* Pursuant to 5 TH C IR . R. 47.5, the Court has determ ined th at this opinio n should not be published and is not precedent except under the limit ed circumstances set fo rth in 5 TH C IR . R. 47.5.4. United States Court of Appeals

Fifth Circuit 

## FILED September 19, 2007 Charles R. Fulbruge III Clerk IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 06-20776 Summary Calendar

M GENE MARLIN; OLD NATIONAL BANK, Pl aint iffs-Appellant s,

versus MOODY NATIONAL BANK, N A; MICHAEL S HAZELWOOD, Defendants-Appellees.
Appeal from the United States District Court fo r the Southern District of Texas Civil Act io n No. H-04-4443

Before DeMOSS, STEWART, and PRADO, Circuit Judges. PER CURIAM: * This appeal ari ses from the district court’s grant of summary judgment in favor of Moody National Bank, N.A. (“Moody Bank”) and Michael Hazelwood. M. Gene Marlin and Old National Bank (“Old National”) filed a lawsuit against Moody Bank and Hazelwood alleging conspiracy in2

vio lat io n of the Racketeer-Inf luenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1962(c) & 1962(d), common-law conspiracy, and negligence. The district court found the lawsuit to b e without merit and granted summary judgment. We affirm the district court’s judgment.

I. FACTUAL AND PROCEDURAL BACKGROUND Larry M. Nixon brokered cranes in Texas, and Marlin dealt with cranes in Indiana. In the early 1990s, Marlin purchased a crane from Nixon. This transaction initiated a long-term business
r elationship between the men. Over the next four years, Marlin purchased four or five additional
cranes from Nixon. In 1997, Marlin financed a crane deal arranged by Nixon. Nixon bought a crane, resold it , and then Nixon and Marlin split the profits from the transactions. Aft er com pleting a few similar transactions, Nixon and Marlin started a com pany, Delta Mike, Inc. (“Delta Mike”), to broker cranes. Marl

in o wned 51% and Nixon owned 49% of the company, but the two men agreed to evenly split all profits. Pursuant to their business agreement, Delta Mike was to identify a crane on the market, lo cate
a buyer, acquire the crane, and finally, re-sell the crane at a prof it
. The acquisitions were to be funded th rough lo ans from dif

ferent banks. In Houston, Nixon held the responsibility of finding available
cranes and willing buyers. To com plete each transaction, Nixon sent a sales agreement to Marlin for approval. Marlin then secured financing for the transaction. After securing financing, Marlin would inst ruct the bank to wire funds to Nixon’s account. For many years, Nixo n’s company, L&D Interests, Inc. (“L&D Interests”), doing business as Delta Crane, bought and sold cranes as the agent of Delta Mike. The bank wired funds to Delta Crane, and after the sale, Nixon paid Delta Mike from the Delta Crane account. Both owners personally guaranteed the lo ans. Once Nixon bought and resold the crane, he wired the mo ney to Delta Mike’s account in Indiana. Marlin repaid the bank, and3

then, the two m

en divided the profits. In August 2001, Nixon opened a personal account and an account for L&D Interests at Moody Bank in Clear Lake Cit y, Texas. Neither account named Marlin as a signatory. In October 2002, at the same Moody Bank branch, Nixon and Marlin opened an account fo r Delta Mike, doing business as Delta Crane. Marlin wanted Delta Mike to purchase cranes directly and the bank to wire funds directly to the sellers. The Delta Mike account named Nixon and Marlin as signatories. The two men inst ructed Moody Bank to send the paper statem ents to Nixon’s address in League Cit y, Texas. During the spring of 2003, Marlin considered selling the business. Marlin mist akenly believed th at several com

panies leased cranes from Delta Mike wit h an option to buy. Marlin requested that Nixon ask th ose com

