…if this Court does find Wilson’s Amended Complaint deficient in any respect Wilson respectfully prays that he be given opportunity to amend his complaint to cure whatsoever deficiencies the Court might find.
While team Wilson was praying Judge Hittner would prescribe a cure, Defendant Steve Patterson’s attorney, Hiram Eastland, filed a Rebuttal declaring the deficiencies fatal.
Plaintiff’s opposition fails to resolve any of the shortcomings addressed in Mr.Patterson’s Motion to Dismiss. From denying the existence of a heightened pleading standard for fraud, to reiterating the same legally insufficient factual allegations, Wilson can point to nothing that would save his complaint from dismissal.
After finding there was “nothing that would save” Wilson’s complaint, Eastland eviscerated Wilson’s Opposition to Patterson’s Motion for Dismissal.
Plaintiff has failed to shed any new light on his Amended Complaint that would allow it to endure against Mr. Patterson. All of the fatal flaws that are reiterated in this reply exist for a reason: this is simply not a RICO case.
Eastland’s arguments, while specific to Patterson, have implications for other defendants and/or other litigation,, particularly those where the distinction between unethical and unlawful conduct has been blurred :
- Plaintiff’s fraud claims are deficient under Federal Rule of Civil Procedure 9(b)
- Wilson still does not plead the commission of predicate acts by Patterson
- Wilson’s fraud claims are still deficient;
- Wilson has not properly pled causation;
- Wilson’s 1964(c) claims are still deficient;
- Wilson’s 1962(d) claim is still deficient; and
- Wilson’s due process claim is still deficient.
The Rebuttal brief alone is 17 pages and a 21-page document with the addition of exhibits. Consequently, this post will only highlight selected arguments. The first is Eastland’s contention Wilson does not plead the predicate acts essential to a RICO complaint.
RICO predicate offenses are a specific group of violations listed in 18 U.S.C. § 1961; actions that do not fall within this list cannot be considered predicates for the purpose of establishing a RICO claim. Tipton v. Northrop Grumman Corp., 2009 WL 2914365, *7 (E.D. La. 2009)(acknowledging that § 1961 is “exhaustive” and “exclusive” list of racketeering acts). Once again, Wilson attempts to ground his RICO claim in accusations such as Mr. Patterson contacting and retaining Ed Peters in the case of Wilson v. Scruggs, keeping in contact with Peters about the case, and allegedly relaying ex parte communications to Judge DeLaughter. Plaintiff’s Motion in Opposition, pg. 6.
As Mr. Patterson has previously explained in his Motion to Dismiss, these acts are not predicates under § 1961. Next, Wilson defends his Amended Complaint by saying that, if these predicates are not enough (which they are not) he has listed more predicates in paragraphs 23-26, 42(a), 44, 65 and 66. The insufficiencies of these acts have also previously been explained in detail in Mr. Patterson’s Motion to Dismiss. Paragraphs 23-26, 44 and 65-66 consist of nothing more than boilerplate allegations that Mr. Patterson “engaged in a conspiracy.” Plaintiff’s Amended Complaint, pg. 5-6. A RICO conspiracy claim that is alleged in such wholly conclusory terms cannot withstand a motion to dismiss. Tel-Phonic Services, Inc. v. TBS Intern., Inc., 975 F.2d at 1140 (citing Miranda v. Ponce Federal Bank, 948 F.2d 41, 48 (1st Cir. 1991)). Paragraph 42(a) of Plaintiff’s Amended Complaint describes Mr. Patterson’s plea in the case of Jones v. Scruggs where he pled guilty to one count of conspiracy under § 371. Conspiracy under § 371 is not included in § 1961 and therefore is not a predicate act. Williams v. Hollingsworth Group, Inc., 238
It is telling that Wilson does not point to any particular predicate allegations in his Amended Complaint and instead makes general assertions that the Complaint “thoroughly describes the predicates of bribery, misprision of a felony, [and] mail and wire fraud.” He does not because he cannot. Nowhere in the Amended Complaint’s 24 pages does Wilson allege anything that amounts to Mr. Patterson bribing any public official or knowing that a co-defendant was doing so…
Grasping for straws, the Plaintiff cites a seemingly irrelevant contract case from the eastern district of Pennsylvania and warns that: “whether Patterson had a duty under the professional rules remains to be seen.” Like the allegations of § 371 and misprision, violations of professional ethical rules do not amount to RICO predicate acts, and therefore, whether Mr. Patterson could be held to the Professional standards of an attorney (which is doubtful) is of no consequence to the RICO claim. Additionally and perhaps more importantly, as an adverse party in litigation, the Scruggs Firm owed Wilson no duty, and as such, no duty existed to impute to Mr. Patterson. See James v. Chase Manhattan Bank, 173 F.Supp.2d 544, 550 (N.D. Miss. 2001)(finding no duty exists between attorney and adverse party in litigation)…
In arguing Wilson’s fraud claims are still deficient, Eastland addresses Wilson’s claimed (and famed) constructive trust:
Although 9(b) provides more than enough reason for this Court to dismiss the fraud claims; however, plaintiff additionally fails to establish any type of duty between Mr. Patterson and himself to prove fraud by omission. Wilson’s first attempt to overcome this deficiency is to argue that Scruggs was deemed his “trustee,” citing the 2005 district court opinion Wilson v. Scruggs. Plaintiff’s Motion in Opposition, pg. 12. This is not true for many reasons.
