NO T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
M AI NGOC B U I,

Pla i ntiff-Appe lla

nt, v. TON PHI NGUYEN; e t a l.,

De fe nda n ts-Appe lle e s. No. 15-55116 D.C . No. 8:14-c v-00757-DOC -R

NB M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia Dav id O. C arte r, Distric t Judge , Pre siding Argue d and Subm i tte d

Oc tobe r 2, 2017 Pa sa de n a , C a l ifornia B e fore : R

AW LINSON a

n d N.R . SM ITH, C irc uit Judge s, a nd KOR M AN, ** Distric t Judge . M a i Ngoc B ui a

ppe a ls the distric t c ourt’ s gra nt of De fe nda

nts’ m otion to dism iss with pre

j u dic e the R a c ke te e r Influe nc e d a nd C orrupt Orga

niz ations (R IC O) c la im

from he r Se c ond Am e n de d C om pla int (SAC ). W e have jurisdic tion



# FIL ED OCT 17 2017 M OLLY C. DW Y ER, CLERK U
. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.

* * The Honora

ble Edwa rd R . Korm an, Unite d Stat e s Distric t Judge for the E a s te rn Distric t of Ne w York, sitting by de signa tion.unde r 28 U.S.C . § 1291. W e re ve rse and re m and with instruc tions to al low B ui

anothe r opportunity

to a m e nd he r c om

pla int. C ivil R IC O is a va lid m e ans of re c ove ry

for a pla i ntiff whe re she m e e ts the sta tutory re quire m e n t s. Se d

ima, S.P.R.L. v . Imre

x C o . , 473 U.S. 479, 493-98 (1985). The R IC O sta

tute outla ws “ (1) the c onduc t of (2) a n e nte rprise tha

t a ffe c ts inte rstate c o m

m e rc e (3) through a

patte rn (4) of ra c ke te e ring a c tivity or c olle c tion of unla wful de b t .” Ec le c ticProps. E., LLC v . Marc u s & Millic hap C o. , 751 F.3d 990, 997 (9th C ir. 2014) (c iting 18 U.S.C . § 1962(c )). “ R a c ke te e ring a c tivity ,” a s a pplic a ble to this c a se , is de fine d a s “ any a c t whic h is indic ta

ble unde r . . . se c tion 1341 (re lating to m a il fra

ud) [or] se c tion 1343 (re lating to wire fraud).” 18 U.S.C . § 1961(1)(B ). An “ e n te rprise ” is a n “ individual, pa

rtne rship, c orporat ion, a ssoc iation, or other le ga l e ntity , a nd a ny union or group of individua ls a s soc iate d in fa c t a l though not a le ga l e ntity .” Id. § 1961(4). And, a “ p atte rn of ra c ke t e e ring a c tivity ” “ re q

uire s at le a st two a c ts of ra c ke te e ring a c tivity ,” oc c urring within ten y e ars of e a c h othe r. Id. § 1961(5). Thus, a s a pre dic ate to susta ining a c ivil R IC O c la im , a pla intiff m

u st de m onstra

te the de fe nda

n t func tione d a s a

n “ e nte rprise ,” e nga ge d in ra c ke te e ring a c tivity

— in this c a se m a il or wire fra ud— a n d did so in a

“ patte rn.” The distric t

c o urt found tha

t B ui’ s SAC fa ile d to suffic ie ntly a lle ge e a c h e le m e nt. 21. An “ e nte rprise ” is a ny “ individual, pa

rtne rship, c orporation, a ssoc iation, or othe r le ga l e ntity , and a ny union or group of individua ls a ssoc iate d in fa c t a lthough not a

le ga l e ntity .” Id. § 1961(4). To find a n “ e nte rprise ,” the re m

ust be (1) “ e vide nc e of a

n ongoing orga

niz ation, form a l or inform a l,” and (2) “ e vide nc e that the va rious a ssoc iate s func tion a s a c ontinuing unit.” Unite d State s v . Turk e tte , 452 U.S. 576, 583 (1981). It m ust ha ve “ a struc ture ,” whic h m e ans it ha s “ a purpose , re lationships a

m ong thosea ssoc iate d with thee nte rprise , a nd longe vity suffic i e nt to pe rm it thosea ssoc iate s to pursue the e nte rprise ’ s purpose .” Boy lev . Unite d State s , 556 U.S. 938, 945-47 (2009). W e have sum

m ariz e d the Supre m e C ourt’ s jurisprude nc e a s re quiring: “ (A) a c om m on purpose , (B ) a

struc ture or orga niz a tion, a

nd (C ) longe vity

ne c e ssa ry to a c c om plish thepurpose .” Ec le c tic Props. E. , 751 F.3d a

t 997 (c iting Boy le , 556 U.S. a t 946). B ui’ s SAC suffic ie ntly

ple a ds the e xiste nc e of suc h a n e nte rprise . First, B ui a lle ge s tha

t De fe nda nts ha d a “ s c he m e to plunde r m illions of dolla rs from M rs. B ui,” and tha

t De fe nda nts “ a c c o m

p lishe d this plunder of M rs. B ui’ s m one y by
m e ans of de libe ra t e , c a lc ulate d a nd m a lic ious le g a l a c ts, inc luding a c t ua l fra ud, wire fra ud a nd forge ry . ” As e vide nc e d by the SAC ’ s a lle gations, this sche m e re quire d a c om m on purpose to c arry out. Se c ond, the SAC ple a d s a suffic ie n t

