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Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

IN RE: 

WILLIAM S. EDWARDS, 

DARINDA J. EDWARDS, and 

DONALD W. EDWARDS, 

TENTH CIRCUIT 

NO. 87-1436 

Plaintiffs-Appellants, 

} 

) 

) 

) 

) 

) 

) 

) 

} 

) 

v. 

FIRST NATIONAL BANK, . } 

Bartlesville, Oklahoma, a ) 

National Bank; FEDERAL ) 

DEPOSIT INSURANCE CORPORATION,) 

as Liquidating Agent for ) 

Fairview State Bank and in ) 

its separate corporate ) 

capacity; PAUL BROWN; ) 

BILL D. WILSON; and ) 

ROBERT GRAALMAN, ) 

Defendants-Appellees. 

) 

) 

FILED 

United States Court of Aopeals 

'l'oP.th f':ircuit • 

APR 111989 

ROBERT L. HOECKER · Clerk 

Appeal from the United States District Court 

for the Western District of Oklahoma 

(D.C. CIV-85-2599-E) 

Terry Guy Shipley, Noble, Oklahoma (Philip w. Redwine 

and Kappel, Norman, Oklahoma, with him on the 

Plaintiffs-Appellants. 

of Redwine 

brief), for 

Harry A. Woods, Jr. (Mark s. Edmondson of Crowe & Dunlevy, with 

him on the brief), Oklahoma City, Oklahoma, Attorneys for Paul 

Brown, Defendant-Appellee; (James Mullen of Brewer, Worten, 

Robinette, Johnson, Worten & King, on the brief), Bartlesville, 

Oklahoma, Attorneys for First National Bank, Bartlesville, 

Oklahoma; and (Steven P. Shreder of Edwards, Roberts & Propester, 

Appellate Case: 87-1436 Document: 01019596461 Date Filed: 04/11/1989 Page: 1 
on the brief), Oklahoma City, Oklahoma, for Federal Deposit Insurance Corporation as Receiver for Fairview State Bank. 

Before MOORE, BALDOCK, and McWILLIAMS, Circuit Judges. 

McWILLIAMS, Circuit Judge. 

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Appellate Case: 87-1436 Document: 01019596461 Date Filed: 04/11/1989 Page: 2 
William Edwards, his brother, Donald Edwards, and William's 

wife, Darinda Edwards, brought the present action under the 

Racketeer Influenced and Corrupt Organizations Act (RICO), 18 

u.s.c. §§ 1961-1968, naming as defendants the First National Bank, 

Bartlesville, Oklahoma, one of its officers, Paul Brown, and the 

Fairview State Bank, Fairview, Oklahoma, and two of its officers, 

Bill Wilson and Robert Graalman. In a second count, plaintiffs 

asserted a pendent cause of action based on intentional tort . . 

Extensive discovery ensued. The defendants then filed motions for 

summary judgment, which motions were granted. Plaintiffs appeal 

the adverse judgments thus suffered. We affirm • 

. The background facts out of which the present controversy 

arose are not seriously disputed. William and Donald Edwards have 

conducted a cattle operation on their ranch near Fairview, 

Oklahoma (population 3,370), since the early 1970's. In 1980, the 

two had an opportunity to purchase an entir~ herd of registered 

and certified Brangus cattle. Needing money to buy the herd, the 

brothers went to the Fairview State Bank and discussed the possibility of a loan with one of its officers, Bill Wi lson . Wilson 

advised the Edwards brothers that a loan could probably be made, 

but that because of banking regulations which placed limits on the 

size of loans the First National Bank, Bartlesville, Oklahoma, 

would participate in the loan. The brothers were also advised 

that, due to regulations, the initial loan would be for only a 

short time, but that the loan could later be extended. The brothers, in turn, advised Bill Wilson that it would take at least five 

years to develop the Brangus herd into a profitable operation. 

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During this development phase, it was understood that the Edwards 

could only pay interest. 

Bill Wilson, representing Fairview State Bank, and Paul 

Brown, an officer of First National Bank, later inspected the 

herd, and a loan to the Edwards brothers was made by Fairview 

State, with First National participating in the loan. From time 

to time during 1981 and 1982 portions of the herd were sold with 

the proceeds being applied on the loan. 

