Rennell v. Rowe
2011 U.S. App. LEXIS 6054
7th Cir.2011Background
- Rennell and Rowe formed Green Courte R.E. Fund to own/manage manufactured-housing communities across several states; Rowe financed, Rennell managed.
- In November 2007 Rowe terminated the joint venture and offered Rennell a termination release for about $283,000 with 24 hours to decide and a threat of public disclosure.
- Rennell signed the release and his joint-venture interest reverted to Rowe; Rennell then sued Rowe, Green Courte, and managers for extortion under RICO and state claims.
- District court dismissed Rennell’s RICO extortion claim, ruling Rowe’s conduct did not meet Hobbs Act extortion; state claims were dismissed.
- The Seventh Circuit reviews de novo and analyzes whether Rowe’s behavior constitutes extortion, focusing on claim-of-right and the Enmons framework.
- Court holds Rowe had right to terminate without cause under property-management agreements, so no extortion; state-law claims remain for state courts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Rowe’s conduct constitute extortion under Hobbs Act/RICO? | Rennell: no claim of right; fear/pressure extorted Rennell’s interest. | Rowe: termination without cause allowed by contracts; no extortion. | No extortion; Rowe had right to terminate. |
| Whether property-management agreements authorize termination without cause. | Rennell: no-for-cause termination absent explicit provision. | Rowe could terminate without cause per agreements. | Termination without cause permitted; joint venture terminated. |
| Whether the alleged threat of publicizing the termination supports extortion. | Threat of publicity used to coerce payment. | Threats based on rightful termination; not extortion. | Not extortion; may be economic duress but not RICO extortion. |
| Should state-law claims be dismissed or retained for state court proceedings? | State claims should proceed in federal court. | If federal claims fail, state claims dismissed; supplemental jurisdiction decline. | State-law claims alive; not removed to federal court; stay for state court. |
Key Cases Cited
- United States v. Enmons, 410 U.S. 396 (U.S. Supreme Court 1973) (extortion requires wrongful use of force, violence, or fear; claim-of-right context)
- United States v. Castor, 937 F.2d 293 (7th Cir. 1991) (claim-of-right defense does not apply to extortion outside labor context)
- United States v. Lisinski, 728 F.2d 1012 (7th Cir. 1984) (wrongful use of fear can constitute extortion even without explicit threats)
- In re Sturm, 870 F.2d 769 (1st Cir. 1989) (economic pressure without a claim of right can be extortion othersize)
- Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494 (3d Cir. 1998) (distinguishes claim-of-right defenses in extortion context)
- Chicago Board Options Exch., Inc. v. Conn. Gen. Life Ins. Co., 713 F.2d 254 (7th Cir. 1983) (contractual interpretation avoiding absurd results)