Federal district court dismisses near $100 million civil RICO, fraud and breach of contract case brought against CW client

December 2020

CW's client was sued by his estranged wife in federal court for nearly $100 million in damages based on state law claims for fraud and breach of contract arising from his failure to have a Liechtenstein trust for which he was the protector distribute funds to her in exchange for her ending prior divorce proceedings. After CW moved to dismiss for lack of diversity jurisdiction, the plaintiff abandoned that jurisdictional ground and instead amended her complaint to add a civil RICO cause of action to create federal question jurisdiction and enable the state law claims to be heard based on supplemental jurisdiction. CW then filed a second motion to dismiss, arguing that the sole basis for federal question jurisdiction was fatally flawed because CW's client's alleged racketeering activity was not the proximate cause of the foreign trust not distributing the promised funds to the plaintiff. The district court agreed, holding that no causation existed despite the plaintiff's many theories of CW's client's predicate acts, such defect could not be remedied by subsequent amendment, and thus there was no basis for subject matter jurisdiction. In addition to dismissing the RICO causes of action with prejudice, the district court declined to exercise supplemental jurisdiction over the state law claims against CW's client and dismissed them as well.