Opinion ID: 2686105
Heading Depth: 2
Heading Rank: 5

Heading: Coquina’s cross-claim

Text: Coquina cross-appeals on a single ground: that the district court erred by denying its motion to amend its complaint to better plead a RICO claim. We review a district court’s denial of a motion to amend a complaint for abuse of discretion. Smith v. Fla. Dep’t of Corr., 713 F.3d 1059, 1063 (11th Cir. 2013). We have observed that “though leave to amend is freely given when justice so requires,” a district court may “deny such leave where there is substantial ground for doing so, such as undue delay . . . and futility of amendment.” Reese v. 18 We summarily reject TD Bank’s argument that the sanction imposed by the district court violated due process because the sanction was not specifically related to the alleged discovery violations. The documents that were improperly produced in this case could have been used by Coquina to show that TD Bank willfully ignored the AML alerts and other risk indicators generated for Rothstein’s accounts. A jury could have inferred from those documents both that TD Bank had knowledge of Rothstein’s fraud and that it had unreasonable systems in place to prevent fraud. 37 Case: 12-11161 Date Filed: 07/29/2014 Page: 38 of 41 Herbert, 527 F.3d 1253, 1263 (11th Cir. 2008) (internal alternation and quotation marks omitted). A brief chronology of events puts this issue in proper perspective. Coquina alleged in its complaint that TD Bank had “engaged in a pattern of related and continuous [RICO] predicate acts over a substantial, but closed, period of time.” 19 TD Bank moved to dismiss the RICO claim, arguing in part that Coquina had failed to sufficiently plead a closed-ended pattern of racketeering activity and thus could not satisfy RICO’s continuity requirement. The district court denied TD Bank’s motion to dismiss, finding sufficient Coquina’s allegation that an enterprise extending over a period of four years existed. In May 2011, TD Bank moved for summary judgment on the RICO claim, arguing again that Coquina had failed to prove a closed-ended pattern of racketeering activity. TD Bank contended that the RICO predicate acts alleged by Coquina occurred over too short a time period to establish closed-ended continuity. To support this assertion, TD Bank cited Jackson v. BellSouth Telecommunications, 372 F.3d 1250 (11th Cir. 2004), in which we explained that the relevant period is the time during which “the specific incidents . . . actually 19 RICO’s continuity requirement can be satisfied either by showing a “closed-ended” pattern of racketeering activity—i.e., “a series of related predicates extending over a substantial period of time”—or by proving an “open-ended” pattern of racketeering activity—i.e., predicate acts that “include a specific threat of repetition extending indefinitely into the future” or that “are part of an ongoing entity’s regular way of doing business.” Jackson v. BellSouth Telecommunications, 372 F.3d 1250, 1265 (11th Cir. 2004) (internal quotation marks omitted). 38 Case: 12-11161 Date Filed: 07/29/2014 Page: 39 of 41 charged” occurred and held that “nine months is not an adequately substantial period of time” for closed-ended continuity. Id. at 1266–67. TD Bank also cited a decision from the Second Circuit, Spool v. World Child Int’l Adoption Agency, 520 F.3d 178 (2d Cir. 2008), which held that “[t]he relevant period . . . is the time during which RICO predicate activity occurred, not the time during which the underlying scheme operated or the underlying dispute took place.” Id. at 184. In its response brief to the district court, Coquina disputed that the relevant period for determining continuity is the time during which the alleged predicate activity—i.e., the alleged acts of fraud against Coquina—occurred, claiming instead that continuity should be “evaluated in the context of the entire fraud involving TD Bank,” including acts of fraud against other Rothstein investors in prior years. Coquina also argued, in the alternative, that it could demonstrate continuity by proving an open-ended pattern of racketeering activity. TD Bank then pointed out in its reply brief that open-ended continuity was a new theory that had not been pled. Coquina was therefore on notice by June 2011, when TD Bank filed its reply brief, that several cases, including a case from the Eleventh Circuit, indicate that the relevant period for determining continuity is not the time during which the underlying scheme operated, but rather the time during which “the specific incidents . . . actually charged” occurred. Jackson, 372 F.3d at 1266. Accordingly, 39 Case: 12-11161 Date Filed: 07/29/2014 Page: 40 of 41 Coquina was on notice by then that its closed-ended continuity theory, which was based on predicate acts spanning only five months, may have been untenable. And significantly, Coquina was also on notice by June 2011 that it had not pled openended continuity. Coquina nevertheless did not move to amend its complaint to add an open-ended pattern of racketeering activity at that time. Instead it sought to do so only after the district court granted summary judgment in favor of TD Bank on the RICO claim four months later. Coquina’s motion to amend its complaint also came immediately before trial. Because Coquina should have known by June 2011 that its closed-ended continuity theory might be untenable and that it had not pled an open-ended pattern of racketeering activity, we agree with the district court that Coquina’s motion to amend, filed four months later, was unduly delayed. Coquina claims that it was surprised by the district court’s summary judgment ruling because the court had treated the four years during which Rothstein’s Ponzi scheme operated as the relevant time for determining continuity at the motion-to-dismiss stage. This assertion rings hollow. Coquina had notice by June 2011 that the motion-todismiss order’s focus on the period during which Rothstein’s fraud operated, instead of the period during which the alleged predicate acts of fraud against Coquina occurred, was inconsistent with case law from our and other circuits. 40 Case: 12-11161 Date Filed: 07/29/2014 Page: 41 of 41 Consequently, it should have known that it could not rely on the district court’s ruling in that regard. Having carefully reviewed the parties’ briefs and the relevant record, we conclude that Coquina has not shown good cause for not seeking to plead an openended pattern of racketeering activity sooner. We therefore find no abuse of discretion in the district court’s denial of Coquina’s motion to amend. 20