Richmark Corp. v. Timber Falling Consultants, Inc.

• Decision Date: 15 February 1990
• Docket Number: Civ. No. 88-1203-FR,89-181-FR.
• Citation: 730 F. Supp. 1525
• Parties: RICHMARK CORPORATION, a California corporation, Plaintiff, v. TIMBER FALLING CONSULTANTS, INC., an Oregon corporation, Defendant. TIMBER FALLING CONSULTANTS, INC., an Oregon corporation, Counterclaim Plaintiff, v. RICHMARK CORPORATION, a California corporation; Peacock Manufacturing Company, Inc., a Texas corporation; Beijing Ever Bright Ind. Co., a foreign corporation; Zhu Yuanchang; Eugene Wang; James Yang; and Francis Tong, Counterclaim Defendants. TIMBER FALLING CONSULTANTS, INC., an Oregon corporation, Plaintiff, v. GENERAL BANK, a California corporation, Defendant.
• Court: U.S. District Court — District of Oregon

730 F. Supp. 1525

RICHMARK CORPORATION, a California corporation, Plaintiff, v. TIMBER FALLING CONSULTANTS, INC., an Oregon corporation, Defendant.

TIMBER FALLING CONSULTANTS, INC., an Oregon corporation, Counterclaim Plaintiff, v. RICHMARK CORPORATION, a California corporation; Peacock Manufacturing Company, Inc., a Texas corporation; Beijing Ever Bright Ind. Co., a foreign corporation; Zhu Yuanchang; Eugene Wang; James Yang; and Francis Tong, Counterclaim Defendants.

TIMBER FALLING CONSULTANTS, INC., an Oregon corporation, Plaintiff, v. GENERAL BANK, a California corporation, Defendant.

Civ. Nos. 88-1203-FR, 89-181-FR.

United States District Court, D. Oregon.

February 15, 1990.

COPYRIGHT MATERIAL OMITTED

Thomas V. Dulcich and Kurt F. Hansen, Schwabe, Williamson & Wyatt, Portland, Or., for Richmark Corp.

John F. Neupert, Miller, Nash, Wiener, Hager & Carlsen, Portland, Or., for Timber Falling Consultants, Inc.

OPINION

FRYE, District Judge:

The matters before the court are:

1) the Rule 12 motions of plaintiff and counterclaim defendant, Richmark Corporation (Richmark) (# 164); and

2) the Rule 12 motions of counterclaim defendants Eugene Wang, James Yang, and Francis Tong (# 166).

BACKGROUND

The court has considered numerous motions in this lawsuit. Therefore, to avoid duplication, this opinion will set out only the facts pertinent to the pending motions. Richmark initiated this action by filing a complaint against defendant, Timber Falling Consultants, Inc. (TFC) for breach of a contract for six shipments of logs. TFC filed counterclaims for breach of contract, civil conspiracy, fraud, tortious interference with business and RICO violations against Richmark, Eugene Wang, James Yang, Francis Tong, Peacock Manufacturing Company, Inc. (Peacock), Beijing Ever Bright Ind. Co. (Ever Bright), and Zhu Yuanchang.

TFC is an Oregon corporation and Richmark is a California corporation. Wang, the president of Richmark, is a citizen of the United States. Tong, the vice president and manager of relations with China for Richmark, is a citizen of the People's Republic of China and a resident alien of the United States. Yang, the vice president of Richmark, is a citizen of Taiwan and a resident alien of the United States.¹

In July, 1989, the court issued an order dismissing some of TFC's counterclaims with leave to amend, and dismissing Peacock from the action for lack of personal jurisdiction. TFC filed its Second Amended Answer and Counterclaims on August 1, 1989. Richmark, Wang, Yang and Tong now move against this pleading pursuant to Fed.R.Civ.P. 12.

CONTENTIONS OF THE PARTIES

Richmark moves first to strike all references in the Second Amended Answer and Counterclaims to Peacock Manufacturing Company, Inc. Richmark argues that since this court dismissed Peacock from the action for lack of personal jurisdiction, it is improper to name Peacock as a party in the Second Amended Answer and Counterclaims and to include allegations regarding Peacock. TFC responds that it is not reasserting claims against Peacock in the Second Amended Answer and Counterclaims.

Richmark then moves to dismiss with prejudice the eighth, ninth, tenth and eleventh counterclaims, which allege claims under federal and Oregon RICO statutes. Richmark contends that the amendments to these claims do not cure the deficiencies which led the court to dismiss these claims for failure to allege predicate acts with sufficient particularity and to adequately allege a pattern of racketeering activity. Richmark argues that even if the allegations are now sufficiently particular, the RICO claims must be dismissed for several reasons which were raised in the earlier motions to dismiss and which the court did not reach at that time.

TFC responds that the Second Amended Answer and Counterclaims has cured any deficiencies in the RICO claims, and that the allegations include numerous predicate acts which form a pattern of racketeering activity. TFC asks that it be given leave to amend again if the court dismisses the RICO claims for any of the reasons which were raised in the earlier motions but not addressed in the court's opinion of July 13, 1989.

