The opinion of the court was delivered by: Spatt, District Judge.
The defendants' motions to dismiss the Complaint raise the
novel issue of whether the defendants' alleged fraudulent
activity as trial counsel for the plaintiff's attorney-decedent
in tort litigation, is sufficient to state a claim for relief
under the Racketeering Influenced Corrupt Organization Act,
18 U.S.C. § 1961, et seq. ("RICO").
This action stems from financial arrangements between Samuel
Wiener, an attorney at law, and the defendants-attorneys,
whereby the defendants acted as trial counsel for Wiener.
According to the Complaint, by letter agreement dated May 24,
1982, Wiener retained defendant Napoli as trial counsel with
respect to fourteen civil actions and agreed to either (1) an
equal division of the fees, or (2) a one-third
Wiener/two-thirds Napoli division of the fees. The agreement
also provided that Wiener would be reimbursed for any
disbursements he incurred in connection with the actions. The
Complaint also alleges that Napoli practiced individually and
also in association and partnership with defendants Eisen and
Eisen & Napoli.
After Wiener's death on August 20, 1982, Florence Wiener, as
the executrix of Mr. Wiener's estate, retained defendant Napoli
and the other defendants as attorneys in an additional
ninety-nine of Wiener's cases (see Complaint, Schedule A).
Wiener's estate and Napoli entered into separate agreements
with respect to each case with regard to the division of fees.
In the Complaint the "Eisen Enterprise" is apparently defined
as Napoli individually and the other named defendants, as an
association (see Complaint, ¶ 18). The Complaint provides, in
part, as follows:
"¶ 26. Since the transfer of the cases to the
EISEN ENTERPRISE under the agreements entered into
prior and subsequent to decedent's death, the fees
and disbursements due from the cases set forth in
Schedule A have not been paid either in full or, in
many instances, not at all.
¶ 27. Defendants, both individually and as part
of the EISEN ENTERPRISE, have in several instances
concealed the resolution and settlement of cases
from plaintiff and failed to remit monies due.
¶ 28. Defendants, both individually and as part
of the EISEN ENTERPRISE, have forged indorsements
on settlement drafts made payable to the Estate of
SAMUEL WIENER and failed to remit fees and
disbursements due thereunder.
¶ 29. Defendants, individually and as part of the
EISEN ENTERPRISE, agreed to hold harmless an
insurance carrier from any claim by decedent's
estate to a lien on settlement proceeds if
settlement drafts would be made payable to EISEN,
P.C. and not to EISEN, P.C. and the Estate of
SAMUEL WIENER, jointly, in order to conceal the
fact of settlement from plaintiff.
¶ 30. Defendants have also failed to file closing
statements with the New York State Office of Court
Administration in a further effort to conceal
settlements and the nonpayment of fees, in whole or
in part, to plaintiff."
The Complaint sets forth five claims: (1) fraud; (2)
accounting based on a constructive trust; (3) moneys had and
received; (4) RICO (18 U.S.C. § 1962[c]); and (5) breach of
contract. Subject matter jurisdiction is based on 28 U.S.C. § 1331,
in that the RICO claim "arises under the . . . laws . . .
of the United States." The Complaint asserts pendent
jurisdiction with regard to the remaining four claims which are
state law causes of action.
As to the RICO claim, the Complaint alleges that defendants
"NAPOLI, EISEN, EISEN, P.C." and "EISEN & NAPOLI" constitute an
"enterprise," the "EISEN ENTERPRISE," within the meaning of
18 U.S.C. § 1961(4), and that "NAPOLI, EISEN, EISEN, P.C." and
"EISEN & NAPOLI" participated in the affairs of the "EISEN
ENTERPRISE" through a "pattern of racketeering" by numerous
acts of alleged mail fraud in violation of 18 U.S.C. § 1341.
In particular, the Complaint alleges the following:
"¶ 56. Defendants formulated and implemented a
fraudulent scheme to defraud plaintiff out of fees
and disbursements due under the various written
agreements referred to herein by concealing
settlements, forging estate endorsements, inducing
settlement checks to issue which did not account
for the estate's continuing interests in settlement
proceeds, by failing to file closing statements
with the appropriate state authorities setting
forth fees and disbursements due, all as set forth
more fully in the claims for relief stated above.
¶ 57. The fraudulent scheme continues to this day
and threatens to continue inasmuch as a number of
the legal matters in which the defendants
substituted as counsel in place of decedent SAMUEL
WIENER are cases and matters which are still open,
awaiting final resolution through either trial,
settlement or other disposition.
¶ 58. On or about the dates set forth below, the
defendants unlawfully, willfully and knowingly, and
for the purpose of furthering and executing their
fraudulent scheme, did place and cause to be placed
in the United States Post Offices and authorized
depositories for mail matter, and did cause to be
delivered by mail, according to the directions
thereon, certain mail matter to be sent and
delivered by the United States Postal Service, all
in violation of 18 U.S.C. § 1341, as follows:"
Thereafter, under the headings "Date," "Transmitting Party,"
"Receiving Party," and "Description," the Complaint lists 32
mailings by the defendant dating from November 11, 1982 to
September 11, 1990. The "Description" of these mailings include
"settlement draft," "fee check" or "check," "letter enclosing
general release," and "closing ...