POLLAK, District Judge:
In this suit initiated in the District Court for the Northern District of California and arising under the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692o ("FDCPA"), and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 ("RICO"), to which were annexed certain supplemental state-law claims, the plaintiffs-appellants are Stephen Turner; his wife, Susana Turner; the Turner children, Daniel, Deborah and David; and Western Paramedical Services, LLC ("WPS"), an entity that employed the Turners.
From District Court orders sequentially dismissing the FDCPA and RICO claims (and, with them, the supplemental state-law claims), plaintiffs-appellants appeal. We affirm.
On August 21, 1998, after a jury trial in the Superior Court for Contra Costa County, in California, appellees Yeo and Martini obtained a judgment against Stephen Turner for more than $1,000,000. According to appellants' First Amended Complaint in the District Court, "the judgment arose from allegations of various
On October 15, 2001, in response to the Yeo-Martini fraudulent conveyance action, Stephen and Susana Turner, suing for themselves and on behalf of their children, filed this action in the United States District Court for the Northern District of California, claiming violations of the FDCPA and various state laws. Subsequently an amended complaint was filed, which included all of the allegations in the original complaint and added RICO claims. The amended complaint included WPS as a plaintiff on the RICO claims and on a California Unfair Competition Act claim. WPS was not a plaintiff on the FDCPA claim or on the state-law claims other than the Unfair Competition Act claim.
The First Amended Complaint
In their FDCPA claims, the Turners alleged that appellees, as part of their efforts to collect on the state-court judgment, dispatched false and misleading communications — by mail, fax and telephone — to numerous insurance companies thought to be debtors of WPS, in violation of 15 U.S.C. §§ 1692c(b), 1692e(2)(A), 1692e(3), 1692e(9), 1692f(1).
In their RICO claims, the Turners, now joined by WPS, charged appellees with violating 18 U.S.C. § 1962(c),
The District Court, in an order issued March 22, 2002, dismissed the FDCPA portions of the amended complaint on the grounds that the debt in question — the tort judgment — was not subject to the FDCPA. The District Court also dismissed appellants' RICO claims for failing to satisfy RICO's continuity requirement, but granted appellants leave to file "an Amended Complaint alleging a RICO violation."
The Second Amended Complaint
On April 22, 2002, the Turners and WPS filed a Second Amended Complaint in which they expanded upon their earlier RICO claims. In this complaint appellants alleged that appellees had sent out "hundreds" of letters and facsimiles to third-party insurance companies misrepresenting the substance of the Superior Court order — an activity that amounted to a continuous "pattern of related, non sporadic repetitious and highly numbered incidents ... of ... illegal racketeering conduct" in violation of 18 U.S.C. §§ 1962(c) and (d).
Appellants also alleged that:
On August 28, 2002, the District Court dismissed the Second Amended Complaint, concluding that appellants had failed to allege any threat of continuing illegal activity, which is required to establish a pattern of racketeering under RICO. The court dismissed without prejudice appellants' state-law claims, and entered final judgment against appellants. Appellants timely filed their appeal on September 20, 2002. This court has jurisdiction under 28 U.S.C. § 1291.
Standard of Review
A judgment dismissing a case on the pleadings is reviewed on appeal de novo. Mendoza v. Zirkle Fruit Co., 301 F.3d 1163, 1167 (9th Cir.2002). The appellate court must "accept all material allegations in the complaint as true and construe them in the light most favorable to [the non-moving party]." NL Industries, Inc. v. Kaplan 792 F.2d 896, 898 (9th Cir.1986). A dismissal may be affirmed "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984)).
