CVLR Performance Horses, Inc. v. Wynne

• Decision Date: 02 April 2012
• Docket Number: Case No. 6:11–CV–00035.
• Citation: 852 F.Supp.2d 705
• Parties: CVLR PERFORMANCE HORSES, INC., Plaintiff, v. John L. WYNNE, et al., Defendants.
• Court: U.S. District Court — Western District of Virginia

852 F.Supp.2d 705

CVLR PERFORMANCE HORSES, INC., Plaintiff,

v.John L. WYNNE, et al., Defendants.

Case No. 6:11–CV–00035.

United States District Court,

W.D. Virginia,

Lynchburg Division.

April 2, 2012.

Recognized as Repealed by Implication

18 U.S.C.A. § 3575(e)

Gary Michael Bowman, Roanoke, VA, for Plaintiff.

Seth Eli Twery, Seth E. Twery, P.C., John M. Perry, Jr., Alison Ferguson Gobble, William Earl Phillips, Edmunds & Williams PC, Lynchburg, VA, for Defendants.

MEMORANDUM OPINION

NORMAN K. MOON, District Judge.

This action arises out of business dealings and financial transactions between the Plaintiff, CVLR Performance Horses, Inc. (“CVLR”), and various business entities and individuals. Previously, I conducted a hearing on Defendants' original motions to dismiss CVLR's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). At that time, I took the motions under advisement upon CVLR's representation that it wished to amend its complaint. Eventually, I granted CVLR leave to amend its complaint, denied the original motions to dismiss as moot, and permitted Defendants to renew their motions to dismiss. Thereafter, CVLR filed an amended complaint in which it seeks compensatory damages as well as equitable relief. Defendants subsequently renewed their motions to dismiss.

CVLR brings a claim under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961–1968. In addition, CVLR asserts state law claims for breach of contract, tortious interference with the performance of contract, and business conspiracy in violation of Virginia Code § 18.2–499. However, my inquiry begins and ends with the RICO claim, which I find is unsupported by CVLR's factual allegations, and without which I lack jurisdiction over this matter. Accordingly, for the reasons that follow, I will dismiss the case.

I. Background

At nearly 60 pages and 189 paragraphs in length, CVLR's amended complaint does not lend itself to a concise summary. Nevertheless, I will endeavor to restate the multitude of facts alleged, which at this stage I must accept as true.

A. Facts Relating to the Purchase of the Riding Center Property

In late 2006, Crystal Rivers (“Ms. Rivers”), the president of CVLR, visited the office of John Wynne (“Mr. Wynne”) in response to an advertisement for the rental of pasture land. At the time, Mr. Wynne was the president of The Rivermont Banking Company, Inc., which is now known as Rivermont Consultants, Inc. (“Rivermont”). In the course of their conversation, Mr. Wynne represented to Ms. Rivers that Rivermont was a bank and he agreed, ostensibly on behalf of Rivermont, to finance the purchase of real estate and equipment for CVLR's horse riding business.

On October 12, 2007, Mr. Wynne contacted Charles Darnell (“Mr. Darnell”), the president of Old Dominion National Bank (“Old Dominion”), to inquire about a loan. Mr. Wynne told Mr. Darnell that he had a contract to purchase riding center property for $475,000.00. The riding center property was known as the Serene Creek Riding Center and was owned by S & R Farm, LLC (“S & R Farm”). According to CVLR, that statement was false; Mr. Wynne had no such contract. However, Mr. Darnell prepared a “loan presentation,” which indicated that Old Dominion would be financing 100% of the riding center property's purchase price. On October 28, 2007, Mr. Wynne obtained the signatures of the two members of S & R Farm, Ralph Beck (“Mr. Beck”) and Shanna Lester (“Ms. Lester”), as well as Ms. Rivers, on a real estate contract under which S & R Farm promised to sell the riding center property to “CVLR Performance Horses or Assignee.” The next day, Old Dominion approved the loan with the borrower listed as “an LLC to be formed” and the guarantors listed as Mr. Wynne and Ms. Rivers.

CVLR alleges that Ms. Rivers saw the loan approval letter and the real estate contract on November 2, 2007. According to CVLR, Ms. Rivers thought that the purchaser would be her closely held corporation, CVLR, and that the “LLC to be formed,” of which she would be a member, would finance the sale by borrowing the money from Old Dominion. Further, she thought that CVLR would give a “mortgage” to the new LLC to secure its repayment of Old Dominion's loan. Ms. Rivers did not know that Mr. Wynne had told Old Dominion that 1650 Partners, LLC (“1650 Partners”), a preexisting LLC controlled by Mr. Wynne, would be the sole purchaser.

