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USCA1 Opinion
December 29, 1994 [NOT FOR PUBLICATION] [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
Nos. 93-1877
93-1878
93-1879
93-1880
93-1881
93-2209
93-2300
AETNA CASUALTY SURETY COMPANY,
Plaintiff - Appellee,
v.
P&B AUTOBODY, ET AL.,
Defendants - Appellees.
____________________
ARSENAL AUTO REPAIRS, INC., ET AL.,
Defendants - Appellants.
____________________
No. 93-1903
AETNA CASUALTY SURETY COMPANY,
Plaintiff - Appellee,
v.
RODCO AUTOBODY, ET AL.,
Defendants - Appellees.
____________________
BETTY ARHAGGELIDIS,
Defendant - Appellant.
____________________
No. 93-2257
AETNA CASUALTY SURETY COMPANY,
Plaintiff - Appellee,
v.
P&B AUTOBODY, ET AL.,
Defendants - Appellees.
____________________
BETTY ARHAGGELIDIS,
Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Boudin, Circuit Judge, _____________
and Keeton,* District Judge. ______________
_____________________
William F. Spallina, with whom Carol A. Molloy was on brief ____________________ _______________
for defendants Arsenal Auto Repairs, Inc., et al.
Kenneth R. Berman, with whom David A. Guberman and Sherin __________________ _________________ ______
and Lodgen, were on brief for defendant Jack Markarian. __________
James P. Duggan, Alfred E. Nugent, John G. Lamb, Flynn, ________________ _________________ ______________ ______
Hardy & Cohn, Giovano Ferro II, Ferro, Feeney, Patten & Galante, _____________ ________________ _______________________________
Daniel T. Sheehan, Ralph Stein, Edward G. Ryan, Ahmad Samadi, __________________ ____________ _______________ ____________
Joseph S. Carter, William D. Crowe, Crowe, Crowe & Vernaglia and _________________ ________________ ________________________
Abdullah Swei for defendants P Autobody, et al. _____________
____________________
* Of the District of Massachusetts, sitting by designation.
David S. Douglas and David O. Brink, with whom Howard S. ________________ _______________ __________
Veisz, Kornstein Veisz & Wexler, Glenda H. Ganem and Smith & _____ _________________________ ________________ _______
Brink, were on brief for plaintiff-appellee Aetna Casualty and _____
Surety Company.
____________________
____________________
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KEETON, District Judge. This case concerns an alleged ______________
widespread fraudulent scheme, involving five automobile body
shops and two insurance claims adjusters. The purpose of the
scheme was to obtain payments on fraudulent insurance claims.
Seven appellants, defendants in the trial court,
challenge on numerous grounds the final judgment entered after a
jury trial. The judgment was for Aetna Casualty and Surety
Company ("Aetna") against
(a) Betty Arhaggelidis on the theory of civil
conspiracy in the sum of $373,857.28 plus interest from October
2, 1989 to the date of entry of judgment;
(b) the Tirinkians and the Markarians (the five
individual "Arsenal defendants") for $3,859,901.72 (consisting of
damages of $789,967.24 trebled to $2,359,901.72 under 18 U.S.C.
1962(c) and 1962(d) of the Racketeer Influenced and Corrupt
Organizations Act ("RICO"), and costs, expenses, disbursements
and attorneys' fees of $1,500,000.00) together with prejudgment
interest from October 2, 1989 to the date of entry of judgment;
(c) three of the Arsenal defendants (Zareh Tirinkian,
Peter Markarian, and Jack Markarian) for a separate and
irreducible penalty of $1,579,934.48 under Mass. Gen. L. ch. 93A
in addition to the amount set forth in (b); and
(d) Arsenal Auto Repairs, Inc. ("Arsenal Auto"), a
separate defendant in the action, for the sum of $789,967.24 on a
claim of civil conspiracy plus interest from October 2, 1989 to
the date of entry of judgment.
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For the reasons that follow,1 we affirm.
I. BACKGROUND I. BACKGROUND
We begin this Opinion with a summary of facts as the
jury might have found them; we view the evidence in the light
most favorable to the verdicts. See United States v. Rivera- ___ ______________ _______
Santiago, 872 F.2d 1073, 1078-79 (1st Cir.), cert. denied, 492 ________ ____________
U.S. 910, (1989).
One of the body shops, Rodco/P&B Autobody, was owned
and operated by defendant Petros Arhaggelidis, who has not
appealed the judgment against him. He is the husband of
appellant Betty Arhaggelidis. She was the owner of two Mercedes
upon which six fraudulent claims were made to Aetna.
Another of the body shops, Arsenal Auto (also an
appellant in this action), was owned and operated by appellant
Zareh Tirinkian. His wife, Lena Tirinkian, and her brothers John
Markarian and Peter Markarian were employees of Arsenal Auto
during the period of the alleged fraudulent scheme.
Tarja Markarian and her husband Peter Markarian were
the co-owners of a Mercedes upon which two fraudulent claims were
made to Aetna.
From 1987 to 1989, the Arsenal defendants, together
____________________
1 The published version of this Opinion includes only the
background statement of facts (Part I) and discussion of those
issues that may be of general interest (Parts II-IX and
Conclusion). The remaining portions of the Opinion (Parts X-XIV)
contain a detailed explanation of the sufficiency of the evidence
to support the jury findings and address other issues that do not
appear to have precedential importance. See First Cir. R. 36.2. ___
-5-
with employees and friends, submitted sixteen fraudulent
insurance claims to Aetna involving luxury automobiles. Aetna
paid $137,346.83 on these claims. The Arsenal defendants filed
at least ten additional fraudulent claims with other insurance
companies on the same group of cars. The Tirinkians submitted a
total of fifteen fraudulent claims (seven to Aetna) upon which
either Lena or Tareh Tirinkian was the claimant or the insured.
Peter and Tarja Markarian submitted four fraudulent claims (two
to Aetna) on their Mercedes. John Markarian, who filed no claims
in his own name, was the supervisor of repairs at Arsenal Auto,
where most of the cars involved in the fraudulent claims were
stored and purportedly repaired.
Timothy Cummings and Steven Dexter were two of the many
Aetna appraisers who covered the area where Arsenal Auto and the
other body shops were located. Either Cummings or Dexter did the
appraisal for ten of the sixteen fraudulent claims that the
Arsenal defendants (personally or in cooperation with their
friends) filed over a three-year period commencing in 1987.
Cummings and Dexter submitted false appraisals to help the
Arsenal defendants defraud Aetna.
In the district court, judgment was entered by default
against Cummings and Dexter under RICO for $789,967.24 (being the
amount paid out by Aetna on 112 insurance claims submitted to
Aetna that the jury found to be fraudulent) trebled to
$2,359,901.72 plus interest at 12% per annum from October 2, 1989
on the trebled amount, plus $1,500,000 in costs, disbursements,
-6-
and attorneys' fees.
For each of the sixteen fraudulent claims directly
involving the Arsenal defendants and friends cooperating with
them, Aetna, in accordance with its business practices, required
a completed work form to be submitted by the claimant. At trial,
the Arsenal defendants did not provide any documentation that
Arsenal Auto or any other autobody shop completed any of the
repairs in connection with any of the claims. With respect to
some claims, the evidence shows that the claimed accidents never
occurred; in other cases, the claimed damage was intentionally
inflicted. The jury may have supportably inferred that in some
cases defective parts were placed on the cars for the purpose of
appraisal and then later replaced with the original parts.
The jury found that each of the individual Arsenal
defendants was liable for a substantive RICO violation under
1962(c) for participating in the affairs of Aetna through a
pattern of racketeering activity. The jury also found all of the
individual Arsenal defendants liable, under 1962(d), for RICO
conspiracy with the adjusters and the operators of other body
shops (not including Betty Arhaggelidis).
The judgment against the Arsenal defendants was in the
same amount, and on the same calculus, as that against Cummings
and Dexter, explained above.
Appellant Betty Arhaggelidis was associated with the
fraudulent scheme through her husband, the owner of Rodco/P&B
Autobody, one of the five autobody shops involved. Betty
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Arhaggelidis owned two Mercedes, one of which was registered in
her mother's name. These two Mercedes were involved in six
fraudulent claims, as to all of which Cummings did the appraisal.
The jury found that she was liable under a "civil conspiracy"
theory centered around Rodco/P&B Autobody, and therefore was
liable in connection with thirty-seven fraudulent claims.
The appellants challenge the judgments entered against
them on a variety of grounds. In addition, each appellant,
except for Arsenal Auto Repairs, Inc., appeals the district
court's denial of his or her motion for judgment as a matter of
law because of insufficiency of the evidence.
First we consider the issues arising from the
relationships among the RICO counts and the civil conspiracy
count, then we consider other issues raised by one or more of the
appellants.
II. RELATIONSHIPS AMONG COUNTS OF THE AMENDED COMPLAINT II. RELATIONSHIPS AMONG COUNTS OF THE AMENDED COMPLAINT
Appellants, at various points, both in oral argument
and in briefs before this court, have seemed to suggest that the
judgment against them in this case is somehow flawed because of
some aspect of the relationships among the different theories
alleged and tried before the jury. We address specific aspects
of this suggestion in Part III, infra. We address the suggestion _____
more broadly here.
The district court considered five different theories
(asserted in five different counts) that are relevant to this
-8-
inquiry: three claims of RICO substantive violations, one claim
of RICO conspiracy, and one non-RICO conspiracy claim.
First. Count VII, a RICO substantive _____
violation under 1962(c) alleging an
association-in-fact enterprise. This
theory was dismissed from the case in the
trial court.
Second. Count VIII, a RICO ______
substantive violation under 1962(c)
alleging Aetna as the enterprise. The
jury found that this claim was proved
against all individual Arsenal
appellants.
Third. Count VI, a RICO substantive _____
violation under 1962(c), alleging
Arsenal Auto as the enterprise. The jury
found that this claim was proved against
all individual Arsenal appellants.
Fourth. Count IX, alleging a RICO _______
conspiracy under 1962(d). The jury
found that this claim was proved against
all individual Arsenal appellants.
Fifth. Count X, common law civil _____
conspiracy. The jury found that this
claim was proved against all the
appellants, including Arsenal Auto and
Arhaggelidis.
The judgment against the individual Arsenal appellants
jointly and severally in the amount of $2,359,901.72 is supported
by the jury's finding of liability on Counts VIII and IX.
Therefore, if we determine that either the finding on Count VIII ______
or that on Count IX is supported by sufficient evidence, the
judgment must stand. In fact, as we explain below, we find that
the evidence was sufficient for the jury reasonably to find
liability on both Count VIII (the RICO substantive violation with ____
Aetna as the enterprise) and Count IX (the RICO conspiracy).
-9-
The Arsenal appellants do not challenge the sufficiency
of the evidence in support of the jury's finding of liability on
Count VI or on Count X. The only argument raised by appellants
with respect to Count VI is an argument regarding pleading
deficiency that we have rejected as wholly without support.
Moreover, because we have determined that the judgment against
the individual Arsenal appellants is supported by jury findings
on Count VIII and Count IX, we have no reason to consider whether
appellants are independently liable under Count VI, Count X, or
both.
The judgment against Arsenal Auto Repairs, Inc. which
is also an appellant in this action, is supported by the jury's
finding of liability on Count X, the civil conspiracy theory.
Arsenal Auto has not challenged the sufficiency of the evidence
supporting the jury's finding with respect to its liability under
Count X. The judgment against Arsenal Auto is affirmed for the
reasons stated in other parts of this Opinion.
The judgment against appellant Arhaggelidis is
supported by the jury's finding of liability on Count X, the
civil conspiracy theory. We conclude that the evidence was
sufficient to support the jury's finding against Arhaggelidis on
Count X.
From this summary, it is clear that one of appellants'
assertions is true: the relationships among transactions,
defendants, and legal claims are complex both legally and
factually. A question remains, however, as to how, if at all,
-10-
any of those complexities or all of them taken together bear upon
any of the issues before this court on appeal.
Nowhere in the trial record, or in their briefs before
this court, except in a passage from their brief that is quoted
in Part III, infra, and an argument that the consolidated case _____
was too complex for a jury to understand, App. Brief at 59-61,
did the appellants ever clearly formulate an argument or set of
arguments based upon their hints and innuendos about complexity.
Nevertheless, we have read with special care all parts
of the briefs containing such hints or suggestions. We have done
so, first, to be certain we have not overlooked any argument
presented and, second, to assure that we have taken into account
any cited cases that might bear upon the issues presented by a
fact pattern as complex as that before us, with interlocking
personal, family, and institutional relationships.
Entirely apart from the complexities added by RICO, a
risk of confusion has long existed because of relationships among
different legal and factual theories of conspiracy that might be
invoked by the parties or by a court. The law bearing upon the
potential consequences of invoking different theories of
conspiracy is more extensively developed in criminal cases than
in civil. Even with respect to the criminal context, however,
relevant statutes and precedents provide only limited guidance
for structuring factual and legal analysis.
In criminal cases, issues arise often with respect to
whether a case should be viewed as one involving:
-11-
(1) a single conspiracy of many parties, multiple
objectives, and broad sweep;
(2) multiple independent conspiracies; or
(3) a nest of interlocking conspiracies that may
involve overlapping conspiracies or smaller, discrete inner
conspiracies of fewer persons and smaller scope that are tied in
with a larger conspiracy whose members include some but not all
of the members of the discrete inner conspiracies.
See, e.g., United States v. Glenn, 828 F.2d __________ _____________ _____
855 (1st Cir. 1987).
