Paul Handeen v. Orlins & Brainerd ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 95-3678
___________
Paul Handeen, *
*
Plaintiff - Appellant, *
*
v. *
*
Gregory A. Lemaire; Henry * Appeal from the United
Lemaire; Patricia Lemaire, * States District Court for
* the District of Minnesota.
Defendants, *
*
Orlins & Brainerd Law Firm; *
Richard K. Brainerd; Peter *
I. Orlins, *
*
Defendants - Appellees.*
___________
Submitted: October 23, 1996
Filed: May 7, 1997
___________
Before RICHARD S. ARNOLD, Chief Judge, FLOYD R. GIBSON, and MORRIS
SHEPPARD ARNOLD, Circuit Judges.
___________
FLOYD R. GIBSON, Circuit Judge.
Paul Handeen appeals the district court’s order granting summary
judgment in favor of the Orlins & Brainerd Law Firm and its principals
(collectively the “Firm”) on his claims under the Racketeer Influenced and
Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968 (1994 & Supp.
I 1995), and various other
provisions of federal and Minnesota state law.1 Given the procedural
posture of this case, we find ourselves constrained to reverse the district
court’s dismissal of Handeen’s RICO and state law causes of action, but we
otherwise affirm.
I. BACKGROUND
The appeal before us traces its genesis to a series of unfortunate
events that has already been the subject of extensive litigation in this
Court, see Handeen v. Lemaire (In re Lemaire), 898 F.2d 1346, 1347-48 (8th
Cir. 1990)(en banc)(“Lemaire II”)(describing underlying factual
foundation), rev’g 883 F.2d 1373, 1375-76 (8th Cir. 1989)(containing
further elaboration), and we see no present need to retell that sorry tale.
Suffice it to say that Gregory Lemaire (individually referred to as
“Gregory” or “Lemaire”) set out to execute Handeen on July 8, 1978, and he
very nearly succeeded.2 As a result of this intentional deed, Lemaire
1
The court’s order did not dispose of Handeen’s claims
against Gregory Lemaire and his parents, Henry and Patricia, who
were originally named as defendants in the Complaint. Handeen,
though, voluntarily dismissed his grounds for relief against the
three Lemaires pursuant to a Pierringer settlement. See
Pierringer v. Hoger, 124 N.W.2d 106 (Wis. 1963).
2
Lemaire represented himself pro se in the instant action,
and one of the numerous documents he filed with the district
court is a rambling, thirty-one page Answer recounting with
chilling detail his version of the events which transpired on
that summer day:
The rifle was a semi-automatic, .22-calibre rifle that
I had purchased many years before for the sole purpose
of shooting at tin cans with my friends. The rifle was
capable of holding 16 bullets . . . . Prior to the
shooting, I had loaded bullets into the gun in the
front seat of my car; in checking that a bullet was in
the chamber, I had ejected one bullet, which landed on
the floor on the passenger’s side of the front seat.
When I began shooting at Mr. Handeen, it was from the
-2-
pleaded guilty to a charge of aggravated assault and spent twenty-seven
months in a Minnesota prison. Following his release, Lemaire resumed his
graduate studies at the University of Minnesota and in January 1986
received a doctoral degree in, of all things, experimental behavioral
pharmacology.
Handeen filed a civil suit against Lemaire and obtained a consent
judgment in excess of $50,000. Lemaire used funds received from his
father to pay an initial lump sum of $3,000 due under the judgment, but he
failed to remit any agreed-upon monthly installments. This prompted
Handeen to commence garnishment proceedings to collect the balance due him.
Lemaire, who was represented by the Firm, filed a Chapter 13 bankruptcy
petition shortly thereafter, and the bankruptcy court, over Handeen’s
objections, approved Lemaire’s repayment plan. The district court and a
divided panel of this Court affirmed the bankruptcy judge’s decision, see
Handeen v. Lemaire (In re Lemaire), 883 F.2d 1373
car in which I sat, perhaps 150-200 feet away from him.
I then left the car and ran toward him, continuing to
shoot. At some point in my approach to him, there were
no more bullets left in the gun. I ran back to the
car, picked up the single remaining bullet from the
floor of the car, placed it in the chamber of the
rifle, and ran to Mr. Handeen. At the instant that I
came to stand directly over Mr. Handeen, there was no
thought involved: I clipped-on the safety mechanism of
the rifle and placed it on the roof of Mr. Handeen’s
car, which was directly adjacent to us. From then on,
I agitatedly paced back and forth in the street with
raised hands, yelling to Mr. Handeen (who repeatedly
atempted to rise), “Stay down![] Stay down! The
ambulance is coming!” . . . . I evidently did fire
nine shots with the intent to execute Mr. Handeen; I
did not fire the tenth shot, which would have done so.
Gregory Lemaire’s Answer at 4. Upon reading Lemaire’s
submissions to the district court, one comes away with the
distinct impression that he considers himself the primary victim
in this affair. This is a sentiment we do not share.
-3-
(8th Cir. 1989)(“Lemaire I”), rev’d en banc, 898 F.2d 1346 (8th Cir. 1990),
but upon rehearing en banc we determined that Handeen had not proposed the
Chapter 13 plan in good faith, see Lemaire II, 898 F.2d at 1352-53.
Accordingly, we reversed the order confirming the plan and remanded the
case for further proceedings. Id. at 1353. On July 19, 1990, the
bankruptcy judge vacated the plan and dismissed the petition.
Handeen initiated this suit against the Firm and the Lemaires on
October 16, 1992. The Complaint paints a sordid portrait of an intricate
scheme through which Lemaire sought to fraudulently obtain a discharge of
Handeen’s judgment by manipulating the bankruptcy system.3 As part of this
plot, the Firm and the Lemaires contrived to minimize whatever reduced
recovery Handeen might achieve via the bankruptcy process. To this end,
the Firm instructed Gregory to inflate the amount of his debts by agreeing
to pay his parents rent and by executing a false promissory note payable
to the elder Lemaires.4 Gregory listed his parents as creditors on
schedules he filed with the bankruptcy court,5 and the Firm relied on the
parents’ claims when preparing proposed
3
As we explain below, at the current stage of these
proceedings we must accept as true all of the allegations within
the Complaint. We pay homage to this requirement during our
recitation of the salient facts.
4
Gregory had never before paid his mother and father rent
for the privilege of living in their home. Furthermore, the
promissory note was dated January 15, 1987, only one day prior to
the date Gregory filed for bankruptcy protection.