First, the federal court made clear that, in deciding a motion for summary judgment, it was determining only whether a relationship could exist as a matter of law. 371 F.Supp.2d 837, 840 (S.D. Miss. 2005). It certainly never “held” that Scruggs was Wilson’s trustee, as Wilson erroneously alleges, nor did it make any other determination on this issue, as the Amended Complaint incorrectly suggests. See Plaintiff’s Amended Complaint, pg. 4 paragraph 20. Second, and most importantly, even if there had been a constructive trust relationship between Scruggs and Wilson, that relationship had clearly ended well before Wilson filed his 2005 lawsuits. According to Wilson’s own Surrebuttal in Opposition from the 2005 litigation, the constructive trust had “a specific time period, i.e., August 7, 1992 thru June 30, 1999.” See Exhibit A. Wilson’s entire 2005 case was premised upon a breach of fiduciary duty; he cannot seriously argue now that this alleged relationship of trust remained intact throughout the subsequent litigation.
Wilson offers misprision as his final attempt to establish a duty. This last-ditch effort fails for many reasons, the most basic being that misprision requires knowledge of “the actual commission of a felony”. 18 U.S.C. § 4. Taking all of his allegations as true, the most Wilson’s Amended Complaint alleges is Mr. Patterson was aware of ethical violations committed by Langston, Balducci, and Peters . While engaging in ex parte communications is certainly reprehensible conduct, it does not amount to a felony… Nor does the statute impose a duty between Wilson and Mr. Patterson. One has only to read the criminal statute itself to see that it creates a duty between a person with knowledge of a felony and the United States…
Although ever mindful that I’m not an attorney and well aware this post is already a long read, I would be remiss in closing before citing portions of Eastland’s argument that cause me to question recent allegations and/or decisions that seem contrary to law cited in Patterson’s Rebuttal. There is nothing more fundamental to a lawful society than law written and applied in a way that is understandable to those whose conduct it governs.
- For purposes of Wilson’s RICO claims, he alleges that SMBD is the enterprise. Plaintiff’s Amended Complaint, pg. 15 paragraph 48. In his Motion in Opposition, Wilson again affirms that “[i]n the instant case, SMBD, Inc. is a defendant and the RICO enterprise.” Based upon this concession, Wilson’s RICO counts fail as a matter of law. See St. Paul Mercury Ins. Co. v. Williamson, 224 F.3d 425, 447 (5th Cir. 2000). A corporate defendant cannot be both a defendant and the enterprise. Id.
- The only specific allegation Wilson can summon from the Amended Complaint is that Mr. Patterson “contacted and retained the services of Ed Peters” . . . was “in regular contact either by phone or by facsimile [with Peters] concerning the case” . . . and “me[t] with Peters in person to discuss issues concerning the Wilson litigation.” Plaintiff’s Amended Complaint, pg. 7, paragraph 27. These allegations do not sufficiently plead Mr. Patterson’s involvement in a conspiracy to violate the RICO statute. Wilson’s own quote from Abraham v. Singh illustrates why his conspiracy claim cannot stand. To state a claim under § 1964(d), the Plaintiff must “allege facts implying [an] agreement involving each of the Defendants to commit at least two predicate acts.” Trugreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 625-26 (N.D. Tex. 2008)(quoting Tel-Phonic Services, 975 F.2d at 1140). Hiring a barred, practicing attorney, calling him about the case and meeting with him on a regular basis are completely legitimate and legal actions. Allegations of an agreement to engage in exparte communications with a judge is a violation of the attorney and judicial ethical rules, but it is not a predicate under § 1961. See St. Germaine, 556 F.3d at 263 (confirming that violations of ethical rules are not predicates under RICO). Mr. Patterson is not alleged to have personally committed, or even to have known about, a single predicate act; therefore, the RICO conspiracy claim against him is deficient and should be dismissed.
