Court Opinion

ID: 2670816
Source: CourtListenerOpinion
Date Created: 2014-04-22 16:05:41.565942+00
Date Added: 2024-06-11T09:19:20.998891
License: Public Domain

FILED
                                                     United States Court of Appeals
                                      PUBLISH                Tenth Circuit

                    UNITED STATES COURT OF APPEALS            April 22, 2014

                                                        Elisabeth A. Shumaker
                          FOR THE TENTH CIRCUIT             Clerk of Court

JUDY KNIGHT,

            Plaintiff - Appellant,

and

PHOENIX CENTRAL, INC.; MINI
MALLS OF AMERICA; JOHN DOE,
unknown investors in Mooring #1 thru
xx; JANE DOE, unknown investors in
Mooring #1 thru xx,

            Plaintiffs,

v.                                              No. 13-6112

MOORING CAPITAL FUND, LLC;
MOORING FINANCIAL
CORPORATION; JOHN JACQUEMIN,

            Defendants - Appellees,

and

DAVID NALLS; JOHN DOE; JANE
DOE; COUNSELS AND AGENTS OF
DEFENDANTS,

            Defendants.

         APPEAL FROM THE UNITED STATES DISTRICT COURT
            FOR THE WESTERN DISTRICT OF OKLAHOMA
                    (D.C. No. 5:13-CV-00129-HE)
Submitted on the briefs:*

Judy Knight, filed a brief pro se.

Leif E. Swedlow, Andrews Davis, P.C., Oklahoma City, Oklahoma, for
Defendants - Appellees.

Before HARTZ, McKAY, and BALDOCK, Circuit Judges.

HARTZ, Circuit Judge.

      Judy Knight appeals from the dismissal of her lawsuit on the grounds of

untimeliness, failure to state a claim, and claim preclusion (res judicata). We affirm

the judgment below. Most of our reasons for affirmance are routine. But this appeal

does raise interesting questions regarding claims under the federal Racketeer

Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68, based on

alleged misconduct in prior litigation.

                                     I. Background

      In 2010 this court decided two appeals involving claims and cross-claims

between, on one side, Ms. Knight and her company Phoenix Central Inc. (Phoenix),

an Oklahoma corporation, and, on the other side, Mooring Capital Fund, LLC

(Capital) and Mooring Financial Corporation (Financial). See Mooring Capital

*
      After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of this
appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.

                                          -2-
Fund, LLC v. Knight, 388 F. App’x 814 (10th Cir. 2010) (Mooring I). Two years

later, Ms. Knight filed a new suit in Oklahoma state court on behalf of herself,

Phoenix, and another of her companies, Mini Malls of America, also an Oklahoma

corporation. The defendants were Capital and Financial and individuals associated

with them, including Financial’s Chief Executive Officer, John Jacquemin, and

unnamed “Counsels and Agents of Defendants.” R. at 15. Capital, Financial, and

Mr. Jacquemin removed the litigation to federal district court.

      The removing defendants moved to dismiss with prejudice. In addition to

filing a response, Ms. Knight filed a first amended complaint that named as

additional defendants the law firm and individual lawyers who represented Capital

and Financial in Mooring I (the Counsel Defendants). Capital, Financial, and

Mr. Jacquemin then moved to dismiss the first amended complaint with prejudice.

Citing claim preclusion, the statute of limitations, and Fed. R. Civ. P. 12(b)(6), the

court granted the motion the next day. In the same order, the court sua sponte

dismissed the claims against the other defendants.

      The day after the district court filed its judgment dismissing the action with

prejudice, Ms. Knight filed a motion to remand the case to state court, which the

district court denied as moot. Ms. Knight then filed a Fed. R. Civ. P. 59 motion to

vacate, alter, or amend the dismissal order, which the district court also denied.

Shortly thereafter, Ms. Knight sent an e-mail message seeking the district judge’s

recusal. The court ordered the e-mail to be filed and denied the request for recusal.

