## United States Court of Appeals FOR THE EIGHTH CIRCUIT

________________ No. 98-1290

________________ Robert R. Wisdom; Nancy J

. * Wisdom, *

Appellants, * Appeal from the United States

v. * Eastern District of Missouri.
Fi rst Midwest Bank, of Popla r * Bluff; Jerry F. McLane; Jerr y * Dorton; Joey McLane, *

Appellees. * *

* District Court for the

*

*

*

________________ Submitted: September 22, 1998 Filed: January 11, 1999

________________ Bef ore HANSEN, BRIGHT, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

________________ HANSEN, Circuit Judge.

Ro bert and Nancy Wisdom (the Wisdoms) brought this Racketeer Influence d and Corrupt Organizations Act (RI CO) claim against First Midwest Bank and three of its officers. They also asserted federal law claim s for violation of the Truth In Lending Act, mail fraud, wire fraud, extortion, and pendant state law claims of common law2

fraud and dec eit. The district court dismissed the claims for failure to state a clai m upon which relief cou ld be granted, from which the Wisdoms now appeal. We affirm in part, vacate in part, and remand to the district court for further proceedings.

I.

In reviewing a motion to dismiss for failure to state a claim, we view the facts in the light most favorable to the claimant, taking the facts as found in the complain t
as true. See Duffy v. Landberg , 133 F.3d 1120, 1122 (8th Cir.), cert. denied , 119 S. Ct. 62 (1998). In May 1989, the Wisdoms borrowed $283,000 (Loan I) from Firs t Midwest Bank to purchase Robert R. Wisdo m Oil Co., Inc., using the proceeds to pay of f the company's creditors. The loan was contingent on them also taking anothe r $120,000 loan (Loan II), which they were unaware of until closing, on propert y foreclosed by a related bank, Carter County Bank. T he Wisdoms allege it was too late to back out o f Loan I because representatives of the creditors to be paid off wer e present at the closing.
Defendant Jerry McLane is principal owner and president of First Midwest Bank and principal owner of Carter County Bank. Defendant Joey McLane was als o president of First Midwest Ban k at some time and dealt with the Wisdoms concerning their loa ns. Plaintiffs defaulted on Loan I in May 1991, and entered into a settlement agreement for $257,825 with defendant Jerry Dorton, a vice-pre sident of First Midwest Bank. Portions of the payments meant for the Loan I settlement were credited to Loan II between May 1991 and January 1992.

In March 1992, when the Wisdoms sought to pay off the then balance of Loan I of $1,473, Dorton strongly suggested that they leave the loan on the books to make it harder for other creditors to attach the property securing the loan. In July, Dorto n mailed a letter to the Wisdoms' attorney, indicating that both notes could be released for $15,000. In August 1992, the bank mailed a notice of def ault, stating a balance dueThe Wisdoms concede that their complaint failed to state a claim under the 1 Truth In Lending Act because the transaction involved a commercial loan to which Truth In Lending does not apply. See 15 U.S.C. § 1603(1).
3 on Loan I of $51,375, and threatened foreclosure. Plaintiffs paid an additional $28,000 between September and December 1992 and arranged for their associate to assume the th en $26,000 balance of Loan I. Because Loan II was still outstanding, defendant s refused to release any collateral securing Loan II. Much of the collateral wa s subsequently stolen and vandalized.

The Wisdoms filed a pro se complaint alleging that the defendants participated in a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c) & (d) (1996), by committing various acts of mail fraud, wire fraud, extortion, and Truth In Lending violations in connection with the collection of the two loans. The Wisdoms als o alleged that the defendants violated the Truth In Lending Act, 15 U.S.C. §§ 1601-67f (19 96). The district court read the complaint as alleging implied rights of actio n

1 under 18 U.S.C. § 1341 (1996) (mail fraud), 18 U.S.C. § 1343 (199 6) (wire fraud), and 18 U.S.C. § 1951 (1996) (extortion). Finally, the Wisdoms brought pendant stat e claims against the defendants based on common law fraud and deceit. The defendants filed a motion to dismiss the complaint for failure to state a claim upon which relie f could be granted. See Fed. R. Civ. P. 12(b)(6). The Wisdoms filed a traverse to the motion to dismiss, requesting that the court allow them to amend their complaint if it was indeed defective. The district court dismissed the complai nt in its entirety, without addressing the Wisdoms' argument that they should be allowed to amend thei r complaint. This appeal followed.

