DECISION AND JUDGMENT
HANDWORK, J.
{¶ 1} This appeal is from the February 25, 2010 judgment of the Lucas County Court of Common Pleas, which denied appellant's, Gary Czerniakowski, emergency motion to stay the writ of possession. Upon a review of the record, we find that the appeal is moot and we must dismiss the appeal. {¶ 2} In 2008, appellee, Flagstar Bank, F.S.B., brought an action against Chere R. Olvera and John Doe, and others under the Fair Debt Collection Act. Appellee alleged that Olvera had defaulted on the note and, therefore, appellee sought to foreclose on the mortgage securing the note. Summary judgment was granted by the trial court to appellee on April 7, 2009. An order confirming the foreclosure sale was entered on September 17, 2009. Appellee then sought a writ of possession to have Olvera and her family evicted from the home. On February 9, 2010, appellant, Gary Czerniakowski, filed an emergency motion to stay the writ of possession. The trial court granted the emergency motion on February 11, 2010, and gave appellant until February 23, 2010 to vacate the premises. On February 22, 2010, appellee filed a second emergency motion to stay the writ of possession. On February 23, 2010, the trial court denied the motion. Appellant then sought a timely appeal to this court on March 24, 2010. The trial court granted a stay of execution of its judgment on March 30, 2010. However, on August 9, 2010, appellee voluntarily withdrew its writ of possession and indicated that it would proceed in the Toledo Municipal Court with a forcible entry and detainer complaint.
{¶ 3} Since appellee has withdrawn its writ of possession, there is no controversy between the parties and no issue for this court to resolve. Appellant's appeal is hereby dismissed. Appellant is hereby ordered to pay the costs of this appeal pursuant to App. R. 24.
APPEAL DISMISSED.
A certified copy of this entry shall constitute the mandate pursuant to App. R. 27. See, also, 6th Dist. Loc. App. R. 4.
Peter M. Handwork, J., Mark L. Pietrykowski, J., Keila D. Cosme, J., concur.
meant to give him $20 accidentally gave him two $20 bills stuck together, he could no longer just pocket the extra $20, but had a duty to disclose the extra $20 to his partner.
Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545, 546 (1928) (Cardozo, J.).
Nor do the kinds of honest services fraud to which the statute is limited by Skilling — bribes and kickbacks — imply a fiduciary limitation. One could bribe a blogger to recommend a bistro, or kick back ten percent to a merchant who recommended a particular electrician to customers, without either of them having a fiduciary relationship. One does not have to be a fiduciary to take bribes or kickbacks.
The cases suggest a legitimate and important purpose in trying to find some sort of limitation on federal mail fraud, so that prosecutors cannot convict whoever may be on the wrong end of political shotguns. Some of the policy concerns are arguable and unsupported by the text. For example, some of the cases suggest that it is no business of the federal government that some state or local governments are corrupt. Maybe so. Or maybe it is the federal government's business, because corruption may not be curable within the very governments that are corrupt. Still, once fraud is broadened to deprivation of services, almost anyone can be charged with not doing all that they ought to have done in performing their jobs, and if broadened that far, the notion of bribes may broaden commensurately so that limitations on prosecutors run amuck become illusory. Is "sneak out to the ball game with me, I already have an extra ticket you can use" a bribe by the offeror and a deprivation of honest services by the employee who accepts?
United States v. Rybicki, 354 F.3d 124, 164-65 (2d Cir. 2003) (Jacobs, J., dissenting) ("[T]he majority opinion invites federal prosecutors to police honesty in the corridors of state government by invoking section 1346 against state employees for their acts of `honest services' fraud. This construction of section 1346 undoubtedly `leaves its outer boundaries ambiguous and involves the Federal Government in setting standards of disclosure and good government for local and state officials.'" (quotation omitted)).
