United States District Court, D. South Carolina, Rock Hill Division
M. Whitner Slagsvol and Elizabeth Slagsvol, Plaintiffs,
Thomas Oswald General Carpentry and Builders, LLC, and Thomas Oswald, Defendants,
Thomas Oswald General Carpentry & Builders, LLC, Third-Party Plaintiff,
Richard Molten, Third-Party Defendant.
OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO
DISMISS RICO CLAIM (ECF NO. 43)
CAMERON MCGOWAN CURRIE SENIOR UNITED STATES DISTRICT JUDGE.
this action, Plaintiffs M. Whitner Slagsvol and Elizabeth
Slagsvol (“Plaintiffs”), bring claims against
Defendants Thomas Oswald General Carpentry and Builders, LLC
(“Oswald Builders”) and Thomas Oswald
“Defendants”) for civil RICO violations, fraud,
breach of contract accompanied by a fraudulent act, negligent
misrepresentation, breach of fiduciary duty, breach of
contract, and negligence. ECF No. 23 (Amended Complaint).
matter is before the court on Defendants' motion to
dismiss the RICO claim with prejudice under Fed.R.Civ.P.
12(b)(6), and, if the court dismisses this cause of action,
to remand to state court “as no remaining causes of
action give Federal jurisdiction.” ECF No. 43.
Plaintiffs have not responded to Defendants' motion, and
the time to do so has expired. For the reasons set forth
below, the motion is granted in part.
motion under Federal Rule of Civil Procedure 12(b)(6) should
be granted only if, after accepting all well-pleaded
allegations in the complaint as true, it appears certain that
the plaintiff cannot prove any set of facts in support of the
claims that entitles it to relief. See Edwards v. City of
Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). Although
the court must take the facts in the light most favorable to
the plaintiff, it “need not accept the legal
conclusions [the plaintiff would draw] from the facts.”
Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir.
2008) (quoting Eastern Shore Mkts., Inc. v. J.D. Assocs.
Ltd. P'ship, 213 F.3d 175, 180 (4th Cir. 2000)). The
court may also disregard any “unwarranted inferences,
unreasonable conclusions, or arguments.” Id.
Rule 12(b)(6) standard has often been expressed as precluding
dismissal unless it is certain that the plaintiff is not
entitled to relief under any legal theory that plausibly
could be suggested by the facts alleged. See Mylan Labs.,
Inc. v. Markari, 7 F.3d 1130, 1134 (4th Cir. 1993).
Nonetheless, the plaintiff must allege “enough facts to
state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)
(quoted in Giarratano, 521 F.3d at 302). Thus, in
applying Rule 12(b)(6), the court also applies the relevant
pleading standard. Despite the liberal pleading standard of
Rule 8, a plaintiff in any civil action must include more
than mere conclusory statements in support of a claim.
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(court need only accept as true the complaint's factual
allegations, not its legal conclusions); see also
McCleary-Evans v. Maryland Dept. of Trans., 780 F.3d
582, 587 (4th Cir. 2015) (noting “Iqbal and
Twombly articulated a new requirement that a
complaint must allege a plausible claim for relief, thus
rejecting a standard that would allow a complaint to survive
a motion to dismiss whenever the pleadings left open the
possibility that a plaintiff might later establish some set
of [undisclosed] facts to support recovery.” (emphasis
and alteration in original, internal quotation marks
omitted)); Walters v. McMahen, 684 F.3d 435, 439
(4th Cir. 2012) (citing Robertson v. Sea Pines Real
Estate Companies, Inc., 679 F.3d 278 (4th Cir. 2012) for
proposition plaintiff need not forecast evidence sufficient
to prove the elements of a claim, but must allege sufficient
facts to establish those elements).
and Defendant Oswald Builders entered into a contract in
November 2016 for construction of a home in Fairfield County.
ECF No. 23 at ¶ 7. Oswald is the managing member of
Oswald Builders. Id. at ¶ 6. Third-party
Defendant Richard W. Molten, Jr. (“Molten”) was
the architect on the project. Id. at ¶¶
10, 11. Under the terms of the contract, Oswald Builders was
to be paid the cost of work defined plus 17% of the cost of
work as its fee. Id. at ¶ 12. Work was to be
completed by June 1, 2017. Id. at ¶ 13.
Builders began work in November 2016, and periodically
prepared invoices for work completed. Id. at
¶¶ 15, 16. Oswald Builders provided 36 invoices to
Molten via email, but allegedly billed for material not
purchased, for an amount over cost, inflated costs of
materials and supplies, inflated cost of subcontractors, and
for labor not used, used on other projects, or denied
reimbursement by the contract. Id. at ¶¶
17-24. Molton was to review the invoices to assure Plaintiffs
the invoices accurately reflected the costs incurred.
Id. at ¶ 26.
allege Oswald Builders and Oswald engaged in a RICO scheme
“to perpetrate a fraud upon [Plaintiffs] by use of
fraudulent invoices, ” and that Oswald had perpetrated
such a scheme on other homeowners dating from 2007.
Id. at ¶¶ 31, 32. They allege Defendants
“performed predicate acts of racketeering activity by
wire fraud through a pattern of sending inflated,
non-conforming, and fraudulent invoices by use of wire
communications” and “intended” Plaintiffs
rely on the invoices, on which they did rely and pay.
Id. at ¶¶ 35-38. Plaintiffs allege
Defendants have used this scheme previously and will continue
to do so “until made to stop by adverse
judgment.” Id. at ¶ 40.
make multiple arguments as to why Plaintiffs' claims
fail, and Plaintiffs have not addressed any. As one is
dispositive, the court only addresses that issue: whether
there is a pattern of racketeering sufficient to state a RICO
court agrees Plaintiffs have failed to allege facts
sufficient to support a RICO claim. Consistent with Fourth
Circuit authority, this case simply does not rise to the
level required for RICO claims predicated on wire fraud:
[W]e are cautious about basing a RICO claim on predicate acts
of mail and wire fraud because ‘[i]t will be the
unusual fraud that does not enlist the mails and wires in its
service at least twice.' Anderson v. Foundation for
Advancement, Educ. and Employment of Am. Indians, 155
F.3d 500, 506 (4th Cir.1998) (internal citations omitted).
This caution is designed to preserve a distinction between
ordinary or garden-variety fraud claims better prosecuted
under state law and cases involving a more serious scope of
activity. See id.; Midwest Grinding Co. v. Spitz,976 F.2d 1016, 1022 (7th Cir.1992). But see Annulli v.
Panikkar,200 F.3d 189, 199 (3d Cir.1999) (stating that
because RICO statute is to be read broadly, RICO “may
be applicable to many garden variety fraud cases”
(internal quotation marks omitted)). We have reserved RICO
liability for ...