5
The Complaint also indicates that the Firm advised Gregory
not to disclose on his schedules a contingent debt in the amount
of $30,000 to $50,000 which he would have been obligated to repay
to the United States Public Health Service if he failed to
fulfill the terms of a fellowship stipend. This obscuration
could have resulted in discrimination among creditors. See
Lemaire II, 898 F.2d at 1350 n.5.
-4-
repayment plans. Of course, to the extent the bankruptcy court recognized
this “indebtedness,” it would reduce Handeen’s pro rata share of any
Chapter 13 distributions. Indeed, the cabal enjoyed success in this
venture, for the bankruptcy court in substantial measure approved the
parents’ petitions against the estate.6 As such, Gregory’s parents
received a portion of the sums he paid under the approved plan, and they
compounded the fraud by transferring much of this money back to Gregory.
The intrigue, however, does not end there. In 1989, while Handeen
was appealing the bankruptcy court’s confirmation of the Chapter 13 plan,
Gregory found a new job which required him to relocate from Minneapolis to
Houston, Texas. This employment significantly enhanced Lemaire’s income.
Nonetheless, presumably because a person who takes refuge in Chapter 13
must ordinarily devote to the repayment plan “all of the debtor’s projected
disposable income,” 11 U.S.C. § 1325(b)(1)(B) (1994),7 Lemaire did not wish
to reveal his increased wages to the bankruptcy trustee. Consequently,
Lemaire, his parents, and the Firm formulated an artifice to avoid rousing
the trustee’s attention. Specifically, the ruse called for Lemaire to mail
his father a parcel every month. Within that package would be an envelope
addressed to the bankruptcy trustee and containing a check representing
Lemaire’s monthly payment under the plan. Lemaire’s father would, in turn,
place the enclosed envelope in the mails, and the trustee would
6
The Firm also represented Henry and Patricia Lemaire before
the bankruptcy court, and it therefore defended their claims
against objections lodged by Handeen.
7
To be sure, § 1325(b)(1)(B) speaks of the debtor’s
“projected disposable income” at the time the plan first takes
effect. Section 1329, though, allows an unsecured creditor or
the trustee to proffer a postconfirmation motion for modification
of the plan. See 11 U.S.C. § 1329(a)(1) (1994).
-5-
thus receive a letter postmarked from Minneapolis rather than Houston. The
object, it is clear, was to fool the trustee into believing that the status
quo ante existed, and this exploitation of the postal service remained a
monthly ritual until the court dismissed Lemaire’s plan in July of 1990.
In his Complaint, Handeen charges that the Firm and the Lemaires,
through their duplicitous association with Gregory’s bankruptcy estate,
violated 18 U.S.C. § 1962(c) by conducting a RICO enterprise (the estate)
through a pattern of racketeering activity. Handeen also alleges that the
group conspired to violate RICO in violation of 18 U.S.C. § 1962(d). On
summary judgment, the district court dismissed these claims against the
Firm based on its determination that Handeen had failed to demonstrate “the
existence of a pattern of racketeering separate and apart from the
bankruptcy estate.” At the same time, the district court rejected
Handeen’s attempt to obtain an augmented recovery under two provisions of
Minnesota state law that subject unscrupulous attorneys to severe monetary
penalties. See Minn. Stat. Ann. §§ 481.07-.071 (West 1990). The court
decided that the statutes in question merely authorize treble damages in
certain civil suits and do not create independent causes of action. Thus,
because the district court believed that Handeen did not attempt to ground
his state law action upon a separate tort, but instead merely invoked the
two damages provisions, the court found summary judgment appropriate.
-6-
Handeen now appeals the district court’s dismissal of his RICO and
state law causes of action.8 We reverse the court’s grant of summary
judgment on these claims.
II. DISCUSSION
A. Procedural Considerations
Before taking up the merits of Handeen’s appeal, we must first focus
on a procedural question of significant import in the context of this case.
At oral argument, counsel for the Firm mentioned that Handeen’s response
to the motion for summary judgment, along with all accompanying
submissions, failed to establish the existence of a “factual record
warranting trial.” Based upon our review of these materials, we
wholeheartedly agree with this suggestion. The response makes no effort
to demonstrate, through citation to affidavits, depositions, answers to
interrogatories, or admissions on file, any “specific facts showing that
there is a genuine issue for trial.” Fed. R. Civ. P. 56(e). It is true
that Handeen supplemented his response with certain affidavits and other
papers extraneous to the pleadings. Still, these documents are
8
The district court dismissed, as well, each of the many
additional claims included within Handeen’s Complaint. With one
exception, Handeen does not challenge the district court’s
rulings on those counts. He does, however, appeal the district
court’s decision to grant summary judgment on a theory of
recovery he struggled to forge from Rule 11 of the Federal Rules
of Civil Procedure. We summarily affirm this aspect of the
district court’s judgment, because “Rule 11 sanctions must be
sought by motion in a pending case; there can be no independent
cause of action instituted for Rule 11 sanctions.” Cohen v.
Lupo, 927 F.2d 363, 365 (8th Cir.), cert. denied, 502 U.S. 861
(1991); see also Port Drum Co. v. Umphrey, 852 F.2d 148, 150 (5th
Cir. 1988)(“[T]he rule’s primary purpose is to discourage
groundless proceedings rather than to compensate wronged parties
by means of affirmative relief.”).
-7-
largely irrelevant to the essential elements Handeen will be required to
prove in order to prevail, and he appears to have included most of them to
provide support for tangential matters not currently in issue.
Accordingly, were this a typical summary judgment case, we would have no
difficulty with affirming the district court’s judgment in toto. See
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)(“[T]he plain language
of Rule 56(c) mandates the entry of summary judgment, after adequate time
for discovery and upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to that
party’s case, and on which that party will bear the burden of proof at
trial.”).
This is not, however, a typical summary judgment case. We have also
had occasion to inspect the Firm’s summary judgment motion, and we are
convinced that, for present purposes, it would be entirely unfair to hold
Handeen accountable for a factual showing that would, under normal
circumstances, be inadequate. This is because the Firm’s motion shares,
and probably engendered, the exact flaw contained in Handeen’s response:
It is almost entirely bereft of any citations to relevant portions of the
record.9 In fact, the Firm went so far as to introduce its argument
section with an express affirmation that
[r]esolution of th[e] motion does not depend upon the outcome
of any disputed question of fact. Instead, it requires only
the application of established principles
9
The district judge was correct in treating the Firm’s
filing as a motion for summary judgment because “matters outside
the pleadings [were] presented and not excluded by the trial
court.” Gibb v. Scott, 958 F.2d 814, 816 (8th Cir.