The facts which form the basis for plaintiffs' RICO claims 

are as follows: 

1. On March 2, 1983, the Edwards were having a sale of some 

of the cattle from the Brangus herd, as well as the sale of cattle 

belongi ng to third parties. On prior sales of this type, the 

proceeds of the sale were delivered to Bill Wilson at the Fairview 

State Bank on the day after the sale. This practice was performed 

with Wi lson's consent. However, on this particular occasion, Paul 

Brown of the First National Bank appeared at the scene of the sale 

and advised William Edwards that he should take the proceeds to 

Fairview State Bank immediately after the sale, and that if he 

didn't, "he was going to jail.'' William Edwards complied with 

that instruction. 

2 . on the next day, March 3, 1983, all three plaintiffs went 

to Wilson's offices at the Fairview State Bank to allocate the 

proceeds of the previous day's sales. On that occasion, Paul 

Brown was also present, and said that if First National's 

participation was not fully paid at once, Donald and William 

Edwards, and Bill Wilson would all go to jail. After this 

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Appellate Case: 87-1436 Document: 01019596461 Date Filed: 04/11/1989 Page: 4 
"threat," the Edwards brothers were asked to call their father, 

Floyd Edwards, and ask for assistance. The Edwards declined to 

call their father. 

Bank 

3. However, Robert Graalman, President of 

did call Floyd Edwards, who carne immediately. 

Fairview State 

At that time, 

Brown again said he would put the Edwards brothers and Bill Wilson 

in jail if First National was not paid at once. Floyd Edwards, 

the father, inquired of Graalman as to what it would take to get 

11 rid'' of Brown. Graalman indicated Floyd Edwards' note for 

$220,000, which was the unpaid amount of First National's 

participation, would get 11 rid" of Brown and First National. Floyd 

Edwards signed a note for $220,000, and the note and a cashier's 

check in that same amount were placed in Fairview's safe. From 

that time on Brown had no further dealings with any of the 

plaintiffs. 

4. In 1982, an noperating loan11 in a sum of approximately 

$65,000 was made by Fairview State Bank to Darinda Edwards. This. 

loan was unsecured. In October, 1983, Wilson told William Edwards 

that the bank needed some collateral on that note. When William 

Edwards told Bill Wilson that there was no available collateral, 

Bill Wilson replied that he would 11 hate to see Darinda go to 

jai l. 11 Collateral was then forthcoming. 

5. In December, 1987, Earl Hall, the newly appointed 

president of Fairview State Bank, told William and Darinda Edwards 

that the operating loan was nillegal" and that the note should be 

paid at once. Shortly thereafter, the three plaintiffs filed for 

Chapter 11 reorganization under the Bankruptcy Code. 

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After discovery, all defendants, i.e., both banks and the 

three individual defendants, filed motions for summary judgment, 

contending that there was no genuine issue of any material fact. 

Their argument was that the pleadings and depositions d~monstrated 

that there was no 11 pattern of racketeering activity, 11 and that 

even if there were, the plaintiffs' action was time barred by the 

applicable statute of limitations. The district court held that 

there were genuine issues of fact concerning the statute of 

limitations. However, the court concluded that the record before 

it showed that there was no "pattern" of racketeering activities 

by the defendants, and on that ground entered summary judgment for 

the defendants on that part of the plaintiffs' claim based on 18 

u.s.c. § l962(c}. Having failed to show a claim under 1962(c), 

the district court held that the plaintiffs also failed on their 

conspiracy claim based ·on 18 u.s.c. § .1962(d). Similarly, once 

the federal RICO claims were dismissed, the district court refused 

to exercise pendent jurisdiction and dismissed plaintiffs' state 

claim. 

At the outset we should scrutinize the claims of the several 

plaintiffs and distinguish each. William and Donald Edwards base 

RICO claims on the events of March 2 and 3, 1983, when Paul Brown 

threatened them with jail. Since she was not threatened on either 

occasion, Darinda Edwards has no RICO claim on the basis of Paul 

Brown's statements on March 2 and 3. Moreover, Bill Wilson made 

no threatening statements to either William or Donald Edwards on 

either March 2 or 3. Indeed, on March 3, Bill Wilson was himself 

threatened with jail by Paul Brown. Consequently, based on the 

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Appellate Case: 87-1436 Document: 01019596461 Date Filed: 04/11/1989 Page: 6 
events of March 2 and 3, William a·nd Donald Edwards, but not 

Darinda, assert a RICO claim against Paul Brown and the First 

National Bank. However, based on the events of March 2 and 3, the 

Edwards brothers have no RICO claim against Bill Wilson. 