                                          -3-
Ms. Knight has appealed.1 We affirm. The removal of the case to federal court was

proper. Some of Ms. Knight’s claims were untimely and the others fail to state a

claim or are barred by issue preclusion (collateral estoppel). And her request for

recusal was untimely.

                                     II. Analysis

A.    Issues Concerning Removal

      1.     District Court’s Jurisdiction

      We first consider Ms. Knight’s challenge to the district court’s jurisdiction,

reviewing the issue de novo, see Australian Gold, Inc. v. Hatfield, 436 F.3d 1228,

1234 (10th Cir. 2006). The district court may exercise removal jurisdiction over

“any civil action brought in a State court of which the district courts of the United

States have original jurisdiction.” 28 U.S.C. § 1441(a). In removing the action,

defendants primarily relied upon diversity jurisdiction, but they also cited

federal-question jurisdiction. We need not consider the arguments regarding

diversity jurisdiction because Ms. Knight’s assertion of federal-law claims under

RICO supports federal-question jurisdiction. See Caterpillar Inc. v. Williams,

482 U.S. 386, 392 (1987). On appeal Ms. Knight appears to argue that she did not

1
       Ms. Knight filed notices of appeal naming as appellants herself and her two
corporations. We have previously explained to Ms. Knight that as a nonattorney she
cannot represent a corporation in federal court. See Mooring I, 388 F. App’x at 823.
No counsel has filed a notice of appeal or appeared for the entities. Consequently,
Ms. Knight is the only appellant, and we do not consider any arguments regarding the
entities’ claims.

                                          -4-
assert any federal-law claims. That argument is undermined, however, by the plain

text of both her original and first amended complaints.

      2.     Counsel Defendants’ Consent to Removal

      The case was removed to federal court by Capital, Financial, and

Mr. Jacquemin. Ms. Knight argues that removal was improper because the Counsel

Defendants did not join in or consent to the removal, as required by 28 U.S.C.

§ 1446(b)(2)(A). But consent is required only of “defendants who have been

properly joined and served,” id., and Ms. Knight, although asserting that she mailed a

summons and complaint to the Counsel Defendants, has failed to demonstrate that

they had been properly served at the time of removal.

      Because the action was in Oklahoma state court before removal, we examine

Oklahoma’s service requirements. Oklahoma allows service by mail on individuals

and entities. See Okla. Stat. Ann. tit. 12, § 2004(C)(2)(a). It is not clear, however,

that Oklahoma would allow a pro se party to mail service. Section 2004(C)(2)(a)

implies the contrary by specifying that service by mail can be accomplished “by the

plaintiff’s attorney, any person authorized to serve process pursuant to subparagraph

a of paragraph 1 of this section [listing sheriff or deputy sheriff, licensed process

server, or person specially appointed to serve process], or by the court clerk.”

      But even assuming that pro se plaintiffs can accomplish service by mail under

Oklahoma law, the record in this case contains no evidence that service was so

accomplished, much less that it was accomplished before the filing of the notice of

                                          -5-
removal. For service by mail in Oklahoma, one must “mail[] a copy of the summons

and petition by certified mail, return receipt requested and delivery restricted to the

addressee.” Id. § 2004(C)(2)(b). “Service by mail shall be effective on the date of

receipt or if refused, on the date of refusal of the summons and petition by the

defendant.” Id. § 2004(C)(2)(a). Although Ms. Knight states that she mailed a

summons and complaint via registered mail, return receipt requested, to one lawyer

and the law firm, her unsupported assertions are insufficient to show that she

complied with the relevant service requirements. The record does not contain any

return receipts showing the date of delivery or any other evidence that the documents

actually were properly addressed, were deposited in the mail, and were delivered or

refused. See Chester v. Green, 120 F.3d 1091, 1091 (10th Cir. 1997) (plaintiff failed

to show service because there was “no authenticating post office stamp on any receipt

showing they actually passed through the mails, nor [was] there a receipt or

acknowledgment showing actual delivery of the complaint to the purported

defendants”); Colclazier & Assocs. v. Stephens, 277 P.3d 1285, 1290 (Okla. Civ.

