Wade v. Gaither

• Decision Date: 06 March 2009
• Docket Number: No. 08-CV-641-WFD.,08-CV-641-WFD.
• Citation: 623 F.Supp.2d 1277
• Parties: Stanley L. WADE, Plaintiff, v. Randall T. GAITHER, Defendant.
• Court: U.S. District Court — District of Utah

623 F.Supp.2d 1277

Stanley L. WADE, Plaintiff, v. Randall T. GAITHER, Defendant.

No. 08-CV-641-WFD.

United States District Court, D. Utah, Central Division.

March 6, 2009.

COPYRIGHT MATERIAL OMITTED

Stanley L. Wade, Florence, CO, pro se.

Randall T. Gaither, Salt Lake City, UT, Robert L. Janicki, Stuart H. Schultz, Strong & Hanni, Salt Lake City, UT, for defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND ADDITIONALLY DENYING PLAINTIFF'S MOTION TO STRIKE AND DEFENDANT'S MOTION FOR SANCTIONS

WILLIAM F. DOWNES, District Judge, sitting by Sepcial Designation.

This matter comes before the Court on Defendant's Motion to Dismiss for failure to state a claim upon which relief can be granted under FED.R.CIV.P. 12(b)(6). Also before the Court are a motion by Plaintiff requesting that Defendant's Motion to Dismiss reply brief be stricken and a motion by Defendant for sanctions under FED. R.CIV.P. 11. Having considered the parties' motions and memoranda, and having determined that a hearing in the matter would not be beneficial, the Court FINDS and ORDERS:

I. Background

Plaintiff Stanley Wade, a non-lawyer, filed his pro se complaint in this matter on August 26, 2008, alleging violations of federal RICO, 18 U.S.C. § 1961, et seq., Utah's Pattern of Unlawful Activity Act, U.C.A. § 76-10-1601, et seq., and common law fraud by his criminal defense attorney, Randall Gaither. Defendant Gaither, who is licensed to practice law in Utah, is also proceeding pro se in this matter. Mr. Gaither represented Mr. Wade in a federal tax evasion case (District of Utah Case No. 04-CR-141-TS) from some time in July, 2004, until the summer of 2005 when Wade appealed his conviction to the Tenth Circuit. It is unclear from the pleadings whether Defendant Gaither represented the Plaintiff at any stage of his appeal or whether he withdrew beforehand.

In his complaint, Mr. Wade alleges that his relationship with Mr. Gaither was to be governed by a fee agreement "providing for a non-refundable retainer in the amount of $25,000, with in-court hours billed against that at $350 per hour [sic] out of court hours billed at $200 per hour, and payment of an expense reserve fee in addition and an additional $25,000." (Compl. at 4.) Plaintiff further alleges "three episodes" of extortion on the part of the Defendant. First, he states that at some point after entering into the fee arrangement, but at a time when only "$16,600 had been expended and there was remaining almost all of the expense reserve and over $30,000 in retainer" Defendant "demanded on threat of withdrawal, while Plaintiff was in great fear of the loss of Defendant's services, another $100,000," which Plaintiff apparently paid. (Id. at 4-5.) Second, "while Plaintiff was in jail and very distraught and fearful, Defendant demanded another $100,000," separate and apart from the first demand for additional funds. Although Plaintiff allegedly attempted to bargain, the Defendant insisted upon receiving the whole amount, telling Plaintiff "[y]ou're going to buy me a Ferrari." (Id. at 5.) Third and finally, "after Plaintiff had been tried and convicted and sentenced, Defendant met with him again and used threats and capitalized on Plaintiff's fear, demanding another $27,500 to handle the appeal," despite Plaintiff's estimate that some $150,000 remained of the monies he had provided. (Id.)

Plaintiff further alleges that Defendant committed various acts of mail and wire fraud in violation of 18 U.S.C. §§ 1341 and 1343 and in furtherance of his extortionist scheme. Plaintiff's specific allegations assert that Defendant made various telephone calls and sent documents via U.S. mail and facsimile machines seeking monies from Don Taylor, the trustee apparently in charge of at least some of Mr. Wade's funds.¹ (Id. at 6.)

The complaint appears to allege that Plaintiff paid Defendant all but the $27,500 demanded for the purposes of appeal, and that at least $150,000 of the amount paid cannot be justified by Defendant. Mr. Wade additionally asserts an interstate nexus by virtue of Mr. Gaither's use of the monies, for among other things, the general operation of his law office, including the purchase of supplies which likely traveled in interstate commerce, as well as the purchase of a Porsche Cayenne luxury sport utility vehicle, manufactured in Germany. (Id. at 7.)

