FIDELITY NATIONAL TITLE INSURANCE COMPANY v. CRAVEN et al

Filing 27

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE RONALD L. BUCKWALTER ON 7/17/13. 7/19/13 ENTERED AND COPIES E-MAILED(mbh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

FIDELITY NATIONAL TITLE
INSURANCE COMPANY, in its
individual capacity and as subrogee of
JP MORGAN BANK, N.A., successor to
WASHINGTON MUTUAL BANK, F.A.,
Plaintiff,
v.
VINCENT E. CRAVEN, Jr., et. al.,
Defendants.

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CIVIL ACTION

NO. 12-4306

MEMORANDUM
BUCKWALTER, S.J.

July 17, 2013

Currently pending before the Court are Defendants Vincent E. Craven, Aimee F. Craven,
and Valerie A. Craven’s (collectively “the Cravens”) Motion to Dismiss Plaintiff Fidelity
National Title Insurance Company’s (“Fidelity”) Amended Complaint and Defendant Tammi M.
Torbik’s Motion to Dismiss Fidelity’s Amended Complaint. For the following reasons, the
Motions are granted in part and denied in part.
I.

FACTUAL AND PROCEDURAL BACKGROUND
This suit arises out of an alleged conspiracy to defraud Plaintiff Fidelity and other lenders

by taking out mortgages and failing to record them properly so that they went unpaid at
foreclosure. The facts of the case, as set forth in the Amended Complaint, focus on Defendants’
actions in the mortgaging and sales of three properties.

A.

328 Fifth Avenue, Conshohocken, PA

On or about January 15, 2003, Valerie Craven conveyed the real property located at 328
Fifth Avenue, Conshohocken, PA (“The Conshohocken Property”) to Vincent Craven, her father,
via deed. (Am. Compl. ¶ 10.) The deed was properly recorded with the Office of the Recorder
of Deeds of Montgomery County. (Id.) On or about March 4, 2005, Mr. Craven executed and
delivered two mortgages against the Conshohocken Property. (Id. ¶ 11.) The first was an openend mortgage in favor of Wachovia Bank, FSB (“Wachovia”) in the amount of $105,000.00.
(Id.) This mortgage was recorded on March 24, 2005. (Id.) Secondly, also on March 4, 2005,
Mr. Craven executed a mortgage in favor of Washington Mutual Bank, F.A. (“Washington
Mutual”) in the amount of $213,750.00. (Id.) This mortgage was recorded on April 14, 2005.
(Id.)
After these mortgages were taken out, Whitford Land Transfer, Inc. (“Whitford”), an
authorized title agent of Fidelity, issued a Loan Policy of Title Insurance (“The March 2005 Loan
Policy”) to Washington Mutual, insuring that its mortgage was a first position mortgage lien
against the Conshohocken Property. (Id. ¶ 12.) Defendant Torbik, in her capacity as a closing
agent for Whitford, processed the March 2005 Loan Policy. (Id. ¶ 13.) Neither Mr. Craven nor
Ms. Torbik disclosed to Fidelity that the Wachovia mortgage and the Washington Mutual
mortgage were executed on the same day. (Id. ¶¶ 14, 17.) Ms. Torbik intentionally recorded the
Wachovia mortgage ahead of the Washington Mutual Mortgage. (Id. ¶ 18.) Ms. Torbik also
failed to ensure that a Seller Affidavit or Owner Affidavit were executed, which would have
included a statement that the properties were free of liens or encumbrances known to the seller.
(Id. ¶¶ 15–16.) Because the Wachovia mortgage was recorded ahead of the Washington Mutual
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mortgage, the Washington Mutual mortgage was not a first position mortgage lien. (Id. ¶ 19.)
As a result, Washington Mutual tendered a claim under the March 2005 Loan Policy. (Id. ¶ 20.)
On or about October 11, 2005, Mr. Craven conveyed the Conshohocken property to his
wife, Aimee Craven, under a deed dated September 23, 2005. (Id. ¶ 21.) This deed was recorded
on November 20, 2006. (Id.) In conjunction with this sale, on or about October 11, Aimee
Craven executed a purchase money mortgage against the Conshohocken Property in favor of
Washington Mutual for $312,000.00. (Id. ¶ 24.) This mortgage was recorded on October 5, 2006.
(Id.) Ms. Torbik also processed this transaction wherein Aimee Craven “purchased” and
mortgaged the Conshohocken Property from her husband. (Id. ¶ 25.) After doing so, Ms. Torbik
issued a check payable to Washington Mutual for an amount sufficient to satisfy the debt from the
March 2005 Washington Mutual mortgage. (Id. ¶ 26.) However, instead of delivering the check
to Washington Mutual, Ms. Torbik delivered it to Mr. Craven with the knowledge and intent that
he would not deliver it to Washington Mutual. (Id. ¶¶ 28–29.) Mr. Craven then fraudulently
negotiated the check and deposited the funds to a bank account owned by his own company,
Monument Mortgage. (Id. ¶ 30.) As a result of these actions, neither the Wachovia nor the
Washington Mutual March 2005 mortgage was paid off. (Id. ¶ 31–32.) Both Ms. Torbik and
Aimee Craven were aware of these mortgages at the time of the sale from Mr. Craven to Aimee.
(Id. ¶ 33–34.)
In connection with the October 2005 sale from Mr. Craven to his wife, Aimee, and the
corresponding purchase money mortgage, Ms. Torbik and Whitford issued another Loan Policy of
Title Insurance, which insured the purchase money mortgage as a first position mortgage lien
against the Conshohocken Property. (Id. ¶ 35.) However, despite committing Fidelity (via its
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agent, Whitford) to insure the October 2005 purchase money mortgage as a first position
mortgage lien, Ms. Torbik recorded this mortgage as a third position mortgage lien behind the
original Wachovia and Washington Mutual mortgages. (Id. ¶ 36.)
Aimee Craven eventually defaulted on the loan secured by the 2005 purchase money
mortgage. (Id. ¶ 37.) While preparing to initiate foreclosure, Washington Mutual obtained a title
report indicating that both the Wachovia and original Washington Mutual mortgages remained of
record. (Id. ¶ 38.) Mr. Craven defaulted on both of these mortgages. (Id. ¶ 39.) As a result of
Mr. Craven’s default on its loan, Wachovia secured a judgment in mortgage foreclosure against
Mr. Craven and scheduled a Sheriff’s sale of the property for June 23, 2010. (Id. ¶ 40.) In order
to avoid a divestiture of both the March 2005 insured mortgage and the October 2005 insured
mortgage, Fidelity paid off Mr. Craven’s loan secured by the Wachovia mortgage. (Id. ¶ 41.)
JPMorgan Chase Bank, N.A. (“Chase”), through the acquisition of certain assets of
Washington Mutual, is now the holder of the March 2005 and October 2005 insured mortgages.
(Id. ¶ 42.) Pursuant to its obligations under the October 2005 loan policy, Fidelity is tendering
payments to Chase in satisfaction of the March 2005 mortgage. (Id. ¶ 43.)
B.