See generally Norman Abrams Sara Sun Beale, Federal Criminal Law and its Enforcement 151 (2d ed. 1993) ("It has been suggested that the federal government has an obligation under the Republican government clause of the constitution to ensure that states are free of public corruption, Adam H. Kurland, The Guarantee Clause as a Basis for Federal Prosecutions of State and Local Officials, 62 S. Cal. L. Rev. 369 (1989), and that authority was cited in the Congressional debates that led to the enactment of Section 1346. 134 Cong. Rec. H11251 (daily ed. Oct. 21, 1988) (comments of Rep. Conyers introducing legislation to overrule McNally).").
The mail fraud statute has been described by one well-known former federal prosecutor as "our Stradivarius, our Colt 45, our Louisville Slugger, our Cuisinart — and our true love." Jed S. Rakoff, The Federal Mail Fraud Statute (Part I), 18 Duquesne L. Rev. 771, 771 (1980).
Judge Raggi's concurrence in the Second Circuit en banc decision United States v. Rybicki suggests a sound textual basis for giving some content to the statute so that it distinguishes between corruption and mere nonfeasance. Her limitation makes textual sense, and is not merely picked out of the air, or based on some policy not set out or implied by the statute. We analyze the statute as she does.
354 F.3d 124 (2d Cir. 2003).
The key is, as it should be, reading the words of Section 1346. This post- McNally restoration of "honest services" fraud says "scheme or artifice to deprive another of the intangible right of honest services." Both "whoever" and "honest" matter. This language does not limit "whoever" in Section 1341 to fiduciaries or any other subset of "whoever." "While a particular relationship may shed light on whether one person owes another honest services, the language of § 1346 indicates that the critical factor is the type of service at issue, not the relationship of the parties."
United States v. Rybicki, 354 F.3d 124, 155 (2d Cir. 2003) (Raggi, J., concurring).
The words of Section 1346 taken together with Section 1341 imply five limitations. First, there must be a legally enforceable right to have another provide honest services, because without that right, there could be no deprivation of the right. Second, not any deprivation of services provides a predicate for fraud, only deprivation of services the value of which depends on their being performed honestly. The statute says "honest services," not just "services," and every word should be accorded meaning. Dishonest deprivation of services differ from deprivation of honesty in providing services. The statute criminalizes the latter, not the former. Suppose an employee in charge of purchasing office supplies, bribed by a free ticket, sneaks off to the ball game leaving his suit jacket on the chair and having his coworker tell his boss if she inquires that he is in the men's room. He has dishonestly deprived his employer of services in exchange for a bribe, but has not deprived his employer of honesty in the performance of his tasks, as he would if in return for the ticket he steered the employer's business to the provider of the ticket instead of a cheaper, better supplier.
Id. at 153.
Id.
2A Sutherland Statutory Construction § 46:6 (7th ed. 2010).
Third, the defendant must intend to defraud, because Section 1341 says "having devised or intending to devise any scheme or artifice to defraud." That the victim may not get all the services it should is insufficient if the specific intent to defraud is absent. Fourth, the scheme must use fraud, that is misrepresentation or concealment of a material fact. And fifth, the mails must be used to further the scheme.
See United States v. Kincaid-Chauncey, 556 F.3d 923, 941 (9th Cir. 2009) ("The specific intent requirement for honest services fraud survives McNally by virtue of § 1346 and is necessary to distinguish legal conduct from honest services fraud." (citation omitted)).
The statute does not say that the fraud must be intended to deprive the victim of money or property. At common law, in the civil context, fraud requires damages, ordinarily a monetary loss, but criminal fraud has always been broader in its reach. Ordinarily, fraud against private victims will have that intent, but fraud against the government often will not. For example, in this case, a commercial drivers' license, though it has considerable economic value to the holder, has no monetary value to the government beyond the fee the government receives when it issues the license, a fee that was paid in this case. What the government seeks, by honest enforcement of the testing requirements, is not money, but safety. The government uses the commercial drivers' license exams to protect its citizens from having to drive their little compact cars alongside big rigs driven by people who have not demonstrated their ability to drive safely. It would make no sense, in terms of the purpose of the fraud statutes or the commercial drivers' license statutes and regulations, to treat as fraud only those schemes that deprived the government of its license issuance fees, yet not of the purpose of the testing, assuring that the drivers honestly passed the tests. All sorts of government services that have to be performed honestly do not involve the financial interest of government — for example, a bribe to a policeman to let a criminal go. The gravamen of the harm prohibited by the statute is dishonesty in providing services where the victim, the government in this case, was entitled to have the services performed honestly.
