The opinion of the court was delivered by: HUYETT
Plaintiff Bernardo J. Penturelli filed this action on December 13, 1984, claiming that he had been defrauded in the purchase of twenty-eight fractional undivided interests in the Addison Development, a coal mining operation in Pennsylvania whereby a limited number of persons would sublease certain rights to mine and remove all mineable and merchantable coal from specific seams of coal situated within Addison Township, Somerset County, Pennsylvania. Penturelli filed this action against twenty-five defendants who played various roles in the Addison Development project, alleging causes of action under the Securities Act of 1933, 15 U.S.C. § 77a et seq., ("'33 Act"), the Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq., ("'34 Act"), the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"), and state common law.
By memorandum and order dated February 14, 1985, 603 F. Supp. 262, I granted defendants' motions to dismiss on the grounds that there was no security giving rise to a claim under the '33 or '34 Acts and plaintiff had failed to allege that his injury was caused by an activity different from that of the alleged predicate acts or prior RICO criminal convictions. In light of new Supreme Court holdings, the Third Circuit reversed in an opinion dated December 18, 1985. Defendants have now renewed their motions to dismiss claiming that plaintiff's claims are barred by the applicable statutes of limitations and that plaintiff's RICO claim fails to state a claim. I will address the issues raised in defendants' motions seriatim.
Securities Claim - - Statute of Limitations
There are two possibilities. The first possibility is the statute of limitations set forth in the Pennsylvania Securities Act, 70 Pa. Stat. Ann. § 1-504(a). Section 504(a) provides that:
No action shall be maintained to enforce any liability created under section 501 (or section 503 as far as it relates to that section) unless brought before the expiration of three years after the act or transaction constituting the violation or the expiration of one year after the plaintiff receives actual notice or upon the exercise of reasonable diligence should have known the facts constituting the violation, whichever shall first expire.
Defendants contend that this provision should be applied and that it sets an absolute limit of three years which plaintiff failed to meet in filing this action. The alternative statute of limitations is that which governs state common law fraud actions. The Third Circuit recently held that for common law fraud actions accruing before February 1983, the limitations period is six years. See A.J. Cunningham Packing Corp. v. Congress Financial Corp., 792 F.2d 330 (3d Cir. 1986). In Cunningham, the court specifically rejected the two year period which several courts had suggested was appropriate. The court concluded that the tort of "taking, detaining, or injuring personal property," which is governed by a two year statute of limitations under the 1976 amendments, 42 Pa. Cons. Stat. Ann. § 5524(3), does not encompass a claim for fraud. Id. 792 F.2d 330, slip op. at 12. Therefore, if I conclude that the appropriate statute of limitations is that which governs common law fraud claims in Pennsylvania, it is clear that plaintiff's claim is timely. The earliest point at which plaintiff's cause of action could have accrued was December 15, 1978; this action was filed on December 13, 1984, two days before the six year period would have run.
The difficult issue, therefore, is which of these two statutes of limitations governs in this case. Defendants, of course, contend that the statute of limitations contained in the Pennsylvania Securities Act governs. In Roberts v. Magnetic Metals Co., 611 F.2d 450 (3d Cir. 1979) and Biggans v. Bache Halsey, 638 F.2d 605 (3d Cir. 1985), the court held that the relevant inquiry is whether the action would be time-barred if it has been brought in state court; implicit in the inquiry is whether state law provides a similar cause of action. Application of 70 Pa. Stat. Ann. § 1-504(a), therefore, is appropriate only if there is a private cause of action under the Pennsylvania Securities Act comparable to that raised by plaintiff under section 10(b) of the '34 Act.
Section 401 of the Pennsylvania Act closely parallels section 10(b) of the '34 Act under which plaintiff is proceeding. However, as the Biggans court noted, the sole source of civil liability for any acts in violation of section 401 is section 501 of which provides in pertinent part:
(a) Any person who . . . offers or sells a security in violation of sections 401, 403, 404, or otherwise by means of any untrue statement of material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading . . . shall be made liable to the persons purchasing the security from him . . .
(b) Any person who purchases a security in violation of sections 401, 403, 404 or otherwise by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading, . . . shall be liable to the person selling the security to him . . .