gabovitch v. shear, 1st cir. (1995)

7/26/2019 Gabovitch v. Shear, 1st Cir. (1995)

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USCA1 Opinion

November 21, 1995 [NOT FOR PUBLICATION]

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

____________________

No. 95-1055

WILLIAM GABOVITCH, ETC.,

Plaintiff, Appellant,

v.


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MAURICE SHEAR, ET AL.,

Defendants, Appellees.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

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

____________________

Before

Torruella, Chief Judge, ___________

Stahl and Lynch, Circuit Judges. ______________

____________________

William Gabovitch on brief pro se. _________________

Brian A. Davis, Julie B. Brennan, and Choate, Hall & Ste ______________ ________________ __________________


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brief for appellees.

____________________

____________________


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Per Curiam. Pro se plaintiff William Gabovitch,___________

certified public accountant and non-practicing attorne

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

irrevocable inter vivos trusts created by Maurice Shear.

1992, in connection with litigation filed in 1987 by Gertru

Shear (Maurice's wife and the contingent life beneficiary

the trusts), a state court judge removed plaintiff from

position as trustee and ordered him to pay substanti


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damages because of his mismanagement of the trust

Plaintiff's appeal from that decision remains pending

state appellate court. Claiming that the allegations

mismanagement were frivolous and that his removal had be

fraudulently obtained, plaintiff pursued various collater

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

federal court, filing the instant civil RICO action again

the Shears (and others), seeking injunctive relief a

damages on behalf of both himself and the trusts. See___

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

dismissed the complaint for failure to state a claim. Havi

reviewed the record in full, and having construed t

complaint in the light most favorable to plaintiff, se _


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e.g., Feinstein v. Resolution Trust Corp., 942 F.2d 34,____ _________ ______________________

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

____________________

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

complaint as true and drawn all reasonable inferences

plaintiff's favor, there is an inconsistency in

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Extended discussion is unnecessary. To state a RI


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claim, plaintiff was required to allege that defendan

conducted an enterprise through a pattern of racketeeri

activity. See, e.g., Libertad v. Welch, 53 F.3d 428, 4 ___ ____ ________ _____

(1st Cir. 1995). As well, he was required to allege that

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

RICO violation. 18 U.S.C. 1964(c); see, e.g., Sedi ___ ____ ____

S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985) ("t ________ __________

plaintiff has standing if, and can only recover to the exte

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

conduct constituting the [RICO] violation"); see also Hol ________ ___

v. Securities Investor Protection Corp., 503 U.S. 258, 2 ______________________________________

(1992) (RICO plaintiff must allege, not only "but fo


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causation, but also proximate causation requiring "so

direct relation between the injury asserted and the injurio

conduct alleged").

This causation requirement enables us, at the outset,

put to the side vast portions of plaintiff's volumino

complaint. For example, plaintiff has detailed numero

instances of criminal and fraudulent activity allege

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

____________________

narrative. The Shears' principal motivation for filing t

1987 lawsuit, plaintiff contends, was to remove him

trustee and thereby gain control of the trusts' prima

asset--the Mount Pleasant Hospital. Yet plaintiff elsewhe

explains that the trusts had sold their interest in t

hospital the previous year (and only reacquired owners

thereof in 1991).


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

in injury to plaintiff's business or property. In tur

plaintiff charges that defendants have engaged in vario

misdeeds following his ouster as trustee in January 199

Again, such actions are not linked to any business

property loss suffered by plaintiff. We note that plainti


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lacks standing to complain of injury to the trus

themselves, having been removed as trustee by the time t

instant suit was filed. And the suggestion that his stat

as a potential creditor of the trusts grants him standing

sue on his own behalf is misplaced. See, e.g., id. at 27 ___ ____ ___

National Enterprises v. Mellon Financial Services, 847 F. ____________________ __________________________

251, 254 (5th Cir. 1988).

The only business or property injury alleged in t

complaint is that stemming from the state court judgment

i.e., plaintiff's loss of his position as trustee; t

accompanying monetary damages; the resulting harm to

reputation and client base; and the legal expenses incurr

in litigating that action. The question thus becomes whet


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plaintiff has set forth a predicate act of racketeering t

has proximately caused such injury. Plaintiff insists he

done so in two respects. He argues that the filing

defendants of the state court suit (as part of a broade

unlawful scheme) constituted attempted extortion in violati

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

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Gertrude Shear, by proffering false affidavits and testimo

to the state court (allegedly at the behest of her husban

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

disagree that such claims establish the necessary predica

act.

