ackerman you may proceed for the appellant thank you handed good afternoon your honors may it please the court my name is nathaniel ackerman i'm representing packard square in this appeal i'm reserving two minutes for  rather critical issue that i'm going to argue today is that the rico claims in this case are based on a separate transaction from the subject of the state court action on the core set of operative facts between the state court action in the federal rico claims are different and distinct peckers squares state court connor claim was claims were seeking the cost effective construction of packard squares project in a michigan so packard square could reno finance on the can for a loan with a new lender this case it's is about a massive criminal scheme to steal packard squares project that was part of the the differences are quite evident when compared under the michigan transactional test in the adair case and that is whether the facts in the auction are pragmatically related in time space origin motivation and whether they form i convenient try a unit first of the two actions do not form a convenient trial unit in our two distinct trial units the state case was solely focused on breach of contract claims between the energies packard square and can for it concerns a false relating to milestones to subcontractors liens and construction conditions the issue was which party defaulted st under the contracts and the counter claims sought to put counter claims well we didn't even know about them at the time we have the evidence to even bring in when we filed our counter claims we didn't learn that evidence until some seventeen months later so there was no way we could have filed them in the beginning i mean you he would have the states it still had over a year before a final judgment sometime in two hundred one thousand so there was a substantial overlap between when the rico allegations you knew of them and when the state claims were still that's correct but we were not required to do it because they were separate transactions and that's the issue i'm getting into now looking at the if there are standard st of all it isn't my thought is that term and whether something is a separate transaction your  st requirement was time it's right and doesn't that just prove the point that there was substantial time overlap i recognize that you're suggesting that the rico conspiracy or whatever you call it the rico activity continued post judgment that at least began and there were a substantial actions during the time of state court allegations that that is true but the question is the time to fax it we litigated in the state court action covered only six months of activity from the defaults in july of two thousand and sixteen until the filing of the nd amended counterclaims on january th two thousand and sixty the rico pattern covers thirteen years there is only a six month overlap if you just take the action that part of the pattern that relates to packard squitter and remove the ten of their victims the criminal acts against packard square cover nearly five years that was the time period prior to entering into the loan agreements to two thousand and nineteen when the defendants caused the receiver not to realty to release to lease the property until packard square's redemption rights were extinguished and that was in june two thousand and nineteen so in terms of the time period the time periods are completely different here as to the element of space which is another element under a day or the cases are also different on the breach of contract claims only occurred in ann arbor the construction site and los angeles from where the default notices were sent in contrast to criminal acts in the rico claims include those two locations plus new york plus when you get with the other ten victims we're talking about palo alto los angeles miami broward county florida georgia and how far does your argument go what if what if so you're basically now relying on the other victims a more than than you did before maybe what if what if your rico claim soley with respect to the an arbor project had been asserted and with along with the breach of contract the breach of contract claim as i said was completely different if you look at the federal rico claims they allege that packer square was a victim along with ten other developers that the rico claims include  sixteen additional defendants individual defendants to corporate defendants that were not parties in the state action up prior to entering into the loan agreements to finance the construction on to defend his plotted to steal the st crack at square into default and steal its broad act out once closed they created bocas defaults and tried to force packer square into signing a deed in lieu of foreclosure and then sued for a receiver to obtain that receiver the defendants lied to the state court the defendant send in a belated the receiver to prevent the defendants from reclaiming the property from the receiver the defendants and gazed into separate schemes to prevent package where from refinancing and woodpecker square filed for bankruptcy protection to refinance the defendants lied to the bankruptcy court about the value and debt balance and the court based its decision on those lies to dismiss peccary squares chapter eleven a petition in addition if you look at the point of origin of this case the state action originated from the loan agreements that was nothing else other than those contracts the rico claims originated as early as two thousand and six whereby the defendants began victimizing ten other developers to steal their properties using the same fraudulent methods and means is here the point of origin is the defendant's way of conducting their business as a criminal enterprise the best example here is college terrace which we also allege in our complaint that occurred simultaneously with the