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United States Court of Appeals,
Fifth Circuit.
No. 94-40166.
Larry D. CROWE and Sue Ellen Crowe Silman, as Administratrix of
the Succession of Reba Coody Crowe, Plaintiffs/Appellants,
v.
Sam O. HENRY, III, the Law Firm of Blackwell, Chambliss, Hobbs &
Henry, Murray Blackwell, Jr., Frank N. Chambliss, James A. Hobbs,
Chet Harrod, Douglas C. Caldwell, K. Tod Cagle, and Continental
Insurance Co., d/b/a/ CNA, Defendants/Appellees.
Jan. 30, 1995.
Appeal from the United States District Court for the Western
District of Louisiana.
Before JOHNSON, HIGGINBOTHAM and DAVIS, Circuit Judges.
JOHNSON, Circuit Judge:
Larry D. Crowe1 brought this RICO2 action against Sam O. Henry,
III, his attorney, and against Henry's law firm, each individual
partner of that firm and the firm's insurer. Crowe contended that
Henry, with the aid of the firm, engaged in a series of fraudulent
acts through which Henry converted, for his personal benefit,
certain property owned by Crowe. The defendants brought a motion
to dismiss under Fed.R.Civ.P. 12(b)(6) which the district court
1The central dispute in this case involves property
originally owned by Larry Crowe and the succession of his wife,
Reba Coody Crowe. Hence, this suit was actually brought by Larry
Crowe and Sue Ellen Crowe Silman as the administratrix of the
Succession of Reba Coody Crowe. However, as the interests of
Larry Crowe and the Succession are the same and as Larry Crowe is
the prime mover in the facts underlying the claim and in the
prosecution of this action, the plaintiffs will be hereinafter
collectively referred to as "Crowe."
2Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. § 1961 et seq.
1

granted finding that the plaintiffs had failed to sufficiently
plead a RICO enterprise. We affirm in part, reverse in part and
remand.
I. FACTS3 AND PROCEDURAL HISTORY
Larry Crowe is a farmer and a businessman. In the early
1960s, he met Sam Henry and they became friends and business
associates. Over the next twenty-five to thirty years, Henry,
through his firm of Blackwell, Chambliss, Hobbs & Henry
(hereinafter "the firm"), represented Crowe and his family in most
of their legal matters.
In the mid-1980s, Crowe became involved in litigation with
James W. Smith and People's Homestead. Henry, who was representing
Crowe in that action, advised Crowe to accept $1.175 million in
settlement from People's Homestead so that they could concentrate
on the threat from Smith. Moreover, to protect the settlement
funds from any possible judgment that Smith might obtain against
Crowe, the money was placed into accounts in the name of the law
firm.4
At about this same time, Henry and Crowe began to discuss a
joint venture involving buying and developing farm land in East
3The facts and allegations in the plaintiffs' complaint are
legion. This summary, drawn from the complaint, develops only
such facts as are needed for the resolution of this matter.
4Henry and/or the firm wrote several checks from these funds
which Crowe contends were unauthorized. These checks included
amounts to pay down the mortgage on the West Carroll property, a
$30,000 check to the firm for disputed legal fees, and a $30,000
check to purchase a condominium for Henry in Baton Rouge.
2

Carroll Parish (East Carroll).5 To accomplish the purchase of this
property, Crowe and Henry planned that land which Crowe owned in
West Carroll Parish (West Carroll)6 would be used as collateral.
Further, they anticipated that funds from the People's Homestead
settlement would be used to clear most of the debt on West Carroll
in order to get ready for the joint venture.
However, still concerned about the possibility of a judgment
against Crowe in favor of Smith, Henry advised Crowe to transfer
various immovable properties to him in "trust." Chiefly,7 this
involved Crowe "selling" West Carroll to Henry with the secret,
oral8 understanding that Henry would return the property to Crowe
upon request. Despite any such sale, though, Crowe insists that
the parties understood that Crowe remained the true owner of the
land.
This "sale" took place in early 1987. To gain court approval
for the sale, Crowe alleges that Henry9 misled the court about the
value of the property, the amount of debt encumbering it, and the
5This property was also known as Deborah plantation and was
a 2,414 acre tract.
6This property consisted of about 900 acres of land and was
the site of the Crowe family home.
7Crowe asserts that a similar pattern occurred with several
smaller parcels of land owned by Crowe in Catahoula Parish.
8Crowe alleges that Henry advised him that it would be
unwise to prepare a counter letter evidencing this arrangement
because such a letter would be discoverable in the litigation
involving Smith. Accordingly, no counter letter exists.
9Acting at Henry's direction, Douglas C. Caldwell, a member
of the firm, aided in this transaction by drawing up and mailing
to the court or the clerk several of the documents involved.
3

