Corporate – Racketeer Influenced and Corrupt Organization Act – Pattern of Racketeering Activity

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Defendants did not conspire to engage in a pattern of racketeering activity.

We affirmed the district court’s grant of summary judgment for Defendants.

This appeal stemmed from a long-standing dispute between Plaintiff-Appellant FX Aviation Capital, LLC and several former business partners—LG Aviation, Inc., Mark Liker, Hector Guerrero, Anatoly Galunov, and Stratus Aircraft n/k/a Airlux Aircraft, Inc. (collectively Defendants). FX alleged that, based on Defendants’ misrepresentation of their assets, it loaned significant sums of money to Defendants for the purpose of acquiring and refitting airplanes. After Defendants defaulted on the loans, FX gained control of the planes. But, in an effort to force FX to forgive the loans, Defendants refused to hand over the planes’ logbooks, significantly decreasing their value. FX brought a civil Racketeer Influenced and Corrupt Organization Act (RICO) suit against the Defendants alleging that they had: (1) conducted or participated in an enterprise’s pattern of racketeering activity, in violation of 18 U.S.C. § 1962(c); and (2) engaged in a conspiracy to do so, in violation of 18 U.S.C. § 1962(d). The district court granted summary judgment for Defendants on both counts. Finding that FX failed to demonstrate that the Defendants had engaged in a “pattern of racketeering activities,” one of the elements for a RICO cause of action, the district court granted summary judgment on Count I. And, because it granted summary judgment on Count I, the district court concluded that the conspiracy count, Count II, “necessarily fails” and granted summary judgment on that as well.

On appeal, FX objected to this holding, arguing that there is a genuine dispute of material fact that the Defendants engaged in a pattern of racketeering activity. In contrast, Defendants defended the district court’s holding and, in addition argued, among other things, that FX is not a proper party to bring a RICO claim, and FX failed to establish that Defendants committed a predicate offense. As for FX’s RICO claim under 18 U.S.C. § 1962(c), we affirmed the district court’s finding that there is no genuine dispute as to whether Defendants engaged in a pattern of racketeering activity, such that FX’s claim fails. We declined to consider whether FX is a proper party to bring suit and whether Defendants committed a predicate offense. Because Defendants did not conspire to engage in a pattern of racketeering activity, summary judgment must be granted as to FX’s §962(d) claim. We therefore affirmed the district court’s grant of summary judgment on both counts.

To be clear, FX’s allegations are serious. However, “this circuit will not lightly permit ordinary business contract or fraud disputes to be transformed into federal RICO claims.” Flip Mortg. Corp., 841 F.2d at 538. This case simply does not present the type of “ongoing unlawful activity whose scope and persistence pose a special threat to social well-being” warranting RICO intervention. Since there is no genuine dispute of material fact that Defendants did not engage in a pattern of racketeering activity, FX’s § 1962(c) claim must fail. And, because Defendants have not satisfied the pattern element, it was not necessary for us to consider whether FX is a proper party to bring suit and whether Defendants committed a RICO predicate offense. We therefore affirmed the district court’s grant of summary judgment to Defendants.

We also held that the district court properly granted summary judgment for Defendants on FX’s RICO conspiracy claim. Defendants have not engaged in a pattern of racketeering activity that would satisfy the substantive RICO claim under § 1962(c). Moreover, FX has presented no evidence that Defendants intended for any scheme to extend any further than it did so as to, if completed, satisfy all the elements of a substantive RICO offense. We therefore affirmed the district court’s grant of summary judgment to the Defendants.

We held that FX has Article III standing to bring its claims. But FX failed to demonstrate a genuine dispute of material fact that Defendants engaged in a pattern of racketeering activity, dooming its § 1962(c) claim. And, because FX failed to allege that Defendants conspired to engage in a pattern of racketeering activity, FX’s § 1962(d) claims fail as well. For the foregoing reasons, we affirmed the district court’s grant of summary judgment to Defendants on both counts.

Affirmed.

FX Aviation Capital LLC v. Guerrero (Lawyers’ Weekly No. 003-007-25, 24 pp.) (Roger Gregory, J.) Appealed from the U.S. District Court for the District of South Carolina, at Greenville (Henry M. Herlong Jr., J.) On Brief: William H. Foster, Littler Mendelson, P.C., Greenville, South Carolina, for Appellant; Craig R. Smith, Smith Law Firm, Woodland Hills, California, for Appellees. U.S. Court of Appeals for the Fourth Circuit Unpublished