Court of Appeals
Fifth District of Texas at Dallas
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No. 05-02-01683-CV
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UDO BIRNBAUM, Appellant
V.
THE LAW OFFICES OF G. DAVID WESTFALL, P.C., G. DAVID WESTFALL,
CHRISTINA WESTFALL, AND STEFANI PODVIN, Appellees
.............................................................
On Appeal from the 294th Judicial District Court
Van Zandt County, Texas
Trial Court Cause No. 00-00619
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OPINION
Before Justices Whittington, Wright, and Bridges
Opinion By Justice Whittington
On Appeal from the 294th Judicial District Court
Van Zandt County, Texas
Trial Court Cause No. 00-00619
.............................................................
OPINION
Before Justices Whittington, Wright, and Bridges
Opinion By Justice Whittington
Appellant Udo Birnbaum
appeals a jury verdict and judgment in favor of appellee The Law Offices of G. David Westfall, P.C. (“Law Office”).
Birnbaum also appeals orders on motions for summary judgment, for sanctions, and
to recuse the trial judge, and complains of the trial judge's failure to appoint
an auditor. We affirm.
Background
Law Office filed a suit
on a sworn account against Birnbaum for legal fees allegedly owed. Birnbaum filed an answer and affidavit denying the claim.
Birnbaum also filed a counterclaim against Law Office and added G. David
Westfall, Christina Westfall, and Stefani Podvin as parties to the lawsuit
(“Third Party Defendants”). He alleged violations of the federal Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq. (2000
and Supp. 2003) (“RICO”) against Third Party Defendants. Law Office and Third
Party Defendants moved for summary judgment on the claims against them. Third
Party Defendants' motions were granted. Birnbaum filed motions to appoint an
auditor and to recuse the trial judge. There is no order on Birnbaum's motion to
appoint an auditor in the clerk's record. At trial, a jury made affirmative
findings on Law Office's claim against Birnbaum for breach of contract and
negative findings on Birnbaum's claim against Law Office for violations of the
Texas Deceptive Trade Practices Act. Tex. Bus. & Com. Code Ann.
§§ 17.41 et seq. (Vernon 2002) (“DTPA”). The trial judge entered
judgment for Law Office which included an award of attorneys' fees as found by
the jury. Third Party Defendants filed a motion for sanctions under Rule 13 of
the Texas Rules of Civil Procedure, which was granted in part and denied in
part. The partial reporter's record submitted with this appeal is the closing
argument from the jury trial and a portion of the sanctions hearing. Birnbaum
has appeared pro se throughout all proceedings.
Judgment
In his first issue,
Birnbaum asserts the trial court's judgment on the jury's verdict was “unlawful” because (1) the trial judge erred in refusing
to submit jury issues on whether Birnbaum was excused from performing the
attorney's fees contract and whether Law Office's services were of no worth; and
(2) the judgment does not conform to the pleadings because the jury was
questioned regarding a breach of contract but Law Office pleaded a suit on sworn
account. Because Birnbaum filed only a partial reporter's record limited to
closing argument and a portion of the sanctions hearing, we are unable to review
these complaints. See Nicholes v. Tex. Employers Ins. Ass'n, 692 S.W.2d
57, 58 (Tex. 1985) (per curiam) (with only partial reporter's record, court
could not determine whether giving improper jury instruction was harmful error);
A.V.A. Servs., Inc. v. Parts Indus. Corp., 949 S.W.2d 852, 854 (Tex.
App.-Beaumont 1997, no pet.) (nothing preserved for review on issue whether
judgment conformed to pleadings, because complaint could not be raised for first
time on appeal, and without reporter's record, no showing made that appellant
received trial court determination on issue). We overrule appellant's first
issue.
Appointment of
Auditor
In his second issue,
Birnbaum urges the trial court erred in failing to appoint an auditor pursuant to Rule 172 of the Texas Rules of Civil
Procedure. While Birnbaum did file a motion to appoint an auditor with the trial
court, he did not receive a ruling on the motion. Therefore, he did not preserve
this complaint for appeal. See Tex. R. App. P. 33.1; Reyna v. First
Nat'l Bank, 55 S.W.3d 58, 67 (Tex. App.-Corpus Christi 2001, no pet.). We
overrule appellant's second issue.
