Court Opinion

ID: 4360955
Source: CourtListenerOpinion
Date Created: 2019-01-23 16:00:20.835633+00
Date Added: 2024-06-11T14:48:10.750069
License: Public Domain

18-66
    Lynn v. McCormick

                         UNITED STATES COURT OF APPEALS
                             FOR THE SECOND CIRCUIT

                                 SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY ORDER@). A PARTY CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

                  At a stated term of the United States Court of Appeals for the Second Circuit,
    held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
    New York, on the 23rd day of January, two thousand nineteen.

    PRESENT:
                ROBERT A. KATZMANN,
                      Chief Judge,
                PETER W. HALL,
                GERARD E. LYNCH,
                      Circuit Judges.
    _____________________________________

    John W. Lynn, Geralynn Lynn,

                          Plaintiffs-Appellants,

                    v.                                                    18-66

    Robert J. McCormick, Michelle Simmons,
    Trustco Bank, The Law Offices of McNamee
    Titus, Lochner & Williams, P.C., Kenneth
    Gellhaus, Peter A. Pastore, Francis J.
    Smith, Christopher Gallagher, Bailey,
    Kelleher & Johnson, P.C., John W. Bailey,
    Kevin Laurilliard,

                          Defendants-Appellees.

    _____________________________________
FOR PLAINTIFFS-APPELLANTS:                          John W. Lynn, Geralynn Lynn, pro se,
                                                    Pomona, NY.

FOR DEFENDANTS-APPELLEES:                           Jonathan Nelson, Esq., Dorf & Nelson LLP,
                                                    Rye, NY (for McCormick, Simmons,
                                                    Trustco Bank, Law Offices of McNamee
                                                    Titus, Lochner & Williams PC, Gellhaus,
                                                    Pastore, Smith, Bailey, Kelleher & Johnson
                                                    PC, John W. Bailey, and Kevin Laurilliard).

                                                    Rita C. Tobin, Esq., RC TobinLaw, PLLC,
                                                    Chappaqua, NY (for Gallagher).

       Appeal from a judgment of the United States District Court for the Southern District of New

York (Seibel, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the judgment of the district court is AFFIRMED.

       John W. Lynn and Geralynn Lynn, pro se, sued Trustco Bank (“Trustco”), Robert J.

McCormick (CEO of Trustco), Michelle Simmons (VP of Facilities at Trustco), the Law Offices of

McNamee Titus, Lochner & Williams PC (“McNamee Titus”), Kenneth Gellhaus (attorney,

formerly of McNamee Titus), Peter A. Pastore (counsel for Trustco), Francis J. Smith (counsel for

Trustco), the Law Offices of Bailey, Kelleher & Johnson PC, John W. Bailey (counsel for Trustco

and McNamee Titus), Kevin Laurilliard, and Christopher Gallagher, for violations of RICO, 18

U.S.C. § 1961 et seq., and state law. The Lynns alleged that Trustco Bank, along with its bankers

and lawyers, conspired to deprive them of their property rights and seize their assets as part of a

criminal scheme. The district court dismissed their action, reasoning that the Lynns failed to

allege sufficient facts to plead a RICO enterprise.      The district court declined to exercise

supplemental jurisdiction over the remaining state law claims. On appeal, the Lynns argue that

the district court erred by dismissing their substantive and conspiracy RICO claims. They do not
challenge the district court’s decision to decline jurisdiction over their state law claims. We

assume familiarity with the underlying facts, procedural history, and issues on appeal.

       This Court “review[s] the grant of a motion to dismiss de novo, accepting as true all factual

claims in the complaint and drawing all reasonable inferences in the plaintiff’s favor.” Fink v.

Time Warner Cable, 714 F.3d 739, 740–41 (2d Cir. 2013). To survive a Rule 12(b)(6) motion to

dismiss, the complaint must plead “enough facts to state a claim to relief that is plausible on its

face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009) (although allegations in a complaint are assumed to be true, this tenet is

“inapplicable to legal conclusions” and “[t]hreadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice”).

