The opinion of the court was delivered by: WEBER
This is an action arising out of the denial of a fire insurance claim. Plaintiff alleges that he bought insurance to cover his dwelling contents and the related private structures on the premises in 1966 from Vic Kress. Everett Cash Mutual Insurance Company issued the insurance. The insurance was still in effect when Wright filed a claim for $4,300.00 after a garage was destroyed by an arson fire on October 21, 1984. Everett Cash Mutual assigned the claim to Lampman Claim Service for adjustment. The claim was denied on the basis that the garage had been used for business purposes (storage) by a third-party, and, therefore was excluded from coverage by reason of a clause in the policy. Plaintiff avers that Vic Kress knew or had reason to know that plaintiff was renting a portion of his garage, and that Vic Kress represented to plaintiff at some point in time that he believed coverage was available for private related structures whether or not they were rented.
After the claim was denied, plaintiff initiated an action in Crawford County Common Pleas Court alleging Racketeer Influenced and Corrupt Organizations Act (RICO) violations as well as common law fraud, breach of contract and bad faith denial of a fire insurance claim.
Defendants removed the action to federal district court based on federal question jurisdiction pursuant to the RICO claims. Thereafter various motions to dismiss were filed by defendants. These motions have been fully briefed by the parties, and await this Court's determination.
Following a preliminary discussion of the pending issues with counsel at a conference on May 16, 1986, and careful consideration of the issues raised in the briefs, we will now determine these matters.
Defendant Vic Kress has filed a Motion to Dismiss and/or Strike requesting that this court strike service on Vic Kress Agency, as no such agency or corporation exists. In the motion, Victor P. Kress, an individual admits he was served with a copy of the complaint. Plaintiff answers that he will amend his complaint to reflect the correct name of the party defendant as Victor P. Kress, the individual who has been served herein and who was involved in the activities in question. We believe that this is the appropriate remedy under the circumstances and we would allow such amendment, denying Kress' Motion to Dismiss.
Defendants Everett Cash Mutual and Lampman claim Service have filed essentially identical Motions to Dismiss and/or to Strike raising a number of issues that may be dispositive or partially dispositive of the claims asserted herein. We will consider these individually.
Defendants' next objection, however, appears to be dispositive. Defendants argue that plaintiff has failed to plead "a pattern of racketeering activity" necessary to state a RICO claim.
Under 18 U.S.C. § 1962(c), a plaintiff must plead and prove a pattern of racketeering activity. Chambers Development Company v. Browning-Ferris Industries, 590 F. Supp. 1528, 1536 (W. D. Pa. 1984). Section 1961(1) of Title 18 defines "racketeering activity" to include a long list of specific federal and state offenses, such as mail fraud under 18 U.S.C. § 1341. A "pattern of racketeering activity" is defined by § 1961(5) to require at least two acts of racketeering activity, within a ten year period, one of which occurred after the effective date of the RICO statute. The statute itself gives no further specific assistance in determining exactly what constitutes a pattern of racketeering activity in any given case.
Justice White's footnote in the U.S. Supreme Court's Sedima case provides an informative analysis of just what is meant by a "pattern" for RICO purposes by examining the overall statutory context and legislative history as follows:
As many commentators have pointed out, the definition of a "pattern of racketeering activity" differs from the other provisions in § 1961 in that it states that a pattern " requires at least two acts of racketeering activity," § 1961(5) (emphasis added), not that it "means" two such acts. The implication is that while two acts are necessary, they may not be sufficient. Indeed, in common parlance two of anything do not generally form a "pattern." The legislative history supports the view that two isolated acts of racketeering activity do not constitute a pattern. As the Senate Report explained: "The target of [RICO] is thus not sporadic activity. The infiltration of legitimate business normally requires more than one 'racketeering activity' and the threat of continuing activity to be effective. It is this factor of continuity plus relationship which combines to produce a pattern." S.Rep. No. 91-617, p. 158 (1969) (emphasis added). Similarly, the sponsor of the Senate bill, after quoting this portion of the Report, pointed out to his colleagues that "the term 'pattern' itself requires the showing of a relationship . . . . So, therefore, Proof of two acts of racketeering activity, without more, does not establish a pattern . . ." 116 Cong.Rec. 18940 (1970) (statement of Sen. McClellan). See also id., at 35193 (statement of Rep. Poff) (RICO "not aimed at the isolated offender"); House Hearings, at 665 . . .
Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, , n.14, 53 U.S.L.W. 5034, 5038, 87 L. Ed. 2d 346, ...