OPINION AND ORDER This matter arises out of an alleged scheme involving predatory loan agreements directed at small businesses and disguised as agreements for the purchase and sale of these businesses’ future sales income or receipts. Plaintiffs Anglin Automotive LLC (“Anglin Automotive”) and its owner Thomas Anglin proceed against EBF Holdings, LLC (“Everest”), Novus Capital Funding II LLC (“Novus”), MCA Receivables, LLC, d/b/a/ Ally Funding Group (“MCA Receivables”), and Five G Funding LLC (“Five G Funding”) (collectively, the “MCA-Funder Defendants”) — with whom Plaintiffs entered into such agreements — as well as against various John and Jane Doe Defendants described as the officers and owners of the MCA-Funder Defendants. In their three-Count Complaint, Plaintiffs assert violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§1961 et seq., bringing both substantive civil RICO and civil RICO conspiracy claims, and further allege a breach of contract claim. Before the Court are motions to dismiss by Everest, Novus, and MCA Receivables (the “Moving Defendants”). Five G Funding has yet to appear in this action, and so Plaintiffs’ motion for default judgment against it is also pending. For the reasons set forth below, the Court finds that Plaintiffs have failed to plead either a substantive civil RICO claim or a civil RICO conspiracy claim, and that the identified deficiency applies equally to these claims as asserted against Five G Funding. Accordingly, the Court dismisses Plaintiffs’ RICO claims in their entirety, and further denies Plaintiffs’ motion for default judgment against Five G Funding on those claims. Furthermore, the Court declines to exercise supplemental jurisdiction over Plaintiffs’ breach of contract claim and thus dismisses it without prejudice to Plaintiffs’ refiling the claim in state court. Finally, because Plaintiffs have yet to amend their Complaint and because permitting amendment at this early stage of the litigation would not prejudice Defendants, the Court grants Plaintiffs leave to amend the Complaint, which leave Plaintiffs are advised to take only if they are able to correct the pleading deficiencies identified in this Opinion and Order and only after they carefully consider all the substantive challenges raised by the Moving Defendants — many of which the Court does not address herein. I. Background A. Facts1 Anglin Automotive, an automotive repair facility in Ohio, is owned by Thomas Anglin. Complaint
22, 23. Having suffered financially “especially during the heart of the pandemic,” id. 24, Anglin Automotive allegedly “fell victim to a group of funders,” id. 25, cast as predatory entities outwardly offering “funding in the form of [a] so-called [] ‘merchant cash advance,’” id. 2, with the intent of ensnaring small businesses (like Anglin Automotive) in transactions that, in fact, operate as usurious loan agreements, see id.
