TUCKER, Chief Judge.
Presently before the Court are six motions for judgment on the pleadings: (1)
This is a civil RICO action. Plaintiff Megan Macauley ("Macauley") initiated this action against twenty defendants,
Because the Court writes primarily for the parties, the Court will discuss only
On December 6, 2006, Macauley and Hill purchased a property located at 3248 Berry Brow Drive, Chalfont, Pennsylvania ("Berry Brow property"). The house was originally owned by Frank and Elizabeth Nicholas, the parents of Hill's friend and business associate, Defendant Casey Nicholas. Macauley alleges that Hill persuaded her to refinance her condominium, at 404 Victoria Drive, to free up cash for the purchase of the Berry Brow property. Defendant Scott Sciarra, then an employee at Defendant Gateway Funding, refinanced the condo for $192,000. Macauley received approximately $21,000 for weddings costs and a down payment on Berry Brow. The couple paid an additional $100,000 at closing. Macauley contends that Hill made her believe that the $100,000 was his and that he had deposited the money into her account to go towards the closing. However, Macauley later discovered through bank records that Casey Nicholas deposited the $100,000 into her account. Macauley further contends that the mortgage obtained for the property far exceeded its fair market value.
Also on December 6, 2006, Defendant Bear Stearns Residential Mortgage Co. approved a first mortgage for $464,250 and a second mortgage for $123,800.00 on the Berry Brow property. The appraiser was Defendant Shawn Strauss. The title company used was Aaron Abstract Co. The mortgage originator was Scott Sciarra.
Hill made several additional purchases of properties with the assistance of the above defendant companies and individuals. Macauley contends that the purchases were in her name and that she had no knowledge of any of them. These properties include:
In addition, Hill also purchased a property located at 137 Buckhill Rd., Albrightville, PA ("Buckhill Road property") in 2005 prior to the couple's marriage and then later had the property transferred to Macauley's name without her knowledge or consent. According to the Complaint, all of the properties went into foreclosure.
Macauley contends that she did not learn of Hill's actions until after she received
As previously noted, Macauley and Hill separated on October 13, 2007. Macauley's divorce from Hill was finalized on July 10, 2008. Macauley was forced to file bankruptcy as a result of Hill's fraudulent transactions. As part of the couple's divorce settlement, Hill sold all of the properties listed in Macauley's name; however, Macauley remains liable for the deficient balance with the mortgage companies.
Macauley's Complaint was filed on December 3, 2010. A Rule 16 Conference was held in this matter on May 7, 2012. Subsequently, on May 11, 2012, the Court ordered Macauley to file a RICO Case Statement to provide additional details of her alleged RICO claims. To support the RICO Case Statement, Macauley requested to take the deposition of Hill, the alleged "ringleader" of the alleged RICO conspiracy. Pursuant to court order, Hill's multi-day deposition was completed on July 31, 2012 and Macauley filed her RICO Case Statement on September 14, 2012. (Doc. 112.)
Thereafter, the instant motions for judgment on pleadings were filed. Oral argument on the motions was subsequently held on June 12, 2013.
Rule 12(c) allows a party to move for judgment on the pleadings "[a]fter the pleadings are closed-but early enough not to delay trial." Fed.R.Civ.P. 12(c). A motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) is subject to the same standard of review applicable to a motion to dismiss under Rule 12(b)(6). See Turbe v. Gov't of Virgin Islands, 938 F.2d 427, 428 (3d Cir. 1991). A court may dismiss a plaintiff's complaint under Rule 12(b)(6) only when it does not state a claim for relief that is "plausible on its face." Santiago v. Warminster Twp., 629 F.3d 121, 128 (3d Cir. 2010) (quoting Sheridan v. NGK Metals Corp., 609 F.3d 239, 262 n. 27 (3d Cir. 2010)). All well-pled factual allegations contained in a plaintiff's complaint must be accepted as true and must be interpreted in the light most favorable to plaintiff. Argueta v. U.S. Immigration & Customs Enforcement, 643 F.3d 60, 74 (3d Cir. 2011). A complaint is plausible on its face when its factual allegations allow a court to draw a reasonable inference that a defendant is liable for the harm alleged. Santiago, 629 F.3d at 128.
