DOUGLAS et al v. LALUMIERE et al

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
JOEL DOUGLAS, et al., 	)
)
Plaintiffs, 	)
)
v. 	) 2:20-cv-00227-JDL
)
SCOTT LALUMIERE, et al., 	)
)
Defendants. 	)
ORDER ON MACHIAS SAVINGS BANK’S MOTION TO DISMISS
Joel Douglas, Steven Fowler, and James Lewis (collectively, “Plaintiffs”) bring
this action against Scott Lalumiere and twenty-five other defendants (collectively,
“Defendants”), asserting seventeen claims arising out of an alleged scheme to defraud
the Plaintiffs and obtain control or ownership of their real estate properties for the
purpose of borrowing against the properties’ equity. 	In total, the Defendants have
filed thirteen motions to dismiss the First Amended Complaint (the “Complaint”)
(ECF No. 11) for failure to state a claim upon which relief can be granted pursuant
to Federal Rule of Civil Procedure 12(b)(6).1 This order addresses Machias Savings
Bank’s (“MSB”) motion to dismiss the claims asserted against it under the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C.A. §§ 1961-1968 (West
1 The following defendants have filed motions to dismiss: Androscoggin Savings Bank (ECF No. 37);
Camden National Bank (ECF No. 61); TTJR, LLC, LH Housing, LLC, and Eric Holsapple (ECF No.
65); LOSU, LLC and David Hirshon (ECF No. 70); Bangor Savings Bank and Robert Burgess (ECF
No. 98); Wayne Lewis (ECF No. 110); Machias Savings Bank (ECF No. 111); Coastal Realty Capital,
LLC, Michael Lyden, and Shawn Lyden (ECF No. 118); Andre Bellucci (ECF No. 147); BLR Capital,
LLC (ECF No. 197); F.O. Bailey Real Estate, LLC and David Jones (ECF No. 203); Russell Oakes (ECF
No. 223); and David Clarke (ECF No. 225). 	Only Defendants Scott Lalumiere, MECAP, LLC, and
Birch Point Storage, LLC have not filed motions to dismiss.
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2021), federal and state consumer lending laws, and Maine contract law (ECF No.
111). 	For the reasons that follow, I grant MSB’s Motion to Dismiss, deny the
Plaintiffs’ Motion for Limited Discovery,2 and deny as moot the Plaintiffs’ objection
to the Magistrate Judge’s order denying the Plaintiffs’ Motion for Limited Discovery.
I. BACKGROUND
The Complaint alleges the following facts, which I treat as true for purposes of
ruling on this Motion to Dismiss.
The Complaint asserts that Scott Lalumiere and other defendants engaged in
three distinct but intertwined schemes to defraud the Plaintiffs. In the first scheme,
the Complaint alleges that Scott Lalumiere, funded by various banks and private
lenders, fraudulently induced several vulnerable individuals, including Plaintiffs
Steven Fowler and Joel Douglas, who lacked access to conventional credit, to enter
into unfavorable lease/buy-back agreements. Under the terms of the agreements, the
title of the victim’s property would be transferred to a corporate entity controlled by
Lalumiere with the victim, as the lessee, retaining a purchase option. The Lalumiere-
controlled entity would subsequently mortgage the property to banks and private
lenders, and, when the entity defaulted on its loan, the mortgagees foreclosed on the
property, frustrating the victim’s option to purchase.
2 I recognize that Magistrate Judge John C. Nivison denied the Motion for Limited Discovery on
January 21, 2021 (ECF No. 156). His order expressly recognized, however, that the Plaintiffs’ request
for limited discovery should be revisited as part of the Court’s assessment of the Motion to Dismiss.
Accordingly, I have treated the earlier order denying the motion as a deferral of action on the motion.
Further, I have considered the merits of the motion and, for the reasons explained herein, I deny the
motion.
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In 	the 	second 	alleged 	scheme, 	Fowler 	entered 	into 	an 	agreement 	with
Lalumiere whereby he would provide labor and materials at a discounted rate to
renovate certain properties controlled by Lalumiere, with the understanding that
Fowler could purchase the properties back upon the completion of the renovations.
