UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

MONROE ONE STOP, L.L.C. and D & M

DEVELOPERS, L.L.C.,

Plaintiffs,

v.

GOLD HOUSE CENTURY 21, et al.,

Defendants.

 /

Case No. 09-10501

Honorable John Corbett O’Meara

ORDER GRANTING DEFENDANT MARSELLA'S

APRIL 20, 2010 MOTION TO DISMISS

This matter came before the court on defendant Larry Marsella's April 20, 1010 motion to

dismiss. Plaintiff D & M Developers ("D & M") filed a response June 30, 2010; and Marsella filed

a reply July 6, 2010. Oral argument was heard July 29, 2010.

BACKGROUND FACTS

Plaintiff D & M attempted to obtain a non-conventional loan through defendant Raj Shergill.

Shergill introduced Plaintiff to defendant Art Shelton, who in turn forwarded the loan request to

defendant Larry Marsella. Marsella forwarded the loan request to defendant Highbank, a potential

lending source that ultimately declined Plaintiff's loan request.

In addition, plaintiff D & M and Marsella entered into a written contract in which Plaintiff

agreed to pay him $32,000 for finding a potential lender. Although not dispositive here, the

agreement also provided that Marsella’s fee was “earned and non-refundable.” After Highbank

declined the loan “application,” Plaintiff sued everyone along the chain, claiming violations of the

RICO Act in Counts I and II based on alleged predicate acts of mail and wire fraud, as well as
2

breach of contract and fraudulent misrepresentation. The court previously dismissed the two state

law claims. Only Count I pertains to defendant Marsella, who filed this motion to dismiss.

LAW AND ANALYSIS

A party alleging fraud “must state with particularity the circumstances constituting fraud.”

Fed. R. Civ. P. 9(b). This court has previously found that

Courts have been particularly sensitive to Fed. R. Civ. Pro. 9(b)’s pleading

requirements in RICO cases in which the ‘predicate acts’ are mail fraud and wire

fraud, and have further required specific allegations as to which defendant caused

what to be mailed (or made which telephone calls), and when and how each mailing

(or telephone call) furthered the fraudulent scheme.

Gotham Print, Inc. V. American Speedy Printing Centers, Inc., 863 F. Supp. 447, 458 (E. D. Mich.

1994)(emphasis in original).

The RICO statute makes it unlawful for “a person employed by or associated with any

enterprise engaged in, or the activities which affect, interstate or foreign commerce, to conduct or

participate, directly or indirectly, though a patten of racketeering activity or collection of unlawful

debt.” 18 U.S.C. § 1982(c).

In order to establish a claim under the statute, plaintiffs must show conduct of an enterprise,

in interstate commerce, through a pattern of racketeering activity. Sedima, S.P.R.L. v. Imrex Co.

Inc., 473 U.S. 479, 495-96 (1985). “To conduct or participate, directly or indirectly, in the conduct

of such enterprise’s affairs, one must participate in the operation or management of the enterprise

itself.” Reves v. Ernst & Young, 507 U.S. 170, 185 (1993).

In this case Plaintiff has failed to allege, much less point to any evidence to show, that

Marsella and the other defendants formed an ongoing enterprise that functioned as a continuing unit

separate from the alleged pattern of racketeering activity. Plaintiff has failed to show that any
3

individual defendant conducted or participated in the conduct of any alleged enterprise other than

his own business entity, and Plaintiff has further failed even to allege that these various entities

constituted a single enterprise or functioned as a continuing organization apart from the mail and

wire fraud alleged. See Wheeling, Inc. v. Stelle, 2000 WL 791782 (E.D. Mich.)

In order to establish a RICO claim, plaintiffs must also establish a “pattern” of racketeering

activity by showing a relationship between a pattern of predicate, fraudulent acts and the threat of

continuing fraudulent activity into the future. In this case, Plaintiff has alleged a denial of a single

loan request, although to its response brief D & M attached the 13-page affidavit of Surjit Singh,

who claims to have been defrauded by Defendants in the same manner as alleged in the instant

complaint. Even though the RICO statute requires a pattern to be at least two predicate acts, the

Court of Appeals for the Sixth Circuit rejected a claim under the Act when a plaintiff alleged only

five acts over a short period of time. See Saglioccolo v. Eagle Ins. Co., 112 F.3d 226 (6th Cir.

1997)(citing an earlier case affirming dismissal of a RICO claim containing claims of continuity

over a period of “only 17 months”). D & M attempts to use the Singh affidavit to show that he too

claims he was defrauded by these defendants. However, Singh is not a party to this case and has not

filed a claim for relief against these defendants.

D & M concluded in its response brief:

To summarize the action before this Court, ‘There is something rotten in the State

of Denmark.’ Shakespeare’s Hamlet, Act I, Scene 4. Maybe the quote should more

accurately involve the state of Finland [defendant Highbank’s location], and the

United States of America, at least when one deals with the Defendants Marsella and

TLD in this truly tragic tale of deceit and fraudulently induced broken promises.

Plaintiff's resp. br. at 11. The statement shows that plaintiff D & M has failed to "state with

particularity the circumstances constituting fraud.” Fed. R. Civ. P. 9(b). Instead, Plaintiff seeks
4

additional time for discovery in an attempt to find facts upon which to base its case. As the this

court has previously held, Rule 9(b)'s pleading requirements in RICO cases involving alleged mail

fraud and wire fraud demand more. Accordingly, defendant Marsella is entitled to dismissal of the

claims against him.

ORDER

It is hereby ORDERED that defendant Marsella's April 20, 2010 motion to dismiss is

GRANTED.

s/John Corbett O'Meara 

United States District Judge

Date: August 3, 2010

I hereby certify that a copy of the foregoing document was served upon the parties of record

on this date, August 3, 2010, using the ECF system and/or ordinary mail.

s/William Barkholz 

Case Manager