U.S. v. Lane, 83-1742

• Decision Date: 18 June 1984
• Docket Number: No. 83-1742,83-1742
• Citation: 735 F.2d 799
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James C. LANE and Dennis R. Lane, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 799

735 F.2d 799

UNITED STATES of America, Plaintiff-Appellee, v. James C. LANE and Dennis R. Lane, Defendants-Appellants.

No. 83-1742.

United States Court of Appeals, Fifth Circuit.

June 18, 1984.

Rehearing and Rehearing En Banc Denied Aug. 22, 1984.

Clifford W. Brown, Robert Michael Brown, Lubbock, Tex., for defendants-appellants.

James A. Rolfe, U.S. Atty., Fort Worth, Tex., Shirley Baccus-Lobel, Asst. U.S. Atty., Dallas, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before GOLDBERG, RUBIN and REAVLEY, Circuit Judges.

GOLDBERG, Circuit Judge:

James C. ("J.C.") Lane and Dennis Lane were indicted in multiple counts for mail fraud, conspiracy, and perjury. J.C. alone was indicted in Count 1 for mail fraud in connection with a 1979 fire at a restaurant in Amarillo, Texas. J.C. and Dennis were both indicted in Counts 2 through 4 for various acts of mail fraud related to a 1980 fire at a duplex in Amarillo. They were also both indicted in Count 5 for conspiring to commit mail fraud in connection with a fire at a Lubbock, Texas flower shop. Dennis alone was indicted in Count 6 for perjury before a Grand Jury. We hold that Count 1 was improperly joined with the other counts pursuant to Fed.Rule Civ.Proc. 8(b). Therefore, we reverse and remand for new trials.

FACTS

A. The El Toro Restaurant Fire

In the summer of 1978, J.C. Lane opened a Mexican restaurant in Amarillo, Texas. J.C., Jimmy Lane, Bill Dale, and Jack Stotts (a cook) were partners in the business. They leased the building for a term of five years and obtained considerable restaurant equipment. The restaurant never operated at a profit, however, and suffered declining gross sales after September, 1978.

In November, J.C. Lane purchased fire insurance on the restaurant from the Transamerica Insurance Group. He insured the contents of the restaurant ($10,000.00) as well as improvements ($10,000.00). He also insured against business losses resulting from the fire ($6,000.00 per month for three months). At about the same time, he contacted Sidney Heard, a professional "torch." Lane hired Heard to burn the building, telling Heard that he wanted to get out of his lease as well as his partnership with the cook.

On February 27, 1979, Heard entered the building and set a fire near the electrical box in the kitchen. The fire did not destroy the building, but the contents suffered smoke damage. After the fire, David Lard, an insurance adjustor for Transamerica, viewed the premises with Lane. Lane showed him where the "electrical" fire had started. The contents portion of the policy was settled for the full amount, $10,000.00. On April 23, 1979, Lard issued a draft for the sum to the El Toro restaurant. On May 3, 1979, he issued a second draft for $9,213.78, covering the "betterments and improvements" portion of the policy.

Finally, on June 1, 1979, Lard mailed a memorandum to officials at Transamerica's regional headquarters in Dallas. He requested their advice on settling El Toro's claim under the "business interruption/loss of earnings" portion of the policy. Included with the memo was a list of monthly income and expenses for the El Toro Restaurant submitted by J.C. Lane. The list claimed a monthly net profit of $2,537.64, reportedly based on average profits between September and December, 1978. ¹ This mailing is set forth in Count 1 of the indictment, which charges mail fraud. The claim was settled for $2,699.00; and on November 1, 1979, Lard issued a draft in that amount made out to the El Toro Restaurant.

B. The Duplex Fire

Sometime in early 1980, J.C. Lane met with Sidney Heard again. Lane advised Heard that he had bought a duplex for $500.00 and was moving it to a vacant lot at 1105 South Jackson Street in Amarillo. Lane offered to hire Heard to burn the building. A few weeks later, Heard, having inspected the property, accepted Lane's offer. Heard recommended that they pile scrap molding inside the building to fuel the flames; and in time, he did move molding into the duplex.

On January 22, 1980, J.C. Lane obtained a $35,000.00 fire policy on the duplex from the Trinity Universal Insurance Company. The policy listed the property as owned by L & L Properties, a partnership composed of Dennis Lane and Andrew Lawson. The duplex policy was added to a preexisting policy for other properties held by the partnership.

Heard instructed his employee, Marvin McFarland, to burn the duplex. Heard was planning a trip to the Bahamas and wanted the fire to take place while he was out of the country. On May 1, 1980, the duplex burned.