1992)(quotation omitted); see also Fed. R. Civ. P. 12(c).
Similar to Handeen’s response, the materials submitted and cited
by the Firm deal primarily with matters of historical fact not
currently in dispute.
-8-
of law to the allegations contained in [Handeen’s] Complaint.
Such application demonstrates that [Handeen] has failed to
state a claim against [the Firm] upon which relief can be
granted . . . .
The Firm’s Summ. J. Mot. at 6. This evolved into the dominant theme
underlying the Firm’s motion, as it is readily apparent that, for whatever
reason, the Firm chose to eschew reliance on the recently alleged absence
of a “factual record warranting trial,” and instead emphasized what were
perceived to be “an array of patently untenable legal theories.” Id. at
1. This is a common refrain throughout the Firm’s motion; the document
repeatedly accepts as true contentions within the Complaint and endeavors
to show why those undisputed facts cannot support a recovery. See, e.g.,
id. at 16 (assuming as accurate the “‘enterprise’ alleged by plaintiff” and
maintaining that Handeen cannot prevail “[e]ven if the [Firm] had engaged
in the acts described in [his] Complaint.”).
It is evident, then, that the Firm failed to meet the prefatory
burden contemplated by Rule 56. The Supreme Court has explained that one
who moves for summary judgment “always bears the initial responsibility of
informing the district court of the basis for its motion, and identifying
those portions of [the record as specified in Rule 56(c)] which it believes
demonstrate the absence of a genuine issue of material fact.” Celotex, 477
U.S. at 323 (quotation omitted). The standard is far from stringent, for
it is sufficient if the movant points out “that the record does not contain
[a genuine issue of material fact] and . . . identif[ies] that part of the
record which bears out his assertion.” City of Mt. Pleasant, Iowa v.
Associated Elec. Coop., Inc., 838 F.2d 268, 273 (8th Cir. 1988). This is
an obligation regularly discharged with ease by parties who desire summary
judgment, but it is one
-9-
that went unsatisfied in this case.10 By founding the summary judgment
motion on a theory which accepted for purposes of argument the veracity of
allegations within Handeen’s Complaint, and by posing no alternative
grounds for the requested action, the Firm neglected to pinpoint those
portions of the record that might have revealed the absence of a genuine
factual issue.11
Due to the Firm’s failure to meet its initial burden, the onus never
passed to Handeen to “set forth specific facts showing that there is a
genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
256 (1986). Only after the moving party fulfills its duty is the nonmoving
party obliged to “proffer evidence that contradicts the moving party’s
showing and that
10
It is possible to construe the Firm’s motion as an effort
to show that the facts alleged by Handeen, though disputed, are
not material. Phrased differently, it might have been the Firm’s
unstated intention to establish that the contentions in the
Complaint are so intrinsically deficient that they could not
“affect the outcome of the suit under the governing law.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Even
viewed in this charitable fashion, the Firm failed to satisfy its
burden, because our interpretation of RICO law reveals that the
allegations are, in fact, material. That is, the Complaint could
support a recovery under RICO.
11
There are, without a doubt, cases in which the defendant
truly does not dispute the plaintiff’s characterization of
relevant events. As a consequence, the parties reach an
agreement, perhaps implicitly, that there is no genuine issue for
trial. Under those circumstances, because it would be senseless
and wasteful for the litigants to submit the matter to a trier of
fact, it is common for the district court to render summary
judgment for one side or the other, often on a set of stipulated
facts. Therefore, it is important to stress our confidence that
the Firm’s concessions were for purposes of argument only. That
is, we do not believe the Firm intended to make a binding
admission that the representations in the Complaint are true.
The most cursory review of the record discloses that the Firm
does, indeed, challenge the accuracy of many of Handeen’s claims.
Were the situation otherwise, under our analysis of RICO law,
summary judgment against the Firm would be proper.
-10-
proves the existence of a genuine issue of material fact.” McKinney v.
Dole, 765 F.2d 1129, 1135 (D.C. Cir. 1985). “[E]ven when the non-movant
bears the burden of proof at trial, simply filing a summary judgment motion
does not immediately compel the party opposing the motion to come forward
with evidence demonstrating material issues of fact as to every element of
its case.” Ashe v. Corley, 992 F.2d 540, 543 (5th Cir. 1993)(quotation and
alteration omitted); see also New Burnham Prairie Homes, Inc. v. Village
of Burnham, 910 F.2d 1474, 1477 (7th Cir. 1990)(recognizing that the
nonmovant must show the existence of an issue warranting trial only after
the movant has met its burden). Any contrary rule would be fundamentally
unfair and would permit a defendant, with very little effort on its own
part, to place upon a plaintiff an unwarranted responsibility to
substantiate each element of its case or face summary dismissal. Unwilling
to countenance such a practice, we must reject the Firm’s belated assertion
that affirmance is appropriate in light of asserted inadequacies in
Handeen’s factual showing.
Ready to turn our attention to the substance of this appeal, we are
left to ponder what legal standard should guide us in our task. There is
authority for the proposition that a summary judgment motion should be
denied whenever its proponent does not meet his initial burden, see
McKinney, 765 F.2d at 1135, but we are reluctant to adopt this approach.
Whatever the wisdom in submitting a motion that assumes the accuracy of a
plaintiff’s portrayal of the episode and does no more than question the
sufficiency of the complaint, we see no reason to prevent a district court
from granting summary judgment if the unchallenged facts cannot, as it
turns out, sustain a viable cause of action. In these situations, we agree
with our counterparts on the Fifth Circuit that the submission should be
evaluated similarly to a 12(b)(6) motion to dismiss. See Ashe, 992 F.2d
at 544. “Where a
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motion for summary judgment is based solely on the pleadings and makes no
[meaningful] reference to affidavits, depositions, or interrogatories, it
makes no difference whether the motion is evaluated under Rule 56 or Rule
12(b)(6) because both standards reduce to the same question.” Id.
