United States District Court, W.D. Oklahoma
DANNIS R. TAYLOR, et al., Plaintiff,
CHESAPEAKE OPERATING, INC., Defendant.
TIMOTHY D. DeGIUSTI CHIEF UNITED STATES DISTRICT JUDGE
matter comes before the Court on Defendant Chesapeake
Operating, Inc.'s Motion to Dismiss [Doc. No. 23].
Plaintiffs have filed a response in opposition [Doc. No. 31],
to which Defendant has replied [Doc. No. 32]. Plaintiffs have
also filed a Motion for Leave to Amend their complaint as
needed [Doc. No. 33]. The matter is fully briefed and at
operates wells on Plaintiffs' land. Response [Doc. No.
31], at 4. Pursuant to the contract at issue, Defendant is
“to operate the wells and account for revenue and
costs, make payments, and provide information to owners of
interests in the wells on [Plaintiffs'] property.”
Id. Plaintiffs allege to have been underpaid
royalties. Defendant contends this is a simple breach of
contract claim and nothing more. Motion at 3. Plaintiffs,
however, maintain this action sounds in fraud. They allege
Defendant engaged in a fraudulent scheme, involving hundreds
of acts of fraud over the course of several years, by which
Plaintiffs were deceived and underpaid. Id. at 5
survive a motion to dismiss under Rule 12(b)(6), “a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Iqbal, 556 U.S. at 678. The “plausibility
standard” announced in Twombly and
Iqbal is not a “heightened standard” of
pleading, but rather a “refined standard.”
Khalik v. United Air Lines, 671 F.3d 1188, 1191
(10th Cir. 2012) (citing Kansas Penn Gaming, LLC v.
Collins, 656 F.3d 1210, 1214 (10th Cir. 2011)). Under
the “refined standard, ” plausibility refers
“to the scope of the allegations in the complaint: if
they are so general that they encompass a wide swath of
conduct, much of it innocent, then the plaintiffs have not
nudged their claims across the line from conceivable to
plausible.” Khalik, 671 F.3d at 1191; see
also Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir.
2008). Further, the Tenth Circuit has noted that “[t]he
nature and specificity of the allegations required to state a
plausible claim will vary based on context.”
Khalik, 671 F.3d at 1191.
sounding in fraud must be pled with particularity, under a
heightened pleading standard. See Fed. R. Civ. P.
9(b). The particularly requirement of Rule 9(b) applies to
claims of mail and wire fraud under the Racketeer Influenced
and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68
(“RICO”). See Tal v. Hogan, 453 F.3d
1244, 1263 (10th Cir. 2006).
Amended Complaint [Doc. No. 20] sets forth six causes of
action. Plaintiffs' claims are as follows: (1) RICO
violations; (2) unjust enrichment; (3) conversion; (4) beach
of lease; (5) breach of overriding royalty interest; and, (6)
actual and constructive fraud, and negligent
misrepresentation. Defendant argues that because Plaintiffs
lack standing to bring RICO claims, this Court lacks subject
matter jurisdiction and should remand the remaining state law
claims. In the alternative, Defendant seeks dismissal of
counts one, two, three, and six of Plaintiffs' Amended
Complaint (referred to as the first, second, third, and sixth
causes of action), for failure to state a claim upon which
relief can be granted.
Plaintiff's RICO allegations suffice to survive a motion
argues (1) Plaintiffs fail to show they were injured by the
alleged RICO violations; (2) the predicate act of wire fraud
is not pled with particularity; (3) the predicate act of mail
fraud is not pled with particularity; (4) there is no
allegation of a pattern of racketeering activity; and, (5)
Plaintiffs fail to plead an enterprise.
provides a private cause of action for “[a]ny person
injured in his business or property by reason of a violation
of section 1962 of this chapter.” 18 U.S.C. §
1964(c). Plaintiffs allege violations of § 1962(c),
which makes it “unlawful for any person employed by or
associated with any enterprise engaged in, or the activities
of which affect, interstate . . . commerce, to conduct or
participate, directly or indirectly, in the conduct of such
enterprise's affairs through a pattern of racketeering
survive a Rule 12(b)(6) motion to dismiss a § 1962(c)
claim, Plaintiffs must allege that Defendant “(1)
participated in the conduct (2) of an enterprise (3) through
a pattern (4) of racketeering activity.” Tal,
453 at 1244. “[R]acketeering activity” is defined
to include several predicate acts, including the two alleged
here-mail fraud and wire fraud. In addition to these
elements, Plaintiffs must also show proximate causation
between the RICO predicate act and the injury. Hemi
Group, LLC v. City of New York, 559 U.S. 1, 8 (2010).
Plaintiffs allege more than simple breach of contract.
argues that because the injury resulting from the breach of
contract claim and the alleged RICO violation are the same,
Plaintiffs lack standing to bring a claim under RICO.
distinct ‘racketeering injury' requirement is
necessary to maintain a private treble damages action under
RICO.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S.
479, 495-96 (1985). If the “defendant engages in a
pattern of racketeering activity in a manner forbidden by
section 1962 and the racketeering activities injured the
plaintiff in his business or property, ” that is
enough. Id. “[T]he plaintiff only has standing
if, and can only ...