- …The other allegation Wilson flags as a predicate is his accusation that DeLaughter sent Peters an advance copy of a proposed order. Plaintiff’s Amended Complaint, pg. 7, paragraph 27. The Fifth Circuit has rejected the contention that such ethical violations constitute mail fraud. See St. Germain v. Howard, 556 F.3d 261, 263 (5th Cir. 2009)(determining that “[i]n their Complaint, Appellants alleged that the predicate acts committed by Appellees were mail and wire fraud. However, the district court found,and Appellants acknowledged, that the ‘patterns of racketeering activity’ they allege are at worst violations of the rules of professional responsibility. Because Appellants have not alleged the requisite predicate criminal acts under RICO, they have not met the pleading standard of Rule 12(b)(6).”).
- Additionally, the Complaint alleges a wire communication between two residents of the same state; such is presumed to be a purely intrastate wire transmission and therefore cannot violate the federal wire fraud statute. See Smith v. Ayres, 845 F.2d 1360, 1366 (5th Cir. 1988)(rejecting the use of 18 U.S.C. § 1343 where communications were intrastate in nature).
- Not content with the conclusive caselaw cited in Mr. Patterson’s Motion to Dismiss, Plaintiff repeats the same irrelevant accusations concerning the cases of Kirk v. Pope and Eaton v. Frisby. These cases, Wilson proclaims, establish continuity in the current RICO case because Peters and DeLaughter9 were somehow involved in them. As Mr. Patterson clearly posited in his Motion to Dismiss, without a connection to Plaintiff’s alleged enterprise (the Scruggs Law Firm) these cases have no relevance to the present claim. See 77 C.J.S. RICO § 25.
- … It is well-settled law that, to have standing to bring a RICO claim, a Plaintiff must show through his pleadings that he was proximately injured as a result of the predicate acts. Cullom v. Hibernia Nat. Bank, 859 F.2d 1211, 1215 (5th Cir. 1988); Regions Bank v. J.R. Oil Co., LLC, 387 F.3d 721, 728-29 (8th Cir. 2004). To demonstrate RICO causation, Wilson must allege a “tangible financial loss.” Price v. Pinnacle Brands Inc., 138 F.3d 602, 606 (5th Cir. 1998). The only tangible loss complained of in the Amended Complaint is the asbestos proceeds; however Wilson had already been denied the proceeds (which were the subject of his initial lawsuit against Scruggs) long before the current alleged actions occurred10. Thus, the deprivation of this money cannot be said to have been “caused” by any action described in this RICO complaint. Regions Bank, 387 F.3d at 729. Wilson complains of the loss of asbestos proceeds, something that occurred prior to any of the current alleged actions by the Defendants. As none of the alleged predicate acts “worsened” Wilson’s condition as to the loss of these proceeds, it cannot be a RICO injury for purposes of showing standing.
- The other injury claimed in Wilson’s Amended Complaint, the loss of a trial ruling in his favor, can only be classified as an intangible, hypothetical property interest. This type of injury, being purely speculative, is not recognized under RICO law. This Court would be required to engage in pure speculation to determine that DeLaughter would have ruled in Wilson’s favor. Such a finding would, at any rate, be unlikely since the federal court in the prior, parallel Wilson v. Scruggs case seemed to at least suggest that it would have found for Scruggs on the constructive trust issue11. See Wilson, 371 F.Supp.2d 837, 841 (S.D. Miss. 2005). As there is no knowing what another judge would have done in DeLaughter’s place, the damages are completely speculative and do not give rise to a RICO injury.
- Specifically, the Court stated that: “The Court would agree with Scruggs, however, that to the extent of any money that Scruggs reasonably and legitimately believed was rightfully his under the terms of the August 1992 dissolution agreement, his use of such money, even if such money is ultimately proven to have belonged to Wilson, would not have been wrongful . . . . While constructive trust is potentially an appropriate remedy to prevent unjust enrichment by Scruggs on account of his alleged use of Wilson’s funds in the tobacco litigation, the Court would not necessarily consider Scruggs’ enrichment “unjust” to the extent that the overwhelming factor in the tremendous (indeed unprecedented) financial success of the tobacco litigation in terms of fees generated was the efforts of Scruggs and others involved in pursuing the litigation.” Wilson, 371 F.Supp.2d at 841 fn. 7, 843. (text of footnote 11, page 14)
Text takes on meaning in context and these quotes are no exception. For example, a full read will show Defendant Patterson acknowledging ethical violations, although not unlawful, are reprehensible conduct.
In that light, it is Plaintiff’s prayer for the opportunity to correct deficiencies that team Wilson may want to amend after Judge Hittner rules on Patterson’s motion. History indicates Hittner takes a dim view of poorly prepared cases and holds attorneys accountable, including those working for the government. As none other than Mother Teressa noted, more tears are shed over answered prayers than unanswered ones.