an enterprise through which the alleged racketeering activity took place. As discussed below, defendants are correct. The court's review of the complaint reveals, however, that it also fails to plead sufficient allegations of racketeering activity.
Racketeering activity under RICO can consist only of the various criminal acts set forth in 18 U.S.C. § 1961(1). There must be at least two such predicate acts properly pled in order to even address whether other precedential requirements for a cognizable RICO "pattern" have been satisfied. Id.; Dennis v. Peoples Gas Light & Coke Company, 1990 U.S. Dist. LEXIS 5751, 1990 WL 70372 (N.D. Ill. 1990). Plaintiff attempts to meet this predicate act requirement by alleging that defendant committed various acts of mail fraud. Mail fraud is one of the criminal acts specified in § 1961(1) as racketeering activity.
The elements of a cause of action for mail fraud are: (1) intentional participation in a scheme to or specific intent to defraud; and (2) use of the mails in furtherance of the scheme. Associates in Adolescent Psychiatry v. Home Life Insurance Co., 751 F. Supp. 727, 729 (N.D. Ill. 1990), aff'd, 941 F.2d 561 (7th Cir. 1991). To establish fraud, the plaintiff must show that the defendant made a false representation of material past or existing fact, which was known to be false when made. The misrepresentation must have been made intentionally to induce the plaintiff to act, and the plaintiff must justifiably rely on the representation. Finally, the plaintiff must be injured as a result of such reliance. Id. at 730. It is not necessary that the mailing itself contains misrepresentations of fact, only that it constitutes a part of the fraudulent scheme. Schmuck v. United States, 489 U.S. 705, 715, 103 L. Ed. 2d 734, 109 S. Ct. 1443 (1989). The plaintiff must show, however, that the defendant engaged in a "scheme to [defraud or] deprive another of money or property by means of false pretenses, representations, or promises." Id. at 711 (quoting Carpenter v. United States, 484 U.S. 19, 27, 98 L. Ed. 2d 275, 108 S. Ct. 316 (1987)). The plaintiff must establish that the defendant had the intent to implement such a scheme. It is "incumbent upon the plaintiff . . . to demonstrate that he would be able to place before a jury sufficient evidence of an intent to deceive . . . ." Id. Of course, pursuant to Fed. R. Civ. P. 9(b) plaintiff must plead this fraud with particularity. Jepson, Inc. v. Makita Corp., 34 F.3d 1321, 1328 (7th Cir. 1994).
Plaintiff's complaint fails to identify specifically any false or misleading statement of fact upon which plaintiff relied justifiably to his detriment. While the complaint takes great pains to detail the manner in which defendants proceeded to obtain and charge plaintiff for unauthorized insurance, it fails to identify any allegedly false or misleading statement made by any of the defendants in this case. As plaintiff himself describes it, his "basic complaint is that defendants violated a number of laws, including RICO, through a program of obtaining unauthorized insurance for borrowers and then charging them for that unauthorized insurance." He asserts that "defendants engaged in an intentional, coordinated, long-term program of obtaining and charging borrowers for insurance where the borrowers' credit contract did not authorize defendants to charge them for that insurance." He is thus arguing that defendants' breach of contract constitutes fraud.
The details of the fraud are, according to plaintiff, alleged in paragraphs 33 through 59 of the complaint. Yet nowhere in those paragraphs has plaintiff identified a single misrepresentation or false statement. The only "statement" identified by plaintiff is the one in the loan/security agreement providing that should plaintiff default by failing to procure insurance, defendant has the option of repossessing the car or purchasing the insurance itself. By itself, however, that statement is insufficient to support a claim for fraud. First, it is not a "statement made by Fidelity" to induce plaintiff to do anything. Indeed, it is a statement by plaintiff made to induce defendant Fidelity to extend him credit. Moreover, and perhaps more importantly, plaintiff has not and cannot identify anything in the statement that is untrue. To the extent that the statement can be attributable to Fidelity at all, it must be considered a statement of possible or contingent future action, not of a past or existing fact.
If plaintiff failed to purchase insurance, then Fidelity could, but was not required to, purchase the insurance. It could, however, elect to repossess the car. Plaintiff has never alleged that Fidelity ever represented that it would or was obligated to purchase authorized insurance. To the contrary, all the contract does is grant Fidelity the option to purchase insurance or repossess the car upon plaintiff's default. There is nothing false or fraudulent in that representation.
Perhaps, without explicitly stating, plaintiff is attempting to plead a material omission or concealment of material information which can, in certain circumstances, constitute fraud. See Emery v. American General Finance Incorporated, 71 F.3d 1343 (7th Cir. 1995). Plaintiff has not alleged, however, that the statement is a half-truth or contains a material omission and, unlike in Emery, the instant complaint contains no allegation that defendants target individuals who do not understand or are incapable of understanding loan documents or security agreements, and that defendants sought to take advantage of such disadvantaged persons. Also unlike in Emery, no information was withheld from plaintiff. According to the allegations of the complaint, plaintiff agreed that he was required to maintain insurance on the automobile, that if he failed to maintain such insurance he would be in default of his loan and that defendant could elect, at its option, to purchase authorized insurance and charge plaintiff for the premium. When defendant elected to purchase insurance, a copy of the policy was sent to plaintiff. As stated by Judge Plunkett in dismissing the complaint in Dixon v. TCF Bank Illinois, 1995 U.S. Dist. LEXIS 15706, 1995 WL 622409, *3 (N.D. Ill 1995) a strikingly similar case also brought by plaintiff's counsel,
. . . there is no allegation that [defendant] misrepresented the nature of the insurance it purchased, nor does [plaintiff] allege with particularity that [defendant] made any misrepresentation in connection with its attempts to collect the deficiency. At most, [plaintiff's] complaint amounts to allegations of breach of contract--purchasing insurance on [plaintiff's] behalf beyond that authorized by the installment sales agreement--and violations of certain state law claims not relevant to the RICO allegations.