One result of this range of possible interpretations of the
evidence in a particular case is that a question concerning legal
theory and arguments based upon it, and concerning instructions
explaining the law to the jury, is difficult and "is probably not
susceptible to an abstract answer unrelated to context."
United States v. Oreto, No. 91-1769, slip ______________ _____
op. at 19 (1st Cir. Oct. 4, 1994).
The persons alleged to be RICO conspirators and civil
conspirators in the present case, like those charged under a non-
RICO conspiracy theory in Oreto _____
have engaged in a series of transactions
that could be viewed as a set of separate
conspiracies, or one overall conspiracy
embracing numerous wrongful transactions,
or . . . both an overarching conspiracy
and a nest of underlying smaller
conspiracies. Partly this is a problem
of proof and inference; partly the
problem arises from trying to squeeze
into the conceptual cubbyhole of "an
agreement" activities that in practice
often have the more shapeless character
of an evolving joint criminal
enterprise.
-12-
Id. at 20 (citations and reference to ___
double jeopardy omitted);
see also United States v. Sep lveda, 15 ________ ______________ _________
F.3d 1161, 1191 (1st Cir. 1993), 114 S.Ct.
2714 (1994)("[T]he fact that the
organization's methods and tactics evolved
over time did not dictate a finding of two,
three, or four separate conspiracies.").
In a criminal context, the prosecutor is allowed some
choice of theory, though the choice may be burdened with
consequences, including those incident to the law of double
jeopardy.
In a civil context, likewise, parties may be allowed
some choice of theory. But the choice, in the civil context
also, may be burdened with consequences -- a point to which we
return below.
In this case, added layers of complexity incident to
relationships among theories exist, not only because of the
relationships between different conspiracy counts -- Count IX
(RICO conspiracy) and Count X (civil conspiracy) -- but also
because of the relationships among these counts and the counts
alleging RICO substantive violations (Counts VII and VIII).
Also, as in criminal cases, see, e.g., Oreto, No. 91-1769, slip _________ _____
op. at 19, an answer as to what significance, if any, the legal
and factual theories may have, must be context sensitive.
Because procedural law allows alternative contentions,
parties to a civil action involving such an array of factual and
legal theories as this case presents may be allowed to defer
choice at least until late stages of proceedings in the trial
court. For example, both plaintiffs and defendants in a civil
-13-
case may be allowed to maintain alternative contentions at least
until the evidence is closed, when the court may require some
choices to be made about the form of verdict to be used in
submitting the case to the jury -- see Fed. R. Civ. P. 49 -- and ___
about instructions to the jury. When a party does not request
either a "special question" or an instruction submitting a
particular theory of conspiracy to the jury, that party makes a
choice that has the associated consequence of almost certainly
precluding the assertion after verdict of the omitted theory of
conspiracy. See, e.g., Fed. R. Civ. P. 49. The law (a ___
procedural rule, in this instance) allows choice, but it may
limit the scope of choice by defining consequences that are
attached to each of the available options, rather than allowing
complete freedom of choice. A party making a choice of this
kind, among legally defined options only, is making an "election"
in the classic sense. See John S. Ewart, Waiver or Election, 29 ___ ___________________
Harv. L. Rev. 724 (1916).
Of course, a trial court may in some circumstances
allow submission to a jury of two or more theories, with
appropriate instructions explaining as to each theory the factual
elements the jury must find to return a verdict sustaining that
theory. The different theories submitted to a jury may be
factually compatible -- that is, a verdict sustaining all
theories submitted may be permissible. Also, however, the
evidence and the different theories of conspiracy submitted to a
jury in a particular case may be so factually incompatible that
-14-
the jury's choice is limited to finding one or another of the
theories supported, but not all.
In the present case, the trial judge, in submitting the
case to the jury, used a verdict form that at first glance might
appear to be a submission on "special questions," with no
"general verdict," under Fed. R. Civ. P. 49(a). Closer
examination, however, of both the verdict form and the record of
colloquies about it, discloses that the court required only a
general verdict of the jury, under Fed. R. Civ. P. 49(b), as to
each claim against each defendant, after elimination of claims
that were alleged but as to which either the court rejected the
claim as a matter of law (the association-in-fact conspiracy
theory alleged in Count VII) or Aetna elected not to request
submission to the jury.
The submission of a separate question requiring the
jury to report an answer as to each of at least 122 of the 176
allegedly fraudulent claims was necessary because disputed
factual issues were presented not only with respect to whether an
alleged RICO conspiracy and the alleged RICO substantive
violations existed, and, if so, what defendants were liable under
each theory, but also with respect to whether each of the
transactions was within the scope of the conspiracy or
substantive violation. The answers have a bearing on the terms
of the judgment to be entered, even though the trial judge
determined (supportably, we have concluded) that no genuine
dispute of fact existed as to the amount paid by Aetna on each of
-15-
the 112 claims the jury found to be fraudulent.
In summary, we conclude that the verdicts and judgment
for plaintiff against the appellants are supported by the
evidence received in this case, and by law.
III. SUFFICIENCY OF PROOF III. SUFFICIENCY OF PROOF
A. Standard of Review __ __________________
Appellants challenge the sufficiency of the evidence to
support the judgment entered against them. They argue that the
district court should have granted their motions for judgment as
a matter of law.
The district court may grant a motion for judgment as a
matter of law only if, after examining the evidence and all
reasonable inferences therefrom "in the light most favorable to
the nonmovant," it determines that "the evidence could lead a
reasonable person to only one conclusion," favorable to the
movant. Gallagher v. Wilton Enterprises, Inc., 962 _________ _________________________
F.2d 120, 124 (1st Cir. 1992)(quoting
Hendricks & Associates, Inc. v. Daewoo Corp., ____________________________ ____________
923 F.2d 209, 215 (1st Cir. 1991)).
A denial of judgment as a matter of law is "reviewed de novo, __ ____
which means that we use the same stringent decisional standards
that control the district court." Id. at 125. ___
With respect to the five individual Arsenal defendants,
appellee argues that the judgment in the amount of $2,369,901.72
is supported, independently, by each of two jury findings --
first, the finding that all individual Arsenal defendants are
liable on a theory of RICO substantive violation with Aetna as
-16-
the enterprise under 1962(c) (Count VIII) and, second, the
finding that all individual Arsenal defendants are liable on a
theory of RICO conspiracy under 1962(d) (Count IX). With
respect to defendant Betty Arhaggelidis, the appellee argues that
the judgment in the amount of $373,857.28 is supported by the
jury finding that she was liable on a theory of civil conspiracy.
We examine the evidence supporting each of these theories against
each defendant in Parts III.C, III.D, and III.E, infra. _____
B. Appellants' Preclusion Argument Based on the __ __________________________________________________
Relationship of Count VII to Other Counts _________________________________________
The appellants challenge the district court's denial of
their motion for judgment as a matter of law on Count VIII, the
RICO substantive charge alleging Aetna as the enterprise, and
Count IX, the RICO conspiracy charge. They contend that once the
district court granted defendants' motion for judgment as a
matter of law on Count VII (the RICO substantive violation
alleging an association-in-fact enterprise including all
defendants), the district court should have granted, also,
defendants' motion for judgment as a matter of law on Counts VIII
and IX. (This argument was not made in the trial court as to
defendants' motion for judgment as a matter of law on Count VI,
nor is it asserted on appeal. Count VI, alleging Arsenal Auto as
the enterprise, alleges a scheme of a smaller scope than that
alleged in Count VII. Thus, no plausible argument can be made
that the court's dismissal of Count VII requires the dismissal of
Count VI.)
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Appellants do not clearly state the legal premises of
their preclusion argument. Reading generously to appellants,
however, to assure that we address any contention that might even
plausibly be presented, we infer that some asserted principle of
preclusion is at least implicitly if not explicitly suggested.
For example, appellants say:
The trial judge's ruling directing a
verdict for all Defendants on Count VII
of the Complaint, because there was
"insufficient evidence to sustain Count
7, an overall association-in-fact
enterprise," (App. 4092), separated the
Arsenal Defendants from the other
Defendants in the case and thereby
disassociated [sic] the actions of the
Allston Group from the acts of the
Arsenal Defendants. Without the
association-in-fact enterprise to meld
the acts of the various Defendants into
an overall conspiracy, the link between
the Arsenal Defendants and the Allston
Group was severed thereby absolving the
Arsenal Defendants from any wrongdoing
concerning bribery. As such, the trial
judge's ruling, by implication, absolved
the Arsenal Defendants from bearing the
burden of the Allston Group's bribery.
Appellants' Brief at 41-42.
It is true that each of Counts VII, VIII, and IX
alleges a fraudulent scheme that includes all the body shops.
These three theories have the same "scope" in the sense that each
of them would support the judgment against the Arsenal individual
defendants in the amount of $2,369,901.72. Nevertheless, each
count asserts a distinctive theory, and none of the three
theories has all of the elements of any other of the three.
Counts VII and VIII allege RICO substantive violations under
-18-
1962(c), but the entities alleged as the enterprise are
different. In contrast to these substantive violations, Count IX ___________
alleges a RICO conspiracy under 1962(d). __________
Since each of the three counts requires different
elements of proof, the appellants are incorrect when they say
that the dismissal of one of these counts, namely Count VII,
requires the dismissal of one or both of the other two counts. ________
Although the appellants' argument fails as a matter of
law, we proceed to consider the possibility of some other
implicit premise that may have led to such a patently incorrect
statement of law.
One premise that may be inferred from appellants'
argument is that in order to prove Count VIII, the RICO
substantive violation with Aetna as the enterprise, the plaintiff
had to prove the same relationships between the defendants that
were essential to the association-in-fact enterprise alleged in
Count VII. This assumption is incorrect.
Section 1961 defines an "enterprise" for the purposes
of RICO to include "any individual, partnership, corporation . .
. 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). Thus to satisfy the "enterprise" element of a RICO
substantive violation, a plaintiff may prove either the existence
of a legal entity, such as a corporation, or that a group of __
individuals were associated-in-fact. Since Aetna is a
corporation, Aetna can constitute an "enterprise" for the purpose
-19-
of Count VIII, even if there is no proof of an association-in-
fact enterprise.
In contrast, Count VII requires proof of an
association-in-fact enterprise. An association-in-fact
enterprise is an "ongoing organization," with members
"function[ing] as a continuing unit," which is "separate and
apart from the pattern of racketeering in which it engages."
United States v. Turkette, 452 U.S. 576, 583 (1981). _____________ ________
Since no party has challenged the district court's
grant of the defendants' motion for judgment as a matter of law
on Count VII, we need not determine the precise elements required
for a plaintiff to prove an association-in-fact enterprise.
Nevertheless, it is clear that an association-in-fact enterprise
is different from an enterprise that is a legal entity, like
Aetna. Since different proof is required to establish these
different kinds of an enterprise, the court's determination as a
matter of law in favor of the defendants on Count VII is
consistent with the court's determination that fact issues
remained for the jury to decide with respect to Count VIII.
Another possible premise, which is not explicitly
articulated or acknowledged by the appellants, is that in order
to prove a RICO conspiracy of the scope alleged in Count IX, the
plaintiff was required to prove the existence of an association-
in-fact enterprise of that same scope.
This premise is not valid. Section 1962(d) does not
require proof of an association-in-fact enterprise. Any
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enterprise meeting the definition of enterprise in 1961 will do.
Under 1961 an enterprise may include a legitimate legal entity
like Aetna as the victim of the racketeering activity. This
court has previously upheld convictions under both 1962(c) and
1962(d), that alleged a victim enterprise like Aetna.
See United States v. Boylan, 898 F.2d 230 ___ _____________ ______
(1st Cir.), cert. denied, 498 U.S. 849 (1990) ____________
(victim enterprise was the Boston Police
Department).
Therefore, in order to satisfy the enterprise element of a RICO
conspiracy of the scope alleged in Count IX, the plaintiff needed
only to prove some kind of enterprise of that scope, not
necessarily an association-in-fact enterprise. In the case at
hand, proving a RICO conspiracy with Aetna as the enterprise was
sufficient.
For these reasons, the trial judge's ruling as a matter
of law for defendants on Count VII, based on the conclusion that
there was not enough evidence to go to the jury on the theory of
an "association-in-fact" enterprise, is entirely consistent with
the jury findings of a 1962(c) substantive violation (with Aetna
as the victim enterprise) and of a 1962(d) conspiracy (with
Aetna as the victim enterprise).
C. Substantive RICO Violation Under 1962(c) with __ __________________________________________________
Aetna as the Enterprise -- Count VIII _____________________________________
For an individual defendant to be liable for a RICO
substantive violation under 1962(c), with Aetna as the
enterprise, the evidence must be sufficient for the jury to find
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that (1) Aetna was an enterprise affecting interstate or foreign
commerce, (2) that the defendant under consideration associated
with the enterprise, (3) that this defendant participated in the
conduct of the enterprise's affairs, and (4) that this
defendant's participation was through a pattern of racketeering
activity. 28 U.S.C. 1962(c).
We consider, whether the evidence was sufficient to
prove each of these elements against each of the defendants the
jury found liable under Count VIII.
First Element. Aetna is an "enterprise affecting _______________
interstate commerce" within the meaning of 1962(c). The major
purpose of RICO is to protect legitimate business enterprises
from infiltration by racketeers. "Enterprise" as used in this
act, includes legitimate corporations. See United States v. ___ _____________
Turkette, 452 U.S. 576, 101 S.Ct. 2524 (1981). Since Aetna is a ________
major property and casualty insurer doing business in many
states, Aetna's conduct of its business "affects interstate
commerce."