To determine the sufficiency of a complaint, courts of the Third Circuit are required to perform a three-step analysis. Santiago, 629 F.3d at 130. First, a court must identify plaintiff's claims and determine the required elements of those claims. Id. Next, a court must identify, and strike, conclusory allegations contained in plaintiff's complaint. Id. Conclusory allegations are those that are no more than "an unadorned, the-defendant-unlawfully-harmed-me accusation, labels and conclusions, a formulaic recitation of the
The focus of a court's inquiry into the sufficiency of a plaintiff's complaint is always plausibility of relief. Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir.2012). Plausibility does not require a plaintiff's complaint to demonstrate entitlement to relief is likely or probable. Argueta, 643 F.3d at 72. A plaintiff's complaint must only plead facts sufficient, "to raise a reasonable expectation that discovery will reveal evidence of the necessary element." McTernan v. City of York, PA, 564 F.3d 636, 646 (3d Cir.2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "A complaint may not be dismissed merely because it appears unlikely that the plaintiff can prove those facts or will ultimately prevail on the merits." McTernan, 564 F.3d at 646 (citing Twombly 550 U.S. at 555-556, 127 S.Ct. 1955).
No less than any other type of case, civil RICO plaintiffs are required to plead, with "some specificity," facts sufficient to plausibly give rise to entitlement to relief. In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 369-370 (3d Cir.2010).
Before discussing the merits of Macauley's claims, the Court must be satisfied that Macauley is the correct plaintiff in this action. Defendant Aurora Commercial Corp. ("Aurora") argues Macauley lacks standing to bring her claims because she failed to list them as assets when she filed for bankruptcy. (Aurora's Mot. J. Pleadings at 12-13.)
A debtor filing for bankruptcy protection under Chapter 7 creates an estate, which "includes all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1). "The broad scope of § 541 includes causes of action existing at the time the bankruptcy petition is filed." Nicolaides v. Bank of Am. Corp., CIV.A. 10-1762, 2012 WL 2864468, at *8 (E.D.Pa. July 12, 2012) (citing Anderson v. Acme Markets, Inc., 287 B.R. 624, 628 (E.D.Pa. 2002)). A cause of action need only accrue to a plaintiff prior to filing to become property of the bankruptcy estate; a formal complaint is not necessary. Feist v. Consol. Freightways Corp., 100 F.Supp.2d 273, 274 (E.D.Pa.1999) aff'd, 216 F.3d 1075 (3d Cir.2000).
Thus, where a debtor's cause of action arises before a debtor files for bankruptcy, "[t]he Chapter 7 trustee [is] the only person with authority to bring such a
Here, Macauley filed her bankruptcy petition on January 30, 2008.
"A RICO claim accrues when the plaintiffs knew or should have known of their injury and the source of their injury." Roberts v. First Bank of Delaware, 3:07CV1406, 2008 WL 4372826, at *7 (M.D.Pa. Sept. 19, 2008) (quoting Prudential Ins. Co. v. U.S. Gypsum Co., 359 F.3d 226, 233 (3d Cir.2004)); see also Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1386 (3d Cir.1994) ("[A] claim accrues in a federal cause of action upon awareness of actual injury, not upon awareness that this injury constitutes a legal wrong.") (emphasis added). As the Complaint makes clear, prior to filing for bankruptcy protection Macauley knew about Hill's actions, as well as the damage she alleges his actions caused her. On September 27, 2007 Macauley received a foreclosure notice that prompted her to investigate her credit. (Compl. at ¶¶ 83-85.) Macauley's credit report revealed multiple properties listed in her name, "exorbitant credit card debt" in Macauley's name, and unpaid utility bills for properties in Philadelphia. (Id. at ¶ 85.) When Macauley confronted Hill, he admitted that he had purchased properties in Macauley's name. (Id. at ¶¶ 86-87.) Between September 27, 2007 and January 30, 2008, the Complaint details multiple foreclosure proceedings and collection efforts being initiated against Macauley as a result of Hill's actions. (Id. at ¶¶ 83-99.) Indeed, Macauley notes that she "was forced to file bankruptcy as a result of all the fraudulent transactions...." (Id. at ¶ 104) (emphasis added).
