## Facts

- Paul Handeen held a civil consent judgment exceeding $50,000 against Gregory A. Lemaire arising from a 1978 shooting.
- Lemaire paid an initial $3,000 using funds from his father but defaulted on agreed monthly installments.
- Handeen began garnishment proceedings to collect the unpaid balance.
- Lemaire, represented by Orlins & Brainerd Law Firm and its principals (the Firm), filed a Chapter 13 bankruptcy petition and obtained confirmation of a repayment plan over Handeen’s objections.
- Handeen alleged the Firm and Lemaire used the bankruptcy process to hinder, delay, and defraud him as a judgment creditor by diverting income and assets through Lemaire’s parents, filing false or misleading bankruptcy schedules and statements, and engaging in post-petition conduct to conceal assets and frustrate collection.
- Handeen filed a federal civil action asserting civil RICO claims and Minnesota state-law claims (including common-law deceit) against the Firm and others; he later dismissed claims against Lemaire and Lemaire’s parents under a settlement, leaving the Firm as the relevant appellee.
- The district court granted summary judgment to the Firm on all claims.

## Issues

1. Whether the evidence and allegations could support liability under 18 U.S.C. § 1962(c) by showing the Firm conducted or participated in an enterprise’s affairs, rather than merely providing traditional legal services.
2. Whether alleged bankruptcy- and mail-fraud predicate acts were sufficient, at summary judgment, to support a jury finding of a pattern of racketeering activity.
3. Whether Handeen adequately alleged and supported RICO standing and proximate causation by claiming the Firm’s conduct foreseeably and substantially impaired his ability to collect the judgment.
4. Whether Minnesota common-law deceit and related state claims against the Firm were properly dismissed on summary judgment.

## Decision

- The Eighth Circuit reversed summary judgment dismissing Handeen’s RICO claims against the Firm and remanded for further proceedings.
- The Eighth Circuit reversed summary judgment dismissing Handeen’s Minnesota state-law claims (including deceit) against the Firm and remanded.
- The court otherwise affirmed aspects of the district court’s disposition not inconsistent with reinstating the RICO and state-law claims.
- The court emphasized it did not decide the merits of the alleged fraud; it held only that genuine disputes of material fact made summary judgment improper.

## Legal Principles

- Under § 1962(c) and Reves’s “operation or management” test, professionals may face RICO liability if they participate in the operation or management of an enterprise’s affairs; formal control or official status in the enterprise is not required.
- At the summary-judgment stage, allegations and evidence that counsel designed and executed a fraudulent scheme using bankruptcy procedures can support the “conduct” element, notwithstanding the defendants’ role as attorneys.
- A “pattern of racketeering activity” may be shown by multiple related predicate acts (including mail fraud and bankruptcy fraud) forming a continuing course of conduct aimed at a common unlawful purpose.
- RICO proximate cause may be satisfied when the alleged racketeering conduct is a substantial factor in producing a reasonably foreseeable injury, including interference with a creditor’s ability to collect a judgment.
- Under Minnesota law, common-law deceit requires a knowing misrepresentation (or actionable omission) of past or present fact intended to induce reliance, causing damages through justifiable reliance; alleged misrepresentations in bankruptcy-related submissions can support such claims if proven.

## Conclusion

The Eighth Circuit held that a creditor’s RICO and Minnesota deceit claims against a debtor’s law firm could proceed where the record, viewed favorably to the creditor, supported a triable theory that the firm did more than provide routine representation and instead helped execute a fraudulent bankruptcy-based scheme that foreseeably hindered collection of a valid judgment.


Handeen v. Lemaire, 112 F.3d 1339 (8th Cir. 1997)