defendants plot to steal packer squares project defendants employed the same fraudulent method of using bogus defaults paragraph thirty seven  our complaint here the allegation is that loan funds were withheld as part of the corrupt plan to squeeze packard square so they could not meet contractual obligations in the study business or that isn't that the main thrust of the state court complaint i know there's a breach of contract but there is also tortious interference breach of fighters your duty you actually allege in the state court counter claims that there was an unlawful steal the autumn off let me address the unlawful s because that's that's totally misleading if you look at it the unlawful scheme relates to one single incident it's like with the defendants have done here they've taken little snippets out of context that all they relates to the new banks  situation and firing new banks at that time we had no idea that the firing of new banks was part of a much larger scheme to basically steal the entire property if you if you would concede though wouldn't you that a lot of your allegations in the state court claim are specific examples of the broader scheme no no no like you know none of them are none of them are you can name any one of them and if you put it in the proper context for example they try and claim was that we had all that we had to have an allegation about a plot with the receiver and canned for work but that related to keeping to getting the developer pecker square back into the situation it had nothing to do with stealing the property from the get go when the defendants have done here the a pelleas have done is basically taken a lot of snippets out of context not go through every one of them here and show you that they all relate to getting the property back into the hands of the developer so that they could continue the construction and do it more economically than the receiver was doing at the time that was what the state case was about the rico case is about a intentional theft of property that is part of what these defendants have been doing over the years from is really is two thousand and six with ten other properties using the same methods to meet me in college terrorist is a case in point where in fact at the same time packard square art was they were involved it's cracked becker's where they were doing the same thing to college terrorists again these were items that were precisely the same invite the court to compare what's in the complaint with respect to the other victims in addition none of the following criminal schemes alleged in the rico claims were alleged in the breach of contract claims o intentionally entering into loan agreements with the intent not to under them and to steal packard squares project to attempting to force packard square into signing a deed in lieu of foreclosure to steal the property three lowing packard square into believing the milestones would not be enforced for false statements to the state court to install the receiver five slowing construction during the receivership to charge more interest six preventing free financing in two ways by making it possible for packard square to assume construction contracts and by intentionally not providing customary payoff letters seven not leasing to artificially depress the project's value until after packard square's redemption rights were extinguished eight the defendants fraud in the bankruptcy court by presenting false information on the value of packer squares property nine the ten other victims obviously had nothing to do with the loan agreements that were issue in the state court case the bottom line is this case is  like any of the nine rico cases relied upon the appellate defendant's year where the defendant's actions that the rico action is based on the same facts are legit in the st action or where those facts were known or should have been known to the pla when it filed its st action none of these cases that they rely on allege a real pattern of racketeering activity such as we have here none of those cases could have been brought by the department of justice this case is a real rico case it involves real criminal activity that has nothing to do with breach of contract the breach of contract here is simply background information to explain the fraud in the context of the thirteen year pattern for example pap packard square does not contest year the state courts finding that it breached the loan agreements by not meaning the strip can't and your dates for the milestones in the agreements indeed the rico claims do not contest any of the findings of the promises of the contract and so i don't because there's this is more this is more than just fraudulent tent these involve specific facts we have evidence that is detailed in utmost particularity in this complaint that shows that right from the get go these defendants intended never to honor those contracts we didn't know about that until much later when we came up with e mails and documents in discovery this also we also didn't know about the fact that there were ten other victims and that one of them was being victimized in another college town in palo alto as opposed to ann arbor where they were basically perpetrating the exact same fraudulent scheme this breach of contract if you look at all of the allegations that and it doesn't just rely on the fraudulent intent i mean that does go to motive one of the factors under a day or the motive here clearly is relevant but it's one of the factors if you look at all of the factors the preacher contract in terms of this action questions judge batchelder do you have any questions or no thank you not at this point judge murphy any further questions of this one now ok all right let's let's hear from the belly use the rico claims to collaterally attack the state court proceedings and a state court judgment the rico complaint itself