See Ellen S. Podgor, Criminal Fraud, 48 Am. U. L. Rev. 729, 730 n. 5 (1999) (discussing fraud in the civil context); id. at 736-47 (discussing the scope and development of criminal fraud); see also Mark Zingale, Note, Fashioning a Victim Standard in Mail and Wire Fraud: Ordinarily Prudent Person or Monumentally Credulous Gull, 99 Colum. L. Rev. 795, 817-18 (1999) (discussing often confused differences between civil and criminal fraud); Steven Fasman, Note, Proper Application of Civil RICO to Patent Fraud, 96 Yale L.J. 1323, 1327 (1987) (discussing civil fraud).
See, e.g., United States v. Boots, 80 F.3d 580 (1st Cir. 1996) (upholding honest services wire fraud conviction for scheme to bribe a police chief to defraud citizens of his honest services), overruled in part by Pasquantino v. United States, 544 U.S. 349, 354, 125 S.Ct. 1766, 161 L.Ed.2d 619 (2005).
III. Conclusion
Honest services mail fraud does not require proof of a fiduciary relationship. Nor does it require damages to the money or property of the victim. It is, however, subject to the limitations set out above. The district court thus erred in dismissing the indictment.
REVERSED and REMANDED.
FERNANDEZ, Circuit Judge, dissenting:
Like the majority, I must start with the mail fraud statute itself, which imposes criminal penalties upon those who use the mails in the execution of "any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises." 18 U.S.C. § 1341.
Before the Supreme Court's decision in McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), we held that § 1341 proscribed schemes to defraud another not only of money and property, but also of "intangible rights," including the right to loyal or honest services. See United States v. Bohonus, 628 F.2d 1167, 1171-72 (9th Cir. 1980); see also United States v. Williams, 441 F.3d 716, 723-24 (9th Cir. 2006). In McNally, 483 U.S. at 360, 107 S.Ct. at 2881-82, the Court held that the mail fraud statute did not extend to honest services fraud. The following year, Congress enacted 18 U.S.C. § 1346, which specifies that for purposes of the mail fraud statute, "the term `scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services." In so doing, "Congress restored the pre- McNally landscape." Williams, 441 F.3d at 722; accord, United States v. Sorich, 523 F.3d 702, 707 (7th Cir. 2008), cert. denied, ___ U.S. ___, 129 S.Ct. 1308, 1308, 173 L.Ed.2d 645 (2009); United States v. Rybicki, 354 F.3d 124, 136-37 (2d Cir. 2003) (en banc). Thus, the fact that a case preceded, rather than succeeded, McNally will not affect my analysis.
