Pacific Northwest Inc. v. Randhawa et al

Filing 97

MEMORANDUM and ORDER signed by Judge Morrison C. England, Jr. on 4/14/2011. Defendants' 86 Motion to Dismiss plaintiff's RICO claim is GRANTED. Plaintiff will NOT be permitted to amend that claim at this juncture. (Marciel, M)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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PARADISE NORTHWEST INC.,

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No. 2:09-cv-02027-MCE-KJN

Plaintiff,
MEMORANDUM AND ORDER

v.
SATVINDER PALSINGH RANDHAWA,
LORNA MARIE RANDHAWA dba GREAT
EASTERN EXPORT & TRADING
COMPANY,

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Defendants and ThirdParty Plaintiffs,
AIR DIFFUSION SYSTEMS, A JOHN
HINDE COMPANY,

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Third-Party Defendant.
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----oo0oo----

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Through this action, Paradise Northwest Inc. (“Plaintiff”)

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seeks redress from Satvinder Palsingh Randhawa and Lorna Marie

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Randhawa doing business as Great Eastern Export & Trading Company

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(“Defendants”) for alleged fraud, breach of contract, and

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violations of the Racketeer Influenced and Corrupt Organizations

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Act (“RICO”).
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Presently before the Court is Defendants’ Motion to Dismiss

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Plaintiff’s RICO cause of action contained in the First Amended

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Complaint.

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Motion to Dismiss will be granted.1

(ECF No. 86.)

For the reasons set below, Defendants’

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BACKGROUND2

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The instant dispute arises out of a project to re-oxygenate
a lake in India.

Defendants formed an oral contract with

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Plaintiff, pursuant to which Plaintiff agreed to provide

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engineering services in connection with the project.

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represented that the Indian Government would be paying for

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Plaintiff’s services.

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to the oral contract, Defendants were paid directly by the Indian

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Government.

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funds to Plaintiff.

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the balance of its final invoice in the amount of $85,296.74.

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Plaintiff contends that Defendants never intended to compensate

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Plaintiff for the engineering services as promised, and have

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victimized others with similar acts of fraud.

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Defendants

After Plaintiff rendered services pursuant

However, Defendants did not release any of these
As a result, Plaintiff has not been paid for

Defendants are a husband and wife doing business under the

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fictitious business name “Great Eastern Export and Trading

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Company.”

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Because oral argument will not be of material assistance,
the Court orders this matter submitted on the briefs. E.D. Cal.
Local Rule 230(g).
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The factual assertions in this section are based on the
allegations in Plaintiff’s First Amended Complaint unless
otherwise specified.
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Satvinder made the business decisions for the venture and engaged

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in negotiations.

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to writing checks, reviewing invoices, and keeping track of

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accounting information.

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there is no allegation of any partnership agreement.

Lorna’s contribution to the venture was limited

The business is not incorporated, and

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STANDARD

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On a motion to dismiss for failure to state a claim under

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Rule 12(b)(6), all allegations of material fact must be accepted

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as true and construed in the light most favorable to the

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nonmoving party.

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337-38 (9th Cir. 1996).

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plain statement of the claim showing that the pleader is entitled

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to relief,” to “give the defendant fair notice of what

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the...claim is and the grounds upon which it rests.”

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Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations

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and quotations omitted).

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Rule 12(b)(6) motion” need not contain “detailed factual

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allegations, a plaintiff’s obligation to provide the ‘grounds’ of

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his ‘entitlement to relief’ requires more than labels and

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conclusions, and a formulaic recitation of the elements of a

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cause of action will not do.”

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Allain, 478 U.S. 265, 2869 (1986)).

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allegations must be enough to raise a right to relief above the

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speculative level.”

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Practice and Procedure § 1216 (3d ed. 2004)

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///

Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,
Rule 8(a)(2) requires only “a short and

Bell Atl.

Although “a complaint attacked by a

Id. at 555 (quoting Papasan v.
A plaintiff’s “factual

Id. (citing 5 C. Wright & A. Miller, Federal

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(“[T]he pleading must contain something more...than...a statement

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of facts that merely creates a suspicion [of] a legally

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cognizable right of action.”)).

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Further, “Rule 8(a)(2)...requires a ‘showing,’ rather than a

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blanket assertion, of entitlement to relief.

Without some

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factual allegation in the complaint, it is hard to see how a

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claimant could satisfy the requirements of providing...grounds on

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which the claim rests.”

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citations omitted).

Twombly, 550 U.S. at 555 n.3 (internal

A pleading must therefore contain “enough

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facts to state a claim to relief that is plausible on its face.”

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Id. at 570.

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across the line from conceivable to plausible, their complaint

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must be dismissed.”

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If the “plaintiffs...have not nudged their claims

Id.

Once the court grants a motion to dismiss, they must then

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decide whether to grant a plaintiff leave to amend.

Rule 15(a)

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authorizes the court to freely grant leave to amend when there is

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no “undue delay, bad faith, or dilatory motive on the part of the

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movant.” Foman v. Davis, 371 U.S. 178, 182 (1962).

