Schrag v. Dinges

820 F. Supp. 565, 1993 U.S. Dist. LEXIS 6294, 1993 WL 152588
CourtDistrict Court, D. Kansas
DecidedApril 20, 1993
DocketCiv. A. No. 88-1373-FGT
StatusPublished
Cited by2 cases

This text of 820 F. Supp. 565 (Schrag v. Dinges) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schrag v. Dinges, 820 F. Supp. 565, 1993 U.S. Dist. LEXIS 6294, 1993 WL 152588 (D. Kan. 1993).

Opinion

MEMORANDUM AND ORDER

THEIS, District Judge.

This is a civil action brought under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., and Kansas common law fraud. The plaintiffs allege that the various defendants were involved in four separate fraudulent schemes involving development of a real estate investment firm called Rexmoor Properties, Inc. The matter is before the court on motions filed by Defendants Denis Dieker and Bonaventure A. Kreutzer for partial summary judgment (Doc. 597 & 599), dismissal (Doc. 670), and to strike certain of plaintiffs’ exhibits with sanctions (Doc. 676). Defendants Dieker and Kreutzer are allegedly involved only in the fourth scheme, which is set forth in Counts IV and V of the Third Amended Complaint.

Counts IV and V are based on the alleged fraud perpetrated by defendants Gary Ding-es, Dieker and Kreutzer on plaintiffs John Nickelson and the estate of his wife (“the Nickelsons”). Plaintiffs’ allegations with respect to Counts IV and V are as follows. The Nickelsons had sold their fertilizer business to ConAgra for $400,000, of which $200,-000 would be amortized ,at the rate of $4,550 per month. In October 1985, Gary Dinges persuaded Nickelson to loan him $87,500 to pay closing costs of the sale of the Paganica development, promising Nickelson total repayment plus a 20% profit from the proceeds of the sale. In fact, the Paganica sale had been closed eleven months earlier, after Rexmoor collapsed. Gary Dinges needed the ■money to repay his debts, at Boulevard Bank.

Realizing that Nickelson did not have the money on hand to extend such a loan, Gary Dinges informed Nickelson that Boulevard Bank would make a $87,000 loan to Nickel-son, which he could then hand over to Gary Dinges. To secure the Boulevard Bank loan, Nickelson had to pledge, his one-half interest in the monthly ConAgra checks. Because the ConAgra checks were issued in his wife’s name, John Nickelson had to assign the entire cheek, worth $175,000 to Boulevard Bank under an agreement that Boulevard Bank would then return $2,275 per month to his wife. Defendants Dieker and Kreutzer, officers at Boulevard Bank, allegedly promised Nickelson that only $87,000 of the $175,000 ConAgra Tine of credit would be loaned to Gary Dinges for the closing costs of Paganica Development, and that Nickelson’s wife would receive ■ her monthly share of the checks. However, Dieker and Kreutzer disbursed the entire ConAgra line of credit to Gary Dinges, which went toward repayment of his prior debts and personal use. Nickel-son’s wife never received her monthly payments from Boulevard Bank. Nickelson lost his investment and his share of the ConAgra contract.

I. Motion for Summary Judgment on Count IV

Defendants Dieker and Kreutzer seek partial summary judgment as to Count IV, which alleges RICO violations. Defendants [567]*567present several arguments in support of their motion. However, the court need not address the merits of those arguments because plaintiffs have responded that they never intended to assert a RICO claim against defendants Dieker and Kreutzer. In something of a departure from their previous arguments in this case, plaintiffs now admit that Count IV does not state (and was never intended to state) a claim against defendants Dieker and Kreutzer. Plaintiffs assert that only Gary Dinges and Ted Dinges are defendants in Count IV.

The Federal Rules of Civil Procedure provide that summary judgment is appropriate when the documentary evidence filed with the motion “show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(e). Because plaintiffs do not seek to establish a RICO cause of action against defendants Dieker and Kreutzer, the court grants their motions for partial summary judgment as to Count rv.

II. Motion to Dismiss Count V

The court will next address the motion to dismiss Count V filed by defendants Dieker and Kreutzer. Defendants argue therein that the court does not have subject matter jurisdiction to decide Count V, which is based on Kansas common law fraud and which is, according to plaintiffs’ current position, the only count in which Dieker and Kreutzer are defendants.

The court has previously addressed the issue of subject matter jurisdiction related to Count V. As stated above, it appeared at that time that the Nickelsons intended to pursue a RICO claim against defendants Dieker and Kreutzer under Count IV, as well as the common law fraud claim under Count-V.1 Therefore, this court held that it could properly exercise its pendent claim jurisdiction to decide the state law-claim. Schrag v. Dinges, 788 F.Supp. 1543, 1549 (D.Kan.1992).

