Gabovitch v. Shear

Opinion

USCA1 Opinion

November 21, 1995       [NOT FOR PUBLICATION]



                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT


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No. 95-1055 



                               WILLIAM GABOVITCH, ETC.,



                                Plaintiff, Appellant,



                                          v.



                                MAURICE SHEAR, ET AL.,



                                Defendants, Appellees.


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                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                     [Hon. William G. Young, U.S. District Judge]
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                                 ____________________



                                        Before



                                Torruella, Chief Judge,
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                           Stahl and Lynch, Circuit Judges.
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                                 ____________________



            William Gabovitch on brief pro se.
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            Brian A. Davis,  Julie B. Brennan,  and Choate, Hall &  Stewart on
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        brief for appellees.


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Per  Curiam.   Pro  se  plaintiff  William Gabovitch,  a
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            certified  public  accountant  and  non-practicing  attorney,



            served  for nearly  eighteen  years as  a  co-trustee of  two



            irrevocable inter vivos trusts created by Maurice Shear.   In



            1992, in connection with litigation filed in 1987 by Gertrude



            Shear (Maurice's wife and  the contingent life beneficiary of



            the  trusts), a state court  judge removed plaintiff from his



            position  as  trustee  and  ordered him  to  pay  substantial



            damages   because  of  his   mismanagement  of   the  trusts.



            Plaintiff's  appeal from  that  decision remains  pending  in



            state  appellate court.    Claiming that  the allegations  of



            mismanagement were  frivolous and  that his removal  had been



            fraudulently obtained, plaintiff  pursued various  collateral



            actions in state court--all without avail.  He then turned to



            federal court,  filing the instant civil  RICO action against



            the  Shears  (and  others),  seeking  injunctive  relief  and



            damages on behalf  of both himself  and the  trusts.  See  18
                                                                  ___



            U.S.C.   1964(c).   The district court, following a  hearing,



            dismissed the complaint for failure to state a claim.  Having



            reviewed  the  record  in  full,  and  having  construed  the



            complaint  in the  light  most favorable  to plaintiff,  see,
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            e.g., Feinstein v.  Resolution Trust Corp.,  942 F.2d 34,  37
            ____  _________     ______________________



            (1st Cir. 1991), we now affirm.1



                                
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            1.  While we  have accepted all well-pled  allegations in the

            complaint  as true  and  drawn all  reasonable inferences  in

            plaintiff's  favor,   there  is   an  inconsistency   in  his



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Extended  discussion is  unnecessary.   To state  a RICO



            claim,  plaintiff  was  required  to  allege that  defendants



            conducted  an enterprise  through  a pattern  of racketeering



            activity.  See,  e.g., Libertad  v. Welch, 53  F.3d 428,  441
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            (1st Cir.  1995).  As well, he was required to allege that he



            suffered  injury in his business or property "by reason of" a



            RICO  violation.   18 U.S.C.    1964(c);  see,  e.g., Sedima,
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            S.P.R.L.  v.  Imrex  Co.,  473  U.S.  479, 496  (1985)  ("the
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            plaintiff has standing if, and can only recover to the extent



            that,  he has been injured in his business or property by the



            conduct  constituting the [RICO] violation"); see also Holmes
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            v. Securities  Investor Protection  Corp., 503 U.S.  258, 268
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            (1992)  (RICO  plaintiff  must  allege, not  only  "but  for"



            causation,  but  also  proximate  causation  requiring  "some



            direct relation between the injury asserted and the injurious



            conduct alleged").



                 This causation requirement enables us, at the outset, to



            put  to  the side  vast  portions  of plaintiff's  voluminous



            complaint.    For  example, plaintiff  has  detailed numerous



            instances  of  criminal  and  fraudulent  activity  allegedly



            undertaken by various of the defendants during the 1970's and



                                
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            narrative.   The Shears' principal motivation  for filing the

            1987  lawsuit,  plaintiff  contends,  was to  remove  him  as

            trustee  and  thereby gain  control  of  the trusts'  primary

            asset--the Mount Pleasant Hospital.  Yet  plaintiff elsewhere

            explains  that the  trusts  had sold  their  interest in  the

            hospital  the previous  year  (and only  reacquired ownership

            thereof in 1991).



