USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
Nos. 93-1877
93-1878
93-1879
93-1880
93-1881
93-2209
93-2300
AETNA CASUALTY SURETY COMPANY,
Plaintiff - Appellee,
v.
P&B AUTOBODY, ET AL.,
Defendants - Appellees.
____________________
ARSENAL AUTO REPAIRS, INC., ET AL.,
Defendants - Appellants.
____________________
No. 93-1903
AETNA CASUALTY SURETY COMPANY,
Plaintiff - Appellee,
v.
RODCO AUTOBODY, ET AL.,

Defendants - Appellees.
____________________
BETTY ARHAGGELIDIS,
Defendant - Appellant.
____________________

No. 93-2257
AETNA CASUALTY SURETY COMPANY,
Plaintiff - Appellee,
v.
P&B AUTOBODY, ET AL.,
Defendants - Appellees.
____________________
BETTY ARHAGGELIDIS,
Appellant.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
___________________

____________________
Before
Torruella, Chief Judge,
___________
Boudin, Circuit Judge,
_____________
and Keeton,* District Judge.
______________
_____________________

William F. Spallina, with whom Carol A. Molloy was on brief

____________________
_______________
for defendants Arsenal Auto Repairs, Inc., et al.
Kenneth R. Berman, with whom David A. Guberman and Sherin
__________________
_________________
______
and Lodgen, were on brief for defendant Jack Markarian.
__________
James P. Duggan, Alfred E. Nugent, John G. Lamb, Flynn,
________________
_________________ ______________ ______
Hardy & Cohn, Giovano Ferro II, Ferro, Feeney, Patten & Galante,
_____________ ________________ _______________________________
Daniel T. Sheehan, Ralph Stein, Edward G. Ryan, Ahmad Samadi,
__________________ ____________ _______________
____________
Joseph S. Carter, William D. Crowe, Crowe, Crowe & Vernaglia and
_________________ ________________ ________________________
Abdullah Swei for defendants P Autobody, et al.
_____________

____________________
*

Of the District of Massachusetts, sitting by designation.

-2-

David S. Douglas and David O. Brink, with whom Howard S.

________________
_______________
__________
Veisz, Kornstein Veisz & Wexler, Glenda H. Ganem and Smith &
_____
_________________________
________________
_______
Brink, were on brief for plaintiff-appellee Aetna Casualty and
_____
Surety Company.

____________________
December 29, 1994
____________________

-3-

KEETON, District Judge.

______________
widespread

fraudulent

shops and two

scheme,

insurance claims

This case concerns an alleged

involving

five

adjusters.

The

automobile body
purpose of

the

scheme was to obtain payments on fraudulent insurance claims.

Seven
challenge on
jury

appellants,

defendants

in

the

trial

court,

numerous grounds the final judgment entered after a

trial.

The

judgment was

for

Aetna Casualty

and Surety

Company ("Aetna") against

(a)
conspiracy in

Betty

Arhaggelidis

on

the sum of $373,857.28 plus

the

theory

of

civil

interest from October

2, 1989 to the date of entry of judgment;

(b)

the

Tirinkians

and

the

Markarians

(the

five

individual "Arsenal defendants") for $3,859,901.72 (consisting of

damages of
1962(c)

$789,967.24 trebled to $2,359,901.72

and 1962(d)

Organizations

of the

Act ("RICO"),

under 18 U.S.C.

Racketeer Influenced
and costs,

and Corrupt

expenses, disbursements

and attorneys' fees

of $1,500,000.00) together with

prejudgment

interest from October 2, 1989 to the date of entry of judgment;

(c) three
Peter

Markarian,

of the Arsenal
and

Jack

defendants (Zareh Tirinkian,

Markarian)

for

separate

irreducible penalty of $1,579,934.48 under Mass. Gen. L.

and

ch. 93A

in addition to the amount set forth in (b); and

(d)

Arsenal Auto

Repairs,

Inc.

("Arsenal Auto"),

separate defendant in the action, for the sum of $789,967.24 on a

claim of civil conspiracy

plus interest from October 2,

1989 to

the date of entry of judgment.

-4-

For the reasons that follow,2 we affirm.

I.
I.
We
jury might

BACKGROUND
BACKGROUND

begin this Opinion with

have found them;

most favorable to
Santiago, 872 F.2d
________

we view

the verdicts.

a summary of

facts as the

the evidence in

See United States v.

___ ______________

1073, 1078-79 (1st

the light

Rivera_______

Cir.), cert. denied,

____________

492

U.S. 910, (1989).

One of
and

operated

appealed
appellant

the body

by

shops, Rodco/P&B Autobody,

defendant

the judgment

Petros Arhaggelidis,

against

him.

Betty Arhaggelidis.

He

is

was owned

who

the

has

husband

not

of

She was the owner of two Mercedes

upon which six fraudulent claims were made to Aetna.

Another
appellant in

the

body

this action), was

Zareh Tirinkian.
Markarian

of

shops, Arsenal

Auto

owned and operated

(also

an

by appellant

His wife, Lena Tirinkian, and her brothers John

and Peter

Markarian

were employees

of Arsenal

Auto

during the period of the alleged fraudulent scheme.

Tarja Markarian

and her husband

Peter Markarian

were

the co-owners of a Mercedes upon which two fraudulent claims were

made to Aetna.
From

1987 to

1989, the

Arsenal defendants,

together

____________________

2
The published version of this Opinion includes only the
background statement of facts (Part I) and discussion of those
issues that may be of
general interest (Parts II-IX and
Conclusion). The remaining portions of the Opinion (Parts X-XIV)
contain a detailed explanation of the sufficiency of the evidence
to support the jury findings and address other issues that do not
appear to have precedential importance. See First Cir. R. 36.2.
___
-5-

with

employees

insurance claims
paid

and

friends,

to Aetna

submitted

ten additional

cars.

fifteen fraudulent claims

either Lena or Tareh

Peter and

The Tirinkians submitted a

(seven to Aetna)

Tarja Markarian submitted four

in his own name, was the

where most of

other insurance

Tirinkian was the claimant or

to Aetna) on their Mercedes.

Aetna

The Arsenal defendants filed

fraudulent claims with

companies on the same group of

total of

fraudulent

involving luxury automobiles.

$137,346.83 on these claims.

at least

sixteen

upon which

the insured.

fraudulent claims (two

John Markarian, who filed no claims

supervisor of repairs at Arsenal

the cars

involved in the

Auto,

fraudulent claims

were

stored and purportedly repaired.

Timothy Cummings and Steven Dexter were two of the many

Aetna

appraisers who covered the area where Arsenal Auto and the

other body shops were located.

appraisal
Arsenal

for

ten of

defendants

friends)

filed

Cummings

and

the

Either Cummings or Dexter did the

sixteen fraudulent

(personally

over a
Dexter

or

three-year
submitted

claims

in cooperation
period

that the

with

their

commencing in

1987.

false appraisals

to

help

the

Arsenal defendants defraud Aetna.

In the district court,

judgment was entered by default

against Cummings and Dexter under RICO for $789,967.24 (being the
amount paid out
Aetna

that

the

by Aetna
jury

on 112 insurance
found

to

be

claims submitted

fraudulent)

trebled

to

to

$2,359,901.72 plus interest at 12% per annum from October 2, 1989

on the

trebled amount, plus $1,500,000

in costs, disbursements,

-6-

and attorneys' fees.

For
involving

each of

the

the

sixteen

Arsenal defendants

them, Aetna, in accordance

fraudulent claims
and friends

directly

cooperating with

with its business practices, required

a completed work form to be submitted by the claimant.

the

Arsenal defendants

Arsenal

Auto or

repairs in

did not

any other

autobody shop

connection with any of

some claims, the evidence shows

occurred; in
inflicted.

provide any

other cases,
The jury

At trial,

documentation that

completed any

the claims.

With

of the

respect to

that the claimed accidents never

the claimed damage

was intentionally

may have supportably inferred that

in some

cases defective parts were placed on the cars for the purpose

of

appraisal and then later replaced with the original parts.

The
defendants
1962(c)

jury found

was liable
for

for

that

each of

the individual

a substantive

participating in

pattern of racketeering activity.

the affairs

Arsenal

RICO violation
of Aetna

under

through a

The jury also found all of the

individual

Arsenal defendants liable,

conspiracy

with the

shops

adjusters and the

under

1962(d),

operators of

for RICO

other body

(not including Betty Arhaggelidis).

The judgment against the

same amount, and on

Arsenal defendants was in the

the same calculus, as that

against Cummings

and Dexter, explained above.

Appellant
fraudulent

Betty Arhaggelidis

scheme through

Autobody, one

of

the

was associated

her husband,

five

autobody

the owner
shops

with the

of Rodco/P&B

involved.

Betty

-7-

Arhaggelidis owned
her

mother's

two Mercedes, one of which

name.

These two

Mercedes

was registered in

were involved

in six

fraudulent claims, as to all of which Cummings did the appraisal.

The jury found
theory

that she

centered around

was liable under

Rodco/P&B

a "civil

Autobody, and

conspiracy"

therefore

was

liable in connection with thirty-seven fraudulent claims.

The
them
except

on

appellants challenge the judgments entered against

a variety
for

of grounds.

Arsenal Auto

Repairs,

In addition,
Inc.,

each appellant,

appeals the

district

court's

denial of his or her motion

for judgment as a matter of

law because of insufficiency of the evidence.

First
relationships

we

consider

among the

the

RICO

issues

counts and

arising
the civil

from

the

conspiracy

count, then we consider other issues raised by one or more of the

appellants.

II.
II.

RELATIONSHIPS AMONG COUNTS OF THE AMENDED COMPLAINT

RELATIONSHIPS AMONG COUNTS OF THE AMENDED COMPLAINT
Appellants,

at various points,

and in briefs before this court,

judgment against them in
some

aspect of

oral argument

have seemed to suggest that the

this case is somehow flawed

the relationships

alleged and tried before

both in

the jury.

among the
We address

of this suggestion in Part III, infra.

_____

because of

different theories

specific aspects

We address the suggestion

more broadly here.

The district court
(asserted in

five different

considered five different

counts) that are
-8-

theories

relevant to

this

inquiry:

three claims of RICO substantive violations, one

claim

of RICO conspiracy, and one non-RICO conspiracy claim.