II. Legal Issues

In his Motion to Dismiss, Defendant Gaither raises four issues,² which he asserts require dismissal of the instant action: (1) failure to plead a pattern of racketeering activity insofar as Plaintiff does not plead sufficient factual support for at least two RICO predicate acts and additionally because the alleged predicate acts do not possess sufficient continuity to establish a pattern; (2) failure to plead fraud with sufficient particularity under FED. R.CIV.P. 9(b); (3) Plaintiff's allegations of extortion fail to state a claim upon which relief can be granted, and fail to establish a RICO pattern; and (4) the Court lacks subject matter jurisdiction because the Plaintiff's complaint was filed after the running of RICO's four year statute of limitations.

Plaintiff not only responds to the issues raised by Defendant, but also peremptorily raises and rebuts the issue of whether he has sufficiently pleaded Defendant's involvement in a RICO "enterprise" when that enterprise apparently consists of the Defendant's own sole proprietorship law office. In his reply, Defendant seizes upon the issue and argues that it, too, is dispositive. Plaintiff subsequently filed a Motion to Strike, arguing that Defendant's use of the "enterprise" argument raises novel issues which were waived when not advanced in Defendant's original Motion to Dismiss. District of Utah Civil Rule 7-1(b)(3) states that "[r]eply memoranda in support of any motion ... must be limited to rebuttal of matters raised in the memorandum opposing the motion." Because Plaintiff raised the "enterprise" issue, the Court cannot say it was untoward for Defendant to discuss the matter in his reply brief, and will address the matter in this order.

III. Standard of Review

When considering a complaint in light of a FED.R.CIV.P. 12(b)(6) motion to dismiss for failure to state a claim upon which relief may be granted, the Court must construe all well-pleaded factual allegations in the light most favorable to the nonmoving party. Moore v. Guthrie, 438 F.3d 1036, 1039 (10th Cir.2006). A complaint need not contain detailed factual allegations, but the allegations must be sufficient to create more than a speculative right to relief. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Court may dismiss a cause of action under Rule 12(b)(6) when it "appears to a certainty that the plaintiff is entitled to no relief under any state of facts which could be proved in support of the claim." Moore, 438 F.3d at 1039 (quotations and citations omitted).

In this case, Plaintiff appears pro se, and the Court complies with its requirement to "liberally construe the allegations of a pro se complaint." Oxendine v. Kaplan, 241 F.3d 1272, 1275 (10th Cir.2001). But while the Court faces additional burdens in the face of a pro se complaint, it is not required to adopt the role of advocate for a pro se plaintiff. Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir.1991).

IV. Legal Analysis

RICO allows private parties harmed by racketeering activities to bring civil suits for treble damages. 18 U.S.C. § 1964(c). To state a RICO claim, a plaintiff must allege that the defendant violated the substantive RICO statute, 18 U.S.C. § 1962, by setting forth "four elements: `(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.'" Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir.2002) (quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). The Court's analysis of these four elements will first determine whether Plaintiff has pleaded sufficient predicate acts of racketeering activity; second, it will address whether his complaint alleges activity meeting the definition of a RICO "pattern of racketeering activity"; third, it will address whether the "enterprise" requirement is met; and finally, it will address Defendant's concerns regarding the statute of limitations.

A. Defendant's Alleged RICO Predicate Acts

1. Plaintiff's Allegations of Extortion Under 18 U.S.C. § 1951

18 U.S.C. § 1951(a) prohibits "interference with commerce by threats or violence" and encompasses the common law crimes of robbery and extortion: "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." Extortion is defined as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." 18 U.S.C. § 1951(b)(2).

Plaintiff's claims of extortion essentially allege that the Defendant, formerly Plaintiff's criminal defense attorney, on multiple occasions threatened to withdraw from representing Plaintiff unless additional funds totaling some $227,500 were provided, though at no time were the funds Plaintiff had already deposited with Defendant so depleted as to require an additional influx. In his motion to dismiss, Defendant neither confirms nor denies his requests for additional funds, instead asserting that he merely warned Plaintiff that he would withdraw for nonpayment of fees if need be. Construing all well-pleaded factual allegations in Plaintiff's favor, the Court must conclude that Defendant may in fact have unjustifiably demanded additional funds on threat of immediate withdrawal. However, Defendant asserts that even if he acted as suggested by Plaintiff, his actions cannot be construed as extortionist.

It is certainly true that the instant case does not fit easily within the commonly-held conception of "e...