Court Opinion

ID: 2963787
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:15:12.777538+00
Date Added: 2024-06-11T15:01:52.368822
License: Public Domain

USCA1 Opinion

	

        November 21, 1995       [NOT FOR PUBLICATION]

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                           
                                 ____________________

        No. 95-1055 

                               WILLIAM GABOVITCH, ETC.,

                                Plaintiff, Appellant,

                                          v.

                                MAURICE SHEAR, ET AL.,

                                Defendants, Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. William G. Young, U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                                Torruella, Chief Judge,
                                           ___________
                           Stahl and Lynch, Circuit Judges.
                                            ______________

                                 ____________________

            William Gabovitch on brief pro se.
            _________________
            Brian A. Davis,  Julie B. Brennan,  and Choate, Hall &  Stewart on
            ______________   ________________       _______________________
        brief for appellees.

                                 ____________________

                                 ____________________

                 Per  Curiam.   Pro  se  plaintiff  William Gabovitch,  a
                 ___________

            certified  public  accountant  and  non-practicing  attorney,

            served  for nearly  eighteen  years as  a  co-trustee of  two

            irrevocable inter vivos trusts created by Maurice Shear.   In

            1992, in connection with litigation filed in 1987 by Gertrude

            Shear (Maurice's wife and  the contingent life beneficiary of

            the  trusts), a state court  judge removed plaintiff from his

            position  as  trustee  and  ordered him  to  pay  substantial

            damages   because  of  his   mismanagement  of   the  trusts.

            Plaintiff's  appeal from  that  decision remains  pending  in

            state  appellate court.    Claiming that  the allegations  of

            mismanagement were  frivolous and  that his removal  had been

            fraudulently obtained, plaintiff  pursued various  collateral

            actions in state court--all without avail.  He then turned to

            federal court,  filing the instant civil  RICO action against

            the  Shears  (and  others),  seeking  injunctive  relief  and

            damages on behalf  of both himself  and the  trusts.  See  18
                                                                  ___

            U.S.C.   1964(c).   The district court, following a  hearing,

            dismissed the complaint for failure to state a claim.  Having

            reviewed  the  record  in  full,  and  having  construed  the

            complaint  in the  light  most favorable  to plaintiff,  see,
                                                                     ___

            e.g., Feinstein v.  Resolution Trust Corp.,  942 F.2d 34,  37
            ____  _________     ______________________

            (1st Cir. 1991), we now affirm.1

                                
            ____________________

            1.  While we  have accepted all well-pled  allegations in the
            complaint  as true  and  drawn all  reasonable inferences  in
            plaintiff's  favor,   there  is   an  inconsistency   in  his

                                         -3-

                 Extended  discussion is  unnecessary.   To state  a RICO

            claim,  plaintiff  was  required  to  allege that  defendants

            conducted  an enterprise  through  a pattern  of racketeering

            activity.  See,  e.g., Libertad  v. Welch, 53  F.3d 428,  441
                       ___   ____  ________     _____

            (1st Cir.  1995).  As well, he was required to allege that he

            suffered  injury in his business or property "by reason of" a

            RICO  violation.   18 U.S.C.    1964(c);  see,  e.g., Sedima,
                                                      ___   ____  _______

            S.P.R.L.  v.  Imrex  Co.,  473  U.S.  479, 496  (1985)  ("the
            ________      __________

            plaintiff has standing if, and can only recover to the extent

            that,  he has been injured in his business or property by the

            conduct  constituting the [RICO] violation"); see also Holmes
                                                          ________ ______

            v. Securities  Investor Protection  Corp., 503 U.S.  258, 268
               ______________________________________

            (1992)  (RICO  plaintiff  must  allege, not  only  "but  for"

            causation,  but  also  proximate  causation  requiring  "some

            direct relation between the injury asserted and the injurious

            conduct alleged").

                 This causation requirement enables us, at the outset, to

            put  to  the side  vast  portions  of plaintiff's  voluminous

            complaint.    For  example, plaintiff  has  detailed numerous

            instances  of  criminal  and  fraudulent  activity  allegedly

            undertaken by various of the defendants during the 1970's and

                                
            ____________________

            narrative.   The Shears' principal motivation  for filing the
            1987  lawsuit,  plaintiff  contends,  was to  remove  him  as
            trustee  and  thereby gain  control  of  the trusts'  primary
            asset--the Mount Pleasant Hospital.  Yet  plaintiff elsewhere
            explains  that the  trusts  had sold  their  interest in  the
            hospital  the previous  year  (and only  reacquired ownership
            thereof in 1991).

