This is our Response to Defendants' State Farm Mutual Automobile Co. (SFM), and State Farm Indmnity Co. (SFI), Motion to Dismiss or Stay. our initial Complaint.
In addition, we have submitted to the Court a Motion to Ammend with a Memorandum in Support of that Motion, together with an Amended Complaint. First, I've outlined the salient points as they exist in the Defendants' Memorandum.
To start at the beginning go the DIARY PAGE.
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
BRYSON CITY DIVISION
____________________________________________
|
WILLIAM C. HAMMEL, |
ALAN J. BELLAMENTE, |
et al., | RESPONSE
| TO DEFENDANT'S MOTION
Plaintiffs | TO DISMISS, OR IN
| THE ALTERNATIVE
vs. | TO STAY
|
STATE FARM MUTUAL AUTOMOBILE |
INSURANCE CO., | No. 2:99:CV-44-T
STATE FARM INDEMNITY COMPANY, |
et al. |
|
Defendants |
___________________________________________|
SHORT CAPTION: HAMMEL v STATE FARM
RESPONSE TO DEFENDANTS' MOTION TO DISMISS, OR IN THE ALTERNATIVE
TO STAY
Preliminaries:
Since the original construction of Plaintiffs' Complaint, and even
since the filing some six months later, conditions and
circumstances have changed, and new information has come to light.
An amended complaint has become necessary and is allowed under FRCP
rule 15(a), and has been allowed by the Court's leave.
In accordance with those conditions and circumstances, as well as
the objections in Defendants' Memorandum in Support of Dismissal,
Plaintiffs submit this memorandum in support of their opposition
for dismissal of parts of their original Complaint, and matters
addressed in that Motion for Dismissal still relevant to the
submitted amended complaint.
Before addressing the specifics of Defendants' Memorandum in
Support of dismissal, Plaintiffs cite, more generally:
Defendants have made a Motion to Dismiss, or in the Alternative
to Stay. The Court is obliged under the Federal Rules of Civil
Procedure to consider the issues in the light most favorable to
the Plaintiffs, the nonmoving parties.
In re Stac Elecs. Sec. Litig., 89 F3d 1399, 1403 (9th Cir, 1996);
Doe v. Hillsboro ISD, 81 F 3d 1395, 1401 (5th Cir. 1996):
Only if no possible construction of the alleged facts will
entitle plaintiffs to relief should the court grant defendants'
motion to dismiss.
In re Hishon v. King Spalding, 467 U.S. 69, 73, 104 S.Ct.
2229, 2232 (1984); Conley v. Gibson, 355 U.S. 41, 45046, 78 S.Ct.
99, 102 (1957): If the factual allegations in plaintiffs'
complaint support any legal theory that entitles plaintiffs to
some relief, the court should overrule defendants' motion for
dismissal.
More Specifically:
Defendants' Memorandum in Support of Motion to Dismiss, ...,
opens with, "Plaintiffs ... have filed this action Pro Se,
literally seeking to transform a litany of complaints about
the handling of an automobile accident claim into a federal case
under the Racketeer Influenced and Corrupt Organizations Act
18 U.S.C. 1962.". (RICO)
Plaintiffs seek no such transformation. Indeed, State Farm Mutual
Automobile Insurance Company, (SFM) and its progeny underwent
their own transformation approximately 25 years ago, from the
legitimate business of insurance to a maleficent profit center
of racketeering.
Plaintiffs allege that they have suffered an instantiation
of the pattern of racketeering activities that is these Defendants'
way of doing business, a way of doing business that has existed
over these many years, and Plaintiffs further claim that this
intransigent pattern of racketeering shows no sign of abatement.
Plaintiffs also allege business, property, personal and future
damages based on theories of RICO, State Statutes and Common Law,
and that these damages are a result of the transactions of
enterprises which will, in the Amended Complaint consist of
persons named as defendants together with their various nexi
of relationships.
All theories and definitions of extortion exclude the case where
the primary act is legal: to sell a thing which may legally be sold
is obviously legal, but to do so fraudulently, and in so doing to
create a fear of loss and attendant physical anxiety is unlawful.
With this reasoning, Plaintiffs allege fraud both in the selling of
an insurance policy, and in handling claims, and therefore allege
extortion in that Plaintiffs were unreasonably and fraudulently
denied benefits of the insurance policy, and had no recourse but
willingly to enter litigation, first on the State level merely
for performance of contract and then on the Federal level to
recover damages from both the induced fear, and the development and
realization of that which was feared, thus depleting the benefits
to which Plaintiffs were legally entitled. Plaintiffs have indeed
experienced the fear of deprivation in their loss of: business and
property; inability to earn income; bodily functions; their existence
as normally independent and productive individuals, peace of mind
requiring medication and psychotherapy and realizations of their
well founded fear.