First. Count VII, a RICO substantive
_____
violation under
1962(c) alleging an
association-in-fact enterprise.
This
theory was dismissed from the case in the
trial court.
Second.
Count
VIII,
a
RICO
______
substantive
violation under
1962(c)
alleging Aetna as the enterprise.
The
jury found that this claim was proved
against
all
individual
Arsenal
appellants.
Third.
Count VI, a RICO substantive
_____
violation
under
1962(c),
alleging
Arsenal Auto as the enterprise. The jury
found that this claim was proved against
all individual Arsenal appellants.
Fourth.
Count IX, alleging a RICO
_______
conspiracy under
1962(d).
The jury
found that this claim was proved against
all individual Arsenal appellants.
Fifth.
Count X, common law civil
_____
conspiracy.
The jury found that this
claim
was
proved
against all
the
appellants, including Arsenal Auto and
Arhaggelidis.
The judgment against

the individual Arsenal appellants

jointly and severally in the amount of $2,359,901.72 is supported

by

the

jury's

Therefore,
or

liability

on

Counts

VIII and

IX.

if we determine that either the finding on Count VIII

______

that on

judgment must
the

finding of

Count IX
stand.

evidence was

is supported

by sufficient

evidence, the

In fact, as we explain below, we find that

sufficient

for the

jury

reasonably to

find

liability on both Count VIII (the RICO substantive violation with

____
Aetna as the enterprise) and Count IX (the RICO conspiracy).
-9-

The Arsenal appellants do not challenge the sufficiency

of the evidence in
Count VI or

on Count X.

with respect
deficiency

support of the jury's finding of liability on

to

Count

that

VI is

we have

Moreover, because
the individual

The only
an

rejected

we have

argument raised by appellants

argument
as

regarding

pleading

wholly without

support.

determined that the

judgment against

Arsenal appellants is supported

by jury findings

on Count VIII and Count IX, we have no reason to consider whether

appellants are independently

liable under Count VI,

Count X, or

both.
The

judgment against Arsenal

is also an

appellant in this action, is

finding of

liability on

Count X,

Arsenal Auto has not challenged

Auto Repairs, Inc. which

supported by the jury's

the civil conspiracy

the sufficiency of the

theory.

evidence

supporting the jury's finding with respect to its liability under

Count X.

The judgment against Arsenal Auto is

affirmed for the

reasons stated in other parts of this Opinion.

The
supported
civil

judgment

by the

against

appellant

jury's finding

conspiracy theory.

sufficient to support the

Arhaggelidis

of liability

We conclude

on Count

that

is

X, the

the evidence

was

jury's finding against Arhaggelidis on

Count X.
From this summary, it is clear that
assertions

is

true:

the

legal

relationships

defendants,

and

claims

are

factually.

A question remains,

one of appellants'
among

complex

transactions,

both

however, as to

legally

and

how, if at all,

-10-

any of those complexities or all of them taken together bear upon

any of the issues before this court on appeal.
Nowhere in the trial record, or in their
this court, except in
in

a passage from their brief

Part III, infra, and

_____

was too

complex for a

did the appellants ever

an argument that

briefs before

that is quoted

the consolidated case

jury to understand, App.

Brief at 59-61,

clearly formulate an argument or

set of

arguments based upon their hints and innuendos about complexity.

Nevertheless, we have read

with special care all parts

of the briefs containing such hints or suggestions.

We have done

so,

any argument

first, to

presented

be certain

we have

not overlooked

and, second, to assure that we have taken into account

any cited cases that

fact pattern

as

might bear upon the

complex as

issues presented by

that before

us, with

interlocking

personal, family, and institutional relationships.

Entirely apart

from the complexities added

by RICO, a

risk of confusion has long existed because of relationships among

different legal and factual theories
invoked by the parties or
potential

consequences

conspiracy is
in

civil.

of conspiracy that might be

by a court.
of

invoking

The law bearing

different

more extensively developed in

Even with

relevant statutes

respect to the

and precedents

upon the

theories

of

criminal cases than

criminal context, however,

provide only

limited guidance

for structuring factual and legal analysis.

In criminal

cases, issues arise often

whether a case should be viewed as one involving:

-11-

with respect to

(1)

single

conspiracy of

many

parties,

multiple

objectives, and broad sweep;

(2) multiple independent conspiracies; or
(3)
involve

nest

overlapping

conspiracies

of

interlocking

conspiracies

or

conspiracies
smaller,

that

discrete

may

inner

of fewer persons and smaller scope that are tied in

with a larger conspiracy

whose members include some but

not all

of the members of the discrete inner conspiracies.

See, e.g., United States v. Glenn, 828 F.2d
_________ _____________
_____
855 (1st Cir. 1987).
One

result of

this

range of

possible

interpretations of

the

evidence in a particular case is that a question concerning legal

theory and

arguments based upon it,

and concerning instructions

explaining the law to the jury, is difficult and "is probably not
susceptible to an abstract answer unrelated to context."
United States v. Oreto, No. 91-1769, slip
______________
_____
op. at 19 (1st Cir. Oct. 4, 1994).
The persons

alleged to be RICO

conspirators and civil

conspirators in the present case, like those charged under a nonRICO conspiracy theory in Oreto
_____
have engaged in a series of transactions
that could be viewed as a set of separate
conspiracies, or one overall conspiracy
embracing numerous wrongful transactions,
or . . . both an overarching conspiracy
and
a
nest
of underlying
smaller
conspiracies.
Partly this is a problem
of proof and
inference; partly
the
problem arises from trying to squeeze
into the conceptual cubbyhole of "an

agreement" activities that in practice

often have the more shapeless character
of
an
evolving
joint
criminal
enterprise.
-12-

Id. at 20 (citations and reference to

___
double jeopardy omitted);
see also United States v. Sep lveda, 15
________ ______________
_________
F.3d 1161, 1191 (1st Cir. 1993), 114 S.Ct.
2714
(1994)("[T]he
fact
that
the
organization's methods and tactics evolved
over time did not dictate a finding of two,
three, or four separate conspiracies.").
In a
choice

of

criminal context, the prosecutor

theory,

consequences,

though

including

the

choice

those incident

may

be

to

the

is allowed some
burdened
law of

with

double

jeopardy.
In a
some choice
also, may

civil context,

of theory.

But

be burdened with

likewise, parties may

the choice,

in the

be allowed

civil context

consequences -- a point

to which we

return below.
In this

case, added

relationships

among

relationships

between different

layers of complexity

theories exist,

not

conspiracy

only

incident to

because of

counts --

the

Count IX

(RICO

conspiracy) and

Count

X (civil

conspiracy) --

because of the

relationships among these

alleging

substantive

RICO

Also, as in criminal
op.

counts and the

violations (Counts

VII

cases, see, e.g., Oreto, No.

_________ _____

at 19, an answer as to

but also

counts

and

VIII).

91-1769, slip

what significance, if any, the legal

and factual theories may have, must be context sensitive.

Because procedural law allows
parties to
legal

a civil action involving such an array of factual and

theories as

choice at least
court.

alternative contentions,

this case

until late

For example, both

presents may

be allowed

stages of proceedings

to defer

in the

plaintiffs and defendants

trial

in a civil

-13-

case may be allowed to maintain alternative contentions at

until the evidence
choices

to be

is closed,

made about

the

when the court

form of

about instructions
either

"special

to the jury.
question"

may require

verdict to

submitting the case to the jury -- see Fed.

___

some

be used

in

R. Civ. P. 49 -- and

When a party does

or an

least

instruction

not request
submitting

particular theory of conspiracy

choice that

has the

associated consequence of

precluding the assertion

conspiracy.

limit

after verdict of the

See, e.g.,
__________

procedural

rule, in

the scope

to the jury, that party

Fed.

R.

Civ.

this instance)

of

choice by

attached

to each of the

complete

freedom of choice.

almost certainly

omitted theory of

P. 49.

The

allows choice,

defining

makes a

law

(a

but it

may

consequences that

are

available options, rather than allowing

A

party making

a choice

of this

kind, among legally defined options only, is making an "election"

in the classic sense.

See John S. Ewart, Waiver or Election, 29

___
___________________

Harv. L. Rev. 724 (1916).

Of
allow

course, a

submission to

trial

court may

jury

of

two

in some

or

more

circumstances
theories,

with

appropriate instructions explaining as to each theory the factual

elements the jury must
theory.
factually
theories

The

find to return a verdict

different

compatible
submitted

-may

theories submitted
that
be

is,

to

Also,

may

be

sustaining all
however,

the

conspiracy submitted to a

case may be so factually

-14-

a jury

verdict

permissible.

evidence and the different theories of

jury in a particular

sustaining that

incompatible that

the

jury's choice is

limited to finding

one or another

of the

theories supported, but not all.

In the present case, the trial judge, in submitting the

case to the jury, used a verdict form that at
appear

to

"general

be

submission

verdict,"

examination,

R.

Civ.

P.

against each

as a

that the court

the jury, under Fed. R. Civ.

that were alleged but

theory

Fed.

it, discloses

general verdict of

claim

"special questions,"

with

49(a).

no

Closer

however, of both the verdict form and the record of

colloquies about

each claim

under

on

first glance might

matter

alleged in

required only

P. 49(b), as to

defendant, after elimination

as to which either the court

of law

of claims

rejected the

(the association-in-fact

Count VII) or

Aetna elected

conspiracy

not

to request

submission to the jury.

The

submission of

jury to report
allegedly

a separate

an answer as to

fraudulent

claims

question requiring

each of at least 122

was

necessary

the

of the 176

because

disputed

factual issues were presented not only with respect to whether an

alleged

RICO

conspiracy

and

the

alleged

RICO

substantive

violations existed, and, if so, what defendants were liable under

each

theory,

transactions

but

also with

was

within

substantive violation.
of

the judgment

to

The

respect

the

scope

to
of

whether
the

each of

the

conspiracy

or

answers have a bearing on

be entered,

even

though the

the terms

trial

judge

determined

(supportably,

we

have

concluded)

that no

genuine

dispute of fact existed as to the amount paid by Aetna on each of

-15-

the 112 claims the jury found to be fraudulent.

In summary, we conclude
for

plaintiff

against

the

that the verdicts and judgment

appellants

are

evidence received in this case, and by law.

supported

by

the

-16-

III.
III.
A.
__

SUFFICIENCY OF PROOF
SUFFICIENCY OF PROOF

Standard of Review
__________________

Appellants challenge the sufficiency of the evidence to

support the judgment entered

against them.

They argue

district court should have granted their motions

that the

for judgment as

a matter of law.

The district court may grant a motion for judgment as a

matter

of

law only

if, after

reasonable inferences
the

nonmovant," it

reasonable

person

examining

the evidence

therefrom "in the light

determines that "the

to only

one

and all

most favorable to

evidence could

conclusion,"

lead a

favorable to

the

movant.
Gallagher v. Wilton Enterprises, Inc., 962
_________
_________________________
F.2d
120,
124 (1st
Cir. 1992)(quoting
Hendricks & Associates, Inc. v. Daewoo Corp.,
____________________________
____________
923 F.2d 209, 215 (1st Cir. 1991)).
A

denial of judgment

which

as a matter

means that we use the

of law is

"reviewed de novo,
__ ____

same stringent decisional standards

that control the district court."

Id. at 125.
___

With respect to the five individual Arsenal defendants,

appellee argues
is

supported,

that the judgment in the amount of $2,369,901.72

independently, by

first,

the finding

liable

on a theory of

the

enterprise

finding that
theory of

that all

under

each of

individual Arsenal

RICO substantive violation

1962(c)

(Count

all individual Arsenal

RICO

two jury

conspiracy

under

VIII)

findings --

defendants are

with Aetna as

and, second,

defendants are liable

1962(d) (Count

IX).

the

on a

With

respect to defendant Betty Arhaggelidis, the appellee argues that

-17-

the judgment in

the amount

of $373,857.28 is

supported by

the

jury finding that she was liable on a theory of civil conspiracy.

