Bowers et al v. Denali State Bank et al

Bowers v. Denali State Bank, et al.
4:21-cv-00007-SLG-DMS
R&R re Mtn to Dismiss & Mtn to Enforce Orders on Service 	1
UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA
GERALD L. BOWERS, et al.,
Plaintiffs,
vs.
DENALI STATE BANK, et al.,
Defendants.
No. 4:21-cv-00007-SLG-DMS
REPORT AND
RECOMMENDATION1 TO GRANT
IN PART DEFENDANTS’ MOTION
TO DISMISS [Dkts. 29, 37] AND
GRANT IN PART DEFENDANTS’
MOTION TO ENFORCE ORDERS
ON SERVICE [Dkts. 51, 54]
I. 	INTRODUCTION
Plaintiff Gerald Bowers, appearing pro se, along with co-plaintiffs Bowers Investment
Company LLC (“BIC”), Bowers Office Products, Inc. (“BOP”), Yukon Maxi-Storage
(“Yukon”), and Bowers General Construction (“BGC”) (collectively “Plaintiffs”), brought this
suit alleging “fraud, civil conspiracy to commit fraud, abuse of process, and civil violations of
the Federal Racketeer Influenced and Corrupt Organizations Act (18 U.S.C. § 1964(c))”
(“RICO”) against 39 defendants, including Denali State Bank, Denali Bancorp, Inc., Steve
Lundgren, Randy Weaver, Aaron Pletnikoff, Jyotsna Heckman, and Aaron Hines (collectively
“Denali Defendants”) and First National Bank Alaska, Betsy Lawer, Jerry Walker, and Bill
Renfrew (collectively “FNBA Defendants”), as well as 28 other defendants (Dkt. 8 at 2).
1 This report and recommendation is being issued as a final report and recommendation. Pursuant to 28 U.S.C. § 636
(b)(1)(C), any objections will be considered by the District Court Judge who will accept, reject, or modify the
recommendation, or resubmit the matter to the Magistrate Judge for additional consideration and recommendations.
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Denali Defendants move to dismiss the claims against them, asserting (1) that all but two
of the claims are time-barred by the four-year statute of limitations applicable to civil RICO
claims, (2) that the remaining claims do not sufficiently allege racketeering activity, and (3) that
any claims brought by the entity plaintiffs are void because the parties are not represented by
counsel in violation of Local Civil Rule 11.1 (Dkt. 29). FNBA Defendants joined the motion
(Dkt. 37).
Plaintiffs responded in opposition, asserting (1) that the amended complaint alleges valid
RICO claims and (2) that the plaintiffs’ claims are not time barred (Dkts. 35, 39).
FNBA Defendants then filed a Motion to Enforce Orders on Service, which asks the
Court to dismiss the case because the Plaintiffs have failed to effectuate proper service on the
defendants within 90 days of filing the complaint, “to authorize the return or destruction of 11
boxes of blanket mailings, and to award FNBA the cost of this Motion and costs and fees
associated with Plaintiff’s insufficient blanket mailing of service of process” (Dkt. 51 at 2).
Denali defendants joined the motion (Dkt. 54).
Plaintiffs responded in opposition, arguing that service to the defendants was proper
(Dkts. 57, 58).
The motions are now ripe for consideration. For the following reasons, the Court
recommends that the District Court GRANT the defendants’ motion to dismiss at docket 29 and
GRANT in part defendants’ motion to enforce orders on service at docket 37.
//
//
//
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II. STATEMENT OF FACTS
Plaintiffs filed this suit on April 14, 2021, alleging 39 “improprieties” in their claims
against 39 defendants (Dkt. 8). These allegations begin in 2006-2008, when the Plaintiffs allege
that Denali State Bank altered documents associated with a loan to the Plaintiffs (Dkt. 8 at 4-5).
Plaintiffs assert that property was added as collateral to that loan without the Plaintiffs’ consent
and that the terms of the agreement were altered (Dkt. 8 at 5-6). Plaintiffs also allege that in 2008
and 2009, Denali State Bank failed to obtain a property appraisal prior to issuing loans to Bowers
Investment Company LLC (“BIC”), attempted to convert a line of credit provided to Bowers
Office Products, Inc. (“BOP”)’ into a term loan, wrongfully charged BOP $13,800 in fees,
prevented Bowers from representing himself in a lawsuit filed in the State of Alaska in 2008, and
failed to provide an accounting of claims, foreclosure amount, seized funds, and levied fees upon
requests by BIC from 2008-2015 (Dkt. 8 at 4-7, 11, 15).
