793 F.3d 852
8th Cir.2015Background
- H & Q appeals district court’s dismissal of their state-law and RICO claims and denial of leave to file a second amended complaint.
- The LLC at issue is Double D Excavating; the Doll Companies opened two Malvern Bank accounts and deposited customer payments.
- Doll Companies transferred funds between accounts, commingled funds, and used them for their own expenses without H & Q’s consent or notice, as alleged by H & Q.
- Doll Companies allegedly represented financial distress to H & Q and contributed funds back to the LLC as purported fresh capital; H & Q invested additional capital.
- District court held that H & Q failed to allege a RICO predicate act and denied leave to amend; state-law claims were dismissed without prejudice.
- On appeal, the Eighth Circuit affirms, finding no viable RICO pattern of racketeering and affirming the futility-based denial of amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether H & Q adequately alleged a RICO predicate act | H & Q contends bank, mail, and wire fraud were alleged | Doll Companies argue no bank fraud; mail/wire fraud not proven | RICO claims insufficient; district court’s ruling affirmed |
| Whether the district court properly denied leave to amend as futile | Proposed second amended complaint would cure deficiencies | Amendments would be futile | Denial of leave to amend affirmed |
Key Cases Cited
- Grand River Enters. Six Nations, Ltd. v. Beebe, 574 F.3d 929 (8th Cir. 2009) (de novo review of dismissals; standard for RICO and related rulings)
- Taxi Connection v. Dakota, Minn. & E. R.R. Corp., 513 F.3d 823 (8th Cir. 2008) (standard deference on leave to amend; futility considerations)
- Crest Const. II, Inc. v. Doe, 660 F.3d 346 (8th Cir. 2011) (when denial of leave to amend rests on futility, review is de novo)
- Walker v. Barrett, 650 F.3d 1198 (8th Cir. 2011) (abuse of discretion standard for leave to amend; futility recognized)
- Wierman v. Casey's Gen. Stores, 638 F.3d 984 (8th Cir. 2011) (notation that court may affirm on any record-supported ground)
- Murr Plumbing, Inc. v. Scherer Bros. Fin. Servs. Co., 48 F.3d 1066 (8th Cir. 1995) (requirements for alleging fraud under Rule 9(b))
- Bennett v. Berg, 685 F.2d 1053 (8th Cir. 1982) (fraud pleading standards under Rule 9(b))
- United States v. Staples, 435 F.3d 860 (8th Cir. 2006) (bank fraud elements and federal banking interests)
- Loughrin v. United States, 134 S. Ct. 2384 (Supreme Court 2014) (limits on bank fraud scope to genuine bank-related deception)