Erie entrepreneur Samuel "Pat" Black III's massive lawsuit against his adopted daughter can still proceed, but with less legal heft.

A federal judge has dismissed all the fraud claims Black made against his daughter, Sumi James-Black, under the Racketeer Influenced and Corrupt Organizations Act, known as RICO, the 1971 federal law aimed at dismantling organized crime.

The ruling removes the case from U.S. District Court in Erie but does not end it altogether. Black can still pursue non-federal fraud claims against James-Black by refiling the case in Erie County Common Pleas Court.

But U.S. District Judge Susan Paradise Baxter's dismissal of the RICO claims still represents a notable loss for Black.

The RICO claims made up the core of a case that has publicly exposed a family rift between Black, 83, once one of Erie's wealthiest residents, and James-Black, 51, his one-time heir apparent whom he adopted in 2019, when he was 77 and she was 44.

Black is claiming James-Black and two other defendants formed a civil conspiracy to defraud him of $200 million from 2017-22. The civil provisions of the RICO statute allow for treble damages.

If Black has prevailed in the RICO claims, he could have obtained a judgment of $600 million, tripling his initial claim of $200 million. The potential damages in Common Pleas Court would be far less than the treble damages available in a RICO case in federal court.

Judge says RICO claims 'fall short' of legal requirements

Black is suing James-Black; the Erie law firm of Knox, McLaughlin, Gornall & Sennett, which handled Black's legal affairs during the five-year period named in the suit; and Nicole Buzzard, a certified public accountant who was vice president of management and accounting at Black's Erie Management Group, the entity that runs Black's businesses.

The businesses include his biggest financial asset — the Hero BX biodiesel plant on East Lake Road, valued at $70 million, according to court records. The plant is under the control of a court-appointed receiver and is for sale.

Black and his business entities, including Erie Management Group, sued in Erie County Common Pleas Court in April 2024, and the case was transferred to federal court in May 2024 due to the RICO claims. The lawsuit was some 324 pages plus 526 pages of exhibits. Black's lawyers also filed a 69-page RICO statement to detail why they believed the anti-racketeering law applied to the case.

In dismissing the RICO claims, Baxter found that Black failed to establish the basic elements needs to pursue a RICO case. She agreed with the defendants' lawyers that Black's lawyers provided no evidence that James-Black, the Knox firm and Buzzard operated together as part of a distinct and independent enterprise under the civil violations of the RICO statute. No one faced criminal charges in the case.

Baxter cited precedent in a 10-page opinion docketed Feb. 2.

"Remarkably," according to the opinion, "despite its immense length and extensive verbiage, Plaintiffs' complaint falls short of establishing the existence of an 'independent, free-standing association-in-fact' enterprise among the RICO defendants, and the subsequent filing of Plaintiffs' 69-page RICO statement has failed to provide any helpful clarity to overcome this hurdle."

Baxter also said in the ruling that Black's filings contained "no allegations of how each RICO Defendant conducted the affairs of the 'enterprise,' nor are there any allegations regarding ongoing organization or decision-making, an actual role for each Defendant in a functional unit, or the existence of any activities beyond the alleged racketeering."

James-Black, Erie law firm applaud dismissal

The lead lawyer for James-Black, John Mizner, welcomed Baxter's ruling.

"Ms. James-Black will always love her father, and has never done anything to dishonor their family relationship," Mizner said. "Sadly, many people have taken advantage of Mr. Black’s declining memory for their own financial benefit.

"The complaint which Mr. Black’s lawyers brought against his daughter was not worth the paper it was written on when it was filed, and it is worth less today. Ms. James-Black fervently hopes that Judge Baxter’s ruling will start the reconciliation process with her father, and that his assets will be protected for his own use and benefit, rather than spent on frivolous lawsuits."

A Pittsburgh-based lawyer, Holly Whalen, is representing the Knox firm in the case.

"We are pleased with Judge Baxter’s ruling in the matter," Whalen said. "Should any part of the case be refiled, the Knox firm will continue to vigorously defend the claims."

Gene Placidi, a lawyer for Buzzard, the other defendant, said "we are grateful for the judge's decision" and that he was confident in the motions he filed to argue for the dismissal of the federal claims.

"We are prepared to defend the rest of the claims in state court," Placidi said.

A lawyer for Black said case will proceed in county court

Four lawyers represent Black: Gery Nietupski, Anthony Angelone, Elliot Segel and Kenneth Wargo.

"We are disappointed," Angelone said of Baxter's ruling. "But the case moves forward."

He said he and the rest of Black's legal team plan to refile the non-federal claims in Erie County Common Pleas Court. The lawyers could also appeal Baxter's ruling to the 3rd U.S. Circuit Court of Appeals, in Philadelphia.

"We are looking at options," Angelone said.

What about other litigation in the Black cases?

The state claims that Black could continue to pursue include unjust enrichment and breach of fiduciary duty. And even if Black declines to move ahead with those claims in Erie County Common Pleas Court, he and James-Black will be involved in other litigation in that venue.

In 2023, Black sued James-Black over an option agreement for the Hero BX plant. Two years later, Black sued James-Black over claims that she defaulted on a $902,000 loan he gave her to buy house they were supposed to share in Portugal.

Also pending is James-Black's request, made in October, that a Common Pleas Court judge declare Black mentally incapacitated and appoint a third-party guardian to manage his financial affairs. James-Black is contending that her father is incapable of making his own decisions and that he is "incompetent to sue," according to court records.

Black is fighting that request, just as James-Black is fighting Black's lawsuits against her.

Original Article by: Ed Palattella at epalattella@usatodayco.com or 814-870-1813.