Richardson v. Cella

• Decision Date: 27 February 2014
• Docket Number: Civil Action No. 12–1771.
• Court: U.S. District Court — Eastern District of Louisiana
• Parties: Rachele Cella RICHARDSON, et al. v. George A. CELLA, III, et al.

1 F.Supp.3d 484

Rachele Cella RICHARDSON, et al.

v.George A. CELLA, III, et al.

Civil Action No. 12–1771.

United States District Court,

E.D. Louisiana.

Feb. 27, 2014.

James M. Garner, Darnell Bludworth, Ryan O'Neil Luminais, Sher, Garner, Cahill, Richter, Klein & Hilbert, LLC, New Orleans, LA, for Rachele Cella Richardson, et al.

Phillip A. Wittmann, Andrew D. Mendez, Barry W. Ashe, Justin Van Alstyne, Matthew S. Almon, Stone, Pigman, Walther, Wittmann, LLC, New Orleans, LA, for George A. Cella, III, et al.

ORDER AND REASONS

ELDON E. FALLON, District Judge.

Before the Court are six motions: Defendant's Motion for Partial Summary Judgment on RICO Claims (Rec. Doc. 95); Defendant's Motion for Partial Summary Judgment on Emotional Distress Claims (Rec. Doc. 96); Defendant's Motion for Partial Summary Judgment as to Claims of Brandy Cella on Statute of Limitations Grounds (Rec. Doc. 97); Defendant's Motion for Partial Summary Judgment as to Claims of Rachele Richardson on Grounds of Unclean Hands (Rec. Doc. 98); Plaintiffs' Motion for Adverse Inference (Rec. Doc. 99); Plaintiffs' Motion for Partial Summary Judgment on Conversion (Rec. Doc. 100). The Court has read the briefs and applicable law and, having heard oral argument on the motions, now issues this order and reasons.

I. BACKGROUND

This case arises out of several policy loans that were allegedly taken by Defendant George A. Cella, III on a life insurance policy (“the Policy”) issued by Defendant New York Life Insurance Company (“New York Life”). According to their complaint, Plaintiffs Rachele Cella Richardson and Brandy Cella, George Cella's adult daughters, own the Policy, which insures George Cella's life. Rachele is the sole beneficiary. (Rec. Doc. 1 at 2). Plaintiffs allege that Mr. Cella sought and obtained loans under the Policy beginning in 2006. According to Plaintiffs, Mr. Cella filled out New York Life policy loan request forms, supplying Rachele's tax identification number and forging Rachele's and Brandy's names without their knowledge or authorization. (Rec. Doc. 1 at 3). Plaintiffs further allege that Mr. Cella submitted the forms via facsimile or other wire transmission. Plaintiffs claim that the loan checks were sent to Defendant's place of business, at which point he endorsed the checks by forging Plaintiffs' signatures and deposited them in his personal checking account. (Rec. Doc. 1 at 4). Plaintiffs claim that he did this all while acting as an officer of two family businesses, Horizon Security Vault Complex, Inc. (“Horizon”) and A. Levet Properties Partnership (“ALPP”).

Plaintiffs assert causes of action against Mr. Cella under the Racketeering Influenced and Corrupt Organization Act (“RICO”), 18 U.S.C. §§ 1962(a), 1962(b), 1962(c), as well as state law claims for fraud, negligence, breach of contract, and intentional infliction of emotional distress. (Rec. Doc. 1). In addition, Plaintiffs brought suit against New York Life for breach of contract and negligence in disbursing the loan funds. (Rec. Doc. 1 at 14).

Defendant George Cella denies that any of the loans were unauthorized or made without Plaintiffs' knowledge and authorization. (Rec. Doc. 45 at 5). Defendant claims that Plaintiffs were aware of all loan requests and that many of the loan requests were made by Plaintiffs without any involvement on his part. (Rec. Doc. 45 at 3). Defendant admits that he may have signed Plaintiff Brandy Cella's name on some loan request forms, but he claims that he did this with her full knowledge and authorization. (Rec. Doc. 45 at 3). Similarly, Defendant claims that many of the loan checks were endorsed by Plaintiffs without any involvement on his part. (Rec. Doc. 45 at 4). Defendant admits that he endorsed some of the referenced checks and deposited some of the checks into his personal account. (Rec. Doc. 45 at 5). Defendant admits that he acted as an officer of ALPP and Horizon and claims that some of the loan proceeds went toward benefiting these businesses, which in turn benefited Plaintiffs. (Rec. Doc. 45 at 2, 7). Defendant claims that, at all times, he acted in good faith. (Rec. Doc. 45 at 13).

