Aetna Cas. Sur. Co. v. P & B Autobody

• Decision Date: 04 August 1994
• Docket Number: Nos. 93-1877,s. 93-1877
• Citation: 43 F.3d 1546
• Parties: AETNA CASUALTY SURETY COMPANY, Plaintiff-Appellee, v. P & B AUTOBODY, et al., Defendants-Appellees. Arsenal Auto Repairs, Inc., et al., Defendants-Appellants. AETNA CASUALTY SURETY COMPANY, Plaintiff-Appellee, v. RODCO AUTOBODY, et al., Defendants-Appellees. Betty Arhaggelidis, Defendant-Appellant. AETNA CASUALTY SURETY COMPANY, Plaintiff-Appellee, v. P & B AUTOBODY, et al., Defendants-Appellees. Betty Arhaggelidis, Appellant. to 93-1881, 93-2209, 93-2300, 93-1903 and 93-2257. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1546

43 F.3d 1546

AETNA CASUALTY SURETY COMPANY, Plaintiff-Appellee, v. P & B AUTOBODY, et al., Defendants-Appellees.

Arsenal Auto Repairs, Inc., et al., Defendants-Appellants.

AETNA CASUALTY SURETY COMPANY, Plaintiff-Appellee, v. RODCO AUTOBODY, et al., Defendants-Appellees.

Betty Arhaggelidis, Defendant-Appellant.

AETNA CASUALTY SURETY COMPANY, Plaintiff-Appellee, v. P & B AUTOBODY, et al., Defendants-Appellees.

Betty Arhaggelidis, Appellant.

Nos. 93-1877 to 93-1881, 93-2209, 93-2300, 93-1903 and 93-2257.

United States Court of Appeals First Circuit.

Heard Aug. 4, 1994.

Decided Dec. 29, 1994.

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 & B Autobody, et al.

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 Cas. and Sur. Co.

Before TORRUELLA, Chief Judge, BOUDIN, Circuit Judge, and KEETON, ^* District Judge.

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. Secs. 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.

For the reasons that follow, ¹ we affirm.

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, 109 S.Ct. 3227, 106 L.Ed.2d 576 (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 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, 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 Sec. 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 Sec. 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 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

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 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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).

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