Plaintiffs allege that the trauma, both physical and psychological,
deliberately inflicted on Plaintiffs is no less than that which
would be normal under The Spanish Inquisition, and that it is
enough to have caused permanent and disabling, business,
property, physical and psychological damage.
In Campbell v. State Farm Mutual Automobile Insurance Co.,
No. 890905231, slip op. at 53 (Third Judicial Dist., Salt Lake
City, Utah, Aug. 3, 1998), a third party action on grounds of
Bad Faith, the Court found ample evidence for its racketeering
activities.
Plaintiffs reference here their accompanying Memorandum On
The Racketeering Nature Of State Farm's Misconduct.
Thus, there exists reason for Plaintiffs allegements of these three
aspects required in RICO; to amass and present the thousands of
pages of evidence within such a short time to prove the existence
of these aspects would be unduly burdensome on Plaintiffs,
unnecessary according to the Federal Rules, at this early stage
of pleadings, and burdensome to the Court.
While SFM and State Farm Indemnity (SFI) are legally distinct
entities, each, under corporate law and under RICO, entitled
to personhood, they confuse themselves in practice, as the
correspondence, internal documents of SFM and SFI, and pleadings
in the New Jersey matters will show. Each engages itself in the
affairs of the other. Given this, it is unlikely that the
misconduct of SFI is inherently different from that of SFM.
Regarding Defendants' arguments that this case should be dismissed,
which may be outlined as:
I. Plaintiffs have settled and dismissed their Claims
against State Farm
Plaintiffs' action is barred by two fundamental legal
doctrines: accord and satisfaction and res judicata.
II. Plaintiffs have failed to state a RICO claim.
Must allege:
(1) that defendant (2) through the commission of two
acts (3) constituting a pattern of (4) racketeering
activity (5) directly or indirectly invests in, or
maintains an interest in, or participates in (6) an
"enterprise," (7) the activities of which affect
interstate or foreign commerce 18 U.S.C 1962(a)-(c).
(A) Plaintiffs lack standing under RICO because they have not
alleged injury in their business or property.
(B) Plaintiffs have failed to adequately plead predicate
criminal acts.
(C) Plaintiffs have failed to plead a "pattern" of "racketeering."
(D) Plaintiffs have not plead a RICO "enterprise".
(E) Plaintiffs RICO claim should be dismissed.
III. In the alternative, this action should be Stayed
pending the outcome of the
"limited issue of underinsured motorist benefits."
Plaintiffs address I. and III. here, referencing this outline,
while II. is addressed by the substance of the amended complaint,
except for Defendants' quoting in II-D that "that a 'person'
is not distinct from an 'enterprise' when a corporation and its
wholly owned subsidiary are involved."
Defendant's specific arguments for dismissal can be divided into
two classes, those of law and those of legal form. The arguments
based on form are reparable, and Plaintiffs submit that such repair
is present in their Amended Complaint.
I.
Regarding Defendants' arguments for dismissal which are the
legal doctrines of Res Judicata, Accord and Satisfaction, and
a principle of Comity:
Regarding Res Judicata
Defendants apparently intend Res Judicata in its restricted
sense of issue preclusion or collateral estoppel, while many
courts understand it to include both issue preclusion and claims
preclusion. Plaintiffs will address Res Judicata in its broader
understanding, as the Fourth Circuit has, and relate it to this
action.
Following In Re Varat Enterprises Inc., 81 F.3d 1310
(4th Cir. 1996), where this broader analytical position is taken;
from In Re Varat, excluding footnotes:
"Under res judicata principles, a prior judgment
between the same parties can preclude subsequent
litigation on those matters actually and necessarily
resolved in the first adjudication. See Restatement
(Second) of Judgments, '' 13 et seq. (1982);
Allen v. McCurry, 449 U.S. 90, 94 (1980);
Federal Deposit Ins. Corp. v. Jones,
846 F.2d 221, 234-35 (4th Cir. 1988). The doctrine
encompasses two concepts: claim preclusion and issue
preclusion, or collateral estoppel. Allen, 449 U.S.
at 94. Rules of claim preclusion provide that if the
later litigation arises from the same cause of action
as the first, then the judgment bars litigation not
only of every matter actually adjudicated in the
earlier case, but also of every claim that might
have been presented. Nevada v. United States,
463 U.S. 110, 129- 30 (1983); Wallis v. Justice Oaks
II, Ltd. (In re Justice Oaks II, Ltd.), 898 F.2d 1544,
1549 n.3 (11th Cir.), cert. denied, 498 U.S. 959 (1990).
Issue preclusion is more narrow and applies when the
later litigation arises from a different cause of
action. Nevada, 463 U.S. at 130 n.11. It operates
to bar subsequent litigation of those legal and
factual issues common to both actions that were
'actually and necessarily determined by a court of
competent jurisdiction' in the first litigation.
Montana v. United States, 440 U.S. 147, 153 (1977);
Combs v. Richardson, 838 F.2d 112, 114 (4th Cir. 1988)."
