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    "judges": [
      "Judges BECTON and PHILLIPS concur."
    ],
    "parties": [
      "HAROLD R. HOKE and FRANCES C. HOKE v. E. F. HUTTON AND COMPANY, INC."
    ],
    "opinions": [
      {
        "text": "COZORT, Judge.\nThe trial court\u2019s Order dismissing only Counts 3, 4 & 5 of plaintiffs\u2019 Amended Complaint, not being final as to all claims, see N.C. Gen. Stat. \u00a7 1A-1, Rule 54(b) of the N.C. Rules of Civil Procedure, requires us to determine whether the trial court\u2019s Order was immediately appealable. Given our Supreme Court\u2019s construction of Rule 54(b) in Ostreicher v. Stores, 290 N.C. 118, 225 S.E. 2d 797 (1976) establishing the rule that a plaintiff has a substantial right to have all claims for relief tried simultaneously before the same judge and jury, we hold that plaintiffs\u2019 appeal is properly before us.\nPlaintiffs first contend that the trial court erred in dismissing the RICO claims on the basis of Rule 12(b)(1), ie., that the trial court lacked subject matter jurisdiction over the RICO claims. Although we note that defendants have, in their brief on appeal, conceded the jurisdiction issue, we nevertheless choose to address this issue.\nWhile the decisions are split on the question of federal versus state jurisdiction in RICO actions, see Brandenburg v. First Maryland Sav. & Loan, Inc., 660 F. Supp. 717 (D.Md. 1987), in light of the U.S. Supreme Court\u2019s decision in Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 69 L.Ed. 2d 784, 101 S.Ct. 2870 (1981), we find persuasive those cases which have found the state courts\u2019 jurisdiction to be concurrent with that of the federal courts. Lou v. Belzberg, 834 F. 2d 730 (9th Cir. 1987), cert. denied, --- U.S. ---, 99 L.Ed. 2d 512, 108 S.Ct. 1302 (1988); Brandenburg, 660 F. Supp. at 717; Village Imp. Ass\u2019n of Doylestown v. Dow Chemical, 655 F. Supp. 311 (E.D. Pa. 1987). The general rule in RICO and similar federal actions presumes concurrent jurisdiction over federal claims as between state and federal courts. This presumption, however, may be rebutted only by showing the existence of a Congressional provision establishing sole federal jurisdiction, a clear implication of exclusivity from the relevant legislative history or a \u201cdisabling incompatibility between the federal claim and state court adjudication.\u201d Gulf Offshore, 453 U.S. at 477-78, 69 L.Ed. 2d at 791, 101 S.Ct. at 2875; cf., Belzberg, 834 F. 2d at 738.\nThe Record and our research reveals no evidence of a Congressional provision mandating exclusive federal jurisdiction nor can we find any relevant legislative history indicating the same. Finally, we can find no potential for incompatibility as state court judges should be equally as adept at adjudication of RICO actions especially where the predicate acts or racketeering activities are comprised of what amount to state actions, ie., fraud, misrepresentation, breach of contract, etc. Because defendant has not attempted to rebut this presumption in its appeal and more importantly because we agree with the reasoning of the Belzberg Court, we hold that the trial court erred in granting defendant\u2019s motion as based on Rule 12(b)(1).\nDefendant also moved to dismiss Counts 3, 4 & 5 of the Amended Complaint under Rule 12(b)(6) for failing to state a claim for relief. Because we find that plaintiffs have failed to sufficiently allege a nexus between the racketeering activity or predicate act as required by \u00a7 1962(c), and their investment loss, we hold that the trial court properly dismissed plaintiffs\u2019 RICO claim.\nIn their Amended Complaint, plaintiffs set forth the following facts: In October 1980, defendant\u2019s agents contacted plaintiffs and suggested that plaintiffs transfer money secured by a stock account, which at that time was invested with defendant, to a commodity account. Plaintiffs allege that in reliance on defendant\u2019s representations that the manager of the commodity account held excellent credentials and that plaintiffs could expect to earn a return of 40%, plaintiffs authorized the transaction through a Power of Attorney. Thereafter defendant\u2019s agent made an excessive number of transactions in a short time period which generated larger commission fees for defendant at a substantial loss to plaintiff.\nContemporaneously, from July 1980 to February 1982, defendant company had been involved in an enormous check-kiting scheme which had artificially inflated the market price of defendant\u2019s common stock on which plaintiffs relied. Plaintiffs were unaware of this scheme until May 1985 when defendant pled guilty to 2,000 counts of federal wire and mail fraud charges. During the period in which the check-kiting scheme took place, defendant continued to file annual and periodic reports with the SEC and other public agencies which perpetuated the defendant\u2019s image as a \u201claw abiding and well-run enterprise.\u201d Plaintiffs claim that they had relied on this reputation when they agreed to make the transfer to the commodities account.\nPlaintiffs alleged in Counts 3 through 5 that defendant\u2019s check-kiting scheme gave rise to a pattern of racketeering which affected interstate commerce. Further, plaintiffs alleged that such activity artificially inflated the price of defendant\u2019s common stock and induced plaintiffs\u2019 reliance on defendant thereby allowing the stock churning incident to occur. As a result of the stock churning, plaintiffs sustained an enormous loss on their investment. This argument is specious at best.