Transamerica Life Insurance Company v. Caramadre

          MEMORANDUM AND ORDER

          William E. Smith Chief Judge

         I. Background

         Joseph Caramadre's stranger-initiated annuity transaction (“STAT”) schemes have been described at length not only by this Court, but also by the First Circuit Court of Appeals and the Rhode Island Supreme Court.^[1] This Memorandum and Order assumes that the reader is familiar with Caramadre's STAT scheme, as well as the criminal charges and civil litigation it has generated.

         Plaintiffs originally brought seven separate civil cases which have been consolidated into one action, with Plaintiffs' Consolidated Complaint (ECF No. 186) as the operative complaint. Defendants Caramadre and ADM Associates, LLC (“ADM”) responded with answers and counterclaims. There are currently three motions pending before the Court: (1) Defendants Caramadre and ADM's Motion to Reconsider the Court's July 12, 2016 Order regarding their untimely response to Plaintiffs' Motion for Partial Summary Judgment (ECF No. 227); (2) Plaintiffs' Motion for Partial Summary Judgment (ECF No. 212); and (3) Plaintiffs' Motion for Prejudgment Attachment of Defendant Joseph Caramadre's Membership Interest in ADM and for Preliminary Injunction Preventing Caramadre from Transferring Assets of ADM or his Interest Therein (ECF No. 187). For the reasons that follow, Defendants' Motion to Reconsider is DENIED, Plaintiffs' Motion for Partial Summary Judgment is GRANTED, and Plaintiffs' Motion for Prejudgment Attachment and a Preliminary Injunction is held pending additional briefing.

         II. Discussion

         A. Motion to Reconsider

         On July 12, 2016, this Court entered an Order (ECF No. 226) denying Defendants Caramadre and ADM's Motion requesting leave to file a memorandum of law in support of its opposition to Plaintiffs' Motion for Partial Summary Judgment. The Order noted that the Court would disregard the memorandum that had been untimely filed by ADM. The Court also entered a text order on July 12 granting Plaintiffs' Motion to Strike Caramadre's memorandum in support of his opposition for the reasons set forth in the Order. Defendants Caramadre and ADM subsequently filed a Motion to Reconsider this Order, ^[2] in which Caramadre states that he does not disagree with the Court's decision to disregard the memoranda that were not timely filed, and acknowledges that the Court was “on proper legal grounds to disregard the late motions.” (Mot. to Recons. 1, 2, ECF No. 227.) Caramadre then requests that the Court consider punishing ADM's attorney for his failure to timely file the response in opposition to Plaintiffs' motion because, he contends, the attorney misled him to believe that the responsive documents would be filed by the June 15, 2016 final deadline set by the Court in a Text Order entered on June 8, 2016. (Id. at 3-5.)

         Caramadre has not provided any basis on which the Court could or would reconsider its July 12 Order and decision to disregard the responsive memoranda filed by both Caramadre and ADM. The Court was well within its discretion to enforce the final deadline that it set after it had granted several extensions, and the Court's reasoning for enforcing the final deadline is articulated in detail in its Order. (See ECF No. 226.) The Motion to Reconsider is DENIED.

         B. Motion for Partial Summary Judgment

         Plaintiffs argue that they are entitled to summary judgment on three of the seventeen counts in the Consolidated Complaint, as well as on all five of Caramadre's counterclaims and all four of ADM's counterclaims. (Mot. for Partial Summ. J. 1, ECF No. 212.) Summary judgment may enter on any claim for which the moving party can show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A genuine issue of material fact “exists where the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Taylor v. Am. Chemistry Council, 576 F.3d 16, 24 (1st Cir. 2009) (internal quotation marks and citation omitted). The Court must consider the facts in the light most favorable to the non-moving party and draw all reasonable inferences in the non-moving party's favor. Dávila v. Corporación de Puerto Rico Para La Difusión Pública, 498 F.3d 9, 12 (1st Cir. 2007).

         Plaintiffs' motion is unopposed because Defendants Caramadre and ADM failed to timely file a response. (See July 12, 2016 Order, ECF No. 226.) Pursuant to the local rules of civil procedure for the District of Rhode Island, Plaintiffs' Statement of Undisputed Facts shall be deemed admitted because Defendants did not file a Statement of Disputed Facts. LR Cv 56(a)(3). Federal Rule 56 is clear, however, that this Court must still analyze Plaintiffs' motion to determine whether they are entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(e)(3); Sanchez-Figueroa v. Banco Popular de Puerto Rico, 527 F.3d 209, 212 (1st Cir. 2008) (noting that an unopposed motion for summary judgment “does not automatically give rise to a grant of summary judgment” because “the district court still must consider the plaintiff[s'] [claims] based on the record properly before [it] . . . .”) (quoting Aguiar-Carrasquillo v. Agosto-Alicea, 445 F.3d 19, 25 (1st Cir. 2006))).

