Guidry v. Bank of LaPlace, Civ. A. No. 89-1690.

• Decision Date: 08 June 1990
• Docket Number: Civ. A. No. 89-1690.
• Parties: Robert J. GUIDRY, v. BANK OF LaPLACE, Patrick Guidry, ABC Insurance Company and First National Bank of Commerce.
• Court: U.S. District Court — Eastern District of Louisiana

740 F. Supp. 1208

Robert J. GUIDRY, v. BANK OF LaPLACE, Patrick Guidry, ABC Insurance Company and First National Bank of Commerce.

Civ. A. No. 89-1690.

United States District Court, E.D. Louisiana.

June 8, 1990.

Roy V. Ladner, Arthur Lemann, III, New Orleans, La., for plaintiff, Robert J. Guidry.

B. Frank Martin, John Gregory Odom, New Orleans, La., for defendants, Bank of LaPlace and Patrick Guidry.

R. Patrice Vance, Pauline F. Hardin, New Orleans, La., for defendant, First Nat. Bank of Commerce.

ROBERT F. COLLINS, District Judge.

I. INTRODUCTION

The Court is presented with two motions to dismiss filed by three defendants. Each motion asserts several grounds for dismissal. First, defendants, Bank of LaPlace ("BOL") and Patrick Guidry ("P. Guidry"), move the Court to dismiss plaintiff's, Robert J. Guidry ("Guidry"), Complaint and First Amended Complaint (referred to collectively hereinafter as "Complaint"), pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted and for failure to plead fraud with particularity. Likewise, defendant, First National Bank of Commerce ("FNBC"), moves the Court to dismiss Guidry's Complaint pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted. FNBC also moves the Court to order plaintiff, pursuant to Fed.R. Civ.P. 9(b) and 12(e), to file a more definite statement of his fraud and concealment claims against FNBC. First, the Court will outline the facts relevant to both motions. The Court will then address BOL and P. Guidry's motion to dismiss. Finally, the Court will address FNBC's motions to dismiss and for a more definite statement. For the reasons given below, the Court GRANTS the motions to dismiss and DISMISSES the motion for a more definite statement as moot.

II. FACTS

In April of 1988, Lynn Paul Martin ("Martin"), turned himself in to federal authorities and confessed his operation of a fraudulent travel company scheme conducted under the name "LPM Enterprises." Martin was indicted, and he pled guilty to federal criminal charges in connection with that scheme. See United States v. Lynn Paul Martin, No. 88-390 "C" (2) (E.D.La.). Guidry, one of Martin's investors, now asserts civil racketeering, federal and state securities fraud, and pendent fraud and negligence claims, accusing defendants herein of having knowingly and intentionally aided and abetted Martin's conduct of his travel scheme.

Guidry invested with Martin over a period of approximately three years. Guidry seeks to recover alleged losses he incurred when the purported "Ponzi" scheme, operated by Martin, collapsed in April of 1988. Guidry was allegedly left holding Martin's unpaid checks totalling over $12 million.

According to the allegations in the Complaint, Martin started the business scheme in 1982. See Complaint, ¶¶ 6-7. Martin pretended to purchase blocks of airline tickets for passengers on gambling junkets to Las Vegas hotels. See Complaint, ¶¶ 10-11. Martin allegedly represented to potential victims, such as Guidry, that they would receive a rate of return of between four and seven percent per month (between 48% and 84% per year) on the amount invested. These amounts were provided in the form of post-dated checks written to Guidry by Martin on his personal checking account. See Complaint, ¶ 10. Martin gave Guidry the post-dated checks when Guidry wrote his checks to Martin. Martin's checks to Guidry were allegedly covered by funds obtained from other investors. See Complaint, ¶ 10. Guidry alleges that he exchanged checks with Martin from August 28, 1986 through April 21, 1988. See Complaint, ¶¶ 16-17, Counts III-XI.

BOL, P. Guidry and FNBC, as well as unknown insurance companies which allegedly provide coverage for the wrongful acts asserted, were made defendants herein. Martin is not named as a defendant in this action. The specific factual allegations made against BOL and P. Guidry are that they:

(1) permitted Martin to operate a "Ponzi" and check kiting scheme out of a BOL checking account;

(2) led investors to believe that Martin was operating a legitimate business;

(3) permitted Martin to overdraw his checking account on a regular basis and for substantial amounts (4) manipulated Martin's checking account to extend the life span of the scheme;

(5) concealed the scheme from law enforcement and regulatory authorities; or, alternatively, consciously avoided discovery of the scheme.

See Complaint, ¶ 10(b).

P. Guidry, a Senior Vice President of BOL, allegedly responded to inquiries from Guidry on September 3, 1986, and at various other unspecified times, "based upon his knowledge of the legitimacy of the LPM investment contract, and led Guidry to believe that LPM was a legitimate investment." See Complaint, ¶¶ 5(d), 19. Guidry allegedly relied upon the representation of P. Guidry to write checks to Martin only during the period September through November of 1986. See Complaint, ¶ 20.

