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SENECA INS. CO. v. COMMERCIAL TRANSP.

November 16, 1995

SENECA INSURANCE COMPANY, LINCOLN GENERAL INSURANCE COMPANY, Plaintiffs
v.
COMMERCIAL TRANSPORTATION, INC.; EVANS, CONGER, BROUSSARD & MCCREA, INC.; ANTHONY N. CAPPOLLA, SR.; ANTHONY N. CAPPOLLA, JR.; ROBERT CAPPOLLA; CHARLES H. BERNIER; Defendants



The opinion of the court was delivered by: CALDWELL

 I. BACKGROUND

 This action arises from policies for property and casualty insurance issued by the Plaintiffs, Seneca Insurance Company ("Seneca") and Lincoln General Insurance Company ("Lincoln"), to Defendant Commercial Transportation, Inc. ("CTI"), a commercial trucking firm. *fn1"

 The complaint alleges that the Defendants intentionally misrepresented facts in CTI's application for insurance with Seneca and Lincoln in June, 1992 in an attempt to secure a lower premium than that to which CTI was entitled. *fn2" Specifically, Plaintiffs assert that Defendants submitted: (1) a fraudulent application; (2) fraudulent equipment lists; (3) fraudulent drivers lists; (4) fraudulent financial information; and (5) fraudulent operational data.

 Based on CTI's representations, Seneca issued a policy to CTI on August 7, 1992, which was effective until August, 1993. During the life of the Seneca Policy, Defendants allegedly continued to submit fraudulent monthly reports, including gross receipts certifications, driver schedules and lists, vehicle schedules and lists, and premiums and claims.

 In June, 1993, CTI notified Lincoln that it would need insurance coverage after the Seneca Policy expired in August, 1993. Defendants renewed the alleged misrepresentations made in the Seneca Policy application and provided Lincoln with additional fraudulent data. Based upon these representations, Lincoln issued an insurance policy in August, 1993. Thereafter, from August, 1993 through December, 1993, Defendants again submitted fraudulent monthly gross receipts certifications, driver schedules and lists, vehicle schedules and lists, and premiums and claims.

 On August 10, 1995, Plaintiffs filed the instant action asserting six grounds for relief. Counts I and II of the complaint seek relief under the Declaratory Judgement Act, 28 U.S.C. § 2201. Counts III and IV allege fraud by CTI, the Cappolla Defendants, ECBM, and Bernier, and Count V seeks a judgment against CTI for unjust enrichment. Finally, Count VI is a claim against the Cappolla Defendants and Bernier for violation of the Racketeering Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq.

 On August 31, 1995, all of the Defendants except ECBM filed motions to dismiss, or in the alternative, to transfer this action to the Eastern District of Pennsylvania.

 II. LAW AND ANALYSIS

 A. Motion to Dismiss

 1. Venue

 The Defendants first seek dismissal of Plaintiffs' complaint pursuant to Fed. R. Civ. P. 12(b) (3) for improper venue. However, venue is proper in the Middle District because Plaintiffs have sufficiently established that a substantial part of the events giving rise to their claims occurred here. 28 U.S.C. § 1391(b) (2).

 2. Jurisdiction

 Defendants also seek dismissal of Counts I-V for lack of subject matter jurisdiction. It is clear that there exists no independent basis for jurisdiction over those claims. *fn3" Plaintiffs maintain that because we have original jurisdiction over Count VI, the RICO claim, we may assert supplemental jurisdiction over the remaining claims pursuant to 28 U.S.C. § 1367. Defendants contend, however, that Count VI fails to state a claim for violation of RICO and should therefore be dismissed under Rule 12(b) (6). If Count VI is dismissed, ...


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