Wang, Yang and Tong join in the motion to strike and the motion to dismiss the RICO claims. Wang, Yang and Tong also move to dismiss with prejudice the sixth counterclaim for tortious interference on the grounds that the Second Amended Answer and Counterclaims does not adequately allege that Wang, Yang or Tong had a personal interest in Richmark's breach of its contract with TFC which was adverse to the interests of Richmark. TFC responds that the allegations are sufficient to state a claim for tortious interference against Wang, Yang and Tong.

ANALYSIS AND RULING

1. Motion to Strike

Richmark, Wang, Yang and Tong move to strike all references to Peacock in the Second Amended Answer and Counterclaims. They argue, without citing any authority, that since this court dismissed Peacock from the action for lack of personal jurisdiction, all references to Peacock must be stricken from this pleading. This position is incorrect, however. Federal pleading practice does not prevent references to a non-party in a complaint where the references provide background or otherwise explain or clarify the allegations of the complaint. Wright and Miller, Federal Practice & Procedure, § 1382 at 813-14.

Although Peacock's name remains in the caption of TFC's counterclaims, it is not necessary to require that a new pleading be filed which deletes Peacock's name from the caption. Therefore, the motion to strike of Richmark, Wang, Yang and Tong is denied.

2. Motion to Dismiss RICO Claims

A. Particularity

In the earlier motions to dismiss, Richmark, Wang, Yang and Tong raised a number of grounds for dismissal of TFC's federal and state RICO claims. In the opinion of July 19, 1989, 1989 WL 81622, the court held:

As TFC has failed to allege any predicate acts with sufficient particularity, the court finds that TFC has not adequately alleged a pattern of racketeering activity. The Ninth Circuit has indicated that it may be an abuse of discretion to deny a RICO claimant an opportunity to cure defects in the pleading. Schreiber Distrib. v. Serv-Well Furniture Co., supra, 806 F.2d 1393 at 1401. Therefore, TFC's eighth, ninth, tenth and eleventh counterclaims will be dismissed with leave to amend. The court does not reach the issues of whether TFC has adequately alleged that the counterclaim defendants were employed by or associated with an enterprise, or that they participated in the conduct of the enterprise.

Id. at 27.

The court faulted TFC for failing 1) to state the content and other details about alleged wire transmissions; 2) to allege specific details regarding the alleged attempt to extort a kickback; 3) to allege specific details regarding the alleged attempt to extort contract concessions; and 4) to specify the role of each defendant where more than one defendant is implicated in a predicate act.

In the Amended Answer and Counterclaims, TFC's allegations regarding predicate offenses were found in paragraphs 70 and 71. The corresponding paragraphs in the Second Amended Answer and Counterclaims are paragraphs 69 and 70. TFC has amended paragraph 69 to include the allegation that the pattern of racketeering activity involved the use of the mail and interstate wires to commit fraud. TFC has added significant detail to the allegations in paragraph 70.

As to the alleged wire transmissions, subparts a.3, b.1 and h. of paragraph 70 now contain specific details regarding the date, content and participants in various interstate wire transmissions. TFC has added specific allegations regarding use of the mails in subparts a.1, a.2 and g. of paragraph 70. Subparts b.1, b.2 and b.3 contain details regarding the alleged attempt to extort a kickback, and subparts e.1, e.2, e.3, e.4 and e.5 contain details regarding the alleged attempt to extort contract concessions. In addition, TFC has amended paragraph 70 to specify the defendant or defendants who allegedly committed each predicate act and the role of each defendant in such acts.

The court concludes that TFC has alleged the facts which form the basis of its RICO allegations with sufficient particularity in the Second Amended Answer and Counterclaims. The court must now consider whether these facts constitute predicate acts under RICO.

B. Predicate Acts

TFC contends that it has alleged one or more violations of each of the following statutes: 18 U.S.C. § 1341 (mail fraud); 18 U.S.C. § 1343 (wire fraud); 18 U.S.C. § 1503 (attempted obstruction of justice); 18 U.S.C. § 1951 (attempted extortion); 18 U.S.C. § 1952 (interstate or foreign travel with intent to promote, manage, establish, carry on or facilitate attempted extortion); O.R.S. 162.265 (bribery of a witness); and O.R.S. 162.285 (tampering with a witness). Each of these statutes qualifies as a racketeering activity under both RICO, 18 U.S.C. § 1961(1), and ORICO, O.R.S. 166.715(6).

Richmark, Wang, Yang and Tong do not challenge the adequacy of the allegations of wire fraud and mail fraud in this motion. They contend that TFC has not adequately alleged the crimes of extortion, bribery of a witness, tampering with a witness, or obstruction of justice.

TFC's claims of extortion are based on 18 U.S.C. § 1951(a), which provides:

Whoever in any way or degree obstructs, delays, or affects commerce or the movement of any article or commodity in commerce, by robbery or extortion or attempts or conspires so to do, or commits or threatens physical violence to any person or property in furtherance of a plan or purpose to do anything in violation of this section shall be fined not more than $10,000 or imprisoned not more than twenty years, or both.

Under section 1951(b)(2), the term extortion "means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or...