However, 	Lalumiere 	frustrated 	Fowler’s 	right 	to 	purchase 	the 	properties 	by
defaulting on the mortgages, causing the mortgagees to foreclose on the properties.
In the third alleged scheme, several of the Defendants agreed to pay-off and
discharge Plaintiff James Lewis’s defaulted mortgage and to lend him money to make
improvements to his property in exchange for him deeding the property to a
corporation and making certain payments. 	After the title was transferred, they
refused to loan him the money and subsequently foreclosed on the property.
The Plaintiffs’ claims against MSB involve the first scheme noted above in
relation to one property: 75 Queen Street, Gorham, Maine. 	On May 19, 2015,
MECAP, LLC—a Lalumiere-controlled entity—entered into an agreement with
Douglas, whereby MECAP would lease the Queen Street property to Douglas for one
year, subject to a purchase and sale agreement that would close at the end of the
lease, on June 30, 2016. 	Per the agreement, Douglas had a contractual right to
purchase the property for $275,000 in exchange for payments of $2,500 due within
three business days and $30,000 due before closing. That same day, other defendants
authorized Lalumiere to purchase the Queen Street property. 	On June 24, 2015,
Lalumiere did purchase the property from an unspecified seller “on . . . behalf” of
Douglas. ECF No. 11 ¶ 66. Lalumiere deeded it to MECAP in July 2015, and MECAP
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transferred title to LH Housing, LLC in April 2016, an entity managed by Wayne
Lewis, another defendant, who worked with Lalumiere. 	Lalumiere, acting through
LH Housing, then encumbered the Queen Street property with a $256,500 mortgage
from MSB. 	MSB’s only involvement in this scheme is extending to LH Housing a
commercial loan, secured by a $256,500 mortgage on the Queen Street property. The
Complaint alleges that the $32,500 deposit paid by Douglas to enter into the
agreement, and the loan from MSB to LH Housing, provided the funds to purchase
three other properties in order to perpetuate the fraudulent behavior.
The Plaintiffs filed a Motion for Limited Discovery from MSB in connection
with their response to the Motion to Dismiss. On January 21, 2021, Magistrate Judge
John C. Nivison entered an order denying the Plaintiffs’ limited discovery request
without prejudice, stating that “[t]he Court will consider Plaintiffs’ [discovery]
requests as part of the Court’s assessment of each defendant’s motion to dismiss.”
ECF No. 156 at 3. On January 28, 2021, the Plaintiffs filed a timely objection to the
Magistrate Judge’s order (ECF No. 162). Below, I address the Plaintiffs’ Motion for
Limited Discovery and the Plaintiffs’ objection to Judge Nivison’s order as it relates
to MSB’s Motion to Dismiss.
II. LEGAL ANALYSIS
In reviewing a motion to dismiss for failure to state a claim, a court must
“accept as true all well-pleaded facts alleged in the complaint and draw all reasonable
inferences therefrom in the pleader’s favor.” 	Rodríguez-Reyes v. Molina-Rodríguez,
711 F.3d 49, 52-53 (1st Cir. 2013) (quoting Santiago v. Puerto Rico, 655 F.3d 61, 72
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(1st Cir. 2011)). 	To survive a motion to dismiss, the complaint “must contain
sufficient factual matter to state a claim to relief that is plausible on its face.” Id. at
53 (quoting Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (1st Cir. 2012)). Additionally,
a court may consider inferences “gleaned from documents incorporated by reference
into the complaint, matters of public record, and facts susceptible to judicial notice.”
Id. (quoting Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011)).
To assess the complaint’s adequacy, courts apply a “two-pronged approach,”
Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011): First, the court
must “isolate and ignore statements in the complaint that simply offer legal labels
and conclusions or merely rehash cause-of-action elements,” and, second, the court
will “take the complaint’s well-pled (i.e., non-conclusory, non-speculative) facts as
true, drawing all reasonable inferences in the pleader’s favor, and see if they plausibly
narrate a claim for relief,” Schatz v. Republican State Leadership Comm., 669 F.3d
50, 55 (1st Cir. 2012). 	To determine the plausibility of a claim is “a context-specific
task that requires the reviewing court to draw on its judicial experience and common
sense.” 	Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). 	Although legal conclusory
statements may “provide the framework of a complaint, they must be supported by
factual allegations.” 	Id. 	The court must determine whether the factual allegations
“plausibly give rise to an entitlement to relief.” Id.
