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Underwood v. 1450 Se Orient, LLC

United States District Court, D. Oregon

June 14, 2019

LAURA L. UNDERWOOD, Plaintiff,
v.
1450 SE ORIENT, LLC dba KALEAFA, et al, Defendants.

          FINDINGS & RECOMMENDATION

          JOLIE A. RUSSO UNITED STATES MAGISTRATE JUDGE.

         Plaintiff Laura Underwood originally brought this action against 226 defendants alleging violation of the Racketeer Influenced and Corrupt Organizations ACT (RICO), 18 U.S.C. § 1962 related to marijuana production on property adjacent to her property. Plaintiff grouped defendants into the following categories: (1) defendants who purchased the neighboring property, “Candy Farm Property, ” in order to produce marijuana and marijuana products on that Property; (2) defendants who cultivated marijuana for the Candy Farm Property on properties other than the Candy Farm Property; and (3) defendants who sold marijuana products produced by the Candy Farm Property at their retail outlets. On March 18, 2019, the court severed the retail defendants from this action.

         On April 16, 2019, plaintiff filed a RICO case statement. Defendants 7Points, Inc., Robert Marion Elam, Michael R. Munzing, Certified Portland, LLC, Adam Kirkwood, East Fork Agriculture LLC, Joel Matthew Fischer, Aaron Howard, Nathan Cole Howard, Joseph River Perkins, Mason Reed Walker, High Noon Farm LLC, Tyson Lewis, Gregory Perrin, Willamette Valley Resources, LLC, David Kline, Darlene Siegel, Sugar Tree Farm, LLC, Steven Penman, and Jason Reynolds now move to dismiss. The other defendants joined in the motion to dismiss. The court held oral argument on June 12, 2019. For the reasons stated below, defendants' motion to dismiss should be granted, and plaintiff's request for leave to file a second amended complaint should be allowed.

         ALLEGATIONS

         Plaintiff is an Oregon property owner who lives immediately adjacent to the former Oregon Candy Farm located at 48620 SE Highway 26 in Sandy, Oregon (Candy Farm Property). First Amended Complaint (doc. 127) at ¶ 1. Defendants Alexander Pavich, Evette Pavich and Nicholas Pavich own and control defendant N&A (the Pavich Defendants). Plaintiff alleges that in August 2013, defendant N&A acquired the Candy Farm Property for the purposes of cultivating marijuana, manufacturing concentrated marijuana extracts and producing marijuana-infused products to sell. Plaintiff alleges these activities constitute a criminal enterprise (the Marijuana Operation). Plaintiff further alleges each of the Pavich defendants agreed to make a financial investment in the Marijuana Operation, and in exchange, each of them would receive a portion of the Marijuana Operation proceeds. Id. at ¶¶ 231-32.

         Plaintiff alleges the Pavich defendants and defendant Aligra Marie Rainy developed the Candy Farm Property beginning in September 2013 in preparation for the Marijuana Operation. Id. at ¶¶ 233-344. Plaintiff further alleges the Pavich defendants formed other companies such as defendant Chronic Creations, LLC and defendant Oregon Candy Farm, LLC to manufacture marijuana products and market and sell those products. Id. at e.g., ¶¶ 236-37.

         Plaintiff alleges other defendants such as defendant 7Points, Inc. also joined in the Marijuana Operation to produce marijuana for Chronic Creations and OCF. Id. at e.g., ¶¶ 423-24. In addition, plaintiff alleges numerous other defendants such as Alpha Alternative Solutions, LLC joined in the Operation to sell the marijuana products at the retail level. Id. at e.g., ¶¶ 243-45.[1]

         Plaintiff alleges all defendants engaged in the production and sale of a controlled substance in violation of the Controlled Substances Act. 21 U.S.C. §§ 812, 823, 841, 844. Plaintiff further alleges violation of the Controlled Substances Act and other criminal statutes through advertisements of marijuana products, facilitation of financial transactions, and reinvestment of proceeds from marijuana sales. 21 U.S.C. §§ 843, 854; 18 U.S.C. §§ 1956, 1957. First Amended Complaint (doc. 127) at ¶ 453. Plaintiff alleges defendants' violation of the Controlled Substances Act and involvement in money laundering constitutes a conspiracy to engage in a pattern of racketeering activity. First Amended Complaint (doc. 127) at ¶¶ 457-558. Accordingly, plaintiff asserts all defendants violated RICO by conspiring to conduct the affairs of the Marijuana Operation. Id. at ¶¶ 561-64. Plaintiff alleges all defendants specifically violated 18 U.S.C. § 1962(c) (use of an enterprise to conduct a pattern of racketeering activity) and 18 U.S.C. § 1962(d) (conspiracy to conduct such activity).

         Plaintiff alleges defendants' violation of RICO caused her injury by:

interfering with Plaintiff's use and enjoyment of Plaintiff's Property, burdening it with noxious odors, diminishing its market value and making it more difficult to sell.
As a direct result of Plaintiff's Property's diminished market value, the amount of credit Plaintiff was able to obtain based upon the value of Plaintiff's Property was materially decreased.

First Amended Complaint (doc. 127) at ¶ 566; see also ¶¶ 447-452 (describing in detail the impact on plaintiff's property).

         DISCUSSION

         Defendants assert the complaint must be dismissed because plaintiff has not and cannot allege an injury ...


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