                                         -4-



1980's.  Yet no contention is made that such conduct resulted



            in  injury to  plaintiff's business  or  property.   In turn,



            plaintiff  charges that  defendants  have engaged  in various



            misdeeds  following his  ouster as  trustee in  January 1992.



            Again,  such  actions  are  not linked  to  any  business  or



            property loss suffered by plaintiff.  We note  that plaintiff



            lacks  standing   to  complain   of  injury  to   the  trusts



            themselves,  having been removed  as trustee by  the time the



            instant suit was filed.   And the suggestion that  his status



            as  a potential creditor of the trusts grants him standing to



            sue on his own behalf  is misplaced.  See, e.g., id.  at 271;
                                                  ___  ____  ___



            National Enterprises v. Mellon  Financial Services, 847  F.2d
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            251, 254 (5th Cir. 1988).



                 The  only business  or  property injury  alleged in  the



            complaint is  that stemming  from the state  court judgment--



            i.e.,  plaintiff's  loss  of  his position  as  trustee;  the



            accompanying  monetary damages;  the  resulting harm  to  his



            reputation and  client base; and the  legal expenses incurred



            in litigating that action.  The question thus becomes whether



            plaintiff  has set forth a predicate act of racketeering that



            has proximately caused such injury.  Plaintiff insists he has



            done  so in  two  respects.   He argues  that  the filing  by



            defendants of the  state court  suit (as part  of a  broader,



            unlawful scheme) constituted attempted extortion in violation



            of  the Hobbs  Act, 18  U.S.C.    1951.   And he  argues that


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Gertrude Shear, by proffering false  affidavits and testimony



            to  the state court (allegedly at the behest of her husband),



            committed mail  fraud in violation of  18 U.S.C.   1341.   We



            disagree that such  claims establish the  necessary predicate



            act.



                 Numerous courts have held that the filing of litigation-



            -no  matter  how  lacking  in merit--does  not  constitute  a



            predicate racketeering  act  of extortion.    "If a  suit  is



            groundless  or filed  in  bad faith,  the  law of  torts  may



            provide  a remedy.  Resort  to a federal  criminal statute is



            unnecessary."   I.S. Joseph Co. v. J. Lauritzen A/S, 751 F.2d
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            265,  267-68 (8th  Cir.  1984); accord,  e.g., First  Pacific
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            Bancorp, Inc.  v. BRO, 847 F.2d 542, 545 (9th Cir. 1988); von
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            Bulow by Auersperg v.  von Bulow, 657 F. Supp.  1134, 1143-45
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            (S.D.N.Y.  1987) (holding  that  malicious prosecution  claim



            does   not   constitute  predicate   act   of  racketeering).



            Plaintiff's reliance on Hall American Center Assocs. v. Dick,
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            726  F. Supp. 1083 (E.D. Mich. 1989), proves unavailing.  The



            defendants there had engaged in spurious litigation described



            by the  district court as a "clear abuse of process."  Id. at
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            1086.  The defendants here prevailed in the state court suit.



            And Lemelson v. Wang Laboratories, Inc., 874 F. Supp. 430 (D.
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            Mass. 1994),  offers minimal  succor to plaintiff,  since the



            court there was addressing the subject of RICO  injury rather



            than predicate acts.


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Plaintiff's  mail fraud claim likewise proves deficient.



            For one thing, it  lacks the specificity required by  Fed. R.



            Civ. P. 9(b).  See, e.g.,  New England Data Services, Inc. v.
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            Becher, 829 F.2d  286, 290  (1st Cir. 1987).2   Moreover,  to
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            the  extent  his  argument  amounts to  the  allegation  that



            Gertrude  Shear committed  perjury,  his cause  would not  be



            advanced; perjury does not constitute an act of racketeering.



