UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NORA CHISOLM; TINA WILCE; LAURA

RICHARDS; STARLETTE SEAMSTER,

Plaintiffs-Appellants,

No. 97-1970

v.

TRANSOUTH FINANCIAL CORPORATION,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Norfolk.

John A. MacKenzie, Senior District Judge.

(CA-93-632-2)

Argued: April 9, 1998

Decided: October 5, 1998

Before ERVIN, Circuit Judge, BUTZNER, Senior Circuit Judge,

and STAMP, Chief United States District Judge for the Northern

District of West Virginia, sitting by designation.

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Reversed and remanded by unpublished opinion. Senior Judge Butzner wrote the opinion, in which Judge Ervin and Chief Judge Stamp

joined.

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COUNSEL

ARGUED: George Robert Blakey, NOTRE DAME LAW SCHOOL,

Notre Dame, Indiana, for Appellants. Gregory Neil Stillman, HUNTON & WILLIAMS, Norfolk, Virginia, for Appellee. ON BRIEF:
Kieron F. Quinn, Richard S. Gordon, LAW OFFICE OF KIERON F.

QUINN, Baltimore, Maryland; F. Paul Bland, Jr., TRIAL LAWYERS

FOR PUBLIC JUSTICE, Washington, D.C., for Appellants. Benjamin V. Madison, III, HUNTON & WILLIAMS, Norfolk, Virginia; R.

Hewitt Pate, HUNTON & WILLIAMS, Richmond, Virginia, for

Appellee.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

BUTZNER, Senior Circuit Judge:

Nora Chisolm and the other named plaintiffs claim TranSouth

Financial Corporation committed mail fraud and conspired to commit

mail fraud under the Racketeer Influenced and Corrupt Organizations

Act (RICO). 18 U.S.C. § 1961 et seq. The plaintiffs appeal the district

court's 12(b)(6) order dismissing their complaint for failure to state

a claim. The district court held that the plaintiffs failed to sufficiently

plead the element of reliance in their attempt to allege RICO mail

fraud. We reverse.

I

The underlying facts are briefly outlined in this opinion; a complete

recitation of the facts may be found in this court's first decision in this

case. See Chisolm v. TranSouth Fin. Corp., 95 F.3d 331 (4th Cir.

1996) (Chisolm I).

Charlie Falk sold cars to customers at inflated prices, financed the

purchases, and took security interests in the cars. Falk then assigned

the secured notes to TranSouth. The assignments included a promise

by Falk to buy back the notes for a fixed price if the borrowers

defaulted on the loans.

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If a borrower missed a payment, TranSouth repossessed the vehicle

and mailed a "Notice of Private Sale" to the borrower. The notice

informed the borrower that the car would be sold privately if it was

not redeemed. The plaintiffs allege that these notices fraudulently

suggested to the borrowers that TranSouth would dispose of the vehicles through legitimate private sales. As this court noted, legitimate,

private sales under Virginia law never took place. Chisolm I, 95 F.3d

at 334, n.3. Instead of legitimate sales, if a car was not redeemed by

a borrower, Falk would buy back the note from TranSouth at the prearranged price and TranSouth would transfer the car back to Falk.

Falk would then assign the note to JB Collection Corporation,

Falk's subsidiary, and JB would demand payment for the deficiency.

While JB tried to collect the deficiency from the borrower, Falk

would attempt to resell the car. The original borrowers were never

informed of subsequent sales, and the subsequent sales were never

credited to the borrowers' deficiencies. The plaintiffs alleged that

TranSouth conspired with Falk and JB to violate the customers' rights

with this scheme. Chisolm I observes: "Indeed, concealment of the

nature of the `private sales' was the very linchpin of the scheme." 95

F.3d at 338.

