IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

TRUGREEN LANDCARE, L.L.C., §

 §

Plaintiff- §

Counterdefendant, §

 § Civil Action No. 3:06-CV-0327-D

VS. §

 §

KAYLYN SCOTT, Individually §

and d/b/a PROFESSIONAL RESEARCH §

AND REFERRALS, §

 §

Defendant- §

Counterplaintiff- §

Third-Party §

Plaintiff, §

 §

VS. §

 §

CITY OF DALLAS and §

MARK DUEBNER, §

 §

Third-Party §

Defendants. §

MEMORANDUM OPINION

 AND ORDER 

In this removed action, the dispositive question presented is

whether the defendant-counterplaintiff-third-party plaintiff has

established a viable claim for relief under the Racketeer

Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968

(“RICO”). Concluding that she has not, the court grants plaintiffcounterdefendant’s and third-party defendants’ motions for summary

judgment dismissing the RICO claim and remands the balance of the

case to state court.

 

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1

Scott entitled her pleading a “cross-petition.” The court

will use the applicable federal terminology for the pleadings.

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I

Although this case is somewhat more involved than the

following description reflects, this discussion of the background

facts and procedural history is sufficient considering the focus of

this decision. Plaintiff-counterdefendant TruGreen Landcare,

L.L.C. (“TruGreen”) sued defendant-counterplaintiff-third-party

plaintiff Kaylyn Scott, individually and d/b/a Professional

Research and Referrals (“Scott”), in Texas state court, seeking to

recover on claims for breach of contract and on a sworn account.

Scott later counterclaimed against TruGreen and filed a third-party

action against third-party defendant the City of Dallas (“City”),

alleging a claim for breach of contract. The City removed the case

to this court on the basis (addressed below) that Scott has

asserted a claim arising under federal law. Scott did not

challenge the removal. About two months after the case was

removed, she filed an amended counterclaim and third-party

complaint1 in which she added Mark Duebner (“Duebner”), a City

employee, as a third-party defendant and explicitly alleged a claim

for relief under RICO against the City, Duebner, and TruGreen.

Although Scott’s pleadings and summary judgment briefing are not

entirely clear, the court assumes that she is asserting a single

RICO claim based on an alleged substantive violation of RICO and a

 

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2Although both sides have filed motions for summary judgment,

because the court is granting summary judgment in favor of the

City, Duebner, and TruGreen on Scott’s RICO claim, it will recount

the evidence in a light favorable to Scott and draw all reasonable

inferences in her favor. E.g., U.S. Bank Nat’l Ass’n v. Safeguard

Ins. Co., 422 F.Supp.2d 698, 701 n.2 (N.D. Tex. 2006) (Fitzwater,

J.) (citing Clift v. Clift, 210 F.3d 268, 270 (5th Cir. 2000)).

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RICO conspiracy. 

Scott contracted with the City to provide ground and

maintenance service for the City Parks and Recreation Department.2

Scott did not have equipment or personnel with which to service the

City contract, so she entered into a subcontract (“Subcontract”)

with TruGreen to provide the labor, equipment, supervision, and

expertise for the City’s ground maintenance. For her services as

contractor, Scott received a percentage of the amount invoiced to

the City.

Under the terms of the Subcontract, TruGreen was required to

provide Scott with a monthly statement and proof of performance

setting forth in detail all costs incurred in performing the work

for the City. Scott was then to remit TruGreen’s invoice to the

City for payment. The City would issue a check to Scott, who

would, in turn, pay TruGreen.

The Subcontract required that Scott open a lockbox and deposit

the payments in the lockbox. From the lockbox, Scott was entitled

to her percentage (3%) of the payments received, and TruGreen had

the right to the remainder (97%). Instead of opening a lockbox,

Scott deposited the City’s checks in a business account to which

 

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TruGreen was not a signatory. 

After the City made several payments from which Scott failed

to pay TruGreen its percentage, TruGreen notified the City that it

was changing the “remit to” address from Scott’s address to

TruGreen’s address. TruGreen maintains that it notified Scott of

this change and asked her to meet TruGreen’s branch manager at the

bank to open a lockbox account to facilitate disbursement of the

funds, but she refused, and instead demanded that the City cancel

and reissue to her all checks that had been sent directly to

TruGreen. The City contacted TruGreen and asked that the checks be

returned. Since TruGreen had not yet endorsed any of the checks,

it returned the ones in its possession. TruGreen contends that it

did not attempt to cash the checks, and that it retained them only

so that it could persuade Scott to open a lockbox. The City

reissued the checks, and Scott was eventually paid for all the

checks sent to TruGreen.

