975 F.2d 1134 (5th Cir. 1992), 91-1790, Tel-Phonic Services, Inc. v. TBS Intern., Inc.

Docket Nº:91-1790.
Citation:975 F.2d 1134
Party Name:RICO Bus.Disp.Guide 8139 TEL-PHONIC SERVICES, INC., William Kirk, and John Bowen, Plaintiffs-Appellants, v. TBS INTERNATIONAL, INC. a/k/a Dy-Con, International, Inc. and the Dispatch Printing Company, Defendants-Appellees.
Case Date:October 23, 1992
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

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975 F.2d 1134 (5th Cir. 1992)

RICO Bus.Disp.Guide 8139

TEL-PHONIC SERVICES, INC., William Kirk, and John Bowen,



TBS INTERNATIONAL, INC. a/k/a Dy-Con, International, Inc.

and the Dispatch Printing Company, Defendants-Appellees.

No. 91-1790.

United States Court of Appeals, Fifth Circuit

October 23, 1992

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[Copyrighted Material Omitted]

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Charles W. Ewing, Hilliard, Ohio, for Tel-Phonic Services, Inc., et al.

Julia L. Armstrong, Terence M. Murphy, Jones, Day, Reavis & Pogue, Dallas, Tex., for TBS Intern., and The Dispatch Printing Co.

Appeal from the United States District Court for the Northern District of Texas.

Before POLITZ, Chief Judge, WILLIAMS and DUHE, Circuit Judges.

DUHE, Circuit Judge:

We are asked to review the sufficiency of a multiple-claim complaint. Plaintiff John Bowen contracted with Defendant

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TBS International, Inc., to purchase computer equipment and to market TBS's telephone-calling software and recordings. A superseding contract between TBS and Plaintiff Tel-Phonic Services, Inc., a corporation jointly owned by Bowen and Plaintiff William Kirk, extended Plaintiffs' marketing area and redefined the parties' rights.

According to the complaint and amended complaint, a series of service problems followed the initial contract, such as failure of call program services, failure of delivery of a magnetic tape drive, and refusal to provide requested technical representatives. Although some initial problems were compromised, Tel-Phonic charges that TBS and its parent corporation, The Dispatch Printing Company, continually made misrepresentations to Plaintiffs, billed Tel-Phonic for charges not due, coerced Tel-Phonic to waive commissions and other contractual rights to revenue, and tried to destroy Tel-Phonic's business by such coercive tactics. Plaintiffs also charge that Defendants failed to safe-guard Tel-Phonic's customer relations and diverted a major customer order. Plaintiffs sued TBS and The Dispatch Printing Company, in federal district court in Tennessee, asserting RICO 1 violations, an antitrust claims, breach of contracts, fraud, and breach of fiduciary duty.

On Defendants' motion to dismiss, the Tennessee district judge ruled that the complaint failed to state a RICO claim and transferred the remaining claims to the Northern District of Texas. Upon renewal of Defendants' motion, the Texas district court dismissed the remaining claims. Plaintiffs challenge the transfer of venue and the dismissal of each of their claims. For the following reasons, we dismiss the challenge to the transfer of venue; affirm the judgment dismissing the RICO, antitrust, and fiduciary claims; and reverse and remand the fraud and breach-of-contract claims.


Asserting that venue was proper in Tennessee, Plaintiffs allege error in the transfer to the Northern District of Texas. Defendants contend that this Court cannot review the transfer order, because it was entered by a district court within the Sixth Circuit. 2 We need not decide this issue. Having agreed to transfer venue to the Northern District of Texas, Plaintiffs cannot now complain of what the district court has done in accordance with their agreement. See Pacific R.R. Mo. v. Ketchum, 101 U.S. 289, 297, 25 L.Ed. 932, 936 (1880). Although Plaintiffs initially objected to Defendants' motion to dismiss based on improper venue, Plaintiffs later advised the court that they had no objection to transferring the matter to federal court in Dallas. In fact Plaintiffs invited the court to transfer the case to Dallas if it was not inclined to rule against Defendants on the motion to dismiss. A party will not be heard to appeal the propriety of an order to which it agreed. Hunt v. Bankers Trust Co., 799 F.2d 1060, 1066 (5th Cir.1986); Haitian Refugee Center v. Civiletti, 614 F.2d 92, 93 (5th Cir.1980).

Accordingly, we dismiss that portion of Plaintiffs' appeal challenging the transfer from the Eastern District of Tennessee to the Northern District of Texas.


