Taylor v. Bettis

• Decision Date: 30 September 2013
• Docket Number: No. 7:09–CV–183–F.,7:09–CV–183–F.
• Citation: 976 F.Supp.2d 721
• Court: U.S. District Court — Eastern District of North Carolina
• Parties: Chris W. TAYLOR, for himself and for all others similarly situated, et al., Plaintiffs, v. Lee W. BETTIS, Jr., Esq., et al., Defendants.

976 F.Supp.2d 721

Chris W. TAYLOR, for himself and for all others similarly situated, et al., Plaintiffs,

v.Lee W. BETTIS, Jr., Esq., et al., Defendants.

No. 7:09–CV–183–F.

United States District Court,

E.D. North Carolina,

Southern Division.

Sept. 30, 2013.

Christopher W. Livingston, Christopher W. Livingston, Esq., White Oak, NC, for Plaintiff.

Philip Alan Collins, Bailey & Dixon, L.L.P., Raleigh, NC, Melody Jewell Jolly, Cranfill Sumner & Hartzog, LLP, Charlotte, NC, for Defendants.

ORDER

JAMES C. FOX, Senior District Judge.

This matter is before the court on the Motion to Dismiss [DE–45] filed by Defendants Lee W. Bettis, Jr., Pat Leigh Pittman, Joanne K. Partin, Robert L. Emanuel, Stephen A. Dunn, Raymond E. Dunn, Jr., Emanuel & Dunn, PLLC, and Bettis Dunn & Dunn (collectively, the “E & D Defendants” or “Defendants E & D”); the Motion to Dismiss [DE–52] filed by Defendants W. Andrew Arnold and the Law Offices of W. Andrew Arnold, P.C. (collectively, the “Arnold Defendants”); the Motion to Dismiss filed by Philip M. Manger [DE–91]; the Motion to Appoint Receiver filed by Plaintiffs Brenda Beasley, Dorman Beasley, William G. Harrison, Cathy Horton Hunt, Linda Sheryl Lucas, Sharon Southwood, and Chris W. Taylor (collectively, “Plaintiffs”); the Motion to Certify Class [DE–96] filed by Plaintiffs; the Motion for Judgment on the Pleadings [DE–98] filed by the E & D Defendants; the Motion to Stay the Motion to Appoint Receiver [DE–104] filed by Defendant Philip M. Manger, and the Motion to Expedite [DE–110] filed by the E & D Defendants. These motions have been pending for some time, and almost all are ripe for ruling.

I. FACTUAL ALLEGATIONS

One of the Plaintiffs in this potential class action, Sharon Southwood, is also the named Plaintiff in Southwood v. The Credit Card Solution, 7:09–CV–81–F (“the Southwood action”), also pending before the undersigned. In that action, Southwood alleges, inter alia, that Defendant CCDN, LLC, a limited liability company organized under Nevada law, along with other associated entities, ran a debt elimination and credit repair scheme which defrauded her and others. Southwood, and several other Plaintiffs, filed this action several months after the Southwood action was removed to this court, alleging claims against many of the same individuals and entities named as defendants in the Southwood action. Additional defendants are also named in this action, including several attorneys and law firms which have represented CCDN, LLC, and/or its affiliates, principals, or agents in litigation.

The allegations in the 158–page, 768–paragraph Amended Complaint include the following:

A. Parties

Defendants CCDN, LLC and other associated entities ¹ (collectively, “CCDN”) ran a debt elimination and credit repair scheme. Amend. Compl. [DE–23] ¶¶ 1, 60. According to Plaintiffs, CCDN—and the entities and individuals it contracted with to market its “product”—promoted the credit repair scheme and solicited business through several websites and videos posted on the websites and unrelated video-sharing websites. Id. ¶¶ 102, 106–09. One of CCDN's top marketers was The Credit Card Solution (“TCCS”), a sole proprietorship of Defendant Robert Mitchell Lindsey, who contracted with R.K. Lock & Associates to sell CCDN's program. Id. ¶ 116. In the scheme, as represented by Plaintiffs, CCDN (or the individual marketing CCDN's program) required an advance payment to enroll in their “process.” Id. ¶ 173. The CCDN marketer then required an enrollee to execute a power of attorney authorizing CCDN to “prepare and sign all documents written with the intent of researching, challenging, negotiating, and otherwise corresponding with creditors, debt buyers, debt collectors, lw[sic] firms, credit reporting bureaus, and government agencies” with respect to specified accounts. Id. ¶ 175. Plaintiffs allege that CCDN then sent letters to enrollees' creditors demanding validation of enrollees' accounts, and asking the creditors to execute an affidavit drafted by CCDN that gave certain “assurances” regarding the enrollees' accounts. Id. ¶¶ 176–77. Plaintiffs also allege that CCDN informs enrollees they then do not have to repay debts. Id. ¶ 187. According to the Plaintiffs, enrollees are then encouraged to “provoke [ ] and allow creditors and collectors to abuse [enrollees] as much as possible in order to generate enough damages under fair debt collection law to offset the debt.” Id. ¶ 196.