Because plaintiffs now admit that their only cause of action against Dieker and Kreutzer is the common law fraud claim, and because defendants Dieker and Kreutzer are the only named defendants in Count V, Dieker and Kreutzer argue that the court does not have subject matter jurisdiction over the claim. The issue, rather than pendent claim jurisdiction, is pendent party jurisdiction. Defendants argue that there is no pendent party jurisdiction under 18 U.S.C. § 1964, RICO’s jurisdictional provision. The court agrees.

In determining the availability of pendent party jurisdiction, the court must undergo a three step analysis. Bolin v. Cessna Aircraft Co., 759 F.Supp. 692, 715 (D.Kan. 1991) (citing Finley v. United States, 490 U.S. 545, 109 S.Ct. 2003, 104 L.Ed.2d 593 (1989). At the first step, the court must decide whether the federal and nonfederal claims comprise “one constitutional case.” Finley, 490 U.S. at 548-49, 109 S.Ct. at 2005-07 (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966).2 The Gibbs test is met if the plaintiff alleges a substantial federal claim, there is a common nucleus of operative facts, and the issues would ordinarily be tried in a single lawsuit. Id. at 549, 109 S.Ct. at 2006. The court will assume for purposes of this decision that the Gibbs factors are met in this case.

At the-second step, the court must decide whether the • applicable jurisdictional statute includes jurisdiction over the nonfed-eral claims as well as over the federal claims. In Finley, the Supreme Court held that pendent party jurisdiction was not available under the Federal Tort Claims Act (“FTCA”), because Congress had granted jurisdiction only over “civil actions on claims against the United States.”3 Therefore, pendent party [568]*568jurisdiction is not available absent an affirmative statutory grant. Sarmiento v. Texas Bd. of Veterinary Medical Examiners, 939 F.2d 1242, 1247 (5th Cir.1991). See also Wanner v. State of Kansas, 766 F.Supp.

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Related

Galen Schrag Merlin Kaufman Michael Maloney Dale McCurry A.J. McCurry Robert McCurry Odel McCurry Cecil McCurry James Meier William G. Schwartz, John R. Nickelson, Individually, and in His Capacity as Administrator of the Estate of Neola Nickelson, James Craig Dodd, Esq. v. Ted Dinges, Jr. Gary Dinges Mark Youngers Charles Brooks Jay Ewing Robert "Bob" Simpson Bonaventure A. Kreutzer, Jr. Denis Dieker Valley Federal Savings & Loan Association Paganica, Inc. Dinges International, Inc. Ag-Marketing Commodities, Inc. Financial Investments, Inc., and Fred Schaffer, Galen Schrag, Merlin Kaufman Michael Maloney Dale McCurry A.J. McCurry Robert McCurry Odel McCurry Cecil McCurry James Meier William G. Schwartz, John R. Nickelson, Individually, and in His Capacity as Administrator of the Estate of Neola Nickelson v. Ted Dinges, Jr. Gary Dinges Charles Brooks Jay Ewing Fredf Shaffer Robert "Bob" Simpson Bonaventure A. Kreutzer, Jr. Denis Dieker Valley Federal Savings & Loan Association Paganica, Inc. Dinges International, Inc. Ag-Marketing Commodities, Inc. Financial Investments, Inc., and Mark Youngers, Galen Schrag Merlin Kaufman Michael Maloney Dale McCurry A.J. McCurry Robert McCurry Odel McCurry Cecil McCurry James Meier William G. Schwartz, John R. Nickelson, Individually, and in His Capacity as Administrator of the Estate of Neola Nickelson v. Ted Dinges, Jr. Gary Dinges Mark Youngers Charles Brooks Jay Ewing Fred Shaffer Bonaventure A. Kreutzer, Jr Denis Dieker Valley Federal Savings & Loan Association Paganica, Inc. Dinges International, Inc. Ag-Marketing Commodities, Inc. Financial Investments, Inc., and Robert "Bob" Simpson, AKA Bob Simpson
73 F.3d 374 (Tenth Circuit, 1995)
Schrag v. Dinges
150 F.R.D. 664 (D. Kansas, 1993)

Cite This Page — Counsel Stack

Bluebook (online)
820 F. Supp. 565, 1993 U.S. Dist. LEXIS 6294, 1993 WL 152588, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schrag-v-dinges-ksd-1993.