Farese v. Scherer

• Decision Date: 19 August 2003
• Docket Number: No. 01-14474.,01-14474.
• Parties: Thomas R. FARESE, Plaintiff-Appellant, v. Kenneth J. SCHERER, Charles I. Cohen, individually, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

342 F.3d 1223

Thomas R. FARESE, Plaintiff-Appellant, v. Kenneth J. SCHERER, Charles I. Cohen, individually, et al., Defendants-Appellees.

No. 01-14474.

United States Court of Appeals, Eleventh Circuit.

August 19, 2003.

COPYRIGHT MATERIAL OMITTED

David Michael Tarlow (Court-Appointed), Spencer & Klein, P.A., Miami, FL, for Plaintiff-Appellant.

James Scott Telepman, Cohen, Norris, Scherer & Weinberger, North Palm Beach, FL, Nancy Wood Gregoire, Bunnell, Woulfe, Kirschbaum, Keller, McIntyre & Gregoire PA, Fort Lauderdale, FL, Marshall J. Osofsky, Lewis, Vegosen, Rosenbach & Silber, West Palm Beach, FL, Louis M. Silber, Silber & Valente, West Palm Beach, FL, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before BARKETT and KRAVITCH, Circuit Judges, and FULLAM^*, District Judge.

PER CURIAM:

Plaintiff-appellant Thomas R. Farese, a federal prisoner proceeding pro se, appeals the district court's sua sponte dismissal of his consolidated action, consisting of two civil cases alleging violations of 18 U.S.C. § 1961; 42 U.S.C. §§ 1985(2), 1985(3), and 1986; the First, Fifth, and Fourteenth Amendments to the United States Constitution; and state law.

I. FACTS

Both suits — a civil rights case and a Racketeer Influenced and Corrupt Organizations Act ("RICO") case — stem from prior business relationships and litigation between Farese and defendant-appellee Harold Dude, involving Florida Ventures, a company that operated a nightclub, Club Diamonds, in West Palm Beach, Florida. Dude was the majority shareholder and Farese a minority shareholder of Florida Ventures. Farese's son-in-law, Glen Agostinelli, also a minority shareholder, was employed as the manager of Club Diamonds.

Prior to the current litigation, Farese and other shareholders of Florida Ventures had filed lawsuits against Dude alleging theft, misappropriation, fraudulent conversion, and breach of fiduciary duty based upon Dude's control of the club and the company's financial accounts. Defendants-appellees Charles I. Cohen and Kenneth J. Scherer and their law firms defended Dude in these actions.

In his current civil-rights complaint, Farese alleged that Dude, his attorneys Cohen and Scherer, and his attorneys' law firms (collectively, the "Defendants") participated in conspiracies to intimidate, threaten, injure, and treat him adversely in an effort to force him to withdraw his prior lawsuits against Dude. Specifically, Farese alleged that (1) Dude personally made several threats designed to coerce him into abandoning his lawsuits; (2) Dude and Scherer threatened him by stating that Agostinelli would be terminated from his job unless Farese withdrew his lawsuits; (3) Dude eventually suspended and then terminated Agostinelli because Farese refused to dismiss his suits; (4) Dude deducted money from Agostinelli's paycheck because Dude had to attend a deposition in Farese's shareholder case; and (5) the Defendants deprived Farese, individually, and as a member of a "prisoner class," of his constitutional right of access to the courts.

Farese's civil-rights complaint also alleged that Dude filed for bankruptcy, placing Club Diamonds and Florida Ventures into bankruptcy, and that when Farese filed an adversary action in the bankruptcy case to affect placement of assets, the Defendants filed malicious and frivolous lawsuits against members of Farese's family in order to (1) intimidate and threaten him and his subpoenaed witnesses; (2) obstruct judicial proceedings; and (3) block his access to the courts. Farese sought an injunction prohibiting the alleged threats and intimidation, jury-determined compensation, punitive damages, costs, and attorney's fees should he retain an attorney.

In his RICO complaint, Farese asserted violations flowing from a conspiracy among Dude and his attorneys to loot companies of which Farese was a shareholder and creditor. The conspiracy allegedly involved (1) Dude's fraudulent transfer of Club Diamonds to an alter ego, while placing Florida Ventures into bankruptcy after creating a false appearance that Florida Ventures was insolvent; (2) Dude's and his attorneys' concealment of Florida Ventures's assets from the bankruptcy trustee and submission of false documents to conceal money laundering in another bankruptcy case; and (3) the attorneys' facilitation of perjury, obstruction of justice, bankruptcy fraud, and the use of the courts to defraud Farese of property and business.