...
"Generally, claims are part of the same cause of
action when they arise out of the same transaction
or series of transactions, Harnett v. Billman,
800 F.2d 1308, 1314 (4th Cir. 1986), cert. denied,
480 U.S. 932 (1987), or the same core of operative
facts, Heritage Hotel, 160 B.R. at 377-78."
...
Also, from Black's Law Dictionary 6th Edition:
res judicata ---- A matter adjudged; a thing judicially
acted upon or decided; a thing or matter settled by
judgment. Rule that a final judgment rendered by a court
of competent jurisdiction on the merits is conclusive as
to the rights of the parties and their privies, and, as
to them, constitutes an absolute bar to a subsequent
action involving the same claim, demand or cause of
action.
Matchett v. Rose, 36 Ill.A;.3d 638, 344 N.E.2d 770, 779.
And to be applicable, requires:
identity in thing sued for
as well as
identity of cause of action,
of persons and parties to action,
and of quality in persons for or against
whom claim is made.
The sum and substance of the whole rule is that a
matter once judicially decided is finally decided.
Also,
"The federal Courts have traditionally adherered to
the related doctrines of res judicata and collateral
estoppel. Under res judicata, a final judgement on
the merits of an action precludes the parties or their
privies from relitigating the issues that were or
could have been raised in that action."
Allen v. McCurry, 449 U.S. 90, 101 S. Ct.
411, 415, 66 L.Ed.2d 308.
Generally, claim preclusion occurs when three conditions are
satisfied:
1) the prior judgment was final and on the merits, and rendered
by a court of competent jurisdiction in accordance with the
requirements of due process;
2) the parties are identical, or in privity, in the two actions;
and,
3) the claims in the second matter are based upon the same cause
of action involved in the earlier proceeding.
Kenny v. Quigg, 820 F.2d 665, 669 (4th Cir. 1987);
see also Justice Oaks, 898 F.2d at 1550
(listing the same criteria as four elements).
"Generally, claims are part of the same cause of action
when they arise out of the same transaction or series of
transactions", Harnett v. Billman, 800 F.2d 1308, 1314
(4th Cir. 1986), cert. denied, 480 U.S. 932 (1987), or
the same core of operative facts, Heritage Hotel,
160 B.R. at 377- 78.
The transactions among and between the Defendants acting
within a RICO enterprise do not concern the matter of
Plaintiffs' specific insurance claims treated in the New
Jersey matters, any more than a specific allegation of fraud
or bad faith is concerned with an insurance claim itself.
In Christiansen v. First Insurance Company of Hawai'i Ltd.,
et al., Intermediate Court of Appeals, No. 19968, on appeal
from the Fifth Circuit Court, Civ. No. 93-0238, the Court
Held that Bad Faith and Breach of Contract are torts outside
of an insurance policy in a first-party action, and are
therefore not bound by any limitations or agreements of
the policy.
The body of law that governs insurance policies is the
insurance law of the State, while, generally, Bad Faith
and Breach of Contract are not insurance law.
When all of the requirements for claim preclusion are
satisfied, the judgment in the first case acts as an
absolute bar to the subsequent action with regard to
every claim which was actually made and those which might
have been presented. Justice Oaks, 898 F.2d at 1552.
Yet, here, the requirements for claims preclusion are
not met in this action.
The Joined State Cases have SFI as sole defendant, while the
Defendants in this single Federal action have additional
Defendants who are altogether related through their activities
within enterprises and schemes.
It must be understood that were it not for the MVA of
September 16, 1994, Plaintiffs would not have been exposed
to an already existing pattern of racketeering activities
of SFM that masquerades as "claims handling", nor would
they have been immediately exposed to the very same pattern
exhibited by SFI, and, in all probability by the entire
"family of State Farm Companies", since they all seem bear
the same relation to SFM as does SFI, being wholly owned
incorporated subsidiaries.
The claims, here, arise from patterns of racketeering activities
and violations of Statutes and common law of the State of
North Carolina, and not from an MVA, nor any lawful handling
of claims.
Plaintiffs complain, in part, in this Federal action, of the
behavior and tactics of State Farm Indemnity (SFI) in New Jersey
and those of SFM in North Carolina within the very litigation
process itself. Since the subject matter of of a given action
cannot be the action itself, it is clear that the two joined
State actions and the single Federal action do not have the
same subject matter.
Plaintiffs do not complain here of injuries sustained in the
accident, but rather of those injuries and their permanency
that arise from transactions within RICO enterprises that
include specific tactics of denials and delays of legitimate
claims; persistence in such denials and delays in the face of
an illegitimacy and illogic that has been repeatedly brought
the attention of Defendants SFM and SFI.
Plaintiffs refer here to their
Memorandum on Causality and Damages.
