Eleventh Circuit Vacates Lower Court Ruling, Distinguishes Plaintiff’s RICO Conspiracy Claim From Common Law Fraud Claim

SunLife Assurance Co. of Canada v. Imperial Premium Finance, ___F.3d ___, 2018 WL 4443054 (11th Cir. Sept. 18, 2018)

Plaintiff alleges that Imperial secured life insurance policies through an unlawful and tortious conspiratorial scheme, alleging (1) conspiracy to commit common law fraud; and (2) conspiracy to violate RICO. Imperial, for its part, contends that its acquisition and ownership of the policies was lawful, and alleges that Sun Life’s attempts to interfere with its ownership of and rights under the policies, including its filing of its lawsuit here, is itself part of Sun Life’s own fraudulent scheme and in breach of the policy contracts.
The alleged conduct underlying both conspiracy claims was the submission of fraudulent life insurance applications to Sun Life. The court first affirmed the dismissal of Sun Life’s fraud conspiracy claim describing that Sun Life’s claim that Imperial conspired with the producers to commit fraud failed because Sun Life did not plausibly allege that the producers and Imperial are independent entities that were capable of conspiring to commit common law fraud as alleged by Sun Life.

However, Sun Life’s claim for RICO conspiracy survives because the “intracorporate conspiracy doctrine,” does not apply to civil claims for RICO conspiracy. Kirwin v. Price Commc’ns Corp., 391 F.3d 1323, 1326–27 (11th Cir. 2004) (“[J]ust as the intracorporate conspiracy doctrine cannot shield a criminal conspiracy from prosecution under the federal criminal code, the doctrine cannot shield the same conspiracy, alleging the same criminal wrongdoing, from civil liability arising under [18 U.S.C. § 1962(d) ].”) And the court disagreed with Imperial’s attacks on the merits of Sun Life’s RICO conspiracy claim, specifically, that Sun Life did not plead (i) an agreement between Imperial and the producers, and (ii) racketeering activity.

First, Sun Life’s complaint easily permits the inference that Imperial and the producers entered into an agreement to effectuate Imperial’s fraudulent plan. As discussed, the complaint contains myriad details of Imperial’s interaction with and direction of the producers with respect to Imperial’s alleged scheme, which included Imperial compensating the producers for their knowing submission of fraudulent applications to Sun Life,. In light of those allegations, an agreement between Imperial and the producers is certainly plausible.

Second, Sun Life pled RICO predicate racketeering acts: the commission of mail and wire fraud, 18 U.S.C. § § 1341, 1343, which “[b]oth … require that a person (1) intentionally participate[d] in a scheme or artifice to defraud another of money or property, and (2) use[d] or ‘cause[d]’ the use of the mails or wires for the purposes of executing the scheme or artifice.” United States v. Ward, 486 F.3d 1212, 1222 (11th Cir. 2007). Sun Life met its burden by alleging that the producers used the United States mail and interstate wire to submit life insurance applications to Sun Life that contained several misrepresentations that induced Sun Life’s issuance of the policies. Sun Life’s reliance on those misrepresentations is supported by the allegation that Sun Life framed the relevant application questions precisely to avoid issuing premium-financed policies or policies intended at the outset for the secondary market. Finally, Sun Life alleged the damages it faced by issuing less profitable premium-financed policies.

Consequently, the court concluded that the district court properly dismissed Sun Life’s fraud conspiracy claim but that it erred in dismissing Sun Life’s RICO conspiracy claim to the extent such claim alleges a conspiracy between Imperial and the producers.

Ed Note: The distinction between common law conspiracy and RICO conspiracy is on display here, explaining that the intra-corporate conspiracy doctrine which restricts a conspiracy between a parent and subsidiary, does not apply to RICO conspiracy. There is a split in the circuits on this issue. Second, although not discussed, RICO conspiracy is broader than the federal general conspiracy statute, and the common law conspiracy doctrine.

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