Summary
Judgment
Birnbaum next complains
of the trial court's no-evidence summary judgment on his RICO claims. We review a no-evidence summary judgment under the same
legal sufficiency standard used to review a directed verdict, to determine
whether the nonmovant produced more than a scintilla of probative evidence to
raise a fact issue on the material questions presented. Gen. Mills Rests.,
Inc. v. Tex. Wings, Inc., 12 S.W.3d 827, 832-33 (Tex. App.-Dallas 2000, no
pet.).
Birnbaum asserted claims under sections 1962(a) and (c) of RICO. Under subsection (a), a person who has received income from a pattern of racketeering cannot invest that income in an enterprise, and under subsection (c), a person who is employed by or associated with an enterprise cannot conduct the enterprise's affairs through a pattern of racketeering. See Whelan v. Winchester Prod. Co., 319 F.3d 225, 231 n.2 (5th Cir. 2003). Elements common to all subsections of RICO are: (1) a person who engages in (2) a pattern of racketeering activity (3) connected to the acquisition, establishment, conduct, or control of an enterprise. Whelan, 319 F.3d at 229.
“Racketeering activity” is defined in section 1961(1) in terms of a list of state and federal crimes. See 18 U.S.C. § 1961(1); Bonton v. Archer Chrysler Plymouth, Inc., 889 F. Supp. 995, 1001 (S.D. Tex. 1995). It includes acts indictable under 18 U.S.C. § 1341, relating to mail fraud. See 18 U.S.C. § 1961(1)(B); Whelan, 319 F.2d at 231. The individual acts of “racketeering activity” are usually described as the “predicate offenses.” Bonton, 889 F. Supp. at 1001. Any act that does not fall within RICO's definition of predicate offenses is not “racketeering activity.” See Heden v. Hill, 937 F. Supp. 1230, 1242 (S.D. Tex. 1996).
A “pattern of racketeering activity” requires at least two acts of racketeering activity. See Whelan, 319 F.3d 231 n.4. Although at least two acts of racketeering are necessary to constitute a pattern, two acts may not be sufficient. Bonton, 889 F. Supp. at 1003. To establish a pattern of racketeering activity, a plaintiff must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. Word of Faith World Outreach Ctr. Church, Inc. v. Sawyer, 90 F.3d 118, 122 (5th Cir. 1996) (citing H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989)). To establish continuity, plaintiffs must prove continuity of racketeering activity, or its threat. Word of Faith, 90 F.3d at 122.
Birnbaum asserts Law Office is a RICO enterprise through which Third Party Defendants conducted a pattern of racketeering. He alleges Third Party Defendants conducted a scheme whereby Law Office's clients were encouraged to file RICO suits against public officials, but failed to receive “honest service” or regular billing. Birnbaum asserts Third Party Defendants engaged in mail fraud in furtherance of this scheme because “almost every document on file in this case” was mailed at one time, including the fraudulent bill on which Law Office's claim was premised. Thus, he alleges the predicate act for purposes of RICO was mail fraud.
Mail fraud under 18 U.S.C. section 1341 “requires that (1) the defendant participate in a scheme or artifice to defraud, (2) the mails be used to execute the scheme, and (3) the use of the mails was 'caused by' the defendant or someone else associated with the scheme.” Bonton, 889 F. Supp. at 1002. As noted in Bonton, “[a] RICO claim asserting mail fraud as a predicate act must allege how each specific act of mail fraud actually furthered the fraudulent scheme, who caused what to be mailed when, and how the mailing furthered the fraudulent scheme.” Bonton, 889 F. Supp. at 1002. The mail fraud statute “does not reach every business practice that fails to fulfill expectations, every breach of contract, or every breach of fiduciary duty.” Bonton, 889 F. Supp. at 1002-1003. A plaintiff may not convert state law claims into a federal treble damage action simply by alleging that wrongful acts are a pattern of racketeering related to an enterprise. Heden, 937 F. Supp. at 1242.