Macauley clearly knew of her injury, and its source, before her bankruptcy filing. Her injuries were the very cause of her bankruptcy petition, as well as her divorce. Because Macauley's RICO claims accrued prior to her bankruptcy petition, and Macauley failed to list these claims in
Where the trustee, not the plaintiff, has been determined to be the true party in interest for a given cause of action, courts in this circuit have split on how to proceed. Some courts dismiss the claim for lack of subject-matter jurisdiction, while others permit substitution of the trustee under Rule 17(a)(3). Compare Allston-Wilson v. Philadelphia Newspapers, Inc., CIV.A. 05-4056, 2006 WL 1050281, at *1-2 (E.D.Pa. Apr. 20, 2006) (dismissing claims for lack of subject matter jurisdiction) and In re Cmty. Bank of N. Virginia Mortgage Lending Practices Litig., 954 F.Supp.2d 360, 382 (W.D.Pa.2013) (dismissing claims and finding "unprecedented" plaintiffs' request "that they should be given time to reopen their bankruptcies, and substitute the bankruptcy trustee as the real party in interest.") with McKenna, 2013 WL 159379, at *3 (allowing plaintiff to reopen bankruptcy proceedings to substitute the trustee "because outright dismissal of her case would be a harsh sanction.") and Killmeyer v. Oglebay Norton Co., 817 F.Supp.2d 681, 690 (W.D.Pa.2011) (granting trustee's motion to substitute but noting "[t]he scope of Rule 17(a)(3) is not unlimited...").
In the present matter, Macauley received her discharge almost six years ago. See Order Discharging Debtor, 2:08-bk-10723 (Bankr.E.D.Pa. May 29, 2008), ECF No. 48. Macauley first received notice that Aurora challenged her ability to prove standing on May 20, 2011. (Aurora's Mot. to Dismiss at 8-9.) In the intervening months, Macauley has never sought to reopen her bankruptcy and permit the trustee to be substituted as the real party in interest. The Court finds Macauley's inaction to be significant and problematic. These claims, should they exist at all, belong to Macauley's bankruptcy estate. McKenna, 2013 WL 159379, at *2. Macauley should not be able to benefit at the expense of the real party in interest to this action, the bankruptcy trustee.
Before the Court considers the merits of Macauley's RICO claims under 18 U.S.C. § 1962, the Court first addresses the threshold question of the adequacy of her pleadings as it relates to RICO standing under § 1964(c). See Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 520-21 (3d Cir.1998) (stating that § 1964(c) sets forth the "standing requirement" applicable to suits brought under RICO). To bring a civil RICO claim, a plaintiff must satisfy two statutory elements to confer standing: (1) that she suffered an injury to her "business or property"; and (2) that her injury was proximately caused by the defendants' violation of § 1962. 18 U.S.C. § 1964; see also Maio v. Aetna, Inc., 221 F.3d 472, 483 (3d Cir.2000) (internal citations omitted). The Court finds that Macauley is unable to satisfy either element.
Injury to business or property requires "a concrete financial loss and not mere injury to a valuable intangible property interest." Maio, 221 F.3d at 483
Practically conclusive on this issue is Macauley's RICO Case Statement. When asked to describe the alleged injury to business or property, Macauley answered: "None can be described at this time and at this early stage of litigation." (RICO Case Statement at ¶ 12.) When asked to list the alleged victims and state how each victim was allegedly injured, Macauley answered:
(Id. at ¶ 3(a).) Finally, when describing the direct causal relationship between her injury and the violation of the RICO statute, Macauley concludes her answer by saying, "As a result, Plaintiff is bankrupt with dismal to no credit." (Id. at ¶ 13.)
