UNPUBLISHED

UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT 

No. 08-2356

C. ALLEN FOSTER; SUSAN C. FOSTER; WILLIAM F. JONES, 

 Plaintiffs - Appellants, 

 v. 

WINTERGREEN REAL ESTATE COMPANY; RICHARD C. CARROLL; PETER 

V. FARLEY; TIMOTHY C. HESS; KYLE T. LYNN, 

 Defendants - Appellees. 

Appeal from the United States District Court for the Western 

District of Virginia, at Charlottesville. Norman K. Moon, 

District Judge. (3:08-cv-00031-nkm-bwc) 

Argued: December 4, 2009 Decided: January 29, 2010 

Before TRAXLER, Chief Judge, and AGEE and DAVIS, Circuit Judges. 

Affirmed by unpublished per curiam opinion. 

Edward B. Lowry, MICHIE, HAMLETT, LOWRY, RASMUSSEN & TWEEL, PC, 

Charlottesville, Virginia, for Appellants. Lloyd Lee Byrd, 

SANDS, ANDERSON, MARKS & MILLER, Richmond, Virginia, for 

Appellees.

Unpublished opinions are not binding precedent in this circuit. 
PER CURIAM: 

 Allen Foster (“A. Foster”), Susan Foster (“S. Foster”), and 

William Jones (“Jones”) (collectively, “Plaintiffs”) appeal the 

judgment of the United States District Court for the Western 

District of Virginia, which dismissed their Complaint against 

Wintergreen Real Estate Company (“WREC”), Richard Carroll 

(“Carroll”), Peter Farley (“Farley”), Timothy Hess (“Hess”), and 

Kyle Lynn (“Lynn”) (collectively, “Defendants”) for failure to 

state a claim under the Racketeer Influenced and Corrupt 

Organizations Act (“RICO”), 18 U.S.C. § 1961, et seq., and the 

Lanham Act, 15 U.S.C.A. § 1125(a).1 The Plaintiffs also appeal 

the district court’s subsequent denial of a motion to amend the 

Complaint. For the following reasons, we affirm the judgment of 

the district court. 

I. 

A. 

 During a period of approximately three years, the 

Plaintiffs, three real estate investors, purchased and sold a 

 1

 The Complaint and Amended Complaint also make various 

state law claims, including fraud, misrepresentation, breach of 

fiduciary duty, breach of contract, breach of express warranty, 

statutory and common law conspiracy, false advertising, and 

tortious interference. The dismissal of these claims is not 

challenged on appeal. 

2 
number of properties in the Wintergreen Resort (“Resort”) using 

the services of WREC and the individual Defendants. 

 Plaintiffs allege that, during the course of their business 

dealings, Defendants made various false statements and/or 

concealed material facts, which include, generally: that the 

Defendants are members of the Multiple Listing Service (“MLS”) 

and that all of the properties would be listed on the MLS 

(hereinafter “MLS scheme”);2 that WREC is the dominant real 

estate company in the Resort (Complaint & Amended Complaint 

¶¶18, 22); that Carroll is the top real estate agent at WREC 

(Complaint & Amended Complaint ¶¶18, 22); that WREC engages in 

an “effective marketing program”;3 that Defendants fraudulently 

 

(Continued) 

2

 Plaintiffs allege that “inclusion in the MLS is a critical 

factor in the exposure of ‘for sale’ properties to the 

marketplace and, thereby, in securing the best price for such 

properties.” (Complaint & Amended Complaint ¶35). Plaintiffs 

further allege that, “even in the cases in which the Defendants 

actually did put Plaintiffs’ ‘for sale’ lots in MLS, they did 

not include a picture of the lot in the listing, thereby making 

the MLS listing essentially worthless, contrary to the 

representations the Defendants had made to the Plaintiffs” (socalled “sham” listings). (Complaint ¶66; Amended Complaint ¶75). 

In the Amended Complaint, Plaintiffs further allege that 

Defendants “utilized similar ‘sham’ MLS listings . . . to 

defraud hundreds of sellers other than the Plaintiffs, beginning 

no later than January, 2000 . . . .” (Amended Complaint ¶76). 