In addition, the Plaintiffs’ fraud-related claims are subject to Federal Rule of
Civil Procedure 9(b), which requires that a complaint “state with particularity the
circumstances constituting fraud.” 	To satisfy this requirement, the complaint must
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set forth the “time, place and content of an alleged false representation.” 	Howell v.
Advantage Payroll Servs., Inc., No. 2:16-cv-438-NT, 2017 WL 782881, at *6 (D. Me.
Feb. 28, 2017) (quoting Hayduk v. Lanna, 775 F.2d 441, 444 (1st Cir. 1985)). 	The
Plaintiffs’ RICO claims are based in part on the predicate acts of mail and wire fraud,
which 	“must 	satisfy 	the 	particularity 	requirements 	of 	Rule 	9(b).” 	Ahmed 	v.
Rosenblatt, 118 F.3d 886, 889 (1st Cir. 1997).
The Plaintiffs’ claims against MSB cluster into three categories: (A) the RICO
claims; (B) the Truth in Lending Act (“TILA”), Maine Consumer Credit Code
(“MCCC”), and contract claims; and (C) the unjust enrichment claim. 	The RICO
claims 	include 	multiple 	counts 	against 	the 	alleged 	enterprise 	operating 	the
conspiracy. 	The TILA, MCCC, and contract claims all stem from Lalumiere’s
representations to the Plaintiffs that they did have an option to purchase certain
properties. The unjust enrichment claim stands for itself. I address each category in
turn.
A. 	RICO Claims (Counts III and IV)
The Complaint asserts that MSB participated in a RICO conspiracy under
18 U.S.C.A. § 1962(d) (West 2021). 	“To prove a RICO conspiracy offense, the
[plaintiff] must show that ‘the defendant knowingly joined the conspiracy, agreeing
with one or more coconspirators “to further the endeavor, which, if completed, would
satisfy all the elements of a substantive RICO offense.”’” United States v. Velazquez-
Fontanez, 6 F.4th 205, 212 (1st Cir. 2021) (alterations omitted) (quoting United States
v. Rodríguez-Torres, 939 F.3d 16, 23 (1st Cir. 2019)). 	It is not necessary to “prove
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that the defendant or his co-conspirators committed any overt act in furtherance of
the conspiracy.” United States v. Leoner-Aguirre, 939 F.3d 310, 317 (1st Cir. 2019).
Here, the Complaint alleges that MSB conspired to violate 18 U.S.C.A.
§ 1962(a), which makes it unlawful to use or invest income derived from a pattern of
racketeering activity under certain circumstances:
It shall be unlawful for any person who has received any income derived,
directly or indirectly, from a pattern of racketeering activity . . . in which
such person has participated as a principal . . . to use or invest, directly
or indirectly, any part of such income, or the proceeds of such income, in
acquisition of any interest in, or the establishment or operation of, any
enterprise which is engaged in . . . interstate or foreign commerce.
An “enterprise” includes “any individual, partnership, corporation, association, or
other legal entity, and any union or group of individuals associated in fact although
not a legal entity.” 	18 U.S.C.A. § 1961(4) (West 2021). 	“To establish a pattern of
racketeering, a plaintiff must show at least two predicate acts of ‘racketeering
activity’, as the statute defines such activity, and must establish that the ‘predicates
are related, and that they amount to or pose a threat of continued criminal activity.’”
