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Ainsworth v. Owenby

United States District Court, D. Oregon, Eugene Division

August 17, 2018




         Plaintiffs are a group of residential property owners displeased with the effects of an alleged marijuana production and processing operation hosted on nearby land. Defendants are the owners of the land on which the marijuana operation is claimed to be maintained and several alleged participants in that operation.[1] As to each defendant, Plaintiffs assert one state-law nuisance claim and two Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims. The case comes before the Court on Defendants' motions to dismiss for lack of subject-matter jurisdiction and, as to the alleged RICO violations, for failure to state a claim upon which relief can be granted. Since each claim satisfies the minimum constitutional requirements for this Court to exercise jurisdiction, Defendants' motion to dismiss for lack of subject-matter jurisdiction is DENIED. Nevertheless, because Plaintiffs fail to allege a compensable property injury under the civil RICO statute, Defendants' motion to dismiss for failure to state a claim is GRANTED. Plaintiffs' RICO claims are therefore DISMISSED without prejudice.


         Robert D. Ainsworth, Tami L. Ainsworth, Karl G. Frink, Lucinda A. Frink, Gordon D. Griswold, Elaine C. Griswold, John K. Lindsey, William E. Whitaker, and Suzanne R. Whitaker bring this civil RICO and state-law nuisance action against Mark A. Owenby, Michelle A. Page, Jenny R. Silveira, Howard D. Brown III, William W. Templeton, Jr., Elisha Templeton, and Bryan D. Philp. Compl. ¶¶ 1-13. Their claims arise out of the presence and effects of an alleged marijuana production and processing operation (the “Marijuana Operation”) on property owned by Owenby and Page in Lebanon, Oregon.[2] Compl. ¶ 1. Plaintiffs are residential property owners with land neighboring the Owenby and Page property. Compl. ¶¶ 27-28, 30-32.

         According to Plaintiffs, in November 2016, Owenby and Page agreed with William Templeton and Elisha Templeton (collectively, the “Templetons”) to seek and acquire property on which to “produce and process” marijuana. Compl. ¶ 15. In December 2016, Owenby and Page purchased their Lebanon property and resolved with the Templetons, Silveira, and Brown to “develop” the property, “erect structures, ” and “purchase and install equipment, fixtures, and materials” to produce and process marijuana. Compl. ¶ 15. Owenby and Page further agreed with the Templetons, Silveria, and Brown that they would “make a financial investment in the Marijuana Operation, and that in exchange, ” Owenby and Page “would receive a portion of the [operation's] proceeds.” Compl. ¶ 15.

         Shortly thereafter, the Templetons, Owenby, Page, Silveira, Brown, and Philp began using the property to “produce[ ] marijuana and distribute[ ] it for sale.” Compl. ¶ 22. To that end, Silveria and Brown moved onto the Owneby and Page property in January 2017, “setting up” and “managing” the Marijuana Operation. Compl. ¶ 17. Also in support of the Marijuana Operation, Owenby, Page, and the Templetons purchased and transported to the property materials and equipment for producing and processing marijuana, often with the help of Silveria, Brown, and Philp. Compl. ¶¶ 16, 18. The same defendants made improvements to the land and its structures in furtherance of the Marijuana Operation. Compl. ¶¶ 18-20. In return, the Templetons, Owenby, Page, Silveria, Brown, and Philp have all “received a portion of the proceeds of the Marijuana Operation.” Compl. ¶ 22.

         Plaintiffs allege that the Marijuana Operation continued to operate through at least December 1, 2017, the date on which they filed their Complaint.[3] Compl. ¶ 22. Since the operation's commencement, a greenhouse “equipped with large, commercial exhaust fans” has operated on the Owenby and Page property “24 hours a day, seven days a week.” Compl. ¶ 24. In addition, Owenby, Page, Silveira, Brown, Philp, and Bill Templeton have “regularly burn[ed] marijuana debris, trash[, ] and discarded items from the [M]arijuana [O]peration, creating thick, noxious smoke.” Compl. ¶ 24. Traffic traveling to and from the Owenby and Page property, moreover, has transformed the two dead-end roads on which Plaintiffs live into “busy, and at times unsafe, commercial roadways.” Compl. ¶ 26. Plaintiffs “no longer feel safe in their homes and on their properties, ” citing the presence of “pit bull guard dogs” roaming loose in the neighborhood, “unknown vehicles entering their properties at all hours of the day and night, ” and at least two reports of “prowling and break-ins” on nearby properties. Compl. ¶ 34.

         Plaintiffs allege that, as a result of the “persistent stench of marijuana, ” ever-present fan noise, and increased traffic, the Marijuana Operation has interfered with the “use and enjoyment of their properties.” Compl. ¶¶ 27-32. They note, for example, that they are no longer able to open the windows in their homes, sit outside on their decks and patios, or recreate in their yards. Compl. ¶¶ 27-32. Plaintiffs further allege that the odors, noise, and traffic created by the Marijuana Operation, along with the very fact of the operation's existence, make each of their properties “worth materially less than they otherwise would be” and “harder to sell at any price.” Compl. ¶ 35. Finally, Plaintiffs allege that, fearing “the presence of a drug trafficking operation in their neighborhood, ” they have “formed a neighborhood watch group, . . . purchased and installed cameras and security systems, purchased and installed fencing and gates, and purchased firearms.” Compl. ¶¶ 28, 30, 34.