The Plaintiffs also allege that Denali State Bank committed misconduct during 2015-
2016 when the Plaintiffs faced default on those loans and foreclosure on certain properties. The
Plaintiffs assert that in August 2015 Denali State Bank initiated foreclosure in breach of an
agreement to allow interest only loan payments, that those payments were misapplied, that
Denali State Bank failed to timely obtain reconveyance of BIC property until 2015, failed to
provide BIC with a copy of an appraisal of BIC’s properties, wrongfully exercised undue control
over the business affairs of BIC, BOP, and Yukon pursuant to Denali State Bank’s Notice of
Default and Sale issued in 2015, and prevented the Plaintiffs from checking BIC’s account
balance and other standard banking practices (Dkt. 8 at 4-12). Plaintiffs allege that in 2016
Denali State Bank wrongfully conducted a foreclosure sale on Plaintiffs’ property; wrongfully
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froze certain BIC bank accounts; wrongfully levied funds of Bowers and BOP; refused to
relinquish personal funds from a BIC account; failed to timely post the Notice of Default and
Sale prior to the 2016 foreclosure sale; and that Denali State Bank provided false loan documents
attached to affidavits (Dkt. 8 at 4-12).
The Plaintiffs also assert that Denali State Bank had been operating without a business
license until 2019 and that Denali State Bank failed to record the sale price from property
formerly owned by BIC (Dkt. 8 at 13-15).
III. APPLICABLE LAW
A. Dismissal Pursuant to Rule 12(b)(6) and Summary Judgement Pursuant to Rule 56
A defendant may seek dismissal by motion on the basis of the plaintiff’s “failure to state
a claim upon which relief can be granted.” Fed. R. Civ. P. 12. “[F]or a complaint to survive a
motion to dismiss, the non-conclusory ‘factual content,’ and reasonable inferences from that
content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S.
Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009). “In all cases, evaluating a complaint’s
plausibility is a ‘context-specific’ endeavor that requires courts to ‘draw on ... judicial experience
and common sense.’” Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (quoting Eclectic
Props. E., LLC v. Marcus Millichap co., 751 F.3d 990, 996 (9th Cir. 2014).
B. Pro Se Representation of Entity Plaintiffs
United States District of Alaska Local Civil Rule 11.1 provides that “[a] non-attorney
may not appear on behalf of any other person or entity.” See also Simon v. Hartford Life, Inc.,
546 F.3d 661, 664 (9th Cir. 2008) (“It is well established that the privilege to represent oneself
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pro se provided by [28 U.S.C.] § 1654 is personal to the litigant and does not extend to other
parties or entities”).
In the Ninth Circuit, sole proprietors “may proceed pro se” under § 1654 because “[a]
sole proprietorship has no legal existence apart from its owner.” Sharemaster v. U.S. Sec. &
Exch. Comm’n, 847 F.3d 1059, 1066 n.4 (9th Cir. 2017) (quoting Holdings AW v. PDVSA
Petroleo S.A., 506 F.3d 350, 354 n.4 (4th Cir. 2007)); see also Brignac v. Yelp Inc., No. 19-CV-
01188-EMC, 2019 WL 5268898, at *4 (N.D. Cal. Oct. 17, 2019) (finding that the Northern
District of California’s local civil rule prohibiting non-lawyers from representing entity plaintiffs
did not bar self-representation of a sole proprietorship). However, “[s]ole shareholders of
corporations are not allowed to represent such corporations pro se.” Cheung v. Youth Orchestra
Found. of Buffalo, Inc., 906 F.2d 59, 61 (2d Cir. 1990) (citing Nat’l Indep. Theatre Exhibitors,
Inc. v. Buena Vista Distribution Co., 748 F.2d 602, 609-10 (11th Cir. 1984)).
C. Federal Subject Matter Jurisdiction
Federal district courts “have original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. ‘“Arising under’ federal
jurisdiction only arises . . . when the federal law does more than just shape a court’s
interpretation of state law; the federal law must be at issue.” Int’l Union of Operating Engineers
v. Cty. of Plumas, 559 F.3d 1041, 1045 (9th Cir. 2009) (emphasis in original).
