in the complaint are true, id., the third parties voluntarily
paid the money in issue to the electric utilities. The landowners never had title to or
ownership of this money. Any conversion or theft of their property by the electric
utilities was the conversion or theft of their real property rights which occurred when the
electric utilities allegedly exceeded the scope of the easements the landowners had
granted. Easements convey intangible or incorporeal rights to the use of real property.
3
See Tex. Elec. Ry. Co. v. Neale, 252 S.W.2d 451, 454 (Tex. 1952) (describing an
easement as “an intangible right”); Hidalgo County v. Pate, 443 S.W.2d 80, 84 (Tex. Civ.
App.–Corpus Christi 1969, writ ref’d n.r.e.) (describing an easement as “an incorporeal
right of passage over the land of another”).
The landowners urge a reading of §§ 2314 and 2315 that we cannot accept.
Looking to the language of the statutes, the landowners’ intangible property rights were
not “transported” in interstate commerce under § 2314, and were not “received” by the
electric utilities after being stolen or converted and crossing state lines under § 2315.
This is not a case where money was fraudulently obtained and “a mere change of form”
occurred when the funds were transported in interstate commerce, as occurred in United
States v. Levy, 579 F.2d 1332, 1336 (5th Cir. 1978).1
1
In Levy, the defendant essentially stole money from his employer’s bank
account. These funds had been wired by a lender to the employer account, for the
purpose of paying a construction contractor. The defendant stole this money by writing
two checks on the employer account and depositing the checks in an account at a bank in
another state. Id. at 1333. We held that § 2314 applied even though the checks
themselves which were transported in interstate commerce had not been obtained by
fraud. We find Levy distinguishable because, for all practical purposes, the money stolen
and money transported in interstate commerce were one and the same, even if, as a purely
technical matter, the physical checks used to move the funds had not been obtained by
fraudulent means. In the pending case, however, plaintiffs’ real property rights on the
one hand, and the monies paid by third parties to the electric utilities on the other hand,
cannot be treated as one and the same for all practical purposes. Further, whether the
checks at issue in Levy are considered “money” or “securities,” see id. at 1335 n.2, both
money and securities are covered by the statute, and Levy and cases cited therein do not
present the issue raised in the pending case, namely whether the defendants’ conduct is
covered by the statute where money is transported in interstate commerce but is allegedly
derived from the conversion of real property rights that are not, for the reasons discussed
below, covered by the statute.
4
Section 2314 only applies to “goods, wares, merchandise, securities or money.”
Section 2315 contains essentially the same language. This language is not, in our view,
expansive enough to include the easement rights allegedly converted in the pending case.
Real property and estates or rights in real property do not fall within the definition of
“goods, wares, merchandise, securities or money.” In construing § 2314, we have noted a
standard dictionary definition of “goods, wares, and merchandise” which describes the
term as referring to personal property as opposed to real property. United States v. Smith,
686 F.2d 234, 240 (5th Cir. 1982). We further noted that “an incorporeal, intangible right
or privilege to engage in or to authorize certain activity is not generally considered to be
goods, wares, or merchandise.” Id. In addition, we noted that the general dictionary
definition of the term “stolen, converted, or taken by fraud” in § 2314 “implicates the
removal or taking of a tangible item that is owned by or in the possession of someone
else.” Id. at 242.2
By this reasoning, and recognizing that criminal statutes must be strictly construed,
Smith, 686 F.2d at 239, we concluded in Smith that the distribution of works in violation
of a copyright owner’s exclusive distribution rights was not covered by §2314. Id. at
2
See also Dowling v. United States, 473 U.S. 207, 216 (1985) (noting that prior
cases “prosecuted under § 2314 have always involved physical ‘goods, wares, [or]
merchandise’ that have themselves been ‘stolen, converted or taken by fraud’” under the
terms of the statute, and that “by requiring that the ‘goods, wares, [or] merchandise’ be
‘the same’ as those ‘stolen, converted or taken by fraud,’ the provision seems clearly to
contemplate a physical identity between the items unlawfully obtained and those
eventually transported, and hence some prior physical taking of the subject goods.”).
5
244. Employing the same reasoning, we conclude that the easement rights in the pending
case—intangible rights to the use of real property—allegedly misused by the electric
utilities do not fall within the ambit of §§ 2314 and 2315.
We finally note that while the briefs include considerable argument on the
underlying state law question of whether the electric utilities exceeded the scope of the
easements granted by the landowners, we do not reach this issue. Because there were no
predicate criminals act that will support a RICO civil action, the federal RICO claim was
properly dismissed, and the district court did not abuse its discretion in dismissing the
remaining supplemental state law claims without prejudice.
AFFIRMED.
6