Scott then terminated the Subcontract with TruGreen, stating

that she would pay TruGreen in full within 30 days. Scott did not

pay TruGreen as promised. Five months after Scott terminated the

Subcontract, the City notified Scott that her Contract with the

City had been cancelled. The City noted that it was aware that

Scott had not paid her subcontractors for services rendered, and it

debarred her from doing business with the City for two years. This

lawsuit followed. 

 

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3TruGreen filed on September 21, 2006 objections to Scott’s

summary judgment response and a motion to strike her summary

judgment evidence, and the City and Duebner filed on September 22,

2006 objections and a motion to strike Scott’s summary judgment

evidence offered in response to their motion, and the City and

Duebner filed on November 13, 2006 objections to and a motion to

strike Scott’s summary judgment evidence offered in support of her

own motion. Given the court’s reasoning and the result reached in

this decision, the court overrules the objections and denies the

motions to strike without prejudice as moot.

4

Scott did not file her response to the motions within 20

days, as required by this court’s local civil rules. After the

deadline had passed, she filed a motion requesting an extension of

time to file her response, and she filed her responsive briefing on

September 11, 2006. Because the tardiness of her response has not

prejudiced the summary judgment movants or interfered with the

decisional process of the court, the court will consider it.

5The jurisdictional issue that the court addresses here is

separate from the one that the City and Duebner have raised and

that the court decides infra at § III.

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All parties have filed motions that are pending for decision.

Concerning Scott’s RICO claim, the City and Duebner move to dismiss

for lack of subject matter jurisdiction, and TruGreen, the City,

and Duebner move for summary judgment.3

 Scott opposes their

motions,4 and she moves for summary judgment establishing that she

is entitled to recover on her RICO claim.

II

The court begins by addressing whether it has subject matter

jurisdiction in this case.5 Although the parties have not raised

this question, the court must notice its own lack of subject matter

jurisdiction sua sponte, if necessary. Kidd v. Sw. Airlines Co.,

891 F.2d 540, 546 (5th Cir. 1990) (“While neither party argued that

 

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the amended complaint provided an adequate basis for federal

question jurisdiction, federal courts must address jurisdictional

questions sua sponte when the parties’ briefs do not bring the

issue to the court’s attention.”).

In this case, plaintiff TruGreen sued defendant Scott in Texas

state court, alleging that it was entitled to recover from her on

a sworn account, as provided in Tex. R. Civ. P. 185, and for

breach of contract. It also sought attorney’s fees and damages

under state law. Scott later counterclaimed against TruGreen and

impleaded the City as a third-party defendant. The City did not

remove the case at that time because, as it candidly concedes in

its notice of removal, Scott sued it only for breach of contract.

“No federal claims or federal issues were stated.” Notice of

Removal ¶ 4. 

The City removed the case, however, after Scott responded to

the City’s first set of interrogatories. In answers to three

interrogatories——not in her state-court third-party petition——Scott

stated that the facts and/or law on which she relied to assert that

the City had no basis to terminate its contract with her were that

the City had acted with bias and prejudice, and had violated

federal law, including the United States Constitution, 42 U.S.C.

§ 1983, RICO, and the Fourteenth Amendment. She also averred that

she was entitled to punitive damages because, inter alia, the City

had violated law and regulations of federal purchasing policies,

 

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6

In its notice of removal, the City relied on two cases to

assert that the interrogatory answers qualified as “other papers”

that made the case removable at that time, even though it was not

removable initially: Chapman v. Powermatic, Inc., 969 F.2d 160 (5th

Cir. 1992), and S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489

(5th Cir. 1996). Notice of Removal ¶ 7. The City’s reliance on

those cases, however, was misplaced. Those were amount-incontroversy decisions. That is, in the context of removal based on

diversity of citizenship (which has an amount in controversy

requirement) they addressed the point in time at which a removing

party could have determined that the amount in controversy was

satisfied. Neither case involved federal question removal——which

is generally determined from the well-pleaded complaint——and

neither undermines this court’s conclusion that the content of

Scott’s third-party petition, not her interrogatory answers,

governed whether she had pleaded a federal question claim that made

the case removable.