922 Montgomery Avenue, Unit C-5, Bryn Mawr, PA

On or about March 9, 2004, Valerie Craven conveyed the real property at 922
Montgomery Avenue, Unit C-5, Bryn Mawr, PA (“The Bryn Mawr C-5 Property”) to her father,
Mr. Craven, under a deed which was never recorded. (Id. ¶ 44.) Also on or about March 9, 2004,
Mr. Craven executed a mortgage against the Bryn Mawr C-5 Property in favor of Washington
Mutual for $140,000.00. (Id. ¶ 45.) On behalf of Fidelity, Whitford and Ms. Torbik issued a loan
policy insuring this mortgage as a first position mortgage lien against the property. (Id. ¶ 46.)
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Ms. Torbik, however, failed to record the mortgage. (Id. ¶ 47.)
On or about September 23, 2005, Mr. Craven sold the Bryn Mawr C-5 Property to his
wife, Aimee, under a deed that was recorded on April 18, 2006. (Id. ¶ 49.) At this time, the
insured C-5 mortgage was not paid off. (Id.) Subsequently, on July 24, 2006, Aimee Craven
conveyed the Bryn Mawr C-5 Property to Vincent Varvolis, under a deed recorded on March 15,
2007. (Id. ¶ 50.) Mr. Varvolis also executed a mortgage against the property in the amount of
$180,000.00, which was recorded on March 15, 2007. (Id. ¶ 52.) The original insured C-5
mortgage executed by Mr. Craven was still not paid off. (Id. ¶ 51.)
Because neither the original insured C-5 mortgage nor the deed conveying the house from
Valerie Craven to Vincent Craven was ever recorded, the insured C-5 mortgage was never
perfected as a lien. (Id. ¶ 47.) Moreover, the insured C-5 mortgage did not attach to the property
when it was conveyed from Mr. Craven to Mr. Varvolis. (Id. ¶ 54.) As a result, Plaintiff Fidelity
paid Chase (the successor to Washington Mutual) for the insured C-5 mortgage. (Id. ¶ 55.)
C.

