Commercial Litigation and Arbitration

RICO — Mere Expectation ≠ Business or Property — Hope of Collecting on Judgment If Suit Succeeds, Absent Non-Speculative Property Right to Collect from Defendant = Mere Expectation — Before RICO Default Judgment, Misconduct Not Actionable

Villoldo v. BNP Paribas S.A., 2016 U.S. App. LEXIS 7747 (2d Cir. April 26, 2016):

Plaintiffs, default judgment creditors against the Republic of Cuba ("Cuba"), appeal from the dismissal of their civil Racketeer Influenced and Corrupt Organizations Act ("RICO") claims, see 18 U.S.C. § 1962, and New York state law claims for fraudulent transfer and tortious interference. Plaintiffs argued that defendants violated United States banking laws by processing U.S. dollar transactions involving Cuba up to 2010, and in doing [*2]  so interfered with their ability to collect on their default judgment against Cuba, obtained in 2011 and domesticated in the Southern District of New York in 2012. We review a judgment of dismissal de novo, "accepting as true all factual claims in the complaint and drawing all reasonable inferences in the plaintiff's favor." Fink v. Time Warner Cable, 714 F.3d 739, 740-41 (2d Cir. 2013). In so doing, we assume the parties' familiarity with the facts and record of prior proceedings, which we reference only as necessary to explain our decision to affirm.


"To establish a RICO claim, a plaintiff must show: (1) a violation of the RICO statute, 18 U.S.C. § 1962; (2) an injury to business or property; and (3) that the injury was caused by the violation of Section 1962." Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 120 (2d Cir. 2013) (internal quotation marks omitted). The district court found the second element wanting, reasoning that insofar as the default judgment was the alleged impaired property, it could not have been injured by defendants' alleged RICO violations because plaintiffs did not obtain their default judgment until after the RICO violations had ended. We agree. This court has made clear that a mere "expectation" cannot constitute "business or property" under RICO. McLaughlin v. Am. Tobacco Corp., 522 F.3d 215, 228 (2d Cir. 2008), abrogated on other grounds by Bridge v. Phx. Bond & Indem. Co., 553 U.S. 639 (2008).

In urging otherwise, [*3]  plaintiffs argue that their right to bring an action against Cuba at the time of defendants' wrongdoing constituted a property right cognizable under RICO. We have recognized a chose in action as a property right under the federal mail fraud statute, a RICO predicate, see Porcelli v. United States, 303 F.3d 452, 455 (2d Cir. 2002) (citing United States v. Porcelli, 865 F.2d 1352, 1359-62 (2d Cir. 1989)), and courts within this circuit have found interference with the ability to bring suit actionable under RICO, see United States v. Eisen, No. CR-90-00018, 1990 WL 164681, at *3 (E.D.N.Y. Oct. 19, 1990), aff'd, 974 F.2d 246 (2d Cir. 1992). But Porcelli involved the deprivation of sales tax revenue, the state's right to which was indisputable at the time of collection, see 865 F.2d at 1361; see also Pasquantino v. United States, 544 U.S. 349, 355 (2005) ("Canada's right to uncollected excise taxes on the liquor petitioners imported into Canada is 'property' in its hands."), and Eisen involved interference with a claimholder's right to bring suit at all, see 1990 WL 164681, at *3. Defendants did not interfere with plaintiffs' right or ability to bring suit against Cuba, and plaintiffs had no non-speculative property right to collect compensatory damages from Cuba until their lawsuit resulted in the entry of judgment in 2011. The hope of collecting upon a judgment if one's suit proves successful is precisely the sort of mere expectation that is too speculative to constitute [*4]  a property right within the meaning of 18 U.S.C. § 1962. See McLaughlin v. Am. Tobacco Corp., 522 F.3d at 228; see also Gil Ramirez Grp., L.L.C. v. Hous. Indep. Sch. Dist., 786 F.3d 400, 409 (5th Cir. 2015) ("Injury to mere expectancy interests or to an intangible property interest is not sufficient to confer RICO standing." (internal quotation marks omitted)).

Because plaintiffs' RICO claim was correctly dismissed on this ground, we need not consider whether dismissal is further supported by a failure plausibly to allege causation or enterprise. We therefore affirm the dismissal of plaintiffs' RICO claims.

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