Robert L. Kroenlein Trust v. Kirchhefer

• Decision Date: 25 August 2014
• Docket Number: No. 13–8040.,13–8040.
• Citation: 764 F.3d 1268
• Parties: ROBERT L. KROENLEIN TRUST, by and through Deborah ALDEN, Successor Trustee; and Chugwater Brewing Company, Inc. a Wyoming corporation, Plaintiffs–Appellants, v. Gary Bruce KIRCHHEFER; Commodore Bar, Inc.; Rick L. Bowen; Silver Dollar Bar of Lusk, LLC, and Larry R. Halligan, Defendants–Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

764 F.3d 1268

ROBERT L. KROENLEIN TRUST, by and through Deborah ALDEN, Successor Trustee; and Chugwater Brewing Company, Inc. a Wyoming corporation, Plaintiffs–Appellants,

v.Gary Bruce KIRCHHEFER; Commodore Bar, Inc.; Rick L. Bowen; Silver Dollar Bar of Lusk, LLC, and Larry R. Halligan, Defendants–Appellees.

No. 13–8040.

United States Court of Appeals, Tenth Circuit.

Aug. 25, 2014.

Patrick J. Crank, Crank Legal Group, P.C., Cheyenne, WY, for Appellants.

R. Todd Ingram (Scott J. Olheiser with him on the brief), Ingram Olheiser, P.C., Casper, WY, for Appellees.

Before TYMKOVICH, McKAY, and MATHESON, Circuit Judges.

TYMKOVICH, Circuit Judge.

The Robert L. Kroenlein Trust owns and operates J & B Liquors, a business in Torrington, Wyoming. In 2005, a salesman for one of J & B's beer distributors, Gary Kirchhefer, began stealing beer from J & B's account and reselling the stolen beer to other bars and liquor stores in Wyoming, including those owned by the defendants. One of the owners of J & B discovered Kirchhefer's theft on August 31, 2007, and Kirchhefer was eventually prosecuted and convicted of the crime.

Seeking recovery of its losses, Kroenlein (we refer to J & B and its owners collectively as Kroenlein) ¹ filed suit on August 15, 2011, against Kirchhefer, two of the bars to which he sold his ill-gotten beer, and the owners of the bars. The suit asserted several claims alleging that the defendants had violated the federal Racketeer Influenced and Corrupt Organization (RICO) statute, 18 U.S.C. §§ 1961– 68. The defendants moved for summary judgment on several grounds, including that Kroenlein's RICO claims were barred by RICO's four-year statute of limitations. The district court granted summary judgment on the grounds that all of Kroenlein's RICO claims were time-barred. In the alternative, the district court also found that the undisputed evidence could not support Kroenlein's RICO claims because the defendants were not properly associated with a statutorily required enterprise under RICO.

Because we agree Kroenlein's RICO claims are time-barred, we AFFIRM the district court's dismissal of Kroenlein's claims.

I. Background

J & B Liquors is a bar and liquor store located in Torrington, Wyoming. Prior to his death in November 2004, Robert L. Kroenlein managed and operated J & B Liquors through the Kroenlein Trust. Following Mr. Kroenlein's death, his daughter, Deborah Alden, became the successor trustee.

After Mr. Kroenlein's death in 2004, Eric Alden, Deborah's husband, assumed the role of operator and manager of the store. At the time, Mr. Alden worked as the Platte County Attorney in Wheatland, Wyoming, a city located sixty miles away from Torrington. Both he and his wife lived in Wheatland until January 2007. Between 2004 and 2007, Margaret Hauf—the store manager during Kroenlein's tenure—ran the day-to-day operations of the store. During this time period, Mr. Alden would visit the store on the weekends and would call Hauf every morning to check in. In January 2007, the Aldens moved to Torrington and Mr. Alden began to manage J & B full time.

J & B stocked beer from several distributors. In particular, J & B purchased Anheuser Busch products from a local distributor, Orrison Distributing Company. Every Monday, an Orrison salesman would conduct a “presale” during which the salesman would inventory the beer in J & B's cooler, determine what Anheuser Busch products needed to be ordered, and put together an order for J & B. The Orrison salesman would enter this order on a digital device and would later transmitthe order to the Orrison warehouse in Cheyenne by plugging the device into a phone line.

The following day, Orrison deliverymen would drive to J & B, unload the beer from the truck and stack the beer in the alley behind J & B for shelving. Orrison would deliver the beer to J & B around 6:30 in the morning. Upon delivery, Hauf would only periodically confirm that the amount of beer on the invoice matched the amount of beer brought into the store. According to Mr. Alden, this inventory count was not consistently performed because Hauf was “busy doing other things” and she was the only employee who opened the store on Tuesdays. App. 1471. This perfunctory practice apparently was specific to beer deliveries, as another employee would open with Hauf on the days liquor was delivered to ensure an inventory count was done on each liquor delivery.