3

 Specifically, “contrary to the representations which the 

Defendants had made to the Plaintiffs,” “Defendants did not 

prepare [or distribute] color brochures for Plaintiffs’ ‘for 

sale’ homes” (Complaint ¶¶68-69; Amended Complaint ¶¶80-81); 

“Defendants did not hold an open house” (Complaint ¶70; Amended 

Complaint ¶82); “Defendants did not put Plaintiff’s ‘for sale’ 

3 
assured Plaintiffs that the Summit House property was the “last 

piece of developable multifamily land left at [the] Resort” 

(Complaint ¶¶100-09; Amended Complaint ¶¶121-32); that 

Defendants failed to disclose that there was a noisy stump 

grinder operating next to property Plaintiffs purchased in the 

Stoney Creek area of the Resort (Complaint ¶¶110-15; Amended 

Complaint ¶¶133-38); and that Defendants violated dual 

representation restrictions (Complaint ¶¶85-96; Amended 

Complaint ¶¶105-17), and other realtor standards of conduct.

(Amended Complaint ¶¶148-51). 

 Plaintiffs contend that at least some of these alleged 

fraudulent acts were conducted through interstate communication 

via the mail and wire, and were perpetrated on “hundreds” of 

other out-of-state clients. They claim that all of these acts 

were committed so that Defendants would earn a higher 

commission, at the expense of potential profit for Plaintiffs. 

(Complaint ¶¶84, 96, 108, 113, 123; Amended Complaint ¶¶104, 

112, 131, 136, 146). 

 Based on these allegations, Plaintiffs alleged that 

Defendants violated several statutes: (1) conducting or 

 

properties on any exclusive Wintergreen TV channel” (Complaint 

¶71; Amended Complaint ¶83); and “Defendants did not advertise 

Plaintiffs’ ‘for sale’ properties in any commercial print 

medium.” (Complaint ¶72; Amended Complaint ¶84). 

4 
participating in a RICO enterprise, in violation of 18 U.S.C. § 

1962(c) (Count I); (2) investment of proceeds of racketeering 

activity, in violation of 18 U.S.C. § 1962(a) (Count II); (3) 

conspiracy to violate RICO, in violation of 18 U.S.C. § 1962(d) 

(Count III) (collectively, “RICO claims”); and (4) false 

advertisement, in violation of the Lanham Act, 15 U.S.C. § 

1125(a) (Count XI). 

B. 

 The district court dismissed the Complaint pursuant to 

Federal Rule of Civil Procedure 12(b)(6) for failure to state a 

claim, holding, in relevant part, that Plaintiffs failed to 

allege facts supporting the RICO claims and did not have 

standing to assert the Lanham Act claim. As to the RICO claims, 

the court held that 

the pattern alleged by the Plaintiffs is based solely 

on predicate acts of wire and mail fraud. Such cases 

require closer scrutiny before concluding that 

Plaintiffs have shown a pattern of racketeering 

activity. When considering the alleged scheme at 

issue in this case, it does not appear to be the type 

of social evil meant to be addressed by RICO. While 

Plaintiffs allege the scheme was directed at other 

victims besides themselves, those allegations are too 

speculative to support a finding of a pattern of 

racketeering activity. 

J.A. 213. 

 As to the Lanham Act claim, the district court held that 

Plaintiffs lacked standing because “[t]he Fourth Circuit has 

5 
squarely held that consumers do not have standing to sue under 

the Lanham Act,” J.A. 216-17, and “in this case . . . it is 

difficult to imagine how the Plaintiffs might have had any 

relationship with the Defendants other than as a consumer.” J.A. 

218. 

 Plaintiffs moved for reconsideration and for leave to amend 

the Complaint. In conjunction with these motions, Plaintiffs 

proffered an Amended Complaint “on the grounds that the 

additional allegations contained in the proposed Amended 

Complaint would cure the defects in the original Complaint and 

state a claim under [RICO].” J.A. 539. 

 The Amended Complaint contained the same basic allegations 

made in the Complaint, with greater detail and certain notable 

additions: it included additional details about the properties 

allegedly involved in the MLS scheme (Amended Complaint ¶¶43-

54); charged that the MLS scheme took place for eight years 

instead of three years and that Defendants perpetrated the 

scheme on hundreds of other clients (Amended Complaint ¶¶76-78); 

included the names and addresses of some of these persons, J.A. 

419-512; included allegations of how each individual Defendant 

was personally involved in the scheme (Amended Complaint ¶86); 

included an affidavit from Wesley C. Boatwright (“Boatwright”); 

and included an affidavit from Ivo Romanesko (“Romanesko”), 

attesting that “the use of marketing tools, such as including 

6 
properties in MLS . . . are essential” and “the standard in the 

industry.” J.A. 235. 

 The district court denied both the motion for 

reconsideration and the motion to amend. The court evaluated 

the Amended Complaint and held that amendment would be futile as 

the additional allegations are insufficient to show 

that the alleged scheme extended beyond the Plaintiffs 

in scope or degree adequate to constitute a pattern of 

racketeering activity. 