According to the allegations of the Complaint, however, the checks exchanged between Guidry and Martin in 1986 and 1987 resulted in tremendous profits to Guidry. There is no allegation that any of the postdated checks written to Guidry by Martin at large, guaranteed rates of return were not honored until April of 1988. See Complaint, Counts III through XI. The only checks for which plaintiff seeks to recover damages are the nine checks that he wrote to Martin during the period of April 18 through 21, 1988. See Complaint, Counts III-XI. According to the Complaint, Guidry decided to write all checks to Martin after November of 1986, based upon the advice of individuals and entities other than BOL and P. Guidry. See Complaint, ¶¶ 51, 127, 227.

Based upon these allegations against defendants, BOL and P. Guidry, Guidry maintains that he is entitled to relief under a variety of statutes and theories. In Counts I and II, Guidry alleges that the defendants are liable for violations of the federal Racketeer Influenced and Corrupt Organizations statute, 18 U.S.C. § 1962(c) ("RICO"), through a pattern of racketeering activity consisting of mail fraud, wire fraud, securities fraud, and interstate transportation of stolen property. Likewise, P. Guidry and BOL are also alleged to have violated Section 1962(d) of the RICO Act by conspiring to violate Section 1962(c). In Counts III through XI, P. Guidry and BOL are alleged to have violated Section 10(b) of the Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b-5 promulgated thereunder. In Count XII, BOL and P. Guidry are alleged to have violated Sections 12(1) and (2) of the Securities Act of 1933 (the "1933 Act"). In Count XIII, BOL and P. Guidry are alleged to have violated the Louisiana Securities Act. In Counts XIV and XVI, BOL and P. Guidry are alleged to have aided and abetted the fraud actually committed by Martin and to have been negligent in failing to discover and prevent Martin's alleged "Ponzi" scheme.

Guidry has four allegations against FNBC. First, Guidry alleges that FNBC had a correspondent banking relationship with BOL. See Complaint, ¶ 5(f). Second, he alleges that FNBC advised him to buy into Martin's scheme. See Complaint at ¶¶ 15-16, 20, 40, 126-27, 226-27, and 361. Third, Guidry alleges that FNBC allowed him to draw on uncollected Martin funds. See Complaint at ¶ 179. Fourth, Guidry alleges that FNBC mailed him his monthly account statements and cancelled checks. See Complaint at ¶ 370(a)-(g).

From these allegations, Guidry concludes:

First NBC aided and abetted the "Ponzi" and check kiting scheme: ...

II. By using its correspondent relationship with BOL to further the goals of the scheme;

III. By concealing the scheme from law enforcement and regulatory authorities; or, alternatively,

IV. By consciously avoiding discovery of the scheme.

Complaint at ¶¶ 10(c), 433. Accord RICO Case Statement Items 2, 5(c) and 6(d). Guidry seeks trebled damages of $18,074,394.00 plus interest, costs and attorney's fees from all defendants.

III. STANDARD OF REVIEW

In considering the instant 12(b)(6) motions to dismiss, the Court is limited in "its consideration to the facts alleged in the Complaint." Murray v. Amoco Oil Co., 539 F.2d 1385, 1387 (5th Cir.1976). Although the federal rules provide for liberal pleading, it is well settled that "a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." In re Plywood Antitrust Litigation, 655 F.2d 627, 641 (5th Cir.1981), cert. denied, 462 U.S. 1125, 103 S.Ct. 3100, 77 L.Ed.2d 1358 (1983) (emphasis in original).

IV. BOL AND P. GUIDRY'S MOTIONS TO DISMISS

A. RICO Claims (Counts I and II)

Defendants contend that Counts I and II of the Complaint should be dismissed because Guidry alleged insufficient facts to establish a valid enterprise. Further, defendants contend that Guidry did not allege sufficient facts to show that BOL and P. Guidry were associated with the alleged enterprise. Finally, defendants contend that plaintiff fails to state a claim upon relief can be granted because plaintiff does not sufficiently allege predicate acts which form a pattern of racketeering activity.

1. RICO Enterprise

It is elemental that a RICO action cannot be maintained without a valid RICO enterprise. 18 U.S.C. § 1962(c); Ross v. Omnibusch, Inc., 607 F.Supp. 835, 837 (W.D. Mich.1984); United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981); an enterprise is "central to each of the subsections of Section 1962." Old Time Enterprises, Inc. v. International Coffee Corp., 862 F.2d 1213, 1219.

An "enterprise" is defined in 18 U.S.C. § 1961(4). The definition includes organizations, such as partnerships, corporations, associations and other legal entities, as well as any group of individuals "associated in fact although not a legal entity." 18 U.S.C. § 1961(4). An enterprise may be either a legitimate or...