danger of foreclosure. According to the papers submitted to the
court, the consideration paid by Henry to purchase this property
was the assumption of certain indebtedness. However, Crowe
maintains that both he and Henry knew that the indebtedness
allegedly assumed had either already been satisfied or was
otherwise not valid and thus that Henry effectively gave no
consideration. After this "sale," Crowe and his family remained on
the property.
On the day that title to West Carroll was transferred to
Henry, he placed a collateral mortgage on it for the purchase of
East Carroll. Title to East Carroll was placed in Henry's name.
Even so, Crowe contends that the parties (Crowe and Henry)
understood that Crowe owned fifty percent of East Carroll10 and that
East Carroll was only titled in Henry's name alone to protect the
property from the Smith litigation.
Initially, Henry financed the purchase by a loan from the
Federal Land Bank. This was interim financing, however, and Crowe
expected that two new loans would be obtained. One loan would be
for $300,000 on West Carroll and the other would be for $1,000,000
on East Carroll. Crowe believed that this was the best arrangement
because it would keep the ownership and the financing on the two
properties separate. However, in late 1989, Henry refinanced the
debt with a combined loan from an out-of-state bank.
10Crowe maintains that his consideration for this ownership
percentage in East Carroll was the use of West Carroll as
collateral for the purchase and the utilization of his farming
expertise, his labor and his equipment in working the East
Carroll land.
4

From 1987 to 1989, East Carroll and West Carroll were farmed
as combined acreage either by Larry Crowe or under lease. Even
when the property was under lease, though, Crowe provided equipment
and services to help with the farming. Crop proceeds or lease
payments from those years went to pay the mortgage and to buy
additional farm equipment and make improvements to the land.11
In 1990, Crowe and Henry decided to farm East Carroll and West
Carroll separately. As the two properties were burdened by the
same mortgage, they drew up a Farm Operating Agreement under which
the mortgage payment would be allocated as twenty-nine percent to
West Carroll and seventy-one percent to East Carroll. The funds
would be sent to Henry at his office and he would make the combined
mortgage payment.
Crowe became concerned, however, when Henry made it known that
he wanted the money from West Carroll sent to him and marked as
rent. Under that arrangement, Crowe worried that Henry could claim
that he was paying all of the note on the properties. Moreover,
Crowe began to suspect that all of Henry's actions were being taken
to freeze him out and to erase any evidence of his ownership.
Therefore, Crowe instead tendered West Carroll's portion of the
mortgage into the registry of the court.
On June 22, 1990, Henry sent a letter to Crowe informing Crowe
11In addition to farming the land, Crowe and Henry applied
for U.S. Department of Agriculture Agricultural Stabilization and
Conservation Service (ASCS) payments in the name of Crowe, Henry
and members of Henry's immediate family. From the years 1987-89,
checks in the amount of $207,087.35 were sent to Henry at his
office at the firm and were used for Henry's personal benefit.
5

that no one in the firm represented him any longer. Litigation
ensued shortly thereafter and Henry sought to evict Crowe from West
Carroll. Members of the firm participated in drawing up documents
and submitting them to the court to accomplish this eviction.
Crowe brought the instant suit against Henry, the firm, each
individual partner of the firm and the firm's insurer on a myriad
of state theories and on a civil RICO claim. As to the RICO claim,
Crowe sought relief for alleged violations of 18 U.S.C. §§ 1962(a),
(b), (c) and (d). In response, the defendants filed a motion to
dismiss under Fed.R.Civ.P. 12(b)(6) contending that Crowe had
failed to adequately plead 1) a pattern of racketeering activity;
2) violations of 18 U.S.C. § 1962; and 3) a RICO enterprise.
The district court found sufficient allegations as to a
pattern of racketeering activity and as to violations of 18 U.S.C.
§ 1962, but agreed with the defendants that Crowe had failed to
adequately plead a RICO enterprise. Accordingly, the district
court dismissed the RICO claim. The pendent state claims were
later dismissed making the action final. Crowe now appeals to this
Court.
II. STANDARD OF REVIEW
In the instant case, the district court dismissed Crowe's
claims for failure to state a claim under Fed.R.Civ.P. 12(b)(6).
A motion to dismiss an action for failure to state a claim "admits
the facts alleged in the complaint, but challenges plaintiff's
right to relief based upon those facts." Ward v. Hudnell, 366 F.2d
247, 249 (5th Cir.1966). Dismissal cannot be upheld unless it
6

