Court Opinion

ID: 4212302
Source: CourtListenerOpinion
Date Created: 2017-10-17 20:00:58.415145+00
Date Added: 2024-06-11T13:31:18.685918
License: Public Domain

FILED
                            NOT FOR PUBLICATION
                                                                            OCT 17 2017
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

MAI NGOC BUI,                                    No.   15-55116

              Plaintiff-Appellant,               D.C. No.
                                                 8:14-cv-00757-DOC-RNB
 v.

TON PHI NGUYEN; et al.,                          MEMORANDUM*

              Defendants-Appellees.

                    Appeal from the United States District Court
                       for the Central District of California
                     David O. Carter, District Judge, Presiding

                      Argued and Submitted October 2, 2017
                              Pasadena, California

Before: RAWLINSON and N.R. SMITH, Circuit Judges, and KORMAN,**
District Judge.

      Mai Ngoc Bui appeals the district court’s grant of Defendants’ motion to

dismiss with prejudice the Racketeer Influenced and Corrupt Organizations

(RICO) claim from her Second Amended Complaint (SAC). We have jurisdiction

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Edward R. Korman, United States District Judge for
the Eastern District of New York, sitting by designation.
under 28 U.S.C. § 1291. We reverse and remand with instructions to allow Bui

another opportunity to amend her complaint.

      Civil RICO is a valid means of recovery for a plaintiff where she meets the

statutory requirements. Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 493-98

(1985). The RICO statute outlaws “(1) the conduct of (2) an enterprise that affects

interstate commerce (3) through a pattern (4) of racketeering activity or collection

of unlawful debt.” Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d

990, 997 (9th Cir. 2014) (citing 18 U.S.C. § 1962(c)). “Racketeering activity,” as

applicable to this case, is defined as “any act which is indictable under . . . section

1341 (relating to mail fraud) [or] section 1343 (relating to wire fraud).” 18 U.S.C.

§ 1961(1)(B). An “enterprise” is an “individual, partnership, corporation,

association, or other legal entity, and any union or group of individuals associated

in fact although not a legal entity.” Id. § 1961(4). And, a “pattern of racketeering

activity” “requires at least two acts of racketeering activity,” occurring within ten

years of each other. Id. § 1961(5). Thus, as a predicate to sustaining a civil RICO

claim, a plaintiff must demonstrate the defendant functioned as an “enterprise,”

engaged in racketeering activity—in this case mail or wire fraud—and did so in a

“pattern.” The district court found that Bui’s SAC failed to sufficiently allege each

element.

                                            2
      1. An “enterprise” is any “individual, partnership, corporation, association,

or other legal entity, and any union or group of individuals associated in fact

although not a legal entity.” Id. § 1961(4). To find an “enterprise,” there must be

(1) “evidence of an ongoing organization, formal or informal,” and (2) “evidence

that the various associates function as a continuing unit.” United States v. Turkette,

452 U.S. 576, 583 (1981). It must have “a structure,” which means it has “a

purpose, relationships among those associated with the enterprise, and longevity

sufficient to permit those associates to pursue the enterprise’s purpose.” Boyle v.

United States, 556 U.S. 938, 945-47 (2009). We have summarized the Supreme

Court’s jurisprudence as requiring: “(A) a common purpose, (B) a structure or

organization, and (C) longevity necessary to accomplish the purpose.” Eclectic

Props. E., 751 F.3d at 997 (citing Boyle, 556 U.S. at 946).

      Bui’s SAC sufficiently pleads the existence of such an enterprise. First, Bui

alleges that Defendants had a “scheme to plunder millions of dollars from Mrs.

Bui,” and that Defendants “accomplished this plunder of Mrs. Bui’s money by

means of deliberate, calculated and malicious legal acts, including actual fraud,

wire fraud and forgery.” As evidenced by the SAC’s allegations, this scheme

required a common purpose to carry out. Second, the SAC pleads a sufficient

“structure or organization,” because, although the SAC alleges that Hung Tran

                                           3
(Hung) and Lan Bich Nguyen (Lan) functioned as the primary actors, the corporate

entities controlled by others, and the property transactions facilitation by them,

formed a cohesive part of the group Bui alleges defrauded her. Finally, the SAC

sufficiently alleges longevity necessary to accomplish the enterprise’s purpose, as

it alleged that the Nguyen family operated other fraudulent schemes in the past,

which interacted with the instant allegation. As such, the district court erred by

concluding that Bui had failed to sufficiently plead the existence of an “enterprise.”

      2. A RICO claim must adequately plead at least “two acts of racketeering

activity,” which, in this case, are wire and mail fraud. 18 U.S.C. § 1961(5). “The

mail and wire fraud statutes are identical except for the particular method used to

disseminate the fraud, and contain three elements: (A) the formation of a scheme to

defraud, (B) the use of the mails or wires in furtherance of that scheme, and (C) the

specific intent to defraud.” Eclectic Props. E., 751 F.3d at 997. “A wire

communication is in furtherance of a fraudulent scheme if it is incident to the

execution of the scheme, meaning that it need not be an essential element of the

scheme, just a step in the plot.” United States v. Jinian, 725 F.3d 954, 960 (9th Cir.