See United States v. South-Eastern ___ ________________ _____________
Underwriters Ass'n, 322 U.S. 533 (1944) (a ___________________
fire insurance company that conducts a
substantial part of its business transactions
across state lines is engaged in "commerce
among the several states" and is subject to
regulation under the Commerce Clause).
Appellants argue that Aetna cannot constitute the
"enterprise" because the alleged racketeering activities were to
the detriment and not the benefit of Aetna. This argument rests
on a misinterpretation of the RICO statute. The statute does not
-22-
require that the pattern of racketeering be in furtherance of the
enterprise. In United States v. Boylan, this court upheld the _____________ ______
convictions of Boston police detectives who violated RICO by
illegally participating in the affairs of the Boston Police
Department (the enterprise), through a pattern of racketeering by
accepting bribes. Boylan, 898 F.2d 230. In Boylan, as in this ______ ______
case, the affairs of the enterprise were undermined by the
illegal activity.
See also Yellow Bus Lines, Inc. v. Drivers ___ ____ _______________________ _______
Chauffeurs & Helpers Local Union 639, 913 _______________________________________
F.2d 948, 952 (D.C. Cir. 1990), cert. denied, ____________
501 U.S. 1222 (1991)("Section 1962(c) nowhere
requires proof regarding the advancement of
the enterprise's affairs by the defendant's
activities or proof that the enterprise
itself is corrupt . . . .");
United States v. Provenzano, 688 F.2d 194 _____________ __________
(3rd Cir.), cert. denied, 459 U.S. 1071 _____________
(1982)(RICO is not limited to racketeering
activities that advance or benefit the
enterprise, but also encompasses racketeering
activities that work to the detriment of the
enterprise).
Second Element. Appellants, who are not employees of _______________
Aetna, attempt to distinguish Boylan by pointing out that in ______
Boylan the defendants were employees of the organization that ______
constituted the RICO enterprise. Appellants argue that the
statute prohibits employees from conducting an enterprise's
affairs through a pattern of racketeering activity to the
detriment of the enterprise, but does not prohibit persons who
are merely associated with the enterprise from conducting the
enterprise's affairs to its detriment through a pattern of
racketeering activity.
-23-
The proposed distinction is not supported by the
language of the statute, which refers to "person[s] employed by
or associated with any enterprise." 18 U.S.C. 1962(c)(emphasis __________ ____
added). Nor is it supported by any identifiable public policy or
by precedent.
See, e.g., United States v. Yonan, 800 F.2d __________ _____________ _____
164 (7th Cir. 1986) cert. denied, 479 U.S. _____________
1055 (1987)(upholding conviction of attorney,
who was not an employee of the enterprise, a
prosecutor's office, for violating RICO by
conducting the affairs of the prosecutor's
office through bribery);
United States v. Bright, 630 F.2d 804, 830- _____________ ______
31 (5th Cir. 1980) (upholding RICO conviction
of a bail bondsmen, who was not an employee
of the enterprise, a sheriff's office, for
unlawfully participating in the affairs of
the enterprise through bribery).
Appellants also argue that the defendants cannot be
held liable for a RICO substantive violation with Aetna as the
enterprise because they were not even "associates" of the
enterprise, but were outsiders and, as outsiders, could not be
said to "have participated in the conduct" of Aetna's affairs.
This is an argument more of words than substance. The statute
uses the phrase "associated with" rather than creating a category
of "associates," narrowly defined to include fewer persons than
those who may be said to have "associated with" an enterprise in
a broader sense of this phrase. In ordinary usage, one who, for
example, buys an insurance policy from an enterprise and depends
on the solidarity of that enterprise, for protection against
defined risks, has an association with, and may be said to have
"associated with," the enterprise.
-24-
Each of the individual appellants was either an insured
or a claimant under an Aetna policy, or an owner or operator of a
body shop involved in repairing automobiles insured by Aetna.
Three of the five individual Arsenal appellants (the Tirinkians
and Peter Markarian) were both insureds and operators. As an
insured, a claimant, or a body shop operator, each of the
appellants was in a contractual relationship with Aetna. The
body shop (also an appellant) and its owners and operators were
"associated with" Aetna because each body shop about which
evidence was received at trial was a place where Aetna employees
conducted appraisals and where cars that were the subject of
insurance were purportedly repaired.
Third Element. Appellants argue that no reasonable _____________
jury could have found that the appellants "participated directly
or indirectly in the conduct of the enterprise's affairs" because
the defendants did not "participate in the operation or
management of the enterprise itself." Reves v. Ernst & Young, _____ _____________
113 S.Ct. 1163 (1993).
Contrary to the appellants' assertion, there was
sufficient evidence for a reasonable jury to find that the
defendants' activities met the definition of "participation"
adopted by the Supreme Court in Reves, which is known as the _____
"operation or management" test. Id. at 1172. Appraising ___
allegedly damaged vehicles and investigating, processing, and
paying automobile insurance claims are vital parts of Aetna's
business. By acting with purpose to cause Aetna to make payments
-25-
on false claims, appellants were participating in the "operation"
of Aetna.
The Supreme Court in Reves interpreted the phrase _____
"conduct of the enterprise's affairs" to indicate a "degree of
direction," which the court described as taking "some part in
directing the enterprise's affairs." Id. at 1170. The evidence ___
was sufficient to support a finding that the individual Arsenal
defendants' activities affected, in a material degree, the
direction of Aetna's affairs by employees of Aetna. Appellants'
activities caused Aetna employees having authority to do so to
direct that other employees make payments Aetna otherwise would
not have made. The Court in Reves emphasized that, as in this _____
case, the defendants' "participation" could be "indirect" in the
sense that persons with no formal position in the enterprise can
be held liable under 1962(c) for "participating in the conduct
of the enterprise's affairs." Id. The evidence was sufficient ___
to support a finding that each of the appellants participated in
the conduct of Aetna's affairs in this way.
Moreover, in Reves the court expressly recognized that _____
"an enterprise also might be operated or managed by others
'associated with' the enterprise who exert control over it as,
for example, by bribery." Id. at 1173. When viewed in the light ___
most favorable to the plaintiff, in support of the verdict in
this case, the evidence supports a finding that appellants caused
the Aetna appraisers to approve false claims and conduct their
appraisals in a manner contrary to Aetna's business practices and
-26-
caused Aetna to pay out large sums of money on false claims. The
evidence was sufficient to support a finding that appellants
exerted control over the enterprise, if not by bribery (the
example given by the Court in Reves), then at least by other _____
methods of inducement. Since a reasonable jury could find that
the appellants exerted some control over Aetna and took part in
directing some aspect of the enterprise's affairs, the
appellants' actions could be found to have satisfied the
"operation or management" test.
Fourth Element. The final element necessary to support _______________
liability under 1962(c) is that each defendant's participation
was "through a pattern of racketeering activity." In order to
establish a pattern of racketeering activity, the evidence must
show that each defendant committed two acts of racketeering
activity within the span of ten years. The predicate acts are
defined by 18 U.S.C. 1961 to include mail fraud, wire fraud, and
bribery as well as aiding and abetting these offenses.
See Oreto, No. 91-1769, slip op. at 27 ___ _____
(jury could find a pattern of racketeering
activity for the purposes of 1962(c) if the
appellants aided and abetted the commission
of at least two predicate acts);
see also Pereira v. United States, 347 U.S. ___ ____ _______ _____________
1, 9 (1954)(a person who aids and abets
another in the commission of mail fraud, a
violation of 1341, also violates 1341);
18 U.S.C. 1961 (violations of 1341
constitute predicate racketeering activity).
Although these terms refer to criminal offenses to
which the beyond-reasonable-doubt burden of proof applies, a
plaintiff in a civil RICO action may prove these acts by a
-27-
preponderance of the evidence.
See Combustion Engineering, Inc. v. Miller ___ ____________________________ ______
Hydro Group, 13 F.3d 437, 466 (1st Cir. ___________
1993)(the preponderance of the evidence
standard applies to fraud claims in civil
RICO proceedings);
see also Moss v. Morgan Stanley, Inc., 553 ___ ____ ____ ____________________
F. Supp. 1347 (S.D.N.Y.), aff'd 719 F.2d 5 _____
(2d Cir. 1983), cert. denied sub nom. Moss v. ____________ ________ ____
Newman, 465 U.S. 1025 (1984) (although proof ______
in civil proceedings under RICO requires only
a preponderance of the evidence, which is a
lower standard of proof than in criminal
proceedings, the standard does not relate to
the elements of the predicate crimes, but to
the burden that the plaintiff bears in
showing the elements).
The elements of a mail fraud violation are a scheme to
defraud and the use of the mails to execute or further this
scheme.
United States v. Brien, 617 F.2d 299, 311 _____________ _____
(1st Cir.), cert. denied, 446 U.S. 919 _____________
(1980).
The plaintiff alleged that each defendant committed predicate
acts of mail fraud.
The intentional filing of false insurance claims or
false completed work forms in order to obtain payments from Aetna
constitutes a "scheme to defraud" Aetna. The plaintiff does not
need to prove that each defendant personally used the mails but
only that the defendant acted "with knowledge that the use of the
mails will follow in the ordinary course of business, or [acted
in circumstances] where such use can be reasonably foreseen."
United States v. Maze, 414 U.S. 395, 399 (1974). In this case, _____________ ____
it could reasonably be foreseen by each defendant that either an
insured, a claimant, a body shop or an appraiser would use the
-28-
mails in connection with each of the fraudulent claims, or that
Aetna would use the mails to send payments to the recipients.
All of these uses of the mails were in furtherance of the
defendants' fraudulent scheme.
See United States v. Martin, 694 F.2d 885, ___ _____________ ______
890 (1st Cir. 1982) (refund checks mailed by
an insurance company to the defendant, an
insurance agent, were closely enough related
to the agent's insurance fraud scheme to
bring his conduct within the statute).
In addition to proof of at least two predicate acts,
there must be evidence of "continuity" sufficient to show that
the predicate acts constitute a "pattern" of racketeering
activity. Boylan, 898 F.2d at 250. Continuity may be ______
established by proving that the predicate acts "form a closed
period of repeated conduct" or that they "are a regular way of
conducting the enterprise."
Id.; ___
see also Digital Equipment Corp. v. Curie ___ ____ ________________________ _____
Enterprises, 142 F.R.D. 16 (D. Mass. ___________
1992)(holding that the use of the mails forms
a "pattern of racketeering activity" if the
uses are related and they amount to, or pose
threat of, continued illegal activity).
The evidence of the ongoing succession of fraudulent claims
presented in this case easily satisfies this requirement.
The appellants do not dispute that each fraudulent
claim is an act of mail fraud and that mail fraud is sufficient
to constitute a predicate offense under the RICO statute.
Similarly, the appellants do not contend that the fraudulent
insurance claims were unrelated or so dissimilar as to lack the
continuity necessary to establish a "pattern" of racketeering
-29-
activity. The appellants simply contend that there was no
evidence of fraud on the part of any of the appellants. We have
concluded that this assertion is contrary to the record.
D. RICO Conspiracy under Section 1962(d) -- Count IX __ _________________________________________________
In addition to finding the individual Arsenal
defendants liable for a RICO substantive violation with Aetna as
the enterprise, the jury also found each of the individual
Arsenal defendants liable for a RICO conspiracy violation under
1962(d). Liability on this theory is proved against a defendant
by showing (1) the existence of enterprise affecting interstate
commerce, (2) that the defendant knowingly joined the conspiracy
to participate in the conduct of the affairs of the enterprise,
(3) that the defendant participated in the conduct of the affairs
of the enterprise, and (4) that the defendant did so through a
pattern of racketeering activity by agreeing to commit, or in
fact committing, two or more predicate offenses. See Boylan, 898 ___ ______
F.2d at 241.
Even though no party objected (on grounds relevant
here) to the trial court's charge to the jury on the elements of
the alleged RICO conspiracy (as well as the elements of the
alleged RICO substantive violations), we have examined the charge
to the jury and determined it to be consistent with the elements
of a RICO conspiracy as we have stated them here. In arriving at
this formulation, we have been sensitive to the fact that earlier
cases in this circuit used the phrase "knowingly joined the
-30-
enterprise."
United States v. Angiulo, 847 F.2d 956, 964 _____________ _______
(1st Cir.), cert. denied, 488 U.S. 928 _____________
(1988);
United States v. Winter, 663 F.2d 1120, _____________ ______
1136 (1st Cir. 1981), cert. denied, 460 U.S. ____________
1011 (1983).
In Boylan, the court first used this same phrase ("knowingly ______
joined the enterprise"), 898 F.2d at 241 (emphasis added), but in __________
a passage following shortly thereafter referred to whether the
defendants had knowingly joined the conspiracy. __________
Id. ("Our inquiry thus reduces to whether ___
such a conspiracy, knowingly joined by all
defendants, was satisfactorily proven.").
In Boylan (and perhaps the earlier cases as well), this ______
difference in phrasing was immaterial to the outcome of the case.
This was so in Boylan because the evidence was undisputed that ______
all of the defendants alleged to have joined the conspiracy were
indisputably employees of the Boston Police Department, the
alleged enterprise. In the present case, on the other hand,
plaintiff alleged that defendants who were not employees of Aetna
(the enterprise in Count VIII) knowingly joined the conspiracy.
For this reason we have addressed the issue more precisely in our
formulation, stated above, of the elements of a RICO conspiracy,
as applied to this case.