 . . . None of the additional allegations in the 

Amended Complaint serve to differentiate this case 

from a “garden variety fraud” or ordinary business 

dispute. 

J.A. 542-43. 

 Plaintiffs timely appealed the district court’s judgment, 

and we have jurisdiction pursuant to 28 U.S.C. §§ 1291 and 1294. 

II. 

 Plaintiffs contend that the district court erred in holding 

that Counts I, II, and III failed to adequately allege a pattern 

of racketeering activity. Plaintiffs also contend that the 

district court erred in finding that Count XI failed to 

adequately state a cause of action under the Lanham Act. 

Finally, Plaintiffs argue that the district court abused its 

7 
discretion by denying the motion to amend on the grounds of 

futility.4 

 We review a district court’s dismissal pursuant to Rule 

12(b)(6) de novo. Robinson v. Am. Honda Motor Co., 551 F.3d 

218, 222 (4th Cir. 2009). Courts should “read the facts alleged 

in the complaint in the light most favorable to petitioners,” 

H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 249-50 (1989), and 

the “complaint must contain sufficient factual matter, accepted 

as true, to ‘state a claim to relief that is plausible on its 

face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) 

(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 

“A claim has facial plausibility when the plaintiff pleads 

factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct 

alleged.” Iqbal, 129 S. Ct. at 1949. 

 The standard of review applicable to the denial of a motion 

to amend pursuant to Rule 15(a) is an abuse of discretion 

standard. Laber v. Harvey, 438 F.3d 404, 428 (4th Cir. 2006) (en 

banc). 

 4

 Plaintiffs do not appeal the district court’s denial of 

the motion for reconsideration. 

8 
III. 

A. RICO Claims 

 Count I alleges that Defendants conducted or participated 

in a RICO enterprise, in violation of 18 U.S.C. § 1962(c). 

Section 1962(c) provides that: 

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. 

18 U.S.C. § 1962(c). “‘Racketeering activity’ is defined as any 

of a number of predicate acts, including mail and wire fraud,” 

Al-Abood v. El-Shamari, 217 F.3d 225, 238 (4th Cir. 2000), as 

alleged in the case at bar. See 18 U.S.C. §1961(1).5 For a 

pattern of racketeering activity to exist, “two or more 

predicate acts of racketeering must have been committed within a 

ten year period.” ePlus Tech., Inc. v. Aboud, 313 F.3d 166, 181 

(4th Cir. 2002). 

 The pattern requirement is important because “[i]n 

providing a remedy of treble damages . . . Congress contemplated 

 5

 The elements of mail fraud are: “(1) a scheme to defraud, 

and (2) the mailing of a letter, etc., for the purpose of 

executing the scheme.” Pereira v. United States, 347 U.S. 1, 8 

(1954). The elements of wire fraud are similar; applying to the 

use of electronic or telephonic communication. Plaintiffs have 

pled multiple instances of mail and wire fraud. 

9 
that only a party engaging in widespread fraud would be subject 

to such serious consequences.” Menasco, Inc. v. Wasserman, 886 

F.2d 681, 683 (4th Cir. 1989). For this reason, RICO’s remedies 

are not appropriate for “the ordinary run of commercial 

transactions.” Id.; see also ePlus Tech., 313 F.3d at 181 

(noting that the pattern requirement is “designed to prevent 

RICO’s harsh sanctions . . . from being applied to gardenvariety fraud schemes”). Instead, “[w]e have reserved RICO 

liability for ‘ongoing unlawful activities whose scope and 

persistence pose a special threat to social well-being.’” AlAbood, 217 F.3d at 238 (quoting Menasco, 886 F.2d at 684). 

 Consequently, “simply proving two or more predicate acts is 

insufficient for a RICO plaintiff to succeed.” Id. at 238. 

Instead, “a plaintiff . . . must show that the racketeering 

predicates are related, and that they amount to or pose a threat 

of continued criminal activity.” H.J. Inc., 492 U.S. at 239. 

Thus, “[i]n essence, the pattern requirement has been reduced to 

a ‘continuity plus relationship’ test.” ePlus Tech., 313 F.3d at 

181. 

 As to the continuity requirement, “‘[c]ontinuity’ is both a 

closed- and open-ended concept, referring either to a closed 

period of repeated conduct, or to past conduct that by its 

nature projects into the future with a threat of repetition.” 

H.J. Inc., 492 U.S. at 241. Closed-ended continuity is shown by 

10 
“proving a series of related predicates extending over a 

substantial period of time.” Id. at 242. Open-ended continuity 

“depends on the specific facts of each case” and may be shown, 

for example, “if the related predicates themselves involve a 

distinct threat of long-term racketeering activity,” or if “the 

predicate acts or offenses are part of an ongoing entity’s 

regular way of doing business.” Id. 

