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H & Q Props., Inc. v. Doll

United States Court of Appeals, Eighth Circuit

July 15, 2015

H & Q Properties, Inc., a Nebraska corporation; John Quandahl; Mark Houlton, Plaintiffs - Appellants
v.
David E. Doll; Double D Properties, L.L.C., a Nebraska limited liability company; DDE, Inc., a Nebraska corporation formerly known as Double D Excavating, Inc.; HNGC, Inc., a Nebraska corporation formerly known as Dougle D Hook-N-Go Containers, Inc.; Nebraska Lowboy Services, Inc., a Nebraska corporation; Double D Excavating, Inc., an Iowa corporation; Load Rite Excavating, L.L.C., a Nebraska limited liability company formerly known as Down Dirty, L.L.C.; Doll Construction, L.L.C., a Nebraska limited liability company; New Era Excavation Company, a Nebraska corporation; Malvern Trust & Savings Bank, an Iowa state-chartered bank, Defendants - Appellees

Submitted May 14, 2015

Appeal from United States District Court for the District of Nebraska - Omaha.

For H & Q Properties, Inc., a Nebraska corporation, John Quandahl, Mark Houlton, Plaintiffs - Appellants: Dana C. Bradford III, Ryan J. Dougherty, Justin D. Eichmann, Bradford & Coenen, Omaha, NE.

For David E. Doll, Double D Properties, L.L.C., a Nebraska limited liability company, DDE, Inc., a Nebraska corporation, formerly known as: Double D Excavating, Inc., HNGC, Inc., a Nebraska corporation, formerly known as: Dougle D Hook-N-Go Containers, Inc., Nebraska Lowboy Services, Inc., a Nebraska corporation, Double D Excavating, Inc., an Iowa corporation, Load Rite Excavating, L.L.C., a Nebraska limited liability company, formerly known as: Down Dirty, L.L.C., Defendants - Appellees: Kathryn J. Derr, Omaha, NE.

For Doll Construction, L.L.C., a Nebraska limited liability company, New Era Excavation Company, a Nebraska corporation, Malvern Trust & Savings Bank, an Iowa state-chartered bank, Defendants - Appellees: William G. Mullin, Clay M. Rogers, Aaron F. Smeall, Smith & Gardner, Omaha, NE.

Before WOLLMAN, SMITH, and BENTON, Circuit Judges.

OPINION

SMITH, Circuit Judge.

Appellants H & Q Properties, Inc., John Quandahl, and Mark Houlton (collectively, " H& Q" ) appeal the district court's[1] dismissal of their claims and denial of their motion for leave to file a second amended complaint alleging violations of both state law and the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § § 1961-1968, against appellees. We affirm.

I. Background[2]

H & Q Properties, Inc. and appellees Double D Properties, L.L.C.; DDE, Inc.; and HNGC, Inc. owned membership units of Double D Excavating, L.L.C. (the " LLC" ).[3] On March 2, 2010, certain appellees (collectively, the " Doll Companies" [4] ) opened account number 121224 (" Account 121224" ) at Malvern Trust & Savings Bank (" Malvern Bank" ) in the name of " Double D Excavating" and deposited into that account a check made payable to the LLC. That same day, the Doll Companies also opened account number 119992 (" Account 119992" ) at Malvern Bank in the name of " David E. Doll."

In the coming weeks, the Doll Companies deposited into Account 121224 multiple payments that the LLC's customers made to the LLC. The Doll Companies thereafter transferred funds from Account 121224 to Account 119992, commingled funds from Account 119992 with funds belonging to the Doll Companies, and used those funds to pay certain of the Doll Companies' own expenses.

H& Q asserts that the Doll Companies failed to give notice or obtain consent for any of the foregoing activities, which H& Q deems actionable. In addition, the Doll Companies allegedly represented to H& Q that the LLC was struggling financially and needed additional financial assistance from H& Q. The Doll Companies contributed a portion of the funds from Account 119992 back to the LLC and, according to H& Q, represented to H& Q that these were fresh capital contributions to the LLC. Thereafter, H& Q also invested additional capital into the LLC.

After discovering the Doll Companies' alleged conduct, H& Q filed this suit asserting various state law and RICO claims against the Doll Companies, two entities associated with the Doll Companies (Doll Construction, L.L.C. and New Era Excavation Company), and Malvern Bank. The appellees moved to dismiss the claims under Federal Rule of Civil Procedure 12(b)(6), and H& Q then moved for leave to file a second amended complaint.

The district court ultimately granted the appellees' motions to dismiss and denied H& Q's motion for leave to amend. The court found, among other things, that H& Q failed to state a RICO claim because it did not sufficiently allege any racketeering activity. The court also denied H& Q's motion to file a second amended complaint because the proffered complaint would not cure the existing pleading deficiencies. The court chose not ...


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