We conclude that the issue we must consider is not
whether the defendants knowingly joined the victim enterprise (as
first phrased in Boylan) but (as later stated in that Opinion) ______
whether the defendants knowingly joined a conspiracy. We
conclude that the evidence is sufficient to support a finding
-31-
that each of the appellants "knowingly joined" the 1962(d) RICO
conspiracy.
The alleged 1962(d) RICO conspiracy (Count IX) was a
conspiracy to violate 1962(c). The major difference between a
violation of 1962(c) itself (such as Count VIII) and a violation
of 1962(d) based on 1962(c)(such as Count IX) is the additional
required element that the defendant knowingly joined a conspiracy
to violate 1962(c). Another difference is that, to prove that a
defendant violated 1962(c), it is necessary for the plaintiff to
prove two predicate offenses; under 1962(d), in contrast, this
is not an element required to be proved. To prove a violation of
1962(d), it is enough to prove that a defendant agreed with one ______
or more others that two predicate offenses be committed. See ___
Boylan, 898 F.2d at 252. In the present case, this latter ______
difference is of no practical consequence because we conclude
that there was sufficient evidence to support a finding that each
defendant in fact committed two predicate offenses.
One assertion, perhaps implicit in the appellants'
argument, is that, in order to prove each defendant liable for
RICO conspiracy (a 1962(d) violation), the plaintiff was
required to prove a conspiracy to defraud Aetna in which each of
the Arsenal defendants conspired directly with one or more
persons associated with each of the other body shops.
This assertion is incorrect because it depends
necessarily upon a misinterpretation of 1962(d) with respect to
the elements necessary to prove a RICO conspiracy. It is true
-32-
that to find a defendant liable under 1962(d) one must find that
the defendant conspired to violate a subsection of 1962. It is
not necessary, however, to find that each defendant knew all the
details or the full extent of the conspiracy, including the
identity and role of every other conspirator.
Boylan, 898 F.2d at 242 ("A RICO conspiracy ______
does not demand . . . that all defendants
participate in all racketeering acts, know of
the entire conspiratorial sweep, or be
acquainted with all other defendants.")
All that is necessary to prove this element of the RICO
conspiracy, against a particular defendant, is to prove that he
or she agreed with one or more co-conspirators to participate in
the conspiracy. Moreover, it is not necessary for the
conspiratorial agreement to be express, so long as its existence
can plausibly be inferred from words, actions, and the
interdependence of activities and persons involved. United ______
States v. Concemi, 957 F.2d 942, 950 (1st Cir. 1992). In this ______ _______
case, the jury reasonably could have found that, although each
defendant may not have known the entire sweep of the conspiracy,
each defendant knew that he or she was a part of a larger
fraudulent scheme. For example, since the evidence supported a
finding that each of the Arsenal defendants was well aware of the
fraudulent business practices of Dexter and Cummings, the jury
could find that all of the Arsenal defendants knew they were part
of a larger conspiracy in which other persons made uses similar
to their own of fraudulent appraisals by Dexter, Cummings, or
both.
-33-
A defendant who does not know the "entire
conspiratorial sweep" is nevertheless jointly and severally
liable, in the civil context, for all acts in furtherance of the
conspiracy. Using a common metaphor, one may say that Cummings
and Dexter, the Aetna appraisers, were at the hub of the overall
RICO conspiracy, providing the central point through which all
the defendant body shops were connected. A jury could reasonably
find that, through Cummings and Dexter, the conspiratorial sweep
extended to all the body shops and most, if not all of the
individual defendants. The jury in this case found that the RICO
conspiracy included all other appellants, except for Arsenal Auto
Repairs, Inc. and Betty Arhaggelidis. We need not consider
whether the evidence would have supported a finding against these
two appellants as well. That was not essential to the liability
of others under this theory, nor to the liability of these two
appellants under a different theory.
From evidence of the extensive dealings of all other
appellants with Cummings and Dexter, the jury could have inferred
an agreement, to defraud Aetna, among all of the Arsenal
defendants (Arhaggelidis not being an Arsenal defendant) and the
appraisers. Through evidence of each individual Arsenal
defendant's actions, the jury could infer that each defendant had
the requisite state of mind for a RICO conspiracy violation --
knowing participation.
See Boylan, 898 F.2d at 242 ("[The ___ ______
plaintiff] may prove [a RICO conspiracy]
through the use of circumstantial evidence,
so long as the total evidence, including
-34-
reasonable inferences, is sufficient to
warrant [the jury's findings].").
The appellants do not dispute that Dexter and Cummings
conspired with the owners and operators of the other body shops.
Through Dexter and Cummings, the Arsenal defendants were linked
to all the other defendants who were found liable for RICO
conspiracy. Thus, upon proof that each defendant committed or
agreed to the commission of two predicate offenses, each
defendant could be held liable for the overall RICO conspiracy.
Moreover, although it was not necessary for the
plaintiff to prove that the Arsenal defendants knew the identity
of defendants from the other body shops and conspired directly
with them, the evidence was sufficient for the jury to infer that
this was in fact the case. For example, Zareh Tirinkian
testified that he frequently attended parties and other social
engagements with the operators of the other body shops. Although
Tirinkian denied discussing his practice of filing fraudulent
insurance claims with the other body shop owners, the evidence
showed that the body shops' racketeering activities were
unusually similar. The body shops all defrauded Aetna, they
reported nearly identical types of fraudulent claims, and they
obtained appraisals from the same appraisers. Evidence of these
similarities, considered along with other evidence, was
sufficient to support a jury finding that the owners of the body
shops conspired directly with one another.
Id. at 242 (a jury may infer that a single ___
overall conspiracy existed when evidence of
racketeering acts shows "hallmarks of
-35-
similarity" and "a significant degree of
interconnectedness").
E. Civil Conspiracy -- Count X __ ___________________________
Defendant Arsenal Auto Repairs, Inc. was not held
liable under any RICO theory. The judgment against Arsenal Auto
rests instead, upon the jury's finding that Arsenal Auto was
liable for civil conspiracy. The appellants' brief does not
challenge this finding against Arsenal Auto on the basis of
insufficiency of the evidence. For this reason, the following
discussion of civil conspiracy concerns Arhaggelidis's appeal
only.
Appellant Arhaggelidis challenges the judgment entered
against her for civil conspiracy on the ground of insufficiency
of the evidence. The plaintiff alleged that Ms. Arhaggelidis
conspired with her fellow Rodco/P&B Autobody defendants to
defraud Aetna.
The nature of a "civil conspiracy" and the proof
required to invoke this type of claim differ significantly from
those applying to criminal conspiracies generally and to RICO
conspiracies in particular. Under Massachusetts law, either of
two possible causes of action may be called "civil conspiracy."
First. There is precedent supporting a "very limited ______
cause of action in Massachusetts" for "civil conspiracy" of a
coercive type. See Jurgens v. Abrams, F. Supp. 1381, 1386 (D. ___ _______ ______
Mass. 1985). "In order to state a claim of [this type of] civil
conspiracy, plaintiff must allege that defendants, acting in
-36-
unison, had some peculiar power of coercion over plaintiff that
they would not have had if they had been acting independently."
Id. (quotations omitted)(citing Fleming v. ___ _______
Dane, 22 N.E.2d 609 (Mass. 1939)). ____
Plaintiff, in paragraph 480 of Count X of its
complaint, does allege a circumstance that, if proved, might
constitute such a "peculiar power of coercion." The allegation
is that "defendants were collectively able to negate the
safeguards that would have prevented any one group of defendants,
acting alone from accomplishing a fraud of this type." (App.
609).
Despite the fact that the pleading was sufficient to
state a claim of this type of civil conspiracy, however, Count X
was tried and the jury was ultimately instructed on a second and
quite different "civil conspiracy" cause of action.
Second. This second type of civil conspiracy is more _______
akin to a theory of common law joint liability in tort. It is
explicitly recognized in Massachusetts law.
See Gurney v. Tenney, 84 N.E. 428, 430 ___ _________________
(Mass. 1908);
see also Phelan v. Atlantic Nat'l Bank, 17 ___ ____ ______ ___________________
N.E.2d 697, 700 (Mass. 1938)("[A]verment of
conspiracy does not ordinarily change nature
of cause of action [sounding in tort] nor add
to its legal force.").
In the civil context, both elsewhere and in Massachusetts, the
word conspiracy is frequently used to denote vicarious liability
in tort for "concerted action."
See W. Page Keeton, Prosser and Keeton on ___ _______________________________________
Torts 322 (5th ed. 1984); _____
Restatement (Second) of Torts 876 cmt. b ______________________________
-37-
(1977).
That is, the concept is invoked to support liability of one
person for a tort committed by another. For liability to attach
on this basis, there must be, first, a common design or an
agreement, although not necessarily express, between two or more
persons to do a wrongful act and, second, proof of some tortious
act in furtherance of the agreement.
See Restatement (Second) of Torts 876 cmt. ___ ______________________________
b.
Where two or more persons act in concert, each will be jointly
and severally liable for the tort.
See id.; ___ ___
see also New England Foundation Co. v. ___ ____ ____________________________
Reed, 95 N.E. 935, 935 (1911)("The gist of a ____
civil action of this sort is not the
conspiracy, but the deceit or fraud causing
damage to the plaintiff, the combination
being charged merely for the purpose of
fixing joint liability on the defendants.").
According to the Restatement:
For harm resulting to a third person from the
tortious conduct of another, one is subject
to liability if he (a) does a tortious act in
concert with the other or pursuant to a
common design with him . . . .
Restatement (Second) of Torts, 876 (1977).
The Supreme Judicial Court has implied that the
Massachusetts common law of civil conspiracy encompasses
liability of this nature, even if the elements of liability are
not in all respects identical to those defined in this section of
the Restatement.
Kyte v. Philip Morris, Inc., 556 N.E.2d ____ ____________________
1025, 1027 (Mass. 1990)(citing Gurney, 84 ______
-38-
N.E. 428, and declining to "pause to
determine whether the principles of 876 and
the law of the Commonwealth are, in all
respects, in complete accord" because the
parties accepted this section as governing
the principles of civil conspiracy in the
Commonwealth);
see also Gurney, 84 N.E. at 430 (alluding ___ ____ ______
to concert of action theory similar to
876(a));
Payton v. Abbott Labs, 512 F. Supp. 1031, ______ ____________
1035 (D. Mass. 1981)("The concert of action
theory in Massachusetts tracks 876(a) of the
Restatement.").
The district court, in this case, instructing the jury on civil
conspiracy, stated:
The essence of conspiracy is that the person
agreed with one or more other persons [to
commit an unlawful act] . . . . Plus for
conspiracy . . . somebody has to do something
to attempt to make it come about.
(App. 4817-18).
Although this instruction is not precisely in accord with
Restatement 876, the appellant has not presented any issue
before this court regarding the instruction. In any event, she
would be precluded from doing so here, not having objected to the
instruction in the district court. Fed. R. Civ. P. Rule 51.
She did, however, challenge the sufficiency of the
evidence by her motion for judgment as a matter of law. We
conclude, nevertheless, that we need not determine the precise
state of Massachusetts law on concerted action in tort, because
under any plausible formulation of Massachusetts law, a jury
reasonably could find that Betty Arhaggelidis acted in concert
with her husband and fellow Rodco/P&B Autobody defendant to
defraud Aetna.
-39-
The jury, with support in evidence, found that
Rodco/P&B Autobody was associated with thirty-seven fraudulent
claims that were submitted to Aetna, and that Betty Arhaggelidis
was directly involved in six of those claims.
From the evidence at trial, the jury reasonably could
find also that Ms. Arhaggelidis "acted in concert" with her
husband, the owner of Rodco/P&B Autobody, pursuant to a common
design. All six claims with which she was connected involved
claimed damage purportedly repaired at Rodco/P&B Autobody. All
six claims were supported by appraisals by Mr. Cummings, a co-
defendant. Her husband, Petros Arhaggelidis, allegedly repaired
many of the cars personally. Evidence was received that she
represented to Aetna that the repairs had been made. Also,
evidence was received of other fraudulent conduct on the part of
Mr. Arhaggelidis: he was a claimant on several claims the jury
found to be fraudulent, and he made payments to Mr. Cummings
totalling over $35,000, which the jury could have inferred to be
bribes. From the evidence as a whole, the jury could infer an
agreement between Betty Arhaggelidis and her husband, under which
they played different roles, but nevertheless acted together with
a common design to defraud Aetna.
IV. SUBMISSION OF CLAIMS TO THE JURY IV. SUBMISSION OF CLAIMS TO THE JURY
The Arsenal appellants argue that only sixteen claims
involving the Arsenal defendants should have been submitted to
the jury, instead of the thirty-three claims involving the
Arsenal defendants on which evidence was heard. The appellants
-40-
correctly assert that only sixteen of these thirty-three claims
were made to Aetna; the other seventeen claims were made to other
insurance companies (except for Tareh Tirinkian's worker's
compensation claim).
Aetna recovered damages for the sixteen automobile
insurance claims paid by Aetna -- claims the jury found to be
fraudulent. The trial court admitted evidence of the other
seventeen claims because each was relevant to the determination
of fraud with respect to one or more of the sixteen Aetna claims
at issue. For example, many of the claims to other insurance
companies duplicated one or more of the claims to Aetna. In one
or more instances, damage that was allegedly sustained in one
accident was later reported to Aetna in connection with another
alleged accident. On this appeal we need not decide whether the
district court was correct in admitting the evidence
corresponding to each of the seventeen claims because, although
in some instances the appellants objected to the introduction of
this evidence at trial, their briefs in this court have not
directly challenged these rulings of the district court.