922 Montgomery Avenue, Unit E-5, Bryn Mawr, PA

The facts for the real property at 922 Montgomery Avenue, Unit C-5, Bryn Mawr, PA
(“The Bryn Mawr E-5 Property”) are almost identical to those for the Bryn Mawr C-5 Property.
On or about March 9, 2004, Valerie Craven conveyed the Bryn Mawr E-5 Property to her father,
Mr. Craven, under a deed which was never recorded. (Id. ¶ 56.) Also on or about March 9, 2004,
Mr. Craven executed a mortgage against the Brywn Mawr E-5 Property in favor of Washington
Mutual for $138,000.00. (Id. ¶ 57.) On behalf of Fidelity, Whitford and Ms. Torbik issued a loan
policy insuring this mortgage as a first position mortgage lien against the property. (Id. ¶ 58.)
Ms. Torbik, however, failed to record the mortgage. (Id. ¶ 59.)
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On or about July 19, 2006, Aimee Craven conveyed the Bryn Mawr E-5 Property to Mr.
Varvolis, under a deed recorded on March 15, 2007. (Id. ¶ 61.) Mr. Varvolis also executed a
mortgage against the property in the amount of $180,000.00, which was recorded on March 20,
2007. (Id. ¶ 63.) The original insured E-5 mortgage executed by Mr. Craven was still not paid
off. (Id. ¶ 62.)
Because neither the original insured E-5 mortgage nor the deed conveying the house from
Valerie Craven to Vincent Craven was ever recorded, the insured E-5 mortgage was never
perfected as a lien. (Id. at ¶ 64.) Moreover, the insured E-5 mortgage did not attach to the
property when it was conveyed to Mr. Varvolis. (Id. ¶ 65.) As a result, Plaintiff Fidelity paid
Chase (the successor to Washington Mutual) for the insured E-5 mortgage. (Id. ¶¶ 66–67.)
D.

Procedural History

Plaintiff Fidelity brought suit on July 30, 2012, alleging ten counts, including (1) fraud
against Vincent Craven, Aimee Craven, and Monument Mortgage for failing to disclose to
Fidelity the existence of the Wachovia mortgage and the numerous transfers and sales of the
properties in question; (2) fraud against Vincent Craven, Aimee Craven, and Valerie Craven for
directing Tammi Torbik to not record the various mortgages and for failing to inform Fidelity that
the instruments were never recorded; (3) fraud against Tammi Torbik for failing to disclose the
above information and for directing the Washington Mutual payoff check for the 2005
Conshohocken property mortgage to Mr. Craven; (4) negligence against Tammi Torbik; (5)
breach of fiduciary duty against Tammiy Torbik; (6) breach of contract against Vincent Craven
and Aimee Craven; (7) unjust enrichment against Vincent Craven, Aimee Craven, Valerie Craven,
and Monument Mortgage; (8) conversion against Vincent Craven, Aimee Craven, Valerie Craven,
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and Monument Mortgage; (9) civil conspiracy against Vincent Craven, Aimee Craven, Valerie
Craven, and Tammi Torbik; and (10) violations of the Racketeer Influence and Corrupt
Organizations (“RICO”) Act, 18 U.S.C. § 1962 et. seq. After Motions by both Defendants, the
Court dismissed Counts I–III, IX, and X without prejudice and Counts VI, VII, and VIII with
prejudice.
On December 12, 2012, Fidelity filed an Amended Complaint and, with new facts,
reasserted Counts I–III, IX, and X. Defendants Vincent, Valerie, and Aimee Craven filed a
Motion to Dismiss Counts I, II, IX, and X on December 31, 2012. Fidelity filed a Response in
Opposition on January 14, 2013, and the Cravens filed a Reply Brief on January 16. Defendant
Tammi Torbik filed her own Motion to Dismiss Claims III, IX, and X on December 26, 2012.
Fidelity filed a Response in Opposition on January 9, 2013, and Ms. Torbik filed a Reply Brief on
January 16. The Court will now consider the merits of these Motions.
II.