         I. Motion to Dismiss Under Rule 12(b)(1).

         A motion to dismiss under Fed.R.Civ.P. 12(b)(1) tests the subject-matter jurisdiction of a federal court. Under the U.S. Constitution, a federal court is without jurisdiction to resolve any claim for which a plaintiff lacks standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). At a constitutional minimum, standing requires a plaintiff to show that she has “suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant, and that the injury can be traced to the challenged action and is likely to be redressed by a favorable decision.” Valley Forge Christian Coll. v. Ams. United for Separation of Church and State, Inc., 454 U.S. 464, 472 (1982) (internal quotation marks and citations omitted). To satisfy the injury-in-fact requirement, the alleged harm must be “an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal quotation marks and citations omitted). The party invoking federal jurisdiction bears the burden of establishing these elements. Id. at 561.

         II. Motion to Dismiss Under Rule 12(b)(6).

         To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint must contain factual allegations sufficient to “state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when the factual allegations allow a court to infer the defendant's liability based on the alleged conduct. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). The factual allegations must present more than “the mere possibility of misconduct.” Id. at 678. When considering a motion to dismiss, a court must accept all allegations of material fact as true and construe those facts in the light most favorable to the non-moving party, Burget v. Lokelani Bernice Pauahi Bishop Trust, 200 F.3d 661, 663 (9th Cir. 2000), but it is “not bound to accept as true a legal conclusion couched as a factual allegation, ” Twombly, 550 U.S. at 555. If a complaint is dismissed, the court must grant the plaintiff leave to amend unless it “determines that the pleading could not possibly be cured by the allegation of other facts.” Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995).


         Defendants move to dismiss Plaintiffs' action for lack of subject-matter jurisdiction, see Fed. R. Civ. P. 12(b)(1), and, as to each RICO claim, for failure to state a claim upon which relief can be granted, see Fed. R. Civ. P. 12(b)(6). Defendants do not dispute that, as alleged, their activities violate the two substantive provisions of RICO relied upon by Plaintiffs, namely 18 U.S.C. § 1962(c) and 18 U.S.C. § 1962(d).[4] They instead argue that Plaintiffs are the wrong parties to bring the instant suit. They contend that Plaintiffs lack constitutional standing to seek relief in federal court and, even if they did not lack constitutional standing, that Plaintiffs have suffered no injuries of the type compensable under the civil RICO statute. Since this Court is without jurisdiction to entertain the merits of any of Plaintiffs' claims if they lack constitutional standing, it addresses that issue first. The Court finds that, although Plaintiffs have constitutional standing to bring their claims, Plaintiffs have not alleged any compensable injuries to property and therefore cannot to state a claim under any provision of the civil RICO statute.

         I. Plaintiffs' Constitutional Standing.

         Defendants argue that this Court is without jurisdiction to decide the present suit because Plaintiffs lack standing. Under Article III of the U.S. Constitution, the “judicial [p]ower” of federal courts is restricted to “[c]ases” and “[c]ontroversies.” U.S. Const. art. III, §§ 1-2. One component of this constitutional limitation is that a federal court may not “decide the merits of [a] dispute” unless the plaintiff demonstrates that she has “standing” as to each claim and each form of relief sought. Warth v. Seldin, 422 U.S. 490, 498 (1975); see also City of Los Angeles v. Lyons, 461 U.S. 95, 105 (1983). To have standing, a plaintiff must show that she has (1) suffered an “injury-in-fact, ” (2) that the injury is “fairly traceable” to the actions of the defendant, and (3) that the injury is likely to be “redressed by a favorable decision.” Lujan, 504 U.S. at 560-61 (internal quotation marks and citations omitted). As relevant here, an injury-in-fact is one which stems from a “legally protected interest” and is both “(a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Id. at 560.

         In the present case, Plaintiffs allege three separate injuries-in-fact upon which to base standing for their RICO and nuisance claims: (1) a present drop in the fair market value of their properties, (2) past and present lost use and enjoyment of their lands, and (3) past out-of-pocket expenses on firearms, fencing, cameras, and other security measures. Compl. ¶¶ 30-32, 34-35. As to each alleged injury and corresponding claim, Plaintiffs seek only damages and no injunctive or other equitable relief. Compl. ¶ 112. In response, Defendants argue that, because all marijuana-related activities have supposedly ceased on the Owenby and Page property, see Page Decl. ΒΆ 7, Plaintiffs' first two injuries no longer exist and, as a result, cannot be redressed by a favorable decision from this Court. They also argue that, although ...

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