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and that she was entitled to injunctive relief based on the fact

that the City continued to violate 42 U.S.C. § 1983. The City

removed this case within a matter of weeks, contending on the basis

of these answers——not based on her well-pleaded complaint——that

Scott had asserted a claim arising under federal law. Notice of

Removal ¶ 6.6

The case was not removable, however, on this basis.

“Ordinarily, the well-pleaded complaint rule governs federal

question jurisdiction. Under the rule, ‘[r]emoval is not possible

unless the plaintiff’s “well pleaded complaint” raises issues of

federal law sufficient to support federal question jurisdiction.’”

Ervin v. Stagecoach Moving & Storage, Inc., 2004 WL 1253401, at *2

(N.D. Tex. June 8, 2004) (Fitzwater, J.) (alteration in original)

(quoting Rodriguez v. Pacificare of Tex., Inc., 980 F.2d 1014, 1017

(5th Cir. 1993)); see Carpenter v. Wichita Falls Indep. Sch. Dist.,

 

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44 F.3d 362, 366 (5th Cir. 1995) (“A determination that a cause of

action presents a federal question depends upon the allegations of

the plaintiff’s well-pleaded complaint.” (citing Louisville &

Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1908))). The wellpleaded complaint rule makes the plaintiff “the master of the

claim; he or she may avoid federal jurisdiction by exclusive

reliance on state law.” Caterpillar Inc. v. Williams, 482 U.S.

386, 392 (1987). Therefore, even if federal claims are available,

the plaintiff may remain in state court by relying exclusively on

state law. See id. If, on its face, the plaintiff’s state court

complaint contains no issue of federal law, there is no federal

question jurisdiction. Aaron v. Nat’l Union Fire Ins. Co., 876

F.2d 1157, 1160-61 (5th Cir. 1989). A federal claim does not exist

simply because facts are available in the complaint to suggest such

a claim. See Gemcraft Homes, Inc. v. Sumurdy, 688 F. Supp. 289,

292 (E.D. Tex. 1988); Chavez v. McDonald’s Corp., 1999 WL 814527,

at *2 (N.D. Tex. Oct. 8, 1999) (Fitzwater, J.) (holding that

plaintiff had not alleged a federal-law claim even though he

referred at one point to exhausting his administrative remedies

under federal law, where he otherwise clearly alleged that his

claims were based on Texas statutory or common law). Nor is the

existence of a federal defense enough to establish federal question

jurisdiction. See, e.g., Hart v. Bayer Corp., 199 F.3d 239, 244

(5th Cir. 2000) (“Yet the mere fact that a given federal law might

 

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7Moreover, “[b]ecause jurisdiction is so fundamental, any

doubts concerning removal must be resolved against removal and in

favor of remanding the case back to state court.” Cross v. Bankers

Multiple Line Ins. Co., 810 F. Supp. 748, 750 (N.D. Tex. 1992)

(Means, J.) (citing Ashley v. Sw. Bell Tel. Co., 410 F. Supp. 1389,

1392 (W.D. Tex. 1976)). “The federal removal statute, 28 U.S.C.

§ 1441 (1997), is subject to strict construction because a

defendant’s use of that statute deprives a state court of a case

properly before it and thereby implicates important federalism

concerns.” Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th

Cir. 1997).

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‘apply’ or even provide a federal defense to a state-law cause of

action, is insufficient alone to establish federal question

jurisdiction.”). There are some exceptions to the well-pleaded

complaint rule, such as complete preemption, but none applies here.

Therefore, the content of Scott’s third-party petition——i.e., her

“well-pleaded complaint”——governed whether the case was removable.