We examine the evidence supporting each of these theories against

each defendant in Parts III.C, III.D, and III.E, infra.
_____

B.
__

Appellants' Preclusion Argument Based

on the
__________________________________________________

Relationship of Count VII to Other Counts

_________________________________________

The appellants challenge the district court's denial of

their motion for
RICO

judgment as a matter of law

substantive charge

alleging Aetna

Count IX, the RICO conspiracy charge.

district

court

matter of

law

on

alleging

an

association-in-fact

defendants),

granted defendants'

the

Count VII

district

(the

court

on Count VIII, the

as the

enterprise, and

They contend that once the

motion
RICO

for

substantive

enterprise
should

judgment as

have

violation

including
granted,

all

also,

defendants' motion for judgment as a matter of law on Counts VIII

and IX.

(This argument was

not made in the

defendants' motion for judgment as

nor is it asserted on appeal.
the enterprise, alleges
alleged in Count

VII.

trial court as

a matter of law on

to

Count VI,

Count VI, alleging Arsenal Auto as

a scheme
Thus, no

of a smaller

scope than

plausible argument can

that

be made

that the court's dismissal of Count VII requires the dismissal of

Count VI.)

Appellants do
their preclusion

not clearly state the

argument.

Reading

legal premises of

generously to

appellants,

however, to assure that we address any contention that might even

-18-

plausibly be presented, we infer that some asserted principle

preclusion is

at least

implicitly if not

explicitly suggested.

For example, appellants say:

The trial judge's ruling directing a
verdict for all Defendants on Count VII
of the Complaint, because
there was
"insufficient evidence to sustain Count
7,
an
overall
association-in-fact
enterprise," (App. 4092), separated the
Arsenal
Defendants
from
the
other
Defendants in the
case and
thereby
disassociated [sic] the actions of the
Allston
Group from the acts of the
Arsenal
Defendants.
Without
the
association-in-fact enterprise to meld
the acts of the various Defendants into
an overall conspiracy, the link between
the Arsenal Defendants and the Allston
Group was severed thereby absolving the
Arsenal Defendants from any wrongdoing
concerning bribery. As such, the trial
judge's ruling, by implication, absolved
the Arsenal Defendants from bearing the
burden of the Allston Group's bribery.
Appellants' Brief at 41-42.

of

It
alleges a

is true

that

each of

fraudulent scheme

Counts

VII, VIII,

that includes all

and

the body

IX

shops.

These three theories have the same "scope" in the sense that each

of them would support the judgment against the Arsenal individual

defendants in
count

asserts

theories
Counts

the amount

has

but

different.

distinctive

all of

VII and

1962(c),

of $2,369,901.72.

the elements

VIII
the

theory,

allege RICO
entities

and

of any

Nevertheless, each
none

of the

other of

the three.

substantive violations

alleged

as

the

three

under

enterprise

are

In contrast to these substantive violations, Count IX

___________

alleges a RICO conspiracy under

__________

1962(d).

-19-

Since
elements of
that

each

of

proof, the

the dismissal

the three

counts

appellants are

of one

of these

requires

incorrect when
counts, namely

different

they say

Count VII,

requires the dismissal of one or both of the other two counts.

________
Although the appellants' argument

fails as a matter of

law,

we proceed

to

consider

implicit premise that may

the

possibility

have led to such a

of

some

other

patently incorrect

statement of law.
One
argument

is

premise
that

in

that

may be

order

to

inferred

prove

from

Count

appellants'

VIII,

the

RICO

substantive violation with Aetna as the enterprise, the plaintiff

had

to prove the same relationships

were essential to
Count VII.

the association-in-fact enterprise

alleged in

This assumption is incorrect.

Section 1961

defines an "enterprise" for

of RICO to include "any individual,

. or

between the defendants that

other legal entity,

associated-in-fact
1961(4).

Thus

partnership, corporation . .

and any union or

although

to satisfy

not a

the purposes

legal

group of individuals
entity."

18

the "enterprise" element

U.S.C.

of a

RICO

substantive violation, a plaintiff may prove either the existence

of a

legal entity,

individuals

were

such as

a corporation, or
__

associated-in-fact.

Since

that a
Aetna

group of
is

corporation, Aetna can constitute an "enterprise" for the purpose

of Count VIII, even

if there is no

proof of an

association-in-

fact enterprise.
In

contrast,

Count

VII
-20-

requires

proof

of

an

association-in-fact

enterprise.

enterprise

"ongoing

is

"function[ing]
apart

an
as a

from the

association-in-fact

organization,"

continuing

pattern of

An

unit," which

racketeering in

with

members

is "separate
which

and

it engages."

United States v. Turkette, 452 U.S. 576, 583 (1981).

_____________
________
Since

no

party has

challenged

grant of the defendants' motion

the district

court's

for judgment as a matter

of law

on Count VII, we need not determine the precise elements required

for

plaintiff

to prove

an

Nevertheless, it is clear that

is

different from

Aetna.

Since

different

of

consistent

law
with

enterprise.

an association-in-fact enterprise

an enterprise

different kinds of
matter

association-in-fact

that is

proof is

a legal

required to

entity, like

establish these

an enterprise, the court's determination as a

in

favor of

the

the

court's

defendants

determination

on

Count

VII is

that

fact

issues

remained for the jury to decide with respect to Count VIII.

Another

possible

articulated or acknowledged

premise,

which

is

not

explicitly

by the appellants, is

that in order

to prove a RICO conspiracy of the scope alleged in

Count IX, the

plaintiff was required to prove

the existence of an association-

in-fact enterprise of that same scope.

This premise is
require

proof

of

an

not valid.

Section 1962(d) does

association-in-fact

enterprise.

not

Any

enterprise meeting the definition of enterprise in

Under
like

1961 an enterprise
Aetna as

the victim

1961 will do.

may include a legitimate

of the

legal entity

racketeering activity.

This

-21-

court has

previously upheld convictions under

both

1962(c) and

1962(d), that alleged a victim enterprise like Aetna.

See United States v. Boylan, 898 F.2d 230
___ _____________
______
(1st Cir.), cert. denied, 498 U.S. 849 (1990)
____________
(victim enterprise was the Boston Police
Department).
Therefore, in order to

satisfy the enterprise element of

a RICO

conspiracy of the scope alleged in Count IX, the plaintiff needed

only

to prove

necessarily an
hand,

some

kind

of

enterprise

of

association-in-fact enterprise.

that

scope,

In the

not

case at

proving a RICO conspiracy with Aetna as the enterprise was

sufficient.

For these reasons, the trial judge's ruling as a matter

of law

for defendants on Count VII, based on the conclusion that

there was not enough evidence to go to the jury on the

an

theory of

"association-in-fact" enterprise, is entirely consistent with

the jury findings of a

as

the victim

1962(c) substantive violation (with Aetna

enterprise)

and of

1962(d)

conspiracy (with

Aetna as the victim enterprise).

C.
__

Substantive RICO Violation Under 1962(c) with

__________________________________________________

Aetna as the Enterprise -- Count VIII

_____________________________________
For an

individual defendant to

with

Aetna

as

RICO

violation

enterprise,

the evidence must be sufficient for the jury to find

the

Aetna was an enterprise affecting interstate or foreign

commerce,
with

1962(c),

for a

substantive

that (1)

under

be liable

(2) that the

defendant under consideration associated

the enterprise, (3) that this defendant participated in the

-22-

conduct

of

the

enterprise's

defendant's participation
activity.

28 U.S.C.

and

(4)

was through a pattern

that

this

of racketeering

1962(c).

We consider,
prove each of these

affairs,

whether

the evidence

was sufficient

elements against each of the

to

defendants the

jury found liable under Count VIII.

First Element.
_______________

Aetna is

interstate commerce" within

purpose

of RICO

is to

from infiltration by
act,

the meaning of

racketeers.

states,

and

casualty

Aetna's conduct

of

The major

as used in

See
___

United States
_____________

2524 (1981).

insurer doing
its

affecting

business enterprises

"Enterprise"

corporations.

Turkette, 452 U.S. 576, 101 S.Ct.

________
property

1962(c).

protect legitimate

includes legitimate

major

an "enterprise

business

this

v.

Since Aetna is a
business

"affects

in

many

interstate

commerce."
See
United
States
v.
South-Eastern
___
________________
_____________
Underwriters Ass'n, 322 U.S. 533 (1944) (a
___________________
fire insurance company
that conducts
a
substantial part of its business transactions
across state lines is engaged in "commerce
among the several states" and is subject to
regulation under the Commerce Clause).
Appellants
"enterprise" because

argue

that

Aetna

cannot

constitute

the

the alleged racketeering activities were to

the detriment and not the benefit of

Aetna.

on a misinterpretation of the RICO statute.

This argument rests

The statute does not

require that the pattern of racketeering be in furtherance of the

enterprise.
convictions

In United States
_____________
of Boston

police

v. Boylan, this
______
detectives who
-23-

court upheld the

violated RICO

by

illegally

participating

in the

affairs

of

the Boston

Police

Department (the enterprise), through a pattern of racketeering by

accepting bribes.

Boylan, 898 F.2d 230.

______

case, the

of

affairs

the enterprise

In

were

Boylan, as in this
______
undermined

by

the

illegal activity.
See also Yellow Bus Lines, Inc. v. Drivers
___ ____ ______________________
_______
Chauffeurs & Helpers Local Union 639, 913
_______________________________________
F.2d 948, 952 (D.C. Cir. 1990), cert. denied,
____________
501 U.S. 1222 (1991)("Section 1962(c) nowhere
requires proof regarding the advancement of
the enterprise's affairs by the defendant's
activities or proof that
the enterprise
itself is corrupt . . . .");
United States v. Provenzano, 688 F.2d 194
_____________
__________
(3rd Cir.), cert. denied, 459 U.S. 1071
_____________
(1982)(RICO is not limited to racketeering
activities that advance
or benefit
the
enterprise, but also encompasses racketeering
activities that work to the detriment of the
enterprise).
Second Element.
_______________
Aetna, attempt
Boylan
______

to distinguish

the defendants

constituted

the

Appellants, who are

Boylan by
______

were employees

RICO enterprise.

not employees of

pointing

of the
Appellants

out that

in

organization that
argue that

the

statute prohibits
affairs

through

detriment of
are

employees
a

pattern

of

affairs

with the
to

its

conducting

racketeering

the enterprise, but

merely associated

enterprise's

from

an

enterprise's

activity

does not prohibit

enterprise from

detriment through

to

the

persons who

conducting the
a

pattern

of

racketeering activity.
The

proposed

language of the statute,

or associated
__________

distinction

is

not

supported

which refers to "person[s]

with any enterprise."

____

18 U.S.C.

by

the

employed by

1962(c)(emphasis

-24-

added).