William Edwards apparently asserts a RICO claim based on an 

incident which occurred in October, 1983, when Bill Wilson reportedly stated that he would hate to see Darinda Edwards 11 go to jail 11 

over the unsecured note she had signed. Neither Darinda Edwards 

nor Donald Edwards was present when this statement was made. Accordingly, Donald Edwards does not have a RICO claim against Bill 

Wilson based on his statement to William Edwards concerning 

Darinda Edwards and the unsecured note she had signed. 

it is doubtful whether Darinda Edwards has a RICO claim 

this incident. 

Similarly, 

based on 

Neither William nor Darinda Edwards bases a RICO clai m on 

Earl Hall's statement to them in December, 1983, that the operating loan to Darind~ Edwards was "illegal ... 

Once the facts and the parties have been sorted out, the 

claims are easily summarized. Based on the events of March 2 and 

3, 1983, William and Donald Edwards, but not Darinda Edwards, assert a RICO claim against Paul Brown and First National Bank, but 

not against Bill Wilson, Robert Graalman or Fairview State Bank. 

William Edwards , and possibly Darinda Edwards, but not Donald 

Edwards, assert a RICO claim against Bill Wilson and Fairview 

State Bank, but not against Paul Brown or the First National Bank, 

based on Bill Wilson's statement in October, 1983, that he would 

hate to see Darinda "go to jail 11 over the unsecured note she had 

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Appellate Case: 87-1436 Document: 01019596461 Date Filed: 04/11/1989 Page: 7 
signed in return for an operating loan. When viewed in this 

light, plaintiffs' RICO claims tend to pale. 

18 U.S.C. § 1962(c) reads as follows: 

§ 1962 Prohibited activities 

. . (c) It shall be unlawful for any person 

employed by or associated with any enterprise 

engaged in, or the activities of which affect, 

interstate or foreign commerce, to conduct or 

participate, directly or indirectly, in the 

conduct of such enterprise's affairs through a 

pattern of racketeering activity or collection 

of unlawful debt . (emphasis added). 

The gist of the complaint is that the defendants formed an 

"enterprise•• which engaged in or conducted activities which affected interstate commerce and that they conducted the 

enterprise's affairs through a "pattern of racketeering activity" 

which damaged the plaintiffs. For this injury plaintiffs sought 

treble damages under 18 u.s.c. § 1964(c} in a total sum of 

$18,000,000.00. It was plaintiffs' position that the threats of 

certain of the defendants to jail the plaintiffs if their debt was 

not repaid at once was extortion under the Extortionate Credit 

Transactions Act, 18 u.s.c. §§ 891-896, as well as under local 

Oklahoma statutory law, and that such conduct was within the 

statutory definition of "racketeering activity" set forth in 18 

u.s.c. § 1961. 

As indicated, the defendants moved for summary judgment on 

several grounds: {1) The RICO claim was time barred; (2) there 

was no "enterprise" or "racketeering activity'' within the meaning 

of 1~ u.s.c. S 1962(c): and (3) if there was any ''racketeering 

activity," there was no "pattern," only isolated acts. As 

-aAppellate Case: 87-1436 Document: 01019596461 Date Filed: 04/11/1989 Page: 8 
indicated, the district court held that there was a genuine issue 

of material fact on the statute of limitations issue. The 

defendants do not reassert that matter in this court. The 

district court also held that there was no "pattern•• of r acketeering activity by the defendants, and on this basis granted summary 

judgment. 

Since the district court found no "pattern, 11 it did not address the other grounds advanced by the defendants, i.e., no 

11 enterprise" and no "racketeering activity... On appeal, the 

defendants suggest that the district court was correct in finding 

no "pattern," but argue that even if we should find that a pattern 

existed, we should nonetheless affirm the district court on the 

grounds that there was no 11 enterprise 11 formed by the defendants, 

and that in fact there was no "racketeering activity11 by the 

defendants. In this latter connection the defendants argue that 

to threaten one with jail over an unpai d qebt is not the type of 

"violence•• contemplated by the Extortionate Credit Transactions 

Act or RICO. Our approach to this case will be similar to the 

district court's and we will consider first the i ssue of ''pattern," vis-a-vis, isolated acts. 

We will assume, though not decide, that Brown committed 

11 racketeering activity" on March 2 and 3, 1983, when he threatened 

William and Donald Edwards with jail, and that Bill Wilson also 

committed "racketeering activity,. in October, 1983, when he 

advised William Edwards that he would "hate•• to see Darinda 

Edwards go to jail over her unsecured note to Fairview State Bank. 