1. Plaintiffs' Claim for Civil Liability pursuant to R.I. Gen. Laws § 9-1-2 as to Defendants Caramadre and Radhakrishnan

         Plaintiffs argue that they are entitled to summary judgment on their claims in Count V that Caramadre and Radhakrishnan are civilly liable for their criminal conduct because Caramadre and Radhakrishnan have admitted to committing mail fraud, wire fraud, and identity fraud, obtaining signatures by false pretenses and forgery, and conspiring to defraud and obtain significant sums of money from insurance companies in violation of state law. (Pls.' Mem. in Supp. of Mot. for Partial Summ. J. (“Pls.' Mem.”) 8-10, ECF No. 212.) Plaintiffs' Statement of Undisputed Facts (“SUF”), deemed admitted by Defendants' failure to timely file a statement of disputed facts, states that they were two of several insurance companies to whom Defendants submitted annuity applications using terminally-ill individuals as annuitants. (SUF ¶ 7, ECF No. 213.) Plaintiff's SUF incorporates the Statement of Facts that Defendants admitted as part of their respective plea agreements. (SUF ¶ 2; SUF Ex. B, ECF No. 213.) In the Statement of Facts, Defendants in fact admitted to “knowingly and willfully conspir[ing] with each other and with others to commit” mail fraud, wire fraud, and identity fraud, in violation of federal law. (SUF Ex. B 1.) Defendants also admitted that they “fraudulently obtained millions of dollars by making . . . material misrepresentations and omissions to [] terminally-ill people . . . in order to obtain identity information and signatures for use in furtherance of the scheme . . . .” (Id. at 3.) It is also undisputed that (1) Plaintiffs were acknowledged as victims of Defendants' scheme; (2) Western Reserve Life Assurance Co. of Ohio (“WRL”) is entitled to $1, 102, 464.28 in restitution; and (3) Transamerica Life Insurance Company is entitled to $805, 926.18 in restitution. (SUF ¶ 15; SUF Ex. D 11.)

         Rhode Island General Laws § 9-1-2 provides, in relevant part, that “[w]henever any person shall suffer any injury to his or her person, reputation, or estate by reason of the commission of any crime or offense, he or she may recover his or her damages for the injury in a civil action against the offender . . . .” The statute clearly enables Plaintiffs to recover the monetary damages incurred as a result of Caramadre and Radhakrishnan's conduct. This Court concludes that Caramadre and Radhakrishnan are civilly liable to Plaintiffs for the criminal conduct to which they admitted as part of the plea agreement. However, this claim represents only a portion of Count V, which broadly claims civil liability for several state and federal crimes and offenses allegedly perpetrated by five of the seven defendants. Plaintiffs are therefore entitled only to judgment as a matter of law with respect to the civil liability of Caramadre and Radhakrishnan.

2. Plaintiffs' Claim for Violations of RICO as to Defendants Caramadre and Radhakrishnan

         Plaintiffs argue that Defendants are liable for their individual violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) pursuant to 18 U.S.C. § 1962(c) and (d) and are therefore entitled to treble damages, costs of the lawsuit, and attorneys' fees pursuant to 18 U.S.C. § 1964(c) (Count IV).^[3] (Pls.' Mem. 10.) Four elements are required to prove a RICO claim pursuant to 18 U.S.C. § 1962(c): “(1) conduct, (2) of an enterprise, (3) through a pattern, (4) of racketeering activity.” Giuliano v. Fulton, 399 F.3d 381, 386 (1st Cir. 2005) (quoting Kenda Corp. v. Pot O'Gold Money Leagues, Inc., 329 F.3d 216, 233 (1st Cir. 2003)); see also Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985).

         ‘“Racketeering activity' means any act that violates one of the federal laws specified in the RICO statute, see 18 U.S.C. § 1961(1), including the mail and wire fraud statutes, 18 U.S.C. §§ 1341 and 1343.” Id. A “pattern” is established by “[a]t least two acts of racketeering activity [occurring] within ten years of each other.” Id. (citing § 1961(5)). “The Supreme Court has construed the pattern element as additionally requiring a showing that ‘the racketeering predicates are related, and that they amount to or pose a threat of continued criminal activity.'” Id. (quoting H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989)). An “enterprise” is defined as “includ[ing] any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.” 18 U.S.C. § 1961(4).

         “For claims under § 1962(d), a plaintiff must show that each defendant in the RICO conspiracy case joined knowingly in the scheme and was involved himself, directly or indirectly, in the commission of at least two predicate acts.” Libertad v. Welch, 53 F.3d 428, 441 (1st Cir. 1995) (quoting Feinstein v. Resolution Trust Corp., 942 F.2d 34, 41 (1st Cir. 1991)).

         Here, there is no dispute that Defendants engaged in conduct that falls within the definition of “racketeering activity” because they pled guilty to one count of wire fraud, and one count of conspiracy to commit wire fraud, mail fraud, and identity theft, United States v. Caramadre, 807 F.3d 359, 365 (1st Cir. 2015), and admitted to a statement of facts that included wire and mail fraud activity (SUF ¶ 2, Ex. B). See 18 U.S.C. § 1961(1). There is also no dispute that Caramadre and Radhakrishnan engaged in a pattern of this racketeering activity because Radhakrishnan joined Caramadre's existing scheme in 2007 and admitted to engaging in racketeering conduct through 2010 (SUF ¶ 6). See ...