United States District Court, D. Minnesota
TIMOTHY J. CLANCY; NICOLE L. CLANCY; and CLANCY'S ON ISLAND LAKE INC d/b/a Vacationaire Resorts d/b/a Clancy's Restaurant and Bar on Island Lake, Plaintiffs,
v.
VACATIONAIRE ESTATES, INC.; THE DONALD L. AND SANDRA S. FLAMM COMMUNITY PROPERTY TRUST; DONALD L. FLAMM; ERIC PHILLIP FLAMM; DENA ANN FLAMM; DANIEL RUSS ELSEY; CRAIG BINGEN; TODD JOEL JUNGWIRTH; and RICHARD JOSEPH JUNGWIRTH, Defendants.
Bradley A. Kirscher, KIRSCHER LAW FIRM, PA for plaintiffs.
Catherine Sung-Yun K. Smith and Eric S. Taubel, GUSTAFSON
GLUEK PLLC, for defendants.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS'
MOTION TO DISMISS
JOHN
R. TUNHEIM CHIEF JUDGE
This
case arises out of actions taken in an attempt to resolve a
property dispute between neighbors. While the property
dispute was resolved by a state court action, this federal
action stems from Defendants' conduct before and during
the pendency of the state court action. Plaintiffs allege
that Defendants engaged in an ongoing pattern of terroristic
actions, including threats and acts of violence, for the
purpose of forcing Plaintiffs to give up their interest in
the disputed property. Plaintiffs bring a federal civil claim
under the Racketeer Influenced and Corrupt Organizations
(“RICO”) Act, as well as state law claims for
tortious interference with prospective economic advantage,
trespass, nuisance, and defamation.
Defendants
have now moved to dismiss the case. Because the Plaintiffs
have not satisfied the pleading standards, the Court will
grant Defendants' Motion in full. It is conceivable that
some of Plaintiffs' claims could survive a Motion to
Dismiss if properly pled; thus, the Court will dismiss those
claims without prejudice to afford Plaintiffs the opportunity
to seek leave to amend.
BACKGROUND
I.
FACTUAL BACKGROUND
A.
The Parties
Plaintiffs
Timothy J. Clancy and Nicole L. Clancy are Minnesota
residents who operate a restaurant, supper club, resort, and
motel in Park Rapids, Minnesota. (Compl. ¶¶ 9, 11,
July 31, 2018, Docket No. 1.) Clancy's on Island Lake
Inc. is a Minnesota corporation that does business in Park
Rapids under the names Vacationaire Resorts and Clancy's
Restaurant and Bar on Island Lake. (Id. ¶ 10.)
Defendant
Vacationaire Estates, Inc. (“VE”) is a Minnesota
association that owns the land under and the common areas
around ten cabins on Island Lake (the “VE
Property”), adjacent to Plaintiffs' restaurant and
motel (the “Clancy Property”). (Id.
¶¶ 12- 13.) Plaintiffs claim that VE has been
operated as a legitimate business but has also been used by
the individual Defendants and the Flamm Trust as a criminal
enterprise. (Id. ¶ 85.)
Defendant
Donald L. and Sandra S. Flamm Community Property Trust (the
“Flamm Trust”) is a family trust that owns real
property across the street from Plaintiffs' restaurant
(the “Flamm Property”). (Id. ¶ 14.)
Defendant
Todd Joel Jungwirth previously owned the Flamm Property.
(Id.) His son, Defendant Richard Joseph Jungwirth,
visited or resided on the property. (Id. ¶ 20.)
Plaintiffs
allege that Defendant Donald L. Flamm resides in Edina,
Minnesota, owns a cabin on VE property, is a member of VE,
and is a trustee of the Flamm Trust. (Id. ¶
15.) However, Defendants have informed Plaintiffs and the
Court that he predeceased the filing of the Complaint.
(Defs.' Mem. Supp. at 11, Sept. 20, 2018, Docket No. 17.)
Defendants
Eric Phillip Flamm and Dena Ann Flamm are Minnesota residents
who own a cabin on VE property and are members of VE. (Compl.
¶ 16.)
Defendant
Daniel Russ Elsey is a Minnesota resident, owns a cabin on VE
property, is a member of VE, and has been the president of VE
since August 2016. (Id. ¶ 17.)
Defendant
Craig Bingen is a Minnesota resident who owned a cabin on VE
property and was a member of VE until he sold his cabin in
June 2017. (Id.¶ 18.)
B.
The Disputed Property
Four
pieces of property are relevant to this dispute: (1) the
Clancy Property, (2) the VE Property, (3) the Flamm Property,
and (4) Icon Drive, a road previously known as “old
County Road 89.”
The
Clancy Property, the VE Property, and the Flamm Property were
once under common ownership. (Aff. of Eric S. Taubel
(“Taubel Aff.”) ¶ 4, Ex. B. (“Am.
State Court Findings”) at 19, Sept. 20, 2018, Docket
No. 18.) In 1963, the parcel of land that contained these
three properties was deeded to David and Lora Lee Sedgwick,
who subsequently founded a corporation called Vacationaire
Inc. (“VInc.”) and transferred the land to it.
(Id.)
The
original parcel contained a resort and what was referred to
as the “owner's house, ” which is now the
Flamm Property. (Id.) In 1971, Sedgwick decided to
separate the cabins from the resort. (Id.) He formed
VE, and VInc. deeded a parcel north of the resort with
several cabins to VE. (Id.)
A
county-owned road, County Road 89, ran through the original
property. (Id. at 19-20.) In 1974, the county
vacated that section of County Road 89, making it a private
road now called Icon Drive. (Id. at 20.) The county
relocated the road to another piece of land owned by VInc.
