Antitrust Law Daily Wrap Up, RICO—D. Idaho: Trucking company’s racketeering claims against brokers for failed equipment funding dismissed, (Jan 9, 2015)

By Linda O’Brien, J.D., LL.M.

A trucking and transportation service provider was unable to sufficiently show a pattern of racketeering in order to pursue claims against two financial brokerage companies in its action over the brokers’ failure to provide funding for an equipment purchase or to return the service provider’s deposit money, the federal district court in Boise, Idaho has decided. Therefore, the brokers’ motion for partial summary judgment was granted (Deer Valley Trucking Inc. v. Lease One Corp., January 7, 2015, Winmill, B.).

Deer Valley Trucking, an Idaho corporation, provides trucking and transportation services to oil companies. In 2011, Deer Valley sought commercial financing for the acquisition of 100 vacuum trailers, which are specialized trailers used to transport oil, and began negotiations with Lease One for an equipment lease agreement. The agreement identified Lease One as the lessor and owner of the equipment, provided a lease rate, and included an option to acquire the equipment at the conclusion of the term. In addition to monthly payments, the agreement provided a large nonrefundable down payment from Deer Valley. First Financial Brokerage would provide the funds for the Lease One transaction with Deer Valley. Deer Valley signed the agreement and wired the down payment.

Subsequently, Lease One failed to return the signed lease agreement, provide the required funding, or return the down payment. Deer Valley was forced to seek financing from other sources. Deer Valley brought suit against Lease One and First Financial, alleging seven causes of action, including violations of the Idaho Racketeering Act. Lease One moved for partial summary judgment on the racketeering claim, while Deer Valley requested additional time to complete discovery.

Pattern of racketeering activity. The court determined that Deer Valley failed to establish a pattern of racketeering. To establish a claim under the Racketeering Act, a plaintiff must show “the existence of an enterprise and a connected pattern of racketeering activity.” A “pattern of racketeering activity” means engaging in at least two incidents of racketeering conduct.

Deer Valley alleged that Lease One engaged in the interstate transportation of stolen property by knowingly causing the wiring of Deer Valley’s funds across state lines and by falsely representing in emails that the lease documents were completed. According to the court, while the allegations constitute a single scheme, Deer Valley provided no evidence that Lease One perpetrated the same fraudulent lending scheme against other companies. Absent such proof, Deer Valley had alleged at best a single scheme of fraud, without showing that the “predicate acts amount to, or constitute a threat of, continuing racketeering activity.” Accordingly, summary judgment was granted on the claim.

Additionally, Deer Valley had ample time in which to conduct discovery. The case was pending in the state court since December 2012 and the deadline for completing discovery was extended on two occasions. Moreover, when Lease One failed to respond to discovery requests, Deer Valley did not contact the court to conduct an informal mediation or file a motion to compel. Thus, Deer Valley’s request for an extension of the discovery deadline was denied, the court concluded.

The case is No. 4:12-cv-00604-BLW.

Attorneys: Jared Wayne Allen (Beard St. Clair Gaffney) for Deer Valley Trucking, Inc. Shelly C. Shannahan (McAnaney and Associates) for Lease One Corp. Marvin Marion Smith (Smith and Banks PLLC) for First Financial Brokerage, Inc.

Companies: Deer Valley Trucking, Inc.; Lease One Corp.; First Financial Brokerage, Inc.

Cases: RICO IdahoNews