Macauley's Complaint fares no better, alleging damage only as a result of her bankruptcy and loss of creditworthiness. (Compl. at ¶¶ 104, 177.) Though the Complaint is rich in factual allegations regarding collection attempts and foreclosure proceedings, Macauley fails to allege that she took any action other than filing for bankruptcy. For instance, Macauley does not allege that she actually paid any of these outstanding bills, or that she was forced to expend money to defend against the foreclosure actions filed against her. See Miller v. Pocono Ranch Lands Prop. Owners Ass'n Inc., 557 Fed.Appx. 141, 145-46, 13-1477, 2014 WL 661573, at *3 (3d Cir. Feb. 21, 2014) (Plaintiff could not establish injury or fraud where she knew that bills sent to her were unwarranted and she had refused to make payment.). The Complaint only references that Macauley's credit was ruined and she was forced to file for bankruptcy, without alleging any concrete financial losses Macauley actually suffered as a result. The loss of creditworthiness, without more, is simply not enough to confer RICO standing. Walter v. Palisades Collection, LLC, 480 F.Supp.2d 797, 805 (E.D.Pa.2007) ("Injury to one's credit score is analogous to injury to one's reputation, and is not actionable.") (citing Maio, 221 F.3d at 483).
Only in Macauley's responses to Defendants' respective motions does she allege anything other than damage to her creditworthiness: legal fees paid to her current attorneys. (See e.g., Pl.'s Resp. in Opp'n to Nicholas' Mot. J. Pleadings at 6.) While certain legal fees can be the type of concrete out-of-pocket expenses required to demonstrate injuries under RICO, see Walter, 480 F.Supp.2d at 804, "the attorney's fees injury must have been proximately caused by the defendant's [racketeering activities]." Lynch v. Capital One Bank (USA), N.A., CIV.A. 12-992, 2013 WL 2915734, at *3 (E.D.Pa. June 14, 2013); see also McCoy-McMahon v. Godlove, 08-CV-05989, 2011 WL 4820185, at *16 (E.D.Pa. Sept. 30, 2011) (legal expenses were not proximately caused by RICO violations because plaintiff was not "hauled into court" and instead incurred the fees "at her own initiation in response to the individual defendants alleged racketeering activities."). Macauley's response alleges that she "has had to pay the undersigned to represent her in this matter, and will incur additional costs throughout this litigation and beyond, in an effort to restore her creditworthiness." (Pl.'s Resp. in Opp'n to Nicholas' Mot. J. Pleadings at 6.) Such an injury, while concrete, is not
The Court has already held that Macauley has failed to satisfy the first element of standing under § 1964(c). Nevertheless, even assuming arguendo that Macauley has adequately alleged injury to her business or property, the well-pled facts of Macauley's Complaint and RICO Case Statement do not plausibly demonstrate an entitlement to relief under §§ 1962(a), 1962(b), 1962(c), or 1962(d). As such, the second element of the § 1964(c) standing requirement is not met.
Section 1962(c) states, in pertinent part, "[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity...." 18 U.S.C. § 1962(c). To state a claim under § 1962(c), a plaintiff must allege defendants: (1) conducted; (2) an enterprise; (3) through a pattern; (4) of racketeering activity; (5) resulting in damage to plaintiff's business or property. Tapp v. Proto, 718 F.Supp.2d 598, 625 (E.D.Pa.2010) aff'd, 404 Fed.Appx. 563 (3d Cir.2010) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)); see also Ins. Brokerage Antitrust Litig., 618 F.3d at 362 (quoting Lum v. Bank of Am., 361 F.3d 217, 223 (3d Cir.2004)).
The Court will first discusses Macauley's "enterprise" allegations. For the purposes of RICO, an enterprise is defined to include "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). Macauley has pled two potential enterprises through which racketeering activity is alleged to have occurred: Wasubul Investments, LLC, and an association-in-fact enterprise referred to as the "Hill Enterprise." The Court discusses each of these alleged enterprises separately. Schwartz v. Lawyers Title Ins. Co., 970 F.Supp.2d 395, 402-03, 2013 WL 4676704, at *4 (E.D.Pa.2013) ("Plaintiffs may allege alternative enterprise theories in their complaint without limit.") (citing United States v. Stratton, 649 F.2d 1066, 1075 (5th Cir.1981)).