Her interrogatory answers played no role in this determination.7

Despite the fact that this case was not initially removable,

Scott did not object when the case was removed. In fact, about two

months after removal, she filed an amended counterclaim and thirdparty complaint in which she explicitly asserted a RICO claim

against the City, Duebner, and TruGreen. “In most cases, federal

courts base decisions about subject matter jurisdiction after

removal on the plaintiff’s complaint as it existed at the time that

the defendant filed the removal petition.” Kidd, 891 F.2d at 546

(citing Lockwood Corp. v. Black, 669 F.2d 324, 326 (5th Cir. 1982);

In re Carter, 618 F.2d 1093, 1101 (5th Cir. 1980)). But “an

alternative standard governs those situations where, after improper

 

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removal, a case is tried on the merits without objection, and the

federal court enters judgment.” Id. (citing Grubbs v. Gen. Elec.

Credit Corp., 405 U.S. 699, 702 (1972)). “The jurisdictional issue

. . . becomes whether the federal district court would have had

jurisdiction over the case had it originally been filed in federal

court.” Id. (addressing jurisdictional issue on appeal) (citing

Grubbs, 405 U.S. at 702). The pleadings are reviewed “as they

existed at the time that the district court enter[ed] judgment.”

Id. (addressing appellate standard). “The ‘trial on the merits’

requirement comprehends a full bench or jury trial, as well as a

summary judgment dismissal.” Id. (citing Farina v. Mission Inv.

Trust, 615 F.2d 1068, 1074 & n.16 (5th Cir. 1980)). 

In this lawsuit, the three prongs of the Grubbs standard have

been satisfied. The case was improperly removed, Scott has

received a trial on the merits of her RICO claim (in the form of

this summary judgment ruling), and Scott has not objected to this

court’s exercising jurisdiction and has thus waived all objections

to removal jurisdiction. See id. Accordingly, the court holds

that it has subject matter jurisdiction to decide whether Scott is

entitled to recover on her RICO claim.

III

The City and Duebner move to dismiss Scott’s third-party

action for lack of jurisdiction under Fed. R. Civ. P. 12(b)(1).

They contend, inter alia, that the court lacks jurisdiction over

 

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8

The court will address the motion to dismiss for lack of

jurisdiction before it reaches the merits of the summary judgment

motions filed by the City and Duebner. See Ramming v. United

States, 281 F.3d 158, 161 (5th Cir. 2001) (per curiam) (“When a

Rule 12(b)(1) motion is filed in conjunction with other Rule 12

motions, the court should consider the Rule 12(b)(1) jurisdictional

attack before addressing any attack on the merits.”). Because the

burden of establishing subject matter jurisdiction is on the party

seeking to invoke it, the court will resolve any doubt on the

question of subject matter jurisdiction in favor of the City. Id.

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her RICO claim because Scott lacks standing to assert such a claim

and because governmental immunity has not been waived. Concerning

Duebner specifically, they argue that it is unclear whether he has

been sued in his official or individual capacity. They maintain

that if he has been sued in his official capacity, he is entitled

to the same governmental immunity as is the City; if he is sued in

his individual capacity, he is entitled to qualified immunity.8

A 

The City and Duebner contend that Scott lacks standing to

bring a RICO claim because she alleges that she lost the terminated

contract, other existing contracts, and opportunities for future

contracts, but these allegations do not support a claim of a

concrete financial loss. In other words, the City and Duebner

challenge standing based on the sufficiency of Scott’s allegations.

Under RICO, “the plaintiff only has standing if, and can only

recover to the extent that, he has been injured in his business or

property . . . .” Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 496

(1985). Thus “[t]o prevail in a RICO suit, a plaintiff must

 

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demonstrate an injury to business or property.” Hughes v. Tobacco

Inst., Inc., 278 F.3d 417, 422 (5th Cir. 2001) (citing 18 U.S.C.

§ 1964(c)). Although Scott’s assertion that she has lost future

contracts is probably insufficient to confer standing, she also

alleges that the conduct of which she complains caused her to lose

existing contracts, damaging her in the millions of dollars. She

has thus asserted a concrete financial loss in which she actually

lost money, which is sufficient to confer standing. See In re

Taxable Mun. Bond Sec. Litig., 51 F.3d 518, 523 (5th Cir. 1995)

(citing Steele v. Hosp. Corp. of Am., 36 F.3d 69, 70 (9th Cir.

1994), for premise that, to establish RICO standing, plaintiffs

must prove a “concrete financial loss,” an actual loss “of their

own money,” and “not mere ‘injury to a valuable intangible property

interest’”). The court therefore holds that Scott has standing to

bring her RICO claim, and it denies the motion on this basis. 

