United States Court of Appeals
For the First Circuit
No. 03-1208
EPIMENIO SOTO-NEGRÓN; AIDA L. POLANCO-LAFONTAINE,
Plaintiffs, Appellants,
v.
TABER PARTNERS I,
Defendant, Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jaime Pieras, Jr., U.S. Senior District Judge]
Before
Lynch, Lipez, and Howard, Circuit Judges.
Maximiliano Trujillo-Gonzalez was on brief for
appellants.
Godwin Aldarondo-Girald and Aldarondo Girald Law Office
were on brief for appellee.
August 7, 2003
LYNCH, Circuit Judge. Plaintiffs brought this action
under the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. §§ 1961-1962 (2000), against the defendant,
claiming that it improperly cashed a series of checks written to
another party. The defendant filed a motion to dismiss for failure
to state a claim, which the district court granted. We affirm on
the grounds that the alleged actions do not constitute a pattern
sufficient to state a claim under RICO.
I.
A. Factual Background
We describe the facts as found in plaintiffs' complaint,
which we take as true when considering a motion to dismiss for
failure to state a claim. Abbott v. United States, 144 F.3d 1, 2
(1st Cir. 1998). We also consider the checks entered into evidence
by plaintiffs. Because they were submitted to the district court
by plaintiffs and are central to their claim, we take them into
account without needing to convert the proceeding into one for
summary judgment. See Watterson v. Page, 987 F.2d 1, 3-4 (1st Cir.
1993).
Epimenio Soto-Negrón and his wife, Aida L. Polanco-
Lafontaine, purchased six official checks in amounts varying from
$2,500 to $4,000. The total amount was $19,100. The complaint
asserts that the checks were issued to the order of "a U.S.
Government agency," namely the U.S. Marshals Service, and were
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"prepared for transactions with the United States Government." The
checks, though, contradict this assertion and are actually made out
to "Mauricio Vazquez, U.S. Marshall Services" (with some variations
on how the entity's name is spelled). All are dated between March
27 and April 3, 2000.
The checks were cashed by the defendant, Taber Partners
I, which owns and controls the Radisson Ambassador Plaza Hotel and
Casino, among other properties. The checks were converted to
private use, even though, the complaint alleges, the checks were
issued to a U.S. government agency. Of the six checks, it is only
ascertainable from the copies in evidence when four of them were
paid; those four were paid between March 27 and March 31, 2000. It
is a reasonable inference that the other two checks were also
cashed around that time. The complaint does not specify the dates
of the transactions.
B. Procedural History
On October 1, 2001, the plaintiffs filed an action
against Taber Partners I in federal district court under RICO, 18
U.S.C. § 1964(c). The complaint alleged that the defendant's
cashing of checks meant for the United States government violated
various statutes, including 18 U.S.C. §§ 495 (forgery with intent
to defraud the United States) and 641 (conversion of public
monies), and constituted an illegal pattern of racketeering conduct
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under RICO. The complaint requested restitution of the amount of
the checks, trebled under RICO, and attorneys' fees.
Plaintiffs served the summons on October 9, 2001. Taber
did not respond, so the district court entered default judgment
against it on December 11, 2001. Taber filed a motion in
opposition to entry of default on April 30, 2002, claiming that the
complaint was served on an employee of the Ambassador Plaza Hotel
and that as a result, the partnership had not learned of the
complaint until the previous day. It moved to vacate the entry of
default on May 9, and the district court granted this request on
May 13.
On August 7, 2002, Taber moved to dismiss the complaint
on three grounds. First, it argued that it was never properly
served with the complaint.1 Second, Taber contended that because
the checks were made payable to a private entity, cashing the
checks was not in fact illegal, and therefore there was no RICO
1
The person served was the Comptroller and Treasurer of the
hotel. Fed. R. Civ. Proc. 4(h) specifies that when a partnership
is served, a copy of the summons and complaint must be delivered
"to an officer, a managing or general agent, or to any other agent
authorized by appointment or by law to receive service of process."
Taber argued that the Comptroller was not authorized to receive
service. Plaintiffs countered that Taber is estopped from making
this argument because, as a foreign partnership, it had not
registered with the Puerto Rico State Department and notified it of
who is designated to receive summons, as it was required to do
under Puerto Rico law.
The district court did not explicitly rule on Taber's motion
to dismiss for insufficiency of service, and neither party raises
the issue on appeal.
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violation.2 Third, it argued that there was no illegal pattern of
conduct within the meaning of RICO, because the check cashing was
an isolated event, not a pattern of events over an extended period
of time.