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leave to amend is generally only denied when it is clear that the

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deficiencies of the complaint cannot possibly be cured by an

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amended version.

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957 F.2d 655, 658 (9th Cir. 1992); Balistieri v. Pacifica Police

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Dept., 901 F. 2d 696, 699 (9th Cir. 1990) (“A complaint should

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not be dismissed under Rule 12(b)(6) unless it appears beyond

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doubt that the plaintiff can prove no set of facts in support of

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his claim which would entitle him to relief.”) (internal

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citations omitted).

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///

In fact,

See DeSoto v. Yellow Freight Sys., Inc.,

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ANALYSIS

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To state a RICO claim, a plaintiff must allege: (1) conduct;

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(2) of an enterprise; (3) through a pattern; (4) of racketeering

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activity.

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2007) (internal quotations omitted).

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“any individual, partnership, corporation, association, or other

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legal entity, and any union or group of individuals associated in

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fact although not a legal entity.”

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Odom v. Microsoft Corp., 486 F.3d 541, 547 (9th Cir.
‘Enterprise’ is defined as

18 U.S.C. § 1961.

Here, Plaintiff concedes that Defendants cannot qualify as

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an enterprise for RICO purposes as a formal legal entity.

The

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dispositive question for purposes of this motion therefore

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becomes whether Defendants alternatively may constitute an

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associated-in-fact enterprise, and may accordingly pass muster

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under RICO in that regard.

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“a group of persons associated together for a common purpose of

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engaging in a course of conduct.”

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United States v. Turkette, 452 U.S. 576, 583 (1981)).

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an associated-in-fact enterprise must have at least three

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structural features: “a purpose, relationships among those

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associated with the enterprise, and longevity sufficient to

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permit these associates to pursue the enterprise’s purpose.”

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Boyle v. U.S., 129 S. Ct. 2237, 2244 (2009).

An associated-in-fact enterprise is

Odom, 486 F.3d at 552 (quoting
Further,

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In the instant case, Plaintiff has not alleged facts

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sufficient to establish an associated-in-fact enterprise.

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Plaintiff contends that Defendants established an enterprise by

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forming the Great Eastern Export and Trading Company.

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However, the Great Eastern Export and Trading Company is merely a

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fictitious business name.

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and wife and have no employees.3

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Lorna Randhawa in connection with the business are limited to

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writing checks, reviewing invoices, and keeping track of

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accounting information.

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activities are normal incidents of a marital relationship and do

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not give rise to an associated-in-fact enterprise.

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Plaintiff makes no allegations to distinguish Defendants’

Defendants run the business as husband
Further, the alleged duties of

(First Am. Compl. ¶ 13.)

Those

In short,

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relationship from the partnership implicit in a typical marriage.

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Because a marital relationship does not involve a common purpose

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of engaging in a particular course of conduct, Plaintiff has not

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established a RICO enterprise.4

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be dismissed.

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As a result, the RICO claim must

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In U.S. v. Benny, the Ninth Circuit held that, for
purposes of RICO, a sole proprietorship with one or more
employees may constitute an enterprise with which the proprietor
may conspire. 786 F.2d 1410, 1415 (9th Cir. 1986). However, as
the business venture in the instant case is operated by husband
and wife without any employees, Benny is inapplicable.
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The Court’s own research revealed scant authority on the
issue of whether a marriage may qualify as an enterprise for
purposes of RICO, but at least one case has held that a marriage
is an associated-in-fact enterprise. Am. Mfrs. Mut. Ins. Co. v.
Townson held that a marriage is an enterprise for purposes of
RICO because a married couple is “associated together for the
common purpose of engaging in a course of conduct necessary to
preserve their welfare as a marital unit.” 912 F. Supp. 291, 295
(E.D. Tenn. 1995). However, the Court finds Townson poorly
reasoned. A marital relationship, without more, although it may
entail a commitment to engage in general conduct necessary to
preserve the relationship, does not involve a purpose of engaging
in any specific course of conduct. This Court declines to follow
Townson’s holding both because is not binding authority, and
because it is ultimately unpersuasive in any event.
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Plaintiff was previously granted leave to amend and was not

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able to cure the defects in the Complaint.

Under the

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circumstances, it appears clear that Plaintiff cannot plausibly

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allege any facts that would establish a RICO enterprise.5

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result, Plaintiff should not be granted leave to amend the RICO

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claim.

As a

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CONCLUSION

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Based on the foregoing, Defendants’ Motion to Dismiss

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Plaintiff’s RICO claim (ECF No. 86) is hereby GRANTED.

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will not be permitted leave to amend that claim at this juncture.

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Plaintiff

IT IS SO ORDERED.
Dated: April 14, 2011

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_____________________________
MORRISON C. ENGLAND, JR.
UNITED STATES DISTRICT JUDGE

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This conclusion is underscored by Plaintiff’s proposed
Second Amended Complaint, attached as an exhibit to Plaintiff’s
Motion fo Leave to Amend the First Amended Complaint. (ECF
No. 95.) The Court’s review of the RICO allegations in that
pleading still causes it to conclude that no viable RICO claim
can be alleged.
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