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Date: 09-14-2017

Case Style:

Valentina Sheshtawy, et al. v. J. Gary Gray, et al.

Case Number: 17-20019

Judge: Per Curiam

Court: United States Court of Appeals for the Fifth Circuit on appeal from the Southern District of Texas (Harris County)

Plaintiff's Attorney: Don Cheatham and Christopher Augustine Gabel for Don Peters, et al.

Defendant's Attorney: Jack D Ballard and Charles Aldine Hammaker, III for Clete Hopper & Company, Inc.

Mike Fuqua for Fuqua & Associates, P.C.

Robert S Harrell and Rafe A Schaefer for MacIntyre, McCulloch, Stanfield & Young, L.L.P.

Laura Beckman Hedge for Kimberly Hightower, et al.

Dale Jefferson for Crain, Caton & James, P.C.

William Russell Jones for Russ Jones

Jeffrey P. Kitner for Christopher Merkl

Julianne C Lomax and P Alan Sanders for Lewis, Brisbois, Bisgaard & Smith, L.L.P.

Laura Flores Macom for Kelly G. Cowan

Robert Keith Morris, III and Jason B Ostrom for Carol Ann Manley, et al.

Brian Harrison Oates for Christopher Merkl

John P Scott for Thomas Schmidt

George W Billy Shepherd, III for Gray, Reed & McGraw, P.C.

Larry Preston Walton for Hanya Sustache

McDonald Scott Worley McDonald Worley, P.C.