2013) (internal quotation marks, ellipses, and citations omitted). All allegations of

fraud must be pleaded with “particularity.” Fed. R. Civ. P. 9(b); accord Sun Sav. &

Loan Ass’n v. Dierdorff, 825 F.2d 187, 196 (9th Cir. 1987).

                                           4
      Bui alleges four wire transfers and one mailing as the necessary predicate

acts of wire and mail fraud, but the district court concluded that, at most, only one

of the alleged transfers was wire fraud. We disagree. Three of the alleged transfers

sufficiently plead instances of wire fraud. First, Bui alleges that all the transfers

were part of the same, overarching scheme to “plunder millions of dollars from

[her],” through initially innocuous property transactions to gain Bui’s trust, and

later unfettered access to her finances. This allegation is sufficient to meet the

requirement that she allege a “scheme to defraud.” Second, each of the alleged

transfers was at least “incidental” to the overarching scheme that Bui alleges. Each

was either (1) used to build Bui’s trust in Defendants; (2) set up the means to

commit the fraud; or (3) outright commit fraud and wrongfully take money from

Bui. Therefore, each wire/mail was, at minimum, incidental to the overall scheme.

Finally, the three actual wire transfers (November 1, 2012, November 6, 2012, and

December 3, 2012) demonstrate a “specific intent” to defraud Bui. The ultimate

scheme was to defraud Bui by convincing her to trust Defendants and then exploit

that trust to defraud her. The November 1, 2012 wire transfer was done “at

Defendant Lan’s direction” and used to purchase the first innocent transaction, the

“set[] up.” The November 6, 2012 wire transfer was done to purchase property,

where ultimately $200,000 “vanished and is unaccounted for” through the

                                            5
construction process. Finally, Hung initiated the December 3, 2012 wire

transfer—without Bui’s knowledge or permission—to purchase the West

Hollywood Property and title it in Tri Tran’s (Tri) name using a “forged ‘gift’

letter to the escrow, indicating that Ms. Bui was gifting” the wire transfer to Tri.

These transfers were “reasonably calculated to deceive persons of ordinary

prudence and comprehension,” Eclectic Props. E., 751 F.3d at 997, and ultimately

used to defraud Bui in various ways.

      However, both the November 1, 2012 “intrabank” transfer (which Bui

alleges is a wire transfer) and the undated mail fraud allegation, are not alleged

with sufficient specificity to meet the pleading requirements. First, the “intrabank”

transfer lacks any allegation that it was, in fact, a wire transfer beyond some

accounting adjustment by Wells Fargo. Second, the mail fraud allegation fails to

meet the Rule 9(b) pleading requirements because it is unclear from the SAC

whether the mailed documents were actually part of the fraud, or if the associated

wire was actually the fraudulent transaction.

      Accordingly, the SAC sufficiently pleaded three instances of wire fraud.

                                           6
      3. The district court noted that Bui had failed to plead a “pattern” since it had

found the SAC only pleaded one instance of wire fraud. This analysis was

insufficient to adequately determine whether Bui pleaded a pattern.1

      4. Although the district court has “particularly broad” discretion regarding

leave to amend where the plaintiff has been given an opportunity to amend, the

court must still consider “whether the proposed amendment results from undue

delay, is made in bad faith, will cause prejudice to the opposing party, or is a

dilatory tactic.” Chodos v. W. Publ’g Co., 292 F.3d 992, 1003 (9th Cir. 2002).

Any denials are “strictly reviewed in light of the strong policy permitting

amendment.” Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 538 (9th Cir.

1989) (internal quotation marks omitted). The district court abused its discretion by

not allowing Bui at least one more attempt to amend her complaint, because (1)

contrary to the district court’s analysis, Bui’s SAC did, after amendments,

sufficiently plead the existence of an “enterprise” and the minimum necessary

predicate wire transfers; and (2) the district court made no additional findings

regarding the factors noted in Chodos.

      1
        Although the district court did some of the analysis of this issue in its order
granting Defendants’ motion to dismiss the First Amended Complaint, that order
was not appealed and is not before us.
                                           7
      Further, even if the three instances of alleged wire fraud may not provide a

sufficient “pattern,” we cannot say that the amendment would be futile and would

contradict the Chodos factors at this motion to dismiss stage of the action. There

may be additional facts and legal theories that could be incorporated into a Third

Amended Complaint which, as required by the Federal Rules, “[t]he court should

freely give . . . when justice so requires.” Fed. R. Civ. P. 15(a)(2).

      REVERSED AND REMANDED.

                                            8
                                                                             FILED
Bui v. Nguyen, Case No. 15-55116
                                                                             OCT 17 2017
Rawlinson, Circuit Judge, concurring:
                                                                         MOLLY C. DWYER, CLERK
                                                                           U.S. COURT OF APPEALS
      I concur in that portion of the disposition remanding for the plaintiff to

attempt to amend her complaint one last time. I express no view on the adequacy

of any of the allegations contained in the Second Amended Complaint.