App. 2012) (“[A]bsent any documentary evidence supporting the Law Firm’s claim

of attempted mailings, the district court could not have determined that service by

mail had been made.”). Since Ms. Knight has failed to establish that the Counsel

Defendants were served before the date of removal, their consent to removal was not

required.

                                          -6-
B.    Dismissal of Claims

       Ms. Knight challenges the district court’s application of statutes of limitations,

Rule 12(b)(6), and claim preclusion. For ease of analysis, we divide her claims into

two categories—first, claims concerning events that occurred before the Mooring I

litigation (Phase 1 claims), and, second, claims concerning events that occurred

during the Mooring I proceedings (Phase 2 claims). We address each category

separately. Our review is de novo. See Wallace v. Microsoft Corp., 596 F.3d 703,

705 (10th Cir. 2010) (statute of limitations); Gee v. Pacheco, 627 F.3d 1178, 1183

(10th Cir. 2010) (Rule 12(b)(6)); Valley View Angus Ranch, Inc. v. Duke Energy

Field Servs., Inc., 497 F.3d 1096, 1100 (10th Cir. 2007) (preclusion).

       1.    Phase 1 Claims

       The Phase 1 claims are claims based on events before Mooring I. They

include claims that were asserted but failed in Mooring I and claims that could have

been asserted but were not. It was proper for the district court to dismiss these

claims on the ground that any applicable limitations period had expired.

       The Phase 1 claims predate Mooring I, which began in state court in

September 2005 and was removed to federal court in January 2006. The present

action was not filed until July 2012. By then, any Phase 1 claims clearly were

untimely. See Okla. Stat. Ann. tit. 12, § 95(A)(1) (five-year limitations period for

actions upon written contracts, agreements, and promises); id. § 95(A)(2) (three-year

limitations period for oral contracts and liabilities created by statute); id. § 95(A)(3)

                                           -7-
(two-year limitations period for torts and fraud); Dummar v. Lummis, 543 F.3d 614,

621 (10th Cir. 2008) (four-year limitations period for federal RICO claims); Okla.

Stat. tit. 22, § 1409(E) (five-year limitations period for Oklahoma RICO claims).

       2.     Phase 2 Claims

       The Phase 2 claims are those claims concerning events that occurred during

Mooring I. They include claims that the defendants committed fraud and deceit in

their filings and testimony and that their litigation conduct was tortious. It was

proper for the district court to dismiss the Phase 2 claims under Rule 12(b)(6) and on

the ground of preclusion (although the appropriate preclusion doctrine is issue

preclusion, not claim preclusion).

              a.     Claims Under Oklahoma Law

       The majority of the Phase 2 claims are claims under Oklahoma law.

Oklahoma, however, has afforded participants in judicial proceedings an absolute

immunity against later civil suits grounded in litigation conduct. See Patel v. OMH

Med. Ctr., Inc., 987 P.2d 1185, 1202 (Okla. 1999) (“To the extent [plaintiff’s]

petition relies on perjurious testimony as the basis of her claim for damages, whether

denominated perjury, fraud, deceit, or ‘prima facie tort’, the petition fails to state a

claim.”); id. at 1202-03 (remedies for litigation-related misconduct must be pursued

in the litigated case, or by criminal or bar-discipline proceedings); Cooper v.