B

The City contends that it is entitled to governmental immunity

because, as a governmental entity, it cannot be liable under RICO.

But the four cases the City cites for this proposition do not

support its argument. They all hold that a city or governmental

entity cannot be held liable under RICO because it cannot form the

necessary criminal intent or mens rea. See Lancaster Cmty. Hosp.

v. Antelope Valley Hosp. Dist., 940 F.2d 397, 404 (9th Cir. 1991)

(“The RICO claims against Antelope and District fail because

 

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government entities are incapable of forming a malicious intent.”);

Gentry v. Resolution Trust Corp., 937 F.2d 899, 908 (3d Cir. 1991)

(“We therefore review the district court's holding that a municipal

corporation like Gloucester Township cannot form the mens rea

necessary to commit or aid a pattern of racketeering activity.

Several other district courts have reached similar holdings.”);

Andrade v. Chojnacki, 65 F.Supp.2d 431, 449 (W.D. Tex. 1999)

(adhering to prior judge’s decision that governmental entities are

not capable of forming the criminal intent necessary to support

predicate RICO offenses); Dammon v. Folse, 846 F. Supp. 36, 37-38

(E.D. La. 1994) (holding that school board as municipal entity

lacked ability to form criminal intent necessary to commit required

predicate acts under RICO and was incapable of forming mens rea”).

They do not hold that a city is immune from liability under RICO.

Moreover, as a general matter, cities do not enjoy Eleventh

Amendment immunity from suit in federal court on federal claims.

See, e.g., Hess v. Port Auth. Trans-Hudson Corp. 513 U.S. 30, 47

(1994) (citing Mt. Healthy City Bd. of Ed. v. Doyle, 429 U.S. 274,

280 (1977); Lincoln County v. Luning, 133 U.S. 529, 530 (1890)).

The City——for good reason——does not argue that it is entitled to

immunity based on the Eleventh Amendment. See Alden v. Maine, 527

U.S. 706, 756 (1999) (sovereign “immunity does not extend to suits

prosecuted against a municipal corporation or other governmental

entity which is not an arm of the State.” (citing Mt. Healthy City

 

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9

Although it is well settled that qualified immunity is not

analyzed in identical terms as are the merits of Scott’s RICO

claim, in these circumstances——where Duebner is clearly entitled to

summary judgment and has already participated to some extent in the

litigation——it is expedient to apply the merits decision to his

qualified immunity defense. 

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Bd. of Ed., 429 U.S. at 280; Lincoln County, 133 U.S. 529)).

Accordingly, the court denies the City’s motion to dismiss Scott’s

RICO claim based on governmental immunity.

C

Scott also asserts a RICO claim claims against Duebner.

Duebner maintains that the claim is barred by governmental immunity

or by qualified and official immunity. 

Duebner argues that he should be accorded governmental

immunity on the same basis as the City. Because the court has held

that the City not entitled to governmental immunity, Duebner is

not either. 

The court concludes, however, that Duebner is entitled to

qualified immunity, at least for the reasons the court sets out

below in granting summary judgment in his favor on Scott’s RICO

claim. See Brown v. Nationsbank Corp., 188 F.3d 579, 588 (5th Cir.

1999) (holding that individual defendants were entitled to

qualified immunity from suit alleging RICO claim because rights

that served as basis of claim were not clearly established at time

of defendants’ alleged acts).9

 

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IV

The court now turns to parts of the motions for summary

judgment of the City, Duebner, and TruGreen in which they seek

dismissal of Scott’s RICO claim. 

A

Because the City, Duebner, and TruGreen will not have the

burden of proof on Scott’s RICO claim at trial, they can obtain

summary judgment by pointing the court to the absence of evidence

to support an essential element of the claim. Celotex Corp. v.

Catrett, 477 U.S. 317, 325 (1986). Once they do so, Scott must go

beyond her pleadings and designate specific facts showing there is

a genuine issue for trial. See id. at 324; Little v. Liquid Air

Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam).

Summary judgment is mandatory if Scott fails to meet this burden.

Little, 37 F.3d at 1076. An issue is genuine if the evidence is

such that a reasonable jury could return a verdict for Scott.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Scott’s

failure to produce proof as to any essential element renders all

other facts immaterial. Edgar v. Gen. Elec. Co., 2002 WL 318331,

at *4 (N.D. Tex. Feb. 27, 2002) (Fitzwater, J.) (citing Celotex

Corp., 477 U.S. at 323).