Courts have discretion to hear pendent state law claims brought in conjunction with
claims arising under federal law. Burgess v. City & Cty. of San Francisco, 955 F.2d 47 (9th Cir.
1992). “Pendent jurisdiction over state law claims exists when there is a viable federal cause of
action and its relationship to the state claims permits the conclusion ‘that the entire action before
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the court comprises but one constitutional case.’” Id. (quoting United Mine Workers of Am. v.
Gibbs, 383 U.S. 715, 725 (1966)).
“[I]f the federal claims are dismissed before trial, even though not insubstantial in a
jurisdictional sense, the state claims should be dismissed as well.” United Mine Workers of Am.,
383 U.S. at 726; see also Acri v. Varian Assocs., Inc., 114 F.3d 999, 1001 (9th Cir.),
supplemented, 121 F.3d 714 (9th Cir. 1997), as amended (Oct. 1, 1997) (“in the usual case in
which all federal-law claims are eliminated before trial, the balance of factors ... will point
toward declining to exercise jurisdiction over the remaining state-law claims”) (quoting
Carnegie–Mellon University v. Cohill, 484 U.S. 343, 350 n.7 (1988)).
D. Civil RICO Claims
There are five elements to a civil RICO claim: “(1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing injury to the
plaintiff’s ‘business or property.’” Grimmett v. Brown, 75 F.3d 506, 510 (1996). “When a motion
to dismiss is based on the running of the statute of limitations, it can be granted only if the
assertions of the complaint, read with the required liberality, would not permit the plaintiff to
prove that the statute was tolled.” Turner v. Boldt, 172 F.3d 59 (9th Cir. 1999) (citing Cervantes
v. City of San diego, 5 F.3d 1273, 1275 (9th Cir. 1993)).
1. 	Statute of limitations for RICO claims
The Supreme Court has imposed a four-year statute of limitations for claims brought
under RICO’s civil enforcement provision. Agency Holding Corp. v. Malley-Duff & Associates,
Inc., 483 U.S. 143, 156 (1987).
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The Ninth Circuit follows the “injury discovery” rule in determining when the statute of
limitations begins tolling for a RICO claim. Grimmett, 75 F.3d at 511. Under the injury
discovery rule,
the civil RICO limitations period begins to run when a plaintiff knows or should
know of the injury that underlies his cause of action. The plaintiff need not
discover that the injury is part of a pattern of racketeering for the period to begin
to run. . . . [A] new cause of action accrues for each new and independent
injury.
Id. at 510 (internal citations omitted) (emphasis added).
“Two elements characterize an overt act which will restart the statute of limitations: 1) It
must be a new and independent act that is not merely a reaffirmation of a previous act; and 2) It
must inflict new and accumulating injury on the plaintiff.” Id. at 513 (citing Pace Industries, Inc.
v. Three Phoenix Co., 813 F.3d 234, 238 (9th Cir. 1987). “The statutes of limitations . . . [does]
not begin anew each time a party discovers the extent of his injury is greater than he expected.
Kurtz v. Goodyear Tire & Rubber Co., No. 19-16544, 2021 WL 2365986, at *2 (9th Cir. June 9,
2021).
2. 	Alleging racketeering activity with particularity
Racketeering activity includes “any act indictable under several provisions of Title 18 of
the United States Code. . . . In order to constitute a ‘pattern,’ there must be at least two acts of
racketeering activity within ten years of one another.” Turner v. Cook, 362 F.3d 1219, 1229 (9th
Cir. 2004).
“Federal Rule of Civil Procedure 9(b) requires a pleader of fraud to detail with
particularity the time, place, and manner of each act of fraud, the nature of the fraudulent
scheme, and the role of each defendant in the scheme,” for the predicate acts underlying a civil
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RICO claim. Lancaster Cmty. Hosp. v. Antelope Valley Hosp. Dist., 940 F.2d 397, 405 (9th Cir.
1991); see also Moore v. Kayport Package Exp., 885 F.531, 541 (9th Cir. 1989) (plaintiff did not
assert fraud with sufficient particularity to establish a claim under RICO where it failed to
specify the time, place, and content of the alleged misrepresentation, nor the identities of the
parties involved).
