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Clancy v. Vacationaire Estates, Inc.

United States District Court, D. Minnesota

February 27, 2019

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 ...

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