Instead, the appellants argue that the verdict form
should not have asked the jury to determine whether each of these
seventeen other claims was fraudulent. We will assume, without
deciding, that the trial court's inclusion in the verdict form of
questions about these seventeen claims was unnecessary because at
most they concerned findings of an evidentiary nature rather than
findings on ultimate issues of fact that had to be decided to
-41-
determine whether each element of some claim or defense was
proved. Since the appellants do not even articulate grounds of
an argument for prejudicial error, however, much less show that
they were in fact prejudiced in any way by the submission of
these seventeen other insurance claims to the jury, we have no
occasion to determine whether their submission was improper. The
trial court did consider and reject the Arsenal defendants'
arguments that they were prejudiced by the jury's hearing
evidence of these seventeen claims. The trial court allowed the
evidence because it tended to support a finding of a common
pattern and scheme of fraud that the jury might find extended to
all the Aetna claims and others as well. Even assuming that an
issue regarding admissibility of the evidence is properly
preserved for our consideration, we conclude that this ruling was
not an abuse of discretion. Nor was it an abuse of discretion to
submit to the jury questions about these claims. It is true that
the jury's findings with respect to the seventeen other insurance
claims were not essential to the judgment entered on the verdict.
We note, however, that an argument can be made, although the
appellee does not advance it on appeal (and need not do so in
view of other findings), that each of these claims, if found to
constitute mail fraud, would constitute a predicate act for the
purposes of Count VI, the substantive RICO violation with Arsenal
Auto as the enterprise. For example, one could argue that two
related, fraudulent claims, although one was submitted to Aetna
and one was submitted to another insurance company, would
-42-
constitute a "pattern of racketeering activity" through which the
defendantsparticipated inthe conductof theaffairs ofArsenal Auto.
In considering the sufficiency of evidence, we need not
address the merits of such an argument because even when limiting
the scope of our review of the evidence to the sixteen Aetna
insurance claims, we find that there was sufficient evidence to
support the finding that each of the Arsenal defendants violated
RICO 1962(c) by committing two related, predicate acts of mail
fraud.
V. UNFAIR TRADE PRACTICES: MASS GEN. L. CH. 93A V. UNFAIR TRADE PRACTICES: MASS GEN. L. CH. 93A
Mass. Gen. L. ch. 93A prohibits "unfair or deceptive
acts or practices in the conduct of any trade or commerce." Mass
Gen. L. ch. 93A 2. The statute provides for treble damages in
the case of a willful violation of the statute. The jury found
that Zareh Tirinkian, Jack Markarian, and Peter Markarian's
deceptive business practices constituted a willful violation of
this statute.
Appellants contend that their dealings with Aetna were
purely personal and that they did not violate this statute,
because they did not deal with Aetna in a business context.
Appellants are correct in asserting that the phrase
"persons engaged in . . . trade or commerce" refers specifically
to individuals acting in a business context. See Lantner v. ___ _______
Carson, 373 N.E.2d 973 (Mass. 1978). Contrary to the appellants' ______
assertions, however, the evidence was sufficient for the jury to
find that these three defendants were acting in a business
-43-
context and engaged in unfair or deceptive business practices in
violation of this statute.
All three defendants were involved in the Arsenal Auto
business: Zareh Tirinkian was an owner and Jack and Peter
Markarian performed repair work. The jury found that family
members and friends of these defendants submitted fraudulent
claims to Aetna for damages. Most of these cars were appraised
by Aetna appraisers, and most of the repair work was allegedly
performed at Arsenal Auto. Many of the work completion forms
submitted to Aetna with respect to these claims bear the stamp
"Arsenal Auto Repairs," certifying that Arsenal Auto completed
the repair work.
Under Massachusetts law, "unfair and deceptive acts or
practices" include acts of fraud.
See Evans v. Yegen Associates, Inc., 556 F. ___ _____ ______________________
Supp. 1219, 1227 (D. Mass. 1982)("Acts of
fraud clearly fall within 2 [of Mass Gen. L.
ch. 93A].");
see also Heller v. Silverbranch Const. ___ ____ ______ ____________________
Corp., 382 N.E.2d 1065, 1069 (Mass. _____
1978)(Chapter 93A expands common law notion
of fraud).
We conclude that the evidence was ample to support
findings of fraudulent practices by these three defendants. From
the evidence before them, the jury could find that these three
defendants used deceptive business practices in their dealings
with Aetna in violation of Mass. Gen. L. ch. 93A.
VI. JURY INSTRUCTIONS VI. JURY INSTRUCTIONS
In addition to arguing that the evidence was
-44-
insufficient to support the finding that each of the individual
Arsenal appellants violated 18 U.S.C. 1962(c) and 1962(d), the
appellants assign error in the district court's jury instructions
on these counts.
The court instructed the jury that "[t]he term
'participate in the conduct of an enterprise' includes the
performance of acts, functions or duties which are related to the
operation of the enterprise." The appellants argue that this
instruction on the meaning of the phrase "participated directly
or indirectly in the conduct of the enterprise's affairs" failed
to comport with the "operation or management" test adopted by the
Supreme Court in Reves v. Ernst & Young, 113 S.Ct. 1163 (1993). _____ _____________
The appellants are precluded from successfully making
this argument on appeal, however, since they failed to object on
this ground at trial. Fed. R. Civ. P. Rule 51. Although the
appellants contend that they objected to this instruction, the
most that can be said is that they objected to the "RICO -- Aetna
as the enterprise" charge on the ground that Aetna could not be
the enterprise as a matter of law. See App. 4833. The record ___
shows that the court did not interpret this to be an objection to
any jury instruction, but merely further argument in support of
their motion for judgment as a matter of law. See App. 4834 ___
("You've made a directed verdict, I've overruled. Of course you
object to the theories going to the jury. . . . Your rights are
saved as to that."). In any case, even if this were to be
interpreted as an objection to the instruction, it is not
-45-
sufficient to preserve an issue for appeal because it does not
"state distinctly the matter objected to and the grounds for
objection."
Fed. R. Civ. P. Rule 51;
see also Jordan v. United States Lines, ___ ____ ______ _____________________
Inc., 738 F.2d 48 (1st Cir. 1984)(holding ____
that appellant's objection to the trial
court's instruction on the definition of
"unseaworthiness" was not specific enough to
satisfy Rule 51).
Moreover, even if viewed as an objection, counsel's statement is
reasonably understood as an objection only to the definition of
"enterprise" and not to the definition of "participate in the
conduct of the affairs." The appellants never objected to the
district court's definition of "participate in the conduct of the
affairs of the enterprise," nor did they ever mention the Reves _____
test or offer any alternative to the instruction given by the
judge.
Although this jury instruction is arguably open to a
broader interpretation, it is also reasonably understood to
convey a meaning consistent with the Supreme Court's language in
Reves that in order to be liable under RICO, a defendant must _____
"participate in the operation or management of the enterprise
itself." Reves, 113 S.Ct. at 1173. "Because of the _____
[appellants'] failure to comply with Rule 51, we review the trial
court's instructions only for plain error." Poulin v. Greer, 18 ______ _____
F.3d 979, 982 (1st Cir. 1994). "The plain error rule should be
applied sparingly and only in exceptional cases or under peculiar
circumstances to prevent a clear miscarriage of justice." Id. ___
-46-
(quotations omitted). The alleged error in this instruction
fails to pass this test.
VII. JURY TRIAL ON DAMAGES VII. JURY TRIAL ON DAMAGES
A. Post-Verdict Hearings and the Standard of Decision __ __________________________________________________
The Arsenal appellants challenge the judgment entered
against them on the ground that they were denied a jury trial on
damages in violation of the Seventh Amendment guarantee of the
right to a jury trial upon a timely demand. Fed. R. Civ. P. 38.
Appellants demanded a jury trial and agreed to a bifurcation of
liability issues and damages. Following the jury trial and jury
verdict on the issues of liability, the district court properly
determined that no genuine disputes of material fact remained
with respect to damages.
The appellants' challenge fails because, after the jury
verdict, damages could be determined purely "as a matter of law,"
in the sense that reasonable factfinders applying the correct
legal standard could come to but one determination as to the
amount of damages to be awarded under the jury's findings on
liability.
Precedents regarding summary judgment provide useful
guidance on issues arising after jury verdict in the first phase
of a phased trial such as occurred in this case.
In the pretrial context, regardless of any jury demand
made by the parties, summary judgment is warranted when no
triable fact issues have been identified.
See Anderson v. Liberty Lobby, Inc., 477 ___ ________ ____________________
-47-
U.S. 242 (1986)(summary judgment is
appropriate when there are no disputed issues
of material fact);
see also Plaisance v. Phelps, 845 F.2d 107 ___ ____ _________ ______
(5th Cir. 1988)(plaintiff did not have an
absolute right to a jury trial where there
was no genuine issue of material fact, since
the function of a jury is to try disputed
material facts);
Bloomgarden v. Coyer, 479 F.2d 201, 206 ______________________
(D.C. Cir. 1973)("The summary judgment
procedure is properly and wholesomely invoked
when it eliminates a useless trial. . . .").
In addition, under Federal Rule of Civil Procedure 16,
the court may take action to formulate and simplify the issues
"including the elimination of frivolous claims or defenses."
Fed. R. Civ. P. 16. Rule 16 also authorizes courts to take
action with respect to the "appropriateness and timing of summary
adjudication under Rule 56." Id. Moreover, Rule 16 was intended ___
to confirm the power of the court to "identify [] litigable
issues" without awaiting a formal motion for summary judgment.
Advisory Committee Notes, 1983 Amendment.
In this case, the trial judge's determination regarding
the damages to be awarded was made after the jury trial on
liability. At the conference on damages held after trial, the
court stated its intention to enter a judgment without another
trial if no genuine dispute of fact material to the damages
determination remained. In a conference with counsel, the court
stated, "[u]nder Rule 16, I have the power to narrow the issues
for trial . . . I can in effect talk through a proceeding akin to
a motion for summary judgment."
This court has held that a district court may grant
-48-
summary judgment sua sponte as long as two requirements are met.
Stella v. Town of Tewksbury, 4 F.3d 53, 55 (1st Cir. 1993). ______ __________________
"First the discovery phase must be sufficiently advanced that the
court can make an accurate determination of whether a genuine
issue of material fact [exists]." Id. (citation omitted). ___
Second, "the target must have been on notice to bring forth all
of its evidence." Id. "'Notice' in this context means that the ___
losing party . . . received a fair opportunity to put its best
foot forward." Jardines Bacata, Ltd. v. Diaz-Marquez, 878 F.2d _____________________ ____________
1555, 1560 (1st Cir. 1989).
These two requirements were met. The discovery phase
was not merely "sufficiently advanced." It was complete. And a
trial on the liability issues had been completed. The appellants
received notice and an opportunity to be heard. The district
judge, before entering judgment, allowed the parties an
opportunity to file written submissions on the issues that were
raised at the conference.
In their post-trial memorandum, the appellants made
substantially the same argument as they make before this court
(discussed below), and in both instances without any proffer that
they would be able to offer at a damages-phase trial any evidence
that would raise a genuine dispute of fact that might be resolved
by a factfinder in their favor.
B. The Alleged Need for a Jury Trial __ _________________________________
The appellants argue that a jury trial on damages was
necessary to determine how much of each fraudulent claim was
-49-
legitimate, that reported losses were merely exaggerated, and
that Aetna's damages should be limited to the difference between
the payment made by Aetna and the actual loss to the appellant.
Each of these arguments fails because, as a matter of law, Aetna
is entitled to damages equal to the entire amount of its payments
on fraudulent claims, regardless of any portion of the claims
that might have been shown to be supportable if no fraudulent
enlargement of the claims had occurred.
We put aside Aetna's argument that appellants violated
the cooperation clause of the various policies under which claims
were made. In part that clause provides:
After an accident or loss, you or
anyone else covered under this policy
must cooperate with us in the
investigation, settlement and defense of _________________________________________
any claim or lawsuit. . . . ____________________
(App. 4800)(emphasis added). Earlier automobile insurance policy
forms, from which this language in the Aetna policies at issue
descended, contained an Assistance and Cooperation Clause, as it
was then called. That clause initially appeared among conditions
that applied only to liability coverages. The claims at issue
here were made under collision coverage. No Massachusetts
precedent has explicitly determined that this clause in policy
forms like those at issue here applies to collision coverage. In
these circumstances, any prediction about whether the Supreme
Judicial Court will hold that this clause applies to collision
coverage is speculative, but we need not make any prediction on
this matter in order to decide this case. We assume in
-50-
appellants' favor, without deciding, that the cooperation clause
in these Aetna policies does not apply to claims under collision
coverage.
The "cooperation clause," of course, is not the only
provision concerning the obligations of insureds and claimants
after an accident or loss. Other provisions concern giving
notice and filing a proof of loss.
Appellants contend that one or another of various
preclusion doctrines of insurance law bars Aetna from asserting
that making a fraudulent claim is a violation of any of the
provisions of the policy under which the claim is made. One
reason all of the appellants' preclusion arguments fail is that
on the facts of this case, as determined by supportable findings
of the jury, every claim included in the trial court's
calculation of the damages award has been found to be a
fraudulent claim. In addition, every claim for which the Arsenal
defendants were held liable was made within the scope of a RICO
substantive violation and a RICO conspiracy, and every claim for
which appellant Arhaggelidis was held liable was within the
finding against her on the ground of civil conspiracy.
