Desoto v. Condon, 032410 FED9, 08-56832

Docket Nº:08-56832
Party Name:TOMMY DESOTO, an individual; GEORGE KOSTY, an individual; STEVE TERRILL, an individual; ANTOINETTE CARDENAS, an individual; DOUGLAS LOVISON, an individual; KATHY FERRIN, an individual, Plaintiffs-Appellants, v. CHRISTOPHER CONDON, an individual; RICHARD CONDON, an individual; TRAGO LP, a British Virgin Islands limited partnership; FX HOLDINGS INTER
Judge Panel:Before: RYMER, WARDLAW and N.R. SMITH, Circuit Judges.
Case Date:March 24, 2010
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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TOMMY DESOTO, an individual; GEORGE KOSTY, an individual; STEVE TERRILL, an individual; ANTOINETTE CARDENAS, an individual; DOUGLAS LOVISON, an individual; KATHY FERRIN, an individual, Plaintiffs-Appellants,

and

FRED HOOD, an individual; JOHN SCHUMACHER, as trustee of the Schumacher Family Trust, Plaintiffs,

v.

CHRISTOPHER CONDON, an individual; RICHARD CONDON, an individual; TRAGO LP, a British Virgin Islands limited partnership; FX HOLDINGS INTERNATIONAL LTD, a British Virgin Islands corporation; TRAGO USA, INC., a California corporation; CT HOLDINGS INTERNATIONAL, INC., a Delaware corporation; PULSE ENTERTAINMENT GROUP, L.L.C., a Nevada limited liability company; TRAGO INTERNATIONAL, INC., a Delaware corporation; RUVA INTERNATIONAL, INC., a Nevada corporation. Defendants-Appellees.

No. 08-56832

United States Court of Appeals, Ninth Circuit

March 24, 2010

NOT FOR PUBLICATION

Argued and Submitted March 4, 2010 Pasadena, California

Appeal from the United States District Court No. 8:08-cv-00514-AHS-MLG for the Central District of California Alicemarie H. Stotler, Senior District Judge, Presiding

Before: RYMER, WARDLAW and N.R. SMITH, Circuit Judges.

MEMORANDUM[*]

Tommy Desoto and others who are limited partners of Trago LP, shareholders of Trago International, or creditors of Trago LP (collectively, Desoto) appeal the district court's order dismissing with prejudice their Racketeer Influenced and Corrupt Organizations Act (RICO) claims against Christopher Condon and others (collectively, Condon) for stealing the assets of Trago LP. We affirm.

I

We review a district court's dismissal for failure to state a claim de novo. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). "We review the district court's denial of leave to amend the complaint for abuse of discretion." Gardner v. Martino, 563 F.3d 981, 990 (9th Cir. 2009).

II

The district court properly concluded that Desoto lacks RICO standing. Shareholders and limited partners typically lack standing to assert RICO claims where their harm is derivative of their corporation or partnership's harm. See Sparling v. Hoffman Constr. Co., 864 F.2d 635, 640-41 (9th Cir. 1988). Such plaintiffs can establish standing only by showing an injury "distinct from that to other shareholders" or a special duty between the shareholder and the defendant. Id. at 640-41. The gravamen of...

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