Hill v. Peterson, Burnell, Gluaser & Allred et al

Filing 5

ORDER Granting 2 Motion for Leave to Proceed in forma pauperis ; Dismissing Rico Claim and Declining to Exercise Supplemental Jurisdiction; and Denying 3 Motion to Appoint Counsel. Plaintiff may refile her California causes of action in state court. Signed by Judge Gonzalo P. Curiel on 1/4/17. (All non-registered users served via U.S. Mail Service)(dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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CARLA HILL,

Case No.: 3:16-cv-2476-GPC-AGS
Plaintiff,

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v.

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PETERSON, BURNELL, GLUSASER &
ALLRED, a Professional Corporation,
RICHARD PETERSON, as an individual,
DOES 1-10.

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ORDER:

Defendants.

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1) GRANTING MOTION TO
PROCEED IN FORMA PAUPERIS
[Dkt. No. 2]
2) DISMISSING RICO CLAIM
PURSUANT TO SUA SPONTE
SCREENING REQUIRED BY 28
U.S.C. §§ 1915(e)(2)(B)(ii) and
DECLINING TO EXERCISE
SUPPLEMENTAL JURISDICTION

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[Dkt. No. 1]

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3) DENYING PLAINTIFF’S
REQUEST FOR APPOINTMENT OF
COUNSEL

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[Dkt. No. 3]

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3:16-cv-2476-GPC-AGS

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Plaintiff Carla Hill, proceeding pro se, has filed a complaint for damages under the

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federal Racketeering Influenced and Corrupt Organizations Act (“RICO”) and for

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conversion, breach of fiduciary duty, and conspiracy under California law. Dkt. No. 1.

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Plaintiff did not prepay the civil filing fee required by 28 U.S.C. § 1914(a) at the time of

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filing, but instead filed a Motion to Proceed In Forma Pauperis (“IFP”) pursuant to 28

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U.S.C. § 1915. For the following reasons, the Court GRANTS Plaintiff’s motion to

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proceed IFP, sua sponte DISMISSES her federal RICO cause of action for failure to state

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a claim, and DECLINES to exercise supplemental jurisdiction over Plaintiff’s remaining

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state law claims.

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I.

Motion to Proceed In Forma Pauperis
All parties instituting any civil action, suit, or proceeding in a district court of the

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United States, except an application for writ of habeas corpus, must pay a filing fee of

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$400. See 28 U.S.C. § 1914(a). An action may proceed despite a plaintiff’s failure to

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prepay the entire fee only if he is granted leave to proceed IFP pursuant to 28 U.S.C.

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§ 1915(a). See Andrews v. Cervantes, 493 F.3d 1047, 1051 (9th Cir. 2007); Rodriguez v.

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Cook, 169 F.3d 1176, 1177 (9th Cir. 1999). A court may authorize the commencement of

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a suit without prepayment of fees if the plaintiff submits an affidavit, including a

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statement of all of his or her assets, showing that he or she is unable to pay the fees. See

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28 U.S.C. §1915(a). Such an affidavit must include a complete statement of the

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plaintiff’s assets. See id.

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An IFP action is subject to dismissal if the court determines that the complaint is

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frivolous or malicious, or fails to state a claim upon which relief may be granted. 28

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U.S.C. § 1915(e)(2). When a plaintiff moves to proceed IFP, the court first “grants or

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denies IFP status based on the plaintiff's financial resources alone and then independently

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determines whether to dismiss the complaint” pursuant to § 1915(e)(2). Franklin v.

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Murphy, 745 F.2d 1221, 1226 n.5 (9th Cir. 1984).

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In her declaration, Plaintiff states that she expects to receive $500 from her
employment, $450 from self-employment, and $143 in dividends, for a total monthly
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income of $1,093.00. Dkt. No. 2 at 1-2. She adds that she currently has just $100.00 in

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one checking account and that she is owed $5,400.00 in child support payments that are

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currently in arrears. Id. at 2-3. Plaintiff’s total monthly expenses, accounting for

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amounts owed on her motor vehicle and on credit cards total $1,947.00. Id. at 5.

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Plaintiff also owes $89,000 in attorney bills owed in conjunction with this lawsuit. See

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id. (“but attorney bills I did not list above of currently 89,000 left.”).

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Because Plaintiff’s monthly expenses far outweigh her monthly income, the Court

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GRANTS Plaintiff’s Motion to Proceed IFP and declines to “exact” any initial filing fee

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because she has no means to pay it.

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II.