Parker-Hughey, 894 P.2d 1096, 1098-1101 (Okla. 1995) (absolute immunity for

witness testimony; no civil cause of action for perjury); Kirschstein v. Haynes,

                                           -8-
788 P.2d 941, 945, 954 (Okla. 1990) (barring claim of defamation or intentional

infliction of emotional distress against attorneys, parties, or witnesses founded on

communications made in preparation for contemplated judicial proceeding);

Hartley v. Williamson, 18 P.3d 355, 358 (Okla. Civ. App. 2000) (barring claims for

negligence, deceit, and conspiracy founded on testimony at judicial proceeding);

see also Briscoe v. LaHue, 460 U.S. 325, 330-35 (1983) (immunity of parties and

witnesses); Miller v. Glanz, 948 F.2d 1562, 1570-71 (10th Cir. 1991) (Briscoe

immunity extends to alleged conspiracies to commit perjury).

       Further, Ms. Knight cannot bring suit under the Oklahoma RICO statute,

Okla. Stat. tit. 22, §§ 1401-1419. That statute restricts standing to bring “any

proceedings, civil or criminal” to “the Attorney General, any district attorney or any

[specially appointed] district attorney.” Id. § 1404(C); see also id. § 1409(A) (“The

Attorney General, any district attorney or any [special] district attorney . . . may

institute civil proceedings . . . .”); id. § 1419 (construction of Oklahoma RICO may

follow construction of federal RICO, “provided that nothing in this section shall be

deemed to provide for any private right of action or confer any civil remedy except as

specifically set out in this act”).

       Accordingly, the Oklahoma-law Phase 2 claims failed to state a claim upon

which relief can be granted.

                                          -9-
                b.   RICO Claims

      The remaining Phase 2 claims are the federal RICO claims. For these claims,

Ms. Knight asserts that defendants made misrepresentations to the district court,

through pleadings and testimony, that increased the cost of litigating Mooring I and

caused the district court to rule against her on her individual claims in Mooring I.

She alleges that this activity violated the federal wire-fraud and mail-fraud statutes,

and thereby constituted a pattern of racketeering in violation of RICO. See 18 U.S.C.

§ 1962(c). In light of the Mooring I judgment, however, she is barred from bringing

these claims.

      An essential element of a RICO claim is that the plaintiff was injured in her

business or property by the RICO violation. See 18 U.S.C. § 1964(c) (creating a civil

cause of action for “[a]ny person injured in his business or property by reason of a

violation of section 1962”); Deck v. Engineered Laminates, 349 F.3d 1253, 1257

(10th Cir. 2003) (“[A] plaintiff has standing to bring a RICO claim only if he was

injured in his business or property by reason of the defendant’s violation of

§ 1962.”). But, as explained below, the damages Ms. Knight alleges from Phase 2

conduct—increased litigation costs and lost claims—were matters resolved by

Mooring I. Further litigation of these issues is therefore precluded, and the Phase 2

RICO claims cannot proceed unless and until Ms. Knight obtains relief from the

judgment in Mooring I. See Robinson v. Volkswagenwerk AG, 56 F.3d 1268,

1272-73 (10th Cir. 1995) (plaintiffs could not pursue fraud claims based on litigation

                                         - 10 -
misconduct without first obtaining relief from prior judgment because their claims of

damages from fraud were incompatible with facts necessarily decided in the prior

action).

       Because Mooring I is a federal judgment in a diversity action applying

Oklahoma law, Oklahoma’s preclusion law applies. See Semtek Int’l Inc. v.

Lockheed Martin Corp., 531 U.S. 497, 508 (2001). In this case the appropriate

preclusion doctrine is issue preclusion. We recognize that the district court relied on

claim preclusion rather than issue preclusion, but we may affirm on any ground

supported by the record. See Bixler v. Foster, 596 F.3d 751, 760 (10th Cir. 2010).

And the defendants raised both claim preclusion and issue preclusion in the district

court, so Ms. Knight had an opportunity to address both doctrines. See id.

       “Issue preclusion prevents relitigation of facts and issues actually litigated and

necessarily determined in an earlier proceeding between the same parties or their

privies.” Durham v. McDonald’s Rests. Of Okla., Inc., 256 P.3d 64, 66 (Okla. 2011)

(emphasis omitted).