The first of the alleged enterprises is Wasubul Investments, LLC. (RICO Case Statement at ¶ 6.) "When the enterprise asserted is a legal identity, such as a legitimate business or organization the need to allege and prove the existence of enterprise structure can be met without great difficulty, since all aspects of the enterprise element are satisfied by the mere proof that the entity does in fact have a legal existence." Ins. Brokerage Antitrust Litig., 618 F.3d at 364 (internal quotation omitted). The alleged RICO enterprise "cannot simply be the `person' referred to by a different name." Stoss v. Singer Fin. Corp., CIV.A.08-5968, 2010 WL 678115, at *5 (E.D.Pa. Feb. 24, 2010) (citing Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 161, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001)). Thus, a plaintiff can bring a civil RICO claim against an owner who conducts her company's affairs in a way forbidden by RICO, but cannot allege RICO claims against a company, its
Formed at the instruction of its sole investor Frank Nicholas, and run by Defendants Hill and Casey Nicholas, Wasubul Investments was allegedly the legal entity used by Hill and the Nicholas Defendants to buy and sell real estate. (RICO Case Statement at ¶¶ 9, 10.) To the extent that Frank Nicholas, Casey Nicholas, and Hill acted through this legal entity to commit mail, wire, and bank fraud, Wasubul Investments can constitute an enterprise for the purposes of RICO.
Macauley has also alleged a second, more amorphous enterprise she refers to as the "Hill Enterprise." (Compl. at ¶ 127; RICO Case Statement at ¶¶ 5(d), 9.) The Hill Enterprise's purpose, according to Macauley, was "using Plaintiff's identity to commit mortgage fraud and ruin her credit." (RICO Case Statement at ¶ 5(b).) "An association-in-fact enterprise is a group of persons associated together for a common purpose of engaging in a course of conduct." United States v. Turkette, 452 U.S. 576, 583, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). To demonstrate an association-in-fact enterprise, a civil RICO plaintiff must identify at least three structural features of the enterprise: (1) a purpose; (2) relationships among those alleged to be associated with the enterprise; and (3) longevity sufficient to allow the enterprise to pursue its purpose. Boyle v. United States, 556 U.S. 938, 946, 129 S.Ct. 2237, 173 L.Ed.2d 1265 (2009). "An association-in-fact enterprise need have no formal hierarchy or means for decision-making, and no purpose or economic significance beyond or independent of the group's pattern of racketeering activity." Ins. Brokerage Antitrust Litig., 618 F.3d at 368 (quoting United States v. Hutchinson, 573 F.3d 1011, 1021 (10th Cir.), cert. denied sub. nom. Montoya v. United States, 558 U.S. 1036, 130 S.Ct. 656, 175 L.Ed.2d 500 (2009)).
According to the Complaint, the Hill Enterprise was comprised of all the Defendants "to perpetrate fraudulent transactions." (RICO Case Statement at ¶ 5(d).) These fraudulent real estate purchases were typically initially financed by the Nicholas Defendants, appraised above their true value, and then refinanced or fraudulently sold to Macauley at the inflated appraisal price. (RICO Case Statement at ¶ 2(a).) Each defendant allegedly played some role in this overall scheme. Some, such as Defendant Shawn Strauss, conducted the appraisals for the properties, while the other defendants were the mortgage brokers, title companies, and realtors for the transactions. (Compl. at ¶¶ 49-53; 58-63; 65-71; 73-77.) Defendants were all motivated by the common goal of making money through these transactions. (RICO Case Statement at ¶ 4(c).).
These allegations, if true, are sufficient to show an association-in-fact enterprise existed between and amongst the Defendants.
Mere association with an enterprise, however, does not violate § 1962(c). Ins. Brokerage Antitrust Litig., 618 F.3d at 370. The conduct element of § 1962(c) requires that a defendant must participate "in the operation or management of the enterprise itself." Reves v. Ernst & Young, 507 U.S. 170, 183, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). Operation of an enterprise necessarily includes both management and lower level participants under the direction of management. Ins. Brokerage Antitrust Litig., 618 F.3d at 371 (quoting Reves, 507 U.S. at 184, 113 S.Ct. 1163). Liability "depends on showing that the defendants conducted or participated in the conduct of the `enterprise's affairs,' not just their own affairs." Reves, 507 U.S. at 185, 113 S.Ct. 1163 (emphasis in original). Furthermore, the defendants must conduct or participate in the enterprise's affairs "through — that is, by means of, by consequence of, by reason of, by the agency of, or by the instrumentality of — a pattern of racketeering activity." Ins. Brokerage Antitrust Litig., 618 F.3d at 372 (internal quotation and citation omitted); see also United States v. Bergrin, 650 F.3d 257, 267 (3d Cir.2011) ("It is the `person' charged with the racketeering offense — not the entire enterprise — who must engage in the `pattern of racketeering activity.'") (citing H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 244, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989)).