Following the fire, William Liles, an adjustor for Trinity Universal, inspected the property; and on May 9, 1980, Liles issued a draft in the amount of $7,000.00 payable to Dennis Lane and Andrew Lawson doing business as L & L Properties. ² At the same time, Dennis Lane and Lawson signed a Proof of Loss form which stated that the "loss did not originate by any act, design or procurement on the part of your insured or this affiant." See Government's Exhibit 34-E. The "Proof of Loss" also stated that "no attempt to deceive [the] company as to the extent of the loss has been made." Id. The amount claimed on the Proof of Loss was $7,000.00. On May 15, 1980, Liles mailed to the company's headquarters in Dallas a report on repair costs at the duplex along with the Proof of Loss, photographs, and a repair estimate of about $14,000.00 provided by Dennis Lane.

On May 21 and 30, Liles issued additional drafts to the insured for $2,000.00 and $3,000.00 respectively, as the cost of repairs mounted up. Dennis Lane submitted an additional Proof of Loss corresponding to each payment. These documents made the same representations as the initial Proof of Loss. The record does not reveal when Dennis Lane submitted these additional forms, but Liles mailed the $2,000.00 Proof of Loss to Dallas on May 25, along with a memorandum indicating that the repairs were in progress and had exceeded the initial $7,000.00 advanced. On August 6, he mailed another progress report, the $3,000.00 Proof of Loss, and an additional On September 16, 1980, Liles issued yet another draft, this one for $12,250.00, representing final settlement of the claims and bringing the total amount paid to $24,250.00. On September 18, Liles mailed a memorandum to Dallas explaining the high total cost of restoration. He enclosed a number of invoices supplied by Dennis Lane. Again, it is not clear when Dennis had delivered the documents. The invoices listed various materials and furniture (e.g. mahogany trim, plywood, door jambs, a bathtub) purportedly bought by L & L Properties to repair and refurbish the duplex. In truth, the invoices had been fabricated by J.C. Lane, Sidney Heard, and Heard's secretary. These invoices and Liles's memorandum form the basis for Count 4.

                Proof of Loss and claim for $2,000.00. 3   The $7,000.00 Proof of Loss and report mailed on May 15 are the subject of Count 2;  the two Proofs of Loss and the memo mailed on August 6 are the subject of Count 3
                

C. The Lubbock Flower Shop Conspiracy

Several weeks after the duplex fire, Sidney Heard visited J.C. Lane's office to collect his payment. J.C., Dennis Lane, and Andrew Lawson were present; and the men began to discuss the duplex. Heard indicated that he did not want to talk in front of Lawson, but Dennis assured him that Lawson was "all right ... he's my partner and he knows what's going on." Trial Transcript at 252. Heard then told them that he was thinking of going into the flower shop business if they were interested. If they would put up $5,000.00 and cover the rent and insurance on the building, he would take care of the "torch," and a man he knew would supply flowers to outfit the shop. He wanted to set up the shop in Lubbock. Dennis and J.C. liked the idea; and J.C. told Heard to contact them when he had picked out a building. ⁴

After the meeting, Heard contacted William Lankford who already ran an artificial flower business in Amarillo (L & L Designs). Lankford agreed to stock the proposed Lubbock shop with old flowers and broomweed. Lankford and Heard planned to insure the contents of the shop for about $50,000.00. They would split $20,000.00 of the proceeds. This cut would be reflected by a note payable to Lankford's company from Dennis Lane.

Later, in June, 1980, Heard introduced Lankford to Dennis Lane. Heard and Dennis had come to Lankford's existing flower shop to see how such a business is run and what kind of supplies are necessary. They did not actually discuss the planned arson at the time because other employees were in the shop.

In July, 1980, Heard began looking for a suitable building to rent for the proposed shop. He and Dennis Lane inspected a building at 3602 Avenue A in Lubbock on July 10. Heard felt that it was a good building to burn; and Dennis put down a deposit on the property. He and Heard returned to Amarillo and, before parting, Dennis gave Heard a $5,000.00 check drawn on the L & L Properties account, payable to L & L Designs. He noted on the check that the payment was for the "first shipment of flowers per invoice." See Government Exhibit 30.

Around late August, Lankford delivered some cut silk flower arrangements and processed broomweed to the building in Lubbock. Dennis Lane met him there and unloaded the van while Lankford arranged the flowers inside the building. After returning to Amarillo, Lankford prepared an invoice reflecting the cost of the flowers. He also prepared several fictitious invoices as well as a note in the amount of $20,213.70 payable to L & L Designs from Lane's Flower Shop. He gave the phony In July, 1980, J.C. and Dennis Lane signed a lease for the shop at 3602 A Avenue. Then, in November, J.C. obtained insurance on the shop from the American States Insurance Company. He insured the contents of the shop for $50,000.00. The shop never burned, however. On March 18,...