(Id.) VInc. executed an easement to provide
reasonable and adequate access over Icon Drive for ingress
and egress to the VE property. (Id.)
A lodge
was built on part of VInc.'s property in 1972, but there
was no paved parking lot. (Id. at 19.) A parking lot
was paved a few years after the lodge was built.
(Id. at 20. Part of the lot lay on VE property, and
VE paid to pave it. (Id. at 20.) Part of the parking
lot lay on the “owner's house”/Flamm
Property. (Id. at 21.)
In
1975, VInc. deeded the Flamm Property to one of its long-time
employees, James Grewe, using the centerline of Icon Drive as
the western boundary of the parcel. (Id. at 21.)
Grewe would occasionally allow employees and guests of
VInc.'s lodge to park vehicles in his portion of the
parking lot. (Id.) Grewe worked for both VInc. and
VE at various times until 2000, including as VInc.'s
president. (Id. at 19, 20-21.) While Grewe lived on
the Flamm Property, all the landowners got along and there
were no disputes about parking. (Id. at 21.) Icon
Drive was open, and vehicles rarely parked on the road north
of the parking lot. (Id.)
In
2000, Grewe closed the resort. (Id.) That same year,
VInc., with Grewe as president, conveyed a parcel of land
north of the Flamm Property to VE and gave VE an easement for
ingress and egress over the land now owned by the Clancys.
(Id.)
In
2002, VInc. sold the resort to Island Lake, Inc., a
corporation owned by James Preiner. (Id.) In 2016,
Island Lake, Inc. sold the resort to the Clancys on a
contract for deed. (Id. at 22.)
Greta
and Todd Jungwirth bought the Flamm Property in 2011 and
resided there until 2017, when they sold it to the Flamm
Trust. (Id.) Greta Jungwirth worked in the
Clancys' restaurant for some time. (Id.) At some
point, a dispute arose, and the Clancys told the Jungwirths
that they were not allowed to access the Flamm Property using
Icon Drive. (Id.) The Jungwirths found an alternate
means of ingress and egress to avoid conflict and possible
litigation. (Id.)
Members
of VE initially frequented the Clancys' restaurant.
(Id.) At some point, VE approached the Clancys
regarding a proposed lease agreement for parking, but an
agreement was never reached. (Id.) A dispute arose
regarding parking, which led to the state litigation,
(id.), and the conduct giving rise to this case.
1.
Ownership of Icon Drive
As to
ownership of Icon Drive, the state court ruled as follows:
As to that part of Icon drive contained on vacated [County
Road] 89, and within land abutted by VE and the Flamm Trust,
the centerline shall be the property division between the
abutting landowners . . . subject to easements on behalf of
the properties lying to the north, including [VE] .....
Except for the part of the road owned by the Flamm Trust, the
real property lying under Icon Drive, at issue in this
proceeding, is currently owned by [VE]. . . . As the Clancys
do not own or have any easement or right to use the road
north of their property, neither they nor their patrons may
park on or along the road north of their property line
without permission. Vehicles parked without permission on or
along the road on property owned by VE or the Flamm Trust may
be towed at the owner's expense.
(Id. at 23.) Notably, this finding was a change from
the state court's initial conclusion that the Clancys
owned the portion of Icon Drive not owned by the Flamm Trust.
(Taubel Aff. ¶ 3 & Ex. A (“Initial State Ct.
Findings”) at 8, 11.)
2.
Ownership of the Parking Lot
As to
ownership of the parking lot, the state court ruled as
follows:
VE is the owner of the paved section of the parking lot
within its property boundary . . .. As the Clancy's
failed to establish their claims for adverse possession or a
prescriptive easement[, ] they and their patrons have no
right to use this section of the parking lot without
permission from VE. Vehicles parked without permission from
VE on this section of the parking lot may be towed at the
owner's expense. . . . The Flamm Trust is the owner of
that part of the parking lot within its property boundary. As
the Clancy's failed to establish their claims for adverse
possession or any kind of easement[, ] they and their patrons
have no right to use this section of the parking lot without
permission from the Flamm Trust. Vehicles parked without
permission from the Flamm Trust on this section of the
parking lot may be towed at the owner's expense.
(Am. State Ct. Findings at 23.) This finding was
consistent with the court's initial conclusion. (Initial
State Ct. Findings at 8, 12.)
C.
Conduct Supporting Plaintiffs' Claims
Plaintiffs
allege that Defendants have engaged in “a nearly
two-year pattern of terroristic actions, terroristic threats,
acts of violence, and threats of violence . . . with the
purpose of forcing the Plaintiffs out of business and forcing
the Plaintiffs to surrender ownership of real property to the
Defendants.” (Compl. ¶ 1.) At the time the
Complaint was filed, the state court had issued initial
findings stating that Plaintiffs owned a portion of Icon
Drive but had no easement for parking on VE or Flamm
property. (Initial State Ct. Findings at 8, 11.) The state
court later amended these findings to state that Plaintiffs
did not own Icon Drive. (Am. State Ct. Findings at 23.)
Plaintiffs
allege the following facts:
In August 2016, Defendants Bingen, Elsey, and Eric Flamm
“began a pattern of terroristic acts, terroristic
threats, acts of violence, threats of violence, and extortion
intended to force the Plaintiffs to surrender their property
interest in [Icon Drive].” (Compl. ¶ 42.)
Defendants' conduct was intended to benefit VE and its
cabin owners and members, who “had actual knowledge of
the conduct” of these defendants and “tacitly
approved” of it. (Id. ΒΆΒΆ 44-46.)
Defendants sought ...