SAM SPARKS

ORDER

BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically the various motions to dismiss Plaintiffs' Second Amended Consolidated Complaint ("Live Complaint") [#467]. With the exception of Jeffrey Turner and Gennady Borokhovich, the Defendants have each filed two motions seeking the dismissal of some or all of the Live Complaint. In each of their first motions, Defendants move to dismiss pursuant to Federal Rule of Civil Procedure 8(a), contending that the Plaintiffs' most recent attempt to plead their claims is actually less cogent than the prior, criticized versions, and, because they have had more than enough opportunities to plead their claims, Plaintiffs should not be permitted further amendments and the case should be dismissed with prejudice. See Motions to Dismiss [##471, 476, 478, 480]. In the second group of motions, Defendants seek the dismissal of several claims pursuant to Federal Rule of Civil Procedure 12(b)(6). See Motions to Dismiss [##470, 475, 477, 482]. Having reviewed these motions, the Plaintiffs' responses, the Defendants' replies, the governing law, and the file as a whole, the Court now enters the following opinion and orders.

I. Defendants' Rule 8(a) Motions

In the four long years this case has been pending, the Court has repeatedly been critical of the Plaintiffs' pleadings. As early as April 2010, the Court ordered Plaintiffs to file an amended complaint because the complaint on file was:

far too lengthy, disorganized, and full of extraneous facts. It is, for the most part, a rambling diatribe against the Defendants, and thus lacks a short, plain statement of any single cause of action. Furthermore, it lacks a statement of the particulars of the fraud by which the Plaintiffs claim they were injured.

In their Rule 8(a) Motions to Dismiss, Defendants complain that Plaintiffs' Second Amended Consolidated Complaint is lengthy, verbose, contradictory, repetitive, and confusing, and thus violates Rule 8(a). While the Second Amended Complaint remains deserving of much of this criticism, Plaintiffs' pleading is not going to improve. It is well past time to move this case forward. The liberal pleading requirements of Rule 8 require "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. CIV. P. 8(a)(2). The primary purpose of the complaint is to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Erickson v. Pardus, 551 U.S. 89, 93 (2007). Rule 8 explicitly permits a party to state "as many separate claims or defenses as it has, regardless of consistency." FED. R. CIV.P. 8(d)(3).

The Court concludes the Second Amended Complaint, though far from perfect, is sufficient to satisfy the requirements of Rule 8. See Skinner v. Switzer, 131 S.Ct. 1289, 1296 (2011) ("[Plaintiff's"] complaint is not a model of the careful drafter's art, but under the Federal Rules of Civil Procedure, a complaint need not pin plaintiff's claim for relief to a precise legal theory."). One of the factors contributing to this conclusion is that this case has been pending so long, and the defendants and the Court have incurred significant costs to get to this point. See SerVaas Inc. v. Republic of Iraq, 540 F. App'x. 38, 42 (2d Cir. 2013) (unpublished) (denying motion to dismiss for forum non conveniens when it was filed more than two-and-a-half years after plaintiff filed complaint). Further, the confusion still present in the Second Amended Complaint is substantially mitigated by the rulings which follow below. Thus, based upon the foregoing, the Court DENIES Defendants' Rule 8(a) Motions to Dismiss [##471, 476, 478, 480].

II. Rule 12(b)(6) Motions

Defendants Barlin, Lahr, Gunn, Zaretsky, North American Title Company (NAT), and Williams move to dismiss Plaintiffs' Racketeer Influenced and Corrupt Organizations Act (RICO) claims as barred by the Private Securities Litigation Reform Act (PSLRA) and for failure to state a claim. NAT and Williams also contend the RICO claims are barred by res judicata. Finally, NAT and Williams move to dismiss Tutor's negligence, gross negligence, conspiracy to commit fraud and beneficiary of fraud claims on statute of limitations grounds.

A. RICO Claims

Plaintiffs' Second Amended Consolidated Complaint alleges Defendants violated RICO, 18 U.S.C. §§ 1962(c)-(d). Four years ago, represented by their first round of lawyers, Plaintiffs asserted similar RICO claims. The then-defendants moved for dismissal, arguing the RICO claims were barred by the PSLRA. See Motion to Dismiss, filed on April 1, 2010 [#34]. At a hearing on the motions, the Court warned Plaintiffs the RICO claims appeared to be meritless and Plaintiffs were in danger of Rule 11 sanctions. See Hrg. Tr. [#65] at 14-15. Following the hearing, Plaintiffs decided to abandon their RICO claims and filed an Amended Complaint alleging various fraud and securities claims instead. See Amended Complaint [#63]. Now, four years and several rounds of attorneys later, the Plaintiffs seek to revive their RICO claims in the Second Amended Complaint. Defendants again argue Plaintiffs' RICO claims are barred under the PLSRA.