explicitly pleads as part of the criminal asking conspiracy quote way challenging any finding of the state or that's simply false it is a lot i buy their own complaint where the state court has found that it was lawful and proper for canyon to it applies to the transactions test which does not depend on whether the elements and sells are specifically the same it applies to alternative theories of liability so here in the state court we had not just breach of contract but actually overwhelming overlap between what was actually played in the state court and the predicate aps of the rico claims with respect to proper square and that a lot of mr ackerman's presentation hits on things that are and the notion that a suits shouldn't be arrested and caught out for actual facts that happened after this goes to final judgment i know there's a lot in around the most of the facts happened when the suit was ongoing there may have been some facts that happened after the final judgment presumably not since they filed before that but how would you respond to that are pressing with respect to the two thousand and seventeen counties and those are challenges to the conduct of the court appointed affirming the bankruptcy dismissal well what do you do for the bankruptcy order to rescue the tot is broader because it covers things that could have been decided i understand collateral estoppel to cover issues that were actually decided and the state court decision on your counter claim said nothing about the federal bankruptcy or the alleged fraud on the federal bankruptcy court so that it was that was like that there might be other issues like that were in the issue bring the collateral estoppel cam there might be other issues like that but even accepting all the issues that the court found in the state  was no breach of contract no bad faith perhaps they still have enough of an actionable rico crane based on other issues that were decided yet in power have collateral stoppel well i think ultimately the collateral estoppel it blesses the validity of the foreclosure and it finds that there was no that if there was an ongoing pattern a practice of allowing the foreclosure to occur based on mr presentations that doing to others is also immaterial because the harm it causes where is negated by race to cause and collateral estoppel will also know that the allegations of this other conduct in the rico complaint largely predates the p claim is based on your own rico injury and not discovery of alleged other wrongdoing so it doesn't affect packer squares obligations who have pleaded the rico claims it all from the outset and i want to go back to really emphasize the idea why there is a complete overlap between the rico allegations we have in the state or counseling themselves allegations of conversion and wrongful revolver with respect to patter square relate to that same motivation the same origin namely the pirates were alone involved the same proprietory which is the lead up and then the prosecution of the state  element needs to be in the same what it means is that you can't pursue a nd action based on a finding or a theory that directly contradicts the finding in the st i still find that a little trickier th doesn't get into the actual hours so what would you say what was in order for issue is your preclusion to absolutely in the rico claim wouldn't there have to be a rico element that the plaint prove wire fraud based on conversion when the state court found there was no unlawful conversion you can prove wire fraud or mail fraud based on that measurement patients or fraud in the default notices when the state court held  would you maybe advocate that we just go that route i don't know i know you've got both bases but you know i i don't like a lot of wasted effort and if we don't have to do analysis of collateral stoppel i'd i was on i was muted on a way to do address the issues of buck and dubin there has to be a course of continuing conduct by the defendant there is nothing in the state case that was a continuing course of conduct that related to the rico dubica to do with our related course of conduct or retaliation bucket to do with the related conduct and discrimination here the only related pattern of conduct was the conduct exhibited by these defendants in  the years of going after these ten other victims and the idea that that there was some kind of finding of no conversion that is not what the court found the come court found very specific facts that related to dismissing the conversion count it found that basically packard square breached the contract by not meeting the milestones we are not disputing any of that we are not disputing any of those facts on the on the collateral foreclosure it's just like in the isaac case there was all kinds of little injury that be fell on the various defendants and the plaintiffs in that case but yet the object of the scheme was a bust out scheme to put it into bankruptcy and that was the point at which the rico claim became right here the rico claim it didn't become right intil the point at which the foreclosure i judgment was entered i started a stand that you've got rico apply is because it was a separate transaction in terms of the timing mr carpenter didn't dispute what i said about that in terms of the geography of or all this all occurred he didn't dispute that in terms of the point of origin he didn't dispute that this all started with the defendants rico action that was perpetrated as early as two thousand and thirteen that the motivation here was an intent to defraud as opposed to simply a breach of contract and there's no question that the convenient trial  here had to do with the recruit case being separate from the contra case where you have six individual defendants three other corporate defendants it's just doesn't make sense that you would put these two together ok thank you any further questions