(quotation omitted). Therefore, a court should grant the motion and
dismiss the action “only if it is clear that no relief could be granted
under any set of facts that could be proved consistent with the
allegations.” Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); see also
WMX Techs., Inc. v. Gasconade County, Missouri, 105 F.3d 1195, 1198 (8th
Cir. 1997)(“In considering a motion to dismiss, the court must construe the
complaint liberally and assume all factual allegations to be true.”). Our
review of the district court’s decision is plenary. See WMX, 105 F.3d at
1198 (reviewing de novo district court’s 12(b)(6) dismissal); Nangle v.
Lauer (In re Lauer), 98 F.3d 378, 382 (8th Cir. 1996)(reviewing de novo
district court’s disposition of summary judgment motion).
B. 18 U.S.C. § 1962(c)
A plaintiff who brings suit under 18 U.S.C. § 1962(c) must prove that
the defendant engaged in (1) conduct (2) of an enterprise (3) through a
pattern (4) of racketeering activity. See Sedima, S.P.R.L. v. Imrex Co.,
473 U.S. 479, 496 (1985); cf. United States v. Darden, 70 F.3d 1507, 1518
(8th Cir. 1995)(describing the elements in an alternative, but essentially
equivalent, manner), cert. denied, 116 S. Ct. 1449, and cert. denied, 116
S. Ct. 2567 (1996). “In addition, the plaintiff only 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 violation.” Sedima, 473 U.S.
at 496. To determine whether Handeen has stated a substantive RICO
violation, we must apply each of these elements
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to the assertions within his Complaint. Having done so, we are convinced
that the district court committed error when it entered summary judgment
for the Firm.
1. Conduct
Liability under § 1962(c) extends only to those persons associated
with or employed by an enterprise who “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). In Reves v. Ernst &
Young, 507 U.S. 170, 185 (1993), the Supreme Court confirmed that this
Circuit has correctly interpreted the “conduct” requirement to authorize
recovery only against individuals who “participate in the operation or
management of the enterprise itself.” See Bennett v. Berg, 710 F.2d 1361,
1364 (8th Cir.)(en banc)(announcing the “operation or management” test),
cert. denied, 464 U.S. 1008 (1983). The Supreme Court clarified the scope
of the operation or management test, observing:
An enterprise is “operated” not just by upper management but
also by lower rung participants in the enterprise who are under
the direction of upper management. An enterprise also might be
“operated” or “managed” by others “associated with” the
enterprise who exert control over it as, for example, by
bribery.
* * *
[Section] 1962(c) cannot be interpreted to reach complete
“outsiders” because liability depends on showing that the
defendants conducted or participated in the conduct of the
“enterprise’s affairs,” not just their own affairs. Of course,
“outsiders” may be liable under § 1962(c) if they are
“associated with” an enterprise and participate in the conduct
of its affairs -- that is, participate in the operation or
management of the enterprise itself . . . .
-13-
Reves, 507 U.S. at 184-85 (emphasis in original)(footnote omitted).
Consonant with the dictate of Reves, it is not necessary that a RICO
defendant have wielded control over the enterprise, but the plaintiff “must
prove some part in the direction . . . of the enterprise’s affairs.”
Darden, 70 F.3d at 1543 (emphasis in original). But cf. Department of
Econ. Dev. v. Arthur Anderson & Co., 924 F. Supp. 449, 466-67 (S.D.N.Y.
1996)(suggesting that requirement of control is the hallmark of Reves).
The Supreme Court’s approval and refinement of our operation or
management test has had far-reaching implications, particularly in the area
of professional liability under RICO. This is not especially surprising,
given that Reves itself involved an attempt to impute liability to an
accounting firm. There, the accounting firm certified that a co-op’s
records adequately reflected its financial status, and the firm relied upon
those existing records, in combination with a review of past co-op
transactions, to prepare audits for the organization. Reves, 507 U.S. at
173-75. In completing these assignments, and without informing the co-op’s
board, the firm utilized questionable measures to verify the co-op’s
solvency. Id. at 174-75. The Supreme Court affirmed our decision finding
that the accounting firm’s activity did not constitute conduct of a RICO
enterprise. Id. at 186.
In our view, the Reves decision represents a fairly uncomplicated
application of the operation or management test. This test, like Reves
itself, is built upon a recognition that Congress did not mean for §
1962(c) to penalize all who are employed by or associated with a RICO
enterprise, but only those who, by virtue of their association or
employment, play a part in directing the enterprise’s affairs. Furnishing
a client with ordinary professional assistance, even when the client
happens to be a RICO enterprise, will not normally rise to the level of
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participation sufficient to satisfy the Supreme Court’s pronouncements in
Reves. In acknowledgment of this certainty, a growing number of courts,
including our own, have held that an attorney or other professional does
not conduct an enterprise’s affairs through run-of-the-mill provision of
professional services. See Azrielli v. Cohen Law Offices, 21 F.3d 512, 521
(2d Cir. 1994)(finding no RICO liability where defendant had “acted as no
more than [an] attorney”); Baumer v. Pachl, 8 F.3d 1341, 1344 (9th Cir.
1993)(affirming dismissal of case against attorney whose “role was limited
to providing legal services”); University of Maryland v. Peat, Marwick,
Main & Co., 996 F.2d 1534, 1538-40 (3d Cir. 1993)(holding that accounting
firm could not be liable for performing generic financial services for an
insurance company); Nolte v. Pearson, 994 F.2d 1311, 1317 (8th Cir.
1993)(deeming directed verdict appropriate where plaintiff’s evidence did
not indicate attorneys participated in the operation or management of the
enterprise); Menuskin v. Williams, 940 F. Supp. 1199, 1210 (E.D.
Tenn.)(granting summary judgment for attorney who performed “standard,
routine” services for construction company), appeal dismissed, 98 F.3d 1342
(6th Cir. 1996). By the same token, RICO is not a surrogate for
professional malpractice actions. See University of Maryland, 996 F.2d at
1539-40 (explaining that an accounting firm does not become liable under
RICO by providing “materially deficient financial services”); Baumer, 8
F.3d at 1344 (“Whether [the attorney] rendered his services well or poorly,
properly or improperly, is irrelevant to the Reves test.”).
Appreciation for the unremarkable notion that the operation or
management test does not reach persons who perform routine services for an
enterprise should not, however, be mistaken for an absolute edict that an
attorney who associates with an enterprise can never be liable under RICO.
