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Phillips Soil Products, Inc. v. Heintz

United States District Court, D. Oregon

May 11, 2018

PHILLIPS SOIL PRODUCTS, INC., an Oregon corporation, Plaintiff,
LESLIE DUTY HEINTZ; JUSTIN TYME HEINTZ; and TIER 1 EXCAVATING, LLC, an Oregon Limited Liability Company, Defendants.

          WILLIAM A. KINSEL Kinsel Law Offices, PLLC Attorney for Plaintiff

          PHILIP J. NELSON KEITH A. PITT Slinde Nelson Attorneys for Defendants



         This matter comes before the Court on the Rule 12 Motions (#15) Against Plaintiff's Complaint filed by Defendants Leslie Duty Heintz, Justin Tyme Heintz, and Tier 1 Excavating, LLC.

         For the reasons that follow, the Court GRANTS Defendants' Rule 12 Motions (#15) against Plaintiff's RICO claim, DISMISSES Plaintiff's RICO claim, and GRANTS Plaintiff leave to file no later June 1, 2018, an amended complaint as to Plaintiff's RICO claim solely to cure the deficiencies as set out in this Opinion and Order. Defendants' response to the amended complaint is due no later than June 15, 2018. The Court declines to address those parts of Defendants' Motions against the state-law claims at this stage without prejudice to Defendants' right to renew such challenges.


         The following pertinent facts are taken from Plaintiff's Complaint:

Plaintiff Phillips Soil Products, Inc., is an Oregon corporation that sells soil products throughout the western United States. Leslie Heintz was employed by Plaintiff from September 24, 2012, through February 29, 2016, in Plaintiff's accounting department and was responsible for tracking accounts receivable, cash receivables, and accounts payable; balancing Plaintiff's bank accounts; and making daily bank deposits.

         Leslie Heintz is married to Justin Heintz. Justin Heintz is a principal of Tier 1 together with his father, Jeffrey Heintz. Tier 1 is an excavating company with its principal place of business in Oregon. Leslie Heintz also provided part-time administrative, billing, and bookkeeping services to Tier 1 during the time she was employed by Plaintiff. Leslie and Justin Heintz “reside on real property owned by” Jeffrey Heintz and pay rent to Jeffrey Heintz.

         Plaintiff alleges during the time it employed Leslie Heintz she manipulated her timekeeping records to reflect overtime hours not actually worked; charged Plaintiff for vacation and sick-leave hours not earned; and paid herself for vacation, sick leave, and hourly compensation not earned. Plaintiff also alleges Leslie Heintz misused a company credit card, misused company property including a cell phone and computer, performed work for Tier 1 during “company time, ” and maintained records for Tier 1 on her work computer. Plaintiff alleges Leslie Heintz took unauthorized “draws” by issuing checks to herself without permission. Plaintiff also alleges Leslie Heintz took cash receipts obtained by Plaintiff from its customers, purchased money orders with the receipts from Western Union, and sent the money orders by United Parcel Service to a personal bank account in another state held jointly with her husband. Plaintiff alleges these stolen funds were used to pay Leslie and Justin Heintz's personal expenses, including payment of rent to Jeffrey Heintz. Plaintiff also alleges the funds were used to pay expenses for Tier 1 and to fund its business activities. In addition, Plaintiff alleges Leslie Heintz engaged in a “widespread and complicated pattern of repeated re-allocations of the general ledger account to which expenses and income were allocated” for the purpose of concealing her thefts and “to affirmatively misrepresent” Plaintiff's financial condition.

         On February 29, 2016, Plaintiff terminated Leslie Heintz's employment.

         On February 9, 2018, Plaintiff filed a Complaint in this Court against Defendants alleging a federal claim for violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1962(a)-(d), and state-law claims of civil conspiracy, fraud, conversion, breach of fiduciary duty, and for an accounting.


         To survive a motion to dismiss a complaint must contain sufficient factual matter, accepted as true, to “state a claim for relief that is plausible on its face.” Bell Atlantic v. Twombly, 550 U.S. 544, 545 (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. Id. at 556. “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(quoting Twombly, 550 U.S. at 546). When a complaint is based on facts that are “merely consistent with” a defendant's liability, it “stops short of the line between possibility and plausibility of entitlement to relief.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 557). See also Bell Atlantic, 550 U.S. at 555-56. The court must accept as true the allegations in the complaint and construe them in favor of the plaintiff. Din v. Kerry, 718 F.3d 856, 859 (9th Cir. 2013).

         The pleading standard under Federal Rule of Civil Procedure 8 “does not require ‘detailed factual allegations, ' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555). See also Federal Rule of Civil Procedure 8(a)(2). “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (citing Twombly, 550 U.S. at 555). A complaint also does not suffice if it tenders “naked assertion[s]” devoid of “further factual enhancement.” Id. at 557.

         “In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice." Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007)(citing Jacobson v. Schwarzenegger, 357 F.Supp.2d 1198, 1204 (C.D. Cal. 2004)). A court, however, "may consider a writing referenced in a complaint but not explicitly incorporated therein if the complaint relies on the document and its authenticity is unquestioned." Id. (quoting Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statute on other grounds as stated in Abrego v. Dow Chem. Co., 443 F.3d 676 (9th Cir. 2006)).


         I. Federal RICO Claim

         Defendants contend Plaintiff fails to state a plausible federal claim under RICO.

         A. ...

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