On December 11, 2002, the district court dismissed the
complaint. It found that because "the predicate acts at issue
extend only over one week," and because there was no threat of
future criminal conduct, the complaint did not allege a RICO
violation. Soto-Negrón v. Taber Partners I, 235 F. Supp. 2d 105,
108-09 (D.P.R. 2002). Plaintiffs appeal this dismissal.
II.
We review de novo a district court's dismissal of a
complaint for failure to state a claim. Chute v. Walker, 281 F.3d
314, 318 (1st Cir. 2002). When reviewing the grant of a motion to
dismiss under Fed. R. Civ. P. 12(b)(6), "[w]e accept as true the
well-pleaded factual allegations of the complaint, draw all
reasonable inferences therefrom in the plaintiff's favor and
determine whether the complaint, so read, sets forth facts
sufficient to justify recovery on any cognizable theory." Martin
v. Applied Cellular Tech., Inc., 284 F.3d 1, 6 (1st Cir. 2002). We
2
Taber bases this argument on two grounds: first, that the
checks named an individual, Mauricio Vazquez, and that the checks
were therefore payable to that person, not a federal agency; and
second, that the "U.S. Marshall Services" refers not to a federal
agency but to "a corporation dedicated to the sale of motor
vehicles."
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need not, however, accept as true all facts in the complaint: "We
exempt, of course, those 'facts' which have since been conclusively
contradicted by plaintiffs' concessions or otherwise . . . ."
Chongris v. Bd. of Appeals, 811 F.2d 36, 37 (1st Cir. 1987).
RICO makes it unlawful, inter alia, "for any person
employed by or associated with any enterprise . . . to conduct or
participate, directly or indirectly, in . . . a pattern of
racketeering activity or collection of unlawful debt." 18 U.S.C.
§ 1962(c). "To state a claim under section 1962(c), a plaintiff
must allege each of the four elements required by the statute: (1)
conduct (2) of an enterprise, (3) through a pattern (4) of
racketeering activity." N. Bridge Assocs., Inc. v. Boldt, 274 F.3d
38, 42 (1st Cir. 2001); see Sedima, S.P.R.L. v. Imrex Co., 473 U.S.
479, 496 (1985).
Like the district court, we bypass the issue of whether
there was any racketeering activity at all and focus instead on
whether that activity constituted a pattern under RICO. While the
definition of a "pattern" was meant to be flexible, mere "sporadic
activity" is not enough. H.J. Inc. v. Northwestern Bell Tel.
Co., 492 U.S. 229, 239 (1989) (quoting S. Rep. No. 91-617, at 158
(1969)). To establish a pattern, a plaintiff must show both a
relationship among the predicate acts and continuity. Id. Acts
are related if they have "the same or similar purposes, results,
participants, victims, or methods of commission, or otherwise are
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interrelated by distinguishing characteristics and are not isolated
events." Id. at 240, quoted in Efron v. Embassy Suites (P.R.)
Inc., 223 F.3d 12, 15 (1st Cir. 2000). Continuity requires that
"the related predicates amount to or pose a threat of continued
criminal activity." H.J., 492 U.S. at 239. Plaintiffs may satisfy
the continuity requirement either by evidence of "a series of
related predicates extending over a substantial period of time,"
id. at 242, or by evidence that the acts "include a specific threat
of repetition extending indefinitely into the future" or "form part
of an ongoing entity's regular way of doing business," id.
Plaintiffs' complaint fails to meet the RICO continuity
requirement. The six checks at issue are all dated within a week
of each other. The four dates of payment known to us are all
within a single five-day period. This time frame is too narrow to
meet the continuity requirement. See Fleet Credit Corp. v. Sion,
893 F.2d 441, 446 (1st Cir. 1990) ("Predicate acts extending over
a few weeks or months and threatening no future criminal conduct do
not satisfy the [continuity] requirement." (quoting H.J., 492 U.S.
at 242)). That multiple instances of wrongful behavior are alleged
is of no consequence. See Sys. Mgmt., Inc. v. Loiselle, 303 F.3d
100, 105 (1st Cir. 2002) ("RICO is not aimed at a single narrow
criminal episode . . . ."); Apparel Art Int'l, Inc. v. Jacobson,
967 F.2d 720, 723 (1st Cir. 1992) ("[A] single episode does not
constitute a 'pattern,' even if that single episode involves
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behavior that amounts to several crimes (for example, several
unlawful mailings).").
Nor does the complaint allege a threat of repetition.
Plaintiffs do not claim that the acts alleged are part of Taber's
"regular way of doing business," nor that this activity is in any
danger of continuing. Without the threat of an "open ended"
pattern of racketeering activity, the complaint cannot overcome the
narrow time period alleged. See Sys. Mgmt., 303 F.3d at 106.
III.
The judgment of the district court is affirmed. Costs
are awarded to defendant.
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