Finkelstein v. Southeast Bank, N.A.

• Decision Date: 07 May 1986
• Docket Number: No. 85-759,85-759
• Parties: RICO Bus.Disp.Guide 6247, 11 Fla. L. Weekly 1086 Margaret FINKELSTEIN, Jill Finkelstein and Diane Finkelstein, Appellants, v. SOUTHEAST BANK, N.A., Appellee.
• Court: Florida District Court of Appeals

Page 976

490 So.2d 976

RICO Bus.Disp.Guide 6247, 11 Fla. L. Weekly 1086

Margaret FINKELSTEIN, Jill Finkelstein and Diane Finkelstein, Appellants, v. SOUTHEAST BANK, N.A., Appellee.

No. 85-759.

District Court of Appeal of Florida,

Fourth District.

May 7, 1986.

Rehearing Denied; Motion to Dismiss Appeal and Withdraw Opinion Denied July 24, 1986.

Edward J. Schack, Coral Gables, and Marc A. Kuperman of Kuperman & Mermell, Coral Gables, for appellants.

Frank P. Scruggs, II, and Merry E. Lindberg of Steel Hector & Davis, Miami, for appellee.

DELL, Judge.

Margaret Finkelstein and her daughters, Jill and Diane Finkelstein, appeal from an order granting temporary injunction which enjoins dissipation or disposal of the principal of the Finkelstein family trust. Appellee Southeast Bank (Southeast) sought and obtained the temporary injunction in conjunction with its suit to recover monies allegedly lost as a result of violations of the Florida RICO (Racketeer Influenced Corrupt Organization) Act, Chapter 895, Florida Statutes (1983), and violations of the Florida Anti-Fencing Act, Chapter 812, Florida Statutes (1983).

Southeast alleged that Margaret Finkelstein's husband, Paul Finkelstein, Lawrence Austin and others operated a telephone solicitation office (described as a "boiler room" operation) engaged in the sale of gems, which they misrepresented as investment grade gems and sold at outrageously high prices. They processed credit card charges at Southeast Bank, which would credit them immediately for credit card sales. Southeast alleged that Paul Finkelstein and others, as part of the "boiler room" operation, made unauthorized charges against the credit card customers. When the cardholders complained, Southeast issued credits to their accounts. After unsuccessful attempts to gain reimbursement from the principals involved in the "boiler room" operation, Southeast filed suit. Southeast later amended its initial complaint to add Margaret Finkelstein and her daughters as defendants in the pending lawsuit. The amended complaint alleged that Margaret Finkelstein associated with her husband Paul Finkelstein and Lawrence Austin for the purpose of sequestering the proceeds derived from the gem sale operations and the credit card operation, and that the Finkelstein family trust constituted an enterprise within the meaning of the RICO Act.

The trial court entered a preliminary injunction, and subsequently two separate temporary injunctions. First, the trial court entered a preliminary injunction (June 1, 1984) which had enjoined all "persons in active concert or participation with Defendant, PAUL FINKELSTEIN," from disposing of assets, including assets in the family trust. That preliminary injunction order did not name appellants. Then, on August 28, 1984, the trial court entered an agreed temporary restraining order, enjoining the disposition of the corpus of the family trust, based on the consent of Margaret Finkelstein and her daughters. Subsequently, after the agreed temporary restraining order had expired by its own terms, Margaret Finkelstein and her daughters moved to exempt or exclude the family trust from the restraints of the preliminary injunction, which did not name them. Southeast thereupon filed a renewed motion for preliminary injunction with respect to the family trust. Southeast stipulated to treatment of the Finkelsteins' motion as a motion to dissolve the preliminary injunction, and both motions were considered simultaneously.

After an evidentiary hearing, the trial court denied the Finkelsteins' motion to dissolve the June 1, 1984 preliminary injunction, and entered a new temporary injunction which prohibited dissipation or disposal of the principal of the trust, but allowed the beneficiaries to receive the interest income from the trust. The court, ex parte, approved an injunction bond by Southeast in the sum of $25,000. This temporary injunction is the subject of this appeal.

Appellants contend that the trial court did not have jurisdiction of the Finkelstein family trust because Southeast did not sue them in their capacity as trustees. Appellants next argue that the trial court imposed the injunction without sufficient evidence to connect Margaret Finkelstein or the corpus of the trust to the alleged RICO activities. They argue in the alternative that the injunction should have been limited to those funds directly related to the RICO activities. Finally, they contend that the amount of the injunction bond is inadequate.

