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UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 97-41102

LESLIE R. BONNER, Trustee of Reliance Trusts;

MARK S. LEE,

Plaintiffs-Appellants,

VERSUS

ROBERT WAYNE HENDERSON, ET AL,

Defendants.

ROBERT WAYNE HENDERSON; MARY BELL HENDERSON; A. D. HENDERSON;

GEORGE CUNYUS; M. E. McDONALD; FRANK YANTIS; STEPHEN EMBREE;

GRANT THORNTON,

Defendants-Appellees.

Appeal from the United States District Court

for the Eastern District of Texas

July 31, 1998

Before WISDOM, KING, and DAVIS, Circuit Judges.

PER CURIAM:

I. Introduction and Background

In the present case, we consider whether a trust constitutes

an “enterprise” for purposes of the Racketeer Influenced and
1 18 U.S.C. § 1962.

2 Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir.

1992).

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Corrupt Organizations Act (RICO).1 We hold that it does not.

In 1941, Frania Tye Hunt created four trusts, collectively

known as the Reliance Trusts, for the benefit of her four children.

The plaintiffs, one of whom is the current trustee, and the other

of whom is one of the trust’s beneficiaries, filed the present suit

against a former trustee and a host of others who allegedly

participated in the fraudulent mismanagement of the trusts. The

plaintiffs initially sought relief in state court, but voluntarily

dismissed their claims. They subsequently filed suit in federal

court, asserting claims both under RICO and state law. The

defendants moved for dismissal under Rule 12(b)(6) of the Federal

Rules of Civil Procedure on the ground that the plaintiffs had not

alleged the existence of an “enterprise” as contemplated by RICO,

and therefore could not state a colorable claim. The district

court granted the motion and declined to exercise jurisdiction over

the outstanding state law claims. We affirm.

II. Discussion

We review de novo a district court’s dismissal on the

pleadings.2 The plaintiffs’ RICO claims may properly be

dismissed “only if it appears that no relief could be granted

under any set of facts that could be proven consistent with the
3 Rubenstein v. Collins, 20 F.3d 160, 166 (5th Cir.

1994)(internal quotation marks omitted).

4 18 U.S.C. § 1962(c).

5 Atkinson v. Anadarko Bank and Trust Co., 808 F.2d 438, 440

(5th Cir. 1987).

6 18 U.S.C. § 1961(4).

7 Aetna Casualty Surety Co. v. Rodco Autobody, 43 F.3d 1546,

1557 (1st Cir. 1994).

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allegations.”3

RICO 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.4

By the very language of the statute, the existence of an

enterprise is an essential element of a RICO claim.5 The

plaintiffs contend that the Reliance Trusts constitute an

enterprise for purposes of the statute. We are not persuaded. 

The term “‘enterprise’ includes any individual, partnership,

corporation, association, or other legal entity, and any union or

group of individuals associated-in-fact although not a legal

entity.”6 A plaintiff, therefore, may satisfy the requisite

“enterprise” element by proving either the existence of (1) a

legal entity, or (2) the existence of a group of individuals who

are associated-in-fact.7 A legal entity is one that “has

sufficient existence in legal contemplation that it can function
8 Black’s Law Dictionary (6th ed. 1990).

9 Aetna Casualty Surety Co. at 1557.

10 862 F.2d 1213 (5th Cir. 1989).

11 Id. at 1218.

12 Black’s Law Dictionary (6th ed. 1990).

13 Trustees of the Hotel Employees and Restaurant Employees

International Union Welfare Pension Fund v. Amivest Corp., 733

F.Supp. 1180, 1184 (N.D. Ill. 1990).

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legally, be sued or sue and make decisions through agents as in

the case of corporations.”8 An association-in-fact, on the other

hand, is an ongoing organization with members functioning as a

continuing unit.9 

A trust is neither a legal entity nor an association-infact. In Old Time Enterprises, Inc. v. International Coffee

Corp.,

10 we stated that intangible rights, such as contract

rights, cannot possibly constitute a legal entity enterprise

under RICO.11 We hold today that trusts fall within that class

of intangible rights. A trust is “a fiduciary relationship in

which one person is the holder of the title to property subject

to an equitable obligation to keep or use the property for the

benefit of another.”12 Like a contract, which cannot be a legal

entity enterprise for RICO purposes, it consists essentially of

rights and duties between two or more parties. Unlike a

corporation, which can be a legal entity enterprise for RICO

purposes, it cannot litigate on its own behalf.13 As such, we
14 Both Louisiana, the state in which the Reliance Trusts were

drafted, and Texas, the state in which the trustee has principally

resided, recognize trusts as fiduciary relationships rather than

legal entities. See La. Rev. Stat. Ann. § 9:1731 (West 1991); Tex.

Prop. Code Ann. § 111.004 (Vernon 1984). 

15 Shaffer v. Williams, 794 F.2d 1030, 1032 (5th Cir. 1986).

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have little difficulty concluding that a trust does not qualify

as a legal entity enterprise as contemplated by RICO.14

Likewise, we conclude that a trust cannot possibly qualify as an

association-in-fact enterprise. An association-in-fact consists

of personnel who share a common purpose and collectively form a

decision-making structure.15 In simple terms, a trust bears no

characteristics of an association-in-fact.

The plaintiffs’ claims under RICO cannot properly lie. The

judgment of the district court is AFFIRMED.