II.

We review the dismissal of a complaint for failure to state a claim upon which relief could be granted de novo, affirming the district court if there is no provable set4

of facts that would entitle the plaintiff to the requested relief. See WMX Tech., Inc.
v. Gascon ade County, Mo. , 105 F.3d 1195, 1198 (8th Cir. 1997). In so doing, w e construe the complaint liberally, taking all factual allegations as true. Id. It is wel l settled that "we may affirm the district court's judgment on any basis supported by the
r e cord." Stevens v. Redwing , 146 F.3d 538, 543 (8th Cir. 1998) (internal quotations and citations omitted).

A. RICO Claim

Section 1962(c) of the RICO Act makes it "unlawful for any person employed by or associated with any enterprise engaged in . . . interstate . . . com merce, to conduct or participate, d irectly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity." Subsection (d) criminalizes a conspiracy to violate
one of the other subsections of § 1962. Section 1964(c) allows a private party, wh o has be en injured in his property from a RICO violation, to sue for damages. To state
a RICO claim, the Wisdoms must show "(1) conduct (2) of an enterprise (3) through a pat tern (4) of racketeering activity." Sedima, S.P.R.L. v. Imrex Co., Inc. , 473 U.S. 479, 496 (1985) (footnote omitted).

The pattern element "requires at least two acts of racketeering activity." 1 8 U.S.C. § 1961(5); see also H.J. Inc. v. Northweste rn Bell Tel. Co. , 492 U.S. 229, 237- 38 (1989). How ever, a mere allegation of two or more acts is insufficient to state a RICO claim; the predicate acts must be related and must "amount to or pose a threat of c ontinued criminal activity." See United Healthcare Corp. v. American Trade Ins. Co., Ltd. , 88 F.3d 563, 571 (8th Cir. 1996) (quoting H.J. Inc. , 492 U.S. at 239). The relationship prong of the pattern element is satisfied if the predicate acts "'have th e same or simil ar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics a nd are not isolated events.'" Handeen v. LeMaire , 112 F.3d 1339, 1353 (8th Cir. 199 7) (quoting H.J. Inc. , 492 U.S. at 240). The second prong, continuity, can be either closed-ended or open-ended.5

Closed-en ded continuity involves "a series of related predicates extending over a substantial period of time;" open-ended continu ity involves acts which, by their nature, threaten repe tition into the future. See H.J. Inc. , 492 U.S. at 241-42. Multipl e predicates within a single scheme are encompassed within the RICO statute as long as the relat ionship and continuity elements are met. See id. at 237; Terry A. Lamber t Plumbing, Inc. v. Western Sec. Bank , 934 F.2d 976, 981 (8th Cir. 1991).

In defining "racketeering activity," § 1961(1) lists the predicate acts that wil l support a RICO claim. The Wisdoms' pro se complaint alleges that the defendants ' racketeering activity in cluded numerous instances of mail fraud, wire fraud, extortion, and violations of Truth In Lending. Acts indictable under the mail fraud, wire fraud, and extortion statutes are among the enumerated predicate acts. However, Truth I n Lending violations are not on the list. See 18 U.S.C. § 1961(1). The Wisdoms wish to replead the act s surrounding First Midwest Bank's requirement that they accept the second loan, originally pled as a violation of Truth In Lending, as a violation of th e Bank Hol ding Company Act, 12 U.S.C. § 1972 (1996). We address this argumen t later, but note for now that a violati on of that statute similarly is not a predicate act for purposes of establishing a RICO claim. See 18 U.S.C. § 1961(1). Thus, we look only to the alleged predicate acts of mail fraud, wire fraud, and extortion to determin e whether the pattern requirement has been met.

