Court Opinion

ID: 2806892
Source: CourtListenerOpinion
Date Created: 2015-06-10 17:00:49.699797+00
Date Added: 2024-06-11T11:30:01.823503
License: Public Domain

CLD-191                                                        NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                       No. 14-2674
                                      ____________

                                 FREDERICK FOSTER,
                                                          Appellant
                                             v.

                       DAVID H. DENENBERG; ABRAMSON &
                        DENENBERG; ANTOINE GARDINER
                        __________________________________

                     On Appeal from the United States District Court
                        for the Eastern District of Pennsylvania
                             (D.C. Civ. No. 2-13-cv-04478)
                          District Judge: Michael M. Baylson
                       __________________________________

                    Submitted on a Motion for Summary Affirmance
                   Pursuant to Third Circuit LAR 27.4 and I.O.P. 10.6
                                      May 7, 2015

       Before: FUENTES, GREENAWAY, JR., and VANASKIE, Circuit Judges

                              (Opinion filed: June 10, 2015)
                                     ____________

                                        OPINION*
                                      ____________

PER CURIAM

       Frederick Foster appeals from an order of the District Court dismissing his

complaint. For the reasons that follow, we will summarily affirm.

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent
       Foster filed suit in 2010 in the United States District Court for the Eastern District

of Pennsylvania against David Denenberg, Esquire, Abraham and Denenberg, P.C., and

Antoine Gardiner. He alleged a violation of the Racketeer Influenced and Corrupt

Organizations statute (“RICO”), and alleged fraud, conversion, breach of contract, and

breach of fiduciary duty, among other allegations, in connection with a 2007 real estate

transaction. That transaction involved properties that Foster owned at 5049-75 Lancaster

Avenue and 5042-5048 Merion Avenue in Philadelphia, Foster v. Denenberg, et al., E.D.

Pa. Civ. No. 10-cv-02470. At the time, there was a parallel, ongoing proceeding in the

Philadelphia Court of Common Pleas involving the same property and transaction, Foster

v. Gardiner, et al., May Term 2007, No. 1248. The issue of contention in both actions

was whether Foster’s sale of the property to Gardiner required partitioning of the

property into two separate properties, so as to allow Foster to retain title to and

possession of the house located at 5049 Lancaster Avenue and the warehouses located at

5042-44 Merion Avenue.

       The District Court, after vacating an entry of default against Gardiner, dismissed

the 2010 federal complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) as to all

defendants on the ground that Foster failed to sufficiently plead his RICO claim. The

Court reasoned that the allegations involved only a single transaction and failed to

establish that the defendants posed a threat of continued criminal activity, as necessary

under RICO’s pattern requirement. Foster appealed, and we summarily affirmed, Foster

v. Denenberg, et al., C.A. No. 12-1873. In the meantime, Foster’s state court case went

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to trial and the jury found in favor of Gardiner on Foster’s breach of contract claim but

found in favor of Foster on Gardiner’s counterclaim for ejectment.

       At issue in this appeal, in 2013, Foster filed another civil action in federal court

alleging a RICO violation against these same defendants, again in connection with the

same 2007 real estate transaction. Foster alleged an “ongoing criminal enterprise whose

modus operandi is real estate theft through misrepresentation and fraud.” Complaint, at ¶

6. He specifically alleged that, in 2012, Gardiner, in attempting to secure the rear portion

of the property located at 5049-75 Lancaster Avenue, broke a hole in the wall that

enclosed Foster’s backyard. Complaint, at ¶¶ 20-23. Foster’s allegation of a RICO

violation appears to have been premised on his belief that he, and not Gardiner, owned

the wall pursuant to the state jury’s verdict.1 Foster further alleged that, on October 22,

2012, Gardiner and his crew completely knocked down an entire section of the wall. Id.

at ¶ 28.

       The defendants moved to dismiss Foster’s second action pursuant to Rule

12(b)(6), arguing, in pertinent part, that the doctrine of res judicata barred Foster from

relitigating what was essentially the same cause of action. The defendants argued in the

alternative that Foster had once again failed to state sufficient allegations to establish a

plausible RICO claim. Foster opposed the motion. In an order entered on April 8, 2014,

the District Court granted the defendants’ motion and dismissed the complaint, holding

1
  In his opposition to the appellees’ motion for summary affirmance, Foster states that, as
a result of the state jury’s verdict, he owns the house at 5049 Lancaster Avenue and the
warehouses located at 5042-44 Merion Avenue, and Gardiner owns the property located
at 5051-75 Lancaster Avenue and 5046-68 Merion Avenue.
                                               3
that Foster’s second civil action was barred by the doctrine of res judicata. The Court

found that the dismissal of Foster’s 2010 action was with prejudice and thus on the

merits; that the parties were the same in each action; and that the two actions were based

on the same facts. The Court noted Foster’s argument that he had alleged new predicate

acts in support of his RICO claim, but held that the new allegations all related back to the

same 2007 transaction at issue in the prior lawsuit. In the alternative, the District Court

held that Foster’s allegations did not show sufficiently for purposes of Rule 12(b)(6) that

the defendants had engaged in a pattern of racketeering, as required to make out a RICO

violation.