Farese's civil-rights case was referred to a magistrate judge for pre-trial administration. Subsequently, Farese notified the district court of the pendency of his RICO case, and the district court consolidated the two actions, assigning the civil-rights docket number to the consolidated action. The district court then granted Farese's motion to proceed in forma pauperis ("IFP") in his civil-rights action.¹

On 6 June 2001, the district court conducted a sua sponte review of the entire record and dismissed the consolidated cases. The district court noted that Farese proceeded IFP in the civil-rights case but paid the appropriate filing and service of process fees when he filed the RICO complaint. Nevertheless, the district court determined that when the cases were consolidated, Farese was "proceeding [IFP] in the RICO claim as well." The district court then dismissed the consolidated case sua sponte, citing § 1915(d)² of the Prison Litigation Reform Act ("PLRA"), which formerly governed IFP proceedings.

In applying § 1915(d), the district court concluded that Farese's claims had no basis in law or in fact. The district court determined that (1) Farese lacked standing to assert alleged wrongs taken against his family members; (2) his other claims sought to re-argue matters addressed in previous lawsuits or to raise matters pending in other cases in other courts; (3) his complaints, if taken as true, did not state any claim upon which relief could be granted; (4) a private attorney who acts within the scope of the representation does not act pursuant to any state authority; (5) Farese failed to provide evidence of the alleged conspiracies; and (6) his prisoner status did not constitute membership in a protected class within the meaning of § 1985(3).

Following the district court's dismissal, Farese submitted a verified first amended complaint. Farese also filed a motion to alter or amend the judgment pursuant to Federal Rule of Civil Procedure 59(e), asserting that the district court improperly dismissed his pro se complaint without offering him notice and an opportunity to amend or cure any defects. The district court stamped "DENIED" on the motion to alter or amend the judgment. Farese timely appealed. While Farese's appeal was pending, Cohen and his law firm filed a motion for an award of damages and costs, including appellate attorney's fees, pursuant to Federal Rule of Appellate Procedure 38, arguing that Farese's appeal was frivolous.

II. ANALYSIS

On appeal, the main issues presented are (1) whether the district court properly dismissed Farese's fees-paid RICO claim under the PLRA; (2) whether the district court properly dismissed Farese's § 1985 claims; and (3) whether Cohen and his law firm are entitled to damages and costs under Federal Rule of Appellate Procedure 38.³

A. Dismissal of Farese's Fees-Paid RICO Case

Farese argues that the district court erred when it dismissed his fees-paid RICO case consolidated with his IFP civil-rights case pursuant to 28 U.S.C. § 1915(d).⁴ Farese contends that he paid the filing fee in his RICO action and disputes the district court's determination that because of the consolidation, he had "been proceeding [IFP] in the RICO claim." While conceding that § 1915, which allows sua sponte dismissals, "may apply to the civil rights action," he argues that this section does not govern his RICO claim and requests that his fees-paid RICO claim be reinstated.⁵

"We review the district court's findings of fact for clear error and its legal conclusions de novo." Falken v. Glynn County, 197 F.3d 1341, 1345 (11th Cir.1999). "The district court's interpretation of the PLRA is a statutory finding and constitutes a question of law, which is reviewed de novo." Hubbard v. Haley, 262 F.3d 1194, 1196 (11th Cir.2001).

Entitled "Proceedings in forma pauperis," § 1915 governs IFP proceedings. Section 1915 allows prisoners to proceed in a suit without "prepayment of fees or security therefor" when the prisoner submits "an affidavit that includes a statement of all assets such prisoner possesses [and] that the person is unable to pay such fees or give security therefor." 28 U.S.C. § 1915(a)(1). A prisoner proceeding IFP must nevertheless pay a filing fee or a portion thereof as funds become available. Id. § 1915(b)(1). Section 1915(e)(2) provides:

Notwithstanding any filing fee, or any portion thereof, that may have been paid, the court shall dismiss the case at any time if the court determines that —

(A) the allegation of poverty is untrue; or

(B) the action or appeal —

(i) is frivolous or malicious,

(ii) fails to state a claim on which relief may be granted; or

(iii) seeks monetary relief against a defendant who is immune from such relief.

Id. § 1915(e)(2). Logically, § 1915(e) only applies to cases in which the plaintiff is proceeding IFP.

Here, the district court specifically found that Farese had not moved to proceed IFP in his RICO suit and had paid the filing and service-of-process fees in that action. The record also reflects that Farese did not proceed IFP in his RICO suit. Furthermore, the consolidation of Farese's cases did not alter the fees-paid status of his RICO case. See Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496-97, 53 S.Ct. 721, 77 L.Ed. 1331 (1933); cf. Xaros v. U.S. Fidelity and Guar. Co., 820 F.2d 1176, 1180 n. 1 (11th Cir.1987) ("Consolidation does not result in a merger of suits or parties such that federal jurisdiction in one...