Numerous courts have held that the filing of litigatio

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

predicate racketeering act of extortion. "If a suit

groundless or filed in bad faith, the law of torts

provide a remedy. Resort to a federal criminal statute

unnecessary." I.S. Joseph Co. v. J. Lauritzen A/S, 751 F. _______________ ________________

265, 267-68 (8th Cir. 1984); accord, e.g., First Pacif ______ ____ ___________


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Bancorp, Inc. v. BRO, 847 F.2d 542, 545 (9th Cir. 1988);_____________ ___

Bulow by Auersperg v. von Bulow, 657 F. Supp. 1134, 1143- __________________ _________

(S.D.N.Y. 1987) (holding that malicious prosecution cla

does not constitute predicate act of racketeerin

Plaintiff's reliance on Hall American Center Assocs. v. Dic ____________________________ __

726 F. Supp. 1083 (E.D. Mich. 1989), proves unavailing. T

defendants there had engaged in spurious litigation describ

by the district court as a "clear abuse of process." Id.___

1086. The defendants here prevailed in the state court sui

And Lemelson v. Wang Laboratories, Inc., 874 F. Supp. 430 ( ________ _______________________

Mass. 1994), offers minimal succor to plaintiff, since t

court there was addressing the subject of RICO injury rat

than predicate acts.


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Plaintiff's mail fraud claim likewise proves deficien

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

Civ. P. 9(b). See, e.g., New England Data Services, Inc.___ ____ _______________________________

Becher, 829 F.2d 286, 290 (1st Cir. 1987).2 Moreover,______


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the extent his argument amounts to the allegation t

Gertrude Shear committed perjury, his cause would not

advanced; perjury does not constitute an act of racketeerin

See, e.g., Pyramid Securities, Ltd. v. IB Resolution, Inc ___ ____ ________________________ _________________

924 F.2d 1114, 1118-19 (D.C. Cir.), cert. denied, 502 U. ____________

822 (1991); United States v. Williams, 874 F.2d 968, 973 n. _____________ ________

(5th Cir. 1989).

To be sure, as plaintiff observes, several courts ha

indicated that a mail fraud claim premised largely on char

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

States v. Eisen, 974 F.2d 246, 254 (2d Cir. 1992) ("use______ _____

the mail fraud offense as a RICO predicate act cannot


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suspended simply because perjury is part of the means f

perpetrating the fraud"), cert. denied, 113 S. Ct. 18 _____________

____________________

2. The suggestion that the information concerni

defendants' use of the mails was in their exclusive control

such that plaintiff should be allowed to amend his complai

following further discovery, see, e.g., Becher, 829 F.2d___ ____ ______

290--falls short. As a party to the state court sui

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

circumstances surrounding the defendants' submission

allegedly fraudulent affidavits to the court. See, e. ___ __

Feinstein, 942 F.2d at 44 ("Although Becher may in certa _________ ______

circumstances give a plaintiff a second bite at the appl

its generous formulation is not automatically bestowed

every litigant.").

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(1993); see also Midwest Grinding Co. v. Spitz, 976 F. _________ _____________________ _____

1016, 1022-23 (7th Cir. 1992) (leaving question open). Her

however, perjury is said to constitute the entire means f

perpetrating the fraud. As well, the Midwest Grinding cou ________________

noted that in cases "allowing perjury to serve as a predica

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

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

perjury before the civil RICO action commenced or had perju


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established as a matter of record in a separate proceedin

Id. at 1022 n.3 (citations omitted). Nothing of the sort___

occurred here; quite to the contrary, the state court dee

Gertrude Shear's evidence credible.

In essence, simply by alleging that defendant

litigation stance in the state court case was "fraudulent

plaintiff is insisting upon a right to relitigate that enti

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

state appellate court). The RICO statute obviously was n

meant to endorse any such occurrence. Cf. Willis v. Lipto

___ ______ ____

947 F.2d 998, 1001 (1st Cir. 1991) ("An extension of RI

standing in these circumstances would serve to 'federalize'

substantial volume of common law fraud litigati


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traditionally left to state courts.").3

____________________

3. Plaintiff's two remaining arguments can be readi

rejected. The district court was not required to conve

defendants' motion to dismiss into one for summary judgme

before taking judicial notice of court papers from the sta

court litigation. See, e.g., Edward v. John Hancock Mutu ___ ____ ______ ________________

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Affirmed.


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_________


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____________________

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

v. South Bay Beer Distributors, Inc., 798 F.2d 1279, 12 __________________________________

(9th Cir. 1986). Nor did it abuse its discretion in denyi

plaintiff's post-judgment request to amend his complai

(following further discovery), where any such amendment wou

have been futile. See, e.g., Arzuaga-Collazo v. Orient ___ ____ _______________ _____

Federal Sav. Bank, 913 F.2d 5, 7 (1st Cir. 1990); Nodine

_________________ ______

Textron, Inc., 819 F.2d 347, 349 (1st Cir. 1987)._____________


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gabovitch v. shear, 1st cir. (1995)

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