No. 96-1436

Mary S. McDonough and Matthew T. * McDonough, *
*

Plaintiffs, *
* Stephen Biras, Donna Biras, * Robert Boehmer, Mary Boehmer, * Jim Catlin, Ruth Catlin, Dan * Darnall, Sue Darnall, Larry * Doelling, and Lisa Doelling, * * Appellants, *
* Appeals from the United States Ken Downey and Rhonda Downey, * District Court for the Eastern * District of Missouri. Plaintiffs, *
* Jayson Fisher, Beth Fisher, * Tim Glover, Sherry Glover, * Sandra J. Hearn, Christine * Henderson, William Henderson, * Dave Kovar, Jenifer Kovar, * David Kuhlmann, Laurie Kuhlmann, * Brad Lavoise, Susan Lavoise, * Joe Ritter, Christina Ritter, * Gary Schmittgens, Wendy * Schmittgens, Joseph Thibodeaux, * Sheryl Thibodeaux, Thomas * Venturella, Patricia Venturella, * Richard Verde, Barbara Verde, * John Vuch, Marie Vuch, Tom * Barnes, Karen Barnes, George * Doerr, Cathy Doerr, Robert * Drury, Patricia Drury, Jeffrey * Kilper, Sheila Kilper, Terry * Kuelker, Lori Kuelker, Thuan * Nguyen, Hoa Tan Nguyen, Phan * Quach Nguyen, Kimberly Smithee, * Dennis Smithee, Adam Schneider, * Robyn Schneider, Robert Thompson, * Julie Thompson, Hiep Nguyen, * Nhutuyet Nguyen, Troy Schaefer, * Mark Wulfmeier, Joyce Wulfmeier, *

### -2-

Robert Gallo, Janet Gallo, and * Raymond J. Marasso, *
* Appellants, *
*
v. *
* National Home Insurance Company, * a Corporation, a Risk Retention * Group; Builders Structural * Services, Inc., II, Doing * Business as Home Buyers Warranty * Company; Henry Cisneros, * Secretary of the Department of * Housing and Urban Development; * William J. Kaufmann; Fern M. * Kaufmann; Shangri-La Development * Company, a Missouri Corporation; * John A. Nurmi; Dennis A. * Bolazina; Mary Catalano; Voges * Company, Inc., a Missouri * Corporation; Caldwell Banker * Ira E. Berry, Inc., a Missouri * Corporation; William W. Kaufmann; * Meramec Sewer Co., a Missouri * Corporation; First Bank, a * Savings Bank, a Corporation, * Doing Business as the Sheahan * Financial Company; First Bank, a * Savings Bank, Doing Business as * First Bank Mortgage; Geo. C. * Doering, Inc., a Missouri * Corporation; Missouri Title * Guaranty Company, a Missouri * Corporation, Doing Business as * Missouri Title Company; LeMay * Bank & Trust Company, a Missouri * Corporation; and Fern M. * Kaufmann, Personal Representative * of the Estate of William J. * Kaufmann, *
* Appellees. *

No. 96-1840

Mary S. McDonough, Matthew T. *

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McDonough, Stephen Biras, Donna * Biras, Robert Boehmer, Mary * Boehmer, Jim Catlin, Ruth Catlin, * Dan Darnall, Sue Darnall, Larry * Doelling, and Lisa Doelling, *
* Plaintiffs, *
* Ken Downey and Rhonda Downey, *
* Appellants, *
* Jayson Fisher, Beth Fisher, Tim * Glover, Sherry Glover, Sandra J. * Hearn, Christine Henderson, * William Henderson, Dave Kovar, * Jenifer Kovar, David Kuhlmann, * Laurie Kuhlmann, Brad Lavoise, * Susan Lavoise, Joe Ritter, * Christina Ritter, Gary * Schmittgens, Wendy Schmittgens, * Joseph Thibodeaux, Sheryl * Thibodeaux, Thomas Venturella, * Patricia Venturella, Richard * Verde, Barbara Verde, John Vuch, * Maria Vuch, Tom Barnes, Karen * Barnes, George Doerr, Cathy * Doerr, Robert Drury, Patricia * Drury, Jeffrey Kilper, Sheila * Kilper, Terry Kuelker, Lori * Kuelker, Thuan Nguyen, Hoa Tan * Nguyen, Phan Quach Nguyen, * Kimberly Smithee, Dennis Smithee, * Adam Schneider, Robyn Schneider, * Robert Thompson, Julie Thompson, * Hiep Nguyen, Nhutuyet Nguyen, * Troy Schaefer, Mark Wulfmeier, * Joyce Wulfmeier, Robert Gallo, * Janet Gallo, and Raymond J. * Marasso, *
* Plaintiffs, *
*
v. *
* National Home Insurance Company, * a Corporation, a Risk Retention * Group; Builders Structural * Services, Doing Business as * Home Buyers Warranty Company, * Inc., II; Henry Cisneros, *