“[A] court should identify pleadings that, because they are no more than conclusions, are
not entitled to the assumption of truth. Then, a court should assume the veracity of well pleaded
factual allegations and determine whether they plausibly give rise to an entitlement to relief.”
Eclectic Properties E., LLC, 751 F.3d at 996 (internal quotations omitted).
“Rule 9(b) does not allow a complaint to merely lump multiple defendants together but
requires plaintiffs to differentiate their allegations when suing more than one defendant and
inform each defendant separately of the allegations surrounding his alleged participation in the
fraud.” Swartz v. KPMG LLP, 476 F.3d 756, 764–65 (9th Cir. 2007) (internal quotations
omitted).
IV. 	DISCUSSION
Plaintiffs’ RICO claims are barred by RICO’s four-year statute of limitations, as
Plaintiffs fail to allege that the injury discovery related to those claims occurred, or should have
occurred, after April 13, 2017, four years before this case was filed. Because the RICO claims
are properly dismissed, any state law claims asserted by the Plaintiffs should be dismissed as
well, since there are no remaining federal claims in the amended complaint.
//
//
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A. Entity Plaintiffs Cannot be Represented by a Non-Attorney.
Bowers appears before the Court pro se and asserts the claims of several business
entities, including Bowers Investment Company LLC, Bowers Office Products, Inc., Yukon
Maxi-Storage, and Bowers General Construction. All of the plaintiffs appear to be represented
by Bowers, a non-attorney. While Bowers may represent himself pro se, Local Civil Rule 11.1
prohibits a non-attorney from representing any other person or entity, unless the entity is a sole
proprietorship.
Plaintiffs failed to assert that BIC, BOP, Yukon, or BGC are sole proprietorships and thus
could represented by Bowers pro se. See Sharemaster, 847 F.3d at 1066 n.4. Plaintiffs had
opportunity to respond the defendants’ assertions that Local Civil Rule 11.1 prevented Bowers
from representing any other plaintiffs in this case, but failed to do so (See Dkts. 35, 39).
However, since the Court finds that all the RICO claims in this case are barred by RICO’s four-
year statute of limitations and that the RICO claims were not alleged with sufficient particularity,
the Court need not determine which claims Bowers may or may not have standing to bring in this
case and which claims, if any, could only be asserted by an entity plaintiff.
B. Plaintiffs’ RICO Claims are Barred by RICO’s Four-Year Statute of Limitations.
The RICO claims asserted in this case have not been brought within the four-year statute
of limitations and therefore must be dismissed. The Plaintiffs’ RICO claims stem from
allegations of misconduct surrounding (1) Denali State Bank’s issuance of loans to the Plaintiffs
and alteration of loan documents from 2006 to 2009 and (2) allegations of misconduct
surrounding Plaintiffs’ default on the loans and the foreclosure on Plaintiffs’ property from 2015
to 2016. Those injuries fall outside RICO’s four-year statute of limitations, as this suit was filed
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on April 14, 2021. Therefore, the Plaintiffs’ RICO claims are time barred and properly
dismissed. Although the issue of RICO’s statute of limitations barring the Plaintiffs’ claims was
discussed by both the Denali Defendants and FNBA Defendants in their motions and related
briefings the Plaintiffs failed to address the issue. In responding to FNBA Defendants’ motion to
join, the Plaintiffs only state that “THE PLAINTIFFS’ CLAIMS ARE NOT TIME BARRED
AND ARE SUBJECT TO RICO RULES OF ACCRUAL” and failed to address the substance of
the defendants’ arguments nor explain how injuries stemming from events occurring before 2017
fall within RICO’s four-year statute of limitations (See Dkt. 39 at 15).
1. 	“Improprieties” 2, 3, 9, 10, 11, 12, 13, 15, 16, 18, 19, 20, 21, 23, 27, 29, 30, 31, 32,
33, and 35 allege misconduct that does not fall within the statute of limitations.