A claimant, in making a fraudulent claim, was
committing a material breach -- indeed, a most fundamental breach
-- of the contract between Aetna and its policyholder. This is
true, of course, not only of a claim by the policyholder but also
of any claim under the policy by any other person entitled by the
terms of the policy to make a claim under the policy.
-51-
A breach as fundamental as this is a bar to the
assertion of any further rights under the contract by the party
guilty of the breach. This is a basic rule of contract law. See ___
E. Allan Farnsworth, Contracts 632-38 (2nd ed. 1990). It applies _________
to insurance contracts as well as other contracts.
Appellants contend that one or another of various
preclusion doctrines developed distinctively in insurance law
nevertheless bars Aetna from asserting fraud by the appellants in
this case. This contention fails because the jury findings in
this case have negated at least one of the essential elements of
each preclusion theory appellants attempt to invoke.
The jury's findings negate the voluntary relinquishment
of known rights that is characteristic of waiver in the classic
sense, the detrimental reliance by a claimant that is
characteristic of estoppel in the classic sense, the voluntary
choice of an option that is characteristic of election in the
classic sense, and insurer overreaching of a less informed and
unequal bargainer that is characteristic of cases in which
precedents have stretched doctrines of waiver, estoppel, and
election beyond their classic meaning to favor a disadvantaged
insured.
See generally id. at 92-102, 319-23, 586- ___ _________ ___
92;
John S. Ewart, Waiver Distributed Among the ____________________________
Departments: Election, Estoppel, Contract, _____________________________________________
Release, 7-9, 84-87 (1917); _______
John S. Ewart, Waiver or Election, 29 Harv. __________________
L. Rev. 724 (1916).
Appellants have not cited any precedent, in
-52-
Massachusetts law or elsewhere, that supports application to any
part of the verdict and judgment in this case of any preclusion
doctrine establishing rights in favor of insurance claimants
beyond those provided by the terms of the contract of insurance.
These terms include the limitations, conditions, and exceptions
as well as its clauses granting and defining the scope of
coverage. Indeed, in view of the jury finding of a RICO
substantive violation with Aetna as victim, if there were any
need or occasion to invoke principles of preclusion rather than
ordinary contract doctrine to decide this case, the record would
be more congenial to preclusion against a fraudulent claimant
than to preclusion of any of Aetna's defenses.
Although the parties have not cited and we are not
aware of any Massachusetts precedent directly determining the
effect of fraudulent claims and RICO violations upon the measure
of recovery to which the insurer is entitled, Massachusetts
decisions on analogous issues support the judgment entered in
this case. For example, Massachusetts courts have held in a
number of different contexts that an insured who committed fraud
either in obtaining a policy or in making a claim was precluded
from recovering on a claim under the policy.
See Airway Underwriters v. Perry, 284 ___ ____________________ _____
N.E.2d 604 (Mass. 1972)(holding that an
attempt to defraud the insurer was a
violation of the policy's cooperation clause
and a clause stating that the policy was void
in case of fraud, and therefore insurer was
relieved of its obligation to indemnify the
insured or defend on the insured's behalf);
Bockser v. Dorchester Mutual Fire Ins. Co., _______ _______________________________
99 N.E.2d 640 (Mass. 1951)(holding that an
-53-
insured, whose property was destroyed by fire
and whose agent attempted to defraud the
insurance company by exaggerating the losses
was precluded from recovery under the policy
in light of a provision of the policy
rendering the policy void if the insured
attempted to defraud the company either
before or after a loss).
In addition, fraud on the part of a party to a contract
has been determined to be a breach of the covenant of good faith
and fair dealing. Glaz v. Ralston Purina Co., 509 N.E.2d 297 ____ ___________________
(Mass. App. Ct. 1987).
The appellants do not contend that the amounts that
Aetna paid out on the policies were ever in dispute. These
amounts were the only facts, in addition to the facts determined
by the jury in the liability phase, that were material to the
court's judgment. Although there may have been some dispute as
to the existence and extent of any actual losses by the
defendants, any dispute about these facts was not material to the
judgment because the appellants' fraud (by either exaggerating or
completely fabricating losses) precluded them from asserting any
right to recover for actual losses under the insurance contracts.
Since no triable fact disputes remained, the appellants were not
denied their right to a jury trial. The court's determinations
of the sums certain to be awarded against the defendants were
properly made as matters of law -- that is, by the judge without
submission to a jury.
VIII. ATTORNEYS' FEES VIII. ATTORNEYS' FEES
As a part of the judgment in this case, the district
-54-
court awarded $1,500,000 in costs, expenses, disbursements, and
attorneys' fees to the plaintiff. Under the terms of the
judgment, each individual Arsenal defendant is jointly and
severally liable for the entire amount of $1,500,000.
The sole challenge in this appeal to this award or the
amount of it is that the Arsenal appellants argue that the
district court improperly held them liable for not only the
attorneys' fees expended in this case but also the attorneys'
fees expended in a related case entitled Aetna Casualty and ___________________
Surety Co. v. Sport Auto Body, Inc., No. 91-11718 (the "Sport __________ ______________________ _____
case"). In the Sport case, Aetna alleged that Sport Auto Body, _____
Inc. and its operators were a part of the same conspiracy to
defraud Aetna, which included Arsenal Auto and the other autobody
shops. The Sport case was consolidated with this case on May 17, _____
1992. Subsequently, the Sport defendants defaulted and the Clerk _____
entered judgment against them.
The appellants argument fails because 18 U.S.C.
1964(c) authorizes the recovery of reasonable attorneys' fees by
a prevailing plaintiff in a civil RICO case. 18 U.S.C. 1964(c).
Since the Sport case was consolidated with this action and _____
judgment was entered against the Sport defendants and the _____
individual Arsenal defendants for the same RICO violations, the
district court correctly held the Arsenal defendants jointly and
severally liable for reasonable attorneys' fees expended by Aetna
for the entire suit. Arsenal appellants argue, but
unconvincingly, that the district court's order of consolidation
-55-
did not extend to the phased trial. The district court rejected
the argument, and we find no abuse of discretion in this ruling.
IX. PREJUDGMENT INTEREST IX. PREJUDGMENT INTEREST
Raising this issue for the first time in a reply brief
on appeal, appellant Jack Markarian challenges the inclusion, in
the judgment against him, of prejudgment interest on the treble
damages awarded under the RICO claims. He argues that since the
treble damages are punitive in nature and not compensatory,
prejudgment interest is inappropriate.
The appellant failed to raise the issue either at trial
or even in his opening brief, which was submitted on behalf of
all the Arsenal defendants. The first statement of this
contention appears in this appellant's reply brief, filed on his
behalf by new counsel representing him alone. In these
circumstances, we hold that he has failed to preserve this issue
for appeal.
American Automobile Manufacturers Assoc. v. ________________________________________
Commissioner, 31 F.3d 18, 25 (1st Cir. ____________
1994)(appellant failed to preserve issue for
appeal when the argument was first raised in
his reply brief);
Frazier v. Bailey, 957 F.2d 920, 932 n.14 _______ ______
(1st. Cir. 1992)(same);
Pignons S.A. de Mecanique v. Polaroid ____________________________ ________
Corp., 701 F.2d 1, 3 (1st Cir. 1983)(same); _____
see also McCoy v. Massachusetts Institute ________ _____ ________________________
of Technology, 950 F.2d 13, 22 (1st. Cir. ______________
1991), cert. denied, 112 S.Ct. 1939(1992)("It ____________
is hornbook law that theories not raised
squarely in the district court cannot be
surfaced for the first time on appeal.").
"[A]n appellee is entitled to rely on the content of an
appellant's [opening] brief for the scope of issues appealed."
-56-
Pignons S.A., 701 F.2d at 3. When an argument is first raised ____________
in a reply brief, the appellee is not given an adequate
opportunity to respond. See Sandstrom v. Chemlawn Corp., 904 ___ _________ ______________
F.2d 83, 87 (1st Cir. 1990). Moreover, the court of appeals is
deprived of the benefit of written submissions by all the
parties. Id. __
This court has recognized that if exceptional
circumstances are shown, an issue may be considered even though
it has not been timely raised.
Id. (citing United States v. LaGuardia, 902 ___ _____________ _________
F.2d 1010, 1013 (1st Cir. 1990)).
Such exceptional circumstances include arguments that are "so
compelling as virtually to insure the appellant's success" or
arguments that must be ruled upon to avoid a miscarriage of
justice.
Johnston v. Holiday Inns, Inc., 595 F.2d ________ ___________________
890, 894 (1st Cir. 1992).
The argument presented by appellant Jack Markarian is
not one that satisfies this standard. A district court's
decision to award prejudgment interest under RICO is ordinarily
subject to review under the "abuse of discretion" standard.
Cf. Earnhardt v. Commissioner of Puerto ___ _________ _______________________
Rico, 744 F.2d 1, 3 (1st Cir. 1984)(abuse of ____
discretion standard is applied to district
court's decision whether to award prejudgment
interest in a Title VII case);
see also Abou-Khadra v. Mahshie, 4 F.3d ___ ____ ___________ _______
1071, 1084 (2nd Cir. 1993), cert. denied, sub ____________ ___
nom. Bseirani v. Mahshie, 114 S.Ct. 1835 ____ ________ _______
(1994) ("Since the RICO statute does not
contain any provisions concerning the award
of prejudgment interest, the district court
had discretion as to whether to award such
-57-
interest.");
Louisiana Power and Light Co. v. United Gas _____________________________ __________
Pipe Line Co., 642 F. Supp. 781 (E.D. La. ______________
1986)(same).
We recognize that there is some force in the
appellant's argument that the district court abused its
discretion in awarding prejudment interest. The appellant
reasons that treble damages under RICO constitute punitive
damages, and that since prejudgment interest on punitive damages
is ordinarily inappropriate, the district court erred in awarding
prejudgment interest in this case.
Cf. McEvoy Travel Bureau, Inc. v. Norton ___ ___________________________ ______
Co., 563 N.E.2d 188, 196 (Mass. 1990)(holding ___
that prejudgment interest should not be
awarded in Mass. Gen. L. ch. 93A cases
because multiple damages are punitive in
nature);
Wickham Contracting Co. v. Local Union No. _______________________ _______________
3, Int'l Brotherhood of Elec. Workers, 955 ________________________________________
F.2d 831, 834 (2nd Cir.), cert. denied, 113 ____________
S.Ct. 394 (1992)(prejudgment interest should
not be awarded when damages are punitive in
nature).
It may reasonably be argued, however, that RICO damages are
primarily compensatory in nature, and thus prejudgment interest
was properly awarded.
Cf. Liquid Air Corp. v. Rogers, 834 F.2d ___ _________________ ______
1297, 1310 (7th Cir. 1987), cert. denied 492 ____________
U.S. 917 (1989)("Although there is some sense
in which RICO treble damages are punitive,
they are largely compensatory in the special
sense that they ensure that wrongs will be
redressed in light of the recognized
difficulties of itemizing [the damages caused
from racketeering activity].").
Thus, the appellants' argument is not so compelling as to ensure
the appellant's success. Nor is his argument so clearly correct
-58-
that a failure to rule in his favor on this issue constitutes a
miscarriage of justice. Therefore, the appellant cannot prevail
under the Johnston standard. ________
X. SEVERANCE X. SEVERANCE
The Arsenal defendants challenge the district court's
denial of their motion for a mistrial at the close of the
plaintiff's evidence. They argue that the district court should
not have tried the case against all fourteen defendants in the
same proceeding because of the potential for jury confusion. In
addition, the Arsenal defendants argue that they were prejudiced
by the jury's hearing evidence concerning the other defendants.
A mistrial need not be allowed absent a clear showing
of prejudice. United States v. Schlamo, 578 F.2d 888, 891 (1st _____________ _______
Cir. 1978). We review the mistrial ruling for "abuse of
discretion." United States v. Dockray, 943 F.2d 152, 157 (1st _____________ _______
Cir. 1991).
The defendants' challenge to the trial court's failure
to sever fails in this instance for several reasons.
First. The Arsenal defendants never moved for a _____
separate trial of the claims against them. Before the trial
began, they were fully aware that all the defendants were to be
tried together and were informed of the identity of every witness
to be called and every exhibit to be offered. Absent a showing
of materially changed circumstances after the trial began, the
Arsenal defendants' failure to move for severance before trial
began precludes both their motion at the close of the plaintiffs'
-59-
evidence and their challenge before this court. Absent special
circumstances, a party is required to object to an allegedly
erroneous or prejudicial procedure while the court has an
opportunity to correct it.
Cf. Computer Systems Engineering, Inc. v. ___ ___________________________________
Qantel Corp., 740 F.2d 59, 69 (1st Cir. _____________
1984)("A party may not wait and see whether
the verdict is favorable before deciding to
object.");
see also Harris v. Chanclor, 537 F.2d 203 ___ ____ ___________________
(5th Cir. 1976)(a motion for new trial on the
grounds that the defendant should have been
given a separate trial was properly denied in
light of the defendant's failure to press a
pre-trial motion to sever).
Second. The defendants have not made the clear showing ______
required to support a determination that the district court's
denial of a mistrial was an abuse of discretion. No appellant
has shown any prejudice from having all the claims at issue tried
together. No basis appears in the record for this court to
conclude that the jury was unable to differentiate among the
defendants and to distinguish the evidence relating to each
defendant. Moreover, the district court's jury instructions
cautioned the jury to consider the claims against each defendant
separately, thus giving added protection against any potential
prejudice.