Screening Pursuant to 28 U.S.C. §§ 1915(e)(2)(B)(ii)
Because Plaintiff is proceeding IFP, her complaint requires a pre-answer screening

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pursuant to 28 U.S.C. § 1915(e)(2). Under this statute, a court must sua sponte dismiss

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an IFP complaint, or any portion of it, which is frivolous, malicious, fails to state a claim,

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or seeks damages from defendants who are immune. See Lopez v. Smith, 203 F.3d 1122,

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1126-27 (9th Cir. 2000) (en banc) (discussing 28 U.S.C. § 1915(e)(2) and explaining that

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it applies equally to prisoner and non-prisoner claimants). A pro se complaint should,

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moreover, be construed liberally and afford the plaintiff any benefit of the doubt. See

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Karim-Panahi v. Los Angeles Police Dep’t, 839 F.2d 621, 623 (9th Cir. 1988).

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“The standard for determining whether a plaintiff has failed to state a claim upon

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which relief can be granted under § 1915(e)(2)(B)(ii) is the same as the Federal Rule of

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Civil Procedure 12(b)(6) standard for failure to state a claim.” Watison v. Carter, 668

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F.3d 1108, 1112 (9th Cir. 2012). Federal Rule of Civil Procedure 12(b)(6) requires that a

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complaint “contain sufficient factual matter, accepted as true, to state a claim to relief that

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is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation

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marks omitted). Detailed factual allegations are not required, but “[t]hreadbare recitals of

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the elements of a cause of action, supported by mere conclusory statements, do not

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suffice.” Id. “Determining whether a complaint states a plausible claim for relief [is] . . .

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a context-specific task that requires the reviewing court to draw on its judicial experience
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and common sense.” Id. The “mere possibility of misconduct” or “unadorned, the

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defendant-unlawfully-harmed me accusation[s]” fall short of meeting this plausibility

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standard. Id.; see also Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir. 2009).

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A. RICO Violation

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The complaint avers that the Defendants and Ron Hill, her former husband,

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violated RICO by defrauding Plaintiff of money and property through a conspiracy aimed

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at getting her to sign a marital dissolution agreement to her financial detriment. See

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Compl. ¶¶ 6-8. More specifically, she alleges that the Defendants “devised a scheme and

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artifice with husband Ron Hill to defraud Plaintiff of property and money due under

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[California Law] . . . by convincing Plaintiff to enter a mediated Agreement by a Special

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Master, for the purpose of allowing Defendant to create attorney fees for themselves

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decried from plaintiff’s community property.” Id. ¶ 17. In order to carry out their

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fraudulent scheme, Plaintiff alleges that Defendants, among other misconduct, denied her

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the opportunity to make an informed decision about whether to accept a $50,000

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settlement from her husband, lied about appointing a “special master” to mediate the

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divorce, and advanced money to the alleged special master as a “bribe or kickback to

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remain complicate [sic] as part of a common scheme to defraud Wife-Plaintiff of her

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property.” Id. ¶ 8.

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To state a claim under § 1962 of RICO, a plaintiff must allege the “(1) conduct (2)

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of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate

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acts’” (5) causing injury to plaintiff’s ‘business or property.’” Living Designs, Inc. v. E.I.

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Dupont de Nemours & Co., 431 F.3d 353, 361 (9th Cir. 2005) (citations omitted); see

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also Richmond v. Nationwide Cassel L.P., 52 F.3d 640, 644 (9th Cir. 1995). A plaintiff

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establishes a pattern of racketeering activity by pleading at least two related and

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continuous predicate acts that amount to or pose a threat of continued criminal activity.

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See Allwaste, Inc. v. Hecht, 65 F.3d 1523, 1527 (9th Cir. 1995); see also H.J. Inc. v. Nw.

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Bell Tel. Co., 492 U.S. 229, 240 (1989).

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In H.J. Inc., the Supreme Court described the “continuity” requirement as both a
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“closed- and open-ended concept, referring either to a closed period of repeated conduct,

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or to past conduct that by its nature projects into the future with a threat of repetition.”

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492 U.S. at 241. “A party alleging a RICO violation may demonstrate continuity over a

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closed period by proving a series of related predicates extending over a substantial period

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of time.” Id. at 242. “Open-ended continuity is the threat that criminal conduct will

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continue into the future. It is established by showing either that the predicate acts include

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a specific threat of repetition extending indefinitely into the future or that the predicate

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acts were part of an ongoing entity’s regular way of doing business.” Allwaste, 65 F.3d

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at 1527 (citations omitted).

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Plaintiff argues that the Defendants committed the following predicate acts:

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bribery pursuant to § 1961(1)(a), mail fraud in violation of 18 U.S.C. § 1341, wire fraud

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under 18 U.S.C. § 1342, and interstate transfer of stolen property in violation of 18

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U.S.C. § 2314. Compl. ¶¶ 21, 37, Prayer for Relief. Assuming arguendo that Plaintiff

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has established two, related predicate acts, she has nonetheless failed to satisfy the H.J.

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Inc. continuity requirement because the facts she alleges do not amount to or pose a threat

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of continued criminal activity.