Standing of plaintiff-appellant Stephen Turner to pursue this appeal
Because Stephen Turner has filed for bankruptcy in the United States Bankruptcy Court, Northern District of California, he is no longer a real party in interest in this matter and has no standing to pursue this appeal. When Turner declared bankruptcy, all the "legal or equitable interests" he had in his property became the property of the bankruptcy
The trustee in Turner's bankruptcy case has, in a letter to Turner's counsel, indicated his willingness to allow Turner to proceed with his appeal. However, the letter, the pertinent text of which is set forth in the margin,
In enacting the FDCPA, Congress sought to counter the abusive, deceptive and unfair debt collection practices sometimes used by debt collectors against consumers. See 15 U.S.C. § 1692.
This court has not heretofore had occasion to address the question of whether a tort judgment resulting from business-related conduct qualifies as a debt under the FDCPA. However, the Eleventh Circuit in Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367 (11th Cir.1998), ruled on a similar issue and concluded that a tort judgment does not constitute a debt, and, therefore, that the FDCPA does not apply. In Hawthorne, the plaintiff was in an accident, allegedly resulting from her negligence, for which the defendant had been assigned subrogation rights. Id. at 1369. After the defendant attempted to collect its claim, the plaintiff sued under the FDCPA. Id. The district court ruled in the defendant's favor, concluding that the obligation at issue did not constitute a "debt" under the FDCPA, and the Eleventh Circuit affirmed. Id. at 1369-70.
The core of the appellate ruling in Hawthorne was as follows:
Hawthorne, 140 F.3d at 1371 (internal citations omitted).
We agree with this well-reasoned Eleventh Circuit opinion, and we conclude that the District Court did not err in dismissing the FDCPA claims. Appellees brought the fraudulent conveyance action against Stephen Turner
Turner's underlying "obligation" to pay Yeo and Martini does not arise out of a consumer transaction, and hence is not a "debt" within the meaning of the FDCPA. We therefore hold that the FDCPA does not apply to appellees' efforts to collect the damages awarded for Stephen Turner's commercial torts. Hence, the District Court properly concluded that the FDCPA does not apply.
Civil liability under RICO is premised on violations of one or more of the provisions of § 1962. The provisions at issue here are 18 U.S.C. §§ 1962(c) and 1962(d).
Section 1962(c) provides:
Section 1962(d) states: "It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section."
Because appellants contended that appellees engaged in "a pattern of racketeering activity," not "collection of unlawful debt," appellants' complaint must allege (1) the conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity. See Sun Sav. & Loan Ass'n v. Dierdorff, 825 F.2d 187, 191 (9th Cir.1987).
As previously described, the "racketeering activity" appellants complained of consisted
"[R]acketeering activity" is any act indictable under several provisions of Title 18 of the United States Code, and includes the predicate acts of mail fraud, wire fraud and obstruction of justice, each of which is alleged in this case. See 18 U.S.C. § 1961(1) (identifying § 1341 (mail fraud), § 1343 (wire fraud) and § 1503 (obstruction of justice) as predicate acts under RICO). In order to constitute a "pattern," there must be at least two acts of racketeering activity within ten years of one another. 18 U.S.C. § 1961(5). However, while two predicate acts are required under the Act, they are not necessarily sufficient. H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 237-38, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 n. 14, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985)). A "pattern" of racketeering activity also requires proof that the racketeering predicates are related and "that they amount to or pose a threat of continued criminal activity." Id. at 239, 109 S.Ct. 2893. Evidence of multiple schemes is not required to show a threat of continued criminal activity, id. at 240, 109 S.Ct. 2893, and, indeed, proof of a single scheme can be sufficient so long as the predicate acts involved are not isolated or sporadic. Sun Sav., 825 F.2d at 193, 194. The Supreme Court, in H.J. Inc., 492 U.S. at 241, 109 S.Ct. 2893, expounded on RICO's continuity requirement, stating:
Thus, in order to allege open-ended continuity, a RICO plaintiff must charge a form of predicate misconduct that "by its nature projects into the future with a threat of repetition." See Religious Tech. Ctr. v. Wollersheim, 971 F.2d 364, 366 (9th Cir. 1992); Sever v. Alaska Pulp Corp., 978 F.2d 1529, 1535-36 (9th Cir.1992); Medallion Television Enters., Inc. v. SelecTV of Cal., Inc., 833 F.2d 1360, 1363-64 (9th Cir.1988) (discussed infra). Conversely, an alleged "series of related predicates" not "extending over a substantial period of time" and not "threatening ... future criminal conduct" fails to charge closed-ended continuity. See Howard v. America Online, Inc., 208 F.3d 741, 750 (9th Cir. 2000); Religious Tech. Ctr., 971 F.2d at 366; River City Mkts., Inc. v. Fleming
Appellants contend that the District Court erred in dismissing their RICO claims for failure to allege a continuing pattern of racketeering activity. They argue that their allegations that appellees had engaged in a "continuous pattern of mailing hundreds of fraudulent letters" satisfied RICO's continuity requirement, and, therefore, adequately alleged a "pattern of racketeering activity." They cite our decision in California Architectural Building Products, Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466 (9th Cir.1987), as support for this proposition.