In the First Amended Complaint, Plaintiffs describe 39 “Improprieties;” 21 of those
“Improprieties” allege dates that fall outside the four-year statute of limitations (Dkt. 8 at 4-13, ¶
2, 3, 9, 10, 11, 12, 13, 15, 16, 18, 19, 20, 21, 23, 27, 29, 30, 31, 32, 33, 35). While in the Ninth
Circuit, “the civil RICO limitations period begins to run when a plaintiff knows or should know
of the injury that underlies his cause of action,” Plaintiffs make no attempt to assert that the
“injury discovery” date related to those alleged improprieties occurred within four years of the
filing of this suit. See Grimmett, 75 F.3d at 510. Therefore, RICO claims stemming from those
allegations are properly dismissed.
2. 	“Improprieties” 4, 5, 6, 7, 8, 14, 17, 22, 24, 25, 26, and 34 allege ongoing injuries,
but fail to assert that the injury discovery date occurred within the statute of
limitations.
12 of the “Improprieties” alleged in the first amended complaint include date ranges that
begin more than four years before the suit was filed and continue “to PRESENT” (Dkt. 8 at 5-13,
¶ 4, 5, 6, 7, 8, 14, 17, 22, 24, 25, 26, 34). As mentioned supra, the Ninth Circuit employs the
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“injury discovery” rule to determine when the statute of limitations begins on a RICO claim; this
occurs when a plaintiff knows or should have known about the resulting injury. Regarding these
12 allegations in the first amended complaint, the date ranges begin outside the statute of
limitations and the Plaintiffs fail to assert that the date they became aware (or should have been
aware) of the associated injuries occurred within four years of bringing this suit. In order to
restart the statute of limitations, Plaintiffs needed to assert that the defendants committed a “new
and independent act that is not merely a reaffirmation of a previous act” that “inflict[s] new and
accumulating injury on” the Plaintiffs. See id. at 513 (emphasis in original).
The following table (1) summarizes the alleged improprieties which Plaintiffs assert are
ongoing and (2) describes the date of injury discovery, which Plaintiffs failed to assert fell within
the four-year statute of limitations.
Table 1: Alleged Ongoing Improprieties and Injury Discovery Dates
Date Range 	Alleged Impropriety 	Injury Discovery Date
4/2008-Present
Dkt. 8 at 5, ¶ 4
“Denali State Bank has refused to release the
original/authentic version of the 2008 Loan
Documents”
Date when Plaintiffs first were made
aware or should have been aware of
Denali State Banks’ alleged refusal to
release documents.
4/2008-Present
Dkt. 8 at 5, ¶ 5
“Denali State Bank’s Materially Altered
Deed of Trust Modified [sic] a 2008 Deed of
Trust to a 2006 Deed of Trust, Promissory
Note, and Related Loan Documents contain
terms that were not agreed to by BIC”
Date when Plaintiffs first were made
aware or should have been aware of
the alleged alterations.
4/2008-Present
Dkt. 8 at 5, ¶ 6
“Denali State Bank’s Materially Altered
Deed of Trust contains a nonconsensual add-
on page entitled “Exhibit-A”, which attempts
to include BIC’s Lot-26 as collateral”
Date when Plaintiffs were first made
aware or should have been aware of
the alleged addition of “Exhibit-A.”
4/2008-Present
Dkt. 8 at 6, ¶ 7
“Denali State Bank falsely asserts that in
2008 BIC borrowed additional funds based
on a 2006 Loan and Modification to a 2006
Deed of Trust.”
Date when Plaintiffs were first made
aware or should have been aware of
the alleged incorrect statement in the
loan documents.
4/2008-Present
Dkt. 8 at 6, ¶ 8
“Denali State Bank’s Materially Altered
Deed of Trust, Promissory Note, and Related
Loan Documents contained altered content
including cut & paste/copied fraudulent
signatures.”
Date when Plaintiffs were first made
aware or should have been aware of
the alleged alterations.
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8/2015-Forward
Dkt. 8 at 8, ¶ 14
“Denali State Bank continued to collect
BIC’s lease revenue and engage in collection
activities even after BIC filed its first chapter
11 Bankruptcy petition on November 17,
2015.”
Date when Plaintiffs were first made
aware of should have been aware of
the alleged impermissible collection of
lease revenues.
10/2015-Present
Dkt. 8 at 8, ¶ 17
“Denali State Bank has continued to keep
Bowers Deposit Account . . . frozen despite
having no legal basis for doing so.”
Date when Plaintiffs were first made
aware or should have been aware of
the alleged impermissible freezing of
the account.