A person engages in a pattern of racketeering activity by engaging in "at least two acts of racketeering activity" within a span of ten years. 18 U.S.C. § 1961(5). Racketeering activity forms a pattern where the racketeering activities are "related, and that they amount to or pose a threat of continued ... activity." H.J. Inc., 492 U.S. at 239, 109 S.Ct. 2893; see also Bergrin, 650 F.3d at 267. Relatedness is demonstrated when racketeering predicates "have the same or similar purposes, results, participants, victims or methods of commission, or otherwise are interrelated by distinguishing characteristics and not isolated events." Mega Concrete, Inc. v. Smith, CIV.A. 09-4234, 2013 WL 3716515, at *10 (E.D.Pa. July 15, 2013) (citing H.J., Inc., 492 U.S. at 239-240, 109 S.Ct. 2893). Continuity is "a closed- and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition." H.J., Inc., 492 U.S. at 241, 109 S.Ct. 2893. Closed-ended continuity, such as Macauley has alleged
Macauley has alleged Defendants engaged in the racketeering acts of mail fraud under 18 U.S.C. § 1341, wire fraud under 18 U.S.C § 1343, and bank fraud under 18 U.S.C. § 1344.
As Macauley admits, the first fraudulent transaction any defendant allegedly engaged in was the sale of a property on December 6, 2006. (Pl.'s Resp. in Opp'n to Nicholas' Mot. J. Pleadings at 7; Compl. at ¶¶ 45-50.) Macauley also alleges three subsequent fraudulent real estate purchases and one fraudulent transfer of real estate, with the last of these fraudulent acts occurring on January 25, 2007. (Compl. at ¶¶ 56-79.) The only other potentially fraudulent act Macauley alleges is a real estate appraisal by Shawn Strauss on May 3, 2007. (Compl. at ¶ 80.) Thus, the racketeering activities alleged in Macauley's Complaint existed for, at most, a period of six months, and likely no more than two. This is insufficient to allege continuity over a substantial period of time. See Hughes, 945 F.2d at 611.
Macauley next alleges violations of 18 U.S.C. § 1962(a), which makes it unlawful
18 U.S.C. § 1962(a). Section 1962(a) "was primarily directed at halting the investment of racketeering proceeds into legitimate businesses, including the practice of money laundering." Brittingham v. Mobil Corp., 943 F.2d 297, 303 (3d Cir.1991). Accordingly, to sufficiently plead a violation of § 1962(a), a plaintiff must allege three elements: (1) the defendant has received money from a pattern of racketeering activity; (2) the defendant then utilized
In her Complaint, Macauley does not set forth how she was injured as a result of Defendants' investment of their alleged racketeering income; the Complaint, in a conclusory fashion, merely restates the elements of a § 1962(a) claim. (Compl. at ¶¶ 126-132.) Further, Macauley's RICO Case Statement only alleges that Hill "either pocket[ed] refinance funds or use[d] them for the purchase of the next home, which he would promptly sell or refinance." (RICO Case Statement at ¶ 8(b).) Such an allegation — that Hill continued to reinvest racketeering income to keep the enterprise alive long enough to injure Macauley — has been repeatedly rejected by courts of this circuit. Lightning Lube, 4 F.3d at 1188; Brittingham, 943 F.2d at 305; Kolar, 361 Fed.Appx. at 368 n. 6. Such a claim is properly brought under § 1962(c), not 1962(a).
Macauley has alleged no facts detailing how she was harmed as a result of Defendants' alleged use of racketeering income. As such, these claims will be dismissed.
