Kevin Doan v. Nirmal Singh , 617 F. App'x 684 ( 2015 )


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  •                                                                                 FILED
    NOT FOR PUBLICATION                                  JUN 12 2015
    MOLLY C. DWYER, CLERK
    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    KEVIN DOAN, et al.,                                No. 13-16980
    Plaintiffs - Appellants,             D.C. No. 1:13-cv-00531-LJO-SMS
    v.
    MEMORANDUM*
    NIRMAL SINGH, et al.,
    Defendants - Appellees.
    Appeal from the United States District Court
    for the Eastern District of California
    Lawrence J. O’Neill, District Judge, Presiding
    Submitted May 15, 2015**
    San Francisco, California
    Before: PAEZ and CLIFTON, Circuit Judges, and DUFFY, District Judge.***
    Plaintiffs Kevin and Pauline Doan filed a complaint in the Eastern District of
    *
    This disposition is not appropriate for publication and is not precedent
    except as provided by Ninth Circuit Rule 36-3.
    **
    The panel unanimously concludes this case is suitable for decision
    without oral argument. See Fed. R. App. P. 34(a)(2).
    ***
    The Honorable Kevin Thomas Duffy, District Judge for the U.S.
    District Court for the Southern District of New York, sitting by designation.
    Page 1 of 5
    California alleging a RICO claim and various state law claims.1 Plaintiffs’ claims
    related to failed gas station development investments in companies controlled by or
    associated with the individual Defendants. Plaintiffs appeal the district court’s
    order dismissing their complaint for failure to state a claim pursuant to Rule
    12(b)(6) of the Federal Rules of Civil Procedure and an order denying Plaintiffs
    further leave to amend their first amended complaint. We have jurisdiction
    pursuant to 
    28 U.S.C. § 1291
     and we affirm the judgment of the district court.
    “We review de novo a dismissal for failure to state a claim under Rule
    12(b)(6).” Odom v. Microsoft Corp., 
    486 F.3d 541
    , 545 (9th Cir. 2007) (en banc).
    We accept as true all factual allegations in the complaint and draw all reasonable
    inferences in favor of the nonmoving party. Retail Prop. Trust v. United Bhd. of
    Carpenters & Joiners of Am., 
    768 F.3d 938
    , 945 (9th Cir. 2014). A complaint
    need not state “detailed factual allegations,” but it must contain sufficient factual
    matter to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.
    Twombly, 
    550 U.S. 544
    , 555, 570 (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.” Ashcroft v.
    1
    Plaintiffs have waived review of the district court’s decision not to
    exercise supplemental jurisdiction over the complaint’s state law claims by failing
    to argue the issue in their briefing. See Fed. R. App. P. 28(a)(8); Christian Legal
    Soc’y Chapter of Univ. of Cal. v. Wu, 
    626 F.3d 483
    , 487 (9th Cir. 2010).
    Page 2 of 5
    Iqbal, 
    556 U.S. 662
    , 678 (2009).
    To state a claim under the civil RICO statute, 
    18 U.S.C. § 1962
    (c), “a
    plaintiff must allege ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of
    racketeering activity.’” Odom, 
    486 F.3d at 547
     (quoting Sedima, S.P.R.L. v. Imrex
    Co., 
    473 U.S. 479
    , 496 (1985)). “In addition, the conduct must be (5) the
    proximate cause of harm to the victim.” Eclectic Props. E., LLC v. Marcus &
    Millichap Co., 
    751 F.3d 990
    , 997 (9th Cir. 2014) (citing Sedima, S.P.R.L., 
    473 U.S. at
    496–97). A “‘pattern of racketeering activity’ requires at least two acts of
    racketeering activity . . . .” 
    18 U.S.C. § 1961
    (5). “‘[R]acketeering activity’ is any
    act indictable under several provisions of Title 18 of the United States Code . . . .”