8/2015-Present
Dkt. 8 at 10, ¶ 22
Denali State Bank “has refused to relinquish
‘All Funds Taken’ within BIC’s account . . .
and the rent control account at [Denali State
Bank].”
Date when Plaintiffs were first made
aware of should have been aware of
the alleged refusal to relinquish those
funds.
11/2015-Present
Dkt. 8 at 11, ¶ 24
“Denali State Bank has illegally prevented
[Bowers, BOP, BIC, and Yukon] from
conducting standard Banking practices and
checking BIC’s account balance.”
Date when Plaintiffs were first made
aware or should have been aware of
the alleged refusal to conduct the
requested banking practices.
2008-2015-Present
Dkt. 8 at 11, ¶ 25
“Denali State Bank has failed to produce an
accurate accounting for its claims,
foreclosure amount, seized funds, and
frivolous miscellaneous fees levied against
[Plaintiffs’] account.”
Date when Plaintiffs were first made
aware or should have been aware of
the alleged denial of Plaintiffs’ first
request for such accounting.
2015-Present
Dkt. 8 at 11, ¶ 26
“BIC has never been allowed to formally
‘Object to Proof of Claim’ and initiate an
adversarial proceeding as allowed by
Bankruptcy law.”
Date when Plaintiffs were first made
aware or should have been aware of
Randall Ensminger’s alleged refusal to
file the desired objection.
9/30/2016-Present
Dkt. 8 at 13, ¶ 34
“Denali State Bank has exercised direct
control of [Yukon] and Lot-26 when they
first posted the property on August 12,
2015.”
Date when Plaintiffs were first made
aware or should have been aware of
the alleged impermissible exercise of
control.
3. 	“Improprieties” 1, 28, 36, and 37 do not assert RICO claims that fall within the
statute of limitations.
First, Plaintiffs assert that Denali State Bank did not have a valid state business license
until 2019 (Dkt. 8 at 4, ¶ 1). Denali Defendants assert that Denali State Bank is exempt from an
Alaska business license because it is regulated by the State of Alaska Division of Banking and
Securities rather than the State Corporations Section (Dkt. 29 at 14). Denali Defendants further
assert that even if they were in violation of the Alaska Business License Act, it would not rise to
a RICO claim as it did not injure the Plaintiffs nor have any bearing on the validity of the alleged
contracts at issue in this case (Dkt. 29 at 14-16). The Alaska Business License Act establishes a
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$300 fine for knowingly operating without a business license in violation of the statute. A.S. §
43.70.020(e). The statute is a revenue raising law. 1960 Alas. AG LEXIS 40, *2, 1960 Op. Atty
Gen. Alas. No. 27. Courts have held that similar revenue raising laws do not result in the voiding
of contracts entered into by a business without a license. See Wane v. Loan Corp., 926 F. Supp.
2d 1312 (M.D. Fla. 2013); see also Sunflower Lumber Co. v. Turner Supply Co., 48 So. 510, 512
(Ala. 1909).
Even assuming it is a valid RICO claim, the fact that Denali State Bank continued to
operate without a license after entering into loan agreements with Plaintiffs from 2006-2009 and
during the default and foreclosures in 2015-2016 does not create a new injury under the Ninth
Circuit’s injury discovery rule. Mere continuation of conduct is not a new and independent act
that inflicts new and accumulating injury. Grimmet, 75 F.3d at 513. Any injury stemming from
agreements between Denali State Bank when it allegedly failed to obtain an Alaska business
license thus occurred outside the statute of limitations.
Next, Plaintiffs allege that “Denali State Bank levied funds out of the Guarantors’
accounts at First National Bank” and in 2016 and a court order forced the return of those funds
on November 28, 2017 (Dkt. 8 at 12, ¶ 28). While Plaintiffs assert that the court order directing
reimbursement occurred within the statute of limitations of this suit, Plaintiffs fail to assert that
the injury discovery occurred, or should have occurred, within the statute of limitations, keeping
in mind that the statute of limitations does not restart “each time a party discovers the extent of
his injury is greater than he expected.” See Kurtz, WL 2365986 at *2. Plaintiffs do not allege
facts to indicate that the injury was discovered after April 2017, regardless of when the court
order was issued.