1) The only remedies available to Plaintiffs by law in the
State of New Jersey are those of performance on an insurance
policy. The cause of action in New Jersey is then,
necessarily, nonperformance under terms of the policy, and
the New Jersey claim is only for performance. The language
of the New Jersey complaints was in substantive error and
at odds with existing State Law. Although New Jersey law
apparently does not explicitly forbid remedies other than
performance in PIP actions, they do not exist, in fact, and
are not supported by statute, nor were they supported by a
body of case law.
The expanded remedies available to Plaintiffs under Federal
Law, are based on criminal acts. Nonperformance is not,
per se, a criminal act. The causes of action in this Federal
action arise from the nexus of criminal acts discovered
subsequent to nonperformance. The claims are then damages
resulting from these causes of action.
Therefore, between the New Jersey State actions and the
Federal action, the claims as well as the issues or causes
of action are distinct.
2) The original separate complaints against State Farm, filed
in New Jersey in October of 1996 did contain allegations
of Bad Faith and demand for punitive damages; the Court
dismissed the punitive damages on April 18, 1997, on grounds
of the unavailability of the punitive damages by Statute
under New Jersey law. These issues were moot even before
the complaints were filed, and dismissal was not based on
the merits. At issue was whether or not punitive damages
were available under New Jersey Law. In raising the issue
of Bad Faith in in Federal District Court, Plaintiffs do
not seek to enhance the Statutory Law of New Jersey, but
seek to avail themselves of available Statutes and Common
Law under North Carolina Law, which are different claims
altogether.
Plaintiff Hammel notes that at the time of dismissal of
punitive damages specifically under PIP actions, the court
granted Plaintiff's attorney's Cross Motion to amend the
complaint for Compensatory damages in place of Punitive
damages, in recognition of the nonexistence of the punitive
damages of Bad Faith, and the possible existence of
compensatory damages.
While this action alleges criminal acts, neither of
Plaintiffs' New Jersey complaints so allege.
An action for performance under an insurance policy pursuant
to the policy and State insurance laws is hardly equivalent
in claims or issues to a Federal action spanning three States
and alleging a racketeering enterprise that continues by
deceit and trickery over a period of approximately five years
to the continuing and now unstoppable detriment of both
Plaintiffs.
Therefore, Res Judicata should not be applied on the basis of
these dismissals of punitive damages under PIP in the State
of New Jersey.
3) The application of Res Judicata, in this action, would
require that Plaintiffs are only now raising issues that they
could have raised properly under New Jersey State Law.
a) Clearly, raising the issue of Bad Faith was not properly
available to Plaintiffs in New Jersey, and although
tortious, Bad Faith is not criminal.
b) Equally clearly, issues of federal RICO violations could
not have been raised, because a State Court is not
competent to hear such issues, especially when no State
RICO statute is available; New Jersey does not have a
RICO statute as do, e.g., Nevada and North Carolina,
Georgia.
Therefore Res Judicata should not be applied to this action
in a plenary manner.
4) The cause of action is not being split here, since the causes
of action in the matters in New Jersey arose under an insurance
policy and are exactly matters of performance; put another way,
they arose seminally from the purchase of an insurance policy
as a single continuing transaction between Plaintiffs and,
originally State Farm Mutual Automobile Insurance Co., and
then State Farm Indemnity Co., terminating in March 1996,
after many years.
Here, the causes of action arise from a series of transactions,
involving the Plaintiffs and Defendants of the
Amended Complaint, in which Plaintiffs allege a nexus of more
than sufficiently many violations of RICO within the
enterprises of associations between these Defendants,
to warrant RICO standing.
5) Between the joined New Jersey matters and this action,
Plaintiffs argue:
a) The causes of action
i) have different Defendants
ii) have different time frames
iii) involve different acts yielding new evidence
since the first filing of Plaintiffs'
complaint
b) The issues are distinct
Issue preclusion applies only to issues actually and
necessarily resolved in the first case. The only
issue of fact and/or law decided by a competent court
of jurisdiction in the NJ matters was that punitive
damages were not available under PIP actions in New
Jersey. This was a matter of a paucity of case law
and statute, and not decided on the merits.
c) Neither the PIP releases nor the Judicial Orders
in New Jersey decide or resolve any issue of Plaintiffs'
current action. Moreover, Plaintiffs allege in their
amended complaint that SFI entered the contract
that is the release, with the same fraudulent intent
and behavior that it had previously exhibited, making
that contract now an issue of controversy in the amended
complaint.
d) The Court in the NJ matter lacks jurisdiction over
over the claims in this Federal action; and, Plaintiffs
would be prejudiced in their theories and remedies in
this action, being denied due process in presenting
their evidence and claims, if Res Judicata were applied.
e) Res Judicata does not act as a bar when the conduct
giving rise to the later suit post-dates the conclusion
of the first suit. [Restatement (Second) of Judgments
24 cmt. f (1982)]. Defendants argue that somehow an
issue has been resolved in PIP which acts to bar
this Federal action. Plaintiffs present claim is further
based on acts post-dating the fraudulent PIP settlement
which reflects back on the understanding of intent in
actions prior to the central post-dated acts.
f) Moreover, Defendant SFI through its attorney, Melli
have, in writing, already claimed that in its PIP
settlement, has "admitted nothing" regarding its
liability in its PIP settlement. Therefore the matter
of SFI's liability is, according to SFI still open
and not at all resolved. If that is not at all
resolved than the central PIP question of liability
and whether Plaintiffs have been properly indemnified
is still open, despite Plaintiff's expectations to,
and understanding of, the contrary.
