## F I L E D United States Court of Appeals Tenth Circuit 

### APR 27 2004 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

AD-X INTERNATIONAL, INC.; ALL STATES MEDIA, INC.; ALL STATES LEGAL REFERRAL SERVICES, INC.; ALL STATES CAPITAL CORPORATION; LARRY MACPHALE,

Plaintiffs-AppellantsCross-Appellees,

v. KENNETH E. KOLBJORNSEN; HANNELORE S. KOLBJORNSEN,

Defendants-AppelleesCross-Appellants, and MICHAEL M. NOYES; THE LAW OFFICES OF MICHAEL M. NOYES; DAVID FOGEL; FOGEL & BLUESTEIN; DONALD MCNURLIN; MCNURLIN & ASSOCIATES; MICHAEL MERRION; THE OFFICES OF MICHAEL MERRION, CPA; DOUG ENGLER; DOUGLAS ENGLER, P.C.; ANDREW SNYDER; THE LAW FIRM OF ANDREW SNYDER; Nos. 03-1192, 03-1219, 04-1033 (D.C. No. 99-D-332 (CBS)) (D. Colo.)* This order and judgment is not binding precedent, e xcept under the

doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3. -2- NATIONAL LAWYERS REFERRAL NETWORK, INC.; LAWYERS AMERICA, INC.,

Defendants-Appellees.

ORDER AND JUDGMENT *

Before SEYMOUR , Circuit Judge, BRORBY , Senior Circuit Judge, and HENRY , Circuit Judge.

After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not materiallyassist the determination of these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). T he cases are therefore ordered submitted without oral argument. Plaintiffs filed this action for bankruptcy fraud, misrepresentation, and racketeering against Kenneth and Hannelore Kolbjorn sen, their now-defunct corporations, and several legal and financial profe ssionals who allegedly assisted the Kolbjornsens in orchestrating and then conceali ng a pre-petition transfer of assets intended to deprive the creditor plaintiffs of any recovery in a Chapter 13 proceeding filed by Mr. Kolbjornsen. The district court dismissed the complaint1 The third appeal in the caption, No. 04-1033, was o pened when plaintiffs

filed a “Certificate of Compliance and Amendment to Notice of Appeal” to notify this court of the disposition of a post-trial motio n filed after the other appeals were commenced. Plaintiffs have now moved to dismi ss No. 04-1033, stating that they had mistakenly added the reference to an amend ed notice and “did not intend [to] . . . initiate a new appeal.” We grant the mo tion. -3- against the professional defendants, but plaintiffs went to trial and obtained a substantial money judgment against the Kolbjornse ns. Plaintiffs now appeal (in No. 03-1192) the dismissal of their claim again st the professional defendants under the Racketeering Influenced and Corrupt Organ izations Act (RICO), 18 U.S.C. §§ 1961, 1962, 1964. The Kolbjornsens cr oss-appeal (in No. 03-1219) the judgment entered on the jury verdict against them. We affirm both rulings. 1 Plaintiffs’ Appeal The district court granted the professional defendants’ motion to dismiss the RICO claim, concluding that the pertinent alleg ations lacked “the level of particularity required to state a claim for [] reli ef.” Aplt. App., Doc. 8, at 144. Predicate acts of fraud for a RICO claim must satis fy the heightened pleading standard of Fed. R. Civ. P. 9(b). Cayman Exploration Corp. v. United Gas Pipe
Line Co. , 873 F.2d 1357, 1362 (10 th Cir. 1989); accord Lum v. Bank of Am. , 361 F.3d 217, 220 (3d Cir. 2004). On de novo review, Robbins v. Wilkie , 300 F.3d 1208, 1209 (10 th Cir. 2002), we agree that the broad-brushed andconclusory allegations involving the professional defendants w ere deficient under Rule 9.-4-

Indeed, at the hearing on the motion to dismiss, pl aintiffs’ counsel repeatedly stated that the complaint was framed (inappropriate ly) in reference to the general notice pleading standards of Fed. R. Civ. P. 8, andnow on appeal plaintiffs make virtually no effort to demonstrate how the pertinent allegations are sufficient under the proper legal standard applied by the district court. Instead, they focus on the district court’s denial of their informal re quest to amend their complaint to correct its deficiencies. This line of attack, how ever, is foreclosed by circuit precedent. Plaintiffs did not file a motion for leave to amend their complaint, much less detail the additional factual allegations they could provide to shore up their RICO claim against the professional defendants. Rather, at the hearing on the motion to dismiss, plaintiffs’ counsel merely made a generic “offer that if additional allegations to supplement those [made] w ill satisfy the Court, we’d request the opportunity to do so.” Aplt. App., Doc . 7, at 118. In the district court’s view, it was “disingenuous” to make this be lated provisional offer: “If [plaintiffs] really wanted to amend, the time to se ek to amend would have been before today’s hearing so that the Court would have had something else to look at [to] figure out if [plaintiffs] have more to say th an what [they have] already said.” Id. The district court’s handling of the matter was appropriate under Calderon v.2 Plaintiffs now assert they had a right to amend the ir pleadings, with or