Whe n pled as RICO predicate acts, mail and wire fraud require a showing of : 1) a plan or scheme to defraud, 2) intent to defraud, 3) reasonable foreseeability that the mail or wires will be used, and 4) actual use of the mail or wires to further th e scheme. See Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co. , 48 F.3d 1066, 1069 & n. 6 (8th Cir. 1995) (noting that a RICO claim does not require proof o f misre presentation of fact). Extortion is defined as "obtaining . . . property fro m
an other, 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).6

The Wisdoms allege th at the defendants committed mail fraud in relation to the settlemen t

agreement reached in May 1991. The Wisdoms do not dispute that the y were d elinquent on the loan or that the amount of the settlement correlated to th e unpaid balance of the loan. They onl y claim that the conditions of the settlement were unfair. The bank had a right to attempt to collect on the delinquent loan, includin g entering into the settlement agreement. We agree with the district court that th e settlement was nothing more than hardball financing; it did not rise to the level o f fraud. See, e.g. , Lambert Plumbing , 934 F.2d at 981 (finding that a bank's acts o f protecting itself in light of a problem loan are not indicative of racketeering activity).

Though mail fraud can be a predicate act, mailings are insufficient to establish the continuity factor unless they contain misrepresentations themselves. The cour t must lo ok to the underlying scheme to defraud. See Primary Care Investors, Seven , Inc. v, PHP Healthcare Corp. , 986 F.2d 1208, 1215 (8th Cir. 1993) (refusing t o consider a letter containing no indications of fraud as the beginning mail frau d predicat e act); Kehr Packages, Inc. v. Fidelcor, Inc. , 926 F.2d 1406, 1414 (3d Cir. ) ("[T]he continuity question should not be affected by the fact that a particula r fraudulen t

scheme involved numerous otherwise 'innocent' mailings . . . ."), cert

. denied , 501 U.S. 1222 (1991). Because the May 1991 settlement agreement did not amount to a fraudulent scheme, the mailing of the agreement is not a predicate act that can be used to establish a pattern.
The only acts that could be construed to involve a fraudulent scheme surround the atte mpts to collect more than the agreed balance of the loans. Reading th e complaint in the light most favorable to the Wisdoms, Dorton agreed to accept $15,000 in full payment of both loans in July 1992. However, later in August, First Midwes t Bank mailed a default notice claiming a balance due of $51,375 and threatene d foreclosu re in the event of nonpayment. Facing foreclosure, the Wisdoms paid, an d caused th eir associates to pay, an additional $54,000 between September an d December 1992.7

Assuming these c ollection activities satisfy the initial showing of an underlying scheme to defraud, the predicate acts of mail and wire fraud oc curred between July and December 1992. This six-month period is too short to satisfy the closed-ende d analysis of the pattern requ irement. See Primary Care , 986 F.2d at 1215 (holding that elev en months is insufficient to satisfy the closed-ended continuity requirement an d noting that other Circuits consistently hold that schemes less than one year are to o sho rt). Assuming, arguendo, that the March 1992 "suggestion" to keep the loan with First Midwest Bank could amount to extortion, the predicate acts would still only cover a ten- month period, which likewise is too short to satisfy the closed-ended continuity requirement. Finally, there are no allegations that can be construed to show on-going criminal activity. We hold that the Wisdoms have failed to meet the pattern element and, thu s, their RICO claim must fail. Consequently, we need not address the othe r RICO elements.