The RICO statute provides a private right of action for a person harmed by a pattern of racketeering activity. 18 U.S.C. §§ 1962,1964(c); Affco Investments 2001, L.L.C. v. Proskauer Rose, L.L.P., 625 F.3d 185, 189 (5th Cir. 2010). "However, Congress limited this right by amending RICO in 1995, as part of the PSLRA, to bar civil RICO claims based on 'any conduct that would have been actionable as fraud in the purchase or sale of securities.'" Affco, 625 F.3d at 189 (quoting 18 U.S.C. § 1964(c)). "Accordingly, if the racketeering activity alleged to support a RICO claim is characterized by the plaintiffs as wire, mail, or bank fraud, but it also amounts to securities fraud, the claim must be dismissed." RA Investments I, LLC v. Deutsche Bank AG, No. Civ.A.3:04-CV-1565-G, 2005 WL 1356446, at *5 (N.D. Tex. June 6, 2005) (citing In re Enron Corp. Sec, Derivative & ERISA Litig., 284 F. Supp. 2d 511, 619 (S.D. Tex. 2003)); see also Bald Eagle Area Sch. Dist. v. Keystone Fin., Inc., 189 F.3d 321, 330 (3d Cir. 1999) ("[A] plaintiff cannot avoid the RICO Amendment's bar by pleading mail fraud, wire fraud and bank fraud as predicate offenses in a civil RICO action if the conduct giving rise to those predicate offenses amounts to securities fraud.").

Through the majority of this case's long and tortured history, Plaintiffs have consistently litigated their claims as fraud in the sale of securities, and not under RICO. Plaintiffs have repeatedly conceded in their pleadings that the loans at issue in this case "constitute securities" within the meaning of federal and state securities laws. See Original Complaint [#1] at ¶ 102; Amended Complaint [# 63] at ¶15; Second Amended Complaint [#86] at ¶ 182; Third Amended Complaint [#202] at ¶ 183. Plaintiffs rely upon the very same conduct and transactions for both their purported RICO claims and their securities fraud claims. Accordingly, Plaintiffs' RICO claims are barred under Section 107 of the PSLRA. Independent of the PSLRA bar, the RICO claims should also be dismissed because Plaintiffs' attempt to reassert the previously-abandoned claims at this late stage of the proceedings is indicative of bad faith. See State of La. v. Litton Mortg. Co., 50 F.3d 1298, 1304 (5th Cir. 1995) (affirming district court's denial of motion to amend where plaintiff attempted to resurrect an abandoned RICO claim after multiple amendments and court found the proposed amendment was "indicative of possible bad faith and dilatory motive at the worst, and weak attempts at artful pleading at best").

With regard to Vodicka and Aubrey's RICO claims against North American Title and Lesley Williams, NAT and Williams also contend that the claims should be dismissed on res judicata gounds. As these Defendants note, Vodicka and Aubrey brought suit against NAT in state court in Dallas in 2011. In their Third Amended Petition filed there, Vodicka and Aubrey presented both "Direct Causes of Action" and "Dependent or Derivative Causes of Action." The direct claims were breach of fiduciary duty, Texas Securities Act violations, conspiracy to commit and beneficiary of fraud, and participation in breach of fiduciary duty, all against NAT. The dependent or derivative claims were breach of fiduciary duty, violations of the Texas Securities Act, transferring funds of criminal activity, conspiracy to commit and beneficiary of fraud, and participation in breach of fiduciary duty, all arising out of the acts of what was referred to as the "Gunn-Lahr-Barlin Syndicate." On August 8, 2012, NAT was awarded summary judgment on all of the direct causes of action. [#477-3]. That judgment was affirmed on appeal earlier this year. Vodicka v. North American Title Co., No. 05-13-00126-CV, 2014 WL 348530 (Tex. App.—Dallas Jan. 30, 2014, no pet.). NAT and Williams argue the RICO claims are part of the same transaction (the loan) that gave rise to Vodicka and Aubrey's other claims, and because they could have been brought in the Dallas litigation, they are precluded by res judicata based on the final judgment in that case. Igal v. Brightstar Info. Tech., 250 S.W.3d 78, 86 (Tex. 2008) ("Res judicata bars the relitigation of claims that have been finally adjudicated or that could have been litigated in the prior action.").