appears beyond doubt that the plaintiffs would not be entitled to
recover under any set of facts that they could prove in support of
their claim. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99,
102, 2 L.Ed.2d 80 (1957); Worsham v. Pasadena, 881 F.2d 1336, 1339
(5th Cir.1989). This Court independently applies the same
standards employed by the district court. Tel-Phonic Services,
Inc. v. TBS International, Inc., 975 F.2d 1134, 1138 (5th
Cir.1992).
III. RICO VIOLATIONS
Crowe has alleged RICO violations under 18 U.S.C. § 1962(a),
(b), (c), and (d). Reduced to their simplest terms, these
subsections state that:
(a) a person who has received income from a pattern of racketeering
activity cannot invest that income in an enterprise;
(b) a person cannot acquire or maintain an interest in an
enterprise through a pattern of racketeering activity;
(c) a person who is employed by or associated with an enterprise
cannot conduct the affairs of the enterprise through a pattern
of racketeering activity; and
(d) a person cannot conspire to violate subsections (a), (b), or
(c).
Common elements are present in all four of these subsections.
Ocean Energy II, Inc. v. Alexander & Alexander, Inc., 868 F.2d 740,
742 (5th Cir.1989). These common elements teach that any RICO
claim necessitates "1) a person who engages in 2) a pattern of
racketeering activity, 3) connected to the acquisition,
establishment, conduct, or control of an enterprise." Delta Truck
& Tractor, Inc. v. J.I. Case Co., 855 F.2d 241, 242 (5th Cir.1988);
cert. denied, 489 U.S. 1079, 109 S.Ct. 1531, 103 L.Ed.2d 836 (1989)
7

(emphasis in original). See also, Calcasieu Marine Nat. Bank v.
Grant, 943 F.2d 1453, 1461 (5th Cir.1991).
A. RICO Persons
The RICO person in a civil or criminal RICO action is the
defendant. Landry v. Air Line Pilots Ass'n Int'l, 901 F.2d 404,
425 (5th Cir.), cert. denied, 498 U.S. 895, 111 S.Ct. 244, 112
L.Ed.2d 203 (1990). The statute defines the RICO person as
including "any individual or entity capable of holding a legal or
beneficial interest in property." 18 U.S.C. § 1961(3). This is a
very broad definition. However, this Court has recognized that if
we are to restrict RICO to the type of conduct that Congress
intended to proscribe,
the RICO person must be one that either poses or has posed a
continuous threat of engaging in acts of racketeering.... The
continuous threat requirement may not be satisfied if no more
is pled than that the person has engaged in a limited number
of predicate racketeering acts.
Delta Truck, 855 F.2d at 242.
In this case, Crowe has alleged two RICO persons in his
complaint--Henry and the firm. As to the firm, we note that Crowe
has only alleged a limited number of predicate acts. The firm only
appears a few times in this drama. Specifically, Crowe refers to
the firm's involvement in drawing up court documents for the 1987
sale and the 1990 eviction and to the firm writing, from funds
owned by Crowe but in the account of the firm, what Crowe contends
was an unauthorized check for legal fees in the amount of $30,000.
Even if all of these actions constituted predicate acts under RICO,
which we do not now decide, we find them to be too isolated and
8

sporadic to support a finding that the firm was a RICO person.
These few acts, spread out over a four-year period, simply do not
show the continuous threat of racketeering activity that RICO was
designed to address.
As to Henry, however, we conclude that Crowe has succeeded in
naming a sufficient RICO person. Henry is certainly an individual
capable of holding a legal or beneficial interest in property and
thus he meets the statutory definition. 18 U.S.C. § 1961(3).
Moreover, for the reasons stated below, we find that Henry's
actions, as alleged, also meet the continuity requirement.
B. Pattern of Racketeering Activity
The district court found that Crowe had adequately pled the
existence of a pattern of racketeering activity consisting of
numerous predicate acts of mail fraud12, wire fraud13, financial
institution fraud14 and theft of goods in interstate commerce.15 We
agree that Crowe's allegations are sufficient.
C. Enterprise
A plaintiff asserting a RICO claim must allege the existence
of an enterprise. Montesano v. Seafirst Commercial Corp., 818 F.2d
423, 427 (5th Cir.1987). A RICO enterprise can be either a legal
entity or an association-in-fact. Manax v. McNamara, 842 F.2d 808,
811 (5th Cir.1988). In this case, Crowe has alleged enterprises
1218 U.S.C. § 1341.
1318 U.S.C. § 1343.
1418 U.S.C. § 1344.
1518 U.S.C. § 659.
9