“ struc ture or orga

niz ation,” be c a

use , a lthough the

SAC a l le ge s tha

t Hung Tra

n 3(Hung) a

nd La n B ic h Nguy e n (La

n) func t ione d a s the prim ary a c tors, the c orporate e ntitie s c o ntrolle d by

othe rs, a nd the prope rty

tra nsa c tions fa c ilita

tion by the m , form e d a c ohe sive pa

rt of the group B ui a l le ge s de fraude d he r. Fina lly , the SAC suffic i e ntly

a lle ge s longe vity

ne c e s sa ry to a c c om plish thee nte rprise ’ s purpose , a s it a lle ge d tha

t the Nguy e n fam ily

ope rate d othe r fra udule n t sc he m e s in the pa st, whic h inte ra c te d with theinsta n t a lle gation. As suc h, the distric t c ourt e rre d by c onc luding tha

t B ui ha d fa ile d to suffic ie ntly ple a d the e x iste nc e of a

n “ e nte rprise .” 2. A RIC O c la i m m

u st a de quate ly

ple a d at le a st “ two a c ts of ra c ke te e ring a c tivity , ” whic h, in this c a se , a re wire and m a il fra

ud. 18 U.S.C . § 1961(5). “ The
m a il a nd wire fra

ud sta tute s a re ide ntic a l e xc e pt for the pa rtic ula r m e thod use d to disse m i nate the fra

ud, a nd c onta in thre e e le m e nts: (A) theform at ion of a sc h e m e to de fraud, (B ) the use of the m a ils or wire s in furthe ranc e of tha t sc he m e , a

nd (C ) the spe c ific inte nt to de fra

ud.” Ec le c ticProps. E. , 751 F.3d a t 997. “ A wire c om m unic a tion is in furthe

ranc e of a fra udule nt sc he m e if it is inc ide n t to the e xe c ution of thesc he m e , m e aning tha t it ne e d not be an e sse ntia l e le m e nt of the sc he m e , just a

ste p i n the plot.” Unite d State s v . J inian , 725 F.3d 954, 960 (9th C ir. 2013) (inte rna l quota

t ion m a rks, e llipse s, a

nd c ita t ions omitte d). All a lle g ations of fraud m ust be ple a de d with “

pa rtic ula rity .” Fe d. R . C iv. P. 9(b); ac c ord Sun Sav . & Loan Ass’n v . Die rdorff

, 825 F.2d 187, 196 (9th C ir. 1987).

4B ui a lle ge s four wire tra nsfe rs a nd one m a iling a s the ne c e ssa ry pre dic ate a c ts of wire and m a il fra

ud, but thedistric t c ourt c onc lude d tha t, at m ost, only

one of the a lle ge d

tra nsfe rs wa s wire fra

ud. W e disa gre e . Thre e of the a lle ge d tra nsfe rs suffic i e ntly

ple a d insta

nc e s of wire fraud. First, B ui a lle ge s tha t a ll the tra

n sfe rs we re pa rt of the sa

m e , ove rarc hing sc he m e to “plunde r m illions of dolla rs from [he r] ,” through initia

lly innoc uous prope rty

tra nsa c t ions to gain B ui’ s trust, a nd late r unfe tte re d a c c e ss to he r fina nc e s. This a lle gation is suffic ie nt to m e e t the re quire m e nt tha

t she a lle ge a “ sc he m e to de fraud.” Se c ond, e a c h of the a lle ge d transfe rs wa s at le a st “ i nc ide nta l” to the ove ra rc hing sc he m e tha

t B ui a l le ge s. Ea c h wa s e ithe r (1) use d to build B ui’ s trust in De fe nda nts; (2) se t up the m e ans to c om m it the fra

ud; or (3) outright c om

m i t fra ud a nd wrongfully

ta ke m one y from B ui. The re fore , e a c h wire /m a i l wa s, at m inim um , inc ide nta l to the ove ra ll sc he m e . Fina lly , the thre e a c tua l w i re tra nsfe rs (Nove m

be r 1, 2012, Nove m

be r 6, 2012, a

nd De c e m b e r 3, 2012) de m onstra

te a “ spe c ific inte nt” to de frau d B ui. The ultim ate sc he m e wa s to de frau d B ui by c onvinc ing he r to trust De fe nda nts a nd the n e xploit that trust to de fraud he r. The Nove m be r 1, 2012 wire tra

nsfe r wa s done “ at De fe nda nt La n’ s dire c t ion” and use d to purc ha se the first innoc e nt tra nsa c tion, the