On November 20, 2007, the closing on the sale of the riding center property was conducted, the result of which was the conveyance of the property from S & R Farm to 1650 Partners. Prior to the closing, the operating agreement for 1650 Partners was amended to give Ms. Rivers a 0.01% interest in 1650 Partners. At the closing, Ms. Rivers signed various documents, thinking that the property was being conveyed to CVLR and that CVLR was giving a “mortgage” for the riding center property. Ms. Rivers told Mr. Wynne that this is what she thought, and he told her that her understanding was correct.

B. Facts Relating to S & R Farm's Alleged Breach of Contract

S & R Farm entered into the October 28, 2007 real estate contract, promising to sell the riding center property to “CVLR Performance Horses or Assignee.” However, CVLR alleges that on November 13, 2007, S & R Farm directed its attorney to prepare a deed conveying the property to 1650 Partners instead. On November 15, 2007, S & R Farm's members, Mr. Beck and Ms. Lester, executed the deed. CVLR maintains that it never assigned or intended to assign its contractual right to purchase the riding center property and that there is no writing constituting such an assignment. However, CVLR alleges that S & R Farm nevertheless sold the property to 1650 Partners in breach of the contract. As a result, CVLR claims it lost the benefit of its bargain to purchase the riding center as well as the expectancy of operating it.

C. Facts Relating to Mr. Wynne's Acquisition of CVLR's Insurance Proceeds

Working under the assumption that it owned the riding center property, CVLR purchased a general liability policy from American Bankers Insurance Company (“American Bankers”), covering the riding center property and listing Old Dominion as the loss payee. In February 2008, wind damage occurred at the riding center property. Thereafter, CVLR filed an insurance claim with American Bankers. After three estimates for fixing the damage were obtained and submitted, American Bankers approved a payment of $38,000.00 to repair the barn. However, Mr. Wynne told CVLR that he could get Glen White, a general contractor with whom he worked, to do the work for less. CVLR agreed to allow Glen White to do the work.

On April 7, 2008, American Bankers issued to “CVLR Performance Horses, Inc. and Old Dominion National Bank” two checks totaling $26,309.24. On April 20, Mr. Wynne emailed an employee of Old Dominion and requested that he “get the insurance proceeds released so I can repair the buildings.” Mr. Wynne stated that a different gentleman, Terrance White, would do the work. He wrote that he “expect[ed] the costs to be around $10,000.00. The remaining proceeds will be used to make capital additions to the property.” He also wrote that “I would hope you would put the proceeds into the 1650 checking account.” According to CVLR, Glenn White, the contractor whom Mr. Wynne had recommended, came to the riding center and began work reconstructing the barn in the spring of 2008. However, he never finished the job, and instead used some of the construction materials intended for the barn on another commercial worksite.

CVLR further alleges that Mr. Wynne sent a forged letter to the insurance adjustor on September 18, 2008. The letter was allegedly on the letterhead of Glen White and was signed with the initials “GDW.” The letter requested payment of attached invoices, payable to Mr. Wynne. The letter falsely stated that “The project is complete and CVLR, Old Dominion Nat'l Bank and Mr. Wynne w/1650 Partners LLC wants to close the book on this project.” According to CVLR, the letter is a forgery because it is handwritten by Mr. Wynne but purports to be from Glen White. The repairs to the barn had not yet been completed and CVLR, the named insured, had not authorized the insurance company to close the book on the project. The invoices attached to the fax were from “Terrance White T/A White Construction,” but Terrance White was employed by Mr. Wynne and was not a licensed contractor. Ultimately, insurance proceeds were paid out to Terrance White, who endorsed all of the checks over to Rivermont.

D. Facts Relating to the Purchase of the Ford F650 Truck

The facts alleged in this regard are many and confusing. While I have tried to distill them as clearly as possible, perfect clarity is likely unattainable. On February 9, 2007, Mr. Wynne, acting for Rivermont, placed a buyer's order for a 2002 Ford F450 truck at Battlefield Ford in Manassas, Virginia. The sales price of the truck was $26,500.00. The truck was titled in the name of Rivermont. Mr. Wynne and Ms. Rivers agreed that the truck was for the use of CVLR, which operated and insured the vehicle. However, the truck had mechanical problems, and so Mr. Wynne and Ms. Rivers agreed to trade it in.

On May 8, 2007, Ms. Rivers completed a buyer's order for a 2006 Ford F650 truck and signed a promissory note in favor of Battlefield Ford in the amount of $76,508.86.¹ A receipt certifying delivery of the Ford F650 truck to “Buyer Crystal Victoria Lee Rivers” was signed and given to Ms. Rivers. An “Application for Certificate of Title and Registration” was prepared at Battlefield Ford listing the owners of the Ford F650 truck as Ms. Rivers and Mr. Wynne. However, a “Temporary Certificate of Title” was issued to “Crystal Victoria Lee Rivers.”

On May 21, 2007, Rivermont and Mr. Wynne (as parties of the first part) and CVLR and Ms. Rivers (as parties of the second part) entered into a “Lease, Loan, and Contract to Buy Agreement”...