       Foster appeals. We have jurisdiction under 28 U.S.C. § 1291. The appellees have

moved for summary affirmance under Third Cir. LAR 27.4 and I.O.P. 10.6. Foster has

submitted a response in opposition to summary affirmance.

       We will grant the motion for summary affirmance and summarily affirm the order

of the District Court because no substantial question is presented by this appeal, Third

Circuit LAR 27.4 and I.O.P. 10.6. We exercise plenary review over res judicata, or claim

preclusion, dismissals. See Elkadrawy v. Vanguard Group, Inc., 584 F.3d 169, 172 (3d

Cir. 2009). We also exercise plenary review over a dismissal with prejudice under Rule

12(b)(6). See Heffernan v. Hunter, 189 F.3d 405, 408 (3d Cir. 1999).

       Res judicata, also known as claim preclusion, applies when there has been (1) a

final judgment on the merits in a prior lawsuit involving (2) the same parties or their

privies and (3) a subsequent suit based on the same cause of action. See Lubrizol Corp.

v. Exxon Corp., 929 F.2d 960, 963 (3d Cir. 1991). Precluding “parties from contesting

                                              4
matters that they have had a full and fair opportunity to litigate protects their adversaries

from the expense and vexation attending multiple lawsuits, conserves judicial resources,

and fosters reliance on judicial action by minimizing the possibility of inconsistent

decisions.” Montana v. United States, 440 U.S. 147, 153-54 (1979). Here, the District

Court correctly concluded that Foster’s 2010 action resulted in a final judgment on the

merits; that the parties in both the 2010 and 2013 actions are the same, and that the 2010

and 2013 suits are based on the same cause of action. In determining whether a

subsequent case is based on the same cause of action as a prior case, we will look to

whether there is an “essential similarity of the underlying events giving rise to the various

legal claims.” Elkadrawy, 584 F.3d at 173. Here, as held by the District Court, in both

the first and second actions, Foster alleged fraud in connection with a 2007 real estate

transaction. The focal point of the “same cause of action” analysis is not whether there

are new facts occurring after the final judgment, but whether the material facts alleged in

each suit are the same, and whether the witnesses and documentation required to prove

the allegations are the same. See United States v. Athlone Industries, Inc., 746 F.2d 977,

984 (3d Cir. 1984). Here, the right to knock that wall down depends on who owns it, and

the issue of ownership is determined by reference to the parties’ intentions when they

negotiated the 2007 transaction. Accordingly, the District Court properly held that

allegations of a continuation of the same fraudulent activity at issue in the prior action do

not raise a new or independent RICO cause of action. Foster’s second action is thus

barred by res judicata.

                                              5
       We further agree with the District Court that Foster’s claims, in any event, do not

state a RICO claim for relief. When considering a motion to dismiss pursuant to Rule

12(b)(6) for failure to state a claim upon which relief may be granted, a court must accept

as true all material allegations, read the complaint in the light most favorable to the

plaintiff, and decide whether, under any reasonable understanding of the complaint, the

plaintiff may be entitled to relief. See Fleisher v. Standard Ins. Co., 679 F.3d 116, 120

(3d Cir. 2012). To constitute a RICO violation, there must be a “pattern of racketeering

activity,” 18 U.S.C. § 1962(a), and to show a pattern of racketeering activity, a plaintiff

must allege that predicate acts of racketeering pose a threat of continued criminal activity.

H.J. Inc. v. Northwest Bell Telephone Co., 492 U.S. 229, 239 (1989) (emphasis added).

Foster’s allegation of a single fraudulent real estate transaction occurring in 2007 does

not satisfy RICO’s continuity requirement. We note that he has asserted in his opposition

to summary affirmance that the defendants have engaged in numerous other real estate

transactions throughout Philadelphia, and that those transactions must necessarily have

involved fraud, but these assertions are speculative and thus insufficient to survive a Rule

12(b)(6) motion. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (To

avoid dismissal, a complaint’s “[f]actual allegations must be enough to raise a right to

relief above the speculative level.”).

       For the foregoing reasons, we grant the appellees’ motion and will summarily

affirm the order of the District Court dismissing the complaint with prejudice.

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