RICO: “Where There is a Single Scheme, Single Injury and Few Victims, It Will Be Virtually Impossible to State a RICO Claim” — Parsing Injury Doesn’t Multiply It (Good Quotes)

Eastern Sav. Bank, FSB v. Papageorge, 2015 U.S. App. LEXIS 17744 (D.C. Cir. Oct. 9, 2015):

On July 29, 2013, appellant Eastern Savings Bank, FSB, filed a complaint in the district court raising nine claims arising out of an alleged conspiracy related to the financing of the purchase of a townhouse located in the District of Columbia. Among its claims, Eastern alleges fraud and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) based on the defendants' alleged attempts to undermine Eastern's interests in the townhouse and acquire the property for a fraction of its fair market value. The parties have been litigating their respective rights in [*2]  the property for more than a decade. The district court dismissed Eastern's instant complaint with prejudice for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). We affirm.

Eastern first challenges the dismissal of its RICO claims. To state a RICO claim, a plaintiff must adequately plead a pattern of racketeering activity. See W. Assocs. Ltd. P'ship v. Mkt. Square Assocs., 235 F.3d 629, 633 (D.C. Cir. 2001). Eastern fails to do so. Eastern alleges that the defendants took a number of steps, primarily through baseless litigation, for the purpose of acquiring Eastern's townhouse at a reduced price. We have said that where there is a "single scheme, single injury, and few victims," it will be "virtually impossible" to state a RICO claimEdmondson & Gallagher v. Alban Towers Tenants Ass'n, 48 F.3d 1260, 1265 (D.C. Cir. 1995); see also Western Associates, 235 F.3d at 634. Eastern's RICO claim involves a single injury, arising out of a single scheme, to at most three victims: First, Eastern's alleged harm amounts to a single set of losses from litigating the parties' property interests in the townhouse. While Eastern argues that its injuries include litigation costs, impairment to its contracts, and damage to its reputation, this is an attempt to multiply its injuries by parsing them, because they all boil down to the effects of litigation over the townhouse. See Western Associates, 235 F.3d at 635. Second, the complaint [*3]  sets forth a single scheme that focuses on the defendants' alleged attempt to control a single piece of property. That alleged conduct is best characterized as a "single effort" to diminish the value of Eastern's interest in the townhouse because everything that Eastern alleges the defendants did was for the alleged purpose of achieving that goal. See id. at 634-35. Finally, Eastern alleges at most three victims: itself and the two subsequent purchasers of the property. Eastern responds that a pattern exists because the dispute has persisted for a number of years and involves multiple alleged predicate acts. But, as we held in Edmondson, these two factors are insufficient to show a pattern of racketeering where the plaintiff alleges a single scheme, involving one injury, to at most a few victims. See 48 F.3d at 1265. Accordingly, Eastern fails to state a claim for violations of RICO or conspiracy to violate RICO.

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