The Tennessee district court dismissed Plaintiffs' RICO claims for failure to state a claim under Federal Rule of Civil Procedure 12, and the Texas district court likewise dismissed the remaining federal claims (anti-trust claims) and all state claims. A motion to dismiss an action for failure to state a claim "admits the facts alleged in the complaint, but challenges plaintiff's rights to relief based upon those facts." Ward v. Hudnell, 366 F.2d 247, 249 (5th Cir.1966). Dismissal cannot be upheld unless it appears beyond doubt that

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the plaintiffs would not be entitled to recover under any set of facts that they could prove in support of the claims. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Worsham v. City of Pasadena, 881 F.2d 1336, 1339 (5th Cir.1989); Partridge v. Two Unknown Police Officers, 791 F.2d 1182, 1185-86 (5th Cir.1986). This Court independently applies the same test employed by the trial court. Worsham, 881 F.2d at 1339.

A. The RICO Claims

  1. Appellate Jurisdiction

    Because the Tennessee court dismissed the RICO claims before it transferred the matter to a district court within our Circuit, Defendants question whether this Court has jurisdiction to review that dismissal. We hold that we do.

    The order dismissing the RICO claims was not final when the transfer occurred and was subject to revision at any time before entry of final judgment. Fed.R.Civ.P. 54(b). The district court in Texas had jurisdiction to review the dismissal by the district court in Tennessee. "A court has the power to revisit prior decisions of its own or of a coordinate court in any circumstance." Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817, 108 S.Ct. 2166, 2178, 100 L.Ed.2d 811 (1988) (recognizing that the law-of-the-case doctrine expresses the practice of courts to refuse to reopen what has been decided but does not limit their power). The fact that the Texas court did not review the Tennessee court's dismissal of the RICO claims does not insulate the issue from appellate review. See id. The RICO dismissal became appealable only when the entire case was final. We are reviewing the final judgment of the district court in Texas, as based in part on the opinion of the federal district judge in Tennessee. See also Astarte Shipping Co. v. Allied Steel & Export Serv., 767 F.2d 86, 87 (5th Cir.1985) (court of appeals of the circuit of the transferee district court has jurisdiction to review decisions made before a 28 U.S.C. § 1407 transfer).

  2. Applicable Law

    When a case is transferred from a district in another circuit, the precedent of the circuit court encompassing the transferee district court applies to the case on matters of federal law. See 1B James W. Moore et al., Moore's Federal Practice p 0.404[4.--2] (1992) ("[T]heoretically the [federal] law is the same [in both circuits], though the courts of appeals may entertain different ideas about what it is."). Accordingly, we assess the federal claims under this Circuit's precedent.

  3. Reason for Dismissal of the RICO Claims

    Plaintiffs asserted that by a pattern of fraudulent acts Defendants have violated the Racketeer Influenced and Corrupt Organizations (RICO) Act and have engaged in a RICO conspiracy.

    The RICO predicate acts were mail and wire fraud. Compl. pp 51-53. The district court dismissed the RICO claims, finding that Plaintiffs failed "to allege a continuous pattern of intentional acts designed to defraud the plaintiffs" and failed "to plead with particularity the requisite elements of wire and mail fraud pursuant to Rule 9(b)." Mem. Op. Sept. 12, 1988 at 3, 4; see Fed.R.Civ.P. 9(b). Because the complaint insufficiently pleads a continuous pattern of racketeering activity or an agreement to commit at least two predicate acts of racketeering activity, we affirm the dismissal of the RICO claims.

    a. Averments of Fraud

    We find that most of the alleged wrongs are not pleaded with sufficient particularity to constitute the RICO predicate act of wire fraud or mail fraud. Rule 9(b) requires particularity in pleading the "circumstances constituting fraud." This particularity requirement applies to the pleading of fraud as a predicate act in a RICO claim as well. Landry v. Air Line Pilots Ass'n Int'l AFL-CIO, 901 F.2d 404, 430 (5th Cir.), cert. denied, --- U.S. ----, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990); see Elliott

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    v. Foufas, 867 F.2d 877, 880 (5th Cir.1989).

    At a minimum, Rule 9(b) requires allegations of the particulars of "time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby." 5 C. Wright & A. Miller, Federal Practice and Procedure § 1297, at 590 (1990); see Keith v. Stoelting, Inc., 915 F.2d 996, 1000 (5th Cir.1990). Allegations about conditions of the mind, such as defendant's knowledge of the truth and intent to deceive, however, may be pleaded generally. Fed.R.Civ.P. 9(b).

    The complaint gives some specifics about communications through the mails or on the telephone, but generally fails to specify the content of any misrepresentation. 3 Misrepresentations that occurred at a meeting do not constitute wire or mail fraud, 18 U.S.C.A. §§ 1341, 1343 (West 1984 & Supp.1992)...

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