Description: Plaintiffs Valentina Sheshtawy, L. S., Don Peterson, Mackey Peterson,
Lonny Peterson, Edward G. Rizk, and Maxwell Rizk (collectively “Plaintiffs”)
sued Defendants1 asserting claims for (1) conspiracy under the Racketeer
Influenced and Corrupt Organizations Act (“RICO”); (2) common law fraud;
and (3) breach of fiduciary relationship.2 Plaintiffs are comprised of
individuals involved in three unrelated probate disputes. Plaintiffs’ main
contention was that Defendants conspired to “take over” Harris County
Probate Court No. 1 through their racketeering schemes to unlawfully enrich
themselves at Plaintiffs’ expense.
The district court dismissed Plaintiffs’ claims under Federal Rules of
Civil Procedure 12(b)(1) and 12(b)(6), and granted sanctions against Plaintiffs
under Rule 11 and the district court’s inherent power. Plaintiffs now appeal
the district court’s dismissal of their claims and grant of sanctions. For the
following reasons, we AFFIRM.
We have jurisdiction under 28 U.S.C. § 1291 to hear this appeal from a
final decision of the district court. We review de novo a district court’s
dismissal under Rules 12(b)(1) and Rule 12(b)(6). Chhim v. Univ. of Tex. at
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
1 Defendants are comprised of individuals and entities involved with the three probate
disputes including Harris County, Harris County Probate Court No. 1 Judge Lloyd Wright,
Associate Judge Ruth Ann Stiles, Court Coordinator Kimberly Hightower, opposing parties
in the underlying probate cases, opposing law firms and attorneys, a medical doctor, a senior
care living center, and various ad litem appointees.
2 The district court recognized, and the parties did not dispute “that except for the
RICO counts in the plaintiffs’ complaint, [the district court was] without subject matter
jurisdiction to entertain the plaintiffs’ common law fraud and breach of fiduciary relationship
claims.” The district court properly dismissed Plaintiff’s federal RICO claims and acted
within its discretion in dismissing Plaintiffs’ remaining state-law claims without prejudice.
See Elliott v. Foufas, 867 F.2d 877, 882 (5th Cir. 1989). Therefore, this opinion does not
address Plaintiffs’ state-law claims.
Case: 17-20019 Document: 00514155803 Page: 2 Date Filed: 09/14/2017
No. 17-20019
Austin, 836 F.3d 467, 469 (5th Cir. 2016) (per curiam). We review the granting
of sanctions for an abuse of discretion. FDIC v. Maxxam, Inc., 523 F.3d 566,
576, 590 (5th Cir. 2008).
On appeal, Plaintiffs argue that the district court erred in
(1) concluding that Plaintiffs lack standing because they did not suffer a
cognizable injury under RICO; (2) determining that Plaintiffs failed to plead
their RICO claims with sufficient particularity; and (3) granting sanctions.3
As to Plaintiffs’ standing arguments, we agree with the district court and
affirm. Plaintiffs lack standing to pursue their RICO claims because they have
failed to allege a direct, concrete, and particularized injury proximately caused
by Defendants’ conduct. See Lujan v. Dept. of Wildlife, 504 U.S. 555, 560–61
(1992); In re Taxable Mun. Bond Sec. Litig., 51 F.3d 518, 521 (5th Cir. 1995).
Plaintiffs attempt to rely on numerous paragraphs in their amended
complaint that purportedly show that they sufficiently alleged a direct injury
caused by Defendants’ conduct, but a review of their 246-page amended
complaint shows only repetition of legal elements with little to no factual
specificity as to injury or causation.
Although we recognize that “[a]t the pleading stage, general factual
allegations of injury resulting from the defendant’s conduct may suffice,”
Lujan, 504 U.S. at 561, Plaintiffs still fail to plead or even suggest the type of
injury caused by Defendants’ conduct. Plaintiffs’ suggest that their injury
comes in the form of financial losses to their property interests in their
respective probate proceedings. However, the alleged injury to their share of
3 To the extent Plaintiffs attempt to appeal the district court’s order denying their
motion for new trial or motion to enter final judgment, such argument is waived due to the
lack of briefing of any alleged error involving these orders. See Willis v. Cleco Corp., 749 F.3d
314, 319 (5th Cir. 2014); see also FED. R. APP. P. 28.
Case: 17-20019 Document: 00514155803 Page: 3 Date Filed: 09/14/2017
No. 17-20019
the estate or trust is merely an expectancy interest that is too speculative and
indirect to satisfy RICO standing. See Gil Ramirez Grp., L.L.C. v. Hous. Indep.
Sch. Dist., 786 F.3d 400, 409–410 (5th Cir. 2015); In re Taxable Mun. Bond Sec.
Litig., 51 F.3d at 522–23; see also Firestone v. Galbreath, 976 F.2d 279, 285
(6th Cir. 1992) (affirming the district court’s dismissal of plaintiffs’ RICO
claims for lack of standing because the estate, not certain potential
beneficiaries, suffered direct harm). Therefore, we affirm the district court’s
determination that Plaintiffs lack RICO standing and pretermit the question
of whether Plaintiffs failed to plead their RICO claims with sufficient
As to the issue of sanctions, we conclude that the district court did not
abuse its discretion by imposing them.5 The district court issued Rule 11
sanctions against Plaintiffs Valentina Sheshtawy, Don Peterson, Mackey
Peterson, and Lonny Peterson6 “because improper purposes motivated the
4 The district court also dismissed Plaintiffs’ RICO claims for failure to state a claim
under Rule 12(b)(6). Although we need not address it, we would affirm on this basis as well.
To state a RICO claim, “a plaintiff must allege: 1) the conduct; 2) of an enterprise; 3)
through a pattern; 4) of racketeering activity.” Elliott, 867 F.2d at 880 (recognizing that each
element of a RICO claim is a term of art which requires particularity). A review of Plaintiffs’
amended complaint shows that, as in Elliott, Plaintiffs “substantially rescript[] the language
of the statute in conclusory form,” and fail to sufficiently plead any RICO causes of action.
See id.; see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). On appeal, Plaintiffs
simply make conclusory assertions that their complaint is sufficient to survive a motion to
dismiss and cite to their entire complaint as evidencing the sufficiency.
5 Although the district court had previously dismissed all of Plaintiffs’ claims under
Rule 12(b)(1) and (6), the court still retained the authority to impose sanctions. See Willy v.
Coastal Corp., 503 U.S. 131, 137 (1992).
6 Although Plaintiffs’ Notice of Appeal mentions only the district court’s dismissal of
Plaintiffs’ claims, the sanctions argument—to the extent Plaintiffs attempted to appeal the
sanctions awarded against themselves—is properly before us because the order granting the
motion to dismiss was effectively a final judgment, and because the issue of sanctions was
fully briefed by the relevant parties. See Trust Co. of La. v. N.N.P. Inc., 104 F.3d 1478, 1486
(5th Cir. 1997).
Case: 17-20019 Document: 00514155803 Page: 4 Date Filed: 09/14/2017
No. 17-20019
filing of the motion for new trial.” Specifically, the district court determined
that, given the history of the multiplied proceedings, as well as Plaintiffs’
knowledge of the litigation costs, it was evident that the purpose of Plaintiffs’
filing of the motion for new trial was to escalate costs. The district court
determined that the facts and circumstances also supported an inference that
Plaintiffs were acting in bad faith so that sanctions were justified under the
court’s inherent powers.7
Contrary to Plaintiffs’ assertions, a review of the record shows that the
district court’s order granting sanctions thoroughly and sufficiently lays out
the basis supporting its imposition of sanctions. Based on those facts, we
conclude that the district court did not abuse its discretion. See Carmon v.
Lubrizol, 17 F.3d 791, 795–96 (5th Cir. 1994).
However, the district court also issued sanctions against Plaintiffs’ attorneys Donald
Cheatham and Christopher Gabel. Neither Cheatham nor Gabel are named as parties in the
Notice of Appeal; they are merely listed as Plaintiffs’ appellate counsel. Therefore, to the
extent Plaintiffs attempt to appeal the sanctions award against counsel, this court is without
jurisdiction to consider that issue. See Kingsley v. Lakeview Reg’l Med. Ctr., LLC, 570 F.3d
586, 589 (5th Cir. 2009); see also Payne v. Univ. of S. Miss., 681 F. App’x 384, 387 (5th Cir.
7 The district court also imposed conditional sanctions for appeal; however, Plaintiffs
do not appear to challenge this award on appeal.
Case: 17-20019 Document: 00514155803 Page: 5 Date Filed: 09/14/2017

Outcome: Affirmed

Plaintiff's Experts:

Defendant's Experts:


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