Scott has also moved for summary judgment establishing that

she is entitled to recover on her RICO claim. Because she bears

the burden of proof on this claim at trial, her summary judgment

 

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burden is even higher: she must establish “beyond peradventure all

of the essential elements of the claim.” Bank One, Tex., N.A. v.

Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D. Tex. 1995)

(Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190,

1194 (5th Cir. 1986)). 

B

Scott alleges violations of 18 U.S.C. §§ 1962 and 1961(1)(B)

and (5). Section 1962 of RICO makes it unlawful for 

any person who has received any income

derived, directly or indirectly, from a

pattern of racketeering activity . . . to use

or invest, directly or indirectly, any part of

such income, or the proceeds of such income,

in acquisition of any interest in, or the

establishment or operation of, any enterprise

which is engaged in, or the activities of

which affect, interstate or foreign commerce.

18 U.S.C. § 1962. Section 1961(1)(B) defines “racketeering

activity” according to whether it constitutes “any act which is

indictable” under several specified sections of title 18 of the

United States Code, one of which is mail fraud, in violation of 18

U.S.C. § 1341. Section 1961(5) defines “pattern of racketeering

activity,” and states that it “requires at least two acts of

racketeering activity, one of which occurred after the effective

date of this chapter and the last of which occurred within ten

years (excluding any period of imprisonment) after the commission

of a prior act of racketeering activity[.]”

“Reduced to their simplest terms, the essential elements of a

 

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RICO claim are: (1) a person who engages in (2) a pattern of

racketeering activity (3) connected to the acquisition,

establishment, conduct, or control of an enterprise.” Larrew v.

Barnes, 2002 WL 32130462, at *1 n.1 (N.D. Tex. Aug. 27) (Kaplan,

J.) (citing Delta Truck & Tractor, Inc. v. J.I. Case Co., 855 F.2d

241, 242 (5th Cir. 1988)), rec. adopted, 2002 WL 32130462 (N.D.

Tex. Sept. 17, 2002) (Fitzwater, J.). The City, Duebner, and

TruGreen have explicitly pointed in their summary judgment motions

to the absence of evidence satisfying the required elements of a

RICO claim.

C

The City, Duebner, and TruGreen contend that they are entitled

to summary judgment because Scott has failed to produce any

evidence of a pattern of racketeering activity. It is unclear from

her amended counterclaim and third-party complaint and response

brief whether Scott bases her claim on 18 U.S.C. § 1962(a) or (c),

but each requires as an essential element a “pattern of

racketeering activity.” As noted, “racketeering activity” is

defined in 18 U.S.C. § 1961(1)(B) to include mail fraud. Scott

alleges that there have been “multiple instances of mail fraud in

violation of [18] U.S.C. section 1341.” Scott Am. 3d Party Compl.

¶ 17. She advances the same assertion in her response to the

summary judgment motions. 

The elements of mail fraud under 18 U.S.C. § 1341 are “(1) a

 

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10Scott’s brief in opposition to the motions of the City,

Duebner, and TruGreen, and in support of her own motion, are

essentially the same when addressing her RICO claim.

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scheme to defraud (2) which involves a use of the mails (3) for the

purpose of executing the scheme.” United States v. Ingles, 445

F.3d 830, 835 (5th Cir. 2006) (citing United States v. McClelland,

868 F.2d 704, 706 (5th Cir. 1989)). There must be an “intent to

defraud.” United States v. Harms, 442 F.3d 367, 372 (5th Cir.

2006) (quoting United States v. Bieganowski, 313 F.3d 264, 275 (5th

Cir. 2002)). “[A] defendant acts with the intent to defraud when

he acts knowingly with the specific intent to deceive for the

purpose of causing pecuniary loss to another or bringing about some

financial gain to himself.” United States v. Akpan, 407 F.3d 360,

370 (5th Cir. 2005) (internal quotation marks omitted) (quoting

United States v. Blocker, 104 F.3d 720, 732 (5th Cir. 1997)). 