 Although Plaintiffs allege multiple instances of mail and 

wire fraud over the course of an arguably substantial period of 

time, “we are cautious about basing a RICO claim on predicate 

acts of mail and wire fraud because it will be the unusual fraud 

that does not enlist the mails and wires in its service at least 

twice.” Al-Abood, 217 F.3d at 238 (internal quotations omitted). 

“This caution is designed to preserve a distinction between 

ordinary or garden-variety fraud claims better prosecuted under 

state law and cases involving a more serious scope of activity.” 

Id. 

 The case at bar is such an instance of “garden-variety 

fraud.” Essentially, Plaintiffs allege that Defendants 

misrepresented their efforts to market for-sale properties, 

misrepresented or failed to disclose material facts about 

specific properties, and breached their fiduciary duties. These 

are quintessential state law claims, not a “scheme[] whose scope 

11 
and persistence set [it] above the routine.” HMK Corp. v. 

Walsey, 828 F.2d 1071, 1074 (4th Cir. 1987). 

 This conclusion is bolstered by the fact that Plaintiffs 

failed to plead with particularity that any other persons were 

similarly harmed by Defendants’ alleged fraud, and thus failed 

to show “a distinct threat of long-term racketeering activity.” 

H.J. Inc., 492 U.S. at 242; see also Menasco, 886 F.2d at 684. 

The Complaint summarily draws the conclusion that other persons 

were harmed by the MLS scheme because “a comparison of the MLS 

listings for Nelson County with the Nelson County property 

transfer records during the relevant period reveals hundreds of 

properties . . . which were, on information and belief, listed 

with Defendants but were not included in MLS.” J.A. 29. Based 

on this fact and the vague reference to “interview[s] [with] a 

number of sellers,” Plaintiffs argue that Defendants “did not 

obtain those sellers’ consent to the omission of those 

properties from MLS.” J.A. 29. However, a complaint must plead 

sufficient facts to allow a court to infer “more than the mere 

possibility of misconduct.” Iqbal, 129 S. Ct. at 1950. 

 Plaintiffs attempted to rectify this deficiency in the 

Amended Complaint by including lists of properties handled by 

Defendants that were not listed on MLS and the names and 

addresses of the sellers associated with those properties. 

However, regardless of these lengthy exhibits, Plaintiffs 

12 
nevertheless fail to plead with particularity that any specific 

person was defrauded other then themselves, much less give any 

particulars of the fraud. Therefore, “[t]hese allegations lack 

the specificity needed to show a ‘distinct’ threat of continuing 

racketeering activity.” Menasco, 886 F.2d at 684. 

 Ultimately, “this circuit will not lightly permit ordinary 

business contract or fraud disputes to be transformed into 

federal RICO claims.” Flip Mortg. Corp. v. McElhone, 841 F.2d 

531, 538 (4th Cir. 1988). If we were “to adopt such a 

characterization[, we] would transform every such dispute into a 

cause of action under RICO.” Id. (internal quotation omitted). 

In light of these considerations, we hold that this case is “not 

sufficiently outside the heartland of fraud cases to warrant 

RICO treatment.” Al-Abood, 217 F.3d at 238.6 The district court 

thus did not err in granting the motion to dismiss. 

 6

 The remaining RICO claims also fail, as they rely on 

successfully pleading a pattern of racketeering activity. 

Plaintiffs argue that the district court erred when it concluded 

that the “allegations are insufficient under Rule 9(b) to state 

a claim against the individual Defendants other than Mr. 

Carroll,” because Plaintiffs did not “allege with specificity 

that any . . . communications were with anyone other than 

Defendant Carroll.” J.A. 208-09. However, because no pattern of 

racketeering existed as to any Defendant, this argument must 

fail. 

Plaintiffs’ argument as to Count II must also fail, because 

§ 1962(a) requires as an element of proof that Defendants 

“derived income from a pattern of racketeering activity.” United 

(Continued) 

13 
B. Lanham Act 

 The district court found that “[t]he Fourth Circuit has 

squarely held that consumers do not have standing to sue under 

the Lanham Act.” J.A. 216-17. Because “it is difficult to 

imagine how the Plaintiffs might have had any relationship with 

the Defendants other than as a consumer,” J.A. 218, the district 

court concluded that “the Plaintiffs do not have standing to sue 

under the Lanham Act.” Id. 