STANDARD OF REVIEW
Under Rule 12(b)(6), a defendant bears the burden of demonstrating that the plaintiff has

not stated a claim upon which relief can be granted. Fed. R. Civ. P.12(b)(6); see also Hedges v.
United States, 404 F.3d 744, 750 (3d Cir. 2005). In Bell Atl. Corp. v. Twombly, 550 U.S. 544
(2007), the United States Supreme Court recognized that “a plaintiff’s obligation to provide the
‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Id. at 555. Following these
basic dictates, the Supreme Court, in Ashcroft v. Iqbal, 556 U.S. 662 (2009), subsequently defined
a two-pronged approach to a court’s review of a motion to dismiss. “First, the tenet that a court
must accept as true all of the allegations contained in a complaint is inapplicable to legal
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conclusions. Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Id. at 678. Thus, although “Rule 8 marks a notable and
generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not
unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at
678–79. Second, the Supreme Court emphasized that “only a complaint that states a plausible
claim for relief survives a motion to dismiss.” Id. at 679. “Determining whether a complaint
states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task
that requires the reviewing court to draw on its judicial experience and common sense.” Id. A
complaint does not show an entitlement to relief when the well-pleaded facts do not permit the
court to infer more than the mere possibility of misconduct. Id.; see also Phillips v. Cnty. of
Allegheny, 515 F.3d 224, 232–34 (3d Cir. 2008) (holding that: (1) factual allegations of complaint
must provide notice to defendant; (2) complaint must allege facts suggestive of the proscribed
conduct; and (3) the complaint’s “‘factual allegations must be enough to raise a right to relief
above the speculative level’”) (quoting Twombly, 550 U.S. at 555)).
Notwithstanding these new dictates, the basic tenets of the Rule 12(b)(6) standard of
review have remained static. Spence v. Brownsville Area Sch. Dist., No. Civ.A.08-626, 2008 WL
2779079, at *2 (W.D. Pa. July 15, 2008). The general rules of pleading still require only a short
and plain statement of the claim showing that the pleader is entitled to relief and need not contain
detailed factual allegations. Phillips, 515 F.3d at 233. Further, the court must “accept all factual
allegations in the complaint as true and view them in the light most favorable to the plaintiff.”
Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006). Finally, the court must
“determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled
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to relief.” Pinkerton v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002).
III.

DISCUSSION
A.

Fidelity’s Claims for Fraud (Counts I–III)

Rule 9(b) of the Federal Rules of Civil Procedure provides that, when alleging a cause of
action based on fraud, “a party must state with particularity the circumstances constituting
fraud[.]” Fed. R. Civ. P. 9(b) (emphasis added). Rule 9(b) applies with equal force to both fraud
actions under federal statutes and actions that are based on state law but brought in federal court.
See Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007); Christidis v. First Pa. Mortg.
Trust, 717 F.2d 96, 99 (3d Cir. 1983). Under Pennsylvania law, the six elements of a common
law fraud action are: (1) a misrepresentation; (2) material to the transaction; (3) made falsely; (4)
with the intent of misleading another to rely on it; (5) justifiable reliance resulted; and (6) injury
was proximately caused by reliance.1 Santana Prods., Inc. v. Bobrick Washroom Equip., Inc., 401
F.3d 123, 136 (3d Cir. 2005) (citing Viguers v. Philip Morris USA, Inc., 837 A.2d 534 (Pa. Super.
Ct. 2003)). “In real estate transactions, fraud arises where a seller knowingly makes a
misrepresentation, undertakes a concealment calculated to deceive, or commits non-privileged
failure to disclose.” Sewak v. Lockhart, 699 A.2d 755, 759 (Pa. Super. Ct. 1997) (citing De
Joseph v. Zambelli, 139 A.2d 644, 647 (Pa. 1958)). In order to survive a motion to dismiss, the
plaintiff’s complaint must “plead or allege the date, time and place of the alleged fraud[,] or
otherwise inject precision or some measure of substantiation into a fraud allegation.” Frederico,
507 F.3d at 200 (citing Lum v. Bank of Am., 361 F.3d 217, 224 (3d Cir. 2004)).
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The Cravens cite to the lack of privity between Plaintiff and Defendants as evidence that
the pleading is inadequate. However, there is no requirement for privity for a fraud claim under
Pennsylvania law.
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The Court previously dismissed Fidelity’s fraud claims in its first Complaint as failing to
meet the heightened pleading standard required by Rule 9(b). Both the Cravens and Ms. Torbik
claim that Fidelity has again failed to allege with the requisite particularity the facts necessary to
give precision and substantiate the allegations of fraud. The Court finds, however, that, though
imperfect, Fidelity has added enough to their Amended Complaint to allow it to proceed. In
addition to the original allegations that Defendants failed to disclose the existence of the
unsatisfied mortgages for Wachovia and Washington Mutual and failed to inform Fidelity that the
deeds and mortgages for the properties at issue were not recorded, Fidelity has added an allegation
that the Cravens failed to execute Sellers or Owners affidavits. (Am. Compl. ¶ 15.) Moreover,
and more importantly, Fidelity attached a copy of the check that was made out to Washington
Mutual and fraudulently negotiated and deposited into an account owned by Vincent Craven’s
company, Monument Mortgage. The addition to the Amended Complaint of the copy of this
check adds detail and substantiation to the allegations such that the Cravens are on notice of the
allegations and can appropriately respond.2
Similarly, Fidelity’s allegations against Ms. Torbik now meet the heightened standard of
Rule 9(b). Again, the addition of the check alleged to have been fraudulently delivered to Vincent
Craven by Ms. Torbik adds particularity that was missing in the original Complaint. Ms. Torbik