The district court's dismissal of the Indictment was based upon its determination that for honest services fraud the Indictment had to plead and the government must prove that at least one of the Defendants had a fiduciary duty to the Washington State Department of Licensing ("DOL"). As the majority points out, § 1346 does not expressly contain that restriction, and I recognize that, in general, where a statute is sufficiently clear we look no farther than its own language. See Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1, 6, 120 S.Ct. 1942, 1947, 147 L.Ed.2d 1 (2000); Burton v. Stevedoring Servs. of Am., 196 F.3d 1070, 1072 (9th Cir. 1999); City of Edmonds v. Wash. State Bldg. Code Council, 18 F.3d 802, 804 (9th Cir. 1994). Here, however, honest services is not an unambiguous phrase, and when attempting to give content to that concept, the courts have always been concerned lest the net cast by the mail fraud statute encompass far too much activity. In my view, when Congress acted, it necessarily adopted the limitations the courts had created when they used the phrase. As we have said, "[w]ithout some kind of limiting principle, honest services wire fraud could potentially make relatively innocuous conduct subject to criminal sanctions." United States v. Kincaid-Chauncey, 556 F.3d 923, 940 (9th Cir. 2009); see also United States v. Handakas, 286 F.3d 92, 107 (2d Cir. 2002) (expressing need to avoid making a § 1346 case out of all breaches of contract or false tax returns), overruled on other grounds by Rybicki, 354 F.3d at 144; Sorich, 523 F.3d at 707 (stating that courts have "felt the need to find limiting principles"); United States v. Cochran, 109 F.3d 660, 667 (10th Cir. 1997) (stating not every breach of contract or misstatement is enough); United States v. Sawyer, 85 F.3d 713, 728 (1st Cir. 1996) (stating that not "every transgression of state governmental obligations" is enough).
Over 125 years ago the Supreme Court noted that "[i]t would certainly be dangerous if the legislature could set a net large enough to catch all possible offenders, and leave it to the courts to step inside and say who could be rightfully detained, and who should be set at large." United States v. Reese, 92 U.S. 214, 221, 23 L.Ed. 563 (1875); see also United States v. Rrapi, 175 F.3d 742, 755-56 (9th Cir. 1999) (Thomas, J., concurring and dissenting) ("A creative interpretation . . . would not afford sufficient notice of the criminal activity to survive constitutional muster.").
Of course, it is presumed that "legislatures act with case law in mind." Abuelhawa v. United States, ___ U.S. ___, ___, 129 S.Ct. 2102, 2106, 173 L.Ed.2d 982 (2009); Williams v. Taylor, 529 U.S. 362, 379-80 n. 12, 120 S.Ct. 1495, 1506 n. 12, 146 L.Ed.2d 389 (2000); cf. NLRB v. Amax Coal Co., 453 U.S. 322, 329, 101 S.Ct. 2789, 2794, 69 L.Ed.2d 672 (1981) (in general, courts "must infer" that when "Congress uses terms that have accumulated settled meaning under . . . common law" it "means to incorporate [that] established meaning").
As it is, courts have applied the honest services concept to the paradigm case of bribing of or other dishonest wrongdoing by high public officials. See United States v. Urciuoli, 513 F.3d 290, 294 (1st Cir. 2008); Bohonus, 628 F.2d at 1171. They have also applied it to employees in general because employees can be said to owe their employers loyal and honest services. See Rybicki, 354 F.3d at 141-42; Bohonus, 628 F.2d at 1172; see also United States v. Alkins, 925 F.2d 541, 545-48 (2d Cir. 1991) (fraud against state by its own employees). In fact, employees do owe a kind of fiduciary duty to their employers. See United States v. Frost, 125 F.3d 346, 366-67 (6th Cir. 1997); see also Sorich, 523 F.3d at 707. Moreover, those who stand in an apparent agency relationship with another can be said to owe a duty of loyalty to their principal, and, thus, be subject to the mail fraud statute. See United States v. Ervasti, 201 F.3d 1029, 1036 (8th Cir. 2000).
The above cases fall into a pattern requiring a fiduciary duty before an honest services mail fraud case can go forward. Some cases have reached further. For example, in one case a consultant who was retained to perform a due diligence investigation regarding a four hundred million dollar letter of credit was said to owe an intangible duty of honest services sufficient to come within the reach of the statute without regard to whether he was a true fiduciary. See United States v. Sancho, 157 F.3d 918, 920-22 (2d Cir. 1998) (per curiam), overruled on other grounds by Rybicki, 354 F.3d at 144. Nevertheless, in an en banc case from the same Circuit, the court stated that even if most of the cases involved employees, it saw "no reason the principle they establish would not apply to other persons who assume a legal duty of loyalty comparable to that owed by an officer or employee to a private entity." Rybicki, 354 F.3d at 142 n. 17. That duty, of course, is a fiduciary duty, or at least something very like one.