Nor is it supported by any identifiable public policy or

by precedent.
See, e.g., United States v. Yonan, 800 F.2d
_________ _____________
_____
164 (7th Cir. 1986) cert. denied, 479 U.S.
____________
1055 (1987)(upholding conviction of attorney,
who was not an employee of the enterprise, a
prosecutor's office, for violating RICO by
conducting the affairs of the prosecutor's
office through bribery);
United States v. Bright, 630 F.2d 804, 830_____________
______
31 (5th Cir. 1980) (upholding RICO conviction

of a bail bondsmen, who was not an employee

of the enterprise, a sheriff's office, for
unlawfully participating in the affairs of
the enterprise through bribery).
Appellants
held

also

liable for a RICO

enterprise

because

the defendants

substantive violation with

they

enterprise, but were

argue that

were

not

even

outsiders and, as

said

to "have participated

This

is an argument more

Aetna as the

"associates"

of

outsiders, could not

in the conduct"
of words than

cannot be

the

be

of Aetna's affairs.

substance.

The statute

uses the phrase "associated with" rather than creating a category

of "associates,"
those who

narrowly defined to include

may be said to have "associated with" an enterprise in

a broader sense of this phrase.

In ordinary usage,

example, buys an insurance policy

on

fewer persons than

the solidarity

of

defined risks, has an

one who, for

from an enterprise and depends

that enterprise,

for protection

against

association with, and may be said

to have

"associated with," the enterprise.

Each of the individual appellants was either an insured

or a claimant under an Aetna policy, or an owner or operator of a

body

shop involved

in repairing
-25-

automobiles insured

by Aetna.

Three of

the five individual Arsenal

and Peter Markarian)

insured,

were both

claimant,

appellants was

in a

or a

appellants (the Tirinkians

insureds and operators.

body

shop

operator,

contractual relationship

appellant) and its owners and

"associated

Aetna

evidence

because

each of

each body

an

the

with Aetna.

body shop (also an

with"

As

The

operators were

shop

about

which

was received at trial was a place where Aetna employees

conducted

appraisals and

where cars

that

were the

subject of

insurance were purportedly repaired.

Third Element.
______________
jury could have found

Appellants

argue that

no reasonable

that the appellants "participated directly

or indirectly in the conduct of the enterprise's affairs" because

the

defendants

management

did

not

"participate

of the enterprise itself."

in

the

operation

Reves v.
_____

or

Ernst & Young,

_____________

113 S.Ct. 1163 (1993).

Contrary
sufficient

evidence

to

for a

defendants'

activities

adopted by

the Supreme

"operation

or

allegedly
paying

the

met

reasonable

management"

damaged vehicles

assertion,
jury

the definition

Court in

automobile insurance

business.

appellants'

test.
and

to
of

Reves, which
_____
Id.
___

at

there

was

find that

the

"participation"
is known

1172.

as the

Appraising

investigating, processing,

claims are

vital parts

and

of Aetna's

By acting with purpose to cause Aetna to make payments

on false claims, appellants were participating in the "operation"

of Aetna.
The

Supreme

Court

in

Reves
_____

interpreted

the phrase

-26-

"conduct of the
direction," which
directing
was

enterprise's affairs" to
the court

described as

the enterprise's affairs."

sufficient to support a

defendants'
direction of

activities

not have

be

affected,

in

other employees make payments

made.

The Court

part in

The evidence

material

degree,

employees having authority

the

Appellants'
to do so

to

Aetna otherwise would

in Reves emphasized that,

_____

as in this

could be "indirect" in the

that persons with no formal position in the enterprise can

held liable under

1962(c) for

of the enterprise's affairs."

to

Id. at 1170.
___

of

finding that the individual Arsenal

case, the defendants' "participation"

sense

taking "some

Aetna's affairs by employees of Aetna.

activities caused Aetna

direct that

indicate a "degree

Id.
___

"participating in the conduct

The evidence

was sufficient

support a finding that each of the appellants participated in

the conduct of Aetna's affairs in this way.

Moreover, in Reves the
_____
"an

enterprise

also might

'associated with'

operated

the enterprise who

for example, by bribery."

most favorable to

be

court expressly recognized that

Id. at 1173.
___

the plaintiff,

or

managed by

others

exert control over

it as,

When viewed in the light

in support of

the verdict

in

this case, the evidence supports a finding that appellants caused

the Aetna appraisers

to approve false

claims and conduct

their

appraisals in a manner contrary to Aetna's business practices and

caused Aetna to pay out large sums of money on false claims.
evidence

was sufficient

exerted control

over

to

support a

the enterprise,

finding that
if

not by

The

appellants

bribery

(the

-27-

example given

by the

Court in Reves),
_____

methods of inducement.

some

aspect

least by

Since a reasonable jury could

the appellants exerted some

directing

then at

control over Aetna and took

of

the

enterprise's

other

find that

part in

affairs,

the

appellants'

actions

could

be

found

to

have

satisfied

the

"operation or management" test.

Fourth Element.
_______________
liability under
was

1962(c) is that each

"through a pattern of

establish a
show

The final element necessary to support

that

defendant's participation

racketeering activity."

pattern of racketeering activity,

each defendant

activity within the span

defined by 18 U.S.C.

committed

two

of ten years.

In order to

the evidence must

acts of

racketeering

The predicate acts

are

1961 to include mail fraud, wire fraud, and

bribery as well as aiding and abetting these offenses.

See Oreto, No. 91-1769, slip op. at 27
___ _____
(jury could find a pattern of racketeering
activity for the purposes of 1962(c) if the
appellants aided and abetted the commission
of at least two predicate acts);
see also Pereira v. United States, 347 U.S.
___ ____ _______
_____________
1, 9 (1954)(a person who aids and abets
another in the commission of mail fraud, a
violation of 1341, also violates 1341);
18 U.S.C.
1961
(violations of
1341
constitute predicate racketeering activity).
Although
which

these

terms

refer to

the beyond-reasonable-doubt

plaintiff in

civil RICO

action

burden

criminal
of

may prove

offenses to

proof applies,

these

preponderance of the evidence.

See Combustion Engineering, Inc. v. Miller
___ ____________________________
______
Hydro Group, 13 F.3d 437, 466 (1st Cir.
____________
1993)(the
preponderance of
the evidence
standard applies to fraud claims in civil
-28-

acts by

RICO proceedings);
see also Moss v. Morgan Stanley, Inc., 553
___ ____ ____
____________________
F. Supp. 1347 (S.D.N.Y.), aff'd 719 F.2d 5
_____
(2nd Cir. 1983), cert. denied sub nom. Moss
____________ _________ ____
v. Newman, 465 U.S. 1025 (1984) (although
______
proof
in
civil proceedings
under RICO
requires
only
a
preponderance of
the
evidence, which is a lower standard of proof
than in criminal proceedings, the standard
does not relate to the elements of the
predicate crimes, but to the burden that the
plaintiff bears in showing the elements).
The
defraud and
scheme.

The

elements of a mail fraud violation are a scheme to

the

use of

the mails

to execute

or further

this

United States v. Brien, 617 F.2d 299, 311

_____________
_____
(1st
Cir.), cert. denied, 446 U.S. 919
_____________
(1980).

plaintiff alleged

that each

defendant committed

predicate

acts of mail fraud.

The

intentional

filing of

false insurance

claims or

false completed work forms in order to obtain payments from Aetna

constitutes

a "scheme to defraud" Aetna.

need to prove that

The plaintiff does not

each defendant personally used the

mails but

only that the defendant acted "with knowledge that the use of the

mails will follow in

in

the ordinary course of business,

circumstances] where

such use

can be

United States v. Maze, 414 U.S. 395,

______________
____
it

reasonably foreseen."

399 (1974).

In this case,

could reasonably be foreseen by each defendant that either an

insured, a

claimant, a body

mails in connection with

Aetna would use
All

or [acted

of

of

would use the

each of the fraudulent claims,

the mails

these uses

shop or an appraiser

to send payments

the mails

were

in

to the

or that

recipients.

furtherance of

the

defendants' fraudulent scheme.

-29-

See United States v. Martin, 694 F.2d 885,

___ _____________
______
890 (1st Cir. 1982) (refund checks mailed by
an insurance company to the defendant, an
insurance agent, were closely enough related
to the agent's insurance fraud scheme to
bring his conduct within the statute).
In addition
there must be
the

predicate

activity.
established by

to proof of

at least two

evidence of "continuity"
acts
Boylan,
______

constitute
898

proving that

F.2d

predicate acts,

sufficient to show

"pattern"

at

250.

the predicate

of

that

racketeering

Continuity
acts "form a

may

be

closed

period

of repeated conduct" or

that they "are

a regular way of

conducting the enterprise."

Id.;
___
see also Digital Equipment Corp. v. Curie
___ ____ _______________________
_____
Enterprises,
142
F.R.D.
16 (D.
Mass.
___________
1992)(holding that the use of the mails forms
a "pattern of racketeering activity" if the
uses are related and they amount to, or pose
threat of, continued illegal activity).
The

evidence

of the

ongoing

succession

of fraudulent

claims

presented in this case easily satisfies this requirement.

The

appellants

claim is an act of
to

constitute

Similarly,

do

not dispute

that

mail fraud and that mail fraud

predicate

the appellants

offense
do

insurance claims were unrelated

continuity

necessary to

activity.

The

evidence of fraud on the

not contend

the

is sufficient
RICO

that the

statute.

fraudulent

or so dissimilar as to

establish

appellants

under

each fraudulent

simply

a "pattern"
contend

of racketeering

that there

part of any of the appellants.

concluded that this assertion is contrary to the record.

-30-

lack the

was

no

We have

D.
__

RICO Conspiracy under Section 1962(d) -- Count IX

_________________________________________________

In

addition

individual

Arsenal

defendants liable for a RICO substantive violation with

Aetna as

the enterprise,

the

Arsenal defendants
1962(d).

to

jury

finding

the

also found

each

liable for a RICO

of

the

individual

conspiracy violation under

Liability on this theory is proved against a defendant

by showing

(1) the existence of

commerce, (2) that the

to participate in the

enterprise affecting interstate

defendant knowingly joined the conspiracy

conduct of the affairs of

the enterprise,

(3) that the defendant participated in the conduct of the affairs

of the enterprise,
pattern of

and (4) that the

racketeering activity by

defendant did so through

agreeing to

fact committing, two or more predicate offenses.

commit, or

in

See Boylan, 898

___ ______

F.2d at 241.
Even

though no

party

objected

(on grounds

here) to the trial court's charge to the jury on

the

alleged

RICO conspiracy

(as well

as

relevant

the elements of

the elements

of the

alleged RICO substantive violations), we have examined the charge

to the jury and determined it

to be consistent with the elements

of a RICO conspiracy as we have stated them here.

In arriving at

this formulation, we have been sensitive to the fact that earlier

cases

in

this circuit

used

the phrase

"knowingly

enterprise."
United States v. Angiulo, 847 F.2d 956, 964
_____________
_______
(1st Cir.), cert. denied, 488
U.S. 928

joined the

_____________
(1988);
United States v. Winter, 663 F.2d 1120,
______________
______
1136 (1st Cir. 1981), cert. denied, 460 U.S.
____________
1011 (1983).
-31-

In Boylan,
______

the court

first

used this

same phrase

("knowingly

joined the enterprise"), 898 F.2d at 241 (emphasis added), but in

__________
a passage

following shortly

thereafter referred to

whether the

defendants had knowingly joined the conspiracy.

