Soto-Negron v. Taber Partners I

          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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