 It is undisputed that “a consumer does not have standing 

under the Lanham Act to sue for false advertising.” Made in the 

USA Found. v. Phillips Foods, Inc., 365 F.3d 278, 281 (4th Cir. 

2004) (emphasis added). Instead, the “Lanham Act is ‘a private 

remedy [for a] commercial plaintiff who meets the burden of 

proving that its commercial interests have been harmed by a 

competitor’s false advertising.’” Id. (quoting Mylan Lab., Inc. 

v. Matkari, 7 F.3d 1130, 1139 (4th Cir. 1993)); see also Barrus 

v. Sylvania, 55 F.3d 468, 470 (9th Cir. 1995) (“[I]n order to 

satisfy standing the plaintiff must allege commercial injury 

 

States v. Vogt, 910 F.2d 1184, 1194 (4th Cir. 1990) (emphasis 

added). 

Consequently, because the Plaintiffs failed to state claims 

as to §§ 1962(a) or (c), Plaintiffs’ charge of conspiracy to 

violate RICO pursuant to § 1962(d) is also without merit. See GE 

Inv. Private Placement Partners II v. Parker, 247 F.3d 543, 551 

n.2 (4th Cir. 2001). 

14 
based upon a misrepresentation about a product, and also that 

the injury was ‘competitive,’ i.e., harmful to the plaintiff’s 

ability to compete with the defendant.”). Although some courts 

have held that a party need not be in direct competition with 

the defendant to have standing,7 no court has held that a 

consumer has standing. 

 Plaintiffs attempt to avoid classification as “consumers” 

by arguing that they have a “business relationship” with 

Defendants. Nevertheless, Plaintiffs squarely fit into the 

“consumer” category. Plaintiffs were typical consumers of 

Defendants’ services as a real estate company and real estate 

agents. The “business relationship” to which Plaintiffs refer 

is simply a different term for the ordinary relationship between 

a seller of real estate services and the consumer of those 

services. Thus, as consumers, Plaintiffs lack standing to sue 

under the Lanham Act and the district court did not err in 

granting the motion to dismiss. 

 7 See Berni v. Int’l Gourmet Rests. of Am., Inc., 838 F.2d 

642, 648 (2d Cir. 1988); Camel Hair and Cashmere Inst. of Am., 

Inc. v. Associated Dry Goods Corp., 799 F.2d 6, 12 (1st Cir. 

1986) (holding that a trade group had standing, because its 

commercial interest had been harmed even though not a 

competitor). 

15 
C. Motion to Amend 

“[A] post-judgment motion to amend is evaluated under 

the same legal standard”—grounded on Rule 15(a)—“as a 

similar motion filed before judgment was entered.” 

Rule 15(a) directs that leave to amend shall be freely 

given when justice so requires. . . . Our court 

therefore reads Rule 15(a) to mean that leave to amend 

should be denied only when the amendment would be 

prejudicial to the opposing party, there has been bad 

faith on the part of the moving party, or amendment 

would be futile. 

Matrix Capital Mgmt. Fund, LP v. BearingPoint, Inc., 576 F.3d 

172, 193 (4th Cir. 2009) (quoting Laber, 438 F.3d at 426-27) 

(internal citations omitted). “Leave to amend . . . should only 

be denied on the ground of futility when the proposed amendment 

is clearly insufficient . . . on its face.” Johnson v. Oroweat 

Foods Co., 785 F.2d 503, 510 (4th Cir. 1986). 

 The district court considered the Amended Complaint and 

held that it would be futile to grant the motion to amend 

because “the additional allegations are insufficient to show 

that the alleged scheme extended beyond the Plaintiffs in scope 

or degree adequate to constitute a pattern of racketeering 

activity.” J.A. 542. 

 As discussed above, neither the Complaint nor the Amended 

Complaint allege a pattern of racketeering activity sufficient 

to support a RICO claim, nor did the Amended Complaint cure 

Plaintiffs’ lack of standing under the Lanham Act. Thus, “[t]he 

proposed amendment would not have corrected the fundamental 

16 
17 

defect in the complaint.” New Beckley Min. Corp. v. Int’l Union, 

United Mine Workers, 18 F.3d 1161, 1164 (4th Cir. 1994). 

Therefore, the district court did not abuse its discretion in 

holding that amendment would be futile and denying the motion to 

amend. 

IV. 

 For the foregoing reasons, we conclude that the district 

court did not err in dismissing Plaintiffs’ Complaint for 

failure to state a claim. Nor did the district court abuse its 

discretion in denying Plaintiffs’ motion to amend due to 

futility. Accordingly, the judgment of the district court is 

AFFIRMED.