This court held that in order for the plaintiffs to properly plead

RICO mail fraud they would have to allege that they relied on the

TranSouth mailing. To plead reliance, the court stated that the plaintiffs need only allege that they relied on the mailings to assure them

that the liquidation of the collateral was proceeding legally and legitimately. Chisolm I, 95 F.3d at 338-39. Since the complaint did not

allege reliance, this court remanded the case with the instruction that

the plaintiffs be given an opportunity to plead reliance.

Upon remand, the plaintiffs filed their third amended complaint,

which they argue alleged reliance. TranSouth, disagreeing, moved to

dismiss the third amended complaint due to the plaintiffs' failure to

allege reliance with the particularity required under Fed. R. Civ. P.

9(b). The district court dismissed the complaint and denied the plaintiffs the opportunity to submit another amended complaint. These rulings are the subject of this appeal.

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II

The district court's 12(b)(6) dismissal of the plaintiffs' complaint

is reviewed de novo. Randall v. United States, 30 F.3d 518, 522 (4th

Cir. 1994). We must accept the well pled allegations in the complaint

as true and we construe the facts in a light most favorable to the plaintiff. Id.; Little v. Federal Bureau of Investigation, 1 F.3d 255, 256 (4th

Cir. 1993).

The purpose of rule 9(b) is to provide a defendant with notice of

the substance of the plaintiffs' claims and to provide the district court

with enough information to distinguish strike suits from legitimate

claims. Michaels Bldg. Co. v. Ameritrust Co., 848 F.2d at 674, 679-

81 (6th Cir. 1988). The language in the plaintiffs' third amended complaint tracks the language this court suggested and meets rule 9(b)'s

requirements. Paragraphs 84 and 88 state:

Transouth issued false and deceptive notices of private sale

which were intended to and which did mislead the public

about their repossession and redemption rights. Transouth's

notices and private sales were intended to and did assure the

plaintiffs herein and the class that the repossession and liquidation of their collateral was proceeding legitimately and

legally and influenced the plaintiffs and the class to accept

the process without question, thus depriving plaintiffs and

the class of the opportunity to assert a meritorious defense

to JB's deficiency suit or seek other available legal remedies. Plaintiffs' and the Class' reliance on the notices of private sales . . . enabled the scheme to continue, and thus

proximately caused the damages suffered by plaintiffs and

the class.

. . .

All of these activities of the association-in-fact form a pattern, continuous in nature, which consists of numerous

unlawful individual acts directed to each named plaintiff and

to each class member. . . . Each fraudulent letter and notice

by Transouth and each fraudulent letter and pleading by JB

were acts in furtherance of the conspiracy for which the

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defendant is liable. The reliance of the plaintiff and the

members of the class on the falsehoods contained in such

documents . . . was justified because such documents would

and did cause persons of ordinary experience to be convinced of the legality and regularity of the process and to

refrain from defending what appeared to be a justifiable

lawsuit.

J.A. 131-132. Read in the context of the other allegations in the complaint these allegations are sufficient to meet rule 9(b)'s particularity

requirement and purpose. Among other allegations, the complaint

specifies: who mailed the fraudulent notices; who received the

notices; when the notices were received; the representations made in

the notices; the reasons why the plaintiffs consider the representations

fraudulent; the facts of the fraudulent scheme; the plaintiffs' reliance

on the notices; and the injury caused by the plaintiffs' reliance. Based

on these allegations, the complaint clearly alleges sufficient facts to

give TranSouth notice of the claims against it and the district court

sufficient information to determine the nature of the plaintiffs' claims.

Further, to the extent that this concerns TranSouth, the complaint is

sufficiently particular to ensure that the plaintiffs' discovery requests

will not be a fishing expedition. See Michaels Bldg. Co, 848 F.2d at

680.

III

Because the third amended complaint sufficiently pleads reliance,

we do not decide whether the district court properly denied the plaintiffs' motion to submit another amended complaint.

We decline the plaintiffs' invitation to provide guidance to the district court on the issue of class certification. This issue is not the subject of this appeal.

The judgment of the district court is reversed, and this case is

remanded for further proceedings consistent with this opinion.

REVERSED AND REMANDED

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