An attorney’s license is not an invitation to engage in racketeering, and
a lawyer no less than anyone else is
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bound by generally applicable legislative enactments. Neither Reves nor
RICO itself exempts professionals, as a class, from the law’s
proscriptions, and the fact that a defendant has the good fortune to
possess the title “attorney at law” is, standing alone, completely
irrelevant to the analysis dictated by the Supreme Court.12 It is a good
thing, we are sure, that we find it extremely difficult to fathom any
scenario in which an attorney might expose himself to RICO liability by
offering conventional advice to a client or performing ordinary legal tasks
(that is, by acting like an attorney). This result, however, is not
compelled by the fact that the person happens to be a lawyer, but for the
reason that these actions do not entail the operation or management of an
enterprise. Behavior prohibited by § 1962(c) will violate RICO regardless
of the person to whom it may be attributed, and we will not shrink from
finding an attorney liable when he crosses the line between traditional
rendition of legal services and active participation in directing the
enterprise. The polestar is the activity in question, not the defendant’s
status. Cf. In re American Honda Motor Co. Dealerships Relations Litig.,
941 F. Supp. 528, 560 (D. Md. 1996)(“Th[e] cases reveal an underlying
distinction between acting in an advisory professional capacity (even if
in a knowingly fraudulent way) and acting as a direct participant in [an
enterprise’s] affairs.”).
12
The Court did reference the distinction between
“outsiders” and “insiders” to a RICO enterprise, but only in
response to an argument by amicus that the operation or
management test exemplifies an overly crabbed reading of the Act
which unnecessarily limits the liability of outsiders. Reves,
507 U.S. at 184-85. In addressing this concern, the Court
stressed that outsiders who associate with an enterprise will be
liable if they “participate in the operation or management of the
enterprise itself.” Id. at 185. To put it another way,
outsiders, like all other people, will be liable only if their
actions satisfy the operation or management test.
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Bearing these principles in mind, we are confident that Handeen’s
Complaint could support a verdict against the Firm. At the outset, we
think it worthwhile to reflect upon the nature of a Chapter 13 bankruptcy
estate. Chapter 13 affords to a debtor with a regular source of income or
earnings, and with a relatively small debt load, an opportunity to obtain
a discharge of debts after devoting to creditors disposable income received
over a period not to exceed five years. See In re Aberegg, 961 F.2d 1307,
1308 (7th Cir. 1992). Because creditors are paid from future earnings
instead of assets, Chapter 13 permits a debtor who meets specified
requirements to shield his property from seizure or liquidation. See
McRoberts v. S.I.V.I. (In re Bequette), 184 B.R. 327, 333 (Bankr. S.D. Ill.
1995). Understandably, then, unless the repayment plan or bankruptcy court
provides otherwise, the debtor retains custody of his possessions, see 11
U.S.C. § 1306(b) (1994), and “confirmation of a plan vests all of the
property of the estate in the debtor,” id. § 1327(b). Furthermore, the
decision to seek Chapter 13 relief is wholly voluntary, and the debtor may,
subject to exceptions not presently relevant, dismiss his case at any time.
See id. § 1307(b). Finally, it is the debtor’s exclusive prerogative to
file a proposed repayment plan, see id. § 1321, and he enjoys many of the
powers normally reserved to a bankruptcy trustee, see id. § 1303.
These examples illustrate, in pointed fashion, that the debtor
exercises significant control over his Chapter 13 estate.13 Of
13
We certainly realize that a debtor is restrained by the
authority of the bankruptcy court. This does not, however,
alterthe reality that the debtor holds the power to create the
estate and define its limits through the proposal of a repayment
plan. Moreover, the continued existence of the Chapter 13 estate
is, for the most part, subject to the debtor’s whim. The court,
in general, acts as a reactive party in the process by granting,
or refusing to grant, approval to courses of action chosen by the
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current paramountcy is how much of that control the debtor, in this case
Lemaire, may have relinquished to others. If the Complaint is to be
believed, as it must, the Firm might have been the beneficiary of
considerable abdication. In keeping with the contentions in that pleading,
Handeen’s proof could show that the Firm and the Lemaires joined in a
collaborative undertaking with the objective of releasing Gregory from the
financial encumbrance visited upon him by Handeen’s judgment. To realize
that goal, Lemaire sought the assistance of the Firm. The attorneys, in
turn, may have suggested that Chapter 13 bankruptcy, which presented a real
opportunity for Lemaire to obtain a discharge of the debt arising from
infliction of “willful and malicious injury by the debtor to another
entity,” 11 U.S.C. § 523(a)(6) (1994), offered the most propitious
opportunity to reach the desired result. While Lemaire, obviously, was the
party on whose behalf the Chapter 13 petition was filed, the Complaint
could support a showing that the Firm navigated the estate through the
bankruptcy system. Under this postulation, the Firm directed Gregory and
his parents to enter into a false promissory note and create other sham
debts to dilute the estate, the Firm represented the elder Lemaires and
defended their fraudulent claims against objections, the Firm prepared
Lemaire’s filings and schedules containing erroneous information, the Firm
formulated and promoted fraudulent repayment plans, and the Firm
participated in devising a scheme to conceal
debtor. It is, without question, the debtor who stands at the
helm of the Chapter 13 estate. Similarly, though a trustee is
normally involved in the Chapter 13 process, “the trustee’s
functions are limited under Code § 1302 to administrative
functions.” Carr v. Demusis (In re Carr), 34 B.R. 653, 655
(Bankr. D. Conn. 1983), aff’d, 40 B.R. 1007 (D. Conn. 1984). “A
Chapter 13 trustee, unlike a Chapter 7 trustee, serves a limited
administrative function of ensuring that the debtor’s plan meets
the standards for confirmation, objecting to claims, and paying
approved claims according to the confirmed plan.” Bequette, 184
B.R. at 333.
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Gregory’s new job from the bankruptcy trustee. In short, Handeen might
prove that Lemaire, who was, after all, ultimately interested solely in
ridding himself of the oppressive judgment, controlled his estate in name
only and relied upon the Firm, with its legal acuity, to take the lead in
making important decisions concerning the operation of the enterprise.
We underscore that we have no basis for speculating whether Handeen
will, in the end, be able to substantiate this narrative. We merely
include the above hypothetical to show that relief is available “under a[]
set of facts that could be proved consistent with the allegations.”