Therefore Res Judicata should not be applied to bar this action.
Regarding Accord and Satisfaction
The signed PIP releases have already been submitted to the Court
through the affidavit of Michelle Wall, allowing Plaintiffs to
discuss them without separate submission.
Though an insurance policy is a contract of adhesion,
a settlement agreement entered into freely by both parties
is an agreement of a standard contractual nature.
These releases have all the required elements of a contract.
1) These releases were signed under physical and emotional
duress as well as a coercion of fact that the PIP case
must be settled before action on UIM could be taken.
Defendants have exploited both this circumstance and
Plaintiffs' fear of yet further damaging delays in
receiving even the smallest amount of money due them
under the terms of the policy.
2) These releases were understood by Plaintiffs as specific
releases in consideration for PIP payments, some of which
had been then recently, suddenly and inexplicably made
before the fact.
Said payments by SFI, made without further medical investigation,
since SFI declined medical investigation after Plaintiffs'
cervical surgeries, and at the time of Plaintiffs' depositions,
can be, and were understood by Plaintiffs and their attorneys
as admission that these payments should have been paid without
the necessity of litigation.
If payments are not made over a period of years, they are not made
because:
1) the claims are determined not to be real
2) the damage is not covered by the policy
3) the insurer is seeking profit by retaining money
due the claimant
4) the insurer is being malicious
5) the insurer is being capricious and arbitrary
or any combination of these. In cases 1) and 2), the insurer has
an obligation to investigate fraud, or state and prove the damage
not to be covered. The rest are unlawful.
When an insurer suddenly after these 4 years pays bills, and
maintains that it has not acted unlawfully, then it
automatically waives cases 1) and 2), for these are assertions
that should have been made and resolved years ago. Defendant
SFI should be barred from maintaining any other reason than it
had "no reason" for denial, by the principle of equitable
estoppel. Any legitimate reason should have been raised long
ago. The only excuses given are the invalid ones given in
the initial denial letters.
In the case of Plaintiff Hammel, the single denial was based
on the statement that "in the doctor's opinion, no further
treatment was necessary"; it was accompanied by Doctor Linder's
second IME report in which no such opinion was expressed
directly or indirectly. Communications, immediately upon
receipt and numerous times thereafter by Plaintiff Hammel
on this point, were ignored. The first response was by
Savastano in a telephone conversation with Plaintiff
Hammel on or about July 31, 1995; when questioned on the
denial of medical benefits said, "Don't worry, it's just a
formality", a statement upon which Plaintiffs relied.
Thereafter, there was no response to the point, nor has
there been any since. What Defendant SFI did was wait
until the second suggested time of treatment had expired
and then issued a denial letter without requesting the
appropriate IME.
Then fifty-six (56) days later, SFI sent an IME request letter,
with the usual threats of denial of benefits for failure to
comply. The IME was with Dr. Harry Merliss, and orthopedic
surgeon. Plaintiff Hammel had not yet seen an orthopedist
of any kind yet. The provisions of the policy provides that
SFI might from time to time seek second opinions, which this
clearly was not. After Plaintiff Hammel had actually made an
appointment with Dr. Merliss, he discovered through contacts
in the medical profession that Dr. Merliss was, in fact, a
medical whore who sold his a priori "medical opinions" to
insurers. Plaintiff Hammel, promptly canceled his appointment
with Dr. Merliss and reported to SFI that Merliss was
unacceptable as an IME physician. It was then clear what
SFI was attempting to do. Plaintiff Hammel had read and
understood similar purpose in IME reports by Drs. Fremed and
Wagle, and thereafter investigated any IME physician declared
by SFI, finding the same continuing pattern.
In the case of Plaintiff Bellamente, Defendant SFI sent two
denial letters for neurological and psychological benefits.
These letters, on which the decisions to deny were based,
were secured through unlawful means. No letter of denial
of chiropractic benefits was ever sent, SFI simply,
unlawfully, refused to pay for Plaintiff Bellamente's
necessary and continuing chiropractic care.
Defendant SFI conspired with both IME physicians Fremed
and Wagle to commit extortion upon Plaintiff Bellamente
by having him attend sham IMEs; conspired to commit
extortion on Plaintiff Bellamente by having sham IME
reports written to present as excuses for depriving him
of benefits due a legitimate claimant.
