Bonton v. Archer Chrysler Plymouth, Inc.

• Decision Date: 09 June 1995
• Docket Number: Civ. A. No. H-94-3886.
• Citation: 889 F. Supp. 995
• Parties: Janice BONTON, Plaintiff, v. ARCHER CHRYSLER PLYMOUTH, INC., Defendant.
• Court: U.S. District Court — Southern District of Texas

889 F. Supp. 995

Janice BONTON, Plaintiff, v. ARCHER CHRYSLER PLYMOUTH, INC., Defendant.

Civ. A. No. H-94-3886.

United States District Court, S.D. Texas.

June 9, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

K.L. Krishnan, Houston, TX, for plaintiff.

Michael E. Warrick, Hudgins, Hudgins & Warrick, Houston, TX, for defendant.

ORDER OF PARTIAL DISMISSAL AND REMAND

HUGHES, District Judge.

1. The court adopts the memorandum and recommendation of the United States Magistrate Judge signed May 11, 1995.

2. Janice Bonton's RICO claim against Archer Chrysler Plymouth, Inc. is dismissed with prejudice.

3. Bonton's claims for breach of contract, conversion, conspiracy, violation of the Texas Deceptive Trade Practices Act, and negligence are remanded to the 151st Judicial District Court of Harris County, Texas.

MEMORANDUM AND RECOMMENDATION

CRONE, United States Magistrate Judge.

Pending before the court is Defendant Archer Chrysler Plymouth, Inc.'s ("Archer") Motion to Dismiss Pursuant to Rule 12(b) of the Federal Rules of Civil Procedure (# 2). Having reviewed the pending motion, the submissions of the parties, the pleadings, and the applicable law, this court recommends that Archer's motion be granted.

I. Background.

In October 1989, Plaintiff Janice Bonton's ("Bonton") vehicle, a 1987 Dodge Charger, was damaged by a fire in its electrical system. Bonton arranged to have her automobile towed to the service department of Archer to permit its employees to examine the vehicle, determine the cause and extent of damage, and provide Bonton an estimate of the cost of repairing the vehicle. After being informed that the cost of repair would exceed the market value of the automobile, Bonton requested Archer to postpone making any repairs. Bonton contends that Archer agreed to hold and safeguard the vehicle while Bonton tried to settle her dispute with Bridgestone/Firestone, Inc. ("Firestone"). Firestone had repaired the electrical wiring several days prior to the electrical system shorting out. According to Bonton, Archer informed her that the fire was caused by Firestone's improper repair of the electrical system.

Bonton was unable to settle her claims against Firestone, and on April 4, 1991, she filed suit in County Court at Law No. 1 in Fort Bend County, Texas, against Firestone ("County Court lawsuit"). After being advised that Archer could not locate her automobile in order to permit its inspection by Firestone, Bonton amended her pleadings to join Archer as an additional defendant. In September 1993, Firestone moved for dismissal of the claims against it on the basis that Firestone had not been provided the opportunity to inspect the vehicle after the suit had been filed. The court granted Firestone's motion and dismissed Bonton's claims against it. Consequently, Bonton amended her pleadings to assert that she had lost the opportunity to recover the damages that were owed to her by Firestone due to Archer's breach of its contract of bailment to store and safeguard her vehicle. Although the County Court lawsuit was scheduled for trial on October 19, 1994, one week prior to the trial setting, Bonton attempted to amend her pleadings to assert claims that Archer had violated the provisions of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The court, however, did not allow Bonton to amend to add the RICO claims. Bonton eventually non-suited the County Court lawsuit.

On October 17, 1994, Bonton filed her original petition in this action in the 151st Judicial District Court of Harris County, Texas, alleging civil conspiracy and claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) & (d), stemming from the alleged taking of her automobile by Archer. Later that day, Bonton filed her first amended original petition, adding claims for breach of contract, conversion, violation of the Texas Deceptive Trade Practices Act, and negligence. Archer removed the case to this court on the basis of federal question jurisdiction. On November 15, 1994, Archer filed the instant motion to dismiss for failure to state a claim.

II. Analysis.

A. The Applicable Standard.

A motion to dismiss under Rule 12(b)(6) tests only the formal sufficiency of the statements of the claims for relief. It is not a procedure for resolving contests about the facts or the merits of the case. In ruling on a motion to dismiss, the court must take the plaintiff's allegations as true, view them in a light most favorable to her, and draw all inferences in her favor. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284-85 (5th Cir.1993). The motion must be denied unless it appears to a certainty that the plaintiff can prove no set of facts that would entitle her to relief. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); McCartney v. First City Bank, 970 F.2d 45, 47 (5th Cir.1992). For purposes of this motion, the court accepts the facts alleged in the first amended original petition as true.