We find no merit in appellants' first point on appeal. Appellants appeared in this action and agreed to the entry of a temporary restraining order precluding dissipation of the principal of the trust. They did not raise jurisdiction as an issue in their motion to dismiss the complaint, or in their later motion to dissolve the agreed temporary restraining order (which was denied as moot, since it was filed after the agreed order had expired). By their actions, they waived any right to challenge jurisdiction because of appellee's failure to sue them in their capacity as trustees. Furthermore, the depository itself did not need to be named in the suit, where all parties interested in the trust res were before the court.

Southeast bases its claim for injunctive relief on Florida's Anti-Fencing Act, particularly Section 812.035(6), Florida Statutes (1983), and Florida's RICO (Racketeer Influenced and Corrupt Organizations) Act, Section 895.05(6), Florida Statutes (1983). Both statutes provide civil remedies to protect the rights of innocent persons and both expressly provide for injunctive relief. See Roush v. State, 413 So.2d 15 (Fla.1982); DeLisi v. Smith, 401 So.2d 925 (Fla. 2d DCA 1981). However, the question presented in this case is one of first impression, since neither statute nor case law has addressed the issue raised here: whether an injunction may be issued prior to judgment barring appellants from disposing of assets in a private trust fund, in order to preserve sums for collection should appellee prevail on its claims of RICO violations or theft. We hold that such an injunction may be issued, but only if the requirements established herein have been satisfied.

We have looked for guidance in the case law interpreting the federal RICO statute, 18 U.S.C. §§ 1961-1968 (1970) (Title IX of the Organized Crime Control Act of 1970). However, despite the similarities between the federal statute and the Florida RICO Act, we have found no case directly on point, since the federal statute does not contain an express provision for injunctive relief such as that contained in Florida RICO. Federal courts have granted injunctions in RICO cases, but on grounds other than the RICO statute. In USACO Coal Co. v. Carbomin Energy, 689 F.2d 94 (6th Cir.1982), the court of appeals in a RICO case affirmed the issuance of a preliminary injunction restraining defendants from dissipating certain assets pendente lite, upon a finding of a substantial likelihood that plaintiffs would prevail on their equitable claim for restitution based on allegations of breach of fiduciary duty. In Ashland Oil, Inc. v. Gleave, 540 F.Supp. 81 (W.D.N.Y.1982), the district court granted preliminary injunctive relief restraining defendants from transferring their tangible assets or properties, based not on federal RICO, but rather upon the New York State law on attachment.

On the other hand, several cases not involving RICO have rejected injunctive relief in cases similar to this one. In ITT Community Development Corporation v. Barton, 569 F.2d 1351 (5th Cir.1978), the appeals court reversed an order which directed prejudgment garnishees not to transfer certain funds, and ordered them to pay the sums into the registry of the court in order to secure payment of a judgment which might subsequently be entered against garnishees. The district court in Barton based its order upon the Florida prejudgment garnishment statute. This court held in St. Lawrence Co. v. Alkow Realty, Inc., 453 So.2d 514 (Fla. 4th DCA 1984) that injunctive relief will not lie where its purpose is to restrain a seller from disbursing sale proceeds when an adequate remedy at law exists. See also Acquafredda v. Messina, 408 So.2d 828 (Fla. 5th DCA 1982) which held that a complaint on a promissory note does not state a claim in equity for an injunction to prevent a debtor from disposing of assets prior to judgment.

Section 895.05(6), Florida Statutes (1985), provides:

Any aggrieved person may institute a proceeding under subsection (1). In such proceeding, relief shall be granted in conformity with the principles that govern the granting of injunctive relief from threatened loss or damage in other civil cases, except that no showing of special or irreparable damage to the person shall have to be made. Upon the execution of proper bond against damages for an injunction improvidently granted and a showing of immediate danger of significant loss or damage, a temporary restraining order and a preliminary injunction may be issued in any such action before a final determination on the merits.

Section 812.035, Florida Statutes, also gives rise to injunctive relief in the Anti-Fencing Act. In Dania Jai-Alai International, Inc. v. Murua, 375 So.2d 57 (Fla. 4th DCA 1979), we recognized that "[g]enerally, a temporary injunction is an extraordinary remedy and will be granted sparingly only after the moving party has alleged and proven facts entitling it to relief." Id. at 58. The Florida RICO Act and Anti-Fencing Act provide that in such a proceeding, relief shall be granted in conformity with the principles that govern the granting of injunctive relief from threatened loss or damage in other civil cases.

As pointed out in DeLisi v. Smith, supra, the burden of proof is on the party seeking the injunction to make a prima facie case that he is entitled to such equitable relief. It is also true that the burden shifts to the movant on any subsequent ...