Professional Documents
Culture Documents
Kearney v. DiManna, 10th Cir. (2006)
Kearney v. DiManna, 10th Cir. (2006)
Kearney v. DiManna, 10th Cir. (2006)
Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
JA M ES F. K EA RN EY ,
Plaintiff-Appellee-CrossAppellant,
v.
V IN CEN T D IM A N N A ; K EN A.
O V ERMA N ; M A RK H A N EY ;
FR AN K J. V ESSA , SR .; A N THONY
P. IAC OV ETTA; JIM M Y J. GO SE;
THOM AS S. LAHEY; JAM ES R.
SM ITH; KEN NETH C. PADGETT;
GEORGE A. GRAY; STEVEN W .
PA N CK ; PA U L M . PA ZEN ; JESUS
QUINON ES; DOU GLAS BRADER;
ANDREW A. RAM IREZ; DAVID
NEIL, individually and as Director of
the Police Protective Association of
the C ity and County of D enver;
M ARTIN VIGIL, individually and as
Director of the Police Protective
Association of the City and County of
Denver; JONATHYN PRIEST; AM Y
M A RTIN , M .D .; D A V ID J. B RUNO;
BRUNO, BRUNO & COLIN , P.C.;
M ICHAEL STACK, individually and
as an Officer and Director of the
Police Protective Association of the
City and County of D enver;
BERNARDO ARABALO, individually
and as an Officer and Director of the
Police Protective Association of the
C ity and C ounty of D enver; JO HN
W YCKOFF, individually and as an
This Order and Judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
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James Kearney, a private investigator, brought this civil claim under the
Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.
196168, against thirty-four individual defendants, a law firm, and a nonprofit corporation (collectively, Defendants). The district court granted
motions by all Defendants to dismiss for failure to state a claim, but denied a
motion by one Defendant for sanctions against Kearney. W e affirm the dismissal
of K earneys claims but reverse and remand on the issue of sanctions.
I. BACKGROUND 1
On September 29, 1999, a SW AT team from the Denver Police Department
entered Ismael M enas residence pursuant to a no-knock search warrant that
mistakenly listed M enas address instead of the crack house next door. During
the raid, M ena was shot and killed. Although there was an initial cover-up, the
fact that the SW AT team had raided the wrong house was anonymously leaked to
the media and publicized in November 1999.
An attorney for M enas family hired Plaintiff Kearney, a former F.B.I.
agent, to investigate the killing. Kearney investigated and concluded that M ena
had been unarmed and that the SW AT team members had initially shot him solely
because they overreacted to the situation. Kearney further concluded that when
the SW AT team members realized that they had raided the wrong house and
nearly killed an unarmed man, they decided to cover up the truth: the SW AT team
shot M ena again, killing him, then altered the crime scene to look as if M ena had
been shooting at them. According to Kearney, the police department then
engaged in a two-month cover-up of the true nature of M enas death.
Kearney attempted to convince both a special prosecutor and the F.B.I. of
his conspiracy theory, but was essentially ignored. He therefore began to
publicize his allegations during appearances on a Denver radio talk show.
Defendants realized that Kearney posed a threat as a potential expert witness
against them and began to discuss how to silence him. Eventually, the Police
Protective Association of the City and County of Denver (PPA) and its
members conspired with attorney David Bruno and his law firm to intimidate
Kearney by filing a defamation lawsuit against Kearney, the talk show host, and
the radio station. The PPA funded the lawsuit, Bruno represented the defamation
plaintiffs, and many Defendants participated by giving false or misleading
deposition testimony. After the radio station and talk show host agreed to settle
the case, Defendants voluntarily dismissed the entire defamation law suit,
including all claims against Kearney who had refused to settle. Kearney
nonetheless alleges that the lawsuit injured him professionally, personally, and
economically, and his [sic] business and business reputation.
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K earney thereafter filed the present suit against Defendants, alleging RICO,
RICO conspiracy, and state law claims. The district court granted D efendants
motions to dismiss Kearneys RICO claims under Rule 12(b)(6) because: (1) he
failed to show that he has standing to pursue the RICO claims; (2) his
definition of the criminal enterprise is not different from his allegations of a
pattern of racketeering activity; (3) he lacked support for a valid claim of an
effect on interstate commerce; and (4) [t]he conspiracy claim is insufficient
because the . . . RICO violations . . . have not been adequately alleged. Because
there were no remaining federal claims, the district court dismissed Kearneys
state law claims under Rule 12(b)(1) for lack of jurisdiction.
During the litigation, Defendant PPA sought Rule 11 sanctions against
Kearney. The district court, however, declined to separate the federal claims
from the unresolved state law claims for sanctions purposes and therefore denied
the request. PPA appeals the denial of its motion for sanctions and Kearney
cross-appeals the dismissal of his RICO and RICO conspiracy claims.
