United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE
before the Court is Defendants Mark Hammervold and
Hammervold, PLC's Amended Motion to Dismiss (Dkt. #137).
Having considered the pleadings, the Court finds that the
motion should be denied.
Diamond Consortium, Inc. d/b/a The Diamond Doctor (“The
Diamond Doctor”) is a retailer and wholesaler of
diamonds and other jewelry. Plaintiff David Blank
(“Blank”) owns The Diamond Doctor (collectively,
“Plaintiffs”). Plaintiffs allege that Defendant
Brian Manookian (“Manookian”) and his law firm,
Defendant Cummings Manookian, PLC (“Cummings
Manookian”) engaged in a scheme to defame and extort
Plaintiffs. According to Plaintiffs, Manookian created
websites and distributed fliers falsely accusing The Diamond
Doctor of having committed “diamond fraud” and
“cheating customers through the sale of over-graded
diamonds.” Plaintiffs allege that Manookian threatened
Plaintiffs with several diamond over-grading lawsuits, unless
Plaintiffs retained Cummings Manookian as counsel and paid a
$25, 000 monthly retainer fee for a period of 120 months,
totaling three million dollars. Plaintiffs state that
Manookian told Blank that if Cummings Manookian represented
The Diamond Doctor, Manookian would be conflicted out of
continuing any negative advertising campaigns. The Diamond
Doctor did not retain Cummings Manookian. Plaintiffs allege
that Manookian continued to defame Plaintiffs utilizing
websites, Facebook posts, YouTube videos, fliers, and door
hangers accusing Blank and The Diamond Doctor of being
“fraudsters” and “stealing customers
cash.” Plaintiffs allege that Manookian has threatened
several other jewelers with similar “smear
campaigns” to extort the jewelers into paying Cummings
Manookian large retainer fees.
further allege that Defendant Mark Hammervold and his law
firm, Defendant Hammervold, PLC (collectively, the
“Hammervold Defendants”) “are necessary to
Manookian's illegal acts . . . because Manookian solicits
clients to sue the targeted jewelers and then refers those
cases to Hammervold and/or Hammervold, PLC to prosecute,
thereby avoiding the appearance of a conflict when Manookian
subsequently enters into ‘engagement agreements' to
represent the targeted jewelers as part of his extortion
scheme.” Plaintiffs allege that Cummings Manookian, and
the Hammervold Defendants are members of an
association-in-fact enterprise because they “together
function as a unit with a common purpose: extorting millions
of their victims.” Plaintiffs bring claims against the
Hammervold Defendants for violations of the Racketeer
Influenced Corrupt Organizations Act, 18 U.S.C. §
1962(c) (the “RICO Act”) and for civil
October 26, 2016, Plaintiffs filed a Consolidated Amended
Complaint (Dkt. #131). On November 9, 2016, the Hammervold
Defendants filed the pending amended motion to dismiss (Dkt.
#137). On December 9, 2016, Plaintiffs filed a response (Dkt.
#147). On December 23, 2016, the Hammervold Defendants filed
a reply (Dkt. #151). On December 30, 2016, Plaintiffs filed a
sur-reply (Dkt. #153).
Federal Rules of Civil Procedure require that each claim in a
complaint include a “short and plain statement . . .
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). Each claim must include enough factual
allegations “to raise a right to relief above the
speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
12(b)(6) motion allows a party to move for dismissal of an
action when the complaint fails to state a claim upon which
relief can be granted. Fed.R.Civ.P. 12(b)(6). When
considering a motion to dismiss under Rule 12(b)(6), the
Court must accept as true all well-pleaded facts in
plaintiff's complaint and view those facts in the light
most favorable to the plaintiff. Bowlby v. City of
Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court
may consider “the complaint, any documents attached to
the complaint, and any documents attached to the motion to
dismiss that are central to the claim and referenced by the
complaint.” Lone Star Fund V (U.S.), L.P. v.
Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
The Court must then determine whether the complaint states a
claim for relief that is plausible on its face.
‘“A claim has facial plausibility when the
plaintiff pleads factual content that allows the [C]ourt to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Gonzalez v.
Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“But where the well-pleaded facts do not permit the
[C]ourt to infer more than the mere possibility of
misconduct, the complaint has alleged-but it has not
‘show[n]'-‘that the pleader is entitled to
relief.'” Iqbal, 556 U.S. at 679 (quoting
Iqbal, the Supreme Court established a two-step
approach for assessing the sufficiency of a complaint in the
context of a Rule 12(b)(6) motion. First, the Court should
identify and disregard conclusory allegations, for they are
“not entitled to the assumption of truth.”
Iqbal, 556 U.S. at 664. Second, the Court
“consider[s] the factual allegations in [the complaint]
to determine if they plausibly suggest an entitlement to
relief.” Id. “This standard
‘simply calls for enough facts to raise a reasonable
expectation that discovery will reveal evidence of the
necessary claims or elements.'” Morgan v.
Hubert, 335 F. App'x 466, 470 (5th Cir. 2009)
(citation omitted). This evaluation will “be a
context-specific task that requires the reviewing [C]ourt to
draw on its judicial experience and common sense.”
Iqbal, 556 U.S. at 679.
“[t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.”' Id. at 678 (quoting
Twombly, 550 U.S. at 570).
state a claim for a RICO Act violation, Plaintiffs must
allege each of the following elements: “(1) conduct (2)
of an enterprise (3) through a pattern (4) of racketeering
activity.” Manax v. McNamara, 842 F.2d 808,
811 (5th Cir. 1988) (citing 18 U.S.C § 1962(c)). The
Hammervold Defendants move for dismissal pursuant to Rule
12(b)(6) arguing Plaintiffs have not pleaded sufficient facts
showing the requisite predicate acts of racketeering activity
and the existence of a RICO Act enterprise. The Court finds
Plaintiffs have pleaded sufficient facts to state plausible
claims of Rico Act violations. Requisite Predicate Acts
of Racketeering Activity The Hammervold Defendants first
argue that Plaintiffs have not pleaded the requisite
predicate acts of racketeering activity required for a RICO
Act claim. “A pattern of racketeering activity requires
two or more predicate acts and a demonstration that the
racketeering predicates are related and amount to or pose a
threat of continued criminal activity.” Brown v.
Protective Life Ins. Co., 353 F.3d 405, 407 (5th Cir.
2003). Plaintiffs allege that Manookian engaged in a pattern
of racketeering activity consisting of violations of four
federal criminal statutes: 18 U.S.C.§ 1341 (mail ...