MCCARTHY et al v. FULLER et al

Filing 382

ENTRY ON MOTION FOR JUDGMENT ON THE PLEADINGS: For the reasons set forth above, the Counterclaim Defendants' motion for judgment on the pleadings on all of the Counterclaimants' claims pursuant to RICO and the Indiana Act 194 is GRANTED ***SEE ENTRY FOR ADDITIONAL INFORMATION***. Signed by Judge William T. Lawrence on 5/2/2012. Copy sent to Larry Young via US Mail. (DW)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
KEVIN B. McCARTHY, et al.,
Plaintiffs,
vs.
PATRICIA ANN FULLER, a/k/a SISTER
JOSEPH THERESE, et al.,
Defendants.

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) CAUSE NO. 1:08-cv-994-WTL-DML
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ENTRY ON MOTION FOR JUDGMENT ON THE PLEADINGS
The Counterclaim Defendants in this cause have filed a Motion for Partial Judgment on
the Pleadings (dkt. no. 194) with respect to the Counterclaimants’ claims brought pursuant to the
Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Indiana Corrupt Business
Influence Act (“the Indiana Act”). The motion is fully briefed, and the Court, being duly
advised, GRANTS the motion for the reasons set forth below.
I. STANDARD
In reviewing a motion for judgment on the pleadings, the Court must apply the same
standard that applies to a motion to dismiss under Rule 12(b)(6). Buchanan-Moore v. County of
Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). Therefore, the Court must accept as true all wellpleaded facts in the amended counterclaim and draw all possible inferences in favor of the
Counterclaimants. See Lake v. Neal, 585 F.3d 1059, 1060 (7th Cir. 2009). In other words, the
question is whether the moving party is entitled to judgment as a matter of law even assuming
that all of the facts are as pled by the nonmoving party.
II. RELEVANT FACTUAL ALLEGATIONS
The recitation of facts in the Amended Counterclaims is lengthy and detailed. What

follows here is a highly condensed version of those alleged facts that are relevant to, or will aid
in the understanding of, the issues addressed herein.
Counterclaimant Patricia Ann Fuller, who is also known as Sister Joseph Therese,
entered a convent as a teenager in 1964. There she met Sister Mildred Neuzil. Beginning in the
1940s, and continuing to the time of her death in 2000, Sister Neuzil “received locutions and
apparitions from the Lord Jesus Christ, His Blessed Mother Mary (hereinafter ‘Blessed
Mother’), Saint Joseph, Saint Michael the Archangel, Saint Bernadette, and others.” Amended
Counterclaims ¶ 27. The Counterclaimants allege that:
During apparitions, the Blessed Mother imparted a number of messages to [Sister
Neuzil], which [she] reduced to writing in the form of a personal diary. In part,
the Blessed Mother requested that the citizenry of the United States devote itself
to purity of heart. Further, the Blessed Mother requested that an American artist,
in the United States, create a statue, in the precise likeness of the Blessed Mother
as She appeared to the Visionary, under the title of Our Lady of America, and that
such a statue be enthroned in solemn procession at the National Shrine of the
Immaculate Conception, Washington, D.C.
Id. at 28. Sister Neuzil told Paul Leibold, who was at the time the Archbishop of Cincinnati,
Ohio, about the apparitions and messages. Archbishop Leibold commissioned a statue (“the
Statue”), a wooden plaque, and religious medallions, all of which depicted the image of Our
Lady of America as she had been drawn by Sister Neuzil.
Sister Neuzil compiled the messages she had received regarding Our Lady of America in
a 48-page book (“the Diary”). She registered the copyright of the Diary in 1989; she also
registered several other copyrights relating to Our Lady of America. Sister Neuzil also founded
the Our Lady of America Center in Fostoria, Ohio, “for the purpose of propogating the Devotion
to Our Lady of America,” and registered the name of the Center as a trade name with the State of
Ohio. Id. at ¶ 37.
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In her will, Sister Neuzil bequeathed all of her possessions to Fuller, including her
copyrights. Fuller has owned and operated the Our Lady of America Center since Sister
Neuzil’s death. Also since that time, Fuller has applied for and been awarded several trademarks
for various items relating to Our Lady of America.
On or about November 1, 2005, Counterclaim Defendants Kevin McCarthy and Albert
Langsenkamp, along with a priest, visited the Our Lady of America Center and “offered to
volunteer their services to [Fuller] and to the Our Lady of America Center, falsely alleging that
their purpose was to propagate the Devotion to the Blessed Mother, under the title of Our Lady
of America, on behalf of the Our Lady of America Center and [Fuller].” Id. at ¶ 45. Their
purpose was actually “to unlawfully wrest control of the Devotion to Our Lady of America from
[Fuller] and the Center, all for the sake of personal financial gain.” Id. at ¶ 46. In fact,
McCarthy and Langenskamp, along with the other Counterclaim Defendants, the Third-Party
Defendants in this case, and others, had joined together in a criminal enterprise (“the
Enterprise”) for the purpose of perpetrating a scheme that targeted Fuller, who they knew had
“for nearly fifty years . . . lived a simple life devoted almost exclusively to prayer, uninvolved
with worldly affairs, and . . . would be naive and trusting.” Id. at ¶ 52.
The members of the Enterprise tricked Fuller into turning over the Statue and several
other items related to Our Lady of America (collectively “the Items”) to them and then refused to
return the Items to Fuller when she asked for them back after discovering that the Counterclaim
Defendants were not really working to further the Devotion. In the course of their scheme, the
Enterprise also defrauded Fuller out of a substantial sum of her personal funds. In addition, the
members of the Enterprise have infringed and continue to infringe Fuller’s copyrights and