__________
Id. ("Our inquiry thus reduces to whether
___
such a conspiracy, knowingly joined by all
defendants, was satisfactorily proven.").
In

Boylan
______

(and

perhaps

the

earlier

cases

as

well),

this

difference in phrasing was immaterial to the outcome of the case.

This
all

was so in Boylan
______

because the evidence

was undisputed that

of the defendants alleged to have joined the conspiracy were

indisputably
alleged

employees

enterprise.

of
In the

the

Boston

Police Department,

present case,

on the

the

other hand,

plaintiff alleged that defendants who were not employees of Aetna

(the enterprise

in Count VIII) knowingly

joined the conspiracy.

For this reason we have addressed the issue more precisely in our
formulation, stated above, of the elements

of a RICO conspiracy,

as applied to this case.

We

conclude that

the issue

we must

consider is

not

whether the defendants knowingly joined the victim enterprise (as

first
whether

phrased in Boylan) but

______
the

conclude that

defendants

(as later stated

knowingly

the evidence

joined

is sufficient

in that Opinion)
conspiracy.

to support a

that each of the appellants "knowingly joined"

the

We

finding

1962(d) RICO

conspiracy.
The alleged
conspiracy to violate

1962(d) RICO conspiracy (Count

IX) was a

1962(c).

between a

The major difference

-32-

violation of
of

1962(c) itself (such as Count VIII) and a violation

1962(d) based on

1962(c)(such as Count IX) is the additional

required element that the defendant knowingly joined a conspiracy

to violate

1962(c).

defendant violated
prove two

Another difference is that, to prove that a

1962(c), it is necessary for the plaintiff to

predicate offenses; under

1962(d),

is not an element required to be proved.

1962(d), it is enough to prove
or more others
Boylan,
______

that two

898 F.2d

difference

is of

in contrast, this

To prove a violation of

that a defendant agreed with one

______

predicate offenses be

at 252.

In the

no practical

present

committed.
case, this

consequence because

See
___

latter

we conclude

that there was sufficient evidence to support a finding that each

defendant in fact committed two predicate offenses.
One
argument,
RICO

assertion,

perhaps

is that, in order

conspiracy

(a

implicit

to prove each

1962(d)

violation),

in

the appellants'

defendant liable for

the

plaintiff

was

required to prove a conspiracy to defraud Aetna in

which each of

the

one

Arsenal

defendants

conspired

directly with

or

more

persons associated with each of the other body shops.

This

assertion

is

incorrect

necessarily upon a misinterpretation

the elements necessary

to prove a RICO

that to find a defendant liable under

the defendant conspired to
not

of

because

it

depends

1962(d) with respect to

conspiracy.

It is

true

1962(d) one must find that

violate a subsection of

1962.

It is

necessary, however, to find that each defendant knew all the

details or

the

full extent

of

the conspiracy,

-33-

including

the

identity and role of every other conspirator.

Boylan, 898 F.2d at 242 ("A RICO conspiracy
______
does not demand . . . that all defendants
participate in all racketeering acts, know of
the entire conspiratorial
sweep, or
be
acquainted with all other defendants.")

All that is necessary to prove this element of the RICO

conspiracy, against a particular
or
the

defendant, is to prove that

she agreed with one or more co-conspirators to participate in

conspiracy.

Moreover,

it

is

not

conspiratorial agreement to be express,

can

plausibly

interdependence
States v.
______

defendant

be

inferred

of

activities

necessary

for

words,

and

persons

actions,

and

involved.

950 (1st Cir. 1992).

reasonably could have

the

so long as its existence

from

Concemi, 957 F.2d 942,

_______

case, the jury

each

he

the

United
______

In this

found that, although

each

may not have known the entire sweep of the conspiracy,

defendant knew

fraudulent scheme.

that
For

he or

she

was a

part

example, since the evidence

of a

larger

supported a

finding that each of the Arsenal defendants was well aware of the
fraudulent business

practices of

Dexter and Cummings,

the jury

could find that all of the Arsenal defendants knew they were part

of a larger conspiracy
to their

in which other persons made

own of fraudulent

appraisals by

uses similar

Dexter, Cummings,

or

both.
A

defendant

conspiratorial

who

sweep"

is

does

not

nevertheless

know
jointly

liable, in the civil context, for all acts

conspiracy.

Using a

the
and

"entire

severally

in furtherance of the

common metaphor, one may say

that Cummings

-34-

and Dexter, the Aetna appraisers, were at the hub of the

RICO conspiracy,

providing the

central point through

the defendant body shops were connected.

find that, through Cummings
extended

to

all the

which all

A jury could reasonably

and Dexter, the conspiratorial sweep

body shops

individual defendants.

overall

and most,

if

not all

of the

The jury in this case found that the RICO

conspiracy included all other appellants, except for Arsenal Auto

Repairs, Inc.

and

Betty Arhaggelidis.

We need

not

consider

whether the evidence would have supported a finding against these

two appellants as
of others under

well.

That was not essential to the liability

this theory, nor to

the liability of these

two

appellants under a different theory.

From evidence

of the

extensive dealings of

all other

appellants with Cummings and Dexter, the jury could have inferred
an

agreement,

to

defraud

Aetna,

defendants (Arhaggelidis not being

appraisers.

Through

among

all

of

the

Arsenal

an Arsenal defendant) and the

evidence

of

each

individual

Arsenal

defendant's actions, the jury could infer that each defendant had
the

requisite state of mind

for a RICO

conspiracy violation --

knowing participation.
See
Boylan, 898
F.2d at
242 ("[The
___
______
plaintiff] may prove [a RICO conspiracy]
through the use of circumstantial evidence,
so long as the total evidence, including
reasonable
inferences, is
sufficient to
warrant [the jury's findings].").
The appellants do not
conspired

dispute that Dexter and Cummings

with the owners and operators of the other body shops.

Through Dexter

and Cummings, the Arsenal

defendants were linked

-35-

to

all the

conspiracy.
agreed

to

other

defendants who

Thus, upon proof

the

commission

were

found liable

that each defendant

of

two

predicate

for

RICO

committed or

offenses,

each

defendant could be held liable for the overall RICO conspiracy.

Moreover,
plaintiff to

although

it

was

not

necessary

for

the

prove that the Arsenal defendants knew the identity

of defendants from

the other body

shops and conspired

directly

with them, the evidence was sufficient for the jury to infer that
this

was in

fact

testified that

the

case.

he frequently

For

example,

Zareh

attended parties and

other social

engagements with the operators of the other body shops.

Tirinkian

denied discussing

insurance claims with

showed

that

the

reported nearly
obtained

practice of

the other body

body

unusually similar.

his

The

shops'

body shops

identical types

all

considered

activities

of fraudulent claims,

along

sufficient to support a jury finding

with

evidence

defrauded Aetna,

appraisals from the same appraisers.

similarities,

Although

filing fraudulent

shop owners, the

racketeering

Tirinkian

were

they

and they

Evidence of these

other

evidence,

was

that the owners of the body

shops conspired directly with one another.

Id. at 242 (a jury may infer that a single
___
overall conspiracy existed when evidence of
racketeering
acts
shows
"hallmarks
of
similarity" and "a significant degree of
interconnectedness").
E.
__

Civil Conspiracy -- Count X

___________________________

Defendant
liable

Arsenal

under any RICO theory.

Auto

Repairs, Inc.

was

not

held

The judgment against Arsenal Auto

-36-

rests instead, upon

liable

for civil

challenge

the jury's

finding that Arsenal

conspiracy.

this finding

The appellants'

against

Arsenal Auto

insufficiency of the

evidence.

discussion of

conspiracy concerns

civil

For

Auto

was

brief does
on

not

the basis

this reason, the

of

following

Arhaggelidis's

appeal

only.
Appellant Arhaggelidis challenges the
against her for
of the

civil conspiracy on the ground

evidence.

conspired

with

The plaintiff
her

fellow

alleged that

Rodco/P&B

Autobody

judgment entered

of insufficiency

Ms. Arhaggelidis
defendants

to

defraud Aetna.
The
required
those

nature

of

"civil conspiracy"

to invoke this type

applying to

conspiracies in

the

proof

of claim differ significantly from

criminal conspiracies

particular.

and

generally and

Under Massachusetts

to RICO

law, either of

two possible causes of action may be called "civil conspiracy."

First.
______
cause of

There is precedent supporting

action in

coercive type.
Mass. 1985).

Massachusetts" for

See Jurgens v.
___ _______

a "very limited

"civil conspiracy"

Abrams, F. Supp. 1381,

______

"In order to state a claim of [this type

of a

1386 (D.

of] civil

conspiracy,
unison,

plaintiff

must

allege that

had some peculiar power

defendants,

acting in

of coercion over plaintiff that

they would not have had if they had been acting independently."
Id. (quotations omitted)(citing Fleming v.
___
_______
Dane, 22 N.E.2d 609 (Mass. 1939)).
____
Plaintiff,
complaint,

in

does allege

paragraph
a

480

of

Count

circumstance that,

of

if proved,

its

might

-37-

constitute such
is

that

a "peculiar power of coercion."

"defendants

were

collectively

able

The allegation
to

negate

the

safeguards that would have prevented any one group of defendants,

acting alone from

accomplishing a

fraud of this

type."

(App.

609).
Despite the
state a

fact that

the pleading was

sufficient to

claim of this type of civil conspiracy, however, Count X

was tried and the jury was

ultimately instructed on a second and

quite different "civil conspiracy" cause of action.

Second.
_______

This second type of civil

conspiracy is more

akin to a theory

of common law joint liability

in tort.

It

is

explicitly recognized in Massachusetts law.

See Gurney v. Tenney, 84 N.E. 428, 430
___ _________________
(Mass. 1908);
see also Phelan v. Atlantic Nat'l Bank, 17
___ ____ ______
___________________
N.E.2d 697, 700 (Mass. 1938)("[A]verment of
conspiracy does not ordinarily change nature
of cause of action [sounding in tort] nor add
to its legal force.").
In

the civil context,

both elsewhere and

word conspiracy is frequently

in Massachusetts, the

used to denote vicarious liability

in tort for "concerted action."

See W. Page Keeton, Prosser and Keeton on
___ _______________________________________
Torts 322 (5th ed. 1984);
_____
Restatement (Second) of Torts 876 cmt. b
______________________________
(1977).
That

is,

person for
on

the concept

is invoked

to

support liability

a tort committed by another.

this basis,

there

must be,

first, a

agreement, although not necessarily

persons to do

of one

For liability to attach

common

design or

an

express, between two or more

a wrongful act and, second, proof of some tortious

-38-

act in furtherance of the agreement.

See
___
b.
Where two or

Restatement (Second) of Torts

______________________________
more persons act

876 cmt.

in concert, each will

be jointly

and severally liable for the tort.

See id.;
___ ___
see also New England Foundation Co. v.
___ ____ ____________________________
Reed, 95 N.E. 935, 935 (1911)("The gist of a
____
civil action of this
sort is not
the
conspiracy, but the deceit or fraud causing
damage to the plaintiff, the combination
being charged merely for the purpose of
fixing joint liability on the defendants.").
According to the Restatement:
For harm resulting to a third person from the
tortious conduct of another, one is subject
to liability if he (a) does a tortious act in
concert with the other or pursuant to a
common design with him . . . .
Restatement (Second) of Torts,
The

Supreme

Massachusetts

common

876 (1977).

