Portfolio Investments Llc, a Washington limited liability corporation v. First Savings Bank Northwest, a Washington state chartered bank

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
PORTFOLIO INVESTMENTS LLC, a
Washington limited liability corporation;
STEVEN J NIKOLICH, managing
member, Portfolio Investments, LLC;
MARCIA A NIKOLICH, both
individually and on behalf of the marital
community comprised thereof,
Plaintiffs - Appellants,
v.
FIRST SAVINGS BANK NORTHWEST,
a Washington state chartered bank;
EXECUTIVE HOUSE INC, a Washington
corporation; JOHN P MILLS, individually
and on behalf of the marital community
comprised thereof; DAVID KROEGER;
JEFF GREGG; JAMES PRESTON;
VICTOR KARPIAK; FIRST FINANCIAL
NORTHWEST INC; FIRST FINANCIAL
DIVERSIFIED CORPORATION, a
Washington corporation; TAX
ATTORNEYS INC, a Washington
corporation; SUSAN CHANG; JOHN E
CICERO, II; JANE DOES, both
individually and on behalf the marital
communities of John E. Cicero, II and Jane
No. 13-35333
D.C. No. 2:12-cv-00104-RAJ
MEMORANDUM*
FILED
JUL 28 2014
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

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Doe Cicero and Justin Cicero and Jane
Doe Cicero,
Defendants - Appellees.
Appeal from the United States District Court
for the Western District of Washington
Richard A. Jones, District Judge, Presiding
Argued and Submitted July 11, 2014
Seattle, Washington
Before: ALARCÓN, TASHIMA, and MURGUIA, Circuit Judges.
Plaintiffs–appellants Portfolio Investments LLC, Stephen Nikolich, and
Stephen’s wife, Marcia Nikolich (collectively “Portfolio”), appeal from the district
court’s dismissal of their amended complaint with prejudice for failure to state a
claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Portfolio
alleged before the district court that the First Savings Bank Northwest (“FSB”)
defendants–appellees 1 and the Tax Attorneys, Inc. defendants–appellees 2
collectively violated the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), 18 U.S.C. §§ 1961–1968, by depriving Portfolio of its intangible right
1 FSB; Executive House, Inc.; John P. Mills; David Kroeger; Jeff Gregg;
James Preston; Victor Karpiak; First Financial Northwest, Inc.; and First Financial
Diversified Corporation.
2 Tax Attorneys, Inc; Susan Chang; and John E. Cicero II.
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to honest services. The district court held that Portfolio had failed to allege
statutory standing under RICO and dismissed Portfolio’s amended complaint with
prejudice. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
I
To state a claim under 18 U.S.C. § 1964(c), Portfolio must have established
statutory standing under RICO by pleading “(1) that [its] alleged harm qualifies as
injury to [its] business or property; and (2) that [its] harm was ‘by reason of’ the
RICO violation.” Canyon Cnty. v. Syngenta Seeds, Inc., 519 F.3d 969, 972 (9th
Cir. 2008). Portfolio argues on appeal that its intangible right to receive honest
services—of which Portfolio contends it has been deprived by FSB and Tax
Attorneys’ actions—suffices as a property interest for RICO statutory standing
purposes. This Court has specifically held, however, that the deprivation of honest
services alone “does not constitute concrete financial loss” for purposes of
pleading RICO’s statutory standing requirement. Ove v. Gwinn, 264 F.3d 817, 825
(9th Cir. 2001); see also United States v. Kincaid-Chauncey, 556 F.3d 923, 941
n.14 (9th Cir. 2009) (“The public’s intangible right to honest services cannot be
construed as ‘property’ traditionally understood.”), abrogated on other grounds by
Skilling v. United States, 561 U.S. 358 (2010). Furthermore, Portfolio’s amended
complaint itself never alleges that (or how) Portfolio was injured in its business or
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property at all. Portfolio therefore failed to plead facts demonstrating that FSB and
Tax Attorneys proximately caused it to sustain injury to its business or property
through a fraudulent scheme to deprive it of honest services. Because we conclude
that Portfolio lacks RICO standing, we do not reach any of the other arguments
raised, including whether honest-services fraud can ever serve as a predicate RICO
act.
II
Portfolio also contends the district court erred by denying it leave to amend
to correct any pleading deficiencies. Despite Portfolio’s failure to seek leave to
amend before the district court, we may review the issue on appeal “[b]ecause the
issue was expressly addressed and decided by the district court, raised on appeal,
and fully briefed by both parties.” United States v. Corinthian Colls., 655 F.3d
984, 995 (9th Cir. 2011).
“When the district court denies leave to amend because of futility of
amendment, we will uphold such denial if it is clear, upon de novo review, that the
complaint would not be saved by any amendment.” Carvalho v. Equifax Info.
Servs., LLC, 629 F.3d 876, 893 (9th Cir. 2010) (internal quotation marks omitted).
Portfolio’s amended complaint was riddled with deficiencies and fell woefully
short of the specificity required to meet Federal Rule of Civil Procedure 9(b)’s
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heightened pleading standard for Portfolio’s fraud contentions. See Schreiber
Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1400 (9th Cir. 1986)
(“Rule 9(b) requires that the circumstances constituting fraud be stated with
particularity.” (omission and internal quotation marks omitted)). Perhaps the most
glaring deficiency is Portfolio’s failure to allege the bribery or kickback scheme
necessary to establish its honest-services fraud claim. See Skilling, 561 U.S. at
404. This is particularly problematic insofar as Skilling’s bribery-or-kickback
requirement, established in June 2010, was not new at the time Portfolio filed its
original complaint in January 2012 or its amended complaint in August 2012.
The great number of pleading deficiencies in Portfolio’s amended
complaint—combined with Portfolio’s complete failure to specify what, if
anything, it could allege to cure those deficiencies—demonstrates Portfolio’s
inability to plead sufficient facts to state a viable RICO claim. We therefore
conclude that any attempt at amendment would have been futile.
AFFIRMED.
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