In this action, State Farm Automobile Insurance Company sued to recover payments made as a result of an allegedly fraudulent automobile accident insurance scheme. Defendants are attorneys David M. Rosenfield
and Elliott Raskin and physicians John L. Cionci, Jordan B. Colletta,
Edward I. Cooper and Armand Castagna.
All of the defendants pleaded guilty or were convicted of criminal charges.
Based on these guilty pleas and convictions, State Farm moved for partial summary judgment against defendants Raskin, Cionci and Castagna as to civil RICO (Count II) and fraud (Count IV) and against defendant Caruso as to civil RICO.
An order was entered granting State Farm's motion for partial summary judgment as to Raskin, who moved for reconsideration. State Farm's partial summary judgment motion as to Cionci, Castagna and Caruso was denied, and State Farm moved for reconsideration.
Both motions for reconsideration concern the civil RICO counts only.
State Farm contends that partial summary judgment
is appropriate as to all four defendants, not only as to Raskin. As to Raskin's motion for reconsideration, State Farm's position is well taken. With regard to Castagna, Cionci and Caruso, because triable issues of fact persist, State Farm's motion for reconsideration must be denied.
No issue of material fact remains as to Raskin's liability for civil RICO. State Farm relies on defendant's guilty plea to mail fraud. When a party invokes collateral estoppel based on a guilty plea, a court must examine the record of the criminal proceedings or plea colloquy to determine what issues were comprehended and decided. De Cavalcante v. Commissioner, 620 F.2d 23, 27 n.10 (3d Cir. 1980); Seiffert v. Green, No. 81-1956, slip op. (E.D. Pa. July 15, 1987); Salvation Army Corp. v. Dumont Export Corp., No. 85-5685, slip op. (E.D. Pa. Oct. 3, 1986). Collateral estoppel applies only to questions "'directly put in issue and directly determined' in the criminal prosecution." United States v. Uzzell, 648 F. Supp. 1362, 1364 (D.D.C. 1986) (quoting Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 569, 71 S. Ct. 408, 414, 95 L. Ed. 534 (1951)). Given Raskin's plea colloquy, collateral estoppel prevents Raskin from disputing having committed mail fraud in conjunction with the alleged insurance fraud scheme.
Despite this preclusion, still at issue is whether these facts conclusively constitute a civil RICO violation. See Appley v. West, 832 F.2d 1021, slip. op. at 11 (7th Cir. 1987). To establish a violation of civil RICO, a RICO plaintiff must prove: (1) the existence of an enterprise which affects interstate or foreign commerce; (2) that defendant was employed by or associated with the enterprise; (3) that the defendant participated in the conduct of the enterprise's affairs; and (4) that the participation was through a pattern of racketeering activity.
18 U.S.C. § 1962(c) (1984).
"Enterprise" includes "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4) (1984). See, e.g., United States v. Turkette, 452 U.S. 576, 101 S. Ct. 2524, 69 L. Ed. 2d 246 (1981); Seville Industrial Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 786 (3d Cir. 1984), cert. denied, 469 U.S. 1211, 105 S. Ct. 1179, 84 L. Ed. 2d 327 (1985).
The David M. Rosenfield law firm, having been a professional corporation organized to practice law, constitutes an "enterprise" for RICO purposes.
See United States v. Jannotti, 729 F.2d 213, 220 (3d Cir.), cert. denied, 469 U.S. 880, 105 S. Ct. 243, 244, 83 L. Ed. 2d 182 (1984) (law firm constituted enterprise). Raskin was associated with the enterprise.
From 1979 through 1982, Raskin was employed as an associate attorney by the Rosenfield law firm. He was in charge of the law office from January 1980 through July 1982. See Raskin's responses to request for admissions at para. 1.
Raskin also "conducted or participated, directly or indirectly, in the conduct of the enterprise's affairs," through his involvement in the submission of fraudulent claims to the insurance companies. In his guilty plea colloquy, Raskin admitted that while employed by the Rosenfield law firm, he "was aware that the accidents charged in the indictments were fictitious and . . . did proceed with them after having that knowledge." Raskin colloquy at 20. Raskin further conceded that he knowingly and willingly became a participant in a scheme to defraud. Id. at 20-21. Raskin thereby "knowingly agreed to participate in the enterprise through a pattern of racketeering." United States v. De Peri, 778 F.2d 963, 974-75 (3d Cir. 1985), cert. denied, 475 U.S. 1110, 106 S. Ct. 1518, 89 L. Ed. 2d 916 (1986).
In his motion for reconsideration, Raskin contends that his guilty pleas to four counts of mail fraud do not demonstrate a "pattern" of racketeering activity as to State Farm. Because State Farm was the victim of only one of those frauds, he maintains that a "pattern" as to this insurance company is lacking.
Raskin would construe the "pattern" and "injury" elements of civil RICO to require that the injuries themselves must evidence the pattern. This analysis, however, "conflate[s] what must be two separate inquiries": (1) the existence of a pattern of racketeering activity and (2) an injury resultant from that activity. Marshall & Ilsley Trust Co. v. Pate, 819 F.2d 806, 809 (7th Cir. 1987). The Pate court observed that "it would be illogical to require a plaintiff to show that all the acts adding up to a 'pattern' injured him, especially in view of the fact that many such acts may be somewhat distinct and separate in time." Id. at 810. Pate distinguishes the "pattern" and "injury" requirements of civil RICO:
We do not believe that a plaintiff, in order to state a claim under section 1964(c), must allege an injury to its business or property either caused by at least two predicate acts, or caused by all the acts adding up to a pattern. Rather we believe a plaintiff must prove only: (1) a violation of section 1962 (for example, a person furthering an enterprise through a pattern of racketeering activity), and (2) an injury directly resulting from some or all of the activities comprising the violation. At what targets the acts of racketeering activity are aimed goes to the question whether a "pattern" has been demonstrated.