Section 1962(b) makes it "unlawful for any person through a pattern of racketeering activity ... to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce." 18 U.S.C. § 1962(b). Thus, to state a cause of action under this section, a plaintiff must allege: (1) defendant has an interest in an enterprise; (2) defendant gained or maintained that interest through a pattern of racketeering; and (3) the enterprise affects interstate commerce. "It is not enough for the plaintiff merely to show that a person engaged in racketeering has an otherwise legitimate interest in an enterprise." Cottman Transmission Sys., LLC v. Kershner, 536 F.Supp.2d 543, 560 (E.D.Pa.2008). Additionally, a plaintiff "must show injury from the defendant's acquisition or control of an interest" of the enterprise via racketeering activities. Lightning Lube, 4 F.3d at 1190.
Again, Macauley's Complaint merely baldly restates the statutory elements of a claim under § 1962(b) and offers no facts to demonstrate how Defendants acquired or maintained their interest in either Wasubul or the Hill Enterprise through a pattern of racketeering. (Compl. at ¶¶ 133-136.) Macauley's RICO Case Statement similarly fails to even describe how Defendants acquired or maintained an interest in any enterprise, other than the entirely legal creation of a Pennsylvania limited liability corporation, Wasubul Investments. (RICO Case Statement at ¶¶ 2(a); 6; 9.) This is fatal to her claims under § 1962(b).
Section 1962 makes it "unlawful for any person to conspire to violate" 18 U.S.C. §§ 1962(a)-(c). 18 U.S.C. § 1962(d). "Any claim under section
Finally, Macauley's cause of action for aiding and abetting RICO violations also fails. The Third Circuit has clearly and unequivocally rejected a civil RICO aiding and abetting claim. Pennsylvania Ass'n of Edwards Heirs v. Rightenour, 235 F.3d 839, 844 (3d Cir.2000). Accordingly, the Court will dismiss Macauley's aiding and abetting claim.
Macauley's remaining federal claims arise under Real Estate Settlement Procedures Act ("RESPA"), 12 U.S.C. §§ 2601 et seq., Equal Credit Opportunity Act ("ECOA"), 15 U.S.C. §§ 1691 et seq., and Home Mortgage Disclosure Act ("HMDA"), 12 U.S.C. §§ 2801 et seq., resulting from "defendants failure to conduct themselves in conformance with their own regulations." (Compl. at ¶¶ 180-182.)
Macauley's RESPA cause of action generally alleges the Defendants violated RESPA's anti-kickback provision, 12 U.S.C. § 2607. (Pl.'s Resp. in Opp'n to Gateway's Mot. J. Pleadings at 9.) Claims under § 2607 are subject to a one-year statute of limitations. 12 U.S.C. § 2614. The violation of RESPA occurs, and the statute of limitations begins to run, on the date of closing and/or settlement. 12 U.S.C. § 2614; In re Cmty. Bank of N. Virginia, 622 F.3d 275, 281 (3d Cir.2010); Taggart v. Norwest Mortgage Inc., 539 Fed.Appx. 42, 43-44 (3d Cir.2013). Here, the loans underlying Plaintiffs' claims had closing dates between December 2006 and January 2007. (Compl. at ¶¶ 49-50; 58; 65; 73). Accordingly, Macauley's RESPA claims are barred by § 2614's statute of
Macauley's ECOA cause of action appears to flow from Defendants' failure to provide her with notification regarding applications for credit made in her name. (Pl.'s Resp. in Opp'n to Gateway's Mot. J. Pleadings at 9.) ECOA requires a creditor to "notify the applicant of its action on the application." 15 U.S.C. § 1691(d)(1). In 2006 and 2007, when any applications for credit would have been made in Macauley's name, ECOA actions were subject to a two-year statute of limitations. Compare 15 U.S.C. § 1691e(f) (1991) with 15 U.S.C. § 1691e(f) (2011) (five-year statute of limitations). Like RESPA, ECOA actions begin to accrue upon violation of the statute, not a plaintiff's discovery of her injury. 15 U.S.C. § 1691e(f) (1991) ("No such action shall be brought later than two years from the date of the occurrence of the violation....") (emphasis added). Because any applications for credit were made in 2006 and 2007, and Macauley did not file her Complaint until December 3, 2010, the claims are barred by the applicable statute of limitations.