                                         -4-

            1980's.  Yet no contention is made that such conduct resulted

            in  injury to  plaintiff's business  or  property.   In turn,

            plaintiff  charges that  defendants  have engaged  in various

            misdeeds  following his  ouster as  trustee in  January 1992.

            Again,  such  actions  are  not linked  to  any  business  or

            property loss suffered by plaintiff.  We note  that plaintiff

            lacks  standing   to  complain   of  injury  to   the  trusts

            themselves,  having been removed  as trustee by  the time the

            instant suit was filed.   And the suggestion that  his status

            as  a potential creditor of the trusts grants him standing to

            sue on his own behalf  is misplaced.  See, e.g., id.  at 271;
                                                  ___  ____  ___

            National Enterprises v. Mellon  Financial Services, 847  F.2d
            ____________________    __________________________

            251, 254 (5th Cir. 1988).

                 The  only business  or  property injury  alleged in  the

            complaint is  that stemming  from the state  court judgment--

            i.e.,  plaintiff's  loss  of  his position  as  trustee;  the

            accompanying  monetary damages;  the  resulting harm  to  his

            reputation and  client base; and the  legal expenses incurred

            in litigating that action.  The question thus becomes whether

            plaintiff  has set forth a predicate act of racketeering that

            has proximately caused such injury.  Plaintiff insists he has

            done  so in  two  respects.   He argues  that  the filing  by

            defendants of the  state court  suit (as part  of a  broader,

            unlawful scheme) constituted attempted extortion in violation

            of  the Hobbs  Act, 18  U.S.C.    1951.   And he  argues that

                                         -5-

            Gertrude Shear, by proffering false  affidavits and testimony

            to  the state court (allegedly at the behest of her husband),

            committed mail  fraud in violation of  18 U.S.C.   1341.   We

            disagree that such  claims establish the  necessary predicate

            act.

                 Numerous courts have held that the filing of litigation-

            -no  matter  how  lacking  in merit--does  not  constitute  a

            predicate racketeering  act  of extortion.    "If a  suit  is

            groundless  or filed  in  bad faith,  the  law of  torts  may

            provide  a remedy.  Resort  to a federal  criminal statute is

            unnecessary."   I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d
                            _______________    ________________

            265,  267-68 (8th  Cir.  1984); accord,  e.g., First  Pacific
                                            ______   ____  ______________

            Bancorp, Inc.  v. BRO, 847 F.2d 542, 545 (9th Cir. 1988); von
            _____________     ___                                     ___

            Bulow by Auersperg v.  von Bulow, 657 F. Supp.  1134, 1143-45
            __________________     _________

            (S.D.N.Y.  1987) (holding  that  malicious prosecution  claim

            does   not   constitute  predicate   act   of  racketeering).

            Plaintiff's reliance on Hall American Center Assocs. v. Dick,
                                    ____________________________    ____

            726  F. Supp. 1083 (E.D. Mich. 1989), proves unavailing.  The

            defendants there had engaged in spurious litigation described

            by the  district court as a "clear abuse of process."  Id. at
                                                                   ___

            1086.  The defendants here prevailed in the state court suit.

            And Lemelson v. Wang Laboratories, Inc., 874 F. Supp. 430 (D.
                ________    _______________________

            Mass. 1994),  offers minimal  succor to plaintiff,  since the

            court there was addressing the subject of RICO  injury rather

            than predicate acts.

                                         -6-

                 Plaintiff's  mail fraud claim likewise proves deficient.

            For one thing, it  lacks the specificity required by  Fed. R.

            Civ. P. 9(b).  See, e.g.,  New England Data Services, Inc. v.
                           ___  ____   _______________________________

            Becher, 829 F.2d  286, 290  (1st Cir. 1987).2   Moreover,  to
            ______

            the  extent  his  argument  amounts to  the  allegation  that

            Gertrude  Shear committed  perjury,  his cause  would not  be

            advanced; perjury does not constitute an act of racketeering.