As summary judgment evidence, Birnbaum filed affidavits of several unhappy clients of Law Office. Although Birnbaum also referred to deposition testimony and pleadings from other lawsuits in his summary judgment response, this evidence was not submitted to the trial court. See Quanaim v. Frasco Rest. & Catering, 17 S.W.3d 30, 42 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) (verified summary judgment response was not summary judgment proof).
Birnbaum's summary judgment evidence establishes that several Law Office clients were encouraged to file RICO suits and did not receive regular billings from Law Office. Birnbaum alleges a scheme to defraud himself and others through these suits, and he offers his affidavit testimony to establish the bill mailed to him by Law Office was fraudulent. He does not, however, offer summary judgment evidence regarding how mailing this fraudulent bill constitutes a pattern of racketeering activity, or furthers a “recognizable scheme formed with specific intent to defraud,” or presents a continued threat of criminal activity. See Bonton, 889 F. Supp. at 1003; see also Word of Faith, 90 F.3d at 122-24 (no continuity where alleged predicate acts are part of a single, lawful endeavor). Further, Birnbaum did not offer summary judgment evidence that Third Party Defendants invested income from a pattern of racketeering activity in the alleged RICO enterprise or that his injury flowed directly from the use or investment of that income. Without such evidence, Birnbaum did not raise a genuine issue of material fact on his claim under RICO § 1962(a). See Nolen v. Nucentrix Broadband Networks, Inc., 293 F.3d 926, 929 (5th Cir.), cert. denied, 537 U.S. 1047 (2002) (for section 1962(a) claim, alleging injury from predicate racketeering acts themselves insufficient; injury must flow from use or investment of racketeering income). Summary judgment on Birnbaum's RICO claims was proper. We overrule Birnbaum's third issue.
Birnbaum asserted claims under sections 1962(a) and (c) of RICO. Under subsection (a), a person who has received income from a pattern of racketeering cannot invest that income in an enterprise, and under subsection (c), a person who is employed by or associated with an enterprise cannot conduct the enterprise's affairs through a pattern of racketeering. See Whelan v. Winchester Prod. Co., 319 F.3d 225, 231 n.2 (5th Cir. 2003). Elements common to all subsections of RICO are: (1) a person who engages in (2) a pattern of racketeering activity (3) connected to the acquisition, establishment, conduct, or control of an enterprise. Whelan, 319 F.3d at 229.
“Racketeering activity” is defined in section 1961(1) in terms of a list of state and federal crimes. See 18 U.S.C. § 1961(1); Bonton v. Archer Chrysler Plymouth, Inc., 889 F. Supp. 995, 1001 (S.D. Tex. 1995). It includes acts indictable under 18 U.S.C. § 1341, relating to mail fraud. See 18 U.S.C. § 1961(1)(B); Whelan, 319 F.2d at 231. The individual acts of “racketeering activity” are usually described as the “predicate offenses.” Bonton, 889 F. Supp. at 1001. Any act that does not fall within RICO's definition of predicate offenses is not “racketeering activity.” See Heden v. Hill, 937 F. Supp. 1230, 1242 (S.D. Tex. 1996).
A “pattern of racketeering activity” requires at least two acts of racketeering activity. See Whelan, 319 F.3d 231 n.4. Although at least two acts of racketeering are necessary to constitute a pattern, two acts may not be sufficient. Bonton, 889 F. Supp. at 1003. To establish a pattern of racketeering activity, a plaintiff must show that the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity. Word of Faith World Outreach Ctr. Church, Inc. v. Sawyer, 90 F.3d 118, 122 (5th Cir. 1996) (citing H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 239 (1989)). To establish continuity, plaintiffs must prove continuity of racketeering activity, or its threat. Word of Faith, 90 F.3d at 122.
Birnbaum asserts Law Office is a RICO enterprise through which Third Party Defendants conducted a pattern of racketeering. He alleges Third Party Defendants conducted a scheme whereby Law Office's clients were encouraged to file RICO suits against public officials, but failed to receive “honest service” or regular billing. Birnbaum asserts Third Party Defendants engaged in mail fraud in furtherance of this scheme because “almost every document on file in this case” was mailed at one time, including the fraudulent bill on which Law Office's claim was premised. Thus, he alleges the predicate act for purposes of RICO was mail fraud.