Since this denial was indeed effected, Defendants SFI,
Fremed and Wagle did coerce Plaintiff Bellamente into
attending these IMEs, they have committed extortion.
Since the IME reports were written and used as excuses to
deny benefits, and benefits were denied, they have also
committed robbery in depriving him of the benefits due him,
which has caused grievous and permanent damage to his business,
property and person.
Defendants SFI, Fremed and Wagle have also committed conspiracy
to commit fraud through the conspiracy to purport that the IMEs
were indeed "independent medical examinations".
These same Defendants have committed fraud upon Plaintiff
Bellamente by purporting that the IMEs were indeed
"independent medical examinations", upon which Plaintiff
Bellamente relied, to his detriment by having his benefits
denied through this scheme of unlawful acts.
The Accord of the PIP releases is understood by Plaintiffs
to cover the PIP claims and only the PIP claims, which SFI
is to satisfy. Any understanding of satisfaction by
Plaintiffs regarding the Accord is based on Plaintiffs'
Good Faith and Reasonable Expectations that satisfaction will
be met in the future. In reality, such satisfaction has not
been met, in that, out of pocket expenses for which bills have
been repeatedly submitted, have not yet been paid or even
acknowledged, and Plaintiffs see little chance that they will be.
3) Since the signing of these release contracts, SFI has been
in default of their agreement, exactly as they were in
default of their agreement under the so called insurance
policy and remain in breach of their fiduciary duties that
extended through the arduous litigation process which was,
and still is, highly destructive to Plaintiffs. Only after
service of the RICO complaint, was there some attempt to
make good appearance of SFI's word in these releases by
what appeared to be an unconvincing kind of deathbed
repentance.
There was a prior attempt by Michelle Wall to settle the
PIP matter in a letter to both Plaintiffs' attorneys dated
November 19, 1998, but for some reason that could only have
its origin in edict by SFI, this attempt suddenly came to a
halt. On information and belief Carole Rickelmann of SFI's
Complex Claims Unit was involved in this malicious edict.
4) The consistency with which SFI has dishonored its word in
policy, fiduciary duty and agreement leaves very little
doubt that these releases, as contracts, were entered into
with no intent other than to continue their racketeering
activities.
Plaintiffs question whether they should be bound by their
agreements to these releases, since SFI has behaved in a
manner indicating that it assumed it was not so bound.
In being so bound Plaintiffs are being punished for Good
Faith, while SFI is being rewarded for its racketeering
activities.
5) Under the doctrine of Reasonable Expectations, Plaintiffs
had been insured by State Farm insurance since 1986, and
had minor claims, and none with liability - plaintiffs
had reasonable expectations of being insured, and of the
policy being honored; Plaintiffs at all times behaved
prudently, and accordingly, were completely surprised at
SFIs, behavior.
6) SFI, agreed to considerations in releases in order to
secure dismissal of the PIP actions. SFI paid Plaintiffs'
Medicaid liens and outstanding medical bills, even before
the releases were signed, tacitly acknowledging that said
PIP payments were legitimate, that the denials of all medical
benefits was improper, and therefore that it had failed in
performance.
After securing Plaintiff Hammel's release and paying his
PIP claims, SFI then sought to relitigate the causation of
damages from the MVA by procuring a "paper review" of
Plaintiff Hammel's medical reports which comes to the not
very surprising conclusion that the MVA caused no damages
at all. This review written by SFI's espoused expert
witness Eric L. Fremed, M.D. for a UIM arbitration, arrives
at his conclusion by contrived selections and omissions from
every medical report stated to have been reviewed, and by
wholly ignoring those from which nothing that suited his
purpose could be harvested. It takes no great medical
expertese, in comparing Dr. Fremed's Reviews with the actual
medical reports of Plaintiffs' treating physicians, and with
the objective radiological reports, to see that these
reviews are complete fabrications in furtherance of the
continuation of SFI's egregiously privative actions.
Its statements and reasoning are a farce of ridiculous
proportions. That such a Review could be constructed
without the direct or indirect coaxing by SFI would
stretch anyone's credulity. Dr. Fremed was paid
approximately $1000.00 for these reviews according to
SFI's internal records.
Referenced here is Plaintiffs' accompanying Memorandum On
Medical Paper Reviews and an IME Report by Defendant Eric
L. Fremed.
In principle, these reviews should be barred in the New
Jersey Courts on the basis of equitable estoppel. These
objections notwithstanding, the purpose of Defendant SFI
was further delay, and denial of benefits of the policy
that should have been paid years ago, and furtherance of
fraud and the pattern of racketeering, which is perfectly
consistent with SFI's prior behavior and tactics.
One Review by Dr. Fremed even extends to an unwarranted ad
hominem, medically unprofessional and legally inappropriate
attack on Plaintiff Hammel.