Scott does not clearly identify in her brief the specific

actions that she contends constitute mail fraud.10 In a response

that devotes but one paragraph to the evidence that supports this

claim, Scott asserts that funds were not delivered to her in the

legal manner, as agreed, that the City, Duebner, and TruGreen were

attempting to divert funds and checks that should have been

forwarded to her, and that they changed the address where checks

should have been mailed. She also advances the conclusory

assertion, with no citation to the summary judgment record, that

they conspired to commit mail fraud. 

 

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The City, Duebner, and TruGreen argue that Scott has produced

no evidence that by changing the “remit to” address, TruGreen

intended to cause pecuniary loss to Scott or to bring about some

financial gain to itself. TruGreen maintains, and has provided

evidence, that its sole intent was to have Scott deposit the checks

in the contractually required lockbox account and pay the past due

amounts. 

Scott has neither cited nor adduced any summary judgment

evidence that would permit a reasonable jury to find that the City,

Duebner, and TruGreen committed the predicate acts of mail fraud or

conspiracy to commit mail fraud. Her ipse dixit assertions,

without supporting evidence, are not enough to survive summary

judgment. In her own motion for summary judgment, in which she

must establish her claim beyond peradventure, Scott has not met her

burden. With no evidence of an intent to defraud, she has not

shown under the required standard of proof that the City, Duebner,

and TruGreen committed mail fraud or conspired to commit mail

fraud.

D

Even if the court were to assume that in changing the “remit

to” address, TruGreen committed an act of mail fraud, this single

act would not be enough to constitute a “pattern of racketeering

activity,” which requires “at least two acts of racketeering

activity” within ten years. 18 U.S.C. § 1961(5). The City,

 

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11The allegation that persons conspired to commit mail fraud

is not, of course, the equivalent of a claim that they engaged in

a RICO conspiracy that involved mail fraud. Conspiracy to commit

mail fraud is addressed in 18 U.S.C. § 371, which makes it unlawful

for “two or more persons [to] conspire . . . to commit any offense

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Duebner, and TruGreen point to the absence of evidence of more than

one so-called act of “racketeering activity,” and Scott has not met

her burden of producing evidence otherwise. She alleges in her

pleadings and contends in her response brief that there were

“[m]ultiple instances of mail fraud,” Scott Sept. 11, 2006 Br. 7,

but she provides no evidence from which a reasonable jury could

make such a finding. The court concludes that Scott has not met

her summary judgment burden of going beyond her pleadings and

designating specific facts that show there is a genuine issue for

trial. Celotex Corp., 477 U.S. at 324. Nor has she established

her RICO claim beyond peradventure. Accordingly, the court grants

the motions for summary judgment of the City, Duebner, and TruGreen

insofar as they are addressed to Scott’s RICO claim, and it denies

Scott’s motion for summary judgment on her own claim.

E

Scott avers generally that the City, Duebner, and TruGreen

have participated in a RICO conspiracy. Her conspiracy allegations

are unclear and conclusory, but the court assumes that her

assertion that the City, Duebner, and TruGreen “conspired to commit

mail fraud” is intended to aver that they conspired to violate

RICO.11

 

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against the United States.” “The three elements of conspiracy to

commit mail fraud are (1) an agreement between appellant[ ] and

others (2) to commit the crime of mail fraud, and (3) an overt act

committed by one of the conspirators in furtherance of that

agreement. Additionally, the defendant must have acted with intent

to defraud.” United States v. Garza, 429 F.3d 165, 168-69 (5th

Cir. 2005) (per curiam) (citations omitted). In the case of a RICO

conspiracy, it must be proved that the accused persons conspired to

commit a substantive RICO offense. A RICO conspiracy is made

unlawful by 18 U.S.C. § 1962(d), which provides that “[i]t shall be

unlawful for any person to conspire to violate any of the

provisions of subsection (a), (b), or (c) of this section [i.e.,

§ 1961].” “To prove a RICO conspiracy, the government must

establish (1) that two or more people agreed to commit a

substantive RICO offense and (2) that the defendant knew of and

agreed to the overall objective of the RICO offense.” United

States v. Delgado, 401 F.3d 290, 296 (5th Cir. 2005) (quoting

United States v. Posada-Rios, 158 F.3d 832, 857-58 (5th Cir.

