The opinion of the court was delivered by: Judge Rebecca R. Pallmeyer
MEMORANDUM OPINION AND ORDER
Plaintiff Richard Rennell's company, R.E. Fund Management Group, LLC, entered into a joint venture with Defendant Randall Rowe's company, Green Courte Real Estate Partners, LLC in 2004. The joint venture, Green Courte R.E. Fund, LLC, was formed for the purpose of owning and managing manufactured housing communities. After three years, Rowe informed Rennell that he was terminating the agreement and that Rennell's company would lose its ownership interest in the joint venture. Rowe gave Rennell the choice to either accept the termination and get a fraction of what he was owed or reject it and get nothing. Rennell accepted and signed an agreement promising not to sue. Rennell and his company have nevertheless brought this suit against Rowe, Rowe's company, and several other Defendants involved in the joint venture, alleging two claims under the Racketeer Influenced and Corrupt Organizations Act ("RICO") and nine state law claims. Defendants move to dismiss the complaint, and, for the reasons that follow, their motion is granted.
Plaintiff Rennell is the managing member of R.E. Fund Management Group. (Compl. ¶¶ 1- 2.) Defendants Rowe, Stephen Wheeler, and James Goldman control Defendants Green Courte Real Estate Partners and Green Courte Partners, LLC. (Id. ¶¶ 7-10.) Both Green Courte entities have the same address; Green Courte Partners is apparently an owner of Green Courte Real Estate Partners. (Id. ¶¶ 4-5.) In 2004, Green Courte Partners and R.E. Fund formed a joint venture to acquire, own, and manage manufactured housing communities.*fn1 (Id. ¶¶ 16, 18-19.) As explained in more detail in the complaint, for each community, Green Courte Partners supplied most or all of the necessary equity while R.E. Fund supplied the rest and was responsible for operations and management. (Id. ¶¶ 16, 28-29, 31, 37, 41-43.) Under agreements made as part of the joint venture, R.E. Fund was to be paid management fees for each community of 3 or 4% of the gross revenues. (Id. ¶¶ 21, 28, 31, 37, 42-43.) The joint venture owned and operated communities in New York, Michigan, Pennsylvania, Wisconsin, and Minnesota. (Id. ¶¶ 19, 26, 29, 33, 39.) And their operations were successful, generating profits and earning "excellent reviews" from Defendants. (Id. ¶¶ 54-56.)
In 2006, Defendant Wheeler joined Green Courte Partners as Managing Director, Asset Management. (Compl. ¶ 34.) Although Wheeler himself "had no previous experience in or knowledge of the manufactured housing industry," Wheeler announced that rather than continue the joint venture, "his goal was to bring all property management aspects" under the direct control of Green Courte Partners. (Id. ¶¶ 34-35.) Despite this statement of Wheeler's intentions, Plaintiffs allege that they were blindsided when, in November 2007, Rowe told Rennell that he was terminating the Joint Venture Operating Agreement. (Id. ¶ 61.) The Agreement, a copy of which is attached to Defendants' memorandum of law,*fn2 permits Green Courte Real Estate to terminate R.E. Fund for cause, (Defs' Ex. 1 § 5.2(a)), but Plaintiffs allege that there was no cause for the termination. (Compl. ¶ 62.)
Following the termination, Rowe proposed that Rennell sign a release in which Rennell would accept the termination and promise not to sue Defendants in exchange for a payment. (Id. ¶ 64; Defs' Ex. 8, Attachment 1.) The amount that Rowe offered was a fraction of what Rennell was entitled to under the agreements: on a loan application in June 2007, Defendants had estimated the value of R.E. Fund's share at $3.5 million, but valued it at only $282,980 in November 2007. (Compl. ¶¶ 51, 71, 131; Defs' Ex. 8, at 1.) Rowe gave Rennell just 24 hours to decide whether he would sign the release and warned that if he did not sign, he would get nothing and Rowe would make the termination public, thereby harming Rennell's future business prospects. (Compl. ¶¶ 65-66.) Rowe's threats were, of course, threats; if Plaintiffs' allegations are true, the court presumes that Rennell could have refused to sign the release and sued for an accounting. Cf. Ambuul v. Swanson, 162 Ill. App.3d 1065, 516 N.E.2d 427 (1st Dist. 1987). Instead, Rennell eventually agreed to the terms of the release, and his share in the joint venture reverted to the Defendants. (Compl.¶ 73.) Plaintiffs allege that Defendants used similar tactics to terminate two partners in other joint ventures without cause and with little compensation. (Id. ¶ 40, 47.)
Plaintiffs filed an eleven-count complaint naming as Defendants the joint venture, the two Green Courte companies, Rennell, Wheeler, Goldman, and ten John Does who Plaintiffs allege to have engaged in similar conduct to the individual Defendants. (Compl.¶¶ 3-11.) Counts One and Two are brought under RICO; the remaining claims are brought under state law. Defendants have moved to dismiss all claims.
Claims One and Two are brought under 18 U.S.C. § 1964(c), which allows individual civil suits to remedy RICO violations. In Claim One, Plaintiffs allege that Defendants violated 18 U.S.C. § 1962(b):
It shall be unlawful for any person through a pattern of racketeering activity or through collection of an unlawful debt to acquire or maintain, directly or indirectly, any interest in or control of any enterprise which is engaged in, or the activities of which affect, interstate or foreign commerce.
And in Claim Two, Plaintiffs allege that Defendants violated § 1962(c):
It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt. Defendants argue that both claims must be dismissed because, among other defects, the Plaintiffs have not alleged any racketeering activity.
"Racketeering activity" is defined in 18 U.S.C. § 1961 to mean any act or threat involving one of several state or federal crimes. Plaintiffs have not specified which crime they believe was involved in Defendants' conduct, but their brief in opposition to Defendants' motion focuses on the federal crime of extortion, defined under the Hobbs Act, 18 U.S.C. § 1951, as "the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right." (Pls' Br. at 5-7.) The fear at issue can be a fear of economic loss, but the use of that fear must be "wrongful." That is, "the statute applies only to situations where ...