CVLR Performance Horses, Inc. v. John Wynne
524 F. App'x 924
4th Cir.2013Background
- CVLR Performance Horses appeals a district court Rule 12(b)(6) dismissal of its RICO and state-law claims against Wynne, Rivermont, and 1650 Partners.
- Wynne, sole owner of Rivermont and 1650 Partners, used them in schemes while advertising Rivermont as a bank.
- CVLR alleges Wynne induced CVLR and its president Rivers into transactions financed by Rivermont-bank misrepresentations; Rivermont was not a bank, but was used to divert funds.
- Rivers, CVLR’s representative, believed CVLR owned the riding center after Wynne’s misrepresentations; Wynne arranged financing through Old Dominion National Bank.
- Wynne caused misappropriation of insurance proceeds and forged Rivers’ signature on a 1650 Partners check to himself.
- Wynne’s schemes extended to other individuals, including Karen Foster and Vicki Marsh, using Rivermont and 1650 Partners to create fraudulent financial statements and loans.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Amended Complaint plead open-ended continuity for RICO? | CVLR alleges a >3-year pattern with Rivermont as the fraud’s core vehicle. | District court found no ongoing threat of repetition; acts had a built-in end. | Yes; open-ended continuity is pled. |
| Did the district court err in dismissing the RICO claim under Rule 12(b)(6)? | Pleading shows ongoing racketeering activity and continued use of Rivermont as a bank. | Insufficient continuity and related predicate acts to sustain RICO. | Reversed; RICO claim survives to proceed. |
Key Cases Cited
- H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989) (open-ended continuity requires threat of repetition projecting into the future)
- GE Investment Private Placement Partners II v. Parker, 247 F.3d 543 (4th Cir. 2001) (two types of continuity: open-ended and closed-ended)
- EPlus Technology Inc. v. Aboud, 313 F.3d 166 (4th Cir. 2002) (open-ended continuity examples of ongoing looting)
- United States v. Busacca, 936 F.2d 232 (6th Cir. 1991) (threat of continuity cannot be shown by fortuitous interruption)
- Wag More Dogs, Ltd. Liab. Corp. v. Cozart, 680 F.3d 359 (4th Cir. 2012) (de novo review standard for 12(b)(6) dismissal on appeal)