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trademarks relating to Our Lady of America in various ways, including making a website that
contains material copied from Fuller’s website.
III. DISCUSSION
The Counterclaim Defendants allege that the amended counterclaim fails as a matter of
law to state a claim under either RICO or the Indiana Act. The arguments of the parties are
addressed, in turn, below.
A. Procedural Arguments
The Counterclaimants make three procedural arguments in opposition to the instant
motion. All are without merit.
First, the Counterclaimants argue that “to the extent that the motion is brought under
Rule 12(b)(6), it should be denied.” Response at 4. Nothing in the motion or brief in support of
it can reasonably be construed as suggesting that the motion is brought pursuant to Rule
12(b)(6). It is clearly and unequivocally a motion for judgment on the pleadings brought
pursuant to Rule 12(c). The Counterclaim Defendants simply note, correctly, as the Court does
above and as the Counterclaimants themselves do in their brief, that the same legal standard is
applicable to both types of motions.
Second, the Counterclaimants argue that the instant motion is “barred” by the
“application of the law of the case doctrine” because the Court denied as moot a previous motion
to dismiss and a motion to strike filed by the Counterclaim Defendants. This argument is, in a
word, silly. In the motion to strike the amended counterclaim, the Counterclaim Defendants
objected to the manner in which the amended counterclaim was organized; that motion did not
raise, and therefore the Court’s ruling did not address, the legal viability of the claims contained

