OK Resorts of Puerto Rico, Inc. v. Charles Taylor Adjusting, Inc.
3:19-cv-01889
| D.P.R. | Jan 29, 2021Background
- Plaintiffs OK Resorts, Executive Fantasy Hotel, and Riverside Resort sued Charles Taylor Consulting Mexico (claims adjuster), Universal, and Integrand after Hurricane María, seeking $10.1M under three insurance policies for unpaid claims.
- Plaintiffs allege a RICO enterprise (association‑in‑fact) of insurers, adjusting firms, and individuals that systematically delayed/denied claims to enrich members; alleged predicate acts include mail and wire communications in March and July 2018.
- Integrand retained Charles Taylor to adjust claims; plaintiffs received several communications by e‑mail/USPS and asserted those were part of the fraud.
- Defendants moved to dismiss under Fed. R. Civ. P. 12(b)(6), arguing lack of RICO standing, absence of a distinct enterprise, no pattern of racketeering, and no conspiracy; Becher discovery was permitted but plaintiffs did not amend the complaint afterward.
- The court concluded plaintiffs failed to plead RICO claims with the required specificity (Rule 9(b)), dismissed §§ 1962(c) and (d) claims, and declined supplemental jurisdiction over Puerto Rico Law 27 claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| RICO standing / proximate causation | Plaintiffs claim they suffered business/property injury (loss of policy proceeds) caused by defendants' scheme to delay/deny claims. | Charles Taylor argues plaintiffs fail to show proximate cause from predicate acts to alleged injuries. | Dismissed for failure to plead predicate mail/wire fraud with particularity and thus insufficient to establish proximate causation/standing. |
| Distinct RICO enterprise (§ 1962(c)) | Plaintiffs allege an association‑in‑fact enterprise of insurers, adjusters, and individuals with common purpose to defraud policyholders. | Universal contends plaintiffs did not plead an enterprise distinct from the defendants or the required structural features. | Dismissed: complaint failed to plead the enterprise relationship and coordination with the specificity Rule 9(b) demands. |
| Pattern of racketeering activity (continuity) | Plaintiffs point to multiple communications and a scheme (delay, underpayment) as related predicate acts amounting to a pattern. | Defendants argue three correspondence dates do not show continuity or threat of ongoing criminal conduct beyond routine business communications. | Court found relatedness but ruled plaintiffs did not meet Rule 9(b) specificity; pattern element not sufficiently pleaded to survive dismissal. |
| RICO conspiracy (§ 1962(d)) | Plaintiffs allege defendants conspired to defraud policyholders as part of the enterprise. | Defendants say plaintiffs only pleaded ordinary business retention/agreements (e.g., Integrand hiring Charles Taylor) and no agreement to commit predicate crimes. | Dismissed: plaintiffs failed to allege a knowing agreement to commit predicate offenses with the required particularity. |
Key Cases Cited
- Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985) (sets out RICO elements: conduct of an enterprise through a pattern of racketeering)
- H.J., Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229 (1989) (defines relatedness and continuity for predicate acts/pattern)
- Becher (New England Data Serv., Inc. v. Becher), 829 F.2d 286 (1st Cir. 1987) (allows limited discovery where fraud particulars are in defendant's control)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) (proximate cause requirement in civil RICO)
- Boyle v. United States, 556 U.S. 938 (2009) (association‑in‑fact enterprise elements: purpose, relationships, longevity)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard for plausibility)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (Twombly plausibility standard)
- Miranda v. Ponce Fed. Bank, 948 F.2d 41 (1st Cir. 1991) (discusses distinctness requirement between defendant and enterprise in § 1962(c))
- Feinstein v. Resolution Trust Corp., 942 F.2d 34 (1st Cir. 1991) (predicate acts and relatedness analysis)
- Libertad v. Welch, 53 F.3d 428 (1st Cir. 1995) (enterprise distinctness and RICO pleading principles)