       To establish issue preclusion, a party must prove: 1) that the party
       against whom it is being asserted was either a party to or a privy of a
       party to the prior action; 2) that the issue subject to preclusion has
       actually been adjudicated in the prior case; 3) that the adjudicated issue
       was necessary and essential to the outcome of that prior case; and 4) the
       party against whom it is interposed had a full and fair opportunity to
       litigate the claim or critical issue.

Id. at 66-67 (emphasis omitted). “The principle of issue preclusion operates to bar

from relitigation both correct and erroneous resolutions of jurisdictional and

                                          - 11 -
nonjurisdictional challenges.” Okla. Dep’t of Pub. Safety v. McCrady, 176 P.3d
1194, 1199 (Okla. 2007). “An issue is actually litigated and necessarily determined

if it is properly raised in the pleadings, or otherwise submitted for determination, and

judgment would not have been rendered but for the determination of that issue.” Id.

      Before examining the applicability of issue preclusion to the two types of

damage alleged by Ms. Knight—increased litigation costs in Mooring I and her loss

on the merits in Mooring I—we address three potential grounds for not applying

preclusion doctrine to her federal RICO claims. First, Ms. Knight asserts that the

defendants other than Capital and Financial (namely, the individual defendants and

the law firm) cannot rely on preclusion because they were not parties in Mooring I.

Those other defendants, however, are in privity with Capital and Financial.

See Plotner v. AT & T Corp., 224 F.3d 1161, 1169 (10th Cir. 2000) (“The law firm

defendants appear by virtue of their activities as representatives of [other

defendants], also creating privity.”); Fox v. Maulding, 112 F.3d 453, 459-60

(10th Cir. 1997) (officers and directors of bank were privies of bank for purposes of

RICO claims because allegations related to actions taken in their capacities as

officers and directors). “In light of the circumstances of this case, including the

alleged relationship between the defendants in this and the previous trial, we think

that Oklahoma would not prohibit the defensive assertion of collateral estoppel on the

sole grounds that the defendants here were not parties to the previous action.”

Robinson, 56 F.3d at 1272 n.3.

                                         - 12 -
      Second, Ms. Knight complains that the defendants did not submit the entire

record from Mooring I in support of their preclusion argument. The district court,

however, could take judicial notice of its own records to evaluate preclusion. See

Gee, 627 F.3d at 1194.

      Third, we consider the possibility that issue preclusion does not apply here

because Ms. Knight’s complaint enables her to set aside the judgment in Mooring I,

eliminating any preclusive effect that it may have. We reject the possibility for the

following reasons.

      To begin with, the remedies under RICO do not include setting aside a prior

judgment or undermining its preclusive effect by a collateral attack. The circuits to

consider the matter have rejected such relief. See Hendrick v. H.E. Avent, 891 F.2d
583, 585-87 (5th Cir. 1990) (collateral attack on judgment through RICO claim is

barred by res judicata); Gekas v. Pipin (In re Met-L-Wood Corp.), 861 F.2d 1012,

1016 (7th Cir. 1988) (“RICO is many things, but it is not an exception to res

judicata.”); see also Gulf Petro Trading Co. v. Nigerian Nat’l Petroleum Corp.,

512 F.3d 742, 747, 749-50 (5th Cir. 2008) (RICO suit was impermissible collateral

attack on foreign arbitration award); Regions Bank v. J.R. Oil Co., LLC, 387 F.3d
721, 731-32 (8th Cir. 2004) (RICO claims by nonparty to bankruptcy action were

impermissible collateral attack on bankruptcy judgment that was good against the

world).

