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Golphin v. Wells Fargo Bank

November 2, 2010


The opinion of the court was delivered by: William W. Caldwell United States District Judge


I. Introduction

Presently before the court is defendant Wells Fargo Bank, N.A.'s ("Wells Fargo) motion to dismiss counts I, III, IV, and VI of plaintiff Mary Shirley Golphin's amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Plaintiff filed this action alleging, amongst other things, that Wells Fargo committed common law fraud and violated the Racketeer Influenced and Corrupt Organizations Act ("RICO") and Pennsylvania's Unfair Trade Practices and Consumer Protection Law ("UTPCPL") in connection with plaintiff's mortgage refinance loan. For the reasons that follow, we will grant defendant's motion.

II. Background

We see no reason to set forth a detailed factual background as the facts were thoroughly addressedby Magistrate Judge Prince in his report and recommendation of May 28, 2010 (see doc. 15.), subsequently adopted by Judge Vanaskie (see doc. 16.), concluding that Wells Fargo's motion to dismiss the original complaint be granted. Any new, relevant allegations pleaded in the amended complaint will be discussed as necessary.

III. Discussion

A. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) authorizes dismissal of a complaint for "failure to state a claim upon which relief can be granted." Under Rule 12(b)(6), we must "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (quoting Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008)). While a complaint need only contain "a short and plain statement of the claim," Fed. R. Civ. P. 8(a)(2), and detailed factual allegations are not required, Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 1964, 167 L.Ed.2d. 929 (2007), a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955 at 1974. "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, - - - U.S. -- - -, 129 S.Ct. 1937, 1949 (2009)(quoting Twombly, 550 U.S. at 556, 127 S.Ct. at 1965.) "[L]abels and conclusions" are not enough, Twombly, 550 U.S. at 555, 127 S.Ct. at 1964-65, and a court "'is not bound to accept as true a legal conclusion couched as a factual allegation.'" Id., 127 S.Ct. at 1965 (quoted case omitted).

In resolving the motion to dismiss, we thus "conduct a two-part analysis." Fowler, supra, 578 F.3d at 210. First, we separate the factual elements from the legal elements and disregard the legal conclusions. Id. at 210-11. Second, we "determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a "'plausible claim for relief.'" Id. at 211 (quoted case omitted).


In Count I, plaintiff alleges the defendants violated the RICO, 18 U.S.C. §§ 1961-1968. Section 1962(c) provides that it is unlawful "for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt." 18 U.S.C. § 1962(c).

To plead a claim under § 1962(c), "the plaintiff must allege (1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity." In re Insurance Brokerage Antitrust Litigation, - - - F.3d - - - -, 2010 WL 3211147, at *42 (3d Cir. 2010). To demonstrate "a pattern of racketeering activity," a plaintiff must establish "at least two acts of racketeering activity within a ten-year period." Id.; see also 18 U.S.C. § 1961(5). In addition, racketeering activity may include, among other things, federal mail fraud, 18 U.S.C. § 1341, or federal wire fraud, 18 U.S.C. § 1343. See 18 U.S.C. § 1961(1); see also Lum v. Bank of America, 361 F.3d 217, 223 (3d Cir. 2004). "To prove a pattern of racketeering activity a plaintiff or prosecutor must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity." H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239, 109 S.Ct. 2893 (1989). Here, defendants assert that plaintiff insufficiently pleaded a "pattern of racketeering activity" because she failed to sufficiently allege facts supporting the continuity prong and failed to plead mail and/or wire fraud with particularity.

1. Continuity Prong

Under the "relatedness" requirement of RICO, predicate acts are related "if they 'have the same or similar purposes, results, participants, victims, or methods of commission, or other are interrelated by distinguishing characteristics and are not isolated events.'" Tabas v. Tabas, 47 F.3d 1280, 1292 (3d Cir. 1995)(citing H.J. Inc., 492 U.S. at 240). Furthermore, under the "continuity" prong, "what a plaintiff or prosecutor must prove is continuity of racketeering activity, or its threat, simpliciter."

H.J. Inc., 492 U.S. at 241. To this end, continuity can be "both a closed-and open-ended concept, referring either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition." Id. at 241. "It is, in either case, centrally a temporal that a party may establish continuity by proving a series of related predicates extending over a substantial period of time." Tabas, 47 F.3d at 1392 (internal citations omitted). Thus, continuity can be shown by establishing long-term criminal activity. Id.

Wells Fargo maintains that the complaint is devoid of allegations regarding the continuity prong, and thus plaintiff cannot establish a pattern of racketeering activity. In opposition, plaintiff argues that she sufficiently pleaded the continuity prong by citing other cases in other jurisdictions where Wells Fargo inflated appraisals in order to make higher fees. Plaintiff avers that:

102. In April of 2009 in the U.S. District Court in San Francisco, a class action lawsuit has been filed against Wells Fargo alleging that Wells Fargo pressured and intimidated appraisers to deliver artificially inflated home appraised values to help close loans and increase profits. 103. In January of 2008 in the U.S. District Court for the District of Maryland (No. 08-00062), the City of Baltimore sued Wells Fargo alleging that the bank pushed blacks into costly or onerous high-interest, predatory subprime loans that were " designed to fail."

104. In April of 2009, the State of California has sued Wells Fargo and accused the bank of securities fraud for telling California investors that $1.5 billion of risky securities sold to them were as safe as cash. 105. On July 31, 2008, Kimberly Thomas was awarded $250,000.00 in damages and $1 million in punitive damages against Wells Fargo in Montgomery County Circuit Court, Maryland, based on Wells Fargo' s conviction for fraud, negligence and other charges for inflating Ms. Thomas' income and assets on her mortgage application, and for locking her into a bigger mortgage that she could afford.

Am. Compl. at ¶¶102-105.

These four instances of alleged fraud are insufficient to show a pattern of racketeering activity. Where, as here, a plaintiff relies on mail and wire fraud as the basis for RICO liability, the complaint must comply with Federal Rule of Civil Procedure 9(b) which requires that fraud allegations be pleaded with particularity. Lum v. Bank of America, 361 F.3d 217, 223 (3d Cir. 2004). A plaintiff satisfies this requirement by pleading the "date, place or time of the fraud, or through alternative means of injecting precision and some measure of substantiation into [her] allegations of fraud." Id. at 224 (citations omitted). As we previously noted, in order to allege a pattern of racketeering activity, plaintiff must allege with particularity that two or more related predicate acts extend over a substantial period of time. Simply averring that Wells Fargo has been sued in other jurisdictions is not enough. We cannot determine if these other cases involve acts that would constitute racketeering activity as defined by 18 U.S.C. ยง 1961 because plaintiff has failed to plead the nature of the frauds, nor the date, place or time of the alleged frauds. ...

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