without leave of court, because some of the defenda nts had not yet answered the complaint. Even if that were true, they “failed to exercise their right to amend prior to the trial court’s decision” and thereafterthey “could have amended their complaint only by leave of court.” Glenn v. First Nat’l Bank in Grand Junction , 868 F.2d 368, 370 (10 th Cir. 1989) (emphasis altered). -5- Kansas Department of Social & Rehabilitation Services , 181 F.3d 1180, 1186-87 (10th Cir. 1999). 2 Plaintiffs focus much of their briefing on a motionthey filed for relief under Fed. R. Civ. P. 60(b) after they appealed fro m the entry of final judgment incorporating the dismissal of the professional def endants and the subsequent verdict against the Kolbjornsens. The denial of th e Rule 60(b) motion is beyond the scope of this appeal, which is limited to order s in existence when the notice of appeal was filed. See, e.g. , EEOC v. Wal-Mart Stores, Inc. , 187 F.3d 1241, 1250 (10th Cir. 1999); Breeden v. ABF Freight Sys., Inc. , 115 F.3d 749, 752 (10 th Cir. 1997); Nolan v. United States Dep’t of Justice , 973 F.2d 843, 846 (10 th Cir. 1992). In any event, our conclusion that the distr ict court proceeded correctly on the motion to dismiss would undercut plaintiffs’ cl aim that the court abused its discretion in denying their Rule 60(b) motion chall enging that disposition. Kolbjornsens’ Appeal The Kolbjornsens appeal from the entry of judgment on the jury’s award of compensatory and punitive damages against them on p laintiffs’ RICO claims.-6-

They contend that the district court erred in instr ucting the jury regarding the “enterprise” and “person” elements of a RICO claim. See 18 U.S.C. § 1962(c) (making it unlawful “for any person” who is “associ ated with any enterprise” to conduct its affairs through a pattern of racketeeri ng activity). Specifically, they argue that Kenneth Kolbjornsen’s bankruptcy estate does not constitute a RICO enterprise and that, in any event, the estate lacks the requisite distinctness from the person (debtor Kenneth Kolbjornsen) who alleged ly used it as a vehicle for racketeering activity. Neither of these contention s has merit. In addition to individuals associated in fact, any legal entity may qualify as a RICO enterprise. Id. § 1961(4). Indeed, because the enterprise must be separate from the pattern of racketeering itself, United States v. Turkette , 452 U.S. 576, 583 (1981), and distinct from the person engaging in it, Cedric Kushner Promotions, Ltd. v. King , 533 U.S. 158, 161-62 (2001), RICO requirements ar e most easily satisfied when the enterprise is a formal legal entity. Bennett v. Berg , 685 F.2d 1053, 1060 (8 th Cir. 1982), adopted on reh’g en banc , 710 F.2d 1361, 1363-64 (8th Cir. 1983); see also United States v. Blinder , 10 F.3d 1468, 1474 (9th Cir. 1993). A bankruptcy estate is clearly suc h an entity. The only published decision to address the matter had no difficulty co ncluding that a bankruptcy estate qualified as a RICO enterprise. Handeen v. Lemaire , 112 F.3d 1339, 1353-7-

(8th Cir. 1997); see also Gunther v. Dinger , 547 F. Supp. 25, 27 (S.D.N.Y. 1982) (same conclusion as to probate estate). We agree. Basically the same reasons undercut the Kolbjornsen s’ argument that the requisite distinction between “enterprise” and “per son” was lacking here. They insist that a bankruptcy estate and debtor are lega lly indistinguishable. On the contrary, “the debtor and the bankruptcy estate are distinct entities in an individual’s bankruptcy proceeding.” Katz v. Comm’r , 335 F.3d 1121, 1127 (10th Cir. 2003). Indeed, the creation of the estate as a formal entity in its own right is the immediate consequence of filing a bank ruptcy case. 11 U.S.C. § 541. Though speaking about a corporation rather than a b ankruptcy estate, the Supreme Court’s analysis of the RICO distinctiveness requirement in Cedric Kushner
Promotions is instructive: “The corporate owner/employee, a natural person, is distinct from the corporation itself, a legally dif ferent entity with different rights and responsibilities due to its different legal status. And we can find nothing in the statute that requires more ‘separatedness’ thanthat.” 533 U.S. at 163. As the facts here reflect, a debtor may “victimize” an est ate or use it as a “vehicle” for unlawful activity directed at others just as an own er/employee may exploit his relationship with a corporation. See id. at 164. To paraphrase the Court, we conclude that “the statute requires nothing more th an the formal legal distinction between [debtor] and [estate] that is present here.” Id. at 165.-8-

Appeal No. 04-1033 is DISMISSED on plaintiffs-appel lants’ own motion; the district court’s order dismissing the claims ag ainst the professional defendants is AFFIRMED in appeal No. 03-1192; and the money ju dgment entered on the jury verdict in favor of the plaintiffs is AFFIRMED in appeal No. 03-1219.

Entered for the Court

Stephanie K. Seymour Circuit Judge