In California Architectural, the defendant-appellee contended that the alleged predicate acts did not satisfy RICO's continuity requirement because the predicate acts all related to a single criminal episode. 818 F.2d at 1469. We disagreed with this contention, finding that multiple criminal episodes are not required to establish a pattern of racketeering under RICO. Id. Appellants in the case at bar argue that the District Court's decision was in error in light of California Architectural. We disagree. The District Court acknowledged that appellants "need not plead multiple `criminal episodes' in order to state a RICO claim." However, because appellants had alleged only a single scheme, the District Court required confirmation that the criminal activity would continue. The court concluded that appellants' pleadings failed to provide such confirmation because appellees' activities were destined to end once the collection of the tort judgment was complete.
The District Court canvassed a number of other decisions of this court — decisions subsequent to California Architectural. Thus, the District Court relied on Medallion, in which, in sustaining a grant of summary judgment against RICO plaintiffs, we said:
833 F.2d at 1363-64 (internal citations and footnote omitted). Similarly, the District Court looked to Religious Technology Center, in which, in sustaining dismissal of certain RICO defendants, we held that, "[s]ince the only goal of the Greene defendants was the successful prosecution of the Wollersheim state tort suit, there was no threat of activity continuing beyond the conclusion of that suit." 971 F.2d at 366.
In the case at bar, appellees' alleged actions, like those just mentioned, failed to satisfy H.J. Inc.'s open-ended continuity requirement since the alleged actions were finite in nature in that the mailings, faxes and telephone calls would cease once appellees collected the outstanding tort judgment against Stephen Turner. Indeed, in their Second Amended Complaint, filed on April 22, 2002, appellants acknowledged that "the racketeering activity [was] `closed-end' and [was] not expected to repeat," unless "the judgment remained[ed] unpaid and Cook [continued] on the case." Cook's firm had withdrawn from this case in March, 2002.
Moreover, appellants' allegations failed to satisfy H.J. Inc.'s closed-ended continuity
Thus, having failed to aver that the alleged acts of mail fraud, wire fraud and obstruction of justice had the requisite continuity, appellants did not sufficiently allege a "pattern of racketeering activity." Accordingly, the District Court properly dismissed appellants' RICO claims.
The dismissal of the FDCPA claims and the RICO claims was proper. Accordingly, the judgment of the District Court is affirmed.
Section 1692e prohibits the debt collector from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt[,]" and outlines conduct constituting a violation of the section. Such conduct includes the false representation of "the character, amount, or legal status of any debt[,]" 15 U.S.C. § 1692e(2)(A), and "[t]he use or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States or any State, or which creates a false impression as to its source, authorization, or approval[,]" id. § 1692e(9).
Section 1692f prohibits the use of "unfair or unconscionable means to collect" a debt, including, pursuant to § 1692f(1), the collection of monies that are not "expressly authorized by the agreement creating the debt or permitted by law."