            See, e.g.,  Pyramid Securities, Ltd. v.  IB Resolution, Inc.,
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            924 F.2d  1114, 1118-19 (D.C.  Cir.), cert. denied,  502 U.S.
                                                  ____________



            822 (1991); United States v. Williams, 874 F.2d 968, 973 n.17
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            (5th Cir. 1989).  



                 To be  sure, as plaintiff observes,  several courts have



            indicated that a mail fraud claim premised largely on charges



            of perjury can suffice as a predicate act.  See, e.g., United
                                                        ___  ____  ______



            States v. Eisen,  974 F.2d 246,  254 (2d Cir. 1992)  ("use of
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            the  mail fraud  offense as  a RICO  predicate act  cannot be



            suspended  simply because perjury  is part  of the  means for



            perpetrating  the  fraud"), cert.  denied,  113  S. Ct.  1840
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            2.  The   suggestion   that   the    information   concerning

            defendants' use of the mails was in their exclusive control--

            such that plaintiff  should be allowed to amend his complaint

            following further  discovery, see, e.g., Becher,  829 F.2d at
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            290--falls  short.   As  a party  to  the state  court  suit,

            plaintiff obviously was  (or should have  been) aware of  the

            circumstances  surrounding  the  defendants'   submission  of

            allegedly  fraudulent affidavits  to the  court.   See, e.g.,
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            Feinstein, 942 F.2d  at 44 ("Although  Becher may in  certain
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            circumstances give  a plaintiff a  second bite at  the apple,

            its  generous formulation  is  not automatically  bestowed on

            every litigant.").



                                         -7-



(1993);  see  also Midwest  Grinding Co.  v. Spitz,  976 F.2d
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            1016, 1022-23 (7th Cir. 1992) (leaving question open).  Here,



            however, perjury is  said to constitute the  entire means for



            perpetrating the fraud.  As well, the Midwest Grinding  court
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            noted that in cases "allowing perjury to serve as a predicate



            act  [by  way  of a  mail  fraud  or  obstruction of  justice



            allegation], ...  the defendant had either  been convicted of



            perjury before the civil RICO action commenced or had perjury



            established as  a matter of record in a separate proceeding."



            Id. at 1022 n.3 (citations omitted).  Nothing of the sort has
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            occurred  here; quite to the contrary, the state court deemed



            Gertrude Shear's evidence credible.  



                 In   essence,  simply   by  alleging   that  defendants'



            litigation stance  in the state court  case was "fraudulent,"



            plaintiff is insisting upon a right to relitigate that entire



            case  in federal court (while the case remains pending in the



            state appellate court).  The  RICO statute obviously was  not



            meant  to endorse any such occurrence.  Cf. Willis v. Lipton,
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            947 F.2d 998,  1001 (1st  Cir. 1991) ("An  extension of  RICO



            standing in these circumstances would serve to 'federalize' a



            substantial   volume   of   common   law   fraud   litigation



            traditionally left to state courts.").3



                                
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            3.  Plaintiff's  two  remaining  arguments  can   be  readily

            rejected.  The  district court  was not  required to  convert

            defendants' motion  to dismiss into one  for summary judgment

            before  taking judicial notice of court papers from the state

            court  litigation.  See, e.g.,  Edward v. John Hancock Mutual
                                ___  ____   ______    ___________________



                                         -8-



Affirmed.
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            Life Ins. Co., 973 F.2d 1027, 1030 n.1 (1st Cir. 1992);  Mack
            _____________                                            ____

            v.  South Bay  Beer Distributors, Inc.,  798 F.2d  1279, 1282
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            (9th Cir. 1986).   Nor did it abuse its discretion in denying

            plaintiff's  post-judgment  request  to  amend  his complaint

            (following further discovery), where any such amendment would

            have  been futile.   See,  e.g., Arzuaga-Collazo  v. Oriental
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            Federal Sav. Bank, 913  F.2d 5, 7 (1st Cir.  1990); Nodine v.
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            Textron, Inc., 819 F.2d 347, 349 (1st Cir. 1987).  
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