In the other review of Plaintiff Bellamente's medical records,
the same conclusion that no injuries were caused by the MVA
is reached. Dr. Fremed has an advantage here, however, since
he is the neurologist to whom SFI sent Plaintiff Bellamente,
in order to obtain an excuse to deny neurological benefits.
Dr. Fremed seems not to agree with any treating physician.
The Complaint sent to the New Jersey Department of insurance,
details Dr. Fremed's alleged 15 minute neurological examination.
For these reasons, Dr. Fremed and his P.C. have now also
been included as named Defendants in this RICO action,
separately and as agents, servants and/or employees of SFI,
as has SFI's other co-conspirator Dr. Sharad Wagle, and his P.C.
7) These releases were understood by Plaintiffs as contracts
for future performance. Defendant SFI has already indicated
fraudulent intent regarding performance in two matters:
regarding payment of out of pocket medical expenses, in the
matter of Plaintiff Hammel's contract (release) leaving future
performance reasonably not to be expected; and regarding their
attempted switch in position on the attribution of injuries
to the MVA. This violates intent and understanding of the
release, and is an exercise in trickery and deceit in
furtherance of the pattern of racketeering.
8) Regarding 5(f) under Res Judicata, the stated position of
defendant SFI is, now, after the fact of the PIP settlement
that SFI has admitted nothing and apparently paid some medical
bills for some capricious reason unknown to Plaintiffs or their
NJ attorneys. In this action, can the accord be considered
satisfied, as it had, not, according to SFI, anything to do
with the requirement of the policy, but is now supposed to be
understood as some arbitrary act, by SFI's own assertion,
through its attorneys, Melli, for which Plaintiffs are now
supposed to obey and be satisfied, according to whatever
interpretation SFI attributes to this act at any particular
moment. The legal concept for this is "tortious interference
with contract."
Therefore, the principle of Accord and Satisfaction should not
be applied to bar this action.
Regarding Comity
Given the above arguments disputing the applicability of
Res Judicata, in all of its requirements, the question of
Comity cannot arise; if it could, in such a case, no Federal
law would be permitted to exist that covers any area
of law where a State law also covers that area. From a
legal standpoint, this is an untenable extreme solution to
the problems of localism conflicts. To Plaintiffs'
knowledge, this extreme solution had not been accepted or
adopted by any Court of the United States.
II. Addressed in Plaintiffs' Amended Complaint
Except for D, which Plaintiffs now address.
1) In Defendant's Memorandum, they note failure on the part
of Plaintiffs properly to distinguish between SFM and SFI,
make a few assumptions and then cite NCNB: National Bank
of North Carolina v. Tiller, 814 F.2d 931, 936 (4th Cir. 1987),
as holding "that a 'person' is not distinct from an
'enterprise' when a corporation and its wholly owned subsidiary
are involved."
This confusing and vague quote creates even more confusion
when followed through to the actual case, and was ultimately
misapplied there:
a) In NCNB, the Court was actually quoting the Court's
opinion in U.S. v. Computer Sciences Corp, 689 F.2d,
1181
b) In NCNB, Appellee NCNB was an UNINCORPORATED
subdivision of Appellee NCNB Corporation.
c) In Computer Sciences, once again Infonet is an
UNINCORPORATED division of CSC.
d) In Computer Sciences, 1190 [13] the Court opines:
"There is, however, the remaining problem, restricted
to CSC, of whether Congress ever intended, in
18 U.S.C. 1962, that the statute prohibit activities
by a person where the activities are described
as occurring with any enterprise when there was
identity between the person, on the one hand,
and the enterprise, on the other. We conclude that
'enterprise' was meant to refer to a being different
from, not the same as or part of, the person whose
behavior the act was designed to prohibit, and
failing that, to punish. To be sure, the analogy
between individuals and fictive persons such as
corporations is not exact. Still, we would not
take seriously, in the absence, at least, of very
explicit statutory language, an assertion that a
defendant could conspire with his right arm, which
held, aimed and fired the fatal weapon. A
corporation, in common parlance, is not regarded
as distinct from its unincorporated divisions either."
e) In Computer Science the Court maintained that the
"person" under RICO must always be different or
distinct from the "enterprise".
e) However, in Busby v. Crown, the court reverses itself
allowing that under an allegement of 1962(a)
the person and the enterprise may be identical, while
maintaining the requirement that the enterprise and
person must be distinct under allegement of 1962(c).
f) In Busby, the Court notes that the distinction between
enterprise and person is followed by all Circuit
Courts excepting the 11th Circuit; U.S. v. Hartley,
678 F.2d 961, 987-90 (11th Cir. 1982).
In summary, as Defendant's state, in allegements of 1962(c),
the person must be distinct from the enterprise; however, in
allegements of 1962(a) they may be identical.