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Plaintiffs also assert that “‘TAKE’ of House located at 791 Eton Boulevard during which
[Bowers] lost real estate property valued at $600,000 and was arrested in a civil case without
proper legal service, no claim of criminal violations while disallowing Bowers [sic] arguments
that he was legally separate from [BIC]” (Dkt. 8 at 14, ¶ 36). While Plaintiffs provide a date of
“August 22, 2019,” Plaintiffs’ first amended complaint does not assert what occurred on that
date. Further, the claims appear to be directed at the Jo Kuchle, Yukon Title Company, the
Alaska State Court System, and the Federal District Court for the District of Alaska. These are
the sole allegations of misconduct on these defendants in the complaint; Plaintiffs have not
alleged a pattern of illegal behavior required to establish a claim under RICO.
Lastly, Plaintiffs allege that on April 28, 2020, “Tanana Chiefs Conference . . .
purchase[ed] [BIC properties] through Doyon’s Ruby area Corporation Dineega” and “[n]either
Tanana Chiefs Conference nor Denali State Bank has recorded a purchase price for conveyance
of [the properties]” (Dkt. 8 at 15, ¶ 37). However, Plaintiffs’ injuries involve the judgement of
default and foreclosure of their properties, therefore the subsequent resale of such properties does
not constitute a new injury so as to restart the statute of limitations. See State Comp. Ins. Fund v.
Khan, 722 F. App’x 628, 631 (9th Cir. 2018), as amended on denial of reh'g and reh’g en banc
(Feb. 27, 2018) (“[The plaintiff] has not introduced evidence of new acts or injuries within the
four years preceding this suit; a third-party’s collection of claims no longer owned by these
Defendants-Appellees does not restart the statute of limitations with regard to [the plaintiff’s]
claims against them”).
//
//
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4. 	“Improprieties” 38 and 39 do not include relevant dates and therefore do not
sufficiently allege RICO claims.
Plaintiffs allege that Denali State Bank has “attempt[ed] to run us out of funds and
resources” and “[t]he ripple effect of Denali State Bank’s corruption during the April 24, 2008
Loan Documents has continued to harm us to this day” (Dkt. 8 at 15, ¶ 38). Plaintiffs further
assert that “[t]here are multiple major disturbances in the Chapter 7 Trustee’s handling of BIC’s
BK Case” (Dkt. 8 at 15-16, ¶ 39). In these allegations, the Plaintiffs do not provide any relevant
dates of conduct or injury discovery that fall within the statute of limitations, and therefore the
claims are properly dismissed.
C. Plaintiffs Failed to Articulate RICO Claims with Particularity.
In their response to the motion to dismiss, Plaintiffs assert that the predicate RICO acts in
this case include (1) mail fraud pursuant to 18 U.S.C. § 1341, (2) wire fraud pursuant to 18
U.S.C. § 1343, and (3) Title 11 bankruptcy fraud (Dkt. 35 at 5). However, Plaintiffs do not plead
those predicate offenses with particularity.
“To allege a violation of the mail fraud statute, it is necessary to show that (1) the
defendants formed a scheme or artifice to defraud; (2) the defendants used the United States
mails or caused a use of the United States mails in furtherance of the scheme; and (3) the
defendants did so with the specific intent to deceive or defraud.” Schreiber Distrib. Co. v. Serv-
Well Furniture Co., 806 F.2d 1393, 1399–400 (9th Cir. 1986). Plaintiffs state in their response to
the motion to dismiss, that
a mailed letter written by Michael McLaughlin acknowledg[ed] that Denial State
Bank had “granted” (past-tense) a Payment Plan. The letter is followed by check
stub receipts showing Bowers made payments as agreed upon in the plan. Denali
State Bank then unlawfully disregarded the plan despite receiving the agreed upon
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payments and participated in fraud throughout a corrupt foreclosure process
causing harm to the Plaintiffs’ business and property.
(Dkt. 35 at 6). Even if this information had been included in the first amended complaint,
it does not meet the particularity requirements of Rule 9(b). Plaintiffs do not allege facts
that McLaughlin or others created a scheme to deceive or defraud using the U.S. Mail to
get the Plaintiffs to enter in a modified payment agreement and then not honor the
agreement. In fact, the referenced letter addressed to Bowers, attached to the original
complaint in this case, states that “[t]he Bank has repeatedly tendered the Change of
Terms agreement to you. Despite your promise to sign it, you have not done so. Nor have
you made an interest payment for May or June,” indicating that Plaintiffs did not enter
into any such agreement (Dkt. 1-3 at 1).
