Document Type

Article

Publication Date

11-1-1989

Abstract

Plaintiffs-appellants Aaron R. Seward and Connie G. Seward (the "Sewards") appeal from a judgment entered on September 20, 1988, in the United States District Court for the Northern District of New York (McCurn, Ch.J.) dismissing their amended complaint on various grounds. The action arose principally in connection with the activities of defendant-appellee Philip J. Devine, the Sewards' attorney and a director of defendant-appellee Wilber National Bank ("WNB" or the "bank"). Essentially, the Sewards alleged that Devine, with the knowledge and consent of the named defendants, was responsible for devising a joint venture and limited partnership to acquire control over the Sewards' farm for the sole purpose of obtaining tax shelter benefits for the investor defendants. The Sewards asserted eight claims in their amended complaint — three RICO claims, two claims based on breach of written contracts, one claim based on breach of an oral agreement, a fraud claim, and a malpractice claim — all arising from a purported scheme designed to wrest control of the farm from them.

The district court dismissed the action in two stages. First, the court dismissed the contract claims for lack of jurisdiction, Fed.R.Civ.P. 12(b)(1), in accordance with forum selection clauses providing for venue in the New York State Supreme Court, Delaware County. Next, the court dismissed the RICO claims as legally insufficient, Fed.R.Civ.P. 12(b)(6), for failure to plead adequately RICO's "continuity plus relationship" requirement. In the absence of an independent basis for federal jurisdiction, the court then dismissed the fraud and malpractice claims and the claim that the bank breached its oral agreement not to foreclose on the farm, pursuant to Fed.R.Civ.P. 12(b)(1), declining to exercise pendent jurisdiction. The court thereafter entered an order dismissing the amended complaint, and on September 20, 1988, judgment was entered.

On appeal, the Sewards contend that the district court erred in dismissing their RICO claims, arguing that the predicate acts pleaded were neither isolated nor sporadic, and thus satisfied RICO's pattern of racketeering activity requirement; that because the fraud and malpractice claims, as well as the breach of oral agreement claim asserted against the bank only, arose out of the same nucleus of operative facts, the court should have entertained those claims under its pendent jurisdiction; and that because the forum selection clauses contained in the relevant agreements did not bestow exclusive jurisdiction upon the state court, the contract claims were within the district court's subject matter jurisdiction. For the reasons that follow, we affirm the judgment of the district court insofar as it dismissed the contract claims pursuant to the forum selection clauses, but reverse and remand on the remaining claims for proceedings consistent with this opinion.

Comments

888 F.2d 957 (1989)

Aaron R. SEWARD and Connie G. Seward, Plaintiffs-Appellants,

v.

Philip J. DEVINE, James Devine, Jr., Daniel Horan, John F. Keating, Jr., Kenneth R. Fitzsimmons, Estate of Frank L. Imparato, Jr., and Wilber National Bank, Defendants-Appellees.

No. 1141, Docket 88-7834.

United States Court of Appeals, Second Circuit.

Argued August 14, 1989. Decided November 1, 1989.

New York Law School location: File #798, Box #123

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