panies to sign new leases th at included an agreement to buy the crane at the end of 2003. When Nixon failed to secure any new leases by July, Marlin visit ed Texas to meet with th ree lessees. Only o ne lessee came to the Delta Mike office to sign the new agreement. Shortly after Marlin returned to Indiana, Nixon faxed executed agreements from the other two lessees. Later that
mo nt h, Marlin asked Nixon about another outstanding payment. When Nixon never handled the problem, Marlin called the buyer to check on the payment. The buyer denied having any knowledge of the sale, and Marlin realized th at Nixon had com mit ted a fraud th

rough their business partnership. Alt hough som

e of the lease agreements were legit imat e transactions, Nixon fabricated mo st of the deals. The following provides a brief overview of the fraudulent scheme. Nixon directed a purported seller to prepare an invo ice fo r a crane and send the paperwork to Marlin, but the purported seller did not actually own the bargained-for crane. Next, Marlin approved the sale and requested th at a bank fund the acquisition. The bank would send the money directly to t he seller.4

The purported seller kept a share and forwarded the remainder to a bank account controlled by Nixon. Nixon then sent Marlin a fake agreement for a sale or lease showing a positive difference. Nixon kept the gross purchase price received from the bank less the seller’s share and Marlin’s onehalf o f t he profit. Between 1997 and October 17, 2002, Nixon defrauded Marlin, First Bank, and Old National
on approximately ninet y sales transactions. Of the 100 fraudulent transactions orchestrated by Nixon, ninet y- five occurred prior to Marlin and Nixon opening the Delta Mi ke account at Moody Bank. Two of these five transactions were legitimate crane sales. At one point , Nixon encouraged James Ogden, the owner of Continental Foundation and a Moody Bank custom

er, to act as a buffer between buyers and sellers to avoid the parties dealing directly wit h one anot her. Initi ally, Michael Morris, a Moody Bank vice-president, handled the accounts of Ogden, Continental Foundation, Nixon, and L&D Interests. Later, Michael Hazelwood
m anaged the accounts. From Septem ber 2002 th

rough June 2003, Ogden’s account receiv ed nine large wire transfers from out-of -state banks. Marlin received paperwork showing Continental Foundation as the seller of the crane. Aft er the money arrived in Ogden’s account, Moody Bank transferred the funds to a Nixon-controlled account. Ogden told Morri s and Hazelwood that he was acting as a middleman to help Nixon hid e the buyers from the sellers. Chris Ogden, Ogden’s son, asked Hazelwood about the tax consequences of his fat her depositing the payments int o Continental Foundation’s account and then immediat ely transferring the mo ney. Hazelwood advised the Ogdens to stop accepting the funds if Continental Foundation could not handle adverse tax consequences. Once the scheme fell apart, Nixon faked his death in a boating accident in Galveston Bay. He
was eventually apprehended by authorities. Nixon pleaded guilty to two counts of bank fraud. The5

court sentenced Nixon to eighty-seven mo nt hs of imprisonment. Marlin, on behalf o f himself and First Bank, and Old National, sued twenty -five defendants fo r fraud, negligence, conspiracy to vio lat e RICO, and conspiracy to com mit fraud, mo ney laundering, and theft
. Marlin and Old National later abandoned their claims against all the parties except Moody Bank and it s of ficer, Hazelwood. Moody Bank and Hazelwood mo ved fo r summary judgment. The district court struck certain summary judgment evidence submitted by Marlin and Old National and granted summary judgment in favor of Moody Bank and Hazelwood. Marlin and Old National now appeal. II. STANDARD OF REVIEW We review a district cour t’s grant of sum mary judgment de novo, applying the same legal standards as the district court. M achinchick v. P.B. Power, Inc. , 398 F.3d 345, 350 (5th Cir. 2005). In deciding a mo tion fo r summary judgment, the court must determ ine whether the submissio ns show th at there is no genuine issue as to any mat erial fact and th at the mo ving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Hart v. Hariston , 343 F.3d 762, 764 (5th Cir. 2003). In deciding whether a fact issue has been created, the facts and inferences to be drawn from them must be reviewed in t he light mo st favorable to the nonmoving party. Reeves Brokerage Co. v. Sunbelt Fruit & Vegetable Co. , 336 F.3d 410, 412 (5th Cir. 2003). We review the district court’s evidentiary rul ings regarding the admissibilit y of hearsay fo r abuse of discretion. J