consisting of either Crowe himself, as a businessman and farmer, or
an association-in-fact consisting of Crowe, Henry and the firm or
any combination thereof. For the reasons given in its opinion, we
agree with the district court that Crowe has not sufficiently pled
a RICO enterprise consisting of either Crowe as an individual or an
association-in-fact involving the law firm. However, we disagree
with the district court and conclude that Crowe has alleged an
enterprise composed of an association-in-fact of Crowe and Henry.
Crowe has pled that he and Henry associated in fact to
operate a farming venture.16 To establish an association-in-fact
enterprise, a plaintiff must "show "evidence of an ongoing
organization, formal or informal, and ... evidence that the various
associates function as a continuing unit.' " Atkinson v. Anadarko
Bank and Trust Co., 808 F.2d 438, 440 (5th Cir.), cert. denied, 483
U.S. 1032, 107 S.Ct. 3276, 97 L.Ed.2d 780 (1987) (quoting U.S. v.
Turkette, 452 U.S. 576, 582, 101 S.Ct. 2524, 2528, 69 L.Ed.2d 246
(1981). This formulation of an association-in-fact enterprise
incorporates the notion of continuity. Calcasieu, 943 F.2d at
1461. Accordingly, this Court has determined that an
"association-in-fact enterprise 1) must have an existence separate
and apart from the pattern of racketeering, 2) must be an ongoing
organization and 3) its members must function as a continuing unit
as shown by a hierarchical or consensual decision making
structure." Delta Truck, 855 F.2d at 243. See, Calcasieu, 943
16Even Henry, in his answer to this suit, characterizes the
Crowe and Henry collaboration as a joint venture.
10

F.2d at 1461; Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir.1989);
Old Time Enterprises, Inc. v. International Coffee Corp., 862 F.2d
1213, 1217 (5th Cir.1989); Foval v. First National Bank of
Commerce, 841 F.2d 126, 129-30 (5th Cir.1988).
The farming venture alleged does appear to exist separate and
apart from the pattern of racketeering. Crowe and Henry's
association extended beyond Henry's alleged acts of fraud and
theft. In order to shield Crowe's assets, they operated a jointly
owned farming business, produced and sold crops, and purchased
farming equipment. Moreover, this farming operation lasted for
almost four years17 and Crowe contends that he and Henry acted as
equal partners and met on a regular basis to make decisions
concerning the operation. Therefore, we find that Crowe has
adequately pled an association-in-fact enterprise consisting of
Crowe and Henry to operate a farming venture.
D. Violations of 18 U.S.C. § 1962(a), (b), (c), and (d)
The defendants herein also contend that Crowe has failed to
adequately allege violations of the RICO subsections, 18 U.S.C. §
1962(a), (b), (c), and (d). As to subsections (a) and (b), we
disagree.
Under subsections (a) and (b), there must be a nexus between
the claimed RICO violations and the injury suffered by the
plaintiff. Old Time, 862 F.2d at 1219. For subsection (a), this
means that the injury must flow from the investment of racketeering
17In addition, this farming venture might have gone on
indefinitely had Crowe not become suspicious and had litigation
not ensued.
11

income into the enterprise. Parker and Parsley Petroleum Co. v.
Dresser Industries, 972 F.2d 580, 584 (5th Cir.1992). Crowe has
alleged such an injury. Funds that he owned, that were allegedly
fraudulently taken from the People's Homestead settlement, were
invested into the enterprise and used to reduce the indebtedness on
land that Crowe alleges was taken from him through a pattern of
racketeering activity. As to subsection (b), a plaintiff must show
that his injuries were proximately caused by a RICO person gaining
an interest in, or control of, the enterprise through a pattern of
racketeering activity. Old Time, 862 F.2d at 1219. Crowe has
certainly alleged that Henry gained ownership of his land and the
farming venture through a pattern of racketeering activity.
Accordingly, we find that Crowe has adequately alleged substantive
violations of 18 U.S.C. § 1962(a) and (b).
The defendants are correct, however, that Crowe cannot
successfully make out a claim under 18 U.S.C. § 1962(c). This
subsection forbids any "person employed by or associated with any
enterprise " from participating in or conducting the affairs of the
enterprise through a pattern of racketeering activity. Id.
(emphasis added). Because of the structure of this language, this
Court has held that the RICO person and the RICO enterprise must be
distinct. Bishop v. Corbitt Marine Ways, Inc., 802 F.2d 122, 123
(5th Cir.1986).
In this case, Crowe has alleged that Henry is both the RICO
person and a member of the Crowe/Henry association-in-fact. This
Court has found, though, that a RICO person cannot employ or
12