McEvoy Travel Bureau, Inc. v. Heritage Travel, Inc., 904 F.2d 786, 788 (1st Cir. 1990)
(quoting H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239). 	“Racketeering activity”
encompasses mail fraud under 18 U.S.C.A. § 1341 (West 2021), wire fraud under
18 U.S.C.A. § 1343 (West 2021), and money laundering under 18 U.S.C.A. § 1956
(West 2021). 	18 U.S.C.A. § 1961(1). 	A plaintiff asserting a § 1962(a) claim must
further prove that he was “injured ‘in his business or property by reason of’ the
defendant’s violation.” 	Compagnie De Reassurance D’Ile de France v. New England
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Reinsurance Corp., 57 F.3d 56, 91 (1st Cir. 1995) (quoting 18 U.S.C.A. § 1964(c) (West
2021)).
The Plaintiffs’ theory is that MSB conspired with the Lalumiere Defendants3
to reinvest the income from a pattern of racketeering activity back into the enterprise.
The alleged racketeering activity was money laundering and mail and wire fraud.
MSB argues that the Complaint fails to plausibly allege that MSB knowingly joined
the 	overall 	conspiracy 	or 	that 	its 	actions 	resulted 	in 	an 	investment 	injury
independent from the underlying predicate acts.4 I agree.
1. 	Knowingly Conspired
The Plaintiffs argue that the Complaint alleges facts that “allow the inference”
that MSB “knew the extent of the enterprise[’]s racketeering activity when it agreed
to provide funds to the enterprise through LH Housing LLC.” 	ECF No. 142 at 22.
The Complaint asserts that MSB had access to the purchase agreement and “would
have had to see the terms of the lease” and therefore should have known that the
lease was fraudulent. ECF No. 11 at ¶ 165. The Complaint’s generalized allegations
regarding MSB’s knowledge are not sufficient to establish the required element of
knowledge.
The Plaintiffs rely on the Complaint’s allegation that, because MSB had access
to the Queen Street purchase agreement and had the opportunity to review it before
3 This term refers to Defendant Scott Lalumiere and the corporate entities he controlled: Defendants
Birch Point Storage, LLC and MECAP, LLC.
4 As I will explain, the Complaint fails to plausibly allege that MSB knowingly joined Lalumiere’s
conspiracy or that the Plaintiffs suffered a distinct investment injury. For those reasons alone, the
Plaintiffs’ RICO claims against MSB fail. Therefore, I do not address MSB’s additional argument that
the Complaint fails to sufficiently plead a plausible pattern of racketeering activity.
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making the loan, it should have known that Lalumiere had the intention to defraud
Douglas and not honor the agreement. However, the Complaint fails to point to any
of the specific terms of the lease arrangement that, without more, would have put
MSB on notice that Lalumiere intended to violate the agreement’s terms. 	The
allegations thus suggest nothing more than a bank engaged in arm’s-length financing
in the normal course of business. 	See Terry A. Lambert Plumbing, Inc. v. W. Sec.
Bank, 934 F.2d 976, 981 (8th Cir. 1991) (“Bankers do not become racketeers by acting
like bankers”). The Complaint’s conclusory allegations to the contrary are not enough
to survive MSB’s Motion to Dismiss.
Accordingly, 	the 	Complaint 	fails 	to 	allege 	facts 	that, 	if 	proven, 	would
demonstrate that MSB knowingly joined the conspiracy.
2. 	Investment Injury
“[T]o have a private cause of action, a plaintiff asserting a civil RICO
conspiracy claim must show ‘injur[y] in his business or property by reason of a
violation of Section 1962.’” 	Veilleux v. Elec. Maine, LLC, No. 1:16-cv-571-NT, 2017
WL 5490838, at *8 (D. Me. Nov. 15, 2017) (quoting 18 U.S.C. § 1964(c)). In the context
of § 1962(a), this requirement is referred to as the “investment use rule,” whereby
“many courts have concluded that the mere reinvestment of racketeering proceeds in
a corporate enterprise with the result that the enterprise continues to engage in the
predicate acts of racketeering[] is insufficient to give rise to a ‘use or investment
injury’ 	that 	is 	distinct 	from 	the 	harm 	caused 	by 	the 	predicate 	acts.”
MyFreeMedicine.com, LLC v. Alpine Investors, 739 F. Supp. 2d 8, 20 n.10 (D. Me.