on-T Chems., Inc. v. Freeport Chem. Co. , 704 F.2d 1412, 1417 (5th Cir. 1983). Tri al courts have broad discretion regarding the admissibilit y of expert opinio n evidence, which the court of appeals will not disturb unless manifest ly erroneous. Eiland v. Westinghouse Elec. Corp. , 58 F.3d 176, 180 (5th Cir. 1995). Expert opinio n testimo ny is admissible when helpful to the jury in understanding the evidence or determining a fact in issue. F ED .R.E VID . 702.6 III. DISCUSSION To prove a RICO conspiracy under Section 1962(d), a plaintiff must establish th at (1) two
or mo re people agreed to com mit a particular substantive RICO of fense; and (2) the defendant knew of and agreed to the objective of the RICO of fense. S ee United States v. Posada-Rios , 158 F.3d 832, 857 (5th Cir. 1998). In this case, Marlin alleged a violation of 18 U.S.C. § 1962(c) as the substantive of fense. Section 1962(c) proscri bes “any person employed by or associated with any enterprise engaged in, or the activit ies of which affect, int erstate or fo reign com merce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activit y or collection of unlawful debt.” Marlin alleges that Nixon engaged in three predicate crimes demonstrating a pattern of racketeering act ivit y: (1) bank fraud, (2) mail and wire fraud, and (3)
mo ney laundering. A person cannot be held liable fo r a RICO conspiracy “merely by evidence th at he associated wit h other . . . conspirators or by evidence th at places the defendant in a climat e of activit y th at reeks of som ething fo ul.” I

d. (int ernal quotations o mit ted). “A conspirator must intend to further an endeavor which, if com

pleted, would sati sfy all of the elements of a substantive criminal of fense, but it suffices th at he adopt the goal of furthering or facilit ating the criminal endeavor.” Salinas v. United States , 522 U.S. 52, 65 (1997). In other words, the conspirator need not expressly agree to violate the statute, but he must have know n and agreed to assi st in t he underlying criminal offense. S ee United States v. Marmolejo , 89 F.3d 1185, 1196 (5th Cir. 1996), aff’d sub nom. , Salinas , 522 U.S. at 65. Therefore, Marlin and Old National must prove that Moody Bank and Hazelwood knew the criminal nat ure of Nixon’s activities and intentionally acted to assist in the unlawful activity. Similarly, under Texas law, c ivil conspiracy requires proof that a defendant agreed to7

accomplish an unlawful purpose or a lawful purpose by unlawful means. S ee Triplex Commc’ns, Inc.
v. Riley , 900 S.W.2d 716, 719 (Tex. 1995). Conspirators must know the object and purpose of the conspiracy, agree to the scheme, and specifically int end to advance the conspiracy. J uhl v. Airington , 936 S.W.2d 640, 644 (Tex. 1996). The “gist of civil conspiracy” is the injury the conspirators intend to cause. Triplex , 900 S.W.2d at 720. Marlin and Old National present no evidence to show th at Moody Bank and Hazelwood knew of the sham crane transactions and agreed to assist Nixon in executing the fraud. The bank merely accepted deposits and transferred funds from one custom er’s account to another. Old National’s vice-president conceded this point , stating that “[i]f an authorized signer on an account asks me to
mo ve mo ney from one of his accounts to another account, I would do th at.” These actions alone, wit hout knowledge of the underlying fraudulent crane sales, fail to implicate Moody Bank or Hazelwood as participants in an unlawful conspiracy. Marlin must show that Moody Bank and Hazelwood knew Nixon was inducing Pl aint iffs to fund fraudulent crane transactions and agreed to perform ordinary banking functions to assist the criminal fraud. Marlin and Old National attem pt to fulfill their evidentiary burden th rough a series of red flags th at should have prom