associate with himself under this subsection. In re Burzynski, 989
F.2d 733, 743 (5th Cir.1993). Accordingly, Crowe's claim under 18
U.S.C. § 1962(c) fails because there is not a sufficient
distinction between the person and the enterprise. Bishop, 802
F.2d at 123.
Lastly, the defendants are also correct that Crowe has failed
to adequately allege a RICO conspiracy under 18 U.S.C. § 1962(d).
"[B]ecause the core of a RICO civil conspiracy is an agreement to
commit predicate acts, a RICO civil conspiracy complaint, at the
very least, must allege specifically such an agreement." Tel-
Phonic, 975 F.2d at 1140 (citing Hecht v. Commerce Clearing House,
Inc., 897 F.2d 21, 25 (2d Cir.1990)). While Crowe has pled the
conclusory allegation that the defendants herein "conspired,"
nowhere does he allege facts implying any agreement to commit
predicate acts of racketeering. Therefore, Crowe's claim under 18
U.S.C. § 1962(d) must also fail.
IV. AIDING AND ABETTING AND VICARIOUS LIABILITY
The law firm challenges Crowe's claim that the firm aided and
abetted Henry in his alleged scheme to defraud Crowe. To
sufficiently plead aider and abetter liability for this fraud,
Crowe would have had to allege facts showing that the firm
participated in the fraud as something it wished to bring about,
and sought by its actions to make it succeed. Armco Industrial
Credit Corporation v. SLT Warehouse Co., 782 F.2d 475 (5th
Cir.1986). Mere negative acquiescence in the fraud is
insufficient. Id.
13

In the complaint, Crowe specifically alleges that the firm
aided and abetted Henry. Further, Crowe explains how and when this
aid occurred--in particular, that members of the firm helped draw up
documents for the sale of West Carroll in 1987 and for the eviction
of Crowe in 1990. Nothing in the complaint is inconsistent with
these allegations.18 Hence, we find that Crowe has adequately pled
that the firm aided and abetted Henry in his alleged scheme to
defraud.
Finally, the firm argues that it cannot be held vicariously
liable for the actions of Henry.19 In examining this question, we
note that, as discussed in part IIID above, the only claims that
remain open to Crowe are for violations of 18 U.S.C. § 1962(a) and
(b). With this in mind, we find no barrier to vicarious liability
in this case as such liability has been found to be available under
subsections (a) and (b) when the principal has derived some benefit
18The complaint does provide that in August of 1990, Crowe
and his mother sent a letter to each partner in the firm
complaining of Henry's actions. The firm argues from this that
since Crowe had to notify the firm's partners of Henry's alleged
fraud, this shows that the firm was not aware of it. However, we
conclude that this merely shows that Crowe was uncertain whether
the members of the firm knew of the alleged fraud and is not
inconsistent with Crowe's allegation that the firm aided and
abetted Henry. Moreover, while the firm notes that Crowe
describes Henry's plan as "secret," it is perfectly possible that
Henry hid the plan from Crowe but shared it with the firm.
19In Landry, this Court found that under 18 U.S.C. §
1962(c), an entity that is the RICO enterprise cannot be held
vicariously liable because to do so would be to treat it as both
the RICO person and the RICO enterprise. 901 F.2d at 425. This
holding is inapplicable here, though, because as discussed in
part IIID above, Crowe's underlying claim based on 18 U.S.C. §
1962(c) is not valid.
14

from the agent's wrongful acts.20 Landry, 901 F.2d at 425; Liquid
Air Corp. v. Rogers, 834 F.2d 1297, 1307 (7th Cir.1987), cert.
denied, 492 U.S. 917, 109 S.Ct. 3241, 106 L.Ed.2d 588 (1989).
V. CONCLUSION
Crowe has failed to adequately plead facts to support that the
firm is a RICO person and thus that it committed RICO violations.
Also, Crowe has failed to sufficiently plead violations of 18
U.S.C. § 1962(c) and (d). To that extent, we AFFIRM the judgment
of the district court. However, Crowe has adequately pled
1) an association-in-fact enterprise consisting of Crowe and Henry
to operate a farming venture;
2) that Henry, a RICO person, engaged in a pattern of racketeering
activity connected to the acquisition, establishment, conduct,
or control of that enterprise;
3) that Henry committed violations of 18 U.S.C. § 1962(a) and (b);
and
4) that the firm aided and abetted Henry in his scheme to defraud.
Accordingly, we REVERSE the judgment of the district court and
REMAND for proceedings consistent with this opinion.

20Crowe has alleged that the firm has received some benefit
from the actions of Henry. Specifically, Crowe alleged that the
firm received at least $30,000 in disputed legal fees.
15