This court has been rather circumspect about the possible full reach of § 1346. As we said in Williams, 441 F.3d at 723:
At a minimum, we and other circuits have recognized the viability of the "intangible rights" theory when the private defendant stands in a fiduciary or trust relationship with the victim of the fraud. Because Defendant had such a relationship with his victim, we need not and do not decide whether Congress intended "another" to reach even further.
I, too, would eschew saying more than is needed for the decision of this case. Still and all, we are called upon to alembicate what has gone before, without suggesting that no new considerations could arise in the future. When I do that, I am satisfied that in order to spell out an honest services fraud case the indictment must plead sufficient facts to give notice that a defendant has a heightened duty (for example, as an official, or employee, or agent, or trustee, or fiduciary) rather than a mere contractual duty toward the alleged victim, and has violated (or attempted to violate) that heightened duty by use of a fraudulent scheme of some sort. I hasten to add that the mere fact that a contract contains performance or other specifications does not itself give rise to a heightened duty. When all of these principles are applied to this case, I am satisfied that the Indictment at hand is insufficient.
As the Supreme Court recently pointed out, before the enactment of § 1346, "[t]he `vast majority' of the honest-services cases involved offenders who, in violation of a fiduciary duty, participated in bribery or kickback schemes." Skilling v. United States, ___ U.S. ___, ___, 130 S.Ct. 2896, 2930, 177 L.Ed.2d 619 (2010).
First, as pled, it is apparent that the applicants themselves had no honest services duty to DOL, and unless either Lamb or Milovanovic did, the Indictment must fall as to the applicants.
Second, as pled, Milovanovic had no honest services duty to DOL. No contractual duty whatsoever is even spelled out. The Indictment does allege that he is bilingual and that an applicant "was entitled to have an interpreter of his or her choosing" to translate for him during the written driver's license examination. It then goes on to describe Milovanovic's central part in the scheme and alleged wrongdoing. No more. Thus, again, unless Lamb had a duty of honest services, the Indictment must fall as to Milovanovic also.
The Indictment comes closest in its allegations about Lamb, but not close enough. It points out that Lamb is certified to give driving skills tests, but he is not a DOL employee. He does have a contract with DOL pursuant to which he gives the tests and reports the results. However, it is not alleged that he is an agent of DOL, nor is it even alleged that he is paid by DOL for his performance pursuant to the contract. Again, the scheme and his activities are spelled out. Again, I fail to see any allegations that subtend a heightened duty toward DOL applicable to Lamb.
Thus, while I am aware of the fact that an indictment need only spell out the elements of the alleged offense and give notice, this Indictment falls short of meeting even those minimum requirements. As a result, the Indictment must, as the district court indicated, fall.
The separate evidence submitted by the government does not help it. But for waiver of the issue, I would not even refer to it. See Boyce Motor Lines v. United States, 342 U.S. 337, 343 n. 16, 72 S.Ct. 329, 332 n. 16, 96 L.Ed. 367 (1952); United States v. Boren, 278 F.3d 911, 914 (9th Cir. 2002); United States v. Buckley, 689 F.2d 893, 897 (9th Cir. 1982). In any event, that evidence makes it even more clear that Lamb and Milovanovic are independent contractors — Lamb with DOL, Milovanovic with a third party. For example, the contract with Lamb says "The parties intend that an Independent Contractor relationship will be created by this Contract. The Contractor performing under this Contract is not an employee or agent of DOL."
I hold no brief for the facinorous behavior alleged against Milovanovic and Lamb. However, I am also unable to say that the Indictment sufficiently pleads the crime of honest services mail fraud. 18 U.S.C. §§ 1341, 1346. That is because it fails to allege the kind of heightened duty to DOL that would suffice to raise Milovanovic and Lamb from the status of miscreants to the status of federal defendants.
Thus, I respectfully dissent.