                                         - 13 -
       Moreover, Ms. Knight’s complaint does not support a direct attack on the

Mooring I judgment under either Fed. R. Civ. P. 60(b)(3) (court may relieve a party

of a judgment for “fraud (whether previously called intrinsic or extrinsic),

misrepresentation, or misconduct by an opposing party”) or an action based on fraud

on the court, see Fed. R. Civ. P. 60(d)(3) (Rule 60 “does not limit a court’s power to

. . . set aside a judgment for fraud on the court”). If construed as a motion under

Rule 60(b)(3) (which would need to have been filed in Mooring I in any event), the

motion was untimely under Fed. R. Civ. P. 60(c)(1) (one-year time limit for Rule

60(b)(3) motions). And the complaint’s allegations regarding defendants’ litigation

misconduct fail to rise to the level of a claim for fraud on the court. See Plotner,
224 F.3d at 1170 (fraud on the court “refers to misrepresentation direct[ly] affecting

the judicial process, not simply the non-disclosure to one party of facts known by

another”); Weese v. Schukman, 98 F.3d 542, 553 (10th Cir. 1996) (allegations of

“material misrepresentations or omitted information needed to make . . . answers

fully truthful . . . simply do not rise to the level necessary to constitute ‘fraud on the

court’”); Bulloch v. United States, 763 F.2d 1115, 1121 (10th Cir. 1985) (en banc)

(“Fraud on the court . . . is fraud which is directed to the judicial machinery itself and

is not fraud between the parties or fraudulent documents, false statements or perjury.

. . . It is thus fraud where the court or a member is corrupted or influenced or

influence is attempted or where the judge has not performed his judicial function—

thus where the impartial functions of the court have been directly corrupted.”).

                                           - 14 -
      We now examine the elements of issue preclusion with respect to Ms. Knight’s

two categories of alleged damages.

                    i.     Increased Costs in Mooring I

      As one item of damages, Ms. Knight asserts that defendants’ fraud

unnecessarily increased the costs of litigating Mooring I. But the parties’ conduct,

and its relation to the fees and costs incurred, were issues in Mooring I.

      After the trial, both sides moved for awards of attorney fees. Phoenix

requested an award of $224,392.17 against Capital and Financial, and Capital and

Financial requested an award of $306,644.34 against Ms. Knight. See Mooring I,

388 F. App’x at 818. The district court granted the motions in part, awarding

Phoenix $49,000 and awarding Capital and Financial $88,000. Id. As part of its

determination, “the district court declined to find that Capital and Financial acted in

bad faith [and] assessed blame for the protracted litigation on all parties, not just

Capital and Financial.” Id. at 828; see also id. at 826 (district court “observed that

both parties’ fees were unreasonable [and] that both parties contributed to the

excessive fees”). Phoenix appealed the amount of the fees awarded to it, and

Ms. Knight appealed the award in favor of Capital and Financial against her. See id.

at 818, 825-28.

      On appeal Ms. Knight argued “that Capital and Financial do not deserve an

award of fees because of their bad faith and misconduct” and that the district court

“did not properly weigh that Capital and Financial created the situation that led to

                                          - 15 -
increased fees.” Id. at 827. This court held, however, that the district court

“thoughtfully reviewed the case, taking into account” the proper factors in

determining a fee award. Id. Further, this court held that the district court did not

abuse its discretion in declining to find that Capital and Financial acted in bad faith

and in assessing blame for increased costs on all the parties. See id. at 828.

      All the elements of issue preclusion are met as to Ms. Knight’s claim of RICO

damages from the increased costs of litigating Mooring I. Ms. Knight, individually,

was a party in Mooring I. As discussed above, the district court actually adjudicated

the parties’ responsibility for the fees and costs incurred in litigating the action. The

district court considered Ms. Knight’s allegations of misconduct, but it specifically

declined to find that Capital and Financial acted in bad faith. If they did not act in

bad faith, they could not have acted fraudulently; therefore, Ms. Knight’s current

claim of damage would require her to establish facts that are incompatible with

Mooring I. Further, the adjudication was necessary and essential to the court’s

determination of the parties’ motions for fees and costs.