    Sanford v. MemberWorks, Inc., 
    625 F.3d 550
    , 557 (9th Cir. 2010) (internal citation
    omitted).
    Here, Plaintiffs claimed mail, wire, and bank fraud as RICO predicates.2 See
    Sanford, 
    625 F.3d at 557
    ; see also 
    18 U.S.C. § 1961
    (1). RICO fraud allegations
    are subject to the heightened pleading standard of Rule 9(b) of the Federal Rules of
    Civil Procedure. Odom, 
    486 F.3d at 553
    .
    A RICO claim also requires a plaintiff to plead the existence of an
    2
    Plaintiffs’ other allegations, as they are described in the complaint, are not
    RICO predicates. See 
    18 U.S.C. § 1961
    (1) (setting forth the complete list of
    “racketeering activities”).
    Page 3 of 5
    “enterprise” within the meaning of 
    18 U.S.C. § 1961
    (4). An enterprise may be a
    legal entity, or it may be an association-in-fact. 
    18 U.S.C. § 1961
    (4). “[A]n
    associated-in-fact enterprise under RICO does not require any particular
    organizational structure, separate or otherwise.” Odom, 
    486 F.3d at 551
    . To allege
    an association-in-fact, the complaint must describe “‘a group of persons associated
    together for a common purpose of engaging in a course of conduct[]’ . . . [and]
    must provide both ‘evidence of an ongoing organization, formal or informal,’ and
    ‘evidence that the various associates function as a continuing unit.’” 
    Id. at 552
    (quoting United States v. Turkette, 
    452 U.S. 576
    , 583 (1981)). Importantly, “[t]he
    ‘enterprise’ is not the ‘pattern of racketeering activity’; it is an entity separate and
    apart from the pattern of activity in which it engages.” Turkette, 
    452 U.S. at 583
    .
    The complaint does not allege a legal entity and fails to sufficiently allege an
    association-in-fact. Plaintiffs have not sufficiently pleaded the existence of an
    enterprise because the complaint does not allege how Defendants associated
    together for a common purpose. Apart from acts attributed to Defendant Nirmal
    Singh, the Defendant Chandis, and Defendant Paul Raj Chadha, the other
    defendants are variously alleged to have “conspired,” “assisted,” “colluded,” or
    “help[ed].” Still, it is not clear what exactly each individual did, when they did it,
    or how they functioned together as a continuing unit. These bare assertions of a
    Page 4 of 5
    pattern of racketeering activity do not establish an enterprise and they do not,
    therefore, satisfy Plaintiffs’ burden. See Iqbal, 
    556 U.S. at 681
    . As such, we
    affirm the judgment of the district court dismissing Plaintiff’s RICO claim.3
    In cases “where the plaintiff has previously been granted leave to amend and
    has subsequently failed to add the requisite particularity to its claims, the district
    court’s discretion to deny leave to amend is particularly broad.” Zucco Partners,
    LLC v. Digimarc Corp., 
    552 F.3d 981
    , 1007 (9th Cir. 2009) (internal quotation
    marks omitted). Here, the district court warned Plaintiffs that given the initial
    complaint’s failure to satisfy rudimentary pleading standards, they would get only
    one opportunity to amend the complaint. The district court dismissed the original
    RICO claim for failure to plead facts sufficient to support the existence of an
    enterprise and noted that Plaintiffs had failed to allege the existence of an ongoing
    organization or that the various Defendants functioned as a continuing unit.
    Plaintiffs’ amended RICO claim suffered from the same deficiencies. The district
    court did not abuse its discretion in denying Plaintiffs further leave to amend.
    The judgment of the district court is AFFIRMED.4
    3
    Moreover, Plaintiffs’ complaint fails to meet the Rule 9(b) standard for
    mail or wire fraud. See Sanford, 
    625 F.3d at 558
    .
    4
    Plaintiffs’ outstanding motions for judicial notice (Dkt. Nos. 19 and 33)
    are denied as moot.
    Page 5 of 5