“ se t[] up.” The Nove m

b e r 6, 2012 wire tra

nsfe r wa s done to purc ha se prope rty , whe re ultim a te ly

$200,000 “va

nishe d a nd is una c c ounte d

for” through the
5c onstruc tion proc e ss. Fina lly , Hung initia te d the De c e m

be r 3, 2012 wire transfe r—

without B ui’ s knowle dge or pe rm ission— to purc h a s e the W e st Holly w ood Prope rty

and title it in Tri Tra

n’ s (Tri) na

m e using a “ forge d

‘ gift’ le tte r to the e sc row, indic a ting tha t M s. B ui wa s gifting”the wire tra nsfe r to Tri. The se tra nsfe rs we re “ re a sona

b ly c a lc ulate d to de c e i ve pe rsons of ordina ry prude n c e and c om

pre he nsion,” Ec le c ticProps. E. , 751 F.3d a t 997, a nd ultim ate ly use d to de fraud B ui in va

rious wa y s. Howe v e r, both theNove m be r 1, 2012 “ intra

ba nk” tra nsfe r (whic h B ui a lle ge s is a

wire tra nsfe r) and the unda

te d m a il fra

ud a lle gation, a

re not a lle ge d with suffic ie nt spe c ific ity to m e e t the ple a ding re quire m e nts. First, the “ i ntra ba nk” transfe r la c ks a

ny a lle gat ion tha

t it wa s, in fa c t, a

wire tra nsfe r be y ond som e a c c ounting a djustm e n t by W e lls Fa rgo. Se c ond, the m a il fra

ud a lle gat ion fa ils to
m e e t the R

ule 9 (b) ple a ding re q

uire m e nts be c a

use it is unc le ar from the SAC whe the r the m a ile d doc um e nts we re a c tua lly pa rt of the fraud, or if the a ssoc iate d wire wa s a c tua lly

the fraudule nt tra

nsa c t ion. Ac c ordingly , the SAC suffic ie ntly ple a de d thre e insta

nc e s of wire fra

ud.

63. The distric t c ourt note d tha t B ui ha d fa ile d

to ple a d a

“ patte rn” sinc e it ha d found the SAC only

ple a de d one insta

nc e of wire fra

ud. This a na ly sis wa s insuffic ie nt to a de quate ly de te rm ine whe the r B ui ple a de d a patte rn. 1 4. Although the

distric t c ourt ha s “ pa

rtic ula rly broa d” disc re tion re ga

rding le ave to a m e nd whe re the pla intiff ha s be e n give n a n opportunity to a

m e nd, the c ourt m ust still c onside r “ whe the r the propose d am e ndm e nt re sults from undue de la y , is m a de in ba d fa ith, will c a use pre j udic e to the opposing pa rty , or is a dila tory ta c tic .” C

hodos v . W

. Publ’g C

o . , 292 F.3d 992, 1003 (9th C ir. 2002). Any de nia ls a re “ stric tly

re vie we d in light of the

strong polic y

pe rm itting am e ndm e nt.” Moorev . K ay port Pac k

ageEx p., Inc
. , 885 F.2d 531, 538 (9th C ir. 1989) (inte rna l quota

t ion m a rks om itte d). The distric t c ourt a buse d its disc re tion by not a llowing B ui a

t le a s t one m ore atte m

pt to a m e nd he r c o m

pla int, be c a

use (1) c ontra ry to the distric t c ourt’ s a

na ly sis, B ui’ s SAC did, a fte r am e ndm e nts, suffic i e ntly

ple a d the e xiste nc e of an “ e nte rprise ” and the m i nim um ne c e ssa ry pre d ic a te wire tra

n sfe rs; a nd (2) the distric t c ourt m a de no a dditiona l findings re ga rding the fa c tors note d in C hodos .

1 Although the

distric t c o urt did som e of the ana ly sis of this issue in its orde r gran ting De fe n da

n t s’ m otion to dism

iss the First Am e nde d C om pla i nt, tha t orde r wa s not a ppe a le d a nd is not be fore us. 7Furthe r, e v e n if the thre e insta nc e s of a l le ge d wire fra

u d m ay not providea suffic i e nt “patte rn,” we c annot sa y tha t the am e ndm e nt would befutile and would c ontra dic t the C

hodos fa c tors a

t this m otion to dism

iss sta ge of the a c tion. The re m ay be a dditiona l fa c ts a

nd le ga l the orie s tha

t c ould be inc orporat e d into a Third Am e nde d C om

pla int whic h, a s re quire d by the Fe de ra l R

ule s, “ [t] he c ourt should fre e ly give . . . whe n justic e so re quire s.” Fe d. R . C i v. P. 15(a )(2). RE V E RSE D AND RE M ANDE D.

8B ui v

. Nguy e n , Case No. 15-55116 Raw linson, Cir c uit Judge , c onc ur r ing: I c onc ur in tha

t portion of the

disposition re

m anding for thepla intiff to a tte m pt to a m e nd he r c om

pla int one la st tim e . I e xpre ss no vie w on the a d e qua c y of any of the a lle gations c onta ine d in the Se c ond Am e nde d C o m pla int. 

# FIL ED

OCT 17 2017 M OLLY C. DW Y ER, CLERK U
. S. CO URT O F APPEALS