Next, any allegations of wire fraud pursuant to 18 U.S.C. § 1343 and Title 11 bankruptcy
fraud in the first amended complaint also are not alleged with particularity. Plaintiffs assert that
the foreclosure on their properties was a result of fraudulent activities of the defendants,
specifically the alteration of the terms of a loan agreement between Denali State Bank and the
Plaintiffs. However, as the Denali Defendants point out, “the only factual allegations in the
Complaint which approach [this] single fraudulent act are Plaintiffs’ vague, non-specific
allegations that an unidentified person, at an unidentified time, in an unidentified place,
improperly altered or changed certain loan documents sometime between 2006 and 2008” (Dkt.
41 at 7). As mentioned supra, plaintiffs who fail to include the time, place, content of an alleged
misrepresentation, and identities of the parties involved in a pattern of predicate offenses, fail to
assert a civil RICO claim with the requisite particularity. Moore, 885 F.2d at 541. Further,
allegations that “are no more than conclusions, are not entitled to the assumption of truth.”
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Eclectic Properties E., LLC, 751 F.3d at 996 (internal quotations omitted). Plaintiffs’ allegations
of predicate acts are not asserted with particularity and therefore the civil RICO claims in the
first amended complaint are properly dismissed.
D. Defendants’ Request to Dismiss on the Ground of Inadequate Service is Moot.
The defendants assert that Plaintiffs’ claims should be dismissed because the defendants
were not provided proper service. When a plaintiff fails to properly serve the defendants in a
case within 90 days as required by Federal Rule of Civil Procedure 4, Courts have discretion to
grant a plaintiff leave to make proper service or dismiss the case without prejudice. Fed. R. Civ.
P. 4(m). Here, the Court has warned the Plaintiffs of their failure to effectuate proper service
(Dkts. 12, 38). The Court informed the Plaintiffs that “[e]ach defendant named must be
individually served in accordance” with Rule 4 and “[b]lanket mailings to groupings of
defendants at business addresses is wholly insufficient” (Dkt. 38 at 6).
Plaintiffs have not corrected those errors. FNBA defendants note “that boxes of
Plaintiffs’ documents were ‘delivered’ to a branch of FNBA and eventually found their way to
counsel,” but an “unexplained delivery of boxes to a bank branch is not reasonably calculated to
provide due process notice” (Dkt. 60 at 2). Plaintiffs assert that “Denali State Bank is responsible
for delivery to its associated Defendants, who operate in their capacity as [Denali State Bank]
associated at the [Denali State Bank] address where they were served,” further asserting that for
any defendants not physically located at the address where the documents were sent, it would be
“possible for the Bank to forward these documents from their headquarters to all [Denali State
Bank] Associated Defendants via the computer” (Dkt. 58 at 3).
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Plaintiffs’ refusal to effectuate proper service on all defendants in this case, despite
multiple Court orders directing them to do so, warrants dismissal without prejudice. However,
this issue is moot, since the Court recommends that the case be dismissed with prejudice due to
the Plaintiffs’ failure to assert valid RICO claims within the statute of limitations and with the
requisite particularity.
E. The Parties May File a Motion for Attorneys’ Fees at the Close of Litigation.
The defendants seek an award of attorneys’ fees associated with improper service and
pleadings in the case. As mentioned in the Court’s Order at docket 63, the defendants may revisit
the issue of costs and fees at the close of litigation. Such motion should provide the Court with
all the information required by Local Civil Rule 54.2.
V. 	CONCLUSION
For the foregoing reasons, the Court recommends that the District Court GRANT the
defendants’ motion to dismiss at docket 29. The Court recommends that the District Court
GRANT in part defendants’ motion to enforce orders on service at docket 51 and authorize the
return or destruction of the 11 boxes of documents improperly served on the defendants in this
case by the Plaintiffs.
DATED this 26 th day of August, 2021 at Anchorage, Alaska.
/s/Deborah M. Smith
CHIEF U.S. MAGISTRATE JUDGE
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