Vodicka and Aubrey do not contest their RICO claims arise out of the same transaction as the claims stated against NAT in the Dallas case. Rather, they respond the RICO claims are not precluded because they actually filed a RICO claim in the Dallas case, summary judgment was not granted on it, and there is no final judgment barring the claim. They note their direct and derivative claims were separated by an order entered on October 20, 2011, severing the cases. The derivative claims were given a new number, DC-11-13471, and were then stayed. On July 12, 2012, a month prior to the summary judgment being entered, Plaintiffs filed a motion in the severed and stayed case requesting leave to file an amended petition and asking that the stay be lifted. [#493-8]. The amended petition they sought leave to file added a RICO claim directly against NAT. [#493-9]. The day after the Dallas court granted summary judgment on the direct claims (which took place on August 8, 2012), NAT removed the stayed case to federal court based on the proposed amended petition's assertion of a RICO claim. Ultimately that case was transferred to this court, and consolidated into this action. Vodicka and Aubrey argue these facts demonstrate "[t]here was never a final adjudication, and has never been a final adjudication, on the merits of those claims which were severed, including the RICO claim, as necessary to establish the defense of res judicata." [#493] at ¶ 6 (emphasis omitted).

NAT contends this "misunderstand[s] the Motion to Sever filed in the Dallas County State Court case." [#501] at 2. It asserts the RICO claim should never have been filed in the stayed case, and it only removed that case to federal court to avoid a claim it had waived its right to do so by not seeking removal within 30 days, as required in 28 U.S.C. § 1446(b)(3). Instead, because it was a direct claim, NAT asserts the RICO claim should have been filed in the case in which summary judgment was granted on August 8, 2012, and the claim is therefore barred as it could have been brought in that suit.

To call this situated confused is an understatement. The confusion, however, is entirely of the Plaintiffs' doing, as they chose to file multiple actions against multiple related parties in multiple courts. The Court's review of the state court record shows that on July 12, 2012, Aubrey and Vodicka filed a motion asking the state court for two things: (1) a lifting of the stay; and (2) for leave to file their Second Amended Petition. [#493-8]. In their own words, "this matter should be returned to the active docket and that Plaintiffs be permitted to file their Second Amended Petition." Id. (emphasis added). When the case was removed to federal court in Dallas, no order had been entered on this motion. The stay was never lifted, and leave to file the amended petition was never granted, either before or after removal. Rather, after the case was transferred to this Court, and before it was consolidated into this case, Aubrey and Vodicka sought leave to file an amended pleading. No. A-12-CV-768 SS [#27]. At the hearing in November 2012, during which the cases were consolidated, the Court granted that motion, and the Third Amended Petition was filed on November 26,2012. [#47].

Thus, the first time a RICO claim by Aubrey and Vodicka was properly filed against NAT or Williams was on November 26, 2012. Summary judgment was granted in NAT's favor by the Dallas state court on August 8, 2012. As noted at the outset, Aubrey and Vodicka do not—nor could they—contest the RICO claim arises out of the very same loan transaction which is the source of the claims that were dismissed by the Dallas state court in August 2012. Texas has adopted the "transactional approach" to claim preclusion, and thus a claim which could have been brought in a lawsuit in which final judgment has been entered is barred if it arises out of the same transaction that was the basis of the suit. Igal, 250 S.W.3d at 86. Applied here, that doctrine means Aubrey and Vodicka's RICO claims against Williams and NAT are barred by res judicata, as well as for the reasons already stated above.

Based upon the foregoing, the Court GRANTS Defendants Barlin, Lahr, Gunn, Zaretsky, Williams, and NAT's Motions to Dismiss Plaintiffs' RICO claims under 18 U.S.C. §§ 1962(c)-(d) [##470, 475, 477, 482]. Although Defendant Jeffrey Turner did not file a motion to dismiss, the Court sua sponte DISMISSES Plaintiffs' RICO claims against Defendant Jeffrey Turner for failure to state a claim, for the same reasons as apply to the other defendants.

B. Limitations

NAT and Williams also move to dismiss Plaintiff Chester Tutor's negligence, gross negligence, and conspiracy to commit and beneficiary of the fraud claims on the basis that they are barred by Texas's two-year statute of limitations. "A statute of limitations may support dismissal under Rule 12(b)(6) where it is evident from the plaintiff's pleadings that the action is barred and the pleadings fail to raise some basis for tolling or the like." Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir. 2003).