Hishon, 467 U.S. at 73. If Handeen’s evidence is up to this challenge, we
are comfortable that he will have succeeded in proving that the attorneys
conducted the bankruptcy estate. In that event, this would not be a case
where a lawyer merely extended advice on possible ways to manage an
enterprise’s affairs. Cf. Azrielli, 21 F.3d at 521 (foreclosing liability
where defendant only acted as attorney in illicit transactions). Nor would
this be a situation where counsel issued an opinion based on facts provided
by a client. See Reves, 507 U.S. at 185-86 (concluding that accounting
firm did not violate RICO when it prepared audits in reliance upon a
client’s existing records); Nolte, 994 F.2d at 1316-17 (refusing to impose
RICO liability where attorney had generated documents based on facts
provided by client). Instead, if the Firm truly did associate with the
enterprise to the degree encompassed by the Complaint, we would not
hesitate to hold that the attorneys “participated in the core activities
that constituted the affairs of the [estate],” Napoli v. United States,
32 F.3d 31, 36 (2d. Cir. 1994), cert. denied, 115 S. Ct. 900, and reh’g
granted, factual inaccuracies corrected, and original determination
confirmed, 45 F.3d 680 (2d. Cir.), cert. denied, 115 S. Ct. 1796, and cert.
denied, 115 S. Ct. 2015-16 (1995), namely, the manipulation of the
bankruptcy process to
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obtain a discharge for Lemaire. In that instance, the Firm would have
played some “role in the conception, creation, or execution,” Azrielli, 21
F.3d at 521, of the illegal scheme, and we could safely say that the
lawyers participated in the operation or management of the estate by
assuming at least “some part in directing the enterprise’s affairs.”
Reves, 507 U.S. at 179 (emphasis in original). Therefore, we conclude that
the Complaint could justify a finding that the Firm participated in the
conduct of the alleged RICO enterprise.
2. Enterprise
The Supreme Court has remarked that “[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.” United States v. Turkette,
452 U.S. 576, 583 (1981). Consequently, “[t]he existence of an enterprise
at all times remains a separate element which must be proved by the
[plaintiff].” Id. Faithful to these excerpts from Turkette, we have
identified three characteristics possessed by all RICO enterprises: (1)
a common or shared purpose; (2) some continuity of structure and personnel;
and (3) an ascertainable structure distinct from that inherent in a pattern
of racketeering. See Atlas Pile Driving Co. v. DiCon Fin. Co., 886 F.2d
986, 995 (8th Cir. 1989). As set forth in the following paragraphs, we
determine that the enterprise alleged in this case, the bankruptcy estate,
bears these attributes.
a. Common or shared purpose
It seems to us manifest that the common or shared purpose of a
bankruptcy estate is to collect assets and pay off creditors. The Firm,
though, asserts that this prerequisite is unmet because
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the attorneys did not stand to benefit economically from the enterprise.14
This contention is specious. Our cases have established that the
enterprise itself, broadly speaking, must be marked by a common purpose,
but it is not necessary that every single person who associates with the
entity gain some discrete advantage as a result of that particular
motivation. Prospective benefit to an individual collaborator is simply
impertinent; it is sufficient if a RICO defendant shared in the general
purpose and to some extent facilitated its commission. See United States
v. Kragness, 830 F.2d 842, 856 (8th Cir. 1987)(deeming this factor
satisfied where each defendant shared common purpose and to some extent
carried it out); United States v. Lemm, 680 F.2d 1193, 1199 (8th Cir.
1982)(“Each appellant shared with Eugene Gamst the purpose of setting arson
fires so as to defraud one or more insurance companies, and each carried
out this purpose to some extent.”), cert. denied, 459 U.S. 1110 (1983).
The overall mission of Lemaire’s bankruptcy estate was to obtain a
discharge of his debts in accord with the terms of a repayment plan, and
the Firm knowingly made positive contributions toward that goal. Thus, we
easily decide that the common purpose element is present here.
b. Continuity of structure and personnel
14
The Firm cites United States v. Flynn, 852 F.2d 1045, 1052
(8th Cir.), cert. denied, 488 U.S. 974 (1988), in support of its
argument that a RICO enterprise “must be directed toward an
economic goal.” The United States Supreme Court quoted that very
passage from Flynn when it reached exactly the opposite
conclusion in National Org. for Women, Inc. v. Scheidler, 510
U.S. 249, 257 (1994)(“Nowhere in either § 1962(c) or the RICO
definitions in § 1961 is there any indication that an economic
motive is required.”). We remind litigants that they are
expected to thoroughly research all issues included within briefs
before this Court.
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In Kragness, we elaborated on this component of a RICO enterprise:
Continuity of structure exists where there is an organizational
pattern or system of authority that provides a mechanism for
directing the group’s affairs on a continuing, rather than an
ad hoc, basis. The continuity-of-personnel element involves a
closely related inquiry, in which the determinative factor is
whether the associational ties of those charged with a RICO
violation amount to an organizational pattern or system of
authority. The continuity of these elements need not be
absolute . . . . [B]oth the structure and the personnel of an
enterprise may undergo alteration without loss of the
enterprise’s identity as an enterprise.
Kragness, 830 F.2d at 856 (citations, quotation, and alteration omitted).
We resolve that the Complaint could support a conclusion that Lemaire’s
bankruptcy estate exhibited the requisite continuity of structure and
personnel.
We have already commented that the Complaint embraces an intricate
and organized scheme. The players, who remained constant throughout the
endeavor, devised a detailed plan to defraud Handeen. Lemaire, the primary
beneficiary, was required to file a bankruptcy petition, make various court
appearances, lend his signature to documents, and comply with the repayment
plan. The parents, who made false claims in order to deplete estate assets
and syphoned money back to Gregory, assumed the role of fictitious
creditors. The Firm directed the affair, representing Lemaire and his
parents, and took primary responsibility for shepherding the estate through
our often labyrinthine legal system.
Comparing these allegations to the guidelines announced in Kragness
is a fairly straightforward undertaking. Under the facts as we must
construe them, it is not challenging to discern a
-22-
continuity of structure. If Handeen is correct in his depiction, the
bankruptcy estate, perhaps captained by the Firm, was assuredly betokened
by a “system of authority that provide[d] a mechanism for directing the
group’s affairs on a continuing . . . basis.” Kragness, 830 F.2d at 856.