In 2005, Gary Kirchhefer, an Orrison salesman, began looting beer from J & B Liquors.² The intricacies of the scheme were not particularly complex. Kirchhefer would perform a presale at J & B on Monday. When he placed the order for J & B, he would order extra cases of beer on J & B's account—beer that J & B did not need, but that Kirchhefer intended to give away or sell to other bars. The next day, Kirchhefer would accompany the delivery truck to J & B, dismiss the driver, and stack most of the beer in J & B's cooler himself, save for the extra beer he intended to resell. Kirchhefer would then load the reserved extra beer into his own van and continue on to his next stop.

Although Kirchhefer testified that he sold or gave away the beer to several people, he mainly resold the stolen beer to the Silver Dollar Bar, owned by Larry Halligan, and the Commodore Bar, owned by Rick Bowen. Kirchhefer would sell Halligan and Bowen the beer at the discounted price of $10–$12 a case; in contrast, normal wholesale Orrison products retailed for $17–$18 per case. All three defendants agree that neither Halligan nor Bowen knew the beer was stolen from another customer.

All of this went on for at least two years, between 2005 and 2007. And the theft did not go unnoticed by J & B's accountants. Carol Clark, one of J & B's accountants, testified that she pointed out to Mr. Alden that J & B's beer purchases were exceeding beer sales as early as 2004, the year Robert Kroenlein died. Eric Alden believed that several factors could have contributed to J & B's beer losses, such as seasonal variations in purchases and sales, employee error, accounting error, employee theft, or theft by one of J & B's several beer distributors. Nevertheless, Mr. Alden testified that by the fall of 2005 he knew that there were significant discrepancies between “the statements, the invoices of Orrison, and the beer sales from J & B” and “was aware of the fact that the problem was not easily explained just by seasonal discrepancies.” App. 1502.³ Althoughhe had “subliminally known that there was something wrong with the numbers on beer sales and they didn't add up or look right,” Mr. Alden only “began to take a hard look” at the problem in March 2007—several months after he moved to Torrington and began managing J & B full time. App. 1497. Mr. Alden was aware that, in each year beginning in 2005, J & B's income tax returns showed that J & B had purchased more beer than it sold in that year, but he merely “wondered about it” and did not start “checking invoices, receipts, visiting with employees or taking any active conduct to find out what was happening.” App. 1561.

Mr. Alden finally took action when he performed the first inventory of the store on August 30 and 31, 2007. On August 30, after closing the store around midnight, he inventoried the amount of Orrison products in the store. The following day, after Kirchhefer had made his delivery, Mr. Alden repeated his inventory of the store's Orrison products. He immediately discovered that there were significant discrepancies between the amount of beer ordered from Orrison and the quantity delivered. But Mr. Alden did not notify Orrison, the police, or any employees about the missing beer because he “wanted to find out what was happening” and “apprehend the thief.” App. 1473–74.

Mr. Alden continued to take inventory of the storeroom before and after each Orrison delivery twice a week for two months. On September 17 and 18, 2007, he inventoried the Orrison products following a delivery by another Orrison employee, Todd Werner, which revealed no shortages. Mr. Alden testified that “it was then that I realized that the common denominator of the thefts was not only that they were all coming from Orrison, but also that they were all occurring only on the days that Mr. Kirchhefer was the one doing it.” App. 1479. Mr. Alden still declined to contact law enforcement for fear of alerting the thief because he wanted to “get firm evidence of what was going on.” App. 1480. Finally, in late October 2007, he installed a video surveillance camera at J & B. Video taken from the camera revealed Kirchhefer loading a portion of J & B's beer into his own van. Every video of Kirchhefer filmed after October 30, 2007, showed Kirchhefer's theft of the beer missing from the Orrison delivery.

In October 2007, Mr. Alden contacted law enforcement. Kirchhefer was eventually charged and pleaded guilty to theft. As part of his plea agreement, Kirchhefer revealed in 2010 that he had sold the stolen beer to Halligan and Bowen.

On August 15, 2011, almost four years after Eric Alden took his first inventory of the store, Kroenlein filed a complaint against Kirchhefer, Bowen, Halligan, the Commodore Bar, and the Silver Dollar Bar, alleging eight causes of action. The complaint alleged two state law claims and six RICO claims—three violations of 18 U.S.C. §§ 1962(a),(c), and (d) by Kirchhefer, the Silver Dollar Bar, and Halligan, and three violations of the same statutory provisions by Kirchhefer, the Commodore Bar, and Bowen. According to the complaint, the defendants engaged in a pattern of racketeering activity by committing wire fraud in violation of 18 U.S.C. § 1343.

The district court granted summary judgment to the defendants on the grounds that all of Kroenlein's RICO claims were barred by the statute of limitations because the undisputed facts established (1) defendants did not fraudulently conceal Kroenlein's cause of action; and (2) Kroenlein was aware of its injury by the...