All of the Plaintiffs allege that they paid specific amounts to marketers of the CCDN program. Id. ¶ 227 (Plaintiff Cathy Horton Hunt paid $2,500.00 to Lindsey), ¶ 267 (Plaintiff Linda Sheryl Lucas paid Federal Debt Relief System at least $8,000.00), ¶ 303 (Plaintiff William G. Harrison paid the Aegis Corporation $4,200.00), ¶ 344 (Plaintiff Southwood paid Lindsey $5,600.00), ¶ 387 (Plaintiff Chris W. Taylor paid $4,500.00 to TCCS), ¶ 468 (Plaintiffs Dorman and Brenda Beasley sent a $2,500.00 check to Everett Smith). Plaintiffs allege that some of those marketers who received their payment converted unspecified amounts to the marketer's own use and remitted the remainder, if any, to CCDN. Id. ¶ 229 (Defendant Lindsey converted part of Plaintiff Hunt's payment), ¶ 268 (alleging some or all of the money Plaintiff Lucas paid went to the benefit of CCDN), ¶ 303 (alleging that Defendant Aegis converted an unspecified amount to its own use and remitted the remainder to CCDN), ¶ 345 (alleging that Defendant Lindsey “kept part or all of [Plaintiff Southwood's payment] for himself, and transmitted the rest (if any) across state lines to CCDN”).

B. Allegations against E & D Defendants

Plaintiffs Harrison, Hunt, Lucas and Southwood allege that after they became dissatisfied with CCDN, they hired counsel, Christopher Livingston (“Plaintiffs' Counsel” or “Livingston”), “on a contingent basis to try to recover some measure of justice from CCDN” and various other entities and individuals. Am. Compl. ¶ 489 [DE–23]. On September 12, 2008, Livingston “commenced Hunt v. R.K. Lock & Associates, 08 CVD 883, Lucas v. R.K. Lock & Associates, 08 CVD 884, and Harrison v. Aegis Corp., 08 CVD 885 in Bladen County District Court.” Id. ¶ 492.

“In or around late November 2008, CCDN Defendants in file numbers 08 CVD 883, 884 and 885 retained E & D Defendants by paying a fee or retainer from the money they criminally derived from Plaintiffs.” Id. ¶ 512. According to Plaintiffs, “[t]hough E & D's clients may not have satisfied their bill in full, neither E & D Defendants nor any sensible defense lawyer would remain on such a case for over a year without actually receiving a very substantial amount of money, and if they were not getting paid, E & D Defendants would have long ago resigned from the representation.” Id. ¶ 512. Plaintiffs assert “Defendants Pittman, Partin, Emmanuel, Steve Dunn and Raymond Dunn, by virtue of their positions as owners and managers of Emmanuel & Dunn, PLLC, and as supervisors of their employee and agent Defendant Bettis, knew that (or their suspicions were aroused by what they learned during the representation, but then they failed to make further inquiry as to whether) their client's sole business and sole source of revenue, proceeds, profit and earnings was and is a combination of wire fraud, mail fraud, bank fraud, obtaining property by false pretenses, and money laundering, and that it as wrong and illegal to accept money so derived.” Id. ¶ 513. Plaintiffs therefore allege that “E & D Defendants are thereby engaged in a pattern of racketeering activity by laundering of monetary instruments, 18 U.S.C. § 1956(a)(1)(A)(i), (1)(B)(i), (2)(A) and (2)(B)(i), and additional count of the same each time they receive another payment from their clients, and since they conspired to do so, they also violated § 1956(h).” Id. ¶ 515.

Plaintiffs go on to allege that “[i]nstead of confining themselves to lawful and ethical defense of a client for alleged past deeds, Raymond Dunn and Mr. Bettis conspired with each other and with Mr. and Mrs. Lock,² Mr. Manger, and Tracy Webster ³ to keep CCDN's fraudulent scheme alive, to continue violating the Credit Repair Organization Act, NCUDTPA, RICO and NCRICO, to expand CCDN's business as much as possible, to prevent recovery of Plaintiffs' property from CCDN or anyone else, and to pay E & D Defendants with property criminally defrauded from Plaintiffs.” Id. 1519.

Plaintiffs assert that the E & D Defendants “declared war” on Plaintiffs and Livingston. Plaintiffs allege that Livingston

lodged a report on the evening of 04 December 2008 with the Bladen County Sheriff's Office to the effect that while Counsel was driving through northern Bladen County, Mr. Bettis had telephoned him and communicated threats to him that reasonably could be interpreted (especially given Mr. Bettis's claim to be an expert in representing racketeers) as credible threats of bodily harm if Counsel did not dismiss with prejudice (without his client's permission) all complaints against Mr. Betttis's clients, to wit, twice shouted at Counsel: “We're coming after you!” referring to Mr. Bettis's clients, who are ruthless and very wealthy, and will stop at nothing to get away with their extremely profitable crimes and frauds.

Id. ¶ 528.

Plaintiffs further allege that “on the afternoon of 05 December [2008], Counsel was in the Bladen County Courthouse clerk's office when Mr. Bettis telephoned yet again and revealed, for the first time, that CCDN, LLC was organized in Nevada, and falsely claimed that since CCDN, LLC had not been sued, that a necessary defendant was missing and all the cases would have to be dismissed, and CCDN would collect Rule 11 fees.” Id. ¶ 530. Following this phone conversation, “[a]t the hearing on 08 December 2008 before the Hon. Napoleon B. Barefoot, Jr., Mr. Bettis served motions to dismiss Ms. Hunt's and Ms. Lucas's cases, frivolously arguing, in writing, lack of personal jurisdiction (without specifically...