complained that plaintiffs did not indicate the subsections of 18 U.S.C. § 1962 under which they were proceeding, but in their Brief in Opposition, plaintiffs subsequently specified that their RICO claim is based upon 18 U.S.C. § 1962(c). See Document 39 at p. 4.
Moreover, defendants claimed that plaintiffs failed to plead fraud with particularity or the element of enterprise.
Plaintiffs' Complaint and their Brief in Opposition describe the alleged fraudulent acts with sufficient particularity. 18 U.S.C. § 1962(c) makes it unlawful for any person "employed by or associated with any enterprise" engaged in interstate commerce to conduct that enterprise's affairs through a pattern of racketeering. Only the individual employees of the enterprise, not the enterprise itself, can be held liable under § 1962(c). B. F. Hirsch v. Enright Refining Co., Inc., 751 F.2d 628 (3d Cir. 1984); and Roche v. E. F. Hutton & Co., Inc., 603 F. Supp. 1411 (M.D. Pa. 1986) (Nealon, C.J.). Enterprise is defined in 18 U.S.C. § 1961(4) as including "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." Although plaintiffs may not have employed the specific label "enterprise," they have clearly presented evidence of the existence of the enterprise element in this action, i.e., Colonial Savings Association. See Eaby v. Richmond, 561 F. Supp. 131 (E.D. Pa. 1983) (Troutman, J.); and Allied Services for the Handicapped, Inc. v. Walters, No. 86-0864, slip op. at 7-9 (M.D. Pa. Nov. 24, 1986) (Kosik, J.).
The summary judgment motion of defendant Spiese will likewise be denied. Both plaintiffs and defendant Spiese cite the decision in Ohio v. Union Trust Company, 137 Pa. Super. 75, 8 A.2d 476 (1939), for the proposition that a claimant may bring an action against a personal representative who has not been discharged, regardless of whether or not the assets of the estate have been distributed and regardless of the collectibility of any judgment, but that a discharge insulates the personal representative from future liability. The dispute in the present case appears to focus on what constitutes a "discharge."
Although defendant Spiese established that the estate of Lloyd Kline was closed on March 20, 1984 and that a release signed by his heirs was filed on March 30, 1984, she has not shown that she filed a final accounting for confirmation or that she was formally discharged from her fiduciary duties by the appropriate court. Plaintiffs contend that Spiese is not relieved of future liability absent the filing of an accounting or a formal discharge, and she has not provided the court with authority to the contrary. It may be that Spiese believes that the filing of a release constitutes a formal discharge by the court. The two are not the same, as evidenced by 20 Pa. C.S.A. § 3532(c) which states that a court's acceptance of a release "shall not be construed as court approval of any act of administration of distribution therein reflected." Moreover, 20 Pa. C.S.A. § 3184 makes confirmation of the final accounting a prerequisite to a discharge from future liability by the court. In the absence of a formal discharge, then, it appears that defendant Spiese may be held liable to plaintiffs in her capacity as personal representative for Lloyd Kline.
Finally, the court does not agree with defendants' assertion that plaintiffs instituted this suit without any basis and are now searching for a foundation for their action through discovery. Plaintiffs have presented evidence that an association to defraud them as to the status of the nationwide loans may have existed. The problem from plaintiffs' perspective is identifying the members of this association, and discovery is an appropriate tool for this purpose. To date, plaintiffs have shown that only two of the named defendants may have participated in this association; defendant Kauffman who prepared the reports to the governmental regulatory body and defendant Franciscus who, on behalf of Colonial, conducted the merger negotiations with Citizens. The court will refrain from granting summary judgment at this point -- while discovery is still being sought -- in favor of any of the various defendants.
The court expects, however, that upon completion of discovery, plaintiffs will act in good faith and will, if necessary, discontinue this suit as to any defendants concerning whom there is no evidence of involvement in the requisite predicate acts. In order to sustain a RICO claim, a plaintiff must present proof that each defendant was in some manner involved in the performance of the requisite predicate acts. See Beck v. Cantor, Fitzgerald & Co., Inc., 621 F. Supp. 1547 (N.D. Ill. 1985); and Eaby v. Richmond, supra. The court questions, for example, how defendants Boddington and Grover Fred Artman, II could have been involved in any of the alleged predicate acts since they were never directors or officers of Colonial.
If plaintiffs fail to narrow the scope of their lawsuit as the evidence may warrant at the conclusion of discovery, any defendants who maintain that there is insufficient evidence linking them to the requisite predicate acts may submit a summary judgment motion. At that time, the court will require plaintiffs to set forth each act of mail fraud or wire fraud with the specificity demanded by the court in Conan Properties, Inc. v. Mattel, Inc., 619 F. Supp. 1167, 1172 (S.D.N.Y. 1985),
and to detail each defendant's possible involvement therein.
An appropriate Order will enter.
William J. Nealon, Chief Judge, Middle District of Pennsylvania
NOW, this 30th day of December, 1986, in accordance with the reasoning set forth in the accompanying Memorandum, IT IS HEREBY ORDERED THAT:
(1) The Motion for Summary Judgment of defendants Franciscus, Rothrock, Grover C. Artman, Bromer, Spinner, Kauffman, Bovender, Long, Horn, Logeman, Sheffer, Dietz, Boddington and Grover Fred Artman, II is denied.
(2) The request for sanctions under Fed.R.Civ.P. 11 of the above-named defendants is denied.