\nTitle 18 of the U. S. Code, Chapter 96 was designed to prevent and punish corrupt business practices evidenced by patterns of racketeering, and particularly derived from organized crime, which affected interstate commerce. United States v. Lemm, 680 F. 2d 1193 (8th Cir. 1982), cert. denied, 459 U.S. 1110, 74 L.Ed. 2d 960, 103 S.Ct. 739 (1983); United States v. Sutton, 605 F. 2d 260, vacated on other grounds, 642 F. 2d 1001, cert. denied, 453 U.S. 912, 69 L.Ed. 2d 995, 101 S.Ct. 3144 (1981). To effectuate this purpose, in part, Congress provided for a private cause action set forth at \u00a7 1964(c) which provides:\nAny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court\nIn order to adequately state a claim under \u00a7 1964, plaintiff must at a minimum allege \u201c(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity,\u201d otherwise known as a \u201cpredicate act.\u201d Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 87 L.Ed. 2d 346, 105 S.Ct. 3275 (1985). In addition, plaintiff must also show, and can only recover to the extent that, the injury in his business or property has been caused by the \u201cconduct constituting the violation (of \u00a7 1962),\u201d or the predicate act. But plaintiffs in the case sub judice fail to show that defendant\u2019s check-kiting scheme directly or indirectly \u201cinjured\u201d their investments. We see no connection between defendant\u2019s stock churning activity and the defendant\u2019s two and one-half year check-kiting scheme. Plaintiffs\u2019 argument that the injury arose from the check-kiting scheme is meritless.\nWe find ample support for our position in a recent New York decision, Zerman v. E. F. Hutton & Co., Inc., 628 F. Supp. 1509, 1512 (S.D.N.Y. 1986) where on similar facts the court stated:\n[T]he allegation that Hutton engaged in an overdrafting scheme can not serve as a predicate act for plaintiffs RICO claim (based on misrepresentations regarding the purchase of securities) because there is no relation between plaintiffs claim and the check overdrafting ....\nWe therefore hold that plaintiffs have failed to state a claim for relief under 18 U.S.C. \u00a7 1964(c) and we affirm the trial court\u2019s dismissal pursuant to Rule 12(b)(6).\nAffirmed as to the Rule 12(b)(6) motion.\nJudges BECTON and PHILLIPS concur.",
        "type": "majority",
        "author": "COZORT, Judge."
      }
    ],
    "attorneys": [
      "Gillespie, Lesesne & Connette, by Louis L. Lesesne, Jr.; and Elam, Seaford & McGinnis, by William H. Elam, for plaintiffs-appellants.",
      "Kennedy, Covington, Lobdell & Hickman, by Edgar Love, III, for defendant-appellee."
    ],
    "corrections": "",
    "head_matter": "HAROLD R. HOKE and FRANCES C. HOKE v. E. F. HUTTON AND COMPANY, INC.\nNo. 8726SC1211\n(Filed 16 August 1988)\n1. Appeal and Error \u00a7 6.2\u2014 dismissal of only one claim \u2014substantial right affected-appealability\nThe trial court\u2019s order dismissing plaintiffs\u2019 allegations of violations of the federal \u201cRacketeer Influenced and Corrupt Organizations Act,\u201d though not final as to all claims, was nevertheless immediately appealable, since a plaintiff has a substantial right to have all claims for relief tried simultaneously before the same judge and jury.\n2. Courts \u00a7 5\u2014 federal law \u2014state court\u2019s jurisdiction concurrent with federal court\u2019s jurisdiction\nThe trial court erred in dismissing plaintiffs\u2019 claims alleging violations of the federal \u201cRacketeer Influenced and Corrupt Organizations Act\u201d on the ground that it lacked subject matter jurisdiction, since there is a presumption that the state courts have concurrent jurisdiction with the federal courts in RICO actions; there is no Congressional provision mandating exclusive federal jurisdiction; and there is no disabling incompatibility between the federal claim and state court adjudications.\n3. Brokers and Factors \u00a7 4\u2014 check-kiting scheme \u2014 no relation to investment losses \u2014 RICO claim properly dismissed\nPlaintiffs failed to state a claim under the federal \u201cRacketeer Influenced and Corrupt Organizations Act,\u201d since their allegation that defendant engaged in a check-kiting scheme could not serve as a \u201cpredicate act\u201d for their claim because there was no relation shown between the check-kiting and their enormous loss on their investment with defendant.\nPLAINTIFFS appeal from Snepp, Frank W., Jr., Judge. Judgment entered 17 September 1987 in MECKLENBURG County Superior Court. Heard in the Court of Appeals 6 June 1988.\nThis appeal stems from an action involving alleged violations of state and federal securities laws. Plaintiffs\u2019 initial Complaint filed November 1983 alleged a cause of action for misrepresentation and breaches of contract and fiduciary duty. Plaintiffs later took a voluntary dismissal on 9 August 1985. The present action was filed on 4 August 1986 which renewed the allegations contained in the 1983 complaint and also included allegations of violations of the federal \u201cRacketeer Influenced and Corrupt Organizations Act\u201d (RICO) 18 U.S.C. \u00a7 1961, et seq. Defendant moved to dismiss the action pursuant to Rules 12(b)(1) and 12(b)(6) of the N.C. Rules of Civil Procedure, N.C. Gen. Stat. \u00a7 1A-1, Rule 12(b). The trial court granted the motion as to Counts 3, 4 & 5 of plaintiffs\u2019 Amended Complaint by Order dated 17 September 1987 which dismissed plaintiffs\u2019 RICO claim. Plaintiffs\u2019 remaining claims of breach of contract, breach of fiduciary duty, and misrepresentation are still pending before the Superior Court. From the grant of defendant\u2019s Motion to Dismiss, plaintiffs have appealed.\nGillespie, Lesesne & Connette, by Louis L. Lesesne, Jr.; and Elam, Seaford & McGinnis, by William H. Elam, for plaintiffs-appellants.\nKennedy, Covington, Lobdell & Hickman, by Edgar Love, III, for defendant-appellee."
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