Bret Healy v. Albert Fox, No. 21-3773 (8th Cir. 2022)
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Plaintiff filed Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims against several parties after a family-help ranch was sold to a corporate entity against his knowledge.
In 1961, Plaintiff’s father and grandfather formed the Healy Ranch Partnership (“HRP”). In 1986, Plaintiff’s grandmother transferred her partnership interest to Plaintiff in exchange for him assuming the partnership’s debt and making certain payments to her. In 1994, Plaintiff’s mother formed a South Dakota corporation, Healy Ranch, Inc. (“HRI”). She filed articles of incorporation authorizing HRI to issue 1,000,000 shares of common stock with a par value of one dollar per share. The articles of incorporation stated that the “corporation will not commence business until consideration of the value of at least Five Thousand Dollars has been received for the issuance of shares.” That same year, Plaintiff’s mother and her lawyer caused HRI to issue nearly 300,000 shares without consideration. In 1995, Plaintiff’s mother conveyed all of the partnership’s real-property interest in the ranch to HRI, including both her 50 percent share as well as Plaintiff’s 50 percent share. In 2000, Plaintiff’s mother sold one-third of her shares of HRI to Plaintiff and one-third to each of his two brothers. In Healy I, the court dismissed Plaintiff’s actions.
Plaintiff then filed this RICO action; which the court dismissed because it ran afoul of res judicata and the four-year statute of limitations for RICO claims.
Court Description: [Gruender, Author, with Benton and Grasz, Circuit Judges] Civil Case - RICO. The district court did not err in dismissing Bret Healy's RICO action as barred by res judicata. Under South Dakota law, his RICO action was the same cause of action as a civil case he had previously litigated in the South Dakota courts, as the actions both arose out of the same nucleus of operative fact and sought to address the same wrong, albeit under different theories of liability. Bret had a full and fair opportunity to to litigate his claim in the state court case.
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