On August 26, 2013, 2013 WL 4525642, this Court dismissed Plaintiffs' claims that were brought pursuant to § 1962(a) and § 1962(b) as well as Plaintiffs' fraud claim. (Rec. Doc. 25). On February 11, 2014, having been informed by the parties that Plaintiffs and Defendant New York Life reached a settlement, the Court issued a reasonable time dismissal as to Defendant New York Life. (Rec. Doc. 109).

II. PRESENT MOTIONS:

Five motions for partial summary judgment are before this Court. Federal Rule of Civil Procedure Rule 56 states that a court shall grant summary judgment if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Rule 56 “mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When considering a motion for summary judgment, the district court “will review the facts drawing all inferences most favorable to the party opposing the motion.” Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir.1986). The court must find “[a] factual dispute [to be] ‘genuine’ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party [and a] fact [to be] ‘material’ if it might affect the outcome of the suit under the governing substantive law.” Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir.1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

A. Motion for Partial Summary Judgment on RICO Claims by Defendant (Rec. Doc. 95).

1. Summary of Motion

Defendant George Cella asks this Court to grant summary judgment as to Plaintiffs' remaining RICO claim, 18 U.S.C. § 1962(c). Defendant argues that RICO subpart (c) requires Plaintiffs to prove that there was a “pattern of racketeering activities” and that there was reliance on Defendant's alleged acts of mail or wire fraud. According to Defendant, Plaintiffs have put forth no evidence to support the RICO “pattern” requirement, because the scheme involved in this case was very narrow and involved a limited number of participants and victims. Further, Defendant argues that Plaintiffs have put forth no evidence that they personally relied upon any acts constituting mail or wire fraud, as required by RICO. Defendant also argues that because the remaining RICO claim is the only basis for subject-matter jurisdiction, this Court should decline to exercise jurisdiction over the state-law claims and should dismiss the case.

In opposition, Plaintiffs claim that there are sufficient facts to indicate that Defendant's actions constituted a “pattern of racketeering activity.” Plaintiffs claim that this court, in Webster v. New York Life Insurance Company, held that a very similar set of facts was sufficient basis for a RICO claim to survive summary judgment. No. Civ.A. 96–0557, 1998 WL 28261 (E.D.La. Jan. 16, 1998). According to Plaintiffs, in order to establish a “pattern” the acts must be “related” and have “continuity.”Plaintiffs point to sixteen separate acts of wire or mail fraud. Plaintiffs claim that these acts of fraud, coupled with a subsequent fraudulent inducement of a loan, satisfy these requirements and therefore constitute a “pattern of racketeering activity.” Plaintiffs also argue that the United States Supreme Court explicitly rejected Defendant's argument that a plaintiff must show reliance in order to assert a RICO claim in Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639, 648, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008). Instead, Plaintiffs claim that 18 U.S.C. § 1964(c) only requires them to show that they were injured and that the injury was a proximate cause of Defendant's RICO activity. Plaintiffs argue that they have satisfied this requirement by showing that Defendant's forgery resulted in direct harm to them.

2. Law & Analysis

As an initial matter, Defendant concedes that in light of the Supreme Court's decision in Bridge, summary judgment on the issue of reliance would not be appropriate. Therefore, the Court will focus only on the “pattern” requirement imposed by RICO.

The Racketeer Influence and Corrupt Organizations Act (“RICO”) was enacted by Congress as “an aggressive initiative to supplement old remedies and develop new methods for fighting crime.” Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 498, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985). The Supreme Court noted that while part of the impetus behind RICO was the desire to use it against “mobsters and organized criminals,” it has developed into a “tool for everyday fraud cases brought against ‘respected and legitimate enterprises.’ ” Id. (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 741 F.2d 482, 487 (2nd Cir.1984)). The Supreme Court recognized that “RICO is evolving into something quite different from the original conception of its enactors,” however, the Court explained that any remedy for this must come from Congress. Id. at 499, 105 S.Ct. 3275.

With this background in mind, the Court turns to the specific provision of the statute at issue in this case. 18 U.S.C. § 1962(c), provides that “[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.” RICO defines the term “pattern of racketeering activity” as requiring the commission of at least two predicate...