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For one, Plaintiff’s complaint is devoid of any allegations from which the Court

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can reasonably conclude or infer that any predicate acts occurred over a “substantial

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period of time,” as is required for closed-concept continuity. See Allwaste, 65 F.3d at

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1528 (noting that the plaintiff should have, but did not, specify the dates of the first and

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last alleged predicate acts in order to satisfy the “substantial period of time” requirement).

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In Allwaste, the Ninth Circuit provided some guidance as to what constitutes a

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“substantial period of time” when it observed that “a pattern of activity lasting only a few

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months does not reflect the long term criminal conduct to which RICO was intended to

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apply” and that, generally speaking, the requirement will not “be satisfied by a pattern of

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activity lasting less than year.” Id. (internal quotations omitted). Here, Plaintiff has not

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provided the Court with the dates of the first and last predicate acts. There are also no

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facts in the complaint that suggest that Defendants’ conduct occurred over a prolonged
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period of time. As such, Plaintiff has failed to demonstrate that the criminal activity she

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complains of occurred over a “substantial period of time.”

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Plaintiff also cannot show open-ended continuity because the alleged predicate acts

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do not pose a threat of continuing criminal activity. The misconduct that Plaintiff

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complains of all pertain to the dissolution of her marriage to her husband, Ron Hill.

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There is, therefore, no threat that Defendants will continue to engage in similar predicate

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acts moving forward because the alleged fraudulent acts pertained only, and specifically,

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to the dissolution of Plaintiff’s marriage. See Sun Sav. & Loan Ass’n v. Dierdorff, 825

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F.2d 187, 194 (9th Cir. 1987) (concluding that predicate acts do not pose a threat of

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continuing activity when they further a single diversion and when defendants have no

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more need to commit predicate acts once the diversion is completed). Thus, absent any

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allegations demonstrating that Defendants’ alleged racketeering activities extend beyond

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the context of Plaintiff’s divorce, Plaintiff has not satisfied the requirement that the

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predicate acts pose a threat of continued criminal activity.

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III.

Pendent Jurisdiction

Pursuant to 28 U.S.C. § 1367(a), “in any civil action of which the district courts

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have original jurisdiction, the district courts shall have supplemental jurisdiction over all

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other claims that are so related to claims in the action within such original jurisdiction

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that they form part of the same case or controversy under Article III of the United States

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Constitution.” Yet even “once judicial power exists under § 1367(a), retention of

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supplemental jurisdiction over state law claims under 1367(c) is discretionary.” Acri v.

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Varian Assoc., Inc., 114 F.3d 999, 1000 (9th Cir. 1997). “The district court may decline

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to exercise supplemental jurisdiction over a claim under subsection (a) if . . . the district

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court has dismissed all claims over which it has original jurisdiction.” 28 U.S.C.

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§ 1367(c)(3). The Supreme Court has cautioned that “if the federal claims are dismissed

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before trial, . . . the state claims should be dismissed as well.” United Mine Workers of

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Am. v. Gibbs, 383 U.S. 715, 726 (1966); see also Townsend v. Columbia Operations, 667

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F.2d 844, 850 (9th Cir. 1982). In the event that all federal law claims are eliminated
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before trial, a district court must weigh the following factors before declining or choosing

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to exercise pendent jurisdiction: judicial economy, comity, convenience, and fairness.

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See Bryant v. Adventist Health System/W., 289 F.3d 1162, 1169 (9th Cir. 2002) (quoting

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Carnegie—Mellon Univ. v. Cohill, 484 U.S. 343, 350 n.7, 108 S. Ct. 614, 98 L. ED. 2d

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720 (1988)).

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Because the Court has dismissed the only federal cause of action apparent in the

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complaint, the Court declines to exercise supplemental jurisdiction over Plaintiff’s

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remaining state law claims. The remaining claims are state tort claims governed by

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California law and have no nexus to questions of federal policy. Thus, there is no federal

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interest served by proceeding with the state law causes of action in federal court, and the

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interest of comity would be served by permitting the state court to decide issues relating

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to the remaining state law claims and defenses. As for convenience to the litigants and

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fairness, the Court concludes that neither factor weighs against declining to exercise

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supplemental jurisdiction as the case is in its infancy, and no answer has yet been filed.

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CONCLUSION
For the foregoing reasons the Court GRANTS Plaintiff’s IFP motion,

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DISMISSES Plaintiff’s RICO cause of action for failure to state a claim on which relief

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can be granted, and DECLINES to exercise supplemental jurisdiction over the remaining

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state law claims. As such, the Court also DENIES Plaintiff’s pending request for

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appointment of counsel as moot. The Plaintiff may refile her California causes of action

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in state court.

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IT IS SO ORDERED.

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Dated: January 4, 2017

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