Summary
The Eighth Circuit reviewed the dismissal of Robert and Nancy Wisdom's claims arising from loans made by First Midwest Bank and related parties. The court affirmed dismissal of the RICO, mail fraud, wire fraud, and extortion claims, concluding that the alleged conduct did not establish a RICO pattern and that the criminal statutes did not create private rights of action. It vacated dismissal of the state fraud claim and remanded for consideration of amendment relating to that claim and a potential Bank Holding Company Act claim.
Topics
Practice areas
Questions Presented
- Whether the complaint adequately alleged a RICO pattern of racketeering activity based on alleged mail fraud, wire fraud, and extortion.
- Whether 18 U.S.C. §§ 1341, 1343, and 1951 create implied private rights of action.
- Whether the Wisdoms should have been allowed to amend their complaint to assert a Bank Holding Company Act anti-tying claim.
- Whether the district court erred by dismissing the Missouri common-law fraud claim and failing to address the request to amend it.
Holdings
- The Wisdoms failed to plead the pattern element of a civil RICO claim because the alleged predicate acts covered at most approximately ten months, which was too short for closed-ended continuity, and the complaint did not allege ongoing criminal activity establishing open-ended continuity.
- The alleged May 1991 settlement agreement and related mailing did not constitute mail fraud because the bank's attempt to collect a delinquent loan and the allegedly unfavorable settlement terms did not rise to the level of fraud.
- The federal mail fraud, wire fraud, and extortion statutes do not create implied private rights of action.
- The district court was required to address the Wisdoms' request to amend their complaint because its order was silent as to whether the request was considered, and the alleged Bank Holding Company Act anti-tying facts might support a claim.
Key quotations
“The pattern element "requires at least two acts of racketeering activity."” (¶ 8)
“Congressional intent is the final touchstone” (¶ 16)
“Leave to amend a complaint should be freely given to promote justice.” (¶ 20)
Factual background
In May 1989, Robert and Nancy Wisdom borrowed $283,000 from First Midwest Bank to purchase an oil company, allegedly on the condition that they also accept a $120,000 loan from a related bank secured by foreclosed property. After defaulting on the first loan, the Wisdoms entered into a settlement and made additional payments. They alleged that bank representatives later agreed to accept $15,000 to release both loans but then sent a default notice claiming a substantially larger balance and threatened foreclosure, leading to additional payments and loss or damage to collateral.
Procedural history
The Wisdoms filed a pro se complaint against First Midwest Bank and three officers. The district court dismissed the complaint in its entirety for failure to state a claim, including the state fraud claim for failure to plead fraud with particularity, and did not address the Wisdoms' request for leave to amend. The Eighth Circuit affirmed dismissal of the RICO, mail fraud, wire fraud, and extortion claims, vacated dismissal of the Missouri common-law fraud claim, and remanded for consideration of the requests to amend concerning the Bank Holding Company Act and Missouri fraud claims.
Remand instructions
The district court must rule on the Wisdoms' request to amend concerning a possible Bank Holding Company Act claim and the Missouri common-law fraud claim. The district court need not entertain amendment of the RICO claim because amendment would be futile in light of the failure to plead the pattern element.