The HMDA does not provide aggrieved mortgagees with private right of action; only the appropriate administrative agency can properly maintain an action. 12 U.S.C. § 2804; see also Stefanowitz v. Suntrust Mortgage, Inc., CIV.A. 3:10-1321, 2011 WL 2970805, at *5 (M.D.Pa. Apr. 27, 2011) report and recommendation adopted, 3:10-CV-1321, 2011 WL 2960870 (M.D.Pa. July 20, 2011) ("With respect to any claim attempting to be brought pursuant to the HMDA, this statute provides only for administrative enforcement."); Swartz v. City Mortgage, Inc., 911 F.Supp.2d 916, 924, 925 (D.Haw.2012) ("[T]he HMDA does not provide for a private right of action."). For this reason, the Court dismisses Macauley's HMDA claim.
Finally, the Court addresses Macauley's pendent state law claims for conversion, fraud, unjust enrichment, negligence and gross negligence, breach of contract, and violations of the Unfair Trade Practices and Consumer Protection Law, 73 Pa. Stat. Ann. § 201-1 et seq. District courts may "have supplemental
Because the Court will dismiss Macauley's Complaint in its entirety, the question remains as to whether the Court will allow Macauley to amend her Complaint. In light of the discovery already granted to Macauley, her lack of standing, and the futility of her federal claims, the Complaint will be dismissed with prejudice.
Amendments prior to trial are governed by Federal Rule of Civil Procedure 15. The Federal Rules direct courts grant a party leave to amend their complaint "when justice so requires." Fed.R.Civ.P. 15(a)(2). "When a plaintiff does not seek leave to amend a deficient complaint after a defendant moves to dismiss it, the court must inform the plaintiff that he has leave to amend within a set period of time, unless amendment would be inequitable or futile." Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir.2002) (citing Shane v. Fauver, 213 F.3d 113, 116 (3d Cir.2000)). "Futility means that the complaint, as amended, would fail to state a claim upon which relief could be granted. In determining whether a claim would be futile, the district court applies the same standard of legal sufficiency as applies under Federal Rule of Civil Procedure 12(b)(6)." Travelers Indem. Co. v. Dammann & Co., Inc., 594 F.3d 238, 243 (3d Cir.2010) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir.1997)).
The Court will dismiss Macauley's RICO claims with prejudice, because no amendment will cure: (1) her lack of standing; (2) her lack of damages; (3) her inability to allege a pattern of racketeering activity; and (4) the extensive deficiencies noted in all of her substantive RICO claims. Even with the benefit of limited discovery, Macauley admits that her Complaint and RICO Case Statement contain nothing more than "legal conclusions based on what she knows at this point, i.e., that her name was forged on several documents to complete the sale of several over-valued properties." (Pl.'s Resp. in Opp'n to Gateway's Mot. J. Pleadings at 3.) As the Third Circuit has recently recognized, "the concern expressed in Twombly is just as applicable to a RICO case, which resembles an antitrust case in point of complexity and the availability of punitive damages and of attorneys' fees to the successful plaintiff. RICO cases, like antitrust cases, are `big' cases and the defendant should not be put to the expense of big-case discovery on the basis of a threadbare claim." In re Ins. Brokerage Antitrust Litig., 618 F.3d at 370 (quoting Limestone Dev. Corp. v. Vill. of Lemont, 520 F.3d 797, 803 (7th Cir.2008)). Because Macauley cannot allege more than legal conclusions, even after having the opportunity to depose the alleged ringleader of the RICO enterprise,
The Court also will dismiss Macauley's RESPA and ECOA claims with prejudice because they are, by Macauley's own admission, beyond the statute of limitations. Likewise, Macauley's HMDA claim will be dismissed with prejudice because there is no private right to action under the HMDA. No amount of re-pleading will allow Macauley to remedy these defects.
For the reasons more fully set forth above, Macauley's federal law claims will be dismissed with prejudice. Because the Court will dismiss all claims over which it had original jurisdiction, the Court will decline to exercise supplemental jurisdiction over Macauley's state law claims and expresses no opinion on the merits of these claims.
An appropriate order follows.