See United States v. Chamorro, 687 F.2d 1, ___ _____________ ________
6 (1st Cir.), cert. denied, 459 U.S. 1043 _____________
(1982)(cautionary jury instructions dispelled
any significant risk of unfair prejudice).
In fact, the jury found some defendants liable on specified
theories and found other defendants not liable on those theories,
thus reinforcing the inference that the jury understood its
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responsibility and was not confused by the size and complexity of
the case.
Cf. United States v. Figueroa, 976 F.2d ___ _____________ ________
1446, 1452 (1st Cir. 1992), cert. denied, 113 ____________
S.Ct. 1346 (1993) (acquittals of some
defendants on some counts was a factor
relevant to decision to uphold a denial of
severance).
Third. Viewing the motion for a mistrial at the close ______
of the defendant's evidence as a delayed motion for severance
does not change the result. This court will reverse a district
court's refusal to sever only upon a finding of manifest abuse of ________
discretion.
See United States v. Olivo-Infante, 938 ___ ______________ _____________
F.2d 1406, 1409 (1st Cir. 1991).
The appellants "must demonstrate that the joint trial prevented
the jury from separating the evidence against each defendant and
reaching a reliable verdict."
United States v. Brandon, 17 F.3d 409, 440 _____________ _______
(1st Cir.), cert. denied, 115 S.Ct. 80 ______________
(1994).
Again, the jury's verdict shows that the jury
considered the evidence against each defendant separately.
Also, we reject the appellants' suggestion that the
district court's dismissal of Count VII (asserting a substantive
RICO violation allegedly involving an overall association-in-fact
enterprise) was an indication of the appropriateness and need for
a separate trial. The district court denied the defendants'
motion for judgment as a matter of law on Count IX (the RICO
conspiracy) and Count VIII (the RICO substantive violation with
-61-
Aetna as the enterprise), and the jury ultimately found the
defendants liable on these theories. Severing the Arsenal
defendants would have required Aetna to present all of the
evidence twice in order to prove the scope of the same fraudulent
scheme in each of two separate trials. The court's dismissal of
Count VII in no way, either explicitly or implicitly, determined
that a separate trial was needed for any of the multiple counts
remaining after the dismissal.
Appellant Arhaggelidis is another party who asserts on
appeal that the district court failed to provide her with a
separate trial. She, too, is precluded from arguing this ground
before this court because she did not move for a separate trial
until after the trial had been completed. Having never moved
before the verdict for a separate trial for herself alone, or
even for the Rodco/P&B Autobody defendants as a group, she is in
no position to complain now that she should have been the sole
defendant in a separate trial. Taking her argument to its
logical conclusion, that each defendant should have had a
separate trial, would require that Aetna present and the court
hear the same evidence up to fourteen times -- one for each
defendant who chose to go to trial. No more need be said.
XI. PRETRIAL ATTACHMENTS XI. PRETRIAL ATTACHMENTS
The Arsenal defendants argue that the pretrial
attachments obtained by Aetna in the district court violated due
process. Their challenge of the pretrial attachments was
rejected six times at the district court level. The challenge
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fails again, for several reasons.
First. The appellants' reliance upon the Supreme ______
Court's decision in Connecticut v. Doehr, 501 U.S. 1 (1991), ___________ _____
holding that the Connecticut attachment statute violated due
process, is not well-founded. The procedure used in this case
was based on the Massachusetts Rules of Civil Procedure; that
procedure and its implementation by the magistrate judge
comported with due process and was entirely consistent with
Doehr. _____
See Digital Equipment Corp. v. Currie ___ _________________________ ______
Enterprises, 142 F.R.D. 16, 26 (D. Mass. ___________
1992)(upholding Massachusetts attachment
statute against due process challenge under
Doehr). _____
Although the attachments were issued ex parte, the plaintiffs
made the requisite showing of an exigent circumstance -- a
clear danger that, if notified in advance, the defendants would
convey the property or remove it from the state.
Doehr, 501 U.S. at 16 (recognizing that a _____
properly supported "allegation that [the
defendant] was about to transfer or encumber
his real estate" would be an exigent
circumstance permitting ex parte attachment).
Second. Although the assets were first attached by an _______
ex parte proceeding, the magistrate judge later conducted a
lengthy hearing at which the appellants were afforded "more than
adequate due process." (Magistrate's Order Re: Second Motion to
Dissolve Ex Parte Attachments, App. 852) As a result of this
hearing, the magistrate judge determined that the pretrial
attachments should not be dissolved. Id. Judge Young ___
subsequently denied the appellants motion for reconsideration of
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the magistrate judge's decision, implicitly determining that any
possible defect in the ex parte procedure was irrelevant in "view
of the extensive hearing held by the magistrate judge."
(Endorsed Order, App. 903.)
Third. The conclusion that appellants' have no basis ______
for relief from the attachments at this time is reinforced upon
the rejection of other contentions on this appeal and upon the
affirmance of the final judgment against the defendants in an
amount greatly in excess of the value of the attached assets. In
light of their joint and several liability for $2,369,901.72, no
basis remains, if ever there was one, for an argument that the
attachment of their assets should now be vacated. Determining
what process is due in pre-judgment attachment proceedings
requires a consideration of the risk of an erroneous deprivation _________
of property. See Doehr, 501 U.S. at 12. With the affirmance of ___ _____
the judgment against all attacks on other grounds, no longer will
there be any such risk. Aetna has prevailed and subsequent
events have demonstrated that no unwarranted deprivation of
property occurred.
XII. ALLEGED PLEADING DEFICIENCIES XII. ALLEGED PLEADING DEFICIENCIES
The appellants challenge the verdict entered against
them on Count VI, which alleged a substantive RICO violation with
Arsenal Auto Repairs, Inc. as the enterprise. They argue that
the district court erred by not granting their Rule 12(b)(6)
motion to dismiss Count VI of the amended complaint for failure
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to state a cause of action.
The appellants' argument is based on what Aetna claims
is a typographical error. Appellants argue that they were
confused by paragraph 460 of the amended complaint, which alleges
that "[e]ach of the individual policyholder/claimants named in
paragraph 38" participated in the conduct of Arsenal's affairs.
Paragraph 38 names Vachig Petrosyans, but none of the Arsenal
appellants. Appellants imply that they were prejudiced by this
error because they had to "guess" at the meaning of Count VI.
The appellants' argument, which the trial court
rejected four times, fails again. Paragraph 459 of the amended
complaint clearly alleges that Tareh Tirinkian, Lena Tirinkian,
Peter Markarian, and Jack Markarian conducted Arsenal's affairs
through a pattern of racketeering activity. The appellant cannot
deny that Count VI was directed towards these four defendants.
Although Count VI does not expressly name Tarja
Markarian, the fifth individual Arsenal defendant, paragraph 460
does refer to "individual policyholders/ claimants" and paragraph
42 states that Tarja Markarian was a policyholder associated with
Arsenal Auto. Therefore, appellants' assertion that they were
confused is both unreasonable and unpersuasive. Moreover,
Aetna's Pretrial Statement of Claims and Damages, which was
submitted four months before trial, states that Count VI is
directed against the five individual Arsenal defendants and lists
them by name. In these circumstances, the appellants never had
any basis for asserting that they were prejudiced at trial by any
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confusion purportedly caused by the amended complaint.
XIII. COURT'S ANSWER TO JURY QUESTION XIII. COURT'S ANSWER TO JURY QUESTION
The Arsenal appellants challenge the judgment against
them on Count VIII, the RICO substantive violation with Arsenal
as the enterprise, on the ground that the judge, in response to a
question by the jury during their deliberations, instructed the
jury that the Arsenal defendants were not part of such a
conspiracy.
Only one sentence of the appellants' brief addresses
this issue. The appellant provides no argument or authority for
its
proposition. This court has previously held that an argument
that is presented in "such a cursory and mechanical fashion" is
rendered unpreserved on appeal.
Gamma Audio & Video, Inc. v. Ean-Chea, 11 __________________________ ________
F.3d 1106, 1112 (1st. Cir. 1994)("We have
consistently admonished litigants that they
cannot simply present this court with a
shopping list of arguments and then expect up
to both develop and address each one.");
Ryan v. Royal Ins. Co., 916 F.2d 731, 734 ____ ______________
(1st Cir. 1990)("[I]ssues adverted to on
appeal in a perfunctory manner, unaccompanied
by some developed argumentation, are deemed
to have been abandoned.").
Similarly, the appellants have not properly preserved this issue
before this court.
Although the appellants are not entitled to a ruling on
this matter, we note in any event that no basis for any relief
appears in the record. In response to a written question by the
jury, the court instructed the jury again on the various RICO
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theories alleged by Aetna and used a diagram to illustrate some
aspects of his instruction. Although it is not clear what aspect
of the response by the court the appellants' are attempting to
put in issue, our examination of the record reveals that the
appellants' have mischaracterized or grossly misinterpreted the
court's response to the jury's question.
From the record, it appears that the court drew a
diagram representing the different enterprise theories that had
been submitted to the jury. Although the record before us does
not include this diagram, the record does include the court's
oral instructions.
One of the theories submitted to the jury, but not at
issue in this appeal, was that two or more of the body shops,
other than Arsenal Auto Repairs, Inc., constituted the "Allston
group" enterprise. The Arsenal defendants were never alleged to
be part of the "Allston group." Therefore, the court pointed out
that the defendants associated with the body shops that allegedly
constituted the "Allston group" did not include the Arsenal
defendants. The court's description of the "Allston group"
theory had no bearing on the Arsenal defendants. Nothing in the
court's detailed response to the jury's question indicated that
the Arsenal defendants were not alleged to have participated in
the affairs of the Aetna enterprise. In these circumstances, we
discern no basis to conclude that the trial court's response to
the jury's question was inconsistent with the court's earlier
instructions to the jury, or with the court's earlier rulings on
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the theories to be submitted to the jury, or with the verdict
ultimately rendered. Thus, the appellants could not prevail on
this issue even if they had preserved it.
XIV. SUFFICIENCY OF EVIDENCE XIV. SUFFICIENCY OF EVIDENCE
A. The Arsenal Appellants __ ______________________
Having addressed in Parts III.C and III.D, supra, the _____
Arsenal appellants' arguments with respect to the elements
necessary to prove liability for each of the two RICO offenses,
we turn here to the evidence against each of the individual
Arsenal defendants. In addition to the explanation in Part
III.D, supra, of the evidence of RICO conspiracy, we note here _____
that there was sufficient evidence against each defendant for the
jury to find that each defendant conspired to violate RICO. We
also conclude that the evidence of an ongoing succession of
fraudulent claims was sufficient to meet the continuity
requirement necessary to establish a pattern of racketeering.
Although the jury found that sixteen Aetna claims that were
connected with the Arsenal defendants were fraudulent, only two
predicate acts are necessary to constitute a pattern of
racketeering. Thus, we need only to conclude, with respect to
each Arsenal defendant, that there was sufficient evidence to
support findings of the fraudulent nature of two claims in which
the defendant was involved.
1. Zareh Tirinkian __ _______________
With respect to Mr. Tirinkian, there was ample evidence
of mail fraud. Mr. Tirinkian was a key figure of the Arsenal
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branch of the RICO conspiracy. As owner and operator of the
Arsenal Body Shop, he was directly involved in all aspects of the
fraudulent scheme. Automobiles were appraised and allegedly
repaired at his shop. On behalf of Arsenal Auto, Mr. Tirinkian's
name appears on appraisal forms, agreeing, on behalf of Arsenal
Auto, to perform repair work. As either an insured, or a
claimant, or a person aiding an insured or claimant under Aetna
policies, Mr. Tirinkian submitted fifteen insurance claims that
the jury found to be fraudulent.
In 1988, Mr. Tirinkian submitted a claim to Aetna,
stating that his 1976 Rolls Royce was hit from behind and forced
into a guardrail by an unknown vehicle. Mr. Tirinkian claims to
have driven home after this alleged accident. Dexter, the Aetna
appraiser, determined that the car needed $6,780.92 in repairs.
When called for a second appraisal, Dexter determined that in
fact it needed $12,023.00 in repairs, $8,090.17 for parts alone.
At trial, Mr. Tirinkian conceded that the only part he purchased
was an axle for $300. From this evidence, the jury could
reasonably find that Mr. Tirinkian submitted a fraudulent claim.
In 1989, Mr. Tirinkian reported that his 1976 Rolls
Royce struck the back of a BFI garbage truck that sped off after
the collision. Mr. Tirinkian received payment of $20,000 from
Aetna for this claim. The record contains, in addition to other
evidence presented at trial supporting the suggestion, the
testimony of an expert witness in accident reconstruction, who
said that BFI operated no truck "that matched in any shape or
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form the damage that [he] saw on this Rolls Royce." The expert
testified also that the damage must have been caused by a
person's striking the car, or driving it into other objects, at
least seven times, at different angles and speeds. From this
evidence, the jury could reasonably find that Mr. Tirinkian
submitted a fraudulent claim to Aetna.
Since the jury reasonably could have found that these
two related acts of mail fraud constituted a pattern of
racketeering activity, Mr. Tirinkian's liability on the theories
of RICO conspiracy (Count IX) and RICO substantive violation with
Aetna as the enterprise (Count VIII) is established.
2. Lena Tirinkian __ ______________
Ms. Tirinkian was an officer of Arsenal Auto Repairs,
Inc. She testified that she performed bookkeeping and accounting
for Arsenal Auto, dealt with insurance companies, and received
checks from them. From her proximity to the Arsenal operations,
taken together with other evidence, the jury could infer that she
conspired with her husband and other defendants. Like Mr.