B. RICO.

In 1970, Congress enacted RICO as Title IX of the Organized Crime Control Act to combat organized crime through both criminal prosecutions and private actions. 18 U.S.C. § 1961 et seq. The "legislative history forcefully supports the view that the major purpose of Title IX is to address the infiltration of legitimate business by organized crime." United States v. Turkette, 452 U.S. 576, 591, 101 S.Ct. 2524, 2532, 69 L.Ed.2d 246 (1981). A private right of action is provided under 18 U.S.C. § 1964(c):

Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee.

Both the government and private plaintiffs may sue for violations of the substantive provisions of the statute. Religious Technology Ctr. v. Wollersheim, 796 F.2d 1076, 1080 (9th Cir.1986), cert. denied, 479 U.S. 1103, 107 S.Ct. 1336, 94 L.Ed.2d 187 (1987).

Under RICO, while four distinct offenses are declared to be unlawful, common elements are present in all four offenses. See 18 U.S.C. § 1962(a)-(d); Calcasieu Marine Nat'l Bank v. Grant, 943 F.2d 1453, 1461 (5th Cir.1991); Ocean Energy II v. Alexander & Alexander, Inc., 868 F.2d 740, 742 (5th Cir.1989); Delta Truck & Tractor, Inc. v. J.I. Case Co., 855 F.2d 241, 242 (5th Cir. 1988), cert. denied, 489 U.S. 1079, 109 S.Ct. 1531, 103 L.Ed.2d 836 (1989). "Reduced to its three essentials, a civil RICO claim must involve: (1) a person who engages in (2) a pattern of racketeering activity; (3) connected to the acquisition, establishment, conduct, or control of an enterprise." Calcasieu Marine Nat'l Bank, 943 F.2d at 1461 (quoting Delta Truck & Tractor, Inc., 855 F.2d at 242 (emphasis in original)); see also Landry v. Air Line Pilots Ass'n Int'l, 901 F.2d 404, 434 (5th Cir.), cert. denied, 498 U.S. 895, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990); Smith v. Cooper/T. Smith Corp., 886 F.2d 755, 756 (5th Cir.1989); Ocean Energy II, 868 F.2d at 743.

In this case, Bonton alleges that Archer violated 18 U.S.C. § 1962(c) and (d) as the basis for recovery of damages under § 1964(c). Section 1962(c) provides:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.

18 U.S.C. § 1962(c). Section 1962(d) states that "it shall be unlawful for any person to conspire to violate any of the provisions of subsections (a), (b), or (c) of this section." 18 U.S.C. § 1962(d).

Archer seeks dismissal of Bonton's RICO claim on the grounds that Bonton fails properly to plead the existence of an enterprise, a relationship between Archer and any RICO enterprise, a pattern of racketeering activity, fraud with particularity, or the existence of a conspiracy to violate RICO.

1. Existence of an Enterprise.

RICO defines "enterprise" very broadly. The term "enterprise" includes "any individual, partnership, corporation, association, or other legal entity, any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). There is no restriction upon the associations embraced by the definition: an enterprise includes any union or group of individuals associated in fact. Turkette, 452 U.S. at 580, 101 S.Ct. at 2527. A legitimate business entity, such as a corporation, may constitute an "enterprise." United States v. Brown, 583 F.2d 659, 663 (3d Cir.1978), cert. denied, 440 U.S. 909, 99 S.Ct. 1217, 59 L.Ed.2d 456 (1979). An illegal organization also may be an enterprise for RICO purposes. Turkette, 452 U.S. at 580-81, 101 S.Ct. at 2527-28. In Turkette, the court stated that an enterprise is proved by "evidence of an ongoing organization, formal or informal, and by evidence that the various associates function as a continuing unit." Id. at 583, 101 S.Ct. at 2528. In addition, the enterprise must be shown to have an existence "separate and apart from the pattern of activity in which it engages." Id. A plaintiff must plead specific facts, not mere conclusory allegations, to establish the enterprise. Montesano, 818 F.2d at 427.

In this case, Bonton asserts in ¶ 24 of her first amended petition that Archer "together with Robert Paul Archer, Paul Finnigan, and Aubrey Vincent conducted their affairs as a continuing enterprise affecting interstate commerce by selling, motor vehicles, parts, and services to the public, (the `enterprise')." In describing Archer in the introductory paragraph,...