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The Cravens argue that the fraud claim (and all claims) should be dismissed under the
“Corporate Conspiracy Doctrine.” Though they do not cite to any caselaw, it appears they are
referring to the “Intra-Corporate Conspiracy Doctrine,” which under Pennsylvania law holds that
“a corporation’s employees, acting as agents of the corporation, are deemed incapable of
conspiring among themselves or with the corporation.” Am. Bd. of Internal Med. v. Von Muller,
No. Civ.A.10-2680,2011 WL 857337, at *12 (E.D. Pa. Mar. 10, 2011). As Ms. Torbik is
accused of conspiring with the Cravens, who are not employees or agents of Fidelity, the doctrine
is inapplicable to this case.
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is in a position to adequately respond to the claim of fraud against her.
Ms. Torbik also argues that the fraud claim should be dismissed with prejudice due to the
economic loss doctrine. Pennsylvania’s economic loss doctrine “‘provides that no cause of action
exists for negligence that results solely in economic damages unaccompanied by physical or
property damage.’” Azur v. Chase Bank, USA, 601 F.3d 212, 222 (3d Cir. 2010) (citing
Sovereign Bank v. BJ’s Wholesale Club, Inc., 533 F.3d 162, 175 (3d Cir. 2008) (other citations
omitted). Ms. Torbik cites to Werwinski v. Ford Motor Co., 286 F.3d 661 (3rd Cir.2002) for the
proposition that the economic loss doctrine bars intentional fraudulent behavior from
misrepresentations arising out of a contractual relationship. Werwinski, however, was done in the
context of a products liability case wherein defendant’s liability was covered under the product’s
warranty and would be the same under either a contractual or tort theory. We decline to extend
Werwinski’s holding to the facts of the current case. See also Foster v. Nw. Mut. Life, No.
Civ.A.02-2211, 2002 WL 31991114, at *2 (E.D. Pa. Jul. 26, 2002) (refusing to extend Werwinski
from the products liability context).
Defendants’ Motions to Dismiss Plaintiff’s claims on fraud (Counts I–III) are therefore
denied.
B.

Fidelity’s Claim for Civil Conspiracy Against All Defendants

“The essential elements of a claim for civil conspiracy are: (1) a combination of two or
more persons acting with a common purpose to do an unlawful act or to do a lawful act by
unlawful means or for an unlawful purpose; (2) an overt act done in pursuance of the common
purpose; and, (3) actual legal damage . . . . Proof of malice, or an intent to injure, is also an
essential part of a cause of action for conspiracy.” Commonwealth v. TAP Pharm. Prods., Inc., 36
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A.3d 1112, 1144 (Pa. Commw. Ct. 2011). Malice requires proof that the conspirators took
unlawful actions with the specific intent to injure the plaintiff, instead of simply furthering their
own interests through unlawful means. See id. at 1185 (collecting cases).
When dismissing Fidelity’s conspiracy charge from its original Complaint, the Court noted
that Fidelity failed to adequately plead malice or to show what overt acts were taken in
furtherance of the conspiracy. Fidelity has fixed these pleading deficiencies in its Amended
Complaint. Specifically, Fidelity cites nine overt acts in paragraph 161 of the Amended
Complaint and alleges malice in paragraph 162. As a result, the Cravens and Ms. Torbik’s
Motions are denied as to the conspiracy claim.
C.

