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WHITEHEAD v. GATEWAY CHEVROLET

January 30, 2004.

ANGELIA M. WHITEHEAD, Plaintiff,
v.
GATEWAY CHEVROLET, OLDSMOBILE, INC., CRAIG ANDREA, LEE DRYZBEK, and THOMAS OKIMOTO, Defendants



The opinion of the court was delivered by: SUZANNE CONLON, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Angelia M. Whitehead ("Whitehead") sues Gateway Chevrolet, Oldsmobile, Inc. ("Gateway"), Craig Andrea ("Andrea"), Lee Dryzbek ("Dryzbek"), and Thomas Okimoto ("Okimoto") (collectively "defendants") for violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c) [Count I], and common Jaw fraud [Count II]. Thereafter, this court ordered Whitehead to file a RICO case statement. In the interim, defendants moved to dismiss Whitehead's complaint for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). In response, Whitehead filed a combined response to defendants' motion to dismiss and her RICO case statement. Defendants' motion, construed as a Fed.R.Civ.P. 12(b)(6) motion to dismiss, was granted, and Whitehead was given leave to file an amended complaint in order to incorporate the allegations from her RICO case statement.

Defendants now move to strike and dismiss Whitehead's amended complaint pursuant to Fed.R.Civ.P. 12(f) and 12(b)(6). Specifically, defendants claim that ¶¶ 64, 68-93, 96-133 and 137 of the amended complaint (as well as portions of the RICO case statement) should be Page 2 stricken because Whitehead has included Gateway's confidential information in those paragraphs, violating an agreed protective order entered by Judge Bucklo in Isaiah Beene v. Gateway Chevrolet, Oldsmobile, Inc., Case No. 02 C 830, Minute Order 7/11/2003, Doc. No. 26 (hereinafter, "Beene protective order"). Defendants further claim that Whitehead's amended complaint is fatally defective in the absence of the protected allegations. Finally, defendants request sanctions against Whitehead's attorney — Christopher V. Langone ("Langone") — pursuant to Fed.R.Civ.P. 37(b) for his violation of the Beene protective order.

  BACKGROUND

 I. Whitehead Transaction

  Underlying Whitehead's RICO claim is her purchase of a 1996 Mercury Mystique from an unidentified Gateway employee on August 14, 1999. Compl. ¶ 16. Whitehead signed a retail installment sales contract to finance the car. Id. ¶ 16. According to Whitehead, the Gateway employee obtained financing for her contract by misrepresenting to Triad Financial that she made a $1000 down payment ("phantom down payment"). Id. ¶¶ 17, 63. In addition, Whitehead maintains that the Gateway employee falsely represented that the annual percentage rate ("APR") of interest would be 12.95%. Id. ¶¶ 16, 21-22, 63. Whitehead then signed a second retail installment sales contract many days later that set the APR at 20.50% after she was informed that the 12.95% rate was unavailable. Id. ¶¶ 21, 24. Whitehead maintains that an unnamed Gateway employee falsely back-dated the second contract. Id. ¶ 25. This second contract — "on information and belief" — was then allegedly mailed and/or faxed to an unnamed finance company. Id. ¶ 26. Whitehead alleges that her name was forged on a title document by an unidentified Gateway title clerk. Id. ¶ 63. Page 3

 II. RICO Allegations

  The predicate racketeering acts are not restricted to Whitehead. The amended complaint alleges purported predicate acts of mail fraud, wire fraud, financial institution fraud, and title forgery aimed at other Gateway consumers in a scheme to defraud them. The propriety of the overwhelming majority of those allegations is the subject of defendants' motion to strike. Whitehead contends that Gateway uses phantom down payments and title forgery in order to induce third party finance companies to finance retail installment contracts on behalf of consumers that they would otherwise reject, thereby binding consumers to economically disadvantageous contracts. In addition to those allegations that are the subject of defendants' motion to strike, Whitehead points to five other retail installment contract disputes involving Gateway, namely those of: (1) Donna Beene; (2) Isaiah Beene; (3) Jason Knight and Tiffany Peake; (4) Rose Tully; and (5) Pearlie Smith.

 A. Donna Beene

  In January 2000, Donna Beene purchased a vehicle at Gateway from Scott Falcone, one of its finance managers. Id. ¶ 52. Beene, like Whitehead, entered into a retail installment sales financing contract that misrepresented she made a $1000 down payment. Id. ¶¶ 52-53. In fact, Beene made no down payment. Id. ¶ 53. Instead, Gateway knowingly accepted a bad check from Beene in the amount of $1000. Id. ¶ 53.

  Gateway then purportedly mailed the contract to Triad Financial Corporation, a third party finance company, on January 31, 2000. Id. ¶ 53. At the same time, a Gateway title clerk, Barb Flores, forged Beene's name on a title document. Id. ¶ 55. According to Whitehead, Triad later learned about the phantom down payment, and required Gateway to re-purchase the Page 4 contract. Id. ¶ 56. Gateway then attempted to sell the contract to another finance company using "fraudulent means." Id. ¶¶ 57-58. Unable to do so, Gateway — through defendant Okimoto and at the behest of defendant Andrea-sent Beene a letter that stated "to avoid arrest you are instructed to return the vehicle immediately." Id. ¶ 58. Beene did not return the vehicle on advice of counsel. Id. ¶ 52.

  Gateway repossessed the car. Id. ¶ 58. In order to sell the car to another customer, Gateway title clerk Stacy Scalise forged Beene's name on a title on October 14, 2000, and "used the mails to register the forged title. . . . and sell the contract" to an unnamed finance company. Id. ¶ 59.

 B. Isaiah Beene

  Within "several days" of Donna Beene's purchase, Isaiah Beene — her father — bought a car from Gateway. Id. ¶ 54. Like his daughter, Isaiah Beene signed a retail installment contract that misrepresented he made a $1000 down payment. Id. ¶ 54. In order to do so, Gateway used the personal check received from Donna Beene. Id. ¶ 54. Isaiah Beene's retail installment contract was purchased by Auto One, a finance company. ...


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