Tirinkian, Ms. Tirinkian was involved in several claims that the
jury found to be fraudulent. A finding that she committed mail
fraud with respect to two or more related claims would support,
in turn, the finding that Ms. Tirinkian violated 1962(c) by
knowingly participating in the affairs of Aetna through a pattern
of racketeering activity. We summarize the evidence against Ms.
Tirinkian with respect to two claims.
The Tirinkians allege that Ms. Tirinkian's 1979 Rolls
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Royce was damaged twice during transport by Forge Motors Auto
Transport -- while being shipped to the Tirinkian's Florida home
in the fall of 1988 and while being shipped back to Massachusetts
in the spring of 1989. The second claim to Aetna alleged that a
$3,306.95 headlight switch was damaged in transit. Yet, at
trial, the owner of Watertown Foreign Car Center, Inc. testified
that he had noticed that the headlights were not working sometime
in the fall of 1988 and suggested to Mr. Tirinkian that he get a
new headlight switch.
It is Aetna's practice to require the insured to sign
completed work forms before obtaining payment from Aetna. Ms.
Tirinkian signed the completed work forms relating to these two
claims on her 1979 Rolls Royce. The forms stated that "all
damage to my auto was repaired in accordance with the appraisal."
At trial Ms. Tirinkian testified that she never saw the damage
allegedly sustained by this vehicle, nor did she ever see the car
at Arsenal Auto or any other auto repair shop. She admitted
that she endorsed and deposited in her bank account the checks
she received from Aetna with respect to these claims. Although
the completed work form with respect to the second claim stated
that the repairs were completed by Watertown Foreign Car Center,
Inc., the owner of that shop testified that no repairs were
completed there. From this and other evidence introduced at
trial, the jury reasonably could find that Ms. Tirinkian
defrauded Aetna by submitting these two false claims on her
automobile.
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Evidence of these two acts of mail fraud, among others,
supported a jury finding of a pattern of racketeering activity by
Ms. Tirinkian from which the jury could find that Ms. Tirinkian
violated 1962(c) and (d). Thus, the district court properly
denied Ms. Tirinkian's motion for judgment as a matter of law.
3. Jack Markarian __ ______________
Jack Markarian, brother of Lena Tirinkian, was an
officer and employee of Arsenal Auto Repairs, Inc. He testified
at trial that he performed repairs and managed the other
employees performing repairs, and that Mr. Tirinkian did mostly
paperwork. Given evidence that he was in charge of repair work
at Arsenal Auto where many of the cars that were the subject of
fraudulent claims were appraised and purportedly repaired, the
jury could infer that he knew and participated in the fraudulent
scheme and conspired with his brother-in-law and others.
In a reply brief filed on his behalf by new counsel
representing him alone, appellant Jack Markarian argues that the
district court improperly denied the motion for judgment as a
matter of law with respect to him. He distinguishes himself from
the other defendants in that he was neither an insured nor a
claimant with respect to any of the claims the jury found to be
fraudulent. His strongest argument is that the plaintiff failed
to establish that he committed or agreed to commit the two
predicate acts necessary for a jury to find him liable under
either 1962(c) or (d). After close scrutiny, however, this
argument fails along with all others made on his behalf.
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It was not necessary for the jury to find that Jack
Markarian committed mail fraud as a principal. Under RICO,
aiding or abetting the commission of mail fraud also constitutes
a "predicate act," because aiding and abetting mail fraud is a
violation of 1341, the mail fraud statute itself. Therefore,
all we have to decide is whether there was evidence sufficient
for the jury to conclude that Jack Markarian aided and abetted
another Arsenal defendant in the commission of two acts of mail
fraud.
From Jack Markarian's formal position and extensive
involvement in the everyday operations of Arsenal Auto, the jury
reasonably could infer that Jack Markarian aided and abetted his
friends and relatives in submitting fraudulent claims. This
inference is supported as well by other circumstantial evidence
introduced at trial.
One example is that Jack Markarian testified that he
was at Arsenal Auto when the 1976 Rolls Royce was towed in after
allegedly hitting the BFI truck and that he "went over" the car
with the Aetna appraiser who arrived later. Given the fact that
Markarian placed himself at the scene with the 1976 Rolls Royce,
the jury could infer that he helped to inflict damage on the car
before the arrival of the Aetna appraiser, who this time was
neither Dexter nor Cummings, or that at the least Jack Markarian
knew about and helped to conceal from the appraiser what had been
done.
Another example concerns a check written by Jack
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Markarian. At trial Jack Markarian was asked about a check for
$9,000 that he wrote to Mr. Keshishian, a person who was involved
with two of the allegedly fraudulent claims submitted to Aetna.
Mr. Markarian testified that this check was a loan. Similarly, a
payment previously made by Keshishian's brother to Tirinkian for
$13,000 had been explained as a loan, but was made on the same
day that Mr. Keshishian received a payment from Aetna on a
fraudulent claim he had submitted on an automobile purportedly
repaired at Arsenal Auto. The jury, not believing this
explanation, could have inferred that the payment by Keshishian's
brother to Tirinkian was a kickback. Similarly, the jury
reasonably could choose to discredit Jack Markarian's explanation
for his own $9,000 payment and infer that Jack Markarian was
providing a kickback to Mr. Keshishian in connection with another
fraudulent claim. Thus, the jury could infer that Jack Markarian
aided and abetted the commission of a fraud upon Aetna.
In many respects, Jack Markarian's testimony
corroborated that of his brother-in-law, Zareh Tirinkian. For
example, Jack Markarian testified that he saw his brother-in-law
working on the 1976 Rolls Royce after the "guardrail" accident in
June 1988, and even stated that he himself had done some of the
repair work. Jack Markarian also testified that the reason
Arsenal did not make available any autobody shop records or
documents for discovery or at trial was that they were destroyed
by flooding in the autobody shop. The jury could infer, from
Jack Markarian's willingness to corroborate his brother-in-law's
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story, which the jury appears to have discredited, that he was
actively involved in the racketeering activities of Arsenal Auto.
As the head of repairs at Arsenal Auto, Jack Markarian
stood to benefit from Arsenal Auto's obtaining payment from Aetna
for work that was never performed. At trial, Jack Markarian
testified that he and his employees repaired many of the cars
that the plaintiff alleged, and offered evidence to show, were
never damaged. He also testified to the general procedure for
dealing with insurance companies, appraisers, and customers when
an accident occurs. The jury could infer that, in his position
at Arsenal Auto, Jack Markarian frequently met with appraisers,
including Cummings and Dexter, and discussed estimates for
repairs. The jury could infer that Jack Markarian, in this way,
aided and abetted his friends and relatives in submitting
fraudulent claims to Aetna.
Despite appellant Jack Markarian's assertions to the
contrary, the record contains ample evidence for the jury to find
that he aided and abetted others in filing fraudulent claims,
thereby committing two or more predicate acts constituting a
pattern of racketeering activity. Therefore, the jury reasonably
could find that Jack Markarian participated in the affairs of
Aetna, the enterprise, in the substantive violation of 1962(c)
and in the RICO conspiracy in violation of 1962(d), through a
pattern of racketeering activity.
4. Peter and Tarja Markarian __ _________________________
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Appellant Peter Markarian, brother of Lena Tirinkian,
was an employee of Arsenal Auto during the course of the
conspiracy except for six months during 1988. He testified that
he had done automobile repair work since he was a teenager. He
also testified that when he was at Arsenal Auto he would see
Dexter and Cummings, the Aetna appraisers, as frequently as twice
a week.
Appellant Tarja Markarian is the wife of Peter
Markarian and co-owner of their 1970 Mercedes. Tarja admitted
that she sometimes worked at Arsenal Auto Repairs, Inc.,
answering phones and running errands.
The evidence shows that Peter Markarian and his wife
Tarja Markarian submitted six claims on their Mercedes, two of
which were to Aetna, within a span of three years, from 1986 to
1988. The jury found four of these claims to be fraudulent.
The first claim the Markarians reported to Aetna
alleged that their car was damaged while parked at a movie
theater. The description of the damage to the car was identical
to that alleged in a previous claim to another insurance company.
Six months later, the Markarians submitted a second claim to
Aetna alleging that their Mercedes had been vandalized while
parked at the Burlington Mall. Fifteen months earlier, Peter
Markarian's sister, Ms. Garabedian, had submitted a claim to
Aetna alleging that her Mercedes had been vandalized while parked
at the Burlington Mall.
Peter Markarian testified that he repaired the car
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after both alleged claims and that he purchased the necessary
parts with cash. He was unable to provide any records or
receipts of such purchases. Tarja Markarian signed the completed
work forms for both sets of repairs. Each form stated that the
repairs were completed by Arsenal Auto. She also endorsed and
deposited the checks from Aetna to the Markarians relating to
these claims. At trial, Tarja Markarian admitted that she had
never seen the damage on the car and had never seen any repairs
being made. An Aetna investigator who examined the car pursuant
to a court-ordered inspection, testified at trial that many of
the alleged repairs had never been made and that some of the
alleged damage never occurred.
From the evidence concerning these two claims and the
evidence concerning the Markarians' claim history, the jury
reasonably could infer that the Markarians participated in the
affairs of Aetna through a pattern of racketeering activity,
consisting of acts of mail fraud, in violation of 1962(c). From
Peter Markarian's employment at Arsenal Auto and his relationship
with the Aetna appraisers, the jury could infer that Peter
Markarian conspired with the other defendants in violation of
1962(d). Similarly, from Tarja Markarian' false representations
with respect to the Aetna claims and her work, albeit limited, at
Arsenal Auto, the jury could infer that she conspired with her
husband and other Arsenal defendants and was a member of the RICO
conspiracy.
B. Betty Arhaggelidis __ __________________
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Much of the evidence against appellant Betty
Arhaggelidis has been described in Part III.E, supra. We add _____
here, some additional details that further demonstrate that the
evidence supported the jury's findings.
In addition to finding that Mr. and Ms. Arhaggelidis
acted in concert, the jury reasonably could find that Ms.
Arhaggelidis actively committed common law fraud by submitting
false claims to Aetna. To establish fraud (the tort of common
law deceit), the plaintiff must show that the defendant made a
false statement of material fact with knowledge of its falsity in
order to induce the plaintiff to act, and that plaintiff
justifiably relied on the false statement to the plaintiff's
detriment. Danca v. Taunton Savings Bank, 429 N.E.2d 1129, 1133 _____ ____________________
(Mass. 1982).
Betty Arhaggelidis used two cars to obtain payments
from Aetna. The title to one of the cars, a Mercedes 380 SL, was
in the name of her mother, Ms. Paikopoulos. The evidence
supported a finding, however, that Betty Arhaggelidis was the
regular driver of the car, her mother had never purchased a car,
and her mother did not have a driver's license. When claims were
made to Aetna on this Mercedes 380 SL, Ms. Arhaggelidis received
the checks from Aetna at her own address, which was not Ms.
Paikopoulos's address. From this evidence, the jury could infer
that Ms. Arhaggelidis arranged for title to the car to be in her
mother's name in order to conceal fraudulent activity.
One of the claims submitted on the Mercedes 380 SL
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alleged that Amir Lajervardi hit the parked car. Thirty-four
days later, the car reportedly hit another parked car owned by
Mohammad Mohammadi. Thirty-three days after that, the Mercedes
240D, title to which was in the name of Betty Arhaggelidis, was
allegedly rear-ended by Rahim Nima. At trial, Mr. Nima
testified that Mr. Mohammadi was his roommate and Mr. Lajervardi
was his classmate. Three months later, the Mercedes 240D
supposedly rear-ended a Mercedes owned by Mr. Diamondopoulos.
Mr. Diamondopoulos testified at trial that the accident never
happened. With respect to this accident, Betty Arhaggelidis
signed a "Total Loss Affidavit" and submitted it to Aetna. She
then received, endorsed, and deposited Aetna's payment into her
account.
From this and other evidence introduced at trial, the
jury could reasonably infer that Ms. Arhaggelidis acted in
concert with her husband to commit fraud and personally committed
acts of fraud. Therefore, Ms. Arhaggelidis was properly held
jointly and severally liable for all the claims associated with
Rodco/P&B Autobody.
CONCLUSION CONCLUSION
In summary, we conclude that none of the arguments
advanced on appeal supports reversal of any aspect of the
judgment in this case. The district court commendably fashioned
an order for phasing of trial in two consolidated cases, with all
disputed and material issues bearing on liability to be tried
before a jury in the first phase. In post-verdict proceedings
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analogous to a hearing on a motion for summary judgment, the
district court correctly determined that no genuine dispute of
fact remained for jury determination and that final judgment
should be entered for Aetna on the jury verdict, establishing
liability, and on the court's calculation of damages based upon
facts disclosed on the record and not subject to genuine dispute.
The district court's pretrial order for phasing and its post-
verdict proceedings were well-tailored to the distinctive
characteristics of this legally and factually complex litigation.
Together they achieved fair and appropriate adjudication of all
claims and defenses on the merits. Proceeding in this fashion,
the court also effected substantial reductions of delay and cost
for the parties and the court system, an objective strongly
commended by Rule 1 of the Federal Rules of Civil Procedure.
The judgment of the district court is AFFIRMED. ________
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Document Info
Docket Number： 93-1877A
Citation Numbers： 43 F.3d 1546
Judges： Torruella, Boudin, Keeton
Filed Date： 12/29/1994
Precedential Status： Precedential
Modified Date： 10/19/2024