       To establish a civil RICO violation under 18 U.S.C. § 1962(c), plaintiffs must plausibly

allege that they were “injured by defendants’ (1) conduct (2) of an enterprise (3) through a pattern

(4) of racketeering activity.” Cofacredit, S.A. v. Windsor Plumbing Supply Co., 187 F.3d 229, 242

(2d Cir. 1999).1 As to the enterprise requirement, a plaintiff must “allege and prove the existence

of two distinct entities: (1) a ‘person’; and (2) an ‘enterprise’ that is not simply the same ‘person’

referred to by a different name.” Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161

(2001). Members of the enterprise must, among other things, share a common purpose. See

Boyle v. United States, 556 U.S. 938, 946 (2009).

1
  Unless otherwise indicated, case quotations omit all internal quotation marks, alterations,
footnotes, and citations.

                                                 3
         “A corporate entity can be sued as a RICO ‘person’ or named as a RICO ‘enterprise,’ but

the same entity cannot be both the RICO person and the enterprise.” U1It4Less, Inc. v. FedEx

Corp., 871 F.3d 199, 205 (2d Cir. 2017) (citing 18 U.S.C. § 1961(3), (4)). Corporations can only

act through their agents and subsidiaries, so permitting corporate defendants to be held liable for

the acts of their agents would do away with the “distinctness” requirement. Id. “Accordingly, a

plaintiff may not circumvent the distinctness requirement by alleging a RICO enterprise that

consists merely of a corporate defendant associated with its own employees or agents carrying on

the regular affairs of the defendant.” Id. at 206.2

         The only alleged “person” in this case who is neither Trustco itself nor its employee or agent

is Christopher Gallagher, a referee appointed in a mortgage foreclosure action that Trustco

commenced in state court in 2013 to recover the real property securing its loans to Mr. Lynn.3

But the allegations in the amended complaint fall far short of plausibly suggesting that Gallagher

shared the goal of illegally depriving the plaintiffs of their property, as there is no suggestion as to

why he would share that purpose or how he furthered that goal. See Cruz v. FXDirectDealer,

LLC, 720 F.3d 115, 121 (2d Cir. 2013) (affirming dismissal of RICO claims against defendants

because “the amended complaint contain[ed] no specific factual allegation about [their] intent” and

it was not plausible that they shared “a common purpose to engage in a particular fraudulent course

of conduct”). Indeed, Mr. Lynn acknowledged during oral argument that appellants had no

2
    This rule has its limits, see Cedric Kushner, 533 U.S. at 163–65, but none are relevant here.
3
  The district court dismissed the claims against Gallagher from the bench on June 5, 2017 on the
ground that he was entitled to judicial immunity.

                                                  4
affirmative reason to believe that Gallagher did share a fraudulent purpose, but merely hoped that

some evidence to that effect might turn up in discovery. The only remaining “persons” making

up the alleged “enterprise” are the corporate defendant and its employees and agents, which cannot

suffice.

           The Lynns’ failure to plead a substantive RICO claim under 18 U.S.C. § 1962(c) necessarily

defeats their conspiracy claim under 18 U.S.C. § 1962(d). To plead a RICO conspiracy, “a

plaintiff must allege the existence of an agreement to violate RICO’s substantive provisions.”

Williams v. Affinion Grp., LLC, 889 F.3d 116, 124 (2d Cir. 2018). Here, the alleged conspiracy

was an agreement to commit the same substantive RICO violations we have deemed insufficiently

pled, so there was no agreement to violate RICO’s substantive provisions. Accordingly, the

district court correctly determined that their claim of conspiracy to violate RICO also fails.

           We understand the Lynns’ distress at the financial ruin that followed Trustco’s decisions to

enforce their note and pursue other litigation remedies. But hard business dealings (or even

criminal conduct, such as the Lynns believed they were victims of) give rise to federal civil liability

only in limited circumstances. The only federal claims they have alleged are based on the RICO

statute, and for the reasons set forth above, their complaint does not make out a valid RICO claim.

           We have considered all of the Lynns’ remaining arguments and find them to be without

merit. For the foregoing reasons, the judgment of the district court is AFFIRMED.

                                                FOR THE COURT:
                                                Catherine O’Hagan Wolfe, Clerk of Court

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