The issue before us is whether there is a genuine issue regarding 

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Appellate Case: 87-1436 Document: 01019596461 Date Filed: 04/11/1989 Page: 9 
the existence of a "pattern" of such activity as required by 18 

u.s.c. § 1962(c). 

The Supreme Court in Sedima, S.P.R.L. v. Imrex Co., Inc., 473 

u.s. 479, 496 (1986), f.n. 14, discussed the "pattern" requirement 

as follows: 

As many commentators have pointed out, the definition of a "pattern of racketeering activity" dif fers 

from the other provisions in § 1961 in that i"t states 

that a pattern "requires at least two acts of racketeering activity," S 196.1( 5} (emphasis added), not that it 

"means" two such acts. -The implication is that while 

two acts are necessary, they may not be suffici ent. 

Indeed, in common parlance two of anything do not generally form a "pattern." The legislative history supports 

the view that two isolated acts of racketeering activity 

do not constitute a pattern. As the Senate Report 

explained: "The target of (RICO] is thus not sporadic 

activity. The infiltration of legitimate business 

normally requires more than one •racketeering activity' 

and the threat of continuing activity to be effective. 

It is this factor of continuity plus relationship which 

combines to produce a pattern." s. Rep. No. 91-617, p. 

158 (1969) (emphasis added). Similarly, the sponsor of 

the Senate bill, after quoting this portion of the 

Report, pointed out to his colleagues that "[t}he term 

'pattern' itself requires the showing of a relationship 

• • • . So, therefore, proof of two acts of racketeer - ing activity, without more, does not establish a pattern 

.••• " 116 Cong. Rec. 18940 (1976) (statement of Sen. 

McClellan). See also id., at 35193 (statement of Rep. 

Poff) {RICO "not aimedat the isolated offender"); House 

Hearings, at 665. Significantly, in defi ning "pattern" 

in a later provision of the same bill, Congress was more 

enlightening: "[C]riminal conduct forms a pattern if it 

embraces criminal acts that have the same or similar 

purposes, results, participants, victims, or methods of 

commission, or otherwise are interrelated by 

distinguishing characteristics and are not isolated 

events." 18 u.s.c. § 3575(e). This language may be 

useful in interpreting other sections of the Act. Cf . Iannelli v. United States, 420 u.s. 770, 789 (1975). 

In Torwest DBC, Inc. v. Dick, 810 F.2d 925 (lOth Cir. 1987), 

we considered the "pattern" issue, but declined to formulate a 

"bright -line test in the abstract" as to what constitutes a 

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"pattern," indicating that the 

determinative . 

facts of each case are 

Torwest, however, sheds considerable light on our present 

problem. In Torwest, two corporations, Vace and Great-West, 

formed a new corporation, Torwest, which would engage in the business of acquiring and developing real property. Great-West was to 

provide the financing for Torwest, and Vace was to find new 

properties for acquisition by Torwest. Thereafter the individual 

incorporators of Vace acquired realty in the name of a "dununy" 

corporation and proceeded to sell the land to Torwest at an 

inflated price. When Torwest discovered the scheme, it brought 

suit against the individual incorporators of Vace, and their 

nominee corporation, Canusa Investments. Torwest asserted a RICO 

claim under the provisions of 18 u.s.c. § 1962(c), as well as 

·pendent claims based on state law. The United States District 

Court for the District of .Colorado dismissed Torwest 's complaint 

under Rule 56, holding that allegations that directors of Vace 

secretly purchased realty and resold it at a substantial profit to 

Torwest did not allege the pattern of racketeering required to 

state a claim under 1962(c) since there was only one scheme, one 

result, one set of participants, one victim, one method of commission, and thus, no continuity and no pattern of racketeering 

activity. Torwest DBC, Inc. v. Dick, et al., 628 F. Supp. 163, 

165-66 (D. Colo. 1986). 

On appeal, we affirmed the judgment entered by the district 

court in Torwest. Torwest DBC, Inc. v. Dick, et al., 810 F.2d 925 

(lOth Cir. 1987). In so doing, we commented as follows: 