Judicial

Court

has

law

civil

conspiracy

liability of this nature,

of

implied

even if the elements of

that

the

encompasses

liability are

not in all respects identical to those defined in this section of

the Restatement.
Kyte v. Philip Morris, Inc., 556 N.E.2d
____
____________________
1025, 1027 (Mass. 1990)(citing Gurney, 84
______
N.E.
428, and
declining to
"pause to
determine whether the principles of
876 and
the law of the Commonwealth are, in all
respects, in complete accord" because the
parties accepted this section as governing
the principles of civil conspiracy in the
Commonwealth);

see also Gurney, 84 N.E. at 430 (alluding

___ ____ ______
to concert of action theory
similar to
876(a));
Payton v. Abbott Labs, 512 F. Supp. 1031,
______
___________
1035 (D. Mass. 1981)("The concert of action
-39-

theory in Massachusetts tracks

Restatement.").
The district court, in

876(a) of the

this case, instructing the jury

on civil

conspiracy, stated:
The essence of conspiracy is that the person
agreed with one or more other persons [to
commit an unlawful act] . . . .
Plus for
conspiracy . . . somebody has to do something
to attempt to make it come about.
(App. 4817-18).
Although

this

Restatement

instruction
876,

is

not

the appellant

before this court regarding

precisely

has

not

in

accord

with

presented any

the instruction.

In any

issue

event, she

would be precluded from doing so here, not having objected to the

instruction in the district court.
She
evidence

did,

by her

Fed. R. Civ. P. Rule 51.

however, challenge

motion for

judgment as

the

sufficiency

a matter

of the

of law.

We

conclude, nevertheless,

that we

need not determine

state

of Massachusetts law on concerted

under

any plausible

reasonably could
with

her

formulation

find that

husband and

the precise

action in tort, because

of Massachusetts

law, a

Betty Arhaggelidis acted

fellow

Rodco/P&B

jury

in concert

Autobody defendant

to

defraud Aetna.
The
Rodco/P&B

jury,

with

Autobody was

support

in

associated with

evidence,

found

that

thirty-seven fraudulent

claims that were submitted to Aetna, and that Betty

Arhaggelidis

was directly involved in six of those claims.

From the
find

also

that Ms.

evidence at trial, the

Arhaggelidis

jury reasonably could

"acted in

concert"

with her

-40-

husband, the owner

design.

All

six claims

claimed damage
six

with which she

of the

represented

pursuant to a
was connected

purportedly repaired at Rodco/P&B

claims were supported by

defendant.
many

of Rodco/P&B Autobody,

appraisals by Mr.

to

Aetna that

Evidence

the repairs

All

Cummings, a co-

was received
had

involved

Autobody.

Her husband, Petros Arhaggelidis, allegedly

cars personally.

common

been made.

repaired

that she

Also,

evidence

was received of other fraudulent conduct on the part of

Mr. Arhaggelidis:
found

to be

totalling
bribes.

he was a claimant

fraudulent, and

on several claims the jury

he made

payments to

Mr. Cummings

over $35,000, which the jury could have inferred to be

From the evidence as

a whole, the jury

could infer an

agreement between Betty Arhaggelidis and her husband, under which

they played different roles, but nevertheless acted together with

a common design to defraud Aetna.
IV.
IV.

SUBMISSION OF CLAIMS TO THE JURY

SUBMISSION OF CLAIMS TO THE JURY

The Arsenal appellants argue

involving the
the

jury,

Arsenal defendants

instead

of

should have been

the thirty-three

Arsenal defendants on which

correctly assert

that only sixteen

claims

evidence was heard.

that only sixteen of

claims

submitted to
involving

the

The appellants

these thirty-three claims

were made to Aetna; the other seventeen claims were made to other
insurance

companies

(except

for

Tareh

Tirinkian's

worker's

compensation claim).
Aetna
insurance claims

recovered
paid by

damages

for the

Aetna -- claims
-41-

sixteen

automobile

the jury found

to be

fraudulent.

The trial

seventeen claims

court

because each was relevant

of fraud with respect to one

at issue.

For example,

companies duplicated
or

admitted evidence

more instances,

damage that

district

was

correct

insurance

at trial,

In one

was allegedly sustained

in one

with another

we need not decide whether the

in

admitting

each of the seventeen

in some instances the appellants

evidence

claims to other

to Aetna in connection

On this appeal

this

to the determination

one or more of the claims to Aetna.

alleged accident.

corresponding to

the other

or more of the sixteen Aetna claims

many of the

accident was later reported

court

of

the

evidence

claims because, although

objected to the introduction of

their briefs

in

this court

have not

directly challenged these rulings of the district court.

Instead,

the appellants

argue that

the

verdict form

should not have asked the jury to determine whether each of these
seventeen other claims was

fraudulent.

We will

assume, without

deciding, that the trial court's inclusion in the verdict form of

questions about these seventeen claims was unnecessary because at

most they concerned findings of an evidentiary nature rather than

findings on ultimate
determine

issues of fact

whether each

element

that had to

of some

claim

be decided
or defense

to

was

proved.
Since the appellants do
an argument for prejudicial
they

were in fact

not even articulate grounds of

error, however, much less show

prejudiced in

any way

by the

that

submission of

these

seventeen other insurance claims

to the jury,

we have no

-42-

occasion to determine whether their submission was improper.

trial

court

arguments

did consider

that

they

and

were

reject

prejudiced

evidence

of these seventeen claims.

evidence

because

it tended

the Arsenal
by

the

to support

the Aetna claims and others as

issue

regarding

admissibility

of

defendants'

jury's

hearing

The trial court allowed the

a

finding of

pattern and scheme of fraud that the jury might

all

The

well.
the

a common

find extended to

Even assuming that an

evidence

is

properly

preserved for our consideration, we conclude that this ruling was

not an abuse of discretion.

Nor was it an abuse of discretion to

submit to the jury questions about these claims.

It is true that

the jury's findings with respect to the seventeen other insurance

claims were not essential to the judgment entered on the verdict.

We

note, however,

that an

argument can

be made,

appellee does

not advance it

view of other

findings), that each of these claims,

constitute mail fraud,

on appeal (and

although the

need not do

so in

if found to

would constitute a predicate act

for the

purposes of Count VI, the substantive RICO violation with Arsenal

Auto as

the enterprise.

related, fraudulent
and

one

was

For

example, one could argue

claims, although one was

submitted

to

another

that two

submitted to Aetna

insurance

company,

would

constitute a "pattern of racketeering activity" through which the

defendants participated in the conduct of the

affairs of Arsenal

Auto.

In considering the sufficiency of evidence, we need not

address the merits of such an argument because even when limiting

-43-

the scope

of our

review of the

insurance claims, we

evidence to

find that there was

1962(c) by committing two

Aetna

sufficient evidence to

support the finding that each of the Arsenal

RICO

the sixteen

defendants violated

related, predicate acts of mail

fraud.
V.
V.

UNFAIR TRADE PRACTICES:

UNFAIR TRADE PRACTICES:
Mass. Gen.

acts
Mass.

or

L. ch.

practices in

Gen.

L. ch.

93A

93A prohibits "unfair

the conduct
2.

MASS GEN. L. CH. 93A

MASS GEN. L. CH. 93A

The

of

any trade

or deceptive

or commerce."

statute provides

for treble

damages
jury

in the case of a willful

found

Markarian's

that

Zareh

violation of the statute.

Tirinkian, Jack

deceptive business

Markarian,

and

practices constituted

The

Peter

a willful

violation of this statute.

Appellants contend
purely

personal and

that

that their dealings with Aetna were

they did

not

violate this

statute,

because they did not deal with Aetna in a business context.

Appellants
"persons
to

are

correct in

asserting that

the phrase

engaged in . . . trade or commerce" refers specifically

individuals acting

in a

business context.

Carson, 373 N.E.2d 973 (Mass. 1978).

______

See
___

Lantner v.
_______

Contrary to the appellants'

assertions, however, the evidence was sufficient for the

find that

these

three

defendants were

acting

context and engaged in unfair or deceptive

in

jury to

business

business practices in

violation of this statute.

All three defendants were
business:

Zareh

Tirinkian

was an
-44-

involved in the Arsenal Auto

owner

and Jack

and

Peter

Markarian performed
members

and friends

repair work.
of

these

claims to Aetna for damages.

by

submitted

Auto.

family

fraudulent

Most of these cars were

appraised

of the repair
Many of the

to Aetna with respect

"Arsenal Auto

found that

defendants submitted

Aetna appraisers, and most

performed at Arsenal

The jury

work was allegedly

work completion

to these claims

Repairs," certifying

forms

bear the stamp

that Arsenal Auto

completed

the repair work.

Under Massachusetts law, "unfair

and deceptive acts or

practices" include acts of fraud.

See Evans v. Yegen Associates, Inc., 556 F.
___ _____
______________________
Supp. 1219, 1227 (D. Mass. 1982)("Acts of
fraud clearly fall within 2 [of Mass Gen. L.
ch. 93A].");
see also Heller v. Silverbranch Const.
___ ____ ______
____________________
Corp.,
382
N.E.2d
1065,
1069
(Mass.
_____
1978)(Chapter 93A expands common law notion
of fraud).
We

conclude that

the

evidence was

ample to

support

findings of fraudulent practices by these three defendants.

the

evidence before them, the

defendants used

jury could find

deceptive business

From

that these three

practices in

their dealings

with Aetna in violation of Mass. Gen. L. ch. 93A.

VI.
VI.
In

addition

JURY INSTRUCTIONS
JURY INSTRUCTIONS
to

arguing

insufficient to support the finding

Arsenal appellants violated 18

that

the

evidence

that each of the

U.S.C.

1962(c) and

was

individual

1962(d), the

appellants assign error in the district court's jury instructions

on these counts.
-45-

The

court

'participate

in

instructed

the

conduct

the

of an

jury

that

enterprise'

"[t]he

term

includes

the

performance of acts, functions or duties which are related to the

operation of

the enterprise."

instruction on
or indirectly

The

the meaning of the

appellants argue that

this

phrase "participated directly

in the conduct of the enterprise's affairs" failed

to comport with the "operation or management" test adopted by the

Supreme Court in Reves v. Ernst & Young, 113 S.Ct. 1163 (1993).
_____
_____________
The appellants
this

are precluded from

successfully making

argument on appeal, however, since they failed to object on

this ground

at trial.

appellants contend

Fed. R. Civ.

that they

P. Rule 51.

objected to this

Although the

instruction, the

most that can be said is that they objected to the "RICO -- Aetna
as the enterprise" charge on
the

enterprise as a matter

the ground that Aetna could not

of law.