pted Moody Bank and Hazelwood to invest igate Nixon’s business affairs. First, Nixon asked Moody Bank to transfer funds to and from the Delta Mike account. He explained to a bank assistant th at “my partner’s com ing int o town, and we’re arguing.” Accepting thi s allegation as true, the direction to transfer funds due to an ongoing disagreement between business partners does not prove Moody Bank’s knowledge of Nixon’s attem pt to conceal fraudulent activit y. The bank assistant testified th at the request “didn’t set of f any bells” and “[w]e transferred mo ney fo r client s all the time.” Based on this testimony, the court cannot reasonably infer that the bank assistant8

knew of and agreed to assist in the underlying fraud. Second, Marlin asserts th at the tran s fers between Nixon’s account and Continental Foundation should have been warning signs. Ironically, Old National dispelled this theory. An Old National officer testified th at, “[a]s I sit here today, that does not create a red flag to me as long as the appropri ate individual who has authority to move the money, has called to do so.” Essentially, the bank transfers constitute routine banking practices. The district court explained that the brokerage business invo lves keeping the buyer and seller unaware of another’s identity in order to protect the middleman’s int erest. Nixon provided this same explanation to Morris, Hazelwood, and Ogden wit h regards to the purpose fo r the transfers. Alt hough Morris denies any knowledge about the transfers, this conflict in the evidence does not alter the analysis because transfers alo ne do not support a reasonable inference th at Hazelwood and Moody Bank knew and agreed to assist in the fraud. T hird, Marlin and Old National suggest th at the conversation between Hazelwood and th e Ogdens establish Moody Bank’s participation in the conspiracy. Everyone involved in the discussion, however, agrees th at the men only addressed the tax implicat io ns of th e int ra-bank transfers. According to t hose present, no one m entioned why Nixon wanted to funnel the money through Ogden’s account. Fourth, Marlin and Old National allege th at Hazelwood did not immediat ely provide Delta Mike’s bank records to Marlin, which proves participation in the conspiracy. Hazelwood provided the re cords, howev er, on the following day according to bank protocol. Fifth, Marlin and Old National assert that the withdrawal by Nixon’s ex-wife aft er Nixon’s fake death establishes Moody Bank’s participation. But Moody Bank properl y co mplied wit h t his request to withdraw funds9

because Nixon’s ex-wife was a signatory on the account. Lastly, Marlin and Old National suggest th at Moody Bank should have conducted an invest igation aft er Nixon’s admission to the crime. This fact provides no support, however, to show Moody Bank’s and Hazelwood’s knowing participation in the conspiracy to defraud Marlin and Old National. Summarily, Marlin and Old National attempt to string together disjo int ed facts in su pport of th eir conspiracy theory but fail to demonstrate, according to standards set fo rth in the governing statutes and case law, th at Hazelwood and Moody Bank know ingly agreed to assist Nixon in a scheme to defraud his business partner. Marlin and Old National argue, in the alt ernative , that int ent may be established through Marlin and Old National’s “deliberate ignorance.” Pl aint iffs may emplo y a deliberate ignorance theory when (1) the defendant was subjectively aware of a high probability of the existence of illegal conduct; and (2) the defendant purposely contrived to avoid learning of the illegal conduct. P osadoRios , 158 F.3d at 875; United States v. Lara-Velasquez , 919 F.2d 946 (5th Cir. 1990). According to the Fift h Circuit, under the deliberate ignorance test, the “first prong [] protects a defendant from being convicted for what he should have known.” Lara-Velasquez , 919 F.2d at 952. In other words, the first prong permits a deliberate ignorance instruction only when the Government presents facts th at support an inference th at the particular defendant subjectively knew his act to b e illegal and not when the Government presents facts th at tend to support an inference th at a reasonable person would have known the act to b e illegal.
Id. “ The key aspect of deliberate ignorance is the conscious action of the defendant–the defendant consciously attem

pted to escape confirmation of conditions or events he strongl y suspected to exist. Id. at 951. Here, Marlin and Old National must prove that Moody Bank and Hazelwood had actual knowledge of the underlying illegal conduct. Marlin and Old National fail to establish this prong of10