Moving to the personnel question, we believe the relationships between the
several actors suffice to demonstrate a sophisticated organizational
pattern.15 Put simply, the sort of association described in the Complaint,
if proven at trial, would adequately show that the estate possessed
continuity of structure and personnel.
c. Ascertainable structure
In assessing whether an alleged enterprise has an ascertainable
structure distinct from that inherent in a pattern of racketeering, it is
our normal practice to determine if the enterprise would still exist were
the predicate acts removed from the equation. “Separating the enterprise
from the pattern of racketeering is generally not problematic where a legal
entity is involved, since this entity is likely to be clearly distinct from
the acts of racketeering.” Kragness, 830 F.2d at 855 n.10 (quotation
omitted). It should come as no surprise, then, that we ascertain the
bankruptcy estate, a legal entity, would have endured even if the slate
were wiped clean of the underlying racketeering activity. Absent the
16
fraudulent filings, the fictitious claims,
15
It appears to us fundamental that the continuity of personnel
element will be satisfied where continuity of structure has been
established and where, as here, the membership of an enterprise does not
change.
16
It might be argued that the enterprise would have collapsed
without the fraudulent submissions because failure to file those
documents would have resulted in dismissal of Lemaire’s petition. In
removing the predicate acts from our analysis, however, we assume
that the filings would have been
made, but with accurate contents. Otherwise, it would be unduly
difficult to find an enterprise in situations similar to this.
-23-
and the mail fraud scheme, the estate would have persevered as a valid
attempt to give Lemaire an economic “fresh start.” The estate would still
have continued as a vehicle for obtaining a legitimate discharge of debts
through the payment of creditors.17 Cf. Atlas, 886 F.2d at 996 (detecting
distinct entity where, after putting aside predicate acts, enterprise still
exhibited on-going structure by selling real estate, loaning money, and
building houses); Kragness, 830 F.2d at 857-58 (involving enterprise that
purchased property, acquired airplanes, and rented buildings). But cf.
Stephens, Inc. v. Gelderman, Inc., 962 F.2d 808, 816 (8th Cir.
1992)(failing to find separate enterprise where, absent predicate acts, the
association had “no form or structure.”). The enterprise had an ongoing
structure independent from the predicate acts of racketeering, and there
is little chance that the estate might have impermissibly been equated with
those nefarious deeds. See Lemm, 680 F.2d at 1201 (finding ascertainable
structure where the enterprise had not been equated with the predicate acts
of racketeering).
In sum, we conclude that Handeen might prove, consistent with his
Complaint, that the bankruptcy estate possessed those
17
This Court has previously held that a Chapter 13
bankruptcy estate survives confirmation of the debtor’s repayment
plan. See Security Bank v. Neiman, 1 F.3d 687, 690 (8th Cir.
1993).
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characteristics common to RICO enterprises.18 Having thus decided, we now
proceed to the lingering issues in this appeal.
3. Pattern
It is by now familiar doctrine that a pattern of racketeering
activity is present only when predicate acts are linked by “continuity plus
relationship.” H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239
(1989)(emphasis omitted). Prohibited activities are related if they “have
the same or similar purposes, results, participants, victims, or methods
of commission, or otherwise are interrelated by distinguishing
characteristics and are not isolated events.” Id. at 240 (quotation
omitted). Continuity is more of an abstraction, but the Court has referred
to it as “both a closed- and open-ended concept,” id. at 241, which is
principally temporal in nature. “A party alleging a RICO violation may
demonstrate continuity over a closed period by proving a series of related
predicates extending over a substantial period of time.” Id. at 242.
Failure to shoulder this burden is not an insuperable bar to relief,
however, because even if the acts do not span the years necessary to
establish closed-ended continuity, see Primary Care Investors, Seven, Inc.
v. PHP Healthcare Corp., 986 F.2d 1208, 1215 (8th Cir. 1993)(“Other
Circuits have consistently held that the requirement of continuity over a
closed period is not met when the predicate acts extend less than a
year.”), the predicates will meet the definition of open-ended continuity
to the extent they
18
In reaching this result, we take comfort in cases which
indicate that a probate estate can act as a RICO enterprise.
See, e.g., Gunther v. Dinger, 547 F. Supp. 25, 27 (S.D.N.Y.
1982)(concluding that a probate estate can be a RICO enterprise).
By our estimation, there is little difference, as far as the
federal racketeering statute is concerned, between a probate
estate and a bankruptcy estate.
-25-
“involve a distinct threat of long-term racketeering activity,” H.J., 492
U.S. at 242 (emphasis added). “The determination of a pattern of
racketeering activity is a factual determination.” Terry A. Lambert
Plumbing, Inc. v. Western Sec. Bank, 934 F.2d 976, 980 (8th Cir. 1991).
The predicate acts relied upon by Handeen were related, as they had
the same purposes, results, participants, and victim. Additionally, the
racketeering activity described in the Complaint, which began in January
1987 and concluded with monthly acts of asserted mail fraud that persisted
through early 1990, was pervasive and is more than sufficient to
19
demonstrate closed-ended continuity. See Diamonds Plus, Inc. v. Kolber,
960 F.2d 765, 769 (8th Cir. 1992)(identifying as adequate multiple acts
committed over two year span); Atlas, 886 F.2d at 994 (finding continuity
where conduct occurred over a period of more than three years). Because
the predicate acts allegedly committed by the attorneys exhibited both
relatedness and continuity, we must reject the Firm’s argument that Handeen
has failed to show a pattern of racketeering activity.
4. Racketeering Activity
In challenging Handeen’s assertion that the Firm engaged in
“racketeering activity” as that term has been defined by Congress,
19
The Firm places much stock in Lambert, 934 F.2d at 981,
where we adjudged that “a single transaction which involves only
one victim and takes place over a short period of time does not
constitute the pattern of racketeering required for long-term
criminal activity under a RICO claim.” We still adhere to this
statement, but we cannot classify the racketeering activity
recounted by Handeen as “a single transaction.” Moreover, we do
not believe a period exceeding three years represents “a short
period of time.”
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see 18 U.S.C. § 1961(1) (1994) (listing as predicate acts certain state law
crimes, conduct that is “indictable” under various federal provisions, and
numerous other “offenses”), the Firm essentially relies on an averment that
the lawyers are not guilty of any “actionable behavior.” This exemplifies
a fallacy in reasoning commonly known as “begging the question.” For
example, the Firm posits that the attorneys could not have committed a
crime by instructing the elder Lemaires to press a claim against the estate
because “Gregory Lemaire believed . . . that the sums represented by the
promissory note were justly due and owing to his parents” and “[r]elatives
are permitted to assert claims in a bankruptcy proceeding.” This is all
good and well, but these bald assertions, unsupported by affidavit or
deposition testimony, do not even begin to explain why Handeen’s Complaint,
which expressly maintains the Lemaires’ claims were fraudulent, does not
state a predicate act. Similarly, the Firm denies it had any “obligation”
to notify the Chapter 13 trustee of Gregory’s change of address and
employment, but this is absolutely irrelevant to Handeen’s assertion that
the lawyers’ involvement in Lemaire’s concealment amounted to mail fraud
or some other crime.20
Put succinctly, the Firm has not listed the elements of the various
offenses and ventured to demonstrate why Handeen’s proof is lacking.