See App.
___

4833.

be

The record

shows that the court did not interpret this to be an objection to

any jury instruction,

their motion
("You've

for judgment

as a

matter of law.

the theories going to the jury. .

to

interpreted
sufficient

that.").
as

In any

an objection

case, even
to

to preserve an issue

"state distinctly

the matter

the

App. 4834

Of course you

. . Your rights are

if this

instruction,

for appeal because

objected to

support of

See
___

made a directed verdict, I've overruled.

object to
saved as

but merely further argument in

and

were to
it

is

be

not

it does not

the grounds

for

objection."
Fed. R. Civ. P. Rule 51;
see also Jordan v. United States Lines,
___ ____ ______
_____________________
-46-

Inc., 738 F.2d 48 (1st Cir. 1984)(holding

____
that appellant's objection to
the trial
court's instruction on the definition of
"unseaworthiness" was not specific enough to
satisfy Rule 51).
Moreover, even if

viewed as an objection, counsel's statement is

reasonably understood as an objection

"enterprise"

and not

to the

only to the definition

definition of "participate

of

in the

conduct

of the affairs."

The appellants never

objected to the

district court's definition of "participate in the conduct of the

affairs of the enterprise,"
test or offer

nor did they ever mention

any alternative

to the instruction

the Reves
_____

given by

the

judge.
Although this
broader interpretation,

jury instruction
it

is

also

is arguably open

reasonably

convey a meaning consistent with the Supreme

Reves that
_____

in order to

"participate
itself."

in the
Reves,
_____

be liable under

operation or
113

S.Ct.

to

Court's language in

RICO, a defendant

management of
at

understood

to a

1173.

must

the enterprise

"Because

of

the

[appellants'] failure to comply with Rule 51, we review the trial

court's

instructions only for plain error."

F.3d 979, 982 (1st Cir.

1994).

Poulin v. Greer, 18
______
_____

"The plain error rule

should be

applied sparingly and only in exceptional cases or under peculiar

circumstances
(quotations

to prevent
omitted).

a clear
The

miscarriage of

alleged error

in this

justice." Id.
___

instruction

fails to pass this test.

VII.
VII.
A.
__

JURY TRIAL ON DAMAGES

JURY TRIAL ON DAMAGES

Post-Verdict Hearings and the Standard of Decision

__________________________________________________
-47-

The Arsenal appellants

against them
damages in

challenge the judgment

on the ground that they were denied a jury trial on

violation of the

Seventh Amendment guarantee

right to a jury trial upon a timely demand.

Appellants demanded a jury

verdict on the issues

that no

of the

Fed. R. Civ. P. 38.

trial and agreed to a

liability issues and damages.

determined

entered

bifurcation of

Following the jury trial and

of liability, the district

genuine disputes

jury

court properly

of material

fact remained

with respect to damages.

The appellants' challenge fails because, after the jury

verdict, damages could be determined purely "as a matter of law,"

in

the sense

legal

that reasonable

standard could

amount

of damages

factfinders applying

come to

to be

but one

awarded under

the correct

determination as
the jury's

to the

findings on

liability.
Precedents
guidance

regarding

summary judgment

provide useful

on issues arising after jury verdict in the first phase

of a phased trial such as occurred in this case.

In the pretrial context,
made

by

the parties,

summary

regardless of any jury demand

judgment

is warranted

triable fact issues have been identified.

See

Anderson v.

Liberty Lobby,

Inc., 477

when

no

___ ________
____________________
U.S.
242
(1986)(summary
judgment
is
appropriate when there are no disputed issues
of material fact);
see also Plaisance v. Phelps, 845 F.2d 107
___ ____ _________
______
(5th Cir. 1988)(plaintiff did not have an
absolute right to a jury trial where there
was no genuine issue of material fact, since
the function of a jury is to try disputed
material facts);
-48-

Bloomgarden v. Coyer, 479 F.2d 201, 206

______________________
(D.C.
Cir.
1973)("The summary
judgment
procedure is properly and wholesomely invoked
when it eliminates a useless trial. . . .").
In addition, under Federal
the

court may take action

"including
Fed.

the elimination

R. Civ.

P. 16.

Rule of Civil Procedure 16,

to formulate and
of

Rule

frivolous

16 also

simplify the issues

claims or

defenses."

authorizes courts

to take

action with respect to the "appropriateness and timing of summary

adjudication under Rule 56."
to

confirm

the power

issues" without

Id.
___

of the

awaiting a

Moreover, Rule 16 was intended

court

to "identify

formal motion for

Advisory Committee Notes, 1983 Amendment.

[] litigable

summary judgment.

In this case, the trial judge's determination regarding

the

damages to

liability.
court stated
trial

if

be

awarded was

the

jury trial

on

At the conference

on damages held

after trial, the

its intention to

enter a judgment

without another

no genuine

dispute of

determination remained.
stated,

made after

fact

material to

the damages

In a conference with counsel, the court

"[u]nder Rule 16, I have the

power to narrow the issues

for trial . . . I can in effect talk through a proceeding akin to

a motion for summary judgment."
This court
summary
Stella
______

has held

that a district

court may

grant

judgment sua sponte as long as two requirements are met.

v. Town of Tewksbury,
__________________

4 F.3d

53,

55 (1st

Cir. 1993).

"First the discovery phase must be sufficiently advanced that the

court can

make an accurate

issue

material

of

fact

determination of
[exists]."

Id.
___

whether a
(citation

genuine

omitted).

-49-

Second, "the target

of its

evidence."

must have been on notice

Id.
___

to bring forth all

"'Notice' in this context means that the

losing party
foot

. . . received

forward."

a fair opportunity to

put its best

Jardines Bacata, Ltd. v. Diaz-Marquez, 878 F.2d

______________________
____________

1555, 1560 (1st Cir. 1989).

These two
was not

requirements were met.

merely "sufficiently advanced."

The discovery phase

It was complete.

trial on the liability issues had been completed.

received notice and
judge,

before

an opportunity

entering

opportunity to file

The appellants

to be heard.

judgment,

allowed

The

the

written submissions on the

And a

district

parties

an

issues that were

raised at the conference.

In
substantially

their

post-trial memorandum,

the same argument

the

as they make

appellants made

before this court

(discussed below), and in both instances without any proffer that

they would be able to offer at a damages-phase trial any evidence

that would raise a genuine dispute of fact that might be resolved

by a factfinder in their favor.
B.
__

The Alleged Need for a Jury Trial

_________________________________

The appellants argue that

necessary
legitimate,

to determine

how much

that reported

losses

a jury trial on
of

damages was

each fraudulent

were merely

claim was

exaggerated, and

that Aetna's damages should be limited to the difference

the payment made

by Aetna and the actual loss

between

to the appellant.

Each of these arguments fails because, as a matter of

law, Aetna

is entitled to damages equal to the entire amount of its payments

-50-

on

fraudulent claims,

that might have

regardless of any

been shown

portion of

to be supportable

if no

the claims

fraudulent

enlargement of the claims had occurred.

We put aside Aetna's argument that

appellants violated

the cooperation clause of the various policies under which claims

were made.

In part that clause provides:

After an accident or loss, you or
anyone else covered under this policy
must
cooperate
with
us
in
the
investigation, settlement and defense of
_________________________________________
any claim or lawsuit. . . .
____________________

(App. 4800)(emphasis added).

forms,

Earlier automobile insurance policy

from which this language

in the Aetna

descended, contained an Assistance

was then called.

applied only to liability

here

were

precedent has

and Cooperation Clause, as it

That clause initially appeared among conditions

that

made

policies at issue

under

coverages.

collision coverage.

explicitly determined

The

claims at issue
No

Massachusetts

that this clause

in policy

forms like those at issue here applies to collision coverage.

these circumstances,
Judicial Court will

any

prediction about

hold that this

whether the

clause applies to

In

Supreme

collision

coverage is speculative, but

this

matter

in order

to

we need not make any

decide

this

appellants' favor, without deciding,

in

case.

prediction on
We

assume

in

that the cooperation clause

these Aetna policies does not apply to claims under collision

coverage.
The "cooperation
provision concerning

clause," of

course, is not

the only

insureds and

claimants

the obligations of
-51-

after

an

accident or

loss.

Other

provisions

concern giving

notice and filing a proof of loss.

Appellants
preclusion doctrines
that

making a

provisions of

contend

that

or another

of insurance law bars

fraudulent claim
the policy under

reason all of the

one

is a

various

Aetna from asserting

violation of

which the

of

claim is

any of

the

made.

One

appellants' preclusion arguments fail

is that

on

the facts of this case, as determined by supportable findings

of

the

jury,

calculation

of

fraudulent claim.

every
the

claim
damages

included
award

has

in

the
been

trial
found

court's
to

be

In addition, every claim for which the Arsenal

defendants were held

liable was made within the

substantive violation and

which

appellant

scope of a RICO

a RICO conspiracy, and every claim for

Arhaggelidis was

held

liable

was within

the

finding against her on the ground of civil conspiracy.

A

claimant,

in

making

fraudulent

claim,

was

committing a material breach -- indeed, a most fundamental breach

-- of the contract between

Aetna and its policyholder.

This is

true, of course, not only of a claim by the policyholder but also

of any claim under the policy by any other person entitled by the
terms of the policy to make a claim under the policy.
A

breach

as

fundamental as

assertion of any further

guilty of the breach.
E.

this

is

bar to

rights under the contract by

the party

This is a basic rule of contract law.

Allan Farnsworth, Contracts 632-38 (2d ed. 1990).

_________

the

See
___

It applies

to insurance contracts as well as other contracts.

-52-

Appellants
preclusion doctrines

contend
developed

that

one or

another

distinctively in

of

various

insurance

law

nevertheless bars Aetna from asserting fraud by the appellants in

this

case.

This contention

fails because the

this case have negated at least

jury findings in

one of the essential elements of

each preclusion theory appellants attempt to invoke.

The jury's findings negate the voluntary relinquishment

of known rights that
sense,

the

detrimental

characteristic of
choice of an

estoppel in

have

election beyond

by

that

is characteristic of

is

stretched

their classic

election in

is

the

informed and

cases

waiver,

meaning to favor

that

the voluntary

of a less

characteristic of
doctrines of

the classic

claimant

the classic sense,

and insurer overreaching

bargainer

precedents

reliance

option that

classic sense,
unequal

is characteristic of waiver in

in

which

estoppel, and

a disadvantaged

insured.
See generally id. at 92-102, 319-23, 586___ _________ ___
92;
John S. Ewart, Waiver Distributed Among the
____________________________
Departments:
Election, Estoppel, Contract,
_____________________________________________
Release, 7-9, 84-87 (1917);
_______
John S. Ewart, Waiver or Election, 29 Harv.
__________________
L. Rev. 724 (1916).
Appellants

have

not

Massachusetts law or elsewhere,

part of the
doctrine
beyond

cited

rights in

precedent,

in

that supports application to any

verdict and judgment in this

establishing

any

favor

case of any preclusion

of

insurance claimants

those provided by the terms of the contract of insurance.

These terms

include the limitations,

conditions, and exceptions

-53-

as

well

as

coverage.

its clauses
Indeed,

in

substantive violation
need

granting
view

of

and

the jury

with Aetna as

or occasion to invoke

defining
finding

victim, if

more congenial

of

there were

of

RICO

any

principles of preclusion rather than

ordinary contract doctrine to decide this case,

be

the scope

to preclusion

against a

the record would

fraudulent claimant

than to preclusion of any of Aetna's defenses.

