Court Denies Defendants Motion to Dismiss Civil RICO Action; Adopting Ninth Circuit’s Liberal Interpretation of Boyle v. United States and Finding Application of Civil RICO to One Incident of Violence Causing Minimal Financial Injury

Mitchell v. First Call Bail and Surety, Inc. et al, __F. Supp.3d ___, 2019 WL 5069352 (D. Mont., Oct. 9, 2019)

The court denied Defendants motion to dismiss finding the use of unlawful force to collect a bond, resulting in damage to a door as a sufficient civil RICO case.

Mitchell failed to show for a hearing and the bond bailsman (First Call) hired a surety to recover, arrest, and surrender a defendant for whom a bail bond has been posted. A bond recovery company (MCAG) hired by First Call is accused of unlawfully arresting Mitchell after breaking his door down (damaging a door) without a warrant and the five bounty hunters present for the break-in have since been charged with assault with a weapon, aggravated burglary, unlawful restraint, accountability for aggravated burglary, and criminal mischief as a result of the incident.

Enterprise

The Complaint alleges that Allegheny, Fidelity, First Call, Ratzburg, MCAG and its members formed an “association-in-fact” enterprise. (Id.) Allegheny and Fidelity were sureties on the bond; Ratzburg was the owner of the local bond agency (First Call), and MCAG was the bounty hunter retained by First Call, collectively known herein as “Surety Defendants.”

Surety Defendants argue that Plaintiffs failed to allege any “common purpose or course of conduct” that is separate from each defendant’s ordinary business affairs. (Doc. 21 at 20–21.) The Court has found nothing to indicate that the Ninth Circuit requires an enterprise to share a “common purpose” that is separate or secondary from its general business purpose. To the extent Surety Defendants argue that a separate (i.e. unlawful) purpose must unite the enterprise, the Court acknowledges that this is an open question in the Ninth Circuit. Gomez v. Guthy-Renker, LLC, No. EDCV-14-01425-JGB(KKX), 2015 WL 4270042, *9 (C.D. Cal. July 13, 2015); Friedman v. 24 Hour Fitness USA, Inc., 580 F. Supp. 2d 985, 991 (C.D. Cal. 2008), and in Odam v. Microsoft Corporation the Circuit made no such requirement. In Odom, the Court held that entities shared “a common purpose of increasing the number of people using Microsoft’s Internet Service” which was a valid “common purpose.” Id. at 552.
The Court agreed that all Defendants shared a common purpose of “contracting with bail bonds clients and collecting bond deposits,” in order to make their cut of the premium or bond. As in Odam, the Complaint alleges a lawful purpose carried out through fraudulent means.*9. The court concluded that the Complaint alleged an “association-in-fact” enterprise.*10.

Pattern of Racketeering

Plaintiffs assert that all Defendants engaged in the predicate acts of “extortionate extension of credit and financing extortionate credit transactions.” Plaintiffs allege that First Call and Ratzburg additionally engaged in kidnapping, extortion, and extortionate collection of credit extensions. Surety Defendants argue that many of these predicate acts fail as a matter of law, but the court found that Plaintiffs state facts sufficient to support a kidnapping charge for the same reasons that its claim for false imprisonment is viable.*11

The court also found that Plaintiffs also stated a viable claim for extortion based on the fact that “Ratzburg threatened that if … Mitchell did not pay the outstanding amount due on his premium or comply with the bond agreement, Ratzburg would ‘get’ him.” Surety Defendants argue that this was merely a warning to exercise a contractual right and “what you may do in a certain event you may threaten to do.” But the court found this is a question of fact stating that a jury could find that Ratzburg was not threatening to arrest Mitchell but threatening physical violence to coerce the remaining payment.

Next, Surety Defendants assert that the Complaint does not plead the required elements for extortionate credit transactions finding the Complaint adequately alleges a predicate offense of making extortionate extensions of credit when it describes that Ratzburg permitted Mitchell to delay part of the premium payment and then threatened Mitchell to collect payment. Because the Court has determined that the Complaint alleges predicate acts of kidnapping, extortion, and extortionate credit transactions, Plaintiffs have met their burden to plead the existence of a pattern.

Note: How could there have been continuity here?

Control Over Enterprise

The court also found that defendants had some degree of control over the “operation or management” of the enterprise’s conduct.

Proximate Cause

Importantly, the court found financial harm proximately caused resulting from the kidnapping as the Plaintiff’s door was damaged and this was “‘direct relationship’ between the injury asserted and the injurious conduct[.]” Here, the injury to the door occurred as a direct result of MCAG entering Mitchell’s house in order to arrest him and in order to recoup a $115 payment that Ratzburg represented was still outstanding. Having addressed each of Surety Defendants’ arguments, the Court concluded that the RICO claims are properly stated and may advance.

Ed Note: The finding of directly caused financial harm resulting from breaking in a door is a very broad application of civil RICO. The moral is that if financial injury can be found from violence crimes constituting predicate acts a court will accept the pleadings.

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