Under Texas law, the statutes of limitations for negligence, gross negligence, and conspiracy to commit and beneficiary of the fraud claims are two years. Tex. Civ. Prac. & Rem. Code § 16.003(a); KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 747 (Tex.1999); Navarro v. Grant Thornton, LLP, 316 S.W.3d 715, 719 (Tex. App.- Houston [14th Dist.] 2010, no pet.). The applicable statutes of limitations generally begin to run when the facts that authorize a plaintiff to seek judicial relief come into existence. Exxon Corp. v. Emerald Oil & Gas Co., L.C, 348 S.W.3d 194, 202 (Tex. 2011). "In most cases, a cause of action accrues when a wrongful act causes a legal injury, regardless of when the plaintiff learns of that injury or if all resulting damages have yet to occur." Provident Life and Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003).

Tutor alleges he invested $600,000.00 in a $4.5 million syndicated bridge loan. Complaint at ¶ 21. Tutor further alleges the borrower of the bridge loan did not own all of the property that served as collateral for the loan except the title to the 100-acre tract in Wildhorse Ranch. Complaint at ¶ 20. According to Plaintiffs' allegations, Tutor's loss on the investment occurred on February 3, 2009, when Southside Bank foreclosed on the 100-acre tract in Wildhorse Ranch and took title to it for the amount of the indebtedness. Defendants contend Tutor suffered legal injury when his loan was not repaid and the foreclosure took place on February 3, 2009. Plaintiffs conceded in a previously filed complaint that February 3, 2009, was in fact the date Tutor's claims accrued. See First Consolidated Amended Complaint at ¶ 158 [#326] ("Due to the inherent undiscoverable nature of Plaintiffs' injuries, as well as Defendants' fraudulent concealment of the facts underlying Plaintiffs' claims, the February 3, 2009 foreclosure was the first possible date Plaintiffs could have known of their fraud and conspiracy claims."). Tutor's negligence, gross negligence, and conspiracy to commit fraud claims were first stated on May 14, 2012, well past the date the statute on these claims ran (February 3, 2011). See No. A-12-CA-503 SS [#1].

Tutor contends his pleading of fraudulent concealment in the Second Amended Complaint tolls the statute of limitation. But he fails to note this only addresses his RICO claims, not his negligence and conspiracy claims. See Live Complaint [#467] at ¶¶ 44-46. Moreover, it is the fact of injury—not when it is discovered—that matters. Knott, 128 S.W.3d at 221; S.V. v. R.V., 933 S.W.2d 1,4 (Tex. 1996). Because the statute of limitations has run on these claims, and there is no basis for equitable tolling, the Court GRANTS Defendants North American Title Company and Lesley Karen Williams' Motion to Dismiss [#477] Plaintiff Chester Tutor's negligence, gross negligence, and conspiracy to commit fraud claims. III. Conclusion Accordingly,

IT IS ORDERED that Plaintiffs' Motion for Leave to File a Sur-Reply to Defendant Lahr's Reply [#506] is GRANTED;
IT IS FURTHER ORDERED that Plaintiffs' Motion for Leave to File a Sur-Reply to Defendants NAT/Williams's Reply [#510] is GRANTED;
IT IS FURTHER ORDERED that Plaintiffs' Motion to Extend Deadline to Response to Defendant William Hemphill, Jr.'s Motion to Dismiss [#453] is DISMISSED AS MOOT;
IT IS FURTHER ORDERED that Defendants Peter E. Barlin, Gregory H. Lahr, Sandra F. Gunn, Vitaly Zaretsky, North American Title Company, and Lesley Karen Williams' Rule 8(a) Motions to Dismiss [##471, 476, 478, 480] are DENIED;
IT IS FURTHER ORDERED that Defendants Peter E. Barlin, Gregory H. Lahr, Sandra F. Gunn, Vitaly Zaretsky, Lesley Karen Williams, and North American Title Company's Motions to Dismiss [##470, 475, 477, 482] are GRANTED;
IT IS FURTHER ORDERED that Plaintiffs' RICO claims against Defendant Jeffrey Turner are DISMISSED sua sponte for failure to state a claim;
IT IS FURTHER ORDERED that Plaintiffs RICO claims against Defendant Gennady Borokhovich are DISMISSED WITHOUT PREJUDICE sua sponte for failure to state a claim and failure to obtain service of process;
IT IS FINALLY ORDERED that the following Defendants, and all claims against them, are DISMISSED WITH PREJUDICE: North American Title Company, Lesley Karen Williams, Jeffery Turner, and Vital Zaretzky.

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SAM SPARKS

UNITED STATES DISTRICT JUDGE