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2010). “[A] plaintiff cannot comply with the ‘investment use rule’ simply by ‘repeating
the crux of [his or her] allegations in regard to the pattern of racketeering.’” 	Id.
(citations omitted). “[A] plaintiff must show that his or her injury was caused by the
defendant’s use or investment of racketeering proceeds,” distinct from the injury
caused by the predicate acts. Id. (citing Compagnie De Reassurance, 57 F.3d at 91).
With respect to MSB, the Complaint alleges that that the proceeds from the
Queen Street fraud were used to purchase other properties involved in the alleged
racketeering scheme. 	The Complaint asserts that the money laundering cost the
Plaintiffs “more than $1,000,000.00” in damages. ECF No. 11 at ¶ 190.
The 	Complaint 	alleges 	facts 	demonstrating 	that 	Douglas 	was 	harmed.
However, the Complaint fails to identify an investment injury distinct from the harm
caused by the predicate fraud. The Complaint alleges that “proceeds from the fraud
were used to purchase additional real estate for the Enterprise and were made to
appear legitimate through those other real estate transactions.” ECF No. 11 at ¶ 91.
Although the Complaint asserts that the proceeds were reinvested in the enterprise
and 	furthered 	the 	alleged 	fraud, 	these 	allegations 	do 	not 	satisfy 	the 	injury
requirement. 	Even if one accepts the Complaint’s theory that the Defendants’
transactions were fraudulent, the Complaint fails to allege a plausible investment
injury distinct from the loss of the property. 	Without a specifically alleged non-
conclusory investment injury, the Complaint fails to adequately plead an injury that
is separate from the predicate harm.
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Without 	pleading 	facts 	that 	could establish 	the required element 	of 	an
investment injury, the Plaintiffs have failed to allege any substantive § 1962(a) claim,
and therefore the § 1962(d) conspiracy claims must be dismissed. 	See Efron v.
Embassy Suites (Puerto Rico), Inc., 223 F.3d 12, 21 (1st Cir. 2000) (“[I]f the pleadings
do not state a substantive RICO claim upon which relief may be granted, then the
conspiracy claim also fails.”); see also MyFreeMedicine.com, 739 F. Supp. 2d at 30-31
(dismissing § 1962(d) conspiracy count because the complaint failed to allege a
substantive RICO violation).
In sum, with regards to RICO, the Complaint fails to allege that MSB
knowingly joined the overall conspiracy and also fails to allege an investment injury
distinct from the predicate acts. 	Therefore, the RICO claims against MSB are
dismissed.
B. 	TILA, MCCC, and Contract Claims (Counts V, IX)
The 	Complaint 	asserts 	two 	claims 	against 	MSB 	based 	on 	Lalumiere’s
misrepresentation that Douglas would be able to purchase the Queen Street property:
TILA and MCCC violations and breach of contract. Although “agency” or an “agency
relationship” are not explicitly mentioned in the Complaint, the Plaintiffs predicate
these two claims against MSB on the theory that the Lalumiere Defendants acted as
agents of MSB when they entered into the contracts with Douglas. Because MSB did
not make any representations to Douglas and did not enter into any agreements with
Douglas, and because the Complaint fails to allege facts that plausibly demonstrate
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the existence of an agency relationship between the Lalumiere Defendants and MSB,
both of these counts must be dismissed.
“When an agent acting with actual or apparent authority makes a contract on
behalf of a disclosed principal, (1) the principal and the third party are parties to the
contract; and (2) the agent is not a party to the contract unless the agent and third
party agree otherwise.” 	Fitzgerald v. Hutchins, 2009 ME 115, ¶ 10, 983 A.2d 382,
386-87 (quoting Restatement (Third) of Agency § 6.01 (2006)).
“An express actual agency is ‘that authority which is directly granted to or
conferred upon the agent in express terms by the principal.’” 	Higgins v. Penobscot
Cnty. Sheriff’s Dep’t, No. CIV 04157BW, 2005 WL 1961369, at *2 (D. Me. Aug. 15,
2005) (alterations omitted) (quoting Libby v. Concord Gen. Mut. Ins. Co., 452 A.2d
979, 981 (Me. 1982)). 	“An implied actual agency is an ‘authority circumstantially
proven from the facts and circumstances attending the transaction in question.’” Id.