1998)). A RICO conspiracy thus has RICO-specific

requirements——such as an agreement by at least two conspirators to

engage in a pattern of racketeering activity——that are not involved

in conspiracies to commit other substantive offenses that might

qualify as “racketeering activity” under 18 U.S.C. § 1961(1)(B).

- 21 -

 The City, Duebner, and TruGreen maintain that Scott has

produced no evidence of any of the elements required for the

conspiracy claim. The City and Duebner posit that the City was

unaware that the change of address was unauthorized. TruGreen

argues that there is no evidence that it and the City agreed to

commit mail fraud.

Scott has failed to adequately plead a RICO conspiracy, much

less to adduce evidence that would permit a reasonable jury to find

one. In Tel-Phonic Services, Inc. v. TBS International, Inc., 975

F.2d 1134 (5th Cir. 1992), the Fifth Circuit held that the

plaintiffs had failed to plead the elements of a RICO conspiracy

merely by alleging the existence of a conspiracy “to defraud

 

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- 22 -

plaintiffs.” Id. at 1140. Although the plaintiffs had pleaded

“the conclusory allegation that the Defendants conspired,’ they

ha[d] not pleaded the elements of a RICO conspiracy” because “[t]he

complaint [did] not allege facts implying any agreement involving

each of the Defendants to commit at least two predicate acts.” Id.

Agreeing with the Second Circuit, the panel concluded that

“[b]ecause the core of a RICO civil conspiracy is an agreement to

commit predicate acts, a RICO civil conspiracy complaint, at the

very least, must allege specifically such an agreement.” Id. at

1140-41 (quoting Hecht v. Commerce Clearing House, Inc., 897 F.2d

21, 25 (2d Cir. 1990), and citing Glessner v. Kenny, 952 F.2d 702,

714 (3d Cir. 1991), and Miranda v. Ponce Fed. Bank, 948 F.2d 41, 47

(1st Cir. 1991)).

Moreover, Scott has not cited or produced evidence to support

her RICO conspiracy claim. In fact, she does not even address it

in response to the arguments that summary judgment should be

granted dismissing the claim. The mere allegation that “[t]he CITY

OF DALLAS and MARK D[UE]BNER conspired and breached the Contract

with TRUGREEN. They conspired to commit mail fraud,” Scott Sept.

11, 2006 Br. 7, is not a summary judgment response because it cites

no evidence that would permit a reasonable jury to find in Scot’s

favor. It is insufficient to meet Scott’s burden to raise a

genuine issue of fact. 

Accordingly, the court grants summary judgment dismissing

 

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Scott’s RICO conspiracy-based claim.

V

A district court retains the discretion to remand a case after

the claims that gave rise to federal jurisdiction and to removal

have dropped out of the case. See Carnegie-Mellon Univ. v. Cohill,

484 U.S. 343, 357 (1988); Giles v. NYLCare Health Plans, Inc., 172

F.3d 332, 338-39 (5th Cir. 1999) (affirming remand of state claims

after plaintiff’s amended complaint dropped claim that was

completely preempted). This lawsuit now involves only state-law

claims, including issues peculiar to Texas state law, such as

governmental and official immunity and the Texas Rule 185 sworn

account procedure, that should be litigated in and decided by a

state court. This lawsuit was not even removable in the first

place, and the court has subject matter jurisdiction only because,

following removal, Scott filed an amended counterclaim and thirdparty complaint that allege a RICO claim (a claim that has now been

dismissed). The case is not set for trial, and the parties can

facilely reformulate the remaining grounds of their summary

judgment motions for use in state court. Accordingly, the court in

its discretion remands the remaining claims to state court.

* * * 

The court grants the City and Duebner’s August 10, 2006 motion

for summary judgment and TruGreen’s August 10, 2006 motion for

summary judgment to the extent that it dismisses Scott’s RICO claim

 

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- 24 -

with prejudice. The court denies Scott’s October 24, 2006 motion

for summary judgment to the extent she seeks summary judgment

establishing that she is entitled to recover under RICO. By Rule

54(b) judgment filed today, Scott’s RICO claim is dismissed with

prejudice. The court remands the balance of this case to the 298th

Judicial District Court of Dallas County, Texas. The clerk of

court shall effect the remand according to the usual procedure.

SO ORDERED.

March 16, 2007.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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