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in the pleading. Indeed, the very premise of the motion to strike was that the Counterclaim
Defendants should not have had to address the legal viability of the claims because they were too
difficult to discern. And while the previous motion to dismiss did involve the legal viability of
the Counterclaimants’ claims, that motion was directed to the original, not the amended,
counterclaim. The Court denied it as moot because the Counterclaimants had filed their
amended counterclaim. Denying the motion as moot simply acknowledged that the motion was
no longer viable because it was directed to a pleading–the original counterclaim–that itself was
no longer viable, having been superceded by the amended counterclaim. That ruling passed no
judgment on the arguments made in the motion to dismiss because the Court never considered
those arguments. This means that there was no “law” developed such that the “law of the case”
could later be invoked. This basic legal principle should have been obvious to counsel for the
Counterclaimants, but in the event it was not, the instruction in the Court’s order denying the
motion to strike and denying the motion to dismiss as moot that “[i]f the Plaintiffs believe that
part or all of the amended counterclaim is subject to dismissal pursuant to Rules 12(b)(6) or 9(b),
they should file an appropriately supported motion to dismiss” should certainly have made it
clear that the Court’s order was in no way intended to foreclose any future motions directed to
the legal viability of the amended counterclaim.
Finally, the Counterclaimants argue that if the Court grants the instant motion, that
should not lead to dismissal of the implicated claims with prejudice because the
Counterclaimants should be given an opportunity to file a second amended counterclaim to
address any deficiencies found by the Court. The Counterclaimants are correct that “district
courts routinely do not terminate a case at the same time that they grant a defendant’s motion to

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dismiss; rather, they generally dismiss the plaintiff’s complaint without prejudice and give the
plaintiff at least one opportunity to amend her complaint.” Bausch v. Stryker Corp., 630 F.3d
546, 562 (7th Cir. 2010). That is because “as a general matter, Rule 15 ordinarily requires that
leave to amend be granted at least once when there is a potentially curable problem with the
complaint or other pleading. A plaintiff is entitled to amend the complaint once as a matter of
right, Fed.R.Civ.P. 15(a), and a court should ‘freely give leave for a party to file an amended
complaint when justice so requires.’” Id. (quoting Fed.R.Civ.P. 15(a)(2)).1 However, the former
rationale does not apply in this case because by the time the instant motion was filed the
Counterclaimants did not have a right to amend as a matter of right; first, they already had done
so, and second, the Counterclaim Defendants had filed their answer to the amended
counterclaim. And justice certainly would not require permitting the Counterclaimants another
opportunity to amend their counterclaim at this late stage in the case.
B. Substantive Arguments
With regard to the substantive arguments made by the Counterclaim Defendants, the
Court notes as an initial matter that the Counterclaimants have failed to address them in any
coherent way. Rather, other than the procedural arguments addressed above, their response brief
consists of a general summary of RICO law that, while fairly thorough and accurate, is not
particularly helpful to the Court in the absence of an explanation of how that law should be
applied to the facts as alleged in the amended counterclaim. Rather than provide that
explanation, the Counterclaimants simply recite some of the paragraphs in the amended