(quoting Libby, 452 A.2d at 982). “An implied [actual] agency may be inferred from
‘the words used, from customs and from the relations of the parties.’” 	Id. (quoting
Libby, 452 A.2d at 982). 	An apparent agency “is created only when a third party
subjectively believes, by the conduct or words of the purported principal, that another
party is an agent.” Id. (citing Libby, 452 A.2d at 982-83).
Here, the Complaint contains no allegations suggesting that MSB did anything
that led the Plaintiffs to believe that the Lalumiere Defendants were MSB’s agents
when the Plaintiffs contracted with the Lalumiere Defendants, or that the Lalumiere
Defendants had express authorization from MSB to enter the allegedly fraudulent
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agreements with the Plaintiffs. 	Thus, the question presented is whether the
Complaint alleges facts that, if proven, could establish the existence of an implied
actual agency.
The Complaint alleges that MSB had a “special relationship” with Lalumiere
“that allowed [it] to lend money to the corporate entities without personal guarantees
and without regard to debt to income ratios of the specific corporate entity holding
title.” ECF No. 11 ¶ 120. Specifically, MSB extended a commercial loan secured by a
$256,500 mortgage on the Queen Street property. However, the mere fact that MSB
provided a loan to Lalumiere does not plausibly suggest that MSB implicitly
authorized Lalumiere to act on its behalf. Without a plausible allegation of an agency
relationship, both counts premised on this theory must be dismissed.
First, the Plaintiffs premise the TILA, 15 U.S.C.A. § 1601, et seq. (West 2021),
and MCCC, Me. Rev. Stat. Ann. tit. 9-A, §§ 8-505, 9-401 (West 2021), violations on
the alleged misrepresentations and omissions made in connection with the Queen
Street transaction. As a threshold matter, while the Complaint states that Count V
is based in part on TILA, none of the allegations of Count V refer to TILA. Regardless,
the claim fails because MSB was not a party to that transaction. 	“A claim of
misrepresentation under the Maine Consumer Credit Code requires a showing that
a creditor or person acting for him induced a consumer to enter a credit transaction
by misrepresenting a material fact with respect to the terms and conditions of the
extension of credit.” McGahey v. Fed. Nat’l Mortg. Ass’n, 266 F. Supp. 3d 421, 442 (D.
Me. 2017) (citing Me. Rev. Stat. Ann. tit. 9-A, § 9-401). Without an adequate agency
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relationship, this claim fails because the Complaint fails to plead facts which, if
proven, would establish that Lalumiere was acting in an agency capacity with MSB
when he made the alleged misrepresentations and omissions.5
Second, the breach of contract claim for the Queen Street property fails as to
MSB because MSB was not a party to the purchase agreement between Douglas and
MECAP. 	Without a plausible allegation of a principal-agent relationship, the
Complaint cannot sustain a claim against a party not involved in the agreements at
issue.
C. 	Unjust Enrichment Claim (Count XVII)
The Complaint asserts a claim for unjust enrichment against MSB based on
the alleged “extraction of equity from the homes at 661 Allen Avenue and 57 Queen
Street.” ECF No. 11 ¶ 255.
A claim for unjust enrichment requires proof that “(1) [the complaining party]
conferred a benefit on the other party; (2) the other party had appreciation or
knowledge of the benefit; and (3) the acceptance or retention of the benefit was under
such circumstances as to make it inequitable for it to retain the benefit without
payment of its value.” 	Knope v. Green Tree Servicing, LLC, 2017 ME 95, ¶ 12,
161 A.3d 696, 699 (quoting Me. Eye Care Assocs., P.A. v. Gorman, 2008 ME 36, ¶ 17,
942 A.2d 707, 712).
5 MSB also argues that TILA and MCCC do not apply to commercial transactions or extensions of
credit primarily for business or commercial purposes. Because the Complaint fails to establish that
Lalumiere was operating as an agent of MSB, I do not reach this additional argument.
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But the Complaint does not allege that a benefit was conferred on MSB.