Instead, the lawyers have proffered conclusory denials. This is an
insufficient showing on behalf of a litigant who seeks summary judgment.
It is an elementary precept of civil procedure that “[t]he party moving for
summary judgment cannot sustain his
20
We note that the Firm does not contest Handeen’s
representations under Rule 9(b) of the Federal Rules of Civil
Procedure. Cf. Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs.
Co., 48 F.3d 1066, 1069 (8th Cir. 1995)(“The particularity
requirements of Rule 9(b) apply to allegations of mail fraud . .
. and wire fraud . . . when used as predicate acts for a RICO
claim.”).
-27-
burden merely by denying the allegations in the opponent’s pleadings.” 10A
Charles A. Wright et al., Federal Practice and Procedure § 2727, at 131 (2d
ed. 1983). Importantly, “a party moving for summary judgment is not
entitled to a judgment merely because the facts he offers appear more
plausible than those tendered in opposition, or because it appears that the
adversary is unlikely to prevail at trial.” Id. § 2725, at 104-05.
Handeen’s Complaint is not so facially deficient that we could justifiably
say he will be unable to corroborate his allegations that the Firm
committed designated predicate acts contained in 18 U.S.C. § 1961(1). As
a consequence, the Firm is not entitled to summary judgment.
5. Injury
The Firm next argues that Handeen has no standing to prosecute this
action because he has not suffered an injury to his business or property
attributable to a RICO violation. See Sedima, 473 U.S. at 496 (“[T]he
plaintiff only 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 violation.”). We disagree. Handeen poses many diverse theories to
expose how he was injured by the RICO enterprise. As an example, he cites
the attorneys’ fees he incurred in objecting to the Lemaires’ supposedly
fraudulent claims.21 We think that this asserted liability, if proven at
trial, qualifies as an injury to business or property that was proximately
caused by a predicate act of racketeering. See Holmes v. Securities
Investor Protection Corp., 503 U.S. 258, 268
21
Here, the Firm does advert to the record in an attempt to
establish that Handeen has not adequately demonstrated his
claimed attorneys’ fees. We hold, however, that the documents
submitted by Handeen are sufficient to raise a genuine issue of
material fact on this point.
-28-
(1992)(deciding that RICO violation must be proximate cause of injury to
business or property); Bowman v. Western Auto Supply Co., 985 F.2d 383,
385-86 (8th Cir.)(explaining that a § 1962(c) plaintiff must allege injury
traceable to a predicate act of racketeering), cert. denied, 508 U.S. 957
(1993). Because this ground for recovery is, in itself, sufficient to
convey standing, we need not consider the soundness of the other
alternatives advanced by Handeen.
C. 18 U.S.C. § 1962(d)
Handeen also charges that the Firm violated 18 U.S.C. § 1962(d)
through participation in a RICO conspiracy. When a plaintiff has already
established a right to relief under § 1962(c), he may show a conspiracy to
violate RICO simply by presenting additional evidence that the defendant
entered into an agreement to breach the statute. See United States v.
Bennett, 44 F.3d 1364, 1374 (8th Cir.), cert. denied, 115 S. Ct. 2279, and
cert. denied, 115 S. Ct. 2585, and cert. denied, 116 S. Ct. 98 (1995). In
the context of this case, it is momentous that a plaintiff “need only
establish a tacit understanding between the parties, and this may be shown
wholly through the circumstantial evidence of [each defendant’s] actions.”
Darden, 70 F.3d at 1518 (8th Cir. 1995)(quotation omitted). On the force
of these authorities, we believe that Handeen’s Complaint, broadly
construed, provides an ample foundation to sustain a finding that the Firm
“objectively manifested an agreement to participate directly, or
indirectly, in the affairs of [the] enterprise through the commission of
two or more predicate crimes.” Bennett, 44 F.3d at 1372 (quotation
omitted).
D. The State Law Claim
-29-
Handeen also attempts to hold the Firm liable under state law, and
to buttress this endeavor he alludes in his Complaint to two Minnesota
statutes. See Minn. Stat. Ann. §§ 481.07-.071 (West 1990). The district
court granted summary judgment on this aspect of the case because it
reasoned that the enactments in question merely authorize treble damages
in certain civil suits and do not create independent grounds for relief.
See Gilchrist v. Perl, 387 N.W.2d 412, 419 (Minn. 1986)(stating that the
two provisions are “virtually identical”); Love v. Anderson, 61 N.W.2d 419,
422 (Minn. 1953)(“[Minn. Stat. Ann. § 481.07] deals with penalties for
deceit or collusion. It does not create a new cause of action. The common
law gives the right of action and the statute the penalty.”). We think the
district court correctly appraised the legal effect of these statutes, but
in light of the peculiar stance in which this action presents itself, we
cannot agree that summary judgment was appropriate. We note, in
particular, that this claim expressly incorporates all of the allegations
relevant to the RICO charge, and Handeen unequivocally asserts that the
Firm acted to “deceive a party to a court proceeding and deceive the
court.” Mindful of the liberal construction we are required at this stage
of the proceedings to afford the Complaint, we ascertain that Handeen’s
pleading sufficiently conveys that he intends to prove the Firm committed
“deceit” in violation of the common law. Giving Handeen the benefit of the
doubt, we accept his explanation that he invoked Minn. Stat. Ann. §§
481.07-.071 for damages purposes only. Nevertheless, because the district
court dismissed this portion of the Complaint on purely procedural grounds,
we think it would be advisable for that court, with its greater familiarity
with local law, to determine on remand whether Handeen’s contentions could
constitute “deceit or collusion” pursuant to the common law of Minnesota.
-30-
III. CONCLUSION
For reasons expressed in the preceding pages, we reverse the district
court’s order to the extent it grants the Firm’s motion for summary
judgment on Handeen’s state law and RICO claims. We affirm the district
court’s order in all other respects and remand for further proceedings
consistent with this opinion.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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