Fidelity’s RICO Claim Against All Defendants

A claim for civil RICO under 18 U.S.C. § 1962(C) requires a plaintiff to plead four
elements: (1) conduct; (2) of an enterprise; (3) through a pattern; (4) of racketeering activity. In re
Ins. Brokerage Antitrust Litig., 618 F.3d 300, 362–363 (3d Cir. 2010). The Cravens and Ms.
Torbik claim that Fidelity has failed to properly allege an enterprise or a pattern of racketeering
activity. The Court previously dismissed Fidelity’s RICO Claim as filed in its original Complaint
for failing to adequately allege an enterprise. Because the Amended Complaint does not fix this
error, the RICO claim is again dismissed
Section 1961(4) defines enterprise as including “any individual, partnership, corporation,
association, or other legal entity, and any union or group of individuals associated in fact although
not a legal entity.” The statute describes two categories of enterprises: “[t]he first encompasses
organizations such as corporations and partnerships, and other ‘legal entities.’ The second covers
‘any union or group of individuals associated in fact although not a legal entity.’” United States v.
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Turkette, 452 U.S. 576, 581–82 (1981) (quoting 18 U.S.C. § 1961(4)). Whereas associations
from the first category are relatively straightforward, those in the second category prove to be
more difficult. For an association-in-fact enterprise, there must be “‘some sort of structure . . .
within the group for the making of decisions, whether it be hierarchical or consensual. There must
be some mechanism for controlling and directing the affairs of the group on an on-going, rather
than ad hoc, basis.’” In re Ins. Brokerage Antitrust Litig., 618 F.3d at 365 (quoting Turkette, 452
U.S. at 222). Second, the associates must function as a continuing unit. Id. at 365. Finally, the
association-in-fact be “an entity separate and apart from the pattern of activity in which it
engages.” Id. (quoting Turkette, 452 U.S. at 583). On this last requirement:
[It] is not necessary to show that the enterprise has some function wholly unrelated to
the racketeering activity, but rather that it has an existence beyond that which is
necessary merely to commit each of the acts charged as predicate racketeering
offenses. The function of overseeing and coordinating the commission of several
different predicate offenses and other activities on an on-going basis is adequate to
satisfy the separate existence requirement.
Id. (quoting United States v. Riccobene, 709 F.2d 214, 223–24 (3d Cir. 1983)).
Fidelity claims that an association-in-fact exists wherein the Cravens and Ms. Torbik each
play a part in conducting a scheme of fraudulent activity as to the three properties at issue.
Fidelity alleges that the group has a structure because Mr. Craven “controlled” the enterprise.
(Am. Compl. ¶ 168(a).) Fidelity argues that the purpose of the enterprise was to commit bank
fraud upon Washington Mutual, for whom Fidelity sues as subrogee. (Am. Compl. ¶ 170.)
However, the Amended Complaint still does not allege facts suggesting that the supposed
enterprise is an entity separate and apart from the alleged pattern of racketeering. There is nothing
in the Amended Complaint to suggest that the four of these individuals had any function wholly

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unrelated to the fraudulent activity claimed in this case. The only interaction with Torbik, in fact,
came as a result of the alleged fraudulent activity. As such, Fidelity cannot meet the standard for
a RICO claim and Defendants’ Motion is granted as to this claim.
IV.

CONCLUSION
In light of the foregoing, the Court denies the Motions of both sets of Defendants on the

Fraud claims (Counts I–III), as Fidelity’s Amended Complaint adds enough to meet the
heightened pleading standard of Rule 9(b) for fraud. Similarly, the Motions are denied as to the
Conspiracy claim (Count IX), as Fidelity has rectified its original deficiencies by citing the overt
acts taken in furtherance of the conspiracy and by alleging malice. Finally, the Motions are
granted as to the RICO claim, as Fidelity has not alleged an enterprise.
An appropriate Order follows.

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