Although it is undisputed that Douglas and Fowler suffered harm through the
frustration of their rights to purchase the Queen Street and Allen Avenue properties,
the Complaint fails to assert facts that would plausibly establish that a resulting
benefit was conferred on MSB. 	There cannot be an unjust enrichment without a
“benefit conferred.”
In sum, the Complaint fails to plead facts which, if proven, would establish a
right of recovery based on unjust enrichment.
D. 	Motion for Limited Discovery
A dismissal is not automatic once the lower court determines that Rule 9(b)
has not been satisfied. 	New England Data Servs., Inc. v. Becher, 829 F.2d 286, 290
(1st Cir. 1987). 	Instead, after the Rule 9(b) determination, a “court should make a
second determination as to whether the claim as presented warrants the allowance
of discovery and if so, thereafter provide an opportunity to amend the defective
complaint.” 	Id. 	The plaintiff may have a right to limited discovery, to the extent
necessary to cure a Rule 9(b) defect about “the details of just when and where the
mail or wires were used.” 	Id. 	A court also has “some latitude” to allow discovery
“where a plausible claim may be indicated ‘based on what is known,’ at least where
. . . ‘some of the information needed may be in the control of the defendants.’”
Menard v. CSX Transp., Inc., 698 F.3d 40, 45 (1st Cir. 2012) (alteration omitted)
(quoting Pruell v. Caritas Christi, 678 F.3d 10, 15 (1st Cir. 2012)).
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Here, 	the 	Plaintiffs 	seek 	limited 	discovery 	from 	MSB 	to 	reveal
“communications between [MSB] and the other defendants” who were allegedly
involved in the conspiracy. 	ECF No. 143 at 2. 	Under the Plaintiffs’ theory, they
believe that MSB had exclusive access to communications that are necessary to prove
the elements of fraud.
The decisions in Becher and Menard establish two possible grounds for
granting limited discovery. 	First, under Menard, where modest discovery may
“provide the missing link” to satisfy the Rule 12(b)(6) plausibility standard, the court
may allow limited discovery “at least where . . . ‘some of the information needed may
be in the control of the defendants.’” 698 F.3d at 45 (quoting Pruell v. Caritas Christi,
678 F.3d 10, 15 (1st Cir. 2012)). 	Here, however, the Complaint is not lacking a
“missing link.” The Complaint does not plausibly suggest that MSB had information
that would provide the “missing link” needed to remedy its deficiencies.
Second, as discussed in Becher, a court may allow discovery as to “the details
of just when and where the mail or wires were used” in a “RICO mail and wire fraud
case.” 	829 F.2d at 290; see also Ahmed v. Rosenblatt, 118 F.3d 886, 890 (1st Cir.
1997). Here, however, the Complaint already contains factual allegations as to how
the scheme involved the use of interstate wires. 	There is no doubt that MSB uses
interstate wires in the course of its regular business activity. Additional information
as to how the conspiracy used the mail or wires would not cure the Complaint’s failure
to sufficiently allege that MSB knowingly joined the conspiracy.
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Neither Menard nor Becher offers a basis to grant limited discovery for the
Plaintiffs as against MSB. 	Thus, the Motion for Limited Discovery as to MSB is
denied, and the Plaintiffs’ objection to the Magistrate Judge’s Order (ECF No. 156)
deferring action on the Motion for Limited Discovery until the Court assessed the
motions to dismiss is denied as moot.
III. CONCLUSION
For the reasons stated above, it is ORDERED that Machias Savings Bank’s
Motion to Dismiss (ECF No. 111) is GRANTED. 	The Amended Complaint (ECF
No. 11) as to Machias Savings Bank is DISMISSED. 	The Plaintiffs’ Motion for
Limited Discovery (ECF No. 143) is DENIED and the Plaintiffs’ Objection to the
Magistrate Judge’s Order on Limited Discovery (ECF No. 162) is DENIED AS
MOOT as to Machias Savings Bank.
SO ORDERED.
Dated: September 29, 2021
/s/ JON D. LEVY
CHIEF U.S. DISTRICT JUDGE
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