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The Court notes that recent amendments to Rule 15 might call this rule into question;
however, the Court need not address that issue here.
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counterclaim. The Court’s task, then, is to determine whether the Counterclaim Defendants have
demonstrated that entry of judgment on the pleadings with regard to the Counterclaimants’ claim
under RICO and the Indiana Act is appropriate as a matter of law.
RICO § 1962(c) provides:
It 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.
18 U.S.C. § 1962(c) . “In order to establish a violation of § 1962(c) . . . a plaintiff must show the
following four elements by a preponderance of the evidence: ‘(1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity.’” Jennings v. Auto Meter Products, Inc., 495 F.3d
466, 472 (7th Cir. 2007) (quoting Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985)).
The Counterclaim Defendants first argue that the amended counterclaim fails to state a
RICO claim because the facts as pled do not support the existence of a RICO “enterprise”
because the Enterprise it alleges does not have the requisite “structure” and is not “separate and
distinct from the persons sought to be held liable.” The problem with the Counterclaim
Defendants’ argument is that it is based upon the state of the law in the Seventh Circuit prior to
the Supreme Court’s ruling in Boyle v. United States, 556 U.S. 938 (2009). While the
Counterclaim Defendants cite to Boyle for the general rule that a RICO association-in-fact “must
have at least three structural features: a purpose, relationships among those associated with the
enterprise, and longevity sufficient to permit these associates to pursue the enterprise’s purpose,”
556 U.S. at 946, they fail to acknowledge that Boyle established a standard for evaluating the
existence of a RICO association-in-fact that is substantially different than that employed by the
Seventh Circuit prior to Boyle. See Jay E. Hayden Foundation v. First Neighbor Bank, N.A., 610
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F.3d 382, 388 (7th Cir. 2010) (setting out pre-Boyle law and acknowledging that Boyle “throws
all in doubt”).
Boyle involved a criminal prosecution for RICO violations. The Supreme Court
summarized the facts as follows:
Petitioner and others participated in a series of bank thefts in New York, New
Jersey, Ohio, and Wisconsin during the 1990's. The participants in these crimes
included a core group, along with others who were recruited from time to time.
Although the participants sometimes attempted bank-vault burglaries and bank
robberies, the group usually targeted cash-laden night-deposit boxes, which are
often found in banks in retail areas.
Each theft was typically carried out by a group of participants who met beforehand to
plan the crime, gather tools (such as crowbars, fishing gaffs, and walkie-talkies), and
assign the roles that each participant would play (such as lookout and driver). The
participants generally split the proceeds from the thefts. The group was loosely and
informally organized. It does not appear to have had a leader or hierarchy; nor does it
appear that the participants ever formulated any long-term master plan or agreement.
From 1991 to 1994, the core group was responsible for more than 30 night-deposit-box
thefts. By 1994, petitioner had joined the group, and over the next five years, he
participated in numerous attempted night-deposit-box thefts and at least two attempted
bank-vault burglaries.
Id. at 941. The issue before the Supreme Court was whether the following jury instruction was
erroneous:
The term “enterprise” as used in these instructions may also include a group of
people associated in fact, even though this association is not recognized as a legal
entity. Indeed, an enterprise need not have a name. Thus, an enterprise need not
be a formal business entity such as a corporation, but may be merely an informal
association of individuals. A group or association of people can be an “enterprise”
if, among other requirements, these individuals “associate” together for a purpose
of engaging in a course of conduct. Common sense suggests that the existence of
an association-in-fact is oftentimes more readily proven by what it does, rather
than by abstract analysis of its structure.
Moreover, you may find an enterprise where an association of individuals,
without structural hierarchy, forms solely for the purpose of carrying out a pattern
of racketeering acts. Such an association of persons may be established by
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evidence showing an ongoing organization, formal or informal, and . . . by
evidence that the people making up the association functioned as a continuing
unit. Therefore, in order to establish the existence of such an enterprise, the
government must prove that: (1) There is an ongoing organization with some sort
of framework, formal or informal, for carrying out its objectives; and (2) the
various members and associates of the association function as a continuing unit to
achieve a common purpose.
Id. at 942 n.1. The Supreme Court rejected the petitioner’s argument that a RICO enterprise
needed more structural features than simply a group of people that joined together to pursue a
course of conduct. Rather, the Court held:
an association-in-fact enterprise is simply a continuing unit that functions with a
common purpose. Such a group need not have a hierarchical structure or a “chain
of command”; decisions may be made on an ad hoc basis and by any number of
methods—by majority vote, consensus, a show of strength, etc. Members of the
group need not have fixed roles; different members may perform different roles at
different times. The group need not have a name, regular meetings, dues,