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Secretary of the Department of * Housing and Urban Development; * William J. Kaufmann; Fern M. * Kaufmann; Shangri-La Development * Company, a Missouri Corporation; * and John A. Nurmi, *
* Appellees, *
* Dennis A. Bolazina, *
* Defendant, *
* Mary Catalano; Voges Company, * Inc., a Missouri Corporation; * Caldwell Banker Ira E. Berry, * Inc., a Missouri Corporation; * William W. Kaufmann; Meramec * Sewer Co., a Missouri * Corporation; First Bank, a * Savings Bank, Doing Business as * the Sheahan Financial Company, * a Corporation; First Bank, a * Savings Bank, Doing Business as * First Bank Mortgage; Geo. C. * Doering, Inc., a Missouri * Corporation, *
* Appellees, *
* Missouri Title Guaranty Company, * Doing Business as Missouri * Title Company, a Missouri * Corporation, *
* Defendant, *
* LeMay Bank & Trust Company, a * Missouri Corporation; and Fern M. * Kaufmann, Personal Representative * of the Estate of William J. * Kaufmann, *
* Appellees. *

Submitted: January 16, 1997
Filed: March 5, 1997

### The Honorab le Carol E. Jackson, United States District Judge 1 

### for the Eastern District of Missouri.

-5- Before LOKEN, JOHN R. GIBSON, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

MORRIS SHEPPARD ARNOLD, Circuit Judge.

The plai ntiffs, a group of home buyers who alleged that defendant s hadfraudulently sold them houses built upon a landfill, sued after th e landfill’s “active” soil shifted and damaged their houses. The district
court dismissed the complaint and the plaintiffs appealed. We affirm.

1

I.
Because the plaintiffs’ appeal follows the dismissal of thei r complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6), we
assume, for the purposes of this appeal, that the factual allegations of the ir complaint are true. In the late 1980s and early 1990s, th e defendants (a group of builders, real estate age nts, inspectors, insurers, and le nders) developed a subdivision in Jefferson County, Missouri, an d sold houses situated in it to first-time buyers. The defendants concealed fromt he buyers the fact that the houses were built upon an unstabl e landfi ll and failed to reveal that both the land and the houses wer e structurallydefective. After the “active” soil in the landfill shifted and damaged the plaintiffs’ houses, they filed acomplaint seeking to hold the defendants responsible for the damage to their houses and property

. They alleged violations of the Organized Crime Control Act of 1970, 1 8 U.S.C. §§ 1961-1968 (popularly known as “RICO”), and the Magnuson-Mos s Warranty Act, 15 U.S. C. §§ 2301-2312, and they advanced various state-law claims in addition. Soon thereafter, the district court entered an order under

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Fed. R. Civ. P. 11(b) requiring the plaintiffs to file what it called a “RICO statement,” that is, a detailed description of the pattern o f racket eeringin which the plaintiffs claimed that the defendants wer e engaged, and the plaintiffs complied.

The plai ntiffs filed motions seeking leave to file a first amende d complaint and later a revised first amended complaint, both of which the district court denied . The district court then dismissed the plaintiffs’ claims based on theiroriginal complaint, holding that they had failed to
state claims under RICO and Magnuson-Moss, and declining to exercis e jurisdictionover the remaining state law claims. Plaintiffs appeal only from the dismissal of their RICO claims.

II. The plaintiffs contend that the district court erred in denyingtheir motions for leave to amend their complaint and i n granting the defendants’ motions to dismiss. The plaintiffs maintain tha t their proposed pleadings (inclu dingthe two proposed amended complaints and a second “RIC O statement”) state a claim under RICO. We theref ore first consider whether the proposed pleading s, taken as a whole, state a claim upon which relief can be granted, becau se, if they do not, an inquiry into the propriety of the district court’s refusal to allow the plaintiffs to amend thei r complaint is moot. To prevail on a RICO claim, the plaintiffs must be able to prov e both the exi stence of an enterprise and a pattern of racketeering activit y within the enterprise. Atlas Pile Driving Co. v . DiCon Financial Co. , 886 F.2d 986, 993-96 (8th Cir. 1989). An enterprise , as contemplated by RICO, has th ree essential characteristics: A common or shared purpose, som e continu ityof structure and personnel, and an ascertainable structur e distinct from that inherent in a pattern of racketeering. Stephens, Inc.

v.

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Gelderm ann, Inc. , 962 F.2d 808, 815 (8th Cir. 1992). The thir d charac teristic, that of a distinct structure, requires that the commo n activities of the enterprise extend beyond the minimal associatio n necessaryto sustain the pattern of racketeering. Id. at 815-16. Tha t each member of a group carries on activities distinct from the pattern of racketeering is insufficient; the group as a who le must have a common link other than the racketeering activity. Id. In the instant case, th e pla intiffs’ three complaints and two RICO statements fail to allege th e existence of a structure distinct from the minimal association necessary
to defrau d the plaintiffs into buying the defective land and homes. I n both RICO statements, in fact, the plaintiffs conceded that the onl y activities of the alleged enterprise were those of the racketeering scheme

. The plaintiffs’ later conclusory allegation in their brief that the allege d enterprise consisted of more than what was necessary to defraud them i s insufficient to satisfy the Stephens requirements.

III. Because we hold that the proposed pleadings in their entirety do not state a claim under R ICO, we need not address the question of whether the district court erred in not granting the plaintiffs leave to amend their origina l complaint. For the reasons stated, therefore, we affirm th e judgment of the district court.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.