Mail fraud under 18 U.S.C. section 1341 “requires that (1) the defendant participate in a scheme or artifice to defraud, (2) the mails be used to execute the scheme, and (3) the use of the mails was 'caused by' the defendant or someone else associated with the scheme.” Bonton, 889 F. Supp. at 1002. As noted in Bonton, “[a] RICO claim asserting mail fraud as a predicate act must allege how each specific act of mail fraud actually furthered the fraudulent scheme, who caused what to be mailed when, and how the mailing furthered the fraudulent scheme.” Bonton, 889 F. Supp. at 1002. The mail fraud statute “does not reach every business practice that fails to fulfill expectations, every breach of contract, or every breach of fiduciary duty.” Bonton, 889 F. Supp. at 1002-1003. A plaintiff may not convert state law claims into a federal treble damage action simply by alleging that wrongful acts are a pattern of racketeering related to an enterprise. Heden, 937 F. Supp. at 1242.
As summary judgment evidence, Birnbaum filed affidavits of several unhappy clients of Law Office. Although Birnbaum also referred to deposition testimony and pleadings from other lawsuits in his summary judgment response, this evidence was not submitted to the trial court. See Quanaim v. Frasco Rest. & Catering, 17 S.W.3d 30, 42 (Tex. App.-Houston [14th Dist.] 2000, pet. denied) (verified summary judgment response was not summary judgment proof).
Birnbaum's summary judgment evidence establishes that several Law Office clients were encouraged to file RICO suits and did not receive regular billings from Law Office. Birnbaum alleges a scheme to defraud himself and others through these suits, and he offers his affidavit testimony to establish the bill mailed to him by Law Office was fraudulent. He does not, however, offer summary judgment evidence regarding how mailing this fraudulent bill constitutes a pattern of racketeering activity, or furthers a “recognizable scheme formed with specific intent to defraud,” or presents a continued threat of criminal activity. See Bonton, 889 F. Supp. at 1003; see also Word of Faith, 90 F.3d at 122-24 (no continuity where alleged predicate acts are part of a single, lawful endeavor). Further, Birnbaum did not offer summary judgment evidence that Third Party Defendants invested income from a pattern of racketeering activity in the alleged RICO enterprise or that his injury flowed directly from the use or investment of that income. Without such evidence, Birnbaum did not raise a genuine issue of material fact on his claim under RICO § 1962(a). See Nolen v. Nucentrix Broadband Networks, Inc., 293 F.3d 926, 929 (5th Cir.), cert. denied, 537 U.S. 1047 (2002) (for section 1962(a) claim, alleging injury from predicate racketeering acts themselves insufficient; injury must flow from use or investment of racketeering income). Summary judgment on Birnbaum's RICO claims was proper. We overrule Birnbaum's third issue.
Sanctions
Order
In his fourth issue,
Birnbaum complains of the order imposing sanctions against him in favor of Christina Westfall and Podvin. He argues the
sanction order is unlawful because it is a criminal sanction “imposed without
full due criminal process,” and does not state the basis for the sanctions award
as required by rule 13 of the Texas Rules of Civil Procedure. We agree with
Birnbaum that the trial court's order awards sanctions without stating the basis
for the award, and therefore does not meet the requirements of rule 13. See
Murphy v. Friendswood Dev. Co., 965 S.W.2d 708, 709- 10 (Tex. App.-Houston
[1st Dist.] 1998, no pet.) (“Rule 13 is clear: the particulars of good cause
'must be stated in the sanction order.' . . .[T]he order here did not recite the
particular reasons supporting good cause to issue the sanctions and did not
include findings of fact and conclusions of law supporting good cause . . . we
hold that the sanction order does not comply with Rule 13.”). This error,
however, may be waived. See McCain v. NME Hospitals, Inc., 856 S.W.2d
751, 756 (Tex. App.-Dallas 1993, no writ).