established rules and regulations, disciplinary procedures, or induction or
initiation ceremonies. While the group must function as a continuing unit and
remain in existence long enough to pursue a course of conduct, nothing in RICO
exempts an enterprise whose associates engage in spurts of activity punctuated by
periods of quiescence. Nor is the statute limited to groups whose crimes are
sophisticated, diverse, complex, or unique; for example, a group that does nothing
but engage in extortion through old-fashioned, unsophisticated, and brutal means
may fall squarely within the statute’s reach.
Id. at 948.
Applying Boyle to the facts alleged in the amended counterclaim, the Counterclaimants
allege the existence of an Enterprise that had each of the elements of a RICO enterprise: (1) a
purpose–“to unlawfully wrest control of the Devotion to Our Lady of America from [Fuller] and
the Center, all for the sake of personal financial gain,” Amended Counterclaim at ¶ 46; (2)
relationships among those associated with the enterprise–the amended counterclaim is replete
with allegations that demonstrate the relationships between McCarthy, Langenskamp, Young,
and others; and (3) sufficient longevity for the Enterprise to pursue its purpose. Therefore, the
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Counterclaimants have sufficiently alleged the existence of a RICO enterprise.
However, the Court agrees with the Counterclaim Defendants that the Counterclaimants’
RICO claim fails for another reason–the scheme alleged by the Counterclaimants fails to satisfy
the “continuity” requirement that is inherent in the “pattern” element of a § 1962(c) claim. “For
this element to be satisfied, the alleged acts of wrongdoing must not only be related, but . . . must
amount to or pose a threat of continued criminal activity.” Gamboa v. Velez, 457 F.3d 703 (7th
Cir. 2006) (citations omitted).
This is true whether the misconduct at issue is considered a “close-ended” scheme
(a completed scheme that, by its duration, can carry an implicit threat of future
harm) or “open-ended” scheme (a scheme that, by its intrinsic (e.g.,
business-as-usual) nature, threatens repetition and thus future harm).
Consequently, isolated instances of criminal behavior, not presenting at least
some threat of future harm, cannot meet § 1962(c)’s continuity element.
Id. at 705-06 (citations omitted).
In Gamboa, the plaintiff alleged that the defendants, a group of detectives, had engaged
in a five-year scheme to frame him and four others for a murder. Gamboa alleged that the
defendants had engaged in numerous acts of racketeering over a five-year period in order to
accomplish their goal. The court held that Gamboa had nonetheless failed to satisfy the
continuity requirement because the allegations in his complaint “foreclosed any threat of
continued criminal activity.”
Restated, when, as here, a complaint explicitly presents a distinct and nonreoccurring scheme with a built-in termination point and provides no indication
that the perpetrators have engaged or will engage in similar misconduct, the
complaint does not sufficiently allege continuity for § 1962(c) purposes even if
the purported scheme takes several years to unfold, involves a variety of criminal
acts, and targets more than one victim. See Talbot v. Robert Matthews Distrib.
Co., 961 F.2d 654, 662-63 (7th Cir.1992) (failure to state a RICO claim even
though defendants’ alleged scheme “extended over a period of years,” involved
multiple fraudulent acts, and injured more than one victim); see also W. Assocs.
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Ltd. P’ship. v. Mkt. Square Assocs., 235 F.3d 629, 633-37 (D.C.Cir. 2001)
(dismissal of complaint affirmed because alleged scheme, while lasting some
eight years, was merely a single effort and thus failed to satisfy the pattern
element); Efron v. Embassy Suites (P.R.), Inc., 223 F.3d 12, 13, 17-21 (1st Cir.
2000) (failure to state a RICO claim-failure to alleged the necessary
pattern-because “the acts as alleged comprise a single effort, over a finite period
of time”); Edmondson & Gallagher v. Alban Towers Tenants Ass’n, 48 F.3d
1260, 1263, 1265 (D.C. Cir.1995) (dismissal of RICO claim upheld, concluding
that, even though the alleged scheme lasted some three years, it was “virtually
impossible for plaintiffs to state a RICO claim” where they alleged a singlepurpose scheme with a discrete injury suffered by a small number of victims.
Id. at 709-710 (additional citations omitted).
The Counterclaim Defendants argue that this case fits within the Gamboa box and
therefore the Counterclaimants cannot satisfy the continuity element. The Court agrees with the
Defendants that the amended counterclaim can, indeed, be read in such a fashion. The
Counterclaimants have alleged that the Enterprise engaged in a scheme to “unlawfully wrest
control of the Devotion to Our Lady of America . . . for the sake of personal financial gain.”
Amended Counterclaim at ¶ 46. A fair reading of the amended counterclaim is that all of the
actions that the Enterprise is alleged to have taken were done in furtherance of or in conjunction
with the scheme to take control of the Devotion from Fuller so that they could financially benefit
from it. There is nothing about the allegations in the amended counterclaim that suggests that
the Enterprise will move on (or would have moved on, absent this lawsuit) to another scheme
when it is finished reaping the benefits of this one. Therefore, as in Gamboa, the amended
counterclaim in this case “presents a distinct and non-reoccuring scheme with a built-in
termination point and provides no indication that the perpetrators have engaged or will engage in
similar misconduct.” See Gamboa, 457 F.3d at 709. Therefore, the continuity requirement is not
satisfied in this case.