B. Implied Right of Action Under Criminal Statutes
A criminal statute may p rovide an implied private right of action if Congress so intended in enacting the

criminal statute. See Thompson v. Thompson , 484 U.S. 174, 179 (1988) (holding that a private remedy will not be implied unless legislative intent
can be infe rred from statutory language or elsewhere). Whether 18 U.S.C. §§ 134 1 (mail fraud), 1 343 (wire fraud), and 1951 (extortion) provide private rights of action
ar e questions of first impression in the Eighth Circuit. We consider four factors i n determini ng whether a private right of action exists: 1) whether the plaintiff is a member of the class for whose benefit the statute was enacted; 2) whether Congres s intended, explicitly or implicitly, to cr eate such a remedy; 3) whether a private remedy is co nsistent with the underlying legislative scheme; and 4) whether a private righ t based on a federal statute would interfere with an a rea relegated to state law. See Cort
v. Ash , 422 U.S. 66, 78 (1975). Congressional intent is the final touchstone and th e Cort factors h ave been limited to providing evidence of Congress's intention to create a private right of action. See Thompson , 484 U.S. at 189 (Scalia, J., concurring)8

(indi cating Cort

was essentially overruled by Touche Ross & Co. v. Redington , 44 2 U.S

. 560 (1979)); Furrer v. Brown , 62 F.3d 1092, 1100 (8th Cir. 1995) (noting tha t Cort is only a guide to determining Cong ressional intent, citing Thompson and Touche Ross ), cert. denied , 517 U.S. 1167 (1996).

The S upreme Court reviewed the legislative history of the mail fraud statute in
asse ssing the breadth of criminal activity within the statute's scope. See McNally v

. United States , 483 U.S. 350, 356-57 (1987). The Supreme Court concluded that the sparse legislative history "indicates that the original impetus behind the mail frau d statute was to protect the people from schemes to deprive them of their money o r property." Id. at 356. It is not enough, however, that a statute intends to benefit a class of persons. See Transamerica Mortgage Advisors, Inc. v. Lewis , 444 U.S. 11, 17-18 (1979) (stating that although Congress clearly intended to benefit the plaintiff b y placing fiduci ary duties on the defendant, whether those duties were enforceable by a private action is anot

her question). Congressional intent is the determining factor and is not mere ly to be weighed against the other Cort factors. See Thompson , 484 U.S. at 179. Though the legislative history according to McNally is not inconsistent wit h
a private right of action, consistency is not enough. There is no clear indication tha t Congress intended to create such a right.

Ot her courts that have considered this issue have found no private right o f act ion. See Ryan v. Ohio Edison Co. , 611 F.2d 1170, 1178 (6th Cir. 1979) (findin g the scant le gislative history of the mail fraud statute to indicate an intent to punis h deal ers of fraudulent devices for using the United States mails but not an intent t o create a priv ate right of action); Bell v. Health-Mor, Inc. , 549 F.2d 342, 346 (5th Cir. 1977) (f inding no implied private remedy under mail fraud statute); Napper v

. Anderson, Henley, Shields, Bradford & Pritchart , 500 F.2d 634, 636 (5th Cir. 1974) (same under wire fraud statute), cert. denied , 423 U.S. 837 (1975). Though a bar e criminal statute does not necessarily preclude an implied private right of action, there should "at least [be] a statutory basis for inferring that a civil cause of action of some sort lay in favor of9