            See, e.g.,  Pyramid Securities, Ltd. v.  IB Resolution, Inc.,
            ___  ____   ________________________     ___________________

            924 F.2d  1114, 1118-19 (D.C.  Cir.), cert. denied,  502 U.S.
                                                  ____________

            822 (1991); United States v. Williams, 874 F.2d 968, 973 n.17
                        _____________    ________

            (5th Cir. 1989).  

                 To be  sure, as plaintiff observes,  several courts have

            indicated that a mail fraud claim premised largely on charges

            of perjury can suffice as a predicate act.  See, e.g., United
                                                        ___  ____  ______

            States v. Eisen,  974 F.2d 246,  254 (2d Cir. 1992)  ("use of
            ______    _____

            the  mail fraud  offense as  a RICO  predicate act  cannot be

            suspended  simply because perjury  is part  of the  means for

            perpetrating  the  fraud"), cert.  denied,  113  S. Ct.  1840
                                        _____________

                                
            ____________________

            2.  The   suggestion   that   the    information   concerning
            defendants' use of the mails was in their exclusive control--
            such that plaintiff  should be allowed to amend his complaint
            following further  discovery, see, e.g., Becher,  829 F.2d at
                                          ___  ____  ______
            290--falls  short.   As  a party  to  the state  court  suit,
            plaintiff obviously was  (or should have  been) aware of  the
            circumstances  surrounding  the  defendants'   submission  of
            allegedly  fraudulent affidavits  to the  court.   See, e.g.,
                                                               ___  ____
            Feinstein, 942 F.2d  at 44 ("Although  Becher may in  certain
            _________                              ______
            circumstances give  a plaintiff a  second bite at  the apple,
            its  generous formulation  is  not automatically  bestowed on
            every litigant.").

                                         -7-

            (1993);  see  also Midwest  Grinding Co.  v. Spitz,  976 F.2d
                     _________ _____________________     _____

            1016, 1022-23 (7th Cir. 1992) (leaving question open).  Here,

            however, perjury is  said to constitute the  entire means for

            perpetrating the fraud.  As well, the Midwest Grinding  court
                                                  ________________

            noted that in cases "allowing perjury to serve as a predicate

            act  [by  way  of a  mail  fraud  or  obstruction of  justice

            allegation], ...  the defendant had either  been convicted of

            perjury before the civil RICO action commenced or had perjury

            established as  a matter of record in a separate proceeding."

            Id. at 1022 n.3 (citations omitted).  Nothing of the sort has
            ___

            occurred  here; quite to the contrary, the state court deemed

            Gertrude Shear's evidence credible.  

                 In   essence,  simply   by  alleging   that  defendants'

            litigation stance  in the state court  case was "fraudulent,"

            plaintiff is insisting upon a right to relitigate that entire

            case  in federal court (while the case remains pending in the

            state appellate court).  The  RICO statute obviously was  not

            meant  to endorse any such occurrence.  Cf. Willis v. Lipton,
                                                    ___ ______    ______

            947 F.2d 998,  1001 (1st  Cir. 1991) ("An  extension of  RICO

            standing in these circumstances would serve to 'federalize' a

            substantial   volume   of   common   law   fraud   litigation

            traditionally left to state courts.").3

                                
            ____________________

            3.  Plaintiff's  two  remaining  arguments  can   be  readily
            rejected.  The  district court  was not  required to  convert
            defendants' motion  to dismiss into one  for summary judgment
            before  taking judicial notice of court papers from the state
            court  litigation.  See, e.g.,  Edward v. John Hancock Mutual
                                ___  ____   ______    ___________________

                                         -8-

                 Affirmed.
                 _________

                                
            ____________________

            Life Ins. Co., 973 F.2d 1027, 1030 n.1 (1st Cir. 1992);  Mack
            _____________                                            ____
            v.  South Bay  Beer Distributors, Inc.,  798 F.2d  1279, 1282
                __________________________________
            (9th Cir. 1986).   Nor did it abuse its discretion in denying
            plaintiff's  post-judgment  request  to  amend  his complaint
            (following further discovery), where any such amendment would
            have  been futile.   See,  e.g., Arzuaga-Collazo  v. Oriental
                                 ___   ____  _______________     ________
            Federal Sav. Bank, 913  F.2d 5, 7 (1st Cir.  1990); Nodine v.
            _________________                                   ______
            Textron, Inc., 819 F.2d 347, 349 (1st Cir. 1987).  
            _____________

                                         -9-