      As to the final element of issue preclusion, Ms. Knight argues that because of

defendants’ fraudulent conduct, she did not have a full and fair opportunity to litigate

her claims in Mooring I. We disagree. In large part, “full and fair opportunity”

focuses on procedural due process and fundamental fairness. The Oklahoma

Supreme Court has stated:

      Issue preclusion . . . is an equitable doctrine. Where the parties’
      alignment and the raised legal and factual issues warrant and fairness to

                                          - 16 -
      the parties is not compromised by the process, its application is
      appropriate. It is indeed the proceeding’s substance and the degree of
      due process inherent in it, rather than its form, which is the court’s
      bellwether for the doctrine’s application.

Cities Serv. Co. v. Gulf Oil Corp., 980 P.2d 116, 126 (Okla. 1999) (internal quotation

marks omitted). And in a case arising from Oklahoma, this court wrote, “The

requirement that the party against whom the prior judgment is asserted had a full and

fair opportunity to be heard centers on the fundamental fairness of preventing the

party from relitigating an issue he has lost in a prior proceeding.” Sil-Flo, Inc. v.

SFHC, Inc., 917 F.2d 1507, 1521 (10th Cir. 1990).

      The Oklahoma Supreme Court has identified several relevant factors in

evaluating this element:

      (1) whether the [party] had ample incentive to litigate the issue fully in
      the earlier proceeding; (2) whether the judgment or order for which
      preclusive effect is sought is itself inconsistent with one or more earlier
      judgments in the [party’s] favor; . . . (3) whether the second action
      affords the [party] procedural opportunities unavailable in the first that
      could readily produce a different result; . . . [(4)] whether the current
      litigation’s legal demands are closely aligned in time and subject matter
      to those in the earlier proceedings; [(5)] whether the present litigation
      was clearly foreseeable . . . at the time of the earlier proceedings; and
      [(6)] whether in the first proceeding the [party] had sufficient
      opportunity to be heard on the issue.

Cities Serv. Co., 980 P.2d at 125 (footnotes omitted); see also Sil-Flo, 917 F.2d at

1521 (“Often, the inquiry will focus on whether there were significant procedural

limitations in the prior proceeding, whether the party had the incentive to litigate

fully the issue, or whether effective litigation was limited by the nature or

                                          - 17 -
relationship of the parties.”); Restatement (2d) of Judgments §§ 28, 29 (listing factors

that may justify not applying preclusion).2

      Nothing in this appeal indicates that applying issue preclusion would be

fundamentally unfair to Ms. Knight. She had the opportunity to be heard in

Mooring I, including the opportunity to appeal to this court, and she had ample

incentive to litigate the issue fully, given that Capital and Financial sought an award

exceeding $300,000. We recognize that preclusion may not be appropriate when “the

party sought to be precluded, as a result of the conduct of his adversary or other

special circumstances, did not have an adequate opportunity or incentive to obtain a

full and fair adjudication in the initial action.” Restatement (2d) of Judgments

§ 28(5)(c). But Ms. Knight does not identify any arguments she would have made

regarding fees and costs in Mooring I had it not been for defendants’ alleged fraud,

does not offer any specific explanation of how defendants’ litigation misconduct

affected her ability to litigate the issue of fees and costs in Mooring I, and does not

allege that there is evidence of litigation misconduct that was unavailable while

Mooring I was pending.

2
       The Oklahoma Supreme Court has relied on the Restatement (Second) of
Judgments as authority. See, e.g., Johnson v. State ex rel. Dep’t of Pub. Safety,
2 P.3d 334, 337 (Okla. 2000); Kirkpatrick v. Chrysler Corp., 920 P.2d 122, 132
(Okla. 1996).

                                          - 18 -
                    ii.    Lost Claims in Mooring I

      As another item of damages, Ms. Knight asserts that the defendants’ conduct

caused the district court to rule against her on her individual claims in Mooring I.