Although
aware

of any

the parties

have not

Massachusetts precedent

cited

and we

directly determining

effect of fraudulent claims and RICO violations upon the

of

recovery

decisions
this

to which

on analogous

case.

the

insurer

is entitled,

issues support

For example,

are not

measure

Massachusetts

the judgment

Massachusetts courts

the

entered in

have held

in a

number of different contexts that an insured

who committed fraud

either in obtaining a

claim was precluded

policy or in making a

from recovering on a claim under the policy.

See Airway Underwriters v.
Perry, 284
___ ____________________
_____
N.E.2d 604 (Mass. 1972)(holding
that an
attempt
to defraud
the insurer
was a
violation of the policy's cooperation clause

and a clause stating that the policy was void

in case of fraud, and therefore insurer was
relieved of its obligation to indemnify the
insured or defend on the insured's behalf);
Bockser v. Dorchester Mutual Fire Ins. Co.,
_______
_______________________________
99 N.E.2d 640 (Mass. 1951)(holding that an
insured, whose property was destroyed by fire
and whose agent attempted to defraud the
insurance company by exaggerating the losses
was precluded from recovery under the policy
in light of a provision
of the policy
rendering the policy void if the insured
attempted to defraud the
company either
before or after a loss).

In addition, fraud on the part of a party to a contract

-54-

has been determined to be a breach of the covenant

and fair dealing.

Glaz
____

of good faith

v. Ralston Purina Co., 509 N.E.2d

___________________

297

(Mass. App. Ct. 1987).

The
Aetna
amounts
by

appellants do

paid out

on the

the jury

the

policies were

that the

ever in

amounts that

dispute.

These

were the only facts, in addition to the facts determined

in the liability

court's judgment.
to

not contend

existence

Although
and

phase, that were

material to the

there may have been some

extent

of

any

actual

dispute as

losses

by

the

defendants, any dispute about these facts was not material to the

judgment because the appellants' fraud (by either exaggerating or

completely fabricating losses) precluded them from asserting

any

right to recover for actual losses under the insurance contracts.

Since no triable fact disputes remained, the
denied their right to
of the sums

a jury trial.

certain to

properly made

The

appellants were not

court's determinations

be awarded against

the defendants

were

as matters of law -- that is, by the judge without

submission to a jury.
VIII.
VIII.
As
court

a part of the

awarded $1,500,000 in

attorneys'
judgment,

fees
each

to

ATTORNEYS' FEES
ATTORNEYS' FEES
judgment in this

costs, expenses, disbursements, and

the plaintiff.

individual

case, the district

Arsenal

Under
defendant

the

terms of

the

jointly

and

is

severally liable for the entire amount of $1,500,000.

The
amount

of it

sole challenge in this appeal to this award or the

is

that the

Arsenal

appellants argue

that

the

-55-

district

court

improperly held

them

liable for

not

only the

attorneys' fees
fees

expended in

expended in

Surety Co. v.
__________
case").

In

Inc. and

this case

related case

but also

entitled

Sport Auto Body, Inc., No.

______________________

Aetna Casualty and

___________________
91-11718 (the

the Sport case, Aetna alleged that

_____

its operators were

a part

the attorneys'

of the

"Sport
_____

Sport Auto Body,

same conspiracy

to

defraud Aetna, which included Arsenal Auto and the other autobody
shops.

The Sport case was consolidated with this case on May 17,
_____

1992.

Subsequently, the Sport defendants defaulted and the Clerk

_____

entered judgment against them.

The

appellants

argument

fails

because

18

U.S.C.

1964(c) authorizes the recovery of reasonable attorneys' fees by

a prevailing plaintiff in a civil RICO case.
Since

the

judgment

Sport
_____
was

case

entered

individual Arsenal

was consolidated
against

the

with

Sport
_____

defendants for the same

district court correctly held

18 U.S.C.
this

1964(c).

action and

defendants

and

the

RICO violations, the

the Arsenal defendants jointly and

severally liable for reasonable attorneys' fees expended by Aetna

for

the

entire

unconvincingly,
did not extend

suit.

Arsenal

appellants

argue,

but

that the district court's order of consolidation

to the phased trial.

The district court rejected

the argument, and we find no abuse of discretion in this ruling.

IX.
IX.

PREJUDGMENT INTEREST
PREJUDGMENT INTEREST

Raising

this issue for the first time in a reply brief

on appeal, appellant Jack

the

Markarian challenges the inclusion, in

judgment against him, of

prejudgment interest on the treble

-56-

damages awarded under the RICO claims.

treble

damages

are punitive

in

He argues that since

nature

and not

the

compensatory,

prejudgment interest is inappropriate.

The appellant failed to raise the issue either at trial

or even
all

the

in his opening brief,

Arsenal

defendants.

which was submitted on

The

first

statement

behalf of
of

this

contention appears in this appellant's reply

brief, filed on his

behalf

alone.

by

new

circumstances,

counsel

representing

him

In

these

we hold that he has failed to preserve this issue

for appeal.
American Automobile Manufacturers Assoc. v.
________________________________________
Commissioner,
31 F.3d 18, 25 (1st Cir.
____________
1994)(appellant failed to preserve issue for
appeal when the argument was first raised in
his reply brief);
Frazier v. Bailey, 957 F.2d 920, 932 n.14
_______
______
(1st. Cir. 1992)(same);
Pignons S.A. de Mecanique
v. Polaroid

____________________________
________
Corp., 701 F.2d 1, 3 (1st Cir. 1983)(same);
_____
see also McCoy v. Massachusetts Institute
________ _____
________________________
of Technology, 950 F.2d 13, 22 (1st. Cir.
______________
1991), cert. denied, 112 S.Ct. 1939(1992)("It
____________
is hornbook law that theories not raised
squarely in the district court cannot be
surfaced for the first time on appeal.").

"[A]n appellee is entitled to rely on the content of an

appellant's [opening]

brief for

the scope of

Pignons S.A., 701 F.2d at

____________

3.

in

appellee

reply

brief,

the

opportunity

to respond.

F.2d 83, 87

(1st Cir. 1990).

deprived

of

parties.

Id.
__

the

When an argument is first raised

is

See Sandstrom
___ _________

benefit

of

issues appealed."

not

given

an

adequate

v. Chemlawn Corp., 904

_______________

Moreover, the

court of appeals is

written submissions

by

all

the

-57-

This

court

circumstances are shown,

has

recognized

an issue may be

that

if

exceptional

considered even though

it has not been timely raised.

Id. (citing United States v. LaGuardia, 902
___
_____________
_________
F.2d 1010, 1013 (1st Cir. 1990)).
Such

exceptional circumstances

compelling

as virtually

arguments

that

include arguments

to insure

must be

that are

the appellant's

ruled upon

to

avoid a

"so

success" or

miscarriage of

justice.
Johnston v. Holiday Inns, Inc.,
________
___________________
890, 894 (1st Cir. 1992).
The
not

one

argument presented by

that

decision to

satisfies

this

595 F.2d

appellant Jack Markarian is

standard.

A district

award prejudgment interest under

court's

RICO is ordinarily

subject to review under the "abuse of discretion" standard.

Cf. Earnhardt v. Commissioner of Puerto
___ _________
_______________________
Rico, 744 F.2d 1, 3 (1st Cir. 1984)(abuse of
____
discretion standard is applied to district
court's decision whether to award prejudgment
interest in a Title VII case);
see also Abou-Khadra v. Mahshie, 4 F.3d
___ ____ ___________
_______
1071, 1084 (2nd Cir. 1993), cert. denied, sub
____________ ___
nom. Bseirani v. Mahshie, 114 S.Ct. 1835
____ ________
_______
(1994) ("Since the RICO statute does not
contain any provisions concerning the award
of prejudgment interest, the district court
had discretion as to whether to award such
interest.");
Louisiana Power and Light Co. v. United Gas
_____________________________
__________
Pipe Line Co., 642 F. Supp. 781 (E.D. La.
______________
1986)(same).
We
appellant's

recognize
argument

that
that

there
the

is

district

some

force

court

in

abused

the

its

discretion
reasons

in

that

awarding
treble

prejudment

damages

under

interest.
RICO

The

constitute

appellant

punitive

-58-

damages, and that since

prejudgment interest on punitive damages

is ordinarily inappropriate, the district court erred in awarding

prejudgment interest in this case.
Cf. McEvoy Travel Bureau, Inc. v. Norton
___ ___________________________
______
Co., 563 N.E.2d 188, 196 (Mass. 1990)(holding
___
that prejudgment interest should
not be
awarded in Mass. Gen. L. ch. 93A cases
because multiple damages are punitive in
nature);
Wickham Contracting Co. v. Local Union No.
________________________
_______________
3, Int'l Brotherhood of Elec. Workers, 955
________________________________________
F.2d 831, 834 (2nd Cir.), cert. denied, 113
_____________
S.Ct. 394 (1992)(prejudgment interest should
not be awarded when damages are punitive in
nature).
It

may reasonably

be

primarily compensatory

argued, however,

that

in nature, and thus

RICO damages

are

prejudgment interest

was properly awarded.

Cf. Liquid Air Corp. v. Rogers, 834 F.2d
___ _________________
______
1297, 1310 (7th Cir. 1987), cert. denied 492

____________
U.S. 917 (1989)("Although there is some sense
in which RICO treble damages are punitive,
they are largely compensatory in the special
sense that they ensure that wrongs will be
redressed
in
light
of the
recognized
difficulties of itemizing [the damages caused
from racketeering activity].").
Thus,
the

the appellants' argument is not so compelling as to ensure

appellant's success.

that

Nor is his argument so clearly correct

a failure to rule in his

miscarriage of justice.

favor on this issue constitutes a

Therefore, the appellant cannot prevail

under the Johnston standard.

________
CONCLUSION
CONCLUSION
In
advanced on

summary, we
appeal

conclude

supports

that none

reversal

of

any

of the

arguments

aspect

of

the

-59-

judgment in this case.

The district court commendably

fashioned

an order for phasing of trial in two consolidated cases, with all

disputed and
before

material issues bearing

a jury in the

first phase.

on liability

to be

tried

In post-verdict proceedings

analogous

to a

hearing on

district court
fact

correctly determined

remained for

should be

a motion

jury

entered for

liability, and on

for summary

that no genuine

determination and
Aetna on the

judgment, the

dispute of

that final

jury verdict,

the court's calculation of

judgment

establishing

damages based upon

facts disclosed on the record and not subject to genuine dispute.

The district
verdict

court's pretrial

proceedings

were

order for

phasing and

well-tailored

to

the

its post-

distinctive

characteristics of this legally and factually complex litigation.

Together they

achieved fair and appropriate

claims and defenses on

the merits.

Proceeding in

the court also effected substantial reductions

for the

parties

and the

court

adjudication of all

system, an

this fashion,

of delay and cost

objective

strongly

commended by Rule 1 of the Federal Rules of Civil Procedure.

The judgment of the district court is AFFIRMED.
________

-60-