A federal judge has dismissed UMB Bank’s civil racketeering claims against the daughter and grandchildren of famed Kansas City artist Thomas Hart Benton, even as two parallel cases over the Benton estate heat up.
Chief U.S. District Judge Beth Phillips ruled on Wednesday that Kansas City-based UMB failed to meet the elements of a racketeering case, saying its lawsuit was at bottom a malicious prosecution case.
Until recently, UMB Bank served as trustee of the Benton estate. The bank claimed that the Benton defendants — Jessie Lyman and her children — hatched a scheme to force UMB to liquidate Benton’s artworks because they were living on a commune whose financial needs necessitated the artworks' sale.
As part of that scheme, UMB alleged, Benton’s heirs made false accusations to media outlets — including the Wall Street Journal, The Kansas City Star and KCUR — that the bank failed to keep proper records, sold Benton artworks below their market value, engaged in improper self-dealing and in general mismanaged the Benton estate.
Benton’s heirs made those allegations in a lawsuit it filed in Jackson County Probate Court in December 2019, touching off a tit-for-tat legal battle. The probate lawsuit, which is pending, prompted UMB to file its own action in federal court accusing Lyman and her children of civil racketeering under the Racketeer Influenced and Corrupt Organizations Act, or RICO.
Originally enacted by Congress to crack down on organized crime, the RICO statute has both a criminal and civil side. Civil RICO claims have been used successfully to go after businesses and individuals who committed multiple acts of fraud, typically mail and wire fraud, which are known as “predicate” acts under RICO.
To establish a civil RICO claim, a plaintiff must show “conduct of an enterprise through a pattern of racketeering activity.”
Phillips found that UMB failed to meet those elements.
The bank claimed that the Benton heirs engaged in a pattern of racketeering activity by instructing their attorney to collect records about UMB’s actions as trustee, sue in probate court and communicate with the media about their allegations; by communicating false claims about UMB’s conduct among themselves and to news outlets; and by continuing to advance false allegations through its probate case.
Phillips said that the heirs’ instructions to their attorney could not, by definition, constitute misrepresentations. And although Phillips said that the heirs’ communications with the media could constitute mail or wire fraud, UMB had failed to demonstrate a pattern of racketeering activity.
“ … there is nothing in the Amended Complaint to indicate that the Lyman family routinely disseminates fraudulent statements to news outlets,” Phillips wrote.
Finally, she ruled that any communications made in the course of prosecuting the probate case could not constitute a predicate RICO act because otherwise courts would be flooded with RICO litigation over unsuccessful legal actions.
Attorneys for UMB did not return calls seeking comment.
In a footnote, Phillips said she agreed with the Benton heirs’ argument that the bank’s lawsuit was needlessly inflammatory and contained irrelevant allegations, but that she didn’t need to address them because she was dismissing the suit.
UMB’s amended complaint starts out with a description of an armed bank robbery committed by the Lyman family in 1973 that culminated in a murder.
Jessie Lyman and her children “have set their sights on a bank, plaintiff UMB,” UMB alleged in its amended complaint. “Instead of guns, Defendants now employ different means: a scheme to defraud UMB of over $300 million.”
In her footnote, Phillips wrote that any crimes committed by the Lyman family in the 1970s “are, obviously, wholly immaterial to the facts of this case. The Court is also inclined to agree with Defendants that the implied association between themselves and bank-robbing murderers is offensive.”
Even as Phillips dismissed UMB Bank’s RICO suit, the probate action filed by Benton’s heirs in Jackson County has been moving ahead in fits and starts. Both sides have exchanged charges of bad faith and moved for sanctions against one another.
The probate case is now scheduled to go to trial in February.
Meanwhile, another case filed by Benton’s heirs against UMB in Jackson County Circuit Court is set to go to trial in August. Unlike the probate case, which will not involve a jury, the circuit court case will be tried before a jury.
In that case, the Benton heirs allege that UMB wrongly kept Benton artworks for itself that it should have turned over to the heirs. The heirs are seeking unspecified punitive damages.