Birnbaum did not bring either of
his complaints about the sanctions order to the attention of the trial judge. To
preserve a complaint for appellate review, a party must have presented to the
trial court a timely request, objection or motion, stating the specific grounds
for the ruling he desired the court to make if the specific grounds were not
apparent from the context. See Tex. R. App. P. 33.1. An objection must
not only identify the subject of the objection, but it also must state specific
grounds for the ruling desired. Without a proper presentation of the alleged
error to the trial court, a party does not afford the trial court the
opportunity to correct the error. See McCain, 856 S.W.2d at 755. While
Birnbaum filed a motion to reconsider the sanctions, he did not object to the
specificity of the order or to the criminal nature of the sanctions. Birnbaum's
only complaint about the specificity of the order was made in an untimely
request for findings of fact and conclusions of law filed more than twenty days
after the date of the sanctions order. See Tex. R. Civ. P. 296 (request
for findings of fact and conclusions of law shall be filed within twenty days
after judgment is signed). Therefore, the trial judge did not have the
opportunity to correct the erroneous order, and error was not preserved. See
McCain, 856 S.W.2d at 755. Appellees have since filed a motion to allow
filing of findings of fact and conclusions of law by the trial judge regarding
the sanctions order, which was opposed by Birnbaum. We need not reach the
question of whether the findings and conclusions may be filed at this time, as
Birnbaum did not preserve his complaints about the sanctions order. We overrule
appellant's fourth point of error.
Recusal of Trial
Judge
Birnbaum complains the
trial judge should have been recused. An evidentiary hearing was held before Judge Ron Chapman on Birnbaum's motion to recuse
Judge Paul Banner, and Judge Chapman denied the motion. No reporter's record of
this hearing is included in our record. Without a record of the proceedings, we
cannot review Judge Chapman's order for abuse of discretion, and nothing is
presented for review. See Ceballos v. El Paso Health Care Sys., 881
S.W.2d 439, 445 (Tex. App.-El Paso 1994, writ denied); In re M.C.M., 57
S.W.3d 27, 33 (Tex. App.-Houston [1st Dist.] 2001, pet. denied); Tex. R. Civ. P.
18a (f). Appellant's fifth point of error is overruled.
Fraud
In his sixth issue,
Birnbaum complains of “fraud, fraud, and more fraud.” In his argument in support of this issue, he contends he made no
agreements with Law Office regarding attorneys' fees and never accepted the
terms of the retainer agreement. The issue regarding any contractual
relationship between Birnbaum and Law Office was resolved by the jury. We have
no record of the testimony relevant to Birnbaum's acceptance of the contract.
Therefore, we presume the omitted portions of the record support the trial
court's judgment. See Schafer v. Conner, 813 S.W.2d 154, 155 (Tex. 1991)
(per curiam) (in absence of a complete statement of facts, it is presumed that
omitted evidence supports trial court's judgment). Birnbaum's sixth issue is
overruled.
Due Process
In his seventh issue,
Birnbaum contends “due process demands a new trial.” The argument presented does not contain citation to authority and
complains of the same rulings addressed in other parts of his brief. This issue
presents nothing for our review. See Tex. R. App. P. 38.1 (h) (brief must
contain clear and concise argument for contentions made, with appropriate
citations to authorities and to the record). In his reply brief, Birnbaum also
complains of incurable jury argument, and includes a reporter's record of the
closing argument from trial in the appellate record. However, the record reveals
Birnbaum did not object to the argument at the time it was made, and so has
failed to preserve error. See Barras v. Monsanto Co., 831 S.W.2d 859, 865
(Tex. App.-Houston [14th Dist.] 1992, writ denied) (complaint of error in
closing argument waived by failure to object). Birnbaum's seventh issue is
overruled. Having overruled
Birnbaum's issues, we affirm the judgment and orders of the trial
court.
MARK WHITTINGTON
JUSTICE
021683F.P05
File Date[10/23/2003]
File Name[021683F]
File Locator[10/23/2003-021683F]
Disclaimer on Opinions
MARK WHITTINGTON
JUSTICE
021683F.P05
File Date[10/23/2003]
File Name[021683F]
File Locator[10/23/2003-021683F]
Disclaimer on Opinions