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There may well be arguments that could be made regarding the allegations in this case
that might lead to a different conclusion. The Counterclaimants have not made them, however,
and the Court is not in a position to make them on their behalf. See Draper v. Martin, 664 F.3d
1110, 1114 (7th Cir. 2011) (“[I]t is not this court’s responsibility to research and construct the
parties’ arguments.”) (citation omitted). As noted above, all the Counterclaimants have done in
response to the instant motion is provide a summary of RICO law and quoted paragraphs from
the amended counterclaim. The quoted paragraphs do contain allegations that the Counterclaim
Defendants’ wrongdoing is continuing in that content remains on their website that infringes
Fuller’s copyrights and trademarks. However, the paragraphs in question suggest only that the
Enterprise copied Fuller’s website and used her website content to create their own website. The
act of infringement, therefore, was the copying of the website; the fact that the copied
information remains available on the internet may be relevant to the calculation of damages in an
action for copyright infringement, but it does not mean that the Enterprise has continued to
engage in additional acts of criminal copyright infringement, nor does it mean that there is a
threat that they will commit additional criminal acts in the future. Accordingly, the Court agrees
with the Counterclaim Defendants that the allegations contained in the amended counterclaims
do not satisfy the continuity requirement necessary to sustain a claim under § 1962(c).
The Counterclaimants also assert a RICO conspiracy claim under 18 U.S.C. § 1962(d).
The Counterclaim Defendants argue, and the Court agrees, that this claim fails for the same
reason as the § 1962(c) claim does.2 So, too, does the Counterclaimants’ claim under the Indiana
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“In order to state a claim for § 1962(d) conspiracy, a plaintiff must allege that (1) the
defendant agreed to maintain an interest in or control of an enterprise or to participate in the
affairs of an enterprise through a pattern of racketeering activity, and (2) the defendant further
agreed that someone would commit at least two predicate acts to accomplish those goals.”
DeGuelle v. Camilli, 664 F.3d 192, 204 (7th Cir. 2011) (citations omitted). Obviously, a RICO
conspiracy claim can, under some circumstances, survive in a case in which a § 1962(c) claim
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Act. As the Counterclaimants concede in their response, “[w]hile the Indiana statutes are not as
identical to the Federal RICO laws as the Movants suggest, the differences and nuances are not
material at this time for resolution of the Motion for Judgment on the Pleadings.” Response at
20.
IV. CONCLUSION
For the reasons set forth above, the Counterclaim Defendants’ motion for judgment on
the pleadings on all of the Counterclaimants’ claims pursuant to RICO and the Indiana Act is
GRANTED.
_______________________________

SO ORDERED: 5/2/12

Hon. William T. Lawrence, Judge
United States District Court
Southern District of Indiana

fails. See, e.g., Gagan v. American Cablevision, Inc., 77 F.3d 951 (7th Cir. 1996). In this case,
however, the Counterclaimants do not allege that the Counterclaim Defendants conspired to
commit any activities other than the ones they allegedly actually committed, and those activities,
for the reasons discussed above, do not satisfy the continuity requirement and therefore do not
qualify as a “pattern of racketeering activity.”
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Copy by United States Mail to:
LARRY YOUNG
P.O. Box 996
Lake Zurich, IL 60047
Copies to all counsel of record via electronic notification

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