so meone." Cort , 422 U.S. at 79; see also Ryan , 611 F.2d at 1178. Neither the mai l fraud stat ute nor its legislative history provides for any remedy other than crimina l sanctions. Thus, we agree with the Fifth and Sixth Circuits and hold that Congress did not intend t o create a private right of action in enacting either the mail or wire frau d statutes.
Though fewer courts h ave addressed the issue of a private right of action under the extortion statute, those that have ha ve found it to be a bare criminal statute with no support for a private cause of action in the legislative history. See American Computer Trust Leasing v. Jack Farrell Implement Co. , 763 F. Supp. 1473, 1497 (D. Minn. 1991) (finding no private right of action under extortion statute which is "purely criminal in nature"), aff'd and remanded , American Computer Trust Leasing v. Boerboom Int'l , In c. , 967 F.2d 1208, 1214 (8th Cir.) ("[W]e affirm the district court's order in al l respects."), cert. denied , 506 U.S. 956 (1992); Peterson v. Philadelphia Stock Exch. , 717 F. S upp. 332, 336 (E.D. Pa. 1989) (finding no legislative intent from the statut e
or its legislative history to imply a private cause of action under 18 U.S.C. § 1951) ; Creech v. Federal Land Bank of Wichita , 647 F. Supp. 1097, 109 9 (D. Colo. 1986) (no private r ight of action under extortion statute). We agree that neither the statutor y language of 18 U.S.C. § 1951 nor its legislative history reflect an intent by Congress to creat e a private right of action. We hold, therefore, that the district court correctly di smissed the Wisdoms' claims based on a private right of action under 18 U.S.C. §§ 1431, 1434, and 1951.

C. Amended Complaint

The Wisdoms filed a traverse to the defendants' motion to dismiss, arguing that they should be allowed to am end their complaint to remedy its shortcomings. Though the W isdoms did not file a formal motion to amend their complaint, that failure is not
neces sarily fatal as long as they show a willingness to amend the complaint. Se e Ferguson v. Cape Girardeau County , 88 F .3d 647, 651 (8th Cir. 1996). Generally, the10

denial of a request to amend a complaint is reviewed by this court for an abuse o f discretio n. See Frey v. City of Herculaneum , 44 F.3d 667, 672 (8th Cir. 1995)

. Bec ause the district court's order is silent as to whether the request was eve n considered, we are un able to ascertain whether the district court denied the request or ignored i t. Leave to amend a complaint should be freely given to promote justice

. Fed. R. Civ. P. 15(a). We generally prefer to decide claims on their merits instead of
on their pleadings. See Ferguson , 88 F.3d at 650; Bank v. Pitt , 928 F.2d 1108, 1112 n.6 (11th Cir. 1991 ). In light of the foregoing, parties should usually be given at least one chance to amend their

complaint. See Bank , 928 F.2d at 1112. However, parties shoul d not be allowed to amend their complaint without showing how the complain t could be amended to save the meritless claim. See Ferguson , 88 F.3d at 651.
The Wisdoms alleg e that the defendants violated the anti-tying provision of the Bank Holding Company Act, 12 U.S.C. § 1972, by requiring them to accept Loan II from Carter County Bank before First Midwest Bank would grant Loan I. These facts may be able to support a claim under that Act. See § 1972(1)(B) ("A bank shall no t in any manner extend

credit . . . on the condition or requirement . . . that the customer shall obtain some ad ditional credit . . . from a bank holding company of such bank, or from any other subsidiary of such bank holding company."). Because we are unsure whethe r the district court addressed the Wisdoms' request to amend their complaint , we remand this issue to the district court for a ruling on the request to amend th e complaint regarding the Bank Holding Company Act.
The district court dismissed the pendant sta te fraud claim for failure to plead the claim with particularity as requi red by Fed. R. Civ. P. 9(b) and for failure to allege the elem ents of fraud under Missouri common law. We likewise remand the request t o amend the comm on law fraud claim for a ruling by the district court. In light of ou r opinion, the Wisdoms have failed to show how an amendment to their RICO claimThe Wisdoms argue that they should be allowed to replead the complaint to 2 properly plead the "enterprise" and "racketeering activity" elements of their RICO claim. Because we find that they fail the "pattern" element, such amendments would be futile.
11 could s ave that claim; thus, the district court need not entertain the request to amend 2 the RICO claim.

III.
For the foregoing reasons, we affir m the district court as to the RICO claim, the mail and w ire fraud claims, and the extortion claim. We vacate the district court' s dismis sal of the common law fraud claim and remand to the district court fo r consideration of the Wisdoms' request to amend their complaint as to the Bank Holding Company Act claim and the Missouri common law fraud claim.
A true copy.

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