This court has recognized that a cause of action is a form of property for purposes of

RICO. See Deck, 349 F.3d at 1259. But we decline to recognize a conclusively

meritless claim as property under RICO, and Ms. Knight’s individual claims in

Mooring I were declared to be meritless. See 388 F. App’x at 818, 823-25. As with

her litigation-costs argument, unless and until the Mooring I judgment is vacated,

issue preclusion establishes conclusively that her claims in Mooring I lacked merit.

      Each element of issue preclusion is satisfied with regard to Ms. Knight’s

individual claims. She presented her individual claims to the court, and judgment

was rendered against her. Id. at 818, 827. The adjudication of her claims was

necessary and essential to the outcome of Mooring I. And Ms. Knight alleges no

facts indicating that she lacked a full and fair opportunity to litigate her individual

claims in Mooring I. Rather than offering any specific explanation of how

defendants’ litigation misconduct prevented her from adequately presenting her

individual claims, she makes only conclusory allegations that defendants’ misconduct

caused the court to rule against her unjustly.

      As long as the Mooring I judgment stands, Ms. Knight cannot plead an

essential element of her Phase 2 RICO claim—namely, injury to a colorable cause of

action. Dismissal of the claim is required under the doctrine of issue preclusion.

                                          - 19 -
      3.     Remaining Arguments

      Ms. Knight asserts that the dismissal decision was premature because the

district court granted defendants’ motion to dismiss before her deadline to file a

motion to remand to state court and before her response period expired. She also

complains that the district court granted judgment for some defendants sua sponte, it

did not give her the opportunity to amend, and it dismissed her claims with prejudice.

We see no reversible error. First, Ms. Knight was not prejudiced by the court’s

taking action before she could move to remand, because such a motion would have

failed. Second, although we disfavor (1) sua sponte dismissals and (2) dismissals

before the losing party has an opportunity to respond, this court has held that such a

“dismissal under Rule 12(b)(6) is not reversible error when it is patently obvious that

the plaintiff could not prevail on the facts alleged and allowing [her] an opportunity

to amend [her] complaint would be futile.” McKinney v. Okla. Dep’t of Human

Servs., 925 F.2d 363, 365 (10th Cir. 1991) (citation and internal quotation marks

omitted). Similarly, even though pro se parties generally should be given leave to

amend, it is appropriate to dismiss without allowing amendment “where it is obvious

that the plaintiff cannot prevail on the facts [s]he has alleged and it would be futile to

give [her] an opportunity to amend.” Gee, 627 F.3d at 1195 (internal quotation

marks omitted). And finally, “[a] dismissal with prejudice is appropriate where a

complaint fails to state a claim under Rule 12(b)(6) and granting leave to amend

would be futile,” Brereton v. Bountiful City Corp., 434 F.3d 1213, 1219 (10th Cir.

                                          - 20 -
2006); see also Gee, 627 F.3d at 1181, 1195 (affirming dismissal with prejudice of

claims barred by statute of limitations and claim preclusion). For the reasons

discussed, it is patently obvious that Ms. Knight cannot proceed with her claims, and

any further opportunity to amend would be futile because her claims would still be

barred. Therefore, the district court did not err in dismissing claims sua sponte, in

dismissing without affording Ms. Knight an opportunity to amend, or in dismissing

the claims with prejudice.

      Finally, Ms. Knight asserts that the district judge should have recused himself.

But she did not request recusal until after the district court dismissed her action and

denied her Rule 59 motion. That was too late. “We have held that under either

28 U.S.C. § 144 or § 455, the party seeking recusal must act in a timely fashion to

request recusal.” United States v. Stenzel, 49 F.3d 658, 661 (10th Cir. 1995).

C.    Rule 59 Motion

      We review the denial of a Rule 59 motion for abuse of discretion. See Price v.

Wolford, 608 F.3d 698, 706 (10th Cir. 2010). Because we have found no reversible

error, we also find no abuse of discretion in denying the Rule 59 motion.

                                    III. Conclusion

      The judgment of the district court is affirmed.

                                         - 21 -