II. D ISC USSIO N
A . D ismissal of Kearneys RICO Claim s
As explained above, the district court dismissed Kearneys RICO and RICO
conspiracy claims (together, R ICO claims) on numerous grounds. Because w e
agree that Kearney failed to plead an enterprise distinct from the pattern of
racketeering activity, we need not address the other grounds for dismissal.
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1. Standard of review
W e review de novo the district courts grant of a motion to dismiss for
failure to state a claim. Sutton v. Utah State Sch. for the Deaf and Blind, 173
F.3d 1226, 1236 (10th Cir. 1999). In our review, we accept all well-pleaded
factual allegations as true and view them in the light most favorable to the
nonmoving party. Id. at 1236. A 12(b)(6) motion should not be granted unless
it appears beyond doubt that the plaintiff can prove no set of facts in support of
his claim which w ould entitle him to relief. Id. (quotation omitted).
2. Enterprise
Subsection 1962(c) of RICO makes it
unlawful for any person employed by or associated w ith 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 enterprises affairs through a pattern of racketeering
activity or collection of unlaw ful debt.
18 U.S.C. 1962(c). Subsection 1962(d) makes it unlaw ful for any person to
conspire to violate subsection 1962(c). Id. 1962(d). RICO provides a private
civil cause of action for those w ho are injured by violations of 1962 and allow s
for recovery of treble damages, costs, and attorney fees. Id. 1964(c).
To successfully state a RICO claim, a plaintiff must allege four elements:
(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity.
Robbins v. W ilkie, 300 F.3d 1208, 1210 (10th Cir. 2002) (quotation omitted).
The second RICO element, an enterprise, includes any individual, partnership,
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Fed. R. Civ. P. 11(b). Rule 11 further provides that [i]f, after notice and a
reasonable opportunity to respond, the court determines that subdivision (b) has
been violated, the court may . . . impose an appropriate sanction upon the
attorneys, law firms, or parties that have violated subdivision (b) or are
responsible for the violation. Id. at 11(c).
In Dodd Insurance Services, Inc. v. Royal Insurance Company of America,
935 F.2d 1152 (10th Cir. 1991), we noted a circuit split as to the proper
interpretation of Rule 11:
Some courts have interpreted Rule 11 narrowly, suggesting that
sanctions are inappropriate when a pleading contains both valid and
frivolous claims. See, e.g., FDIC v. Tekfen Constr. & Installation Co.,
847 F.2d 440, 444 n.6 (7th Cir. 1988) ([E]ven if this minor argument
were off the mark, the fact that one argument in an otherwise valid
paper is not meritorious does not warrant Rule 11 sanctions.); Burull
v. First Natl Bank of M inneapolis, 831 F.2d 788, 789 (8th Cir. 1987)
(lawsuit containing meritless and factually groundless claims did not
mandate Rule 11 sanctions because complaint, taken as a whole, was
legally and factually substantial enough to reach a jury), cert. denied,
485 U.S. 961 (1988); Golden Eagle Distrib. Corp. v. Burroughs Corp.,
801 F.2d 1531, 1540 (9th Cir. 1986) ( Rule [11] permits the imposition
of sanctions only when the pleading, motion, or other paper itself is
frivolous, not when one of the arguments in support of a pleading or
motion is frivolous.). O ther courts interpret Rule 11 more broadly,
finding that it may be violated by a pleading containing a single
frivolous claim. See, e.g., Cross & Cross Properties v. Everett Allied
Co., 886 F.2d 497, 504 (2d Cir. 1989) ([T]o adopt a standard that
would deny sanctions for a significant and obviously meritless claim
simply because the rest of the pleading was sound strikes us as contrary
to this courts established reading of Rule 11.); Patterson v. Aiken, 841
F.2d 386, 387 (11th Cir. 1988) (Rule 11 does not prevent the
imposition of sanctions where it is shown that the Rule was violated as
to a portion of a pleading, even though it was not violated as to other
portions.); Frantz v. United States Pow erlifting Fedn, 836 F.2d 1063,
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do not think that relatedness matters. Although there are, not surprisingly, many
similarities between the state and federal causes of action asserted by Kearney,
RIC O contains special requirements that do not apply to the state law claims.
Therefore, even if Kearney were to prevail on his state-law claims, that would be
quite irrelevant to the question of whether the federal claims with their unique
requirements were warranted and nonfrivolous.
W e emphasize that our decision, of course, should not be taken as a
conclusion that sanctions are merited in this case; that is a decision for the district
court to make in the first instance. Our conclusion is simply that the district court
based its ruling on an erroneous view of the law, Barrett, 30 F.3d at 1301
(quotation omitted), and thereby abused its discretion. Consequently, we remand
for the district court to address whether sanctions are merited.
III. C ON CLU SIO N
For the foregoing reasons, we AFFIRM the dismissal of Kearneys RICO
claims but REVERSE the district courts decision on sanctions and REM AND for
a determination of whether sanctions are merited.
David M . Ebel
Circuit Judge
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