the deliberate ignorance test fo r the same reasons th at their claims fail under the ordinary conspiracy theories. Marlin and Old National also attem pt to hold Moody Bank and Hazelwood liable under state law fo r negligence based on the info rmation th at these parties should have known. Under Texas law, however, one cannot agree or conspire to act in a negligent manner. See Tri v. J.T.T. , 162 S.W.3d 552, 557 (Tex. 2005). Alt hough the situation may present “good reason to believe” that the “exist ence and object of the conspiracy could have been discovered
. . . by the exercise of the slight est degree of diligen ce,” such evidence alone does not support a reasonable inference of actual knowledge or an int ent to participate in t he wrong. Schlumberger Well Surveying Corp. v. Nortex Oil & Gas Corp. , 435 S.W.2d 854, 857 (Tex. 1968). Similarly, under RICO, the plaintiff must establish th at each defendant knew of , and agreed to assist, the racketeering enterprise. S ee United States v. Sutherland , 656 F.2d 1181, 1192-93 (5th Cir. 1981). To prove a RICO conspi racy, the plaint iff must show th at “each defendant must necessarily have known th at others we re also conspiring to participate in the same ente rpri se through a pattern of racketeering activity.” Sutherland , 656 F.2d at 1193. Marlin and Old National fail to reconcile their negligence theory with the knowledge and intentionality requirements. Further, a bank owes a duty of care to custom ers but not thir d parties. G uerra v. Regions Bank , 188 S.W.3d 744, 747 (Tex. App. 2006). The depository agreement, recognized as a contract between the bank and its customer, named Moody Bank and Delta Mike. S ee T EX . B US . & C OM . C ODE § 4.104(a)(5); see also Am. Airlines Employees Fed. Credit Union v. Martin , 29 S.W.3d 86, 96 (Tex. 2000); L aSara Grain Co. v. First Nat’l Bank , 673 S.W.2d 558, 564 (Tex. 198 4). Therefore, Moody Bank served Delta Mike. Marlin, in his individual capacity, was not a bank11

custom er. Accordingly, Moody Bank owed no duty to Marlin. In this appeal, Marlin argues that he
was owed a duty as a custom er of the bank, but this argument is waived because he argued the exact opposite in t he district court. Aldrup v. Caldera , 274 F.3d 282, 288 (5th Cir. 2001). Finally, Marlin and Old National argue th at the di strict court erred in striking summary judgment evidence from the rec ord. Pursuant to the hearsay rule, the district court struck several statem ents of fact submit ted by Marlin and Old National th rough affidavit s and deposition testimo ny. Based on a review of the record, the excl uded evidence reiterates facts presented through other means, and even considering the evidence, nothing in the statem ents create a genuine issue of mat erial fact. Accordingly, regardless of whether the district court erred in excluding the evidence, its ruling
was harmless. B urleson v. Tex. Dep’t of Crim. Justice , 393 F.3d 577, 5 83 (5th Cir. 2004). The district court also disqualified the expert testimo ny of fered by Marlin and Old National. The district court reasoned that “the expert’s testimony is neit her sufficient ly rigorous or technical fo r him t o be allowed to comment on whether the bank has met the law’s requirement.” Mo re specific to the case, the district court held th at “[h]is experience as a bank worker responsi ble fo r invest igating fraud might be useful as a source of data about the int ricacies of wire transfers, but it does not make him eligible to swear to his judgment about this case inst ead of let ting the jurors make th at application and evaluation themselves.” The court’s assessment of the expert’s helpfulness in determ ining Moody Bank’s int ent to defraud Marlin and Old National comports with the Fifth Circuit’s stance th at an expert’s conclusory assertions regarding a defendant’s state of mind are not helpful or admissible. S ee Salas v. Carpenter , 980 F.2d 299, 305 (5th Cir. 1992). As stated by the district court, an expert’s credentials do not place him in a better position th an the jury to draw conclusions about a defendant’s state of mind. I d
. Accordingly, we conclude that the district court12

did not abuse it s discretion or manifest ly err in stri king porti ons of Marl

in’s and Old National’s summary judgment evidence. IV. CONCLUSION For the foregoing reasons, we affirm the district court’s judgment.