Plaintiff's have already alleged and do so again in their amended
complaint that SFI is an INCORPORATED wholly owned subsidiary
of SFM. The citation prohibiting the separation of person
and enterprise "when a corporation and its wholly owned
subsidiary are involved" is taken, in both Computer Sciences
and in NCNB, out of the context of the issue of unincorporated
wholly owned subsidiaries.
In common corporate parlance "wholly owned subsidiary" is
understood as incorporated, so it is easy to see how, without a
careful reading of the issues in NCNB and Computer Sciences,
the unfortunate phraseology of the Court might be misinterpreted.
In Busby and NCNB, the Courts do not find that a 'person'
is not distinct from an 'enterprise' when a corporation and
its incorporated wholly owned subsidiary are involved.
The issue is one of the degree of separateness of person
as defined 18 USC 1961(3), "includes an individual or
entity capable of holding a legal or beneficial interest
in property". Any holding or possession of an unincorporated
wholly owned subsidiary of a corporation is, per force, the
property of the corporation. The unincorporated subsidiary
is not a legal person and is not capable of holding a legal
or beneficial interest of its own, exclusively, being too
closely bound to the corporation itself. An incorporated
wholly owned subsidiary, however, has by law, the normal
sense of person and is indeed legally capable of holding
a legal and beneficial interest in property.
Therefore, Defendant's have misinterpreted and misapplied
this aspect of the Courts' holdings in NCNB, and Computer
Sciences.
III. Regarding Defendants' Alternative Motion to Stay
1) Should compensatory damages actually be awarded in the
remaining UIM matter, they would only be a compensation for
the pain and suffering endured by Plaintiffs during the
time of protraction in performance of Defendant SFI, and
not compensation sought here for permanent business,
property and bodily losses, and their consequential damages,
which will continue until Plaintiffs' demise.
The claims and relief sought here are distinct from those sought
in the New Jersey State actions brought under State Insurance
Law. There is no attempt to relitigate the same claims, nor
do Plaintiffs seek double recovery. Plaintiffs have not, however,
been made whole. Quite the contrary, and it is this for
which compensation is sought. The RICO patterns defined in
this federal complaint, are the cause of permanent damages
to both Plaintiffs. Since the business and property of both
Plaintiffs are also by law, personal, the formal restriction
to business and property extends by law to personal damages.
Plaintiff Hammel was, at the time of the MVA, engaged in
businesses that were d/b/a's, meaning that legally, his
business was indeed personal. Plaintiff Bellamente was
engaged as conservator of an elderly aunt's estate; his business
was then also purely personal. So, in this particular case the
usual distinction between "business and property" damages and
personal damages does not apply.
By reference, the accompanying Memorandum on Causality and Damages.
is included in entirety with all of it paragraphs.
This Federal action is distinct from the two joined matters in
New Jersey.
Should SFI give Plaintiffs reason by their further behavior in
litigation in New Jersey, Plaintiffs will supplement this
Federal complaint.
2) Nothing that may be resolved in the New Jersey matters will
have meaning here, excepting that one pattern alleged may
have changed its status from open to closed. The only other
consequences of not staying this action in regard to the
New Jersey matters are that Plaintiffs may be forced to
submit supplements to the complaint.
3) To stay this action pending the outcomes in New Jersey would
give SFI direct control over delays in this Federal
Court. SFI has successfully delayed the New Jersey claims
for five years, and the cases for three years using the
very same tactics outlined in Campbell and independently
in Plaintiffs' Complaints to the New Jersey Department of
Insurance. SFI's "investigations" of Plaintiffs' claims
will be shown to be mere shams and fabrications, whose sole
intention was and is to deny Plaintiffs that to which they
have rightful claim, and that these shams are patterns of
racketeering masquerading as "claims handling".
4) It would be intolerable for any RICO enterprise to be given
permission by the Court to prevent, interfere with, or delay,
indeterminately by its own activities, litigation against
that very enterprise.
5) If, in Defendants' words, the issue of underinsured motorists
benefits are so "limited" and one assumes by inference,
relatively trivial, this action should not be stayed.
Defendants give no substantive reason why it should.
6) No matter the UIM arbitration panel's decision, it can not
negate the RICO violations; nor can it negate the violations
of the Statutes and common law of North Carolina of which
Plaintiffs complain in their Amended Complaint.
THEREFORE, neither Res Judicata nor Accord and Satisfaction,
nor Comity, should be applied to bar or dismiss this action;
nor should this action be stayed pending any resolution of
the UIM arbitration in New Jersey.
Respectfully Submitted:
William C. Hammel Alan J. Bellamente
A-11 Moose Branch Road, A-11 Moose Branch Road,
Sweetwater Apartments 1A, Sweetwater Apartments 8A,
Robbinsville, NC 28771 Robbinsville, NC 28771
(828) 479-1547 (828) 479-1547
/S/ /S/
------------------------------- ------------------------------
William C. Hammel Alan J. Bellamente
DATE: February 4, 2000 DATE: February 4, 2000
Hammel v. State Farm Diary
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