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In this case, the court and the .parties assumed for 

purposes of the court's ruling that defendants engaged 

in numerous racketeering acts. It is clear that when, 

as here, the acts are part of a common fraudulent 

scheme, they satisfy the relationship requirement of 

Sedima. See, e.g., Superior Oil Co. v. Fulmer, 785 F.2d 

252 (8th Cir. 1986). However, to establish a RICO pattern, a plaintiff must also demonstrate continuity, that 

is, "the threat of continuing activity... Sedima, 105 

S.Ct. at 3285 n. 14. This element is derived from 

RICO's legislative history, which indicates that RICO 

does not apply to "sporadic activity" or to the 

"isolated offender." Id. · 

. The continui ty requirement has been the source of 

considerabie difficulty. Courts generally agree that to 

make an adequte showing of continuity under Sedima, a 

plaintiff must demonstrate some facts from which at 

least a threat of ongoing illegal conduct may be 

inferred. A scheme to achieve a single discrete objective does not in and of itself create a threat of ongoing activity, even when that goal is pursued by multiple 

illegal acts, because the scheme ends when the purpose 

is accomplished. Courts that have considered a RICO 

claim grounded on this type of scheme have therefore 

required some additional evidence showing that the 

scheme was not an isolated occurrence. See, e.g., Lipin 

Enters. Inc. v. Lee, 803 F.2d 322, 324 (7th Cir. 1986) 

(acts to defraud one victim one · time insufficient in 

absence of showing of other victims or other frauds). A 

more difficult question is presented when the RICO claim 

is based on one scheme involving one victim, but the 

plan contemplates open-ended fraudulent activity and 

does not have a single goal that, when achieved, will 

bring the activity to an end. Some courts have found 

that such an ongoing scheme is itself sufficient to 

satisfy the continuity element of a RICO pattern. See, 

e.g., Morgan v. Bank of Waukegan, 804 F.2d 970, 976 (7th 

Cir. 1986); see also Illinois Dept. of Revenue v. 

Phillips, 771 F.2d 312 (7th Cir. 1985). Other courts 

may require additional proof showing that the defendants 

have engaged in similar activity in the past, or have 

been involved in other criminal activity, or pose a 

threat of similar activity in the future. See, e.g., 

Superior Oil Co., 785 F.2d at 257. 

Id. at 928 (footnote omitted). 

Similarly, in Condict v. Condict, 815 F.2d 579 (lOth Cir. 

1987), we held that a family dispute over a family ranching 

operation amounted, at most, to a garden variety fraud case, and 

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did not 

damages. 

fit the RICO mold entitling the injured party to treble 

Our reasoning was that the facts did not meet the 

11Continuity requirement 11 

of an enterprise through 

requirement of 18 u.s.c. 

Sedima. 

commented on in Torwest or the 11 conduct 

a pattern of racketeering activity" 

§ 1962(c} discussed in footnote 14 in 

Based on our understanding of Sedima and our pronouncements 

in Torwest and Condict, we do not believe that there is a genuine 

issue concerning the pattern requirement of 18 u.s.c. § 1962(c). 

Certainly Brown•s statements on March 2 and 3 , 1983, do not 

themselves establish a pattern. Similarly, Bill Wilson•s statement made in October, 1983, does not meet the test. Plaintiffs• 

reliance on a statement made in the summer of 1983 by another 

employee of Fairview State Bank to a different borrower of the 

bank that he would go to jail if he didn•t repay his debt is 

misplaced~ Such a statement would have no relation to the statements attributed to Paul Brown made some months prior thereto. In 

addition, such a statement would be insufficient to cause Bill 

Wilson•s statement of October, 1983, to rise to a RICO claim. As 

the Supreme Court noted in Sedima, proof of two acts, without 

more, does not a pattern make. 

Plaintiffs also asserted a conspiracy claim based on 18 

u.s.c. § 1962(d). Here, as in Torwest, 810 F.2d at 927, n.2, and 

Condict, 815 F.2d at 582, the conspiracy claim falls when the 

substantive claim based on 1962(c) is deficient. See also, Grider 

v. Texas Oil & Gas Corp., ____ F .2d ____ (lOth Cir. 1989). 

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There was no abuse of discretion when the district court, 

after granting the defendants• motions for summary judgment on 

plaintiffs• RICO claims, dismissed the plaintiffs• pendent 

claim based on intentional tort. See Pitts v. Turner 

Boisseau, Chartered, 850 F.2d 650, 653 (lOth Cir. 1988); 

state 

and 

Key 

Financial Planning Corp. v. ITT Life Ins. Corp., 828 F.2d 635, 643 

{lOth Cir. 1987); Curtis Ambulance v. Shawnee City Board of Commissioners, 811 F.2d 1371, 1386 (lOth Cir. 1987} (listing factors 

to be considered). 

By disposing of